Exhibit 4.1
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE
AGREEMENT
Dated as of August 23, 2001
among
SPEEDCOM WIRELESS CORPORATION
and
THE PURCHASERS LISTED ON EXHIBIT A
TABLE OF CONTENTS
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PAGE
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ARTICLE I Purchase and Sale of Preferred Stock...................................................... 1
Section 1.1 Purchase and Sale of Stock..................................................... 1
Section 1.2 The Conversion Shares.......................................................... 1
Section 1.3 Purchase Price and Closing..................................................... 2
Section 1.4 Exchange of Series A Preferred Stock........................................... 2
Section 1.5 Warrants....................................................................... 2
ARTICLE II Representations and Warranties........................................................... 3
Section 2.1 Representations and Warranties of the Company.................................. 3
Section 2.2 Representations and Warranties of the Purchasers............................... 13
ARTICLE III Covenants............................................................................... 14
Section 3.1 Securities Compliance.......................................................... 14
Section 3.2 Registration and Listing....................................................... 15
Section 3.3 Inspection Rights.............................................................. 15
Section 3.4 Compliance with Laws........................................................... 15
Section 3.5 Keeping of Records and Books of Account........................................ 16
Section 3.6 Reporting Requirements......................................................... 16
Section 3.7 Amendments..................................................................... 16
Section 3.8 Other Agreements............................................................... 16
Section 3.9 Distributions.................................................................. 16
Section 3.10 Status of Dividends............................................................ 16
Section 3.11 Intentionally Omitted.......................................................... 17
Section 3.12 Future Financings; Right of First Offer and Refusal............................ 17
Section 3.13 Reservation of Shares.......................................................... 19
Section 3.14 Transfer Agent Instructions.................................................... 19
Section 3.15 X.X. Xxxxxxxxxx & Co., Inc..................................................... 19
ARTICLE IV Conditions 20
Section 4.1 Conditions Precedent to the Obligation of the Company to Sell the Shares....... 20
Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Purchase
the Shares..................................................................... 20
ARTICLE V Intentionally Omitted..................................................................... 23
ARTICLE VI Stock Certificate Legend................................................................. 23
Section 6.1 Legend......................................................................... 23
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ARTICLE VII Intentionally Omitted................................................................... 24
ARTICLE VIII Indemnification........................................................................ 24
Section 8.1 General Indemnity.............................................................. 24
Section 8.2 Indemnification Procedure...................................................... 24
ARTICLE IX Miscellaneous............................................................................ 25
Section 9.1 Fees and Expenses.............................................................. 25
Section 9.2 Specific Enforcement, Consent to Jurisdiction.................................. 25
Section 9.3 Entire Agreement; Amendment.................................................... 26
Section 9.4 Notices........................................................................ 26
Section 9.5 Waivers........................................................................ 27
Section 9.6 Headings....................................................................... 27
Section 9.7 Successors and Assigns......................................................... 27
Section 9.8 No Third Party Beneficiaries................................................... 27
Section 9.9 Governing Law.................................................................. 28
Section 9.10 Survival....................................................................... 28
Section 9.11 Counterparts................................................................... 28
Section 9.12 Publicity...................................................................... 28
Section 9.13 Severability................................................................... 28
Section 9.14 Further Assurances............................................................. 28
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SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE
AGREEMENT
This SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is dated as of August 23, 2001 by and among Speedcom Wireless
Corporation, a Delaware corporation (the "Company"), and each of the Purchasers
of shares of Series B Convertible Preferred Stock of the Company whose names are
set forth on Exhibit A hereto (individually, a "Purchaser" and collectively, the
"Purchasers").
The parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Preferred Stock
Section 1.1 Purchase and Sale of Stock. Upon the following terms and
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conditions, the Company shall issue and sell to the Purchasers and each of the
Purchasers shall purchase from the Company, the number of shares of the
Company's Series B Convertible Preferred Stock, par value $.001 per share (the
"Preferred Shares"), at a purchase price of $2.25 per share, set forth with
respect to such Purchaser on Exhibit A hereto. Upon the following terms and
conditions, the Purchasers shall be issued Series A Warrants, in substantially
the form attached hereto as Exhibit B-1 (the "Series A Warrants") and Series B
Warrants, in substantially the form attached hereto as Exhibit B-2 (the Series B
Warrants and, together with the Series A Warrants, the "Warrants"), to purchase
the Company's Common Stock, par value $.001 per share (the "Common Stock"). The
aggregate purchase price for the Preferred Shares and the Warrants shall be
$8,500,000. A portion of the aggregate purchase price shall be paid with (i)
shares of Series A Preferred Stock issued by the Company in connection with the
Series A Preferred Stock Purchase Agreement dated June 29, 2001 (the "Series A
Preferred Stock"); (ii) subordinated promissory notes issued by the Company in
connection with the Note and Warrant Purchase Agreement dated April 13, 2001
(the "April Notes"); and (iii) promissory notes issued by the Company in
connection with the Note and Warrant Purchase Agreement dated June 11, 2001 (the
"June Notes"), in the amounts set forth next to each Purchaser's name on
Schedule 1.1 attached hereto. The designation, rights, preferences and other
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terms and provisions of the Series B Convertible Preferred Stock are set forth
in the Certificate of Designation of the Relative Rights and Preferences of the
Series B Convertible Preferred Stock attached hereto as Exhibit C (the
"Certificate of Designation"). The Company and the Purchasers are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded by Rule 506 of Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act") or Section 4(2) of the Securities Act.
Section 1.2 The Conversion Shares. The Company has authorized and
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has reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, a sufficient number of its
authorized but unissued shares of its Common Stock, to effect the conversion of
the Preferred Shares and exercise of the Warrants.
Any shares of Common Stock issuable upon conversion of the Preferred Shares and
exercise of the Warrants (and such shares when issued) are herein referred to as
the "Conversion Shares" and the "Warrant Shares", respectively. The Preferred
Shares, the Conversion Shares and the Warrant Shares are sometimes collectively
referred to as the "Shares".
Section 1.3 Purchase Price and Closing. The Company agrees to issue and
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sellto the Purchasers and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally but not jointly, agree to purchase that number of the
Preferred Shares and Warrants set forth opposite their respective names on
Exhibit A. The aggregate purchase price of the Preferred Shares and Warrants
being acquired by each Purchaser is set forth opposite such Purchaser's name on
Exhibit A (for each such purchaser, the "Purchase Price" and collectively
referred to as the "Purchase Prices"). The Company acknowledges and agrees that
the Purchase Price for certain Purchasers for the Preferred Shares and Warrants
will be paid to the Company with shares of the Series A Preferred Stock, the
April Notes and/or the June Notes, as applicable, in the amounts set forth on
Schedule 1.1 attached hereto. The closing of the purchase and sale of the
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Preferred Shares and Warrants to be acquired by the Purchasers from the Company
under this Agreement shall take place at the offices of Jenkens & Xxxxxxxxx
Xxxxxx Xxxxxx LLP, The Chrysler Building, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Closing") at 10:00 a.m., New York time on (i) the date on which
the last to be fulfilled or waived of the conditions set forth in Article IV
hereof and applicable to such Closing shall be fulfilled or waived in accordance
herewith or (ii) at such other time and place or on such date as the Purchasers
and the Company may agree upon (the "Closing Date").
Section 1.4 Exchange of Series A Preferred Stock / Notes. Prior to or
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at the Closing, the Purchasers shall surrender to the Company stock certificates
representing their shares of Series A Preferred Stock, the April Notes and/or
June Notes, as applicable. Upon the Closing, the Purchasers shall receive in
exchange for the surrender of the stock certificates representing shares of
Series A Preferred Stock, the April Notes and/or the June Notes, as applicable,
stock certificates representing their pro rata portion of the Preferred Shares.
Section 1.5 Warrants. The Company agrees to issue to each of the
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Purchasers Series A Warrants and Series B Warrants to purchase the number of
shares of Common Stock set forth opposite such Purchaser's name on Exhibit A
hereto, such number of shares of Common Stock determined as follows: (a) the
Purchasers shall receive a Series A Warrant for the purchase of .80 shares of
Common Stock for each Preferred Share purchased and (b) the Purchasers shall
receive a Series B Warrant for the purchase of 1.189 shares of Common Stock for
each Preferred Share purchased. The Warrants shall have an exercise price equal
to the Warrant Price (as defined in the applicable Warrant). The Series A
Warrants shall expire on the fifth (5th) anniversary of the date of issuance and
the Series B Warrants shall expire twenty (20) trading days following the
release of the Company's audited financial statements for fiscal year 2001. The
Warrants shall provide for a cashless exercise until the Effectiveness Date (as
defined in the Registration Rights Agreement) of the Registration Statement.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of the Company. The Company
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hereby makes the following representations and warranties to the Purchasers,
except as set forth in the Company's disclosure schedule delivered with this
Agreement as follows:
(a) Organization, Good Standing and Power. The Company is a corporation
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incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
The Company does not have any subsidiaries except as set forth in the Company's
Form 10-KSB for the year ended December 31, 2000, including the accompanying
financial statements (the "Form 10-KSB"), or in the Company's Form 10-QSB for
the fiscal quarters ended June 30, 2000, September 30, 2000 or March 31, 2001
(collectively, the "Form 10-QSB"), or on Schedule 2.1(a) hereto. The Company and
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each such subsidiary is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary
except for any jurisdiction(s) (alone or in the aggregate) in which the failure
to be so qualified will not have a Material Adverse Effect (as defined in
Section 2.1(e) hereof) on the Company's financial condition.
