COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and
entered into as of this 6th day of April, 1999, by and between TELECOM
WIRELESS CORPORATION, a Utah corporation (the "COMPANY"), and the person
whose name appears on the signature page hereof adjacent to the caption "Name
of Purchaser" (the "PURCHASER").
BACKGROUND
The Company has authorized the issuance, sale, and delivery of up to
$600,000 of common stock of the Company par value $.006 (the "COMMON STOCK")
pursuant to Rule 504 of Regulation D ("REGULATION D") of the Securities Act
of 1933, as amended (the "1933 ACT"). The Company has within twelve months
of the date of this Agreement sold and issued certain shares of its common
stock pursuant to Rule 504 of Regulation D, and desires to complete the
transactions contemplated herein as permitted by the limits of Regulation D
and the 1933 Act. Purchaser desires to purchase, on the terms set forth
herein, the number of shares of Common Stock set forth on the signature page
hereto adjacent to the caption "Number of Shares Purchased" (the "SHARES"),
at the price per Share set forth on the signature page hereto adjacent to the
caption "Purchase Price Per Share" (the "PRICE PER SHARE"). Pursuant to the
terms of an Escrow Agreement (the "ESCROW AGREEMENT") dated April 2, 1999, by
and among the Company, the Escrow Agent, and the Purchaser, the Company has
established an escrow account (the "ESCROW ACCOUNT") with SunTrust Bank,
Atlanta (the "ESCROW AGENT"), providing for the initial receipt of all funds
submitted pursuant to this Agreement.
AGREEMENT
For and in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the parties
hereto agree as follows:
SECTION 1. PURCHASE OF STOCK. Purchaser hereby purchases the
Shares at the Price Per Share and herewith delivers to the Escrow Agent by
wire transfer (pursuant to the wire transfer instructions established in the
Escrow Agreement) or check, an amount equal to the product of the number of
Shares purchased MULTIPLIED BY the Price Per Share (such amount is the
"PURCHASE PRICE").
SECTION 2. THE CLOSING. Within two (2) business days following the
receipt of the Purchase Price and this Agreement executed by Purchaser, the
Company shall accept or reject this Agreement. If the Company rejects this
Agreement, the Company shall so notify Purchaser in writing, which writing
shall direct the Escrow Agent to remit the amount tendered by Purchaser in
payment of the Purchase Price, and shall destroy this Agreement. If the
Company accepts this Agreement, the Company shall: (i) promptly indicate its
acceptance of this Agreement, (ii) issue and deliver to Purchaser a
certificate, registered in the name of Purchaser, evidencing the Shares, and
(iii) furnish to Purchaser a copy of this Agreement, executed by the Company.
Thereafter, the Company may transmit to Escrow Agent a release notice
directing the release of funds held in the Escrow Account, in accordance with
the instructions contained in such notice.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. To
induce Purchaser to purchase the Shares, the Company hereby represents and
warrants to Purchaser that:
3.1. ORGANIZATION, STANDING, AND QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Utah and is duly qualified
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to transact business as a foreign corporation and is in good standing in each
state in which the nature of the business transacted by it or the character
of the properties owned or leased by it requires such qualification. The
Company has the requisite corporate power and authority to own, lease, and
operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted, and prior to the date hereof has
not and as of the date hereof does not operate as a "blind-pool" or other
similar corporation.
3.2. SUBSIDIARIES AND OTHER EQUITY INTERESTS. The Company does not
(a) own of record or beneficially, directly, or indirectly, (i) any shares of
capital stock or securities convertible into capital stock of any
corporation, or (ii) any participating interest in any partnership, joint
venture, or other non-corporate business enterprise or (b) control, directly
or indirectly, any other entity, PROVIDED HOWEVER, that the Company has
previously disclosed that it owns, controls, or beneficially holds all of the
issued and outstanding stock of (i) Phoenix Communications, Inc., a Colorado
corporation, and (ii) Keys Microcable Corporation, a Florida corporation.
3.3. AUTHORIZATION OF AGREEMENTS, ETC. All corporate action on the
part of the Company, its officers, directors, and shareholders necessary for
the sale and issuance of the Shares and the execution, delivery, and
performance by the Company of this Agreement has been duly and validly taken.
This Agreement is the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application relating to
or affecting enforcement of creditors' rights, and by the exercise of
judicial discretion in accordance with general equitable principles.
3.4. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of or default under any provision of its articles of incorporation
or bylaws, or any provision of any indenture, contract, agreement, mortgage,
deed of trust, loan, commitment, judgment, decree, order, or obligation to
which it is a party or by which any of its properties or assets are bound, or
to the best of the Company's knowledge, of any provision of any federal,
state, or local statute, rule, or governmental regulation applicable to the
Company. The execution and delivery by the Company of this Agreement and the
other documents and instruments contemplated hereby, the performance by the
Company of its obligations hereunder and thereunder, and the issuance, sale,
and delivery of the Shares, will not result in any such violation, conflict
with, breach of, or constitute (with due notice or lapse of time or both) a
default under, any such provision, require any consent or waiver under any
such provision, or result in the creation or imposition of any lien, charge,
restriction, claim, or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
3.5. TITLE TO PROPERTIES. The Company has good and marketable title
to all the tangible properties and assets owned by it, free and clear of all
mortgages, pledges, security interests, liens, charges, claims, restrictions,
and other encumbrances, except liens for current taxes not yet due and
payable and minor imperfections of title, if any, not material in nature or
amount and not materially detracting from the value or impairing the use of
the property subject thereto or impairing the operations or proposed
operations of the Company. The Company owns, leases, or licenses all
tangible properties and assets necessary to the operation of its business as
now conducted.
3.6. LEASEHOLD INTERESTS. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or
personal, is a valid and subsisting agreement without any default of the
Company thereunder and, to the best of the Company's knowledge, without any
default thereunder of any other party thereto. No event has occurred and is
continuing which, with due notice or lapse of time or both, would constitute
a default or event of default by the Company under any such lease
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or agreement or, to the best of the Company's knowledge, by any other party
thereto. The Company's possession of such property has not been disturbed
and, to the best of the Company's knowledge, no claim has been asserted
against the Company adverse to its rights in such leasehold interests.
3.7. BROKERS. The Company has no contract, arrangement, or
understanding with any broker, finder, or similar agent with respect to the
transactions contemplated by this Agreement, EXCEPT for the Placement Agency
Agreement of even date herewith, between the Company and Xxxx Xxxxxxxx &
Associates, Inc., a Florida corporation.
3.8. TAXES. The Company has filed or obtained filing extensions for
all tax returns, federal, state, county, and local, required to be filed by
it, and the Company has paid or established adequate reserves (in accordance
with generally accepted accounting principles) for the payment of all taxes
shown to be due by such returns as well as all other taxes, assessments, and
governmental charges which have become due or payable, including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors, and third parties.
3.9. CONFIDENTIAL COMPANY INFORMATION. The unaudited Balance Sheet
dated December 31, 1998, and an Income Statement for the twelve months then
ended (collectively, the "FINANCIAL STATEMENTS") are in accordance with the
books and records of the Company and present fairly the financial condition
of the Company as of the respective dates indicated and the results of
operations for such periods, except that the Financial Statements are subject
to year-end audit adjustments. The books, records, and accounts of the
Company accurately and fairly reflect, in reasonable detail, the
transactions, the assets, and the liabilities of the Company. The Company
has not engaged in any transaction, maintained any bank account, or used any
of the funds of the Company, except for transactions, bank accounts, and
funds which have been and are reflected in the normally maintained books and
records of the Company.
3.10. PRIOR OFFERINGS. The Company has not engaged in any offering
or sale of its securities within the twelve (12) month period prior to the
date of this Agreement that resulted in greater than $300,000.00 in proceeds
to the Company pursuant to any offering(s) under Regulation D of the
Securities Act (as defined below).