(b) Authorization; Enforcement. The Company has the requisite corporate
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power and authority to enter into and perform this Agreement, the Registration
Rights Agreement attached hereto as Exhibit D (the "Registration Rights
Agreement"), the Transfer Agent Instructions (as defined in Section 3.14), the
Certificate of Designation, and the Warrants (collectively, the "Transaction
Documents") and to issue and sell the Shares and the Warrants in accordance with
the terms hereof. The execution, delivery and performance of the Transaction
Documents and the Certificate of Designation by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Company.
The other Transaction Documents will have been duly executed and delivered by
the Company at the Closing. Each of the Transaction Documents constitutes, or
shall constitute when executed and delivered, a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company and the
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shares thereof currently issued and outstanding as of June 29, 2001 are set
forth on Schedule 2.1(c) hereto. All of the outstanding shares of the Company's
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Common Stock and Series B Convertible Preferred Stock have been duly and validly
authorized. Except as set forth in this Agreement and the Registration Rights
Agreement and as set forth in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(c)
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hereto, no shares of Common Stock are entitled to preemptive
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rights or registration rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company. Furthermore, except as set forth in this Agreement and the
Registration Rights Agreement and as set forth in the Form 10-KSB, Form 10-QSB
or on Schedule 2.1(c), there are no contracts, commitments, understandings, or
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arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company. Except for customary
transfer restrictions contained in agreements entered into by the Company in
order to sell restricted securities or as provided in the Form 10-KSB, Form 10-
QSB or on Schedule 2.1 (c) hereto, the Company is not a party to any granting
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registration or anti-dilution rights to any person with respect to any of its
equity or debt securities. The Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of any shares of
the capital stock of the Company. Except as set forth in the Form 10-KSB, Form
10-QSB or on Schedule 2.1(c) hereto, the offer and sale of all capital stock,
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convertible securities, rights, warrants, or options of the Company issued prior
to the Closing complied with all applicable Federal and state securities laws,
and no stockholder has a right of rescission or claim for damages with respect
thereto which would have a Material Adverse Effect (as defined below) on the
Company's financial condition or operating results. The Company has furnished or
made available to the Purchasers true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof (the
"Certificate"), and the Company's Bylaws as in effect on the date hereof (the
"Bylaws"). For the purposes of this Agreement, "Material Adverse Effect" means
any adverse effect on the business, operations, properties, prospects, or
financial condition of the Company or its subsidiaries and which is material to
such entity or other entities controlling or controlled by such entity.
(d) Issuance of Shares. The Preferred Shares and the Warrants to be
------------------
issued at the Closing have been duly authorized by all necessary corporate
action and the Preferred Shares, when paid for or issued in accordance with the
terms hereof, shall be validly issued and outstanding, fully paid and
nonassessable and entitled to the rights and preferences set forth in the
Certificate of Designation. When the Conversion Shares and the Warrant Shares
are issued in accordance with the terms of the Preferred Shares as set forth in
the Certificate of Designation and the Warrants, respectively, such shares will
be duly authorized by all necessary corporate action and validly issued and
outstanding, fully paid and nonassessable, and the holders shall be entitled to
all rights accorded to a holder of Common Stock.
(e) No Conflicts. Except as disclosed in Schedule 2.1(e) hereto, the
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execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Certificate of
Designation and the consummation by the Company of the transactions contemplated
herein and therein do not and will not (i) violate any provision of the
Company's Certificate or Bylaws, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party or by which it or its properties or assets are bound, (iii) create or
impose a lien, mortgage, security interest, charge or encumbrance of any nature
on any property of the Company under any agreement or any
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commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries are bound or
affected, except, in all cases other than violations pursuant to clauses (i) and
(iv) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect. The Company is not required under 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 the Transaction
Documents or the Certificate of Designation, or issue and sell the Preferred
Shares, the Warrants, the Conversion Shares and the Warrant Shares in accordance
with the terms hereof or thereof (other than any filings which may be required
to be made by the Company with the Commission or state securities administrators
subsequent to the Closing, any registration statement which may be filed
pursuant hereto, and the Certificate of Designation); provided that, for
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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 Purchasers herein.
(f) Commission Documents, Financial Statements. The Common Stock of the
------------------------------------------
Company is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, except as disclosed
in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(f) hereto, since March 31,
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2001, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein as the
"Commission Documents"). The Company has delivered or made available to each of
the Purchasers true and complete copies of the Commission Documents filed with
the Commission since March 31, 2001. The Company has not provided to the
Purchasers any material non-public information or other information which,
according to applicable law, rule or regulation, was required to have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement. As of
their respective dates, the Form 10-KSB and the Form 10-QSB complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder and other federal, state
and local laws, rules and regulations applicable to such documents, and, as of
their respective dates, none of the Form 10-KSB and the Form 10-QSB contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Commission
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in
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accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) Subsidiaries. The Form 10-KSB, Form 10-QSB or Schedule 2.1(g)
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hereto sets forth each subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person's
ownership of the outstanding stock or other interests of such subsidiary. For
the purposes of this Agreement, "subsidiary" shall mean any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by the Company and/or any of its other
subsidiaries. All of the outstanding shares of capital stock of each subsidiary
have been duly authorized and validly issued, and are fully paid and
nonassessable. There are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any
subsidiary for the purchase or acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary.
(h) No Material Adverse Change. Since March 31, 2001, the date through
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which the most recent quarterly report of the Company on Form 10-QSB has been
prepared and filed with the Commission, a copy of which is included in the
Commission Documents, the Company has not experienced or suffered any Material
Adverse Effect, except as disclosed on Schedule 2.1(h) hereto.
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(i) No Undisclosed Liabilities. Except as disclosed in the Form 10-KSB,
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Form 10-QSB or on Schedule 2.1(i) hereto, neither the Company nor any of
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its subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) other than those incurred in the ordinary course of the Company's
or its subsidiaries respective businesses since March 31, 2001 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or its subsidiaries.
(j) No Undisclosed Events or Circumstances. No event or circumstance has
--------------------------------------
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
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(k) Indebtedness. The Form 10-KSB, Form 10-QSB or Schedule 2.1(k)
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hereto sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any subsidiary, or for which the Company or any
subsidiary has commitments. For the purposes of this Agreement, "Indebtedness"
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.
(l) Title to Assets. Each of the Company and the subsidiaries has good
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marketable title to all of its real and personal property reflected in the
Commission Documents, free and clear of any mortgages, pledges, charges, liens,
security interests or other encumbrances, except for those indicated in the Form
10-KSB, Form 10-QSB or on Schedule 2.1(l) hereto or such that, individually or
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in the aggregate, do not cause a Material Adverse Effect on the Company's
financial condition or operating results. All said leases of the Company and
each of its subsidiaries are valid and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim, investigation,
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arbitration, alternate dispute resolution proceeding or any other proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any subsidiary which questions the validity of this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. Except as set
forth in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(m) hereto, there is no
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action, suit, claim, investigation, arbitration, alternate dispute resolution
proceeding or any other proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company, any subsidiary or any of their
respective properties or assets. Except as set forth in the Form 10-KSB, Form
QSB or Schedule 2.1(m) hereto, there are no outstanding orders, judgments,
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injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any subsidiary or any officers or
directors of the Company or subsidiary in their capacities as such.
(n) Compliance with Law. The business of the Company and the
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subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Form 10-KSB, Form 10-QSB, on Schedule
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2.1(n) hereto or such that, individually or in the aggregate, do
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not cause a Material Adverse Effect. The Company and each of its subsidiaries
have all franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of its
business as now being conducted by it unless the failure to possess such
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
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(o) Taxes. Except as set forth in the Form 10-KSB, Form 10-QSB or on
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Schedule 2.1(o) hereto, the Company and each of the subsidiaries has accurately
prepared and filed all federal, state and other tax returns required by law to
be filed by it, has paid or made provisions for the payment of all taxes shown
to be due and all additional assessments, and adequate provisions have been and
are reflected in the financial statements of the Company and the subsidiaries
for all current taxes and other charges to which the Company or any subsidiary
is subject and which are not currently due and payable. Except as disclosed on
Schedule 2.1(o) hereto, none of the federal income tax returns of the Company or
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any subsidiary have been audited by the Internal Revenue Service. The Company
has no knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal or state) of any nature whatsoever, whether pending
or threatened against the Company or any subsidiary for any period, nor of any
basis for any such assessment, adjustment or contingency.
(p) Certain Fees. Except as set forth in this Agreement or on Schedule
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2.1(p) hereto, no brokers, finders or financial advisory fees or commissions
will be payable by the Company or any subsidiary or any Purchaser with respect
to the transactions contemplated by this Agreement.
(q) Disclosure. To the best of the Company's knowledge, neither this
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Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of the Company or any
subsidiary in connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made herein or therein, in the light
of the circumstances under which they were made herein or therein, not
misleading.
(r) Operation of Business. The Company and each of the subsidiaries
---------------------
owns or possesses all patents, trademarks, domain names (whether or not
registered) and any patentable improvements or copyrightable derivative works
thereof, websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations as set forth in the
Form 10-KSB, Form 10-QSB and on Schedule 2.1(r) hereto, and all rights with
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respect to the foregoing, which are necessary for the conduct of its business as
now conducted without any conflict with the rights of others.
(s) Environmental Compliance. The Company and each of its subsidiaries
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have obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws. The Form 10-KSB or Form 10-QSB sets forth all material permits, licenses
and other authorizations issued under any Environmental Laws to the Company or
its subsidiaries. "Environmental Laws" shall mean all applicable laws relating
to the protection of the environment including, without limitation, all
requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of hazardous substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether
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solid, liquid or gaseous in nature. The Company has all necessary governmental
approvals required under all Environmental Laws and used in its business or in
the business of any of its subsidiaries. The Company and each of its
subsidiaries are also in compliance with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required or
imposed under all Environmental Laws. Except for such instances as would not
individually or in the aggregate have a Material Adverse Effect, there are no
past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its subsidiaries
that violate or may violate any Environmental Law after the Closing Date or that
may give rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous substance.
"Environmental Liabilities" means all liabilities of a person (whether such
liabilities are owed by such person to governmental authorities, third parties
or otherwise) whether currently in existence or arising hereafter which arise
under or relate to any Environmental Law.
(t) Books and Record Internal Accounting Controls. The records and
---------------------------------------------
documents of the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the
Company's board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate actions is taken
with respect to any differences.
(u) Material Agreements. Except as set forth in the Form 10-KSB, Form
-------------------
10-QSB or on Schedule 2.1(u) hereto, neither the Company nor any subsidiary is a
---------------
party to any written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement, a copy of which would be required to be
filed with the Commission as an exhibit to a registration statement on Form S-3
or applicable form (collectively, "Material Agreements") if the Company or any
subsidiary were registering securities under the Securities Act. The Company and
each of its subsidiaries has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and, to the best of the Company's
knowledge are not in default under any Material Agreement now in effect, the
result of which could cause a Material Adverse Effect. No written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement of
the Company or of any subsidiary limits or shall limit the payment of dividends
on the Company's Preferred Shares, other Preferred Stock, if any, or its Common
Stock.
-9-
(v) Transactions with Affiliates. Except as set forth in the Form
----------------------------
10-KSB, Form10-QSB or on Schedule 2.1(v) hereto, there are no loans, leases,
---------------
agreements, contracts, royalty agreements, management contracts or arrangements
or other continuing transactions between (a) the Company, any subsidiary or any
of their respective customers or suppliers on the one hand, and (b) on the other
hand, any officer, employee, consultant or director of the Company, or any of
its subsidiaries, or any person owning any capital stock of the Company or any
subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.
(w) Securities Act of 1933. Based in material part upon the
----------------------
representations herein of the Purchasers, the Company has complied and will
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Shares and the Warrants hereunder. Neither
the Company nor anyone acting on its behalf, directly or indirectly, has or will
sell, offer to sell or solicit offers to buy any of the Shares, the Warrants or
similar securities to, or solicit offers with respect thereto from, or enter
into any preliminary conversations or negotiations relating thereto with, any
person, or has taken or will take any action so as to bring the issuance and
sale of any of the Shares and the Warrants under the registration provisions of
the Securities Act and applicable state securities laws, and neither the Company
nor any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of any of the Shares and the Warrants.
(x) Governmental Approvals. Except as set forth in the Form 10-KSB or
----------------------
Form 10-QSB, and except for the filing of any notice prior or subsequent to the
Closing Date that may be required under applicable state and/or Federal
securities laws (which if required, shall be filed on a timely basis), including
the filing of a registration statement or statements pursuant to the
Registration Rights Agreement, and the filing of the Certificate of Designation
with the Secretary of State for the State of Delaware, no authorization,
consent, approval, license, exemption of, filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Preferred Shares and the
Warrants, or for the performance by the Company of its obligations under the
Transaction Documents or the Certificate of Designation.
(y) Employees. Neither the Company nor any subsidiary has any collective
---------
bargaining arrangements or agreements covering any of its employees, except as
set forth in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(y) hereto. Except
---------------
as set forth in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(y) hereto,
---------------
neither the Company nor any subsidiary has any employment contract, agreement
regarding proprietary information, non-competition agreement, non-solicitation
agreement, confidentiality agreement, or any other similar contract or
restrictive convenant, relating to the right of any officer, employee or
consultant to be employed or engaged by the Company or such subsidiary. Since
March 31, 2001, no officer, consultant or key employee of the Company or any
subsidiary whose termination, either individually or in the aggregate, could
have a Material Adverse Effect, has terminated or, to the
-10-
knowledge of the Company, has any present intention of terminating his or her
employment or engagement with the Company or any subsidiary.
(z) Absence of Certain Developments. Except as provided in Form 10-KSB,
-------------------------------
10-QSB or in Schedule 2.1(z) hereto, since March 31, 2001, neither the Company
---------------
nor any subsidiary has:
(i) issued any stock, bonds or other corporate securities or any
rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such subsidiary's business;
(iii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or other
property to stockholders with respect to its stock, or purchased or redeemed, or
made any agreements so to purchase or redeem, any shares of its capital stock;
(v) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights, trademarks,
trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;
(vii) suffered any substantial losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor that
aggregate in excess of $100,000;
(x) entered into any other transaction other than in the ordinary
course of business, or entered into any other material transaction, whether or
not in the ordinary course of business;
(xi) made charitable contributions or pledges in excess of $25,000;
-11-
(xii) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(xiii) experienced any material problems with labor or management in
connection with the terms and conditions of their employment;
(xiv) effected any two or more events of the foregoing kind which in
the aggregate would be material to the Company or its subsidiaries; or
(xv) entered into an agreement, written or otherwise, to take any
of the foregoing actions.
(aa) Use of Proceeds. The proceeds from the sale of the Preferred Shares
---------------
will be used by the Company for working capital and general corporate purposes.
(bb) Public Utility Holding Company Act and Investment Company Act Status.
--------------------------------------------------------------------
The Company is not a "holding company" or a "public utility company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon the Closing will not
be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(cc) ERISA. No liability to the Pension Benefit Guaranty Corporation has
-----
been incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would be materially adverse to the Company and its subsidiaries. The
execution and delivery of this Agreement and the issue and sale of the Preferred
Shares will not involve any transaction which is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax could be imposed pursuant
to Section 4975 of the Internal Revenue Code of 1986, as amended, provided that,
if any of the Purchasers, or any person or entity that owns a beneficial
interest in any of the Purchasers, is an "employee pension benefit plan" (within
the meaning of Section 3(2) of ERISA) with respect to which the Company is a
"party in interest" (within the meaning of Section 3(14) of ERISA), the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.
As used in this Section 2.1(ac), the term "Plan" shall mean an "employee pension
benefit plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.
(dd) Dilutive Effect. The Company understands and acknowledges that the
---------------
number of Conversion Shares issuable upon conversion of the Preferred Shares and
the Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Preferred Shares in accordance
with this Agreement and the Certificate of Designation and its obligations to
issue the Warrant Shares upon the exercise of the Warrants in accordance with
this Agreement and the Warrants, is, in each case, absolute and unconditional
regardless of the
-12-
dilutive effect that such issuance may have on the ownership interest of other
stockholders of the Company.
Section 2.2 Representations and Warranties of the Purchasers. Each
------------------------------------------------
of the Purchasers hereby makes the following representations and warranties to
the Company with respect solely to itself and not with respect to any other
Purchaser:
(a) Organization and Standing of the Purchasers. If the Purchaser
-------------------------------------------
is an entity, such Purchaser is a corporation or partnership duly incorporated
or organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.
(b) Authorization and Power. The Purchaser has the requisite power
-----------------------
and authority to enter into and perform this Agreement and to purchase the
Preferred Shares being sold to it hereunder. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement by such
Purchaser and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate or partnership
action (if the Purchaser is an entity), and no further consent or authorization
of such Purchaser or its Board of Directors, stockholders, or partners, as the
case may be, is required. Each of this Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by such Purchaser.