3.11. CAPITALIZATION. Immediately prior to Closing, the authorized
capital stock of the Company consisted of 500,000,000 shares of capital
stock, of which 500,000,000 shares are Common Stock, par value $.006, of
which approximately 4,634,969 shares are issued and outstanding, and there
are no shares of preferred stock (the "PREFERRED STOCK") authorized as of the
date hereof. All of such outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. No shares of Common
Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company, EXCEPT that the
Purchaser purchasing Shares hereunder is entitled to receive repricing
warrants being issued by the Company under certain circumstances, as more
fully outlined in the Term Sheet (as defined in Section 5.5 below). As of
the effective date of this Agreement, the Company has previously granted to
an existing shareholder of the Company warrants for the exercise of Common
Stock of the Company under certain circumstances, and has entered into an
agreement with an existing shareholder of the Company to issue to such
shareholder additional Company securities (either additional Common Stock or
a class of convertible preferred stock not existing as of the date of this
Agreement). These agreements may contain certain obligations of the Company
in respect of registration rights in favor of certain shareholders of the
Company and not others. As of the effective date hereof, there are no
outstanding debt securities of the Company and, except as stated in this
Section 3.11, no agreements or arrangements under which the Company or any of
its subsidiaries is obligated to register the sale of any of their securities
under the 0000 Xxx. There are no
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securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Shares in the manner contemplated by
this Agreement. The Company has furnished or agreed to make available to the
Purchaser true and correct copies of: (x) the Company's Certificate of
Incorporation, as amended prior to the date here of (the "CHARTER"), (y) the
Company's Bylaws, as in effect on the date hereof (the "BYLAWS"), and (z) the
terms of all securities convertible into or exercisable for Common Stock and
the material rights of the holders thereof in respect thereto, if any, and as
of the date hereof is planning no other changes to its corporate or
capitalization structure; PROVIDED HOWEVER, that the Company is planning to
effect a reverse stock split within thirty days after the date hereof,
substantially under the terms that each five (5) shares of currently issued
and outstanding Common Stock of the Company will be exchanged for one (1)
share of newly issued Common Stock of the Company, and the number of
authorized shares of Common Stock of the Company available for issuance will
be reduced to 100,000,000 at at a restated par value of $.001.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
acknowledges that the Shares have not been registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and are being offered and
sold pursuant to an exemption from registration contained in the Securities
Act based in part upon the representations of Purchaser contained herein.
Purchaser represents and warrants to the Company that:
(a) The Shares are being acquired for Purchaser's own account,
for investment and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the
Securities Act or the securities laws of any other state applicable to
Purchaser.
(b) Purchaser and any representatives of Purchaser have been
afforded full and free access to corporate books, records, contracts,
documents, and other information concerning the Company and to offices
and facilities of the Company, have been afforded an opportunity to ask
such questions of the Company's officers, employees, agents, accountants,
and representatives concerning the Company's business, operations,
financial condition, assets, liabilities, and other relevant matters as
they have deemed necessary or desirable, and have been given all such
information as has been requested, in order to evaluate the merits and
risks of the prospective investments contemplated herein.
(c) Purchaser and Purchaser's representatives have been solely
responsible for Purchaser's own "due diligence" investigation of the
Company and the Company's management and business, for Purchaser's own
analysis of the merits and risks of this investment, and for Purchaser's
own analysis of the fairness and desirability of the terms of the
investment. Purchaser has such knowledge and experience in financial and
business matters that Purchaser is capable of evaluating the merits and
risks of the purchase of the Shares pursuant to the terms of this
Agreement and of protecting Purchaser's interests in connection
therewith.