(c) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Registration Rights Agreement and the consummation by such
Purchaser of the transactions contemplated hereby and thereby or relating hereto
do not and will not (i) result in a violation of such Purchaser's charter
documents or bylaws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument to which such Purchaser
is a party, or result in a violation of any law, rule, or regulation, or any
order, judgment or decree of any court or governmental agency applicable to such
Purchaser or its properties (except for such conflicts, defaults and violations
as would not, individually or in the aggregate, have a material adverse effect
on such Purchaser). Such Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Registration Rights Agreement or to
purchase the Preferred Shares or acquire the Warrants in accordance with the
terms hereof, provided that for purposes of the representation made in this
sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
(d) Acquisition for Investment. Such Purchaser is acquiring the
--------------------------
Preferred Shares and the Warrants solely for its own account for the purpose of
investment and not with a view to or for sale in connection with distribution.
Such Purchaser does not have a present intention to sell the Preferred Shares or
the Warrants, nor a present arrangement (whether or not legally binding) or
intention to effect any distribution of the Preferred Shares or the Warrants to
or through any person or entity; provided, however, that by making the
-------- -------
representations herein and subject to Section 2.2(f) below, such Purchaser does
not agree to hold the Shares or the
-13-
Warrants for any minimum or other specific term and reserves the right to
dispose of the Shares or the Warrants at any time in accordance with Federal and
state securities laws applicable to such disposition. Such Purchaser
acknowledges that it is able to bear the financial risks associated with an
investment in the Preferred Shares and the Warrants and that it has been given
full access to such records of the Company and the subsidiaries and to the
officers of the Company and the subsidiaries and received such information as it
has deemed necessary or appropriate to conduct its due diligence investigation.
(e) Accredited Purchasers. Such Purchaser is an "accredited
---------------------
investor" as defined in Regulation D promulgated under the Securities Act.
(f) Rule 144. Such Purchaser understands that the Shares must be
--------
held indefinitely unless such Shares are registered under the Securities Act or
an exemption from registration is available. Such Purchaser acknowledges that
such Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such person has been advised that Rule 144 permits resales only under
certain circumstances. Such Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any Shares without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.
(g) General. Such Purchaser understands that the Shares are being
-------
offered and sold in reliance on a transactional exemption from the registration
requirement of Federal and state securities laws and the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the applicability of such exemptions and the suitability of such
Purchaser to acquire the Shares.
(h) Residence. Such Purchaser's permanent domicile is as set forth
---------
in Exhibit A.
ARTICLE III
Covenants
The Company covenants with each of the Purchasers as follows, which
covenants are for the benefit of the Purchasers and their permitted assignees
(as defined herein).
Section 3.1 Securities Compliance.
---------------------
(a) The Company shall notify the Commission in accordance with their
rules and regulations, of the transactions contemplated by any of the
Transaction Documents, including filing a Form D with respect to the Preferred
Shares, Warrants, Conversion Shares and Warrant Shares as required under
Regulation D, and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, for the legal
and valid issuance of the Preferred Shares, the Warrants, the Conversion Shares
and the Warrant Shares to the Purchasers or subsequent holders.
-14-
(b) The Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such Purchasers set forth herein in order to determine the applicability of
Federal and state securities laws exemptions and the suitability of such
Purchasers to acquire the Preferred Shares.
(c) The Company covenants and agrees that it will not issue any
shares of the Common Stock to a Purchaser which would result in the issuance
under this Agreement of more than 19.9% of the issued and outstanding shares of
the Common Stock as of the date hereof, unless such issuance has been duly
approved by the shareholders of the Company.
(d) Unless waived by a Purchaser by means of providing sixty (60)
days notice to the Company, the Company covenants and agrees that the number of
Conversion Shares issuable upon conversion of the Preferred Shares and the
number of Warrant Shares issuable upon any exercise of such Warrant by a
Purchaser shall not exceed the number of such shares that, when aggregated with
all other shares of Common Stock then owned by a Purchaser beneficially or
deemed beneficially owned by a Purchaser, would result in a Purchaser owning
more than 4.99% of all of such Common Stock as would be outstanding on such date
of conversion or such date of exercise of the Warrant, as determined in
accordance with Section 16 of the Exchange Act and the regulations promulgated
thereunder.
Section 3.2 Registration and Listing. The Company will cause its
------------------------
to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act,
will comply in all respects with its reporting and filing obligations under the
Exchange Act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement or the Registration Rights Agreement,
and will not take any action or file any document (whether or not permitted by
the Securities Act or the rules promulgated thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted
herein. The Company will take all action necessary to continue the listing or
trading of its Common Stock on the over-the-counter electronic bulletin board.
Section 3.3 Inspection Rights. The Company shall permit, during
-----------------
normal business hours and upon reasonable request and reasonable notice, each
Purchaser or any employees, agents or representatives thereof, so long as such
Purchaser shall be obligated hereunder to purchase the Preferred Shares or shall
beneficially own any Preferred Shares, or shall own Conversion Shares which, in
the aggregate, represent more than 2% of the total combined voting power of all
voting securities then outstanding, for purposes reasonably related to such
Purchaser's interests as a stockholder to examine and make reasonable copies of
and extracts from the records and books of account of, and visit and inspect the
properties, assets, operations and business of the Company and any subsidiary,
and to discuss the affairs, finances and accounts of the Company and any
subsidiary with any of its officers, consultants, directors, and key employees.
Section 3.4 Compliance with Laws. The Company shall comply, and
--------------------
cause each subsidiary to comply, with all applicable laws, rules, regulations
and orders, noncompliance with which could have a Material Adverse Effect.
-15-
Section 3.5 Keeping of Records and Books of Account. The Company shall
---------------------------------------
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
Section 3.6 Reporting Requirements. If the Company ceases to file its
----------------------
periodic reports with the Commission, or if the Commission ceases making these
periodic reports available via the Internet without charge, then the Company
shall furnish the following to each Purchaser so long as such Purchaser shall be
obligated hereunder to purchase the Preferred Shares or shall beneficially own
any Preferred Shares, or shall own Conversion Shares which, in the aggregate,
represent more than 2% of the total combined voting power of all voting
securities then outstanding:
(a) Quarterly Reports filed with the Commission on Form 10-QSB as
soon as available, and in any event within forty-five (45) days after the end of
each of the first three fiscal quarters of the Company;
(b) Annual Reports filed with the Commission on Form 10-KSB as soon
as and in any event within ninety (90) days after the end of each fiscal year of
the Company; and
(c) Copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to holders of shares of Common Stock, contemporaneously with the
delivery of such notices or information to such holders of Common Stock.
Section 3.7 Amendments. The Company shall not amend or waive any
----------
provision of the Certificate or Bylaws of the Company, or Registration Rights
Agreement in any way that would adversely affect the liquidation preferences,
dividends rights, conversion rights, voting rights or redemption rights of the
holders of the Preferred Shares.
Section 3.8 Other Agreements. The Company shall not enter into any
----------------
agreement in which the terms of such agreement would restrict or impair the
right or ability to perform of the Company or any subsidiary under any
Transaction Document or the Certificate of Designation.
Section 3.9 Distributions. So long as any Preferred Shares or Warrants
-------------
remain outstanding, the Company agrees that it shall not (i) declare or pay any
dividends or make any distributions to any holder(s) of Common Stock or (ii)
purchase or otherwise acquire for value, directly or indirectly, any Common
Stock or other equity security of the Company.
Section 3.10 Status of Dividends. The Company covenants and agrees
-------------------
that (i) no Federal income tax return or claim for refund of Federal income tax
or other submission to the Internal Revenue Service will adversely affect the
Preferred Shares, any other series of its
-16-
Preferred Stock, or the Common Stock, and any deduction shall not operate to
jeopardize the availability to Purchasers of the dividends received deduction
provided by Section 243(a)(1) of the Code or any successor provision, (ii) in no
report to shareholders or to any governmental body having jurisdiction over the
Company or otherwise will it treat the Preferred Shares other than as equity
capital or the dividends paid thereon other than as dividends paid on equity
capital unless required to do so by a governmental body having jurisdiction over
the accounts of the Company or by a change in generally accepted accounting
principles required as a result of action by an authoritative accounting
standards setting body, and (iii) other than pursuant to this Agreement or the
Certificate of Designation, it will take no action which would result in the
dividends paid by the Company on the Preferred Shares out of the Company's
current or accumulated earnings and profits being ineligible for the dividends
received deduction provided by Section 243(a)(1) of the Code. The preceding
sentence shall not be deemed to prevent the Company from designating the
Preferred Stock as "Convertible Preferred Stock" in its annual and quarterly
financial statements in accordance with its prior practice concerning other
series of preferred stock of the Company. Notwithstanding the foregoing, the
Company shall not be required to restate or modify its tax returns for periods
prior to the Closing Date. In the event that the Purchasers have reasonable
cause to believe that dividends paid by the Company on the Preferred Shares out
of the Company's current or accumulated earnings and profits will not be treated
as eligible for the dividends received deduction provided by Section 243(a)(1)
of the Code, or any successor provision, the Company will, at the reasonable
request of the Purchasers of 51% of the outstanding Preferred Shares, join with
the Purchasers in the submission to the Service of a request for a ruling that
dividends paid on the Shares will be so eligible for Federal income tax
purposes, at the Purchasers expense. In addition, the Company will reasonably
cooperate with the Purchasers (at Purchasers' expense) in any litigation, appeal
or other proceeding challenging or contesting any ruling, technical advice,
finding or determination that earnings and profits are not eligible for the
dividends received deduction provided by Section 243(a)(1) of the Code, or any
successor provision to the extent that the position to be taken in any such
litigation, appeal, or other proceeding is not contrary to any provision of the
Code or incurred in connection with any such submission, litigation, appeal or
other proceeding. Notwithstanding the foregoing, nothing herein contained shall
be deemed to preclude the Company from claiming a deduction with respect to such
dividends if (i) the Code shall hereafter be amended, or final Treasury
regulations thereunder are issued or modified, to provide that dividends on the
Preferred Shares or Conversion Shares should not be treated as dividends for
Federal income tax purposes or that a deduction with respect to all or a portion
of the dividends on the Shares is allowable for Federal income tax purposes, or
(ii) in the absence of such an amendment, issuance or modification and after a
submission of a request for ruling or technical advice, the service shall rule
or advise that dividends on the shares should not be treated as dividends for
Federal income tax purposes. If the Service determines that the Preferred Shares
or Conversion Shares constitute debt, the Company may file protective claims for
refund.
Section 3.11 Intentionally Omitted.
---------------------
Section 3.12 Future Financings; Right of First Offer and Refusal. (a)
---------------------------------------------------
During the period commencing on the Closing Date and ending on the one hundred
eightieth day after the Effectiveness Date (as defined in the Registraiton
Rights Agreement), the Company covenants and agrees that it will not, without
the prior written consent of the Purchasers, enter into
-17-
any subsequent offer or sale to, or exchange with (or other type of distribution
to), any third party (a "Subsequent Financing"), of Common Stock or any
securities convertible, exercisable or exchangeable into Common Stock, including
debt securities (collectively, the "Financing Securities") other than a
Permitted Financing (as defined hereinafter). For purposes of this Agreement,
"Permitted Financing" shall mean any transaction involving (i) the Company's
issuance of any Financing Securities (other than for cash) in connection with a
merger and/or acquisition, consolidation, sale or disposition of all or
substantially all of the Company's assets, (ii) the Company's issuance of
Financing Securities to bona fide strategic investors that provide the Company
with significant competitive advantages in the wireless products marketplace,
(iii) the Company's issuance of Financing Securities in exchange for
professional services, (iv) the Company's issuance of Common Stock or the
issuance of options to purchase Common Stock as such is related to any employee
stock ownership plan, (v) senior secured debt bank financing in an amount not to
exceed $500,000 in the aggregate, or (vi) any transaction where the first use of
proceeds from such transaction would be used to redeem all of the Preferred
Shares in accordance with Section 8(h) of the Certificate of Designation.
(b) Notwithstanding anything in the foregoing to the contrary, the
Company covenants and agrees that so long as any Preferred Shares are
outstanding, the Company will not, without the prior written consent of 65% of
the holders of the outstanding Preferred Shares, enter into any subsequent offer
or sale to, or exchange with (or other type of distribution to), any third
party, of any Financing Securities whether or not convertible or exchangeable
into Common Stock, ranking senior or pari passu to the Preferred Shares, except
that the Company may enter into a Permitted Financing.
(c) During the period commencing on the Closing Date and ending on
the first (1st) anniversary of the Effectiveness Date, the Company covenants and
agrees to promptly notify (in no event later than five (5) days after making or
receiving an applicable offer) in writing (a "Rights Notice") the Purchasers of
the terms and conditions of any proposed Subsequent Financing. The Rights Notice
shall describe, in reasonable detail, the proposed Subsequent Financing, the
proposed closing date of the Subsequent Financing, which shall be within thirty
(30) calendar days from the date of the Rights Notice, including, without
limitation, all of the terms and conditions thereof. The Rights Notice shall
provide the Purchasers an option (the "Rights Option") during the ten (10)
trading days following delivery of the Rights Notice (the "Option Period") to
inform the Company whether the Purchasers will purchase all or part of the
securities being offered in such Subsequent Financing on the same, absolute
terms and conditions as contemplated by such Subsequent Financing (the "First
Refusal Rights"). Delivery of any Rights Notice constitutes a representation and
warranty by the Company that there are no other material terms and conditions,
arrangements, agreements or otherwise except for those disclosed in the Rights
Notice, to provide additional compensation to any party participating in any
proposed Subsequent Financing, including, but not limited to, additional
compensation based on changes in the Purchase Price or any type of reset or
adjustment of a purchase or conversion price or to issue additional securities
at any time after the closing date of a Subsequent Financing. If the Company
does not receive notice of exercise of the Rights Option from the Purchasers
within the Option Period, the Company shall have the right to close the
Subsequent Financing on the scheduled closing date with a third party; provided
--------
that all of the terms and conditions of the closing are the same as those
provided to the Purchasers in the Rights Notice.
-18-
If the closing of the proposed Subsequent Financing does not occur on that date,
any closing of the contemplated Subsequent Financing or any other Subsequent
Financing shall be subject to all of the provisions of this Section 3.12,
including, without limitation, the delivery of a new Rights Notice. The
provisions of this Section 3.12(c) shall not apply to issuances of Financing
Securities in connection with strategic partnerships, acquisition candidates and
public secondary offerings.
(d) During the period commencing on the Closing Date and ending on
the second (2/nd/) anniversary of the Closing Date, if the Company enters into
any Subsequent Financing on terms more favorable than the terms governing the
Preferred Shares, then the Purchasers in their sole discretion may exchange the
Preferred Shares together with accrued but unpaid dividends (which dividends
shall be payable, at the sole option of the Purchasers, in cash or in the form
of the new securities to be issued in the Subsequent Financing) for the
securities issued or to be issued in the Subsequent Financing. The Company
covenants and agrees to promptly notify in writing the Purchasers of the terms
and conditions of any such proposed Subsequent Financing.
Section 3.13 Reservation of Shares. So long as any of the Preferred
---------------------
Shares or Warrants remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 150% of the aggregate number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares and the Warrant
Shares. The Company shall take all action necessary to increase its authorized
capital stock within forty-five (45) days of the Closing Date to maintain no
less than 150% of the aggregate number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant Shares.
Section 3.14 Transfer Agent Instructions. The Company shall issue
---------------------------
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of each Purchaser or its
respective nominee(s), for the Conversion Shares and the Warrant Shares in such
amounts as specified from time to time by each Purchaser to the Company upon
conversion of the Preferred Shares or exercise of the Warrants in the form of
Exhibit E attached hereto (the "Irrevocable Transfer Agent Instructions"). Prior
to registration of the Conversion Shares and the Warrant Shares under the
Securities Act, all such certificates shall bear the restrictive legend
specified in Section 6.1 of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 3.14 will be given by the Company to its transfer agent and that
the Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section 3.14 shall affect in any way each
Purchaser's obligations and agreements set forth in Section 6.1 to comply with
all applicable prospectus delivery requirements, if any, upon resale of the
Shares. If a Purchaser provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Shares may be made without registration under the Securities Act
or the Purchaser provides the Company with reasonable assurances that the Shares
can be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Conversion Shares
and the Warrant
-19-
Shares, promptly instruct its transfer agent to issue one or more certificates
in such name and in such denominations as specified by such Purchaser and
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations under this Section 3.14 will cause irreparable harm to the
Purchasers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.14 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 3.14, that the Purchasers shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
Section 3.15 X.X. Xxxxxxxxxx & Co., Inc. The Company covenants and
--------------------------
agrees to undertake a formal process under the guidance and advice of X.X.
Xxxxxxxxxx & Co., Inc. to explore strategic transactions for the Company,
including a merger or sale of the Company.
ARTICLE IV
Conditions
Section 4.1 Conditions Precedent to the Obligation of the Company to
--------------------------------------------------------
Sell the Shares.The obligation hereunder of the Company to issue and sell the
---------------
Preferred Shares and the Warrants to the Purchasers is subject to the
satisfaction or waiver, at or before the Closing, each of the conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) Accuracy of Each Purchaser's Representations and Warranties. The
-----------------------------------------------------------
representations and warranties of each Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.