(d) Purchaser acknowledges that the purchase of the Shares is a
speculative investment, and that no assurance has been given by the
Company or any person authorized to act on its behalf that the purchase
of the Shares will not ultimately result in a total loss of Purchaser's
investment. Purchaser acknowledges that Purchaser is able to bear the
economic risk of the purchase of the Shares pursuant to the terms of this
Agreement, including a complete loss of Purchaser's investment in the
Shares. Purchaser has no need for current income from the Shares and has
sufficient liquid financial resources remaining after the purchase of the
Shares to provide for Purchaser's current needs and reasonable
contingencies.
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4.1. ACKNOWLEDGMENT OF STATUS OF SHARES. Purchaser acknowledges
that the Shares have not been registered under the Securities Act or any
applicable state blue sky laws by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 3(b) thereof and Rule 504 promulgated under the Securities Act and
exemptions under applicable state blue sky law;
4.2. PURCHASER INFORMATION. The information furnished by Purchaser
on the signature page hereof is true and correct.
4.3. POWER AND AUTHORITY. Purchaser has the full right, power,
authority, and capacity to enter into and perform Purchaser's obligations
under this Agreement, and this Agreement constitutes a valid and binding
obligation of Purchaser enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other laws of general application relating to or affecting enforcement of
creditors' rights and rules or laws concerning equitable remedies.
4.4. NO PUBLIC SOLICITATIONS. Purchaser knows of no public
solicitations or advertisements in connection with the offer and sale of the
Shares.
SECTION 5. COVENANTS OF THE COMPANY. The Company covenants and
agrees with Purchaser that, until the first to occur of the closing of a
public offering or the date Purchaser is no longer a holder of any Shares:
5.1. FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall furnish,
upon the written request of Purchaser:
(a) within ninety (90) days after the end of each fiscal year
of the Company, an unaudited balance sheet of the Company, as of the end
of such fiscal year, and the related unaudited statements of income,
shareholders' equity, and changes in cash flows for such fiscal year,
prepared in accordance with generally accepted accounting principles and
certified by the President and chief financial officer of the Company;
(b) within thirty (30) days after the end of each fiscal month,
other than the last month in each fiscal year, an unaudited summary
balance sheet of the Company and an unaudited summary income statement of
the Company; and,
(c) promptly, from time to time, such other information
regarding the business, prospects, financial condition, operations,
property, or affairs of the Company as Purchaser reasonably may request;
PROVIDED HOWEVER that the Company shall not be required to disclose
information it deems to be a trade secret or confidential information
unless Purchaser shall have signed a confidentiality agreement.
5.2. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles,
consistently applied, reflecting all financial transactions of the Company
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.
5.3. PIGGY-BACK REGISTRATION RIGHTS. Commencing with any initial
public offering, the Holder shall have unlimited piggyback registrations
until all shares of Common Stock issued or issuable upon the exercise of any
warrants obtained hereby (the "WARRANTS") have been registered. The
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Company agrees to give the registered Holder of the Warrants notice of its
intent to file a registration statement with the Securities and Exchange
Commission relating to any equity securities of the Company at least 45 days
prior to the date of filing with the Securities and Exchange Commission of
any such registration statement and to include in such registration
statement, all shares of Common Stock issuable upon exercise hereof which
Holder requests be included in such registration. Holder will bear customary
selling expenses such as underwriter's discount and commissions and the
Company will bear all other costs associated with the registration and sale
of the shares included in such registration.
5.4. CO-SALE RIGHTS. The Company agrees that in the event any
founder, officer, or director of the Company enters into an Agreement to sell
20% of more of the capital Stock of the Company held by such founder,
officer, and director and Subscriber is not a party to such purchase, the
Company will not transfer the securities involved in such sale, unless, as a
condition precedent to the sale by such founder, officer, or director, the
transferee of such founder, officer, or director offers to purchase, on the
same terms and conditions, of the sale by such founder, officer, or director,
the same percentage of shares as the percentage purchased from such founder,
officer, or director.
5.5. COMPLIANCE WITH TERM SHEET. The Company agrees to comply with
the terms and provisions of the term sheet (the "TERM SHEET") between the
Company and its placement agent dated March 29, 1999, including without
limitation its obligations concerning the repricing rights provided for in
the Term Sheet that accompany the Shares.