(b) Performance by the Purchasers. Each Purchaser shall have
-----------------------------
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
Section 4.2 Conditions Precedent to the Obligation of the Purchasers
--------------------------------------------------------
to Purchase the Shares. The obligation hereunder of each Purchaser to acquire
----------------------
and pay for the Preferred Shares and the Warrants is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion.
-20-
(a) Accuracy of the Company's Representations and Warranties. Each of
--------------------------------------------------------
the representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a particular date), which shall be true and correct in all material
respects as of such date.
(b) Performance by the Company. The Company shall have performed,
--------------------------
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) No Suspension, Etc. From the date hereof to the Closing Date,
------------------
trading in the Company's Common Stock shall not have been suspended by the
Commission (except for any suspension of trading of limited duration agreed to
by the Company, which suspension shall be terminated prior to the Closing), and,
at any time prior to the Closing, trading in securities generally as reported by
Bloomberg Financial Markets ("Bloomberg") shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities, nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on, or any material adverse change in any
financial market which, in each case, in the judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Preferred Shares.
(d) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding
----------------------------
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened,
against the Company or any subsidiary, or any of the officers, directors or
affiliates of the Company or any subsidiary seeking to restrain, prevent or
change the transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(f) Certificate of Designation of Rights and Preferences. Prior to
----------------------------------------------------
the Closing, the Certificate of Designation in the form of Exhibit C attached
hereto shall have been filed with the Secretary of State of Delaware.
(g) Opinion of Counsel, Etc. At the Closing, the Purchasers shall
-----------------------
have received an opinion of counsel to the Company, dated the date of the
Closing, in the form of Exhibit F hereto, and such other certificates and
documents as the Purchasers or its counsel shall reasonably require incident to
the Closing.
-21-
(h) Registration Rights Agreement. At the Closing, the Company shall
-----------------------------
have executed and delivered the Registration Rights Agreement to each Purchaser.
(i) Certificates. The Company shall have executed and delivered to
------------
the Purchasers the certificates (in such denominations as such Purchaser shall
request) for the Preferred Shares and Warrants being acquired by such Purchaser
at the Closing.
(j) Resolutions. The Board of Directors of the Company shall have
-----------
adopted resolutions consistent with Section 2.1(b) above in a form reasonably
acceptable to such Purchaser (the "Resolutions").
(k) Reservation of Shares. As of the Closing Date, the Company shall
---------------------
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the exercise of
the Warrants, a number of shares of Common Stock equal to at least 150% of the
aggregate number of Conversion Shares issuable upon conversion of the Preferred
Shares outstanding on the Closing Date and the number of Warrant Shares issuable
upon exercise of the number of Warrants assuming such Warrants were granted on
the Closing Date (after giving effect to the Preferred Shares and the Warrants
to be issued on the Closing Date and assuming all such Preferred Shares and
Warrants were fully convertible or exercisable on such date regardless of any
limitation on the timing or amount of such conversions or exercises) .
(l) Transfer Agent Instructions. The Irrevocable Transfer Agent
---------------------------
Instructions, in the form of Exhibit E attached hereto, shall have been
delivered to and acknowledged in writing by the Company's transfer agent.
(m) Secretary's Certificate. The Company shall have delivered to such
-----------------------
Purchaser a secretary's certificate, dated as of the Closing Date, as to (i) the
Resolutions, (ii) the Certificate, (iii) the Bylaws, (iv) the Certificate of
Designation, each as in effect at the Closing, and (iv) the authority and
incumbency of the officers of the Company executing the Transaction Documents
and any other documents required to be executed or delivered in connection
therewith.
(n) Officer's Certificate. The Company shall have delivered to the
---------------------
Purchasers a certificate of an executive officer of the Company, dated as of the
Closing Date, confirming the accuracy of the Company's representations,
warranties and covenants as of the Closing Date and confirming the compliance by
the Company with the conditions precedent set forth in this Section 4.2 as of
the Closing Date.
(o) Nasdaq Rule. Prior to the Closing, the Company shall have
-----------
received written consents from its controlling shareholders certifying that such
controlling shareholders will vote in favor of the issuance of shares Common
Stock under this Agreement in excess of 19.99% of its existing Common Stock then
outstanding.
-22-
ARTICLE V
Intentionally Omitted
ARTICLE VI
Stock Certificate Legend
Section 6.1 Legend. Each certificate representing the Preferred Shares
------
and the Warrants, and, if appropriate, securities issued upon conversion
thereof, shall be stamped or otherwise imprinted with a legend substantially in
the following form (in addition to any legend required by applicable state
securities or "blue sky" laws):
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR SPEEDCOM
WIRELESS CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
The Company agrees to reissue certificates representing the Shares without
the legend set forth above if at such time, prior to making any transfer of any
Shares or Shares, such holder thereof shall give written notice to the Company
describing the manner and terms of such transfer and removal as the Company may
reasonably request. Such proposed transfer will not be effected until: (a) the
Company has notified such holder that either (i) in the opinion of Company
counsel, the registration of such Shares under the Securities Act is not
required in connection with such proposed transfer; or (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Company with the Commission and has become effective under the
Securities Act; and (b) the Company has notified such holder that either: (i) in
the opinion of Company counsel, the registration or qualification under the
securities or "blue sky" laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state securities
or "blue sky" laws has been effected. The Company will use its best efforts to
respond to any such notice from a holder within ten (10) days. In the case of
any proposed transfer under this Section 6, the Company will use reasonable
efforts to comply with any such applicable state securities or "blue sky" laws,
but shall in no event be required, in connection therewith, to qualify to do
business in any state where it is not then qualified or to take any action that
would subject it to tax or to the general service of process in any state where
it is not then subject. The restrictions on transfer contained in Section 6.1
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Agreement.
-23-
ARTICLE VII
Intentionally Omitted.
ARTICLE VIII
Indemnification
Section 8.1 General Indemnity. The Company agrees to indemnify and
-----------------
hold harmless the Purchasers and any finder (and their respective directors,
officers, affiliates, agents, successors and assigns) from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys' fees, charges
and disbursements) incurred by the Company as result of any inaccuracy in or
breach of the representations, warranties or covenants made by such Purchaser
herein.
Section 8.2 Indemnification Procedure. Any party entitled to
-------------------------
indemnification under this Article VIII (an "indemnified party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such
-24-
action or claim, then the indemnified party shall be entitled to participate in
such defense with counsel of its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement of any action, claim
or proceeding effected without its prior written consent. Notwithstanding
anything in this Article VIII to the contrary, the indemnifying party shall not,
without the indemnified party's prior written consent, settle or compromise any
claim or consent to entry of any judgment in respect thereof which imposes any
future obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such claim. The
indemnification required by this Article VIII shall be made by periodic payments
of the amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred, so long as
the indemnified party irrevocably agrees to refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was
not entitled to indemnification. The indemnity agreements contained herein shall
be in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
ARTICLE IX
Miscellaneous
Section 9.1 Fees and Expenses. Except as otherwise set forth in this
-----------------
Agreement, the Registration Rights Agreement or the Certificate of Designation,
each party shall pay the fees and expenses of its advisors, counsel, accountants
and other experts, if any, and all other expenses, incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement, provided that the Company shall pay, at the Closing, (i) all
--------
actual attorneys' fees and expenses (exclusive of disbursements and out-of-
pocket expenses) incurred by the Purchasers up to $50,000 in connection with the
preparation, negotiation, execution and delivery of this Agreement, the
Registration Rights Agreement and the transactions contemplated thereunder and
(ii) consulting fees and fees in connection with the preparation of documents
incurred by the Purchasers in connection with the preparation, negotiation,
execution and delivery of this Agreement, the Registration Rights Agreement and
the transactions contemplated thereunder. In addition, the Company shall pay all
reasonable fees and expenses incurred by the Purchasers in connection with the
filing and declaration of effectiveness by the Commission of the Registration
Statement (as defined in the Registration Rights Agreement) any amendments,
modifications or waivers of this Agreement or any of the other Transaction
Documents, or incurred in connection with the enforcement of this Agreement or
any of the other Transaction Documents, including, without limitation, all
reasonable attorneys' fees and expenses. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the
Preferred Shares pursuant hereto.
Section 9.2 Specific Enforcement, Consent to Jurisdiction.
---------------------------------------------
(a) The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement, the Certificate of Designation or the Registration Rights Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
-25-
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement or the Registration Rights Agreement and to enforce
specifically the terms and provisions hereof or thereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.
(b) Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New York located in
New York county for the purposes of any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents or
the transactions contemplated hereby or thereby and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the
Purchasers consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 9.2 shall affect or limit any right to serve process in any other manner
permitted by law.
Section 9.3 Entire Agreement; Amendment. This Agreement contains the
---------------------------
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein or in the Transaction Documents or
the Certificate of Designation, neither the Company nor any of the Purchasers
makes any representations, warranty, covenant or undertaking with respect to
such matters and they supersede all prior understandings and agreements with
respect to said subject matter, all of which are merged herein. No provision of
this Agreement may be waived or amended other than by a written instrument
signed by the Company and the holders of at least two-thirds (2/3) of the
Preferred Shares then outstanding, and no provision hereof may be waived other
than by an a written instrument signed by the party against whom enforcement of
any such amendment or waiver is sought. No such amendment shall be effective to
the extent that it applies to less than all of the holders of the Preferred
Shares then outstanding. No consideration shall be offered or paid to any person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents or the Certificate of Designation unless the same
consideration is also offered to all of the parties to the Transaction Documents
or holders of Preferred Shares, as the case may be .
Section 9.4 Notices. Any notice, demand, request, waiver or other
-------
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: Speedcom Wireless Corporation
-26-
0000 Xxxxxxxxxxxx Xxxxxxxxx, X-0
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx, Chief Financial Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
with copies to: Xxxxx & Lardner
One IBM Plaza
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No: (000) 000-0000
If to any Purchaser: At the address of such Purchaser set forth on
Exhibit A to this Agreement, with copies to
Purchaser's counsel as set forth on Exhibit A
or as specified in writing by such Purchaser
with copies to:
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.
Section 9.5 Waivers. No waiver by either party of any default with
-------
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 9.6 Headings. The article, section and subsection headings in
--------
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 9.7 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the parties and their successors and assigns.
After the Closing, the assignment by a party to this Agreement of any rights
hereunder shall not affect the obligations of such party under this Agreement.
Section 9.8 No Third Party Beneficiaries. This Agreement is intended for the
----------------------------
-27-
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 9.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions. This Agreement shall not
interpreted or construed with any presumption against the party causing this
Agreement to be drafted.
Section 9.10 Survival. The representations and warranties of the
--------
Company and the Purchasers contained in Sections 2.1(o) and (s) should survive
indefinitely and those contained in Article II, with the exception of Sections
2.1(o) and (s), shall survive the execution and delivery hereof and the Closing
until the date three (3) years from the Closing Date, and the agreements and
covenants set forth in Articles I, III, V, VIII and IX of this Agreement shall
survive the execution and delivery hereof and the Closing hereunder until the
Purchasers in the aggregate beneficially own (determined in accordance with Rule
13d-3 under the Exchange Act) less than 2% of the total combined voting power of
all voting securities then outstanding, provided, that Sections 3.1, 3.2, 3.4,
3.5, 3.7, 3.8, 3.9, 3.10, 3.12, 3.13 and 3.14 shall not expire until the
Registration Statement required by Section 2 of the Registration Rights
Agreement is no longer required to be effective under the terms and conditions
of Registration Rights Agreement.
Section 9.11 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
Section 9.12 Publicity. The Company agrees that it will not disclose,
---------
and will not include in any public announcement, the name of the Purchasers
without the consent of the Purchasers unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.
Section 9.13 Severability. The provisions of this Agreement, the
------------
Certificate of Designation and the Registration Rights Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement, the Certificate of Designation or the Registration Rights Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement, the Certificate of
Designation or the Registration Rights Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
Section 9.14 Further Assurances. From and after the date of this
------------------
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the Purchasers shall execute and deliver such instrument, documents and
other writings as may be reasonably
-28-
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement, the Preferred Shares, the Conversion
Shares, the Warrants, the Warrant Shares, the Certificate of Designation, and
the Registration Rights Agreement.
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
SPEEDCOM WIRELESS CORPORATION
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: CEO
SDS MERCHANT FUND, L.P.
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
S.A.C. CAPITAL ASSOCIATES, LLC
By: S.A.C. Capital Advisors, LLC
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxx
Title: General Counsel
OSCAR PRIVATE EQUITY INVESTMENTS,
L.P.
By: Oscar Private Equity, LLC
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
By: /s/ Xxxxx Xxxxxxxxxxx
----------------------------
Xxxxx Xxxxxxxxxxx
-30-
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx
[NAME OF PURCHASER]
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
Title
[NAME OF PURCHASER]
DLJSC for the benefit of Xxxxxxx X. Xxxx
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title:
[NAME OF PURCHASER]
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title:
[NAME OF PURCHASER]
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
-31-
[NAME OF PURCHASER]
Xxxxxxx Family Limited Partnership
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: General Partner
[NAME OF PURCHASER]
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title:
[NAME OF PURCHASER]
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title:
-32-
EXHIBIT A to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
FOR SPEEDCOM WIRELESS CORPORATION
Names and Addresses Number of Preferred Shares Dollar Amount
of Purchasers & Warrants Purchased of Investment
------------------- -------------------------- -------------
SDS Merchant Fund, L.P. Preferred Shares: 794,664 $1,787,992
c/o SDS Capital Partners Series A Warrants: 635,732
One Sound Shore Drive Series B Warrants: 944,856
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Fax no.: (000) 000-0000
S.A.C. Capital Associates, LLC Preferred Shares: 1,608,854 $3,619,921
c/o S.A.C. Capital Advisors, LLC Series A Warrants: 1,287,084
000 Xxxx Xxxxx Xxxx Series B Warrants: 1,912,928
Xxxxxxxx, XX 00000
Attention: General Counsel
Fax no.: (000) 000-0000
Oscar Private Equity
Investments, L.P. Preferred Shares: 560,278 $1,260,625
00000 Xxx Xxxxxxx Xxxx. Series A Warrants: 448,223
Suite 810 Series B Warrants: 666,171
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxx
Fax no.: (000) 000-0000
Xxxxx Xxxxxxxxxxx Preferred Shares: 222,778 $ 501,250
000 Xxxxxxx Xxx Xxxxx Series A Warrants: 178,223
Xxxxxxxxx, XX 00000 Series B Warrants: 264,884
Fax No.: (000) 000-0000
Xxxxxx X. Xxxx Preferred Shares: 100,000 $ 225,000
0000 Xx Xxxxx Xx. Series A Warrants: 80,000
Xxx Xxx, XX 00000 Series B Warrants: 118,900
Fax No.: (000) 000-0000
Xxxxxx Xxxxxx Preferred Shares: 22,223 $ 50,000
000 Xxxx Xxxxx Series A Warrants: 17,779
Xxxxxxxx, XX 00000 Series B Warrants: 26,424
Fax No.: (000) 000-0000
DLJSC for the benefit of Preferred Shares: 9,956 $ 22,400
Xxxxxxx X. Xxxx Series A Warrants: 7,965
000 Xxxxxx Xxxxx Series B Warrants: 11,838
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Fax No.: (000) 000-0000
Names and Addresses Number of Preferred Shares Dollar Amount
of Purchasers & Warrants Purchased of Investment
------------------- -------------------------- -------------
Xxxxxx X. Xxxxxxx, Xx. Preferred Shares: 112,000 $252,000
1750 W. Sussex Series A Warrants: 89,600
Xxxxxxx, XX 00000 Series B Warrants: 133,168
Fax No.: (000) 000-0000
Xxxxxxx Xxxxxxx Preferred Shares: 4,800 $ 10,800
0000 X. Xxxxxx #000 Series A Warrants: 3,840
Xxxxx, XX 00000 Series B Warrants: 5,708
Fax No.: (000) 000-0000
Xxxxxxx Family Limited Partnership Preferred Shares: 88,889 $200,000
000 Xxxxxxxx Xxxx, Xxxxx 000 Series A Warrants: 71,112
Xxxxxxxxxx, XX 00000 Series B Warrants: 105,690
Attention: Xxxxx Xxxxxxx
Fax No.: (000) 000-0000
Xxxxx Xxxxxxx Preferred Shares: 266,667 $600,000
000 Xxxxxxxx Xxxx, Xxxxx 000 Series A Warrants: 213,334
Xxxxxxxxxx, XX 00000 Series B Warrants: 317,068
Attention: Xxxxx Xxxxxxx
Fax No.: (000) 000-0000
Xxxxx Xxxxxx Preferred Shares: 44,445 $100,000
0000 Xxxxxxxxx Xxxxx Series A Warrants: 35,556
Xxxxxxx, XX 00000 Series B Warrants: 52,846
Fax No.: (000) 000-0000
EXHIBIT B-1 to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
SPEEDCOM WIRELESS CORPORATION
FORM OF SERIES A WARRANT
EXHIBIT B-2 to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
SPEEDCOM WIRELESS CORPORATION
FORM OF SERIES B WARRANT
EXHIBIT C to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
SPEEDCOM WIRELESS CORPORATION
FORM OF CERTIFICATE OF DESIGNATION
EXHIBIT D to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
SPEEDCOM WIRELESS CORPORATION
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT E to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
SPEEDCOM WIRELESS CORPORATION
FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
SPEEDCOM WIRELESS CORPORATION
as of August 23, 2001
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: _____________
Ladies and Gentlemen:
Reference is made to that certain Series B Convertible Preferred Stock
Purchase Agreement, dated as of August 23, 2001, by and among Speedcom Wireless
Corporation, a Delaware corporation (the "Company"), and the purchasers named
therein (collectively, the "Purchasers") pursuant to which the Company is
issuing to the Purchasers shares of its Series B Convertible Preferred Stock,
par value $.001 per share, (the "Preferred Shares") and warrants (the
"Warrants") to purchase shares of the Company's common stock, par value $.001
per share (the "Common Stock") Warrants in connection with the sale and issuance
of Preferred Shares and Warrants to the Purchasers. This letter shall serve as
our irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue shares of Common Stock upon
conversion of the Preferred Shares (the "Conversion Shares") and exercise of the
Warrants (the "Warrant Shares") to or upon the order of a Purchaser from time to
time upon (i) surrender to you of a properly completed and duly executed
Conversion Notice or Exercise Notice, as the case may be, in the form attached
hereto as Exhibit I and Exhibit II, respectively, (ii) in the case of the
conversion of Preferred Shares, a copy of the certificates (with the original
certificates delivered to the Company) representing Preferred Shares being
converted or, in the case of Warrants being exercised, a copy of the Warrants
(with the original Warrants delivered to the Company) being exercised (or, in
each case, an indemnification undertaking with respect to such share
certificates or the warrants in the case of their loss, theft or destruction),
and (iii) delivery of a treasury order or other appropriate order duly executed
by a duly authorized officer of the Company. So long as you have previously
received (x) written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares or Warrant
Shares, as applicable, has been declared effective by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), and no subsequent notice by the Company or its counsel of the
suspension or termination of its effectiveness and (y) a copy of such
registration statement, and if the Purchaser represents in writing that the
Conversion Shares or the Warrant Shares, as the case may be, were sold pursuant
to the Registration Statement, then certificates representing the Conversion
Shares and the Warrant Shares, as the case may be, shall not bear any legend
restricting transfer of the Conversion Shares and the Warrant Shares, as the
case may be, thereby and should not be subject to any stop-transfer restriction.