SECTION 6. GENERAL PROVISIONS.
6.1. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements between Purchaser and the Company,
their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein. Except as specifically set forth herein
or therein, neither the Company nor Purchaser makes any representation,
warranty, covenant, or undertaking with respect to such matters other than
those contained in this Agreement. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party
to be charged with enforcement.
6.2. GOVERNING LAWS. This Agreement shall be construed,
administered and enforced according to the laws of the State of Colorado
without giving effect to its conflict of law principles; PROVIDED HOWEVER, no
Shares shall be issued except, in the reasonable judgment of the Board of
Directors, in compliance with exemptions available under applicable state
securities laws of the state in which Purchaser resides, and/or any other
applicable securities laws.
6.3. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the heirs, legal representatives, successors, and permitted
assigns of the parties.
6.4. SEVERABILITY. In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, the
same shall not invalidate or otherwise affect any other provisions of this
Agreement, and this Agreement shall be construed as if the invalid, illegal,
or unenforceable provision or portion thereof had never been contained herein.
6.5. HEADINGS. Paragraph and Section headings used herein are for
convenience of reference only and shall not be considered in construing this
Agreement.
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6.6. CORRECTNESS OF REPRESENTATIONS. Acceptance by the Purchaser of
the certificate representing the Shares shall constitute a confirmation by
the Purchaser that all agreements and representations made herein shall be
true and correct at such time.
[Remainder of this page intentionally left blank]
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SIGNATURE PAGE TO
COMMON STOCK PURCHASE AGREEMENT
PROVIDE THE FOLLOWING IDENTIFYING INFORMATION:
1. NAME OF PURCHASER: PRINCETON INSURANCE COMPANY
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2. PURCHASER'S ADDRESS: X X XXX 0000
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X00 XXXXXXXXX XXXX
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3. PURCHASER'S TELEPHONE: XXXXXXXXX XX 00000 609520-9404
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4. PURCHASER'S TAX ID OR SOCIAL SECURITY NUMBER: 00-0000000
--------------------------
PROVIDE THE FOLLOWING INFORMATION CONCERNING YOUR PURCHASE:
NUMBER OF SHARES PURCHASED: 20,000
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PURCHASE PRICE PER SHARE: 1.00
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TOTAL PURCHASE PRICE: 20,000
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ANSWER THE FOLLOWING QUESTIONS:
1. Are you aware of the fact that you have the opportunity to question a
representative of the Company about this investment, the Company, the
Company's properties, the Company's operations and the Company's methods
of doing business?
X
-------- --------
Yes No
2. (a) Do you understand the merits and risks associated with investments
in closely-held companies?
X
-------- --------
Yes No
(b) Do you understand the merits and risks associated with an
investment in the Company?
X
-------- --------
Yes No
3. Do you understand that there is no guarantee of any financial return on
this investment and that you run the risk of losing your entire
investment?
X
-------- --------
Yes No
4. Do you understand that this investment is illiquid?
X
-------- --------
Yes No
SIGNATURE: Executed by Purchaser this 23 day of April, 1999 at
-----
Princeton , NJ
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Purchaser Name (Printed): ART XXXXXXXX UPI
--------------------------------
Purchaser Signature: /s/ Art Xxxxxxxx
--------------------------------
Accepted by the Company this ______ day of April, 1999: By:
____________________
_________, President
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Schedule to Common Stock Purchase Agreement
Dated April 6, 1999
Identifying Purchasers
Purchaser and Address Date No. of Shares
--------------------- ---- -------------
GBS Capital Management, Ltd. April 6, 1999 42,000
Silenus Limited April 6, 1999 20,000
Princeton Insurance Company April 23, 1999 4,000
Chelverton Fund, Ltd. April 15, 1999 18,000
Mach Products, Inc. May 1999 28,000
SovCap Equity Partners Ltd. May 1999 8,000