Provided, however, that if you have not previously received (i) written
confirmation from counsel to the Company that a registration statement covering
resales of the Conversion Shares or Warrant Shares, as applicable, has been
declared effective by the SEC under the 1933 Act, and (ii) a copy
of such registration statement, then the certificates for the Conversion Shares
and the Warrant Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS, OR SPEEDCOM WIRELESS CORPORATION SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS
OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
and, provided further, that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
and the Warrant Shares in the event a registration statement covering the
Conversion Shares and the Warrant Shares is subject to amendment for events then
current.
A form of written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares and the Warrant
Shares has been declared effective by the SEC under the 1933 Act is attached
hereto as Exhibit III.
Please be advised that the Purchasers are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Purchaser is a third party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at ___________.
Very truly yours,
SPEEDCOM WIRELESS CORPORATION
By: ____________________________
Name: _____________________
Title: ____________________
ACKNOWLEDGED AND AGREED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: ____________________________
Name: ____________________________
Title: ____________________________
Date: ___________
EXHIBIT I
---------
SPEEDCOM WIRELESS CORPORATION
CONVERSION NOTICE
Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series B Preferred Stock of Speedcom Wireless Corporation
(the "Certificate of Designation"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series B Preferred Stock, par value $.001 per share (the "Preferred
Shares"), of Speedcom Wireless Corporation, a Delaware corporation (the
"Company"), indicated below into shares of Common Stock, par value $.001 per
share (the "Common Stock"), of the Company, by tendering the stock
certificate(s) representing the share(s) of Preferred Shares specified below as
of the date specified below.
Date of Conversion: _____________________________
Number of Preferred Shares to be converted: _______
Stock certificate no(s). of Preferred Shares to be converted: _______
The Common Stock have been sold pursuant to the Registration Statement (as
defined in the Registration Rights Agreement): YES ____ NO____
Please confirm the following information:
Conversion Price: _____________________________
Number of shares of Common Stock
to be issued: _____________________________
Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:
Issue to: _____________________________
_____________________________
Facsimile Number: _____________________________
Authorization: _____________________________
By: ______________________
Title: ______________________
Dated:
PRICES ATTACHED
EXHIBIT II
----------
FORM OF EXERCISE NOTICE
EXERCISE FORM
SPEEDCOM WIRELESS CORPORATION
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Speedcom
Wireless Corporation covered by the within Warrant.
Dated: _________________ Signature ___________________________
Address _____________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________________ Signature ___________________________
Address _____________________
_____________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: _________________ Signature ___________________________
Address _____________________
_____________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ canceled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
EXHIBIT III
-----------
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: _____________
Re: Speedcom Wireless Corporation
-----------------------------
Ladies and Gentlemen:
We are counsel to Speedcom Wireless Corporation, a Delaware corporation
(the "Company"), and have represented the Company in connection with that
certain Series B Convertible Preferred Stock Purchase Agreement (the "Purchase
Agreement"), dated as of August 23, 2001, by and among the Company and the
purchasers named therein (collectively, the "Purchasers") pursuant to which the
Company issued to the Purchasers shares of its Series B Convertible Preferred
Stock, par value $.001 per share, (the "Preferred Shares") and warrants (the
"Warrants") to purchase shares of the Company's common stock, par value $.001
per share (the "Common Stock"). Pursuant to the Purchase Agreement, the Company
has also entered into a Registration Rights Agreement with the Purchasers (the
"Registration Rights Agreement"), dated as of August 23, 2001, pursuant to which
the Company agreed, among other things, to register the Registrable Securities
(as defined in the Registration Rights Agreement), including the shares of
Common Stock issuable upon conversion of the Preferred Shares and exercise of
the Warrants, under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ________________, 2001, the Company filed a Registration Statement
on Form S-3 (File No. 333-________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the resale of the
Registrable Securities which names each of the present Purchasers as a selling
stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and accordingly, the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
[COMPANY COUNSEL]
By: __________________________________
cc: [LIST NAMES OF PURCHASERS]
EXHIBIT F to the
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
SPEEDCOM WIRELESS CORPORATION
FORM OF OPINION OF COUNSEL
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the state of Delaware and has the requisite
corporate power to own, lease and operate its properties and assets, and to
carry on its business as presently conducted. The company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Transaction Documents and to issue
the Preferred Stock, the Warrants and the Common Stock issuable upon conversion
of the Preferred Stock and exercise of the Warrants. The execution, delivery and
performance of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly and
validly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. Each of the Transaction Documents have been duly executed and
delivered, and the Preferred Stock and the Warrants have been duly executed,
issued and delivered by the Company and each of the Transaction Documents
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms. The Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants are
not subject to any preemptive rights under the Certificate of Incorporation or
the Bylaws.
3. The Preferred Stock and the Warrants have been duly authorized and,
when delivered against payment in full as provided in the Purchase Agreement,
will be validly issued, fully paid and nonassessable. The shares of Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants,
have been duly authorized and reserved for issuance, and, when delivered upon
conversion or against payment in full as provided in the Certificate of
Designation and the Warrants, as applicable, will be validly issued, fully paid
and nonassessable.
4. The execution, delivery and performance of and compliance with the
terms of the Transaction Documents and the issuance of the Preferred Stock, the
Warrants and the Common Stock issuable upon conversion of the Preferred Stock
and exercise of the Warrants do not (i) violate any provision of the Certificate
of Incorporation or Bylaws, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party, (iii) create or impose a lien, charge or encumbrance on any
property of the Company under any agreement or any commitment to which the
Company is a party or by which the Company is bound or by which any of its
respective properties or assets are bound, or (iv) (a) result in a violation of
any federal, state, local or foreign statute, rule, regulation, order, judgment,
injunction or decree (including Federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, except, in all cases other than violations
pursuant to clause (i) above, for such conflicts, default, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.
5. No consent, approval or authorization of or designation, declaration
or filing with any governmental authority on the part of the Company is required
under Federal, state or local law, rule or regulation in connection with the
valid execution and delivery of the Transaction Documents, or the offer, sale or
issuance of the Preferred Stock, the Warrants or the Common Stock issuable upon
conversion of the Preferred Stock and exercise of the Warrants other than the
Certificate of Designation and the Registration Statement.
6. There is no action, suit, claim, investigation or proceeding pending
or threatened against the Company which questions the validity of this Agreement
or the transactions contemplated hereby or any action taken or to be taken
pursuant hereto or thereto. There is no action, suit, claim, investigation or
proceeding pending, or to our knowledge, threatened, against or involving the
Company or any of its properties or assets and which, if adversely determined,
is reasonably likely to result in a Material Adverse Effect. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such.
7. The offer, issuance and sale of the Preferred Stock and the Warrants
and the offer, issuance and sale of the shares of Common Stock issuable upon
conversion of the Preferred Stock and exercise of the Warrants pursuant to the
Purchase Agreement, the Certificate of Designation and the Warrants, as
applicable, are exempt from the registration requirements of the Securities Act.
8. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
Very truly yours,
XXXXX & XXXXXXX
