AMENDMENT
AMENDMENT dated August 10, 2000 (the "Amendment") to the Securities
Purchase Agreement dated April 14, 2000 (the "Purchase Agreement") and related
Transaction Documents (as defined in the Purchase Agreement) between World Wide
Wireless Communications, Inc. (the "Company") and each of: Esquire Trading &
Finance, Inc. ("Esquire"), Amro International, S.A. ("Amro"), Xxxxxxx Trust Reg.
("Xxxxxxx"), The Endeavor Capital Fund, S.A. ("Endeavor"), Nesher, Ltd.
("Nesher"), The Keshet Fund, L.P. ("Keshet Fund") and Keshet, L.P. ("Keshet").
Esquire, Amro, Xxxxxxx, Endeavor, Keshet Fund and Keshet are each referred to
herein as a "Purchaser." All capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in the Purchase Agreement.
WHEREAS, the Purchasers desire to continue their investment in the
Company as contemplated by the Purchase Agreement as amended hereby; and
WHEREAS, the Purchasers have made certain concessions to the Company in
respect of their rights and the Company's obligations under the Transaction
Documents; and
WHEREAS, the Company wishes to obtain the additional financing
contemplated by the Purchase Agreement under the terms of the Transaction
Documents as amended hereby,
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the Company and each
Purchaser hereby restate their respective representations, warranties and
covenants as contained in the Transaction Documents as of the date hereof and
agree to amend the Transaction Documents as follows:
1. August 10, 2000 (the "Amendment Closing Date") shall be the Subsequent
Closing Date for all purposes under the Transaction Documents and upon
the purchase of the securities contemplated by this Amendment, the
Purchasers shall have no further obligation to purchase securities from
the Company.
2. Talbiya B Investments Ltd. is hereby joined as a Purchaser to the
Securities Purchase Agreement, as amended hereby and as a Purchaser to
the Registration Rights Agreement, as amended hereby.
3. The total number of shares of Common Stock to be issued and delivered
by the Company to the Purchasers pursuant to the Purchase Agreement
shall be 2,128,000 of which 760,000 were the Initial Shares issued and
delivered on the Initial Closing Date, 760,000 shall be shares issued
and delivered by the Company on the Amendment Closing Date in
consideration of the Purchasers' forbearance of their rights under the
Transaction Documents (the "Consideration Shares") and 608,000 shall be
Additional Shares issued and delivered by the Company on the Amendment
Closing Date. The Consideration Shares shall for all purposes under the
Transaction Documents (other than with respect to the consideration
payable to the Company in respect of such shares) be Additional Shares
subject to all the representations and warranties, and rights and
obligations of the parties pertaining to Additional Shares. The number
of Consideration Shares, Additional Shares, Convertible Securities and
Additional Warrants to be issued and delivered to each Purchaser and
the Additional Purchase Price payable therefor is identified on
Schedule 1 (the "Amended Schedule 2") attached hereto, which Amended
Schedule 2 shall supersede and replace Schedule 2 to the Purchase
Agreement.
4. The definition of "Effectiveness Date" in the Registration Rights
Agreement is hereby deleted and replaced with:
""Effectiveness Date" means September 8, 2000."
Each Purchaser hereby waives any remedies which may have accrued in
favor of such Purchaser against the Company as a result of the
Company's failure to comply, prior to the Amendment Closing Date, with
the provisions of Section 7(e)(A) of the Registration Rights Agreement.
Notwithstanding the foregoing, if the Company does not comply with the
provisions of Section 7(e)(A) after the Amendment Closing Date giving
effect to the additional time given to the Company as a result of the
amended "Effectiveness Date," (i) such waiver shall be of no further
force and effect and (ii) all the rights and remedies available to the
Purchasers shall be based upon the unamended Effectiveness Date.
5. Paragraph 4(c)(i) of the Debentures (including those issued on the
Initial Closing Date and those to be issued on the Amendment Closing
Date) shall be amended and restated as follows:
"The conversion price for the Debentures (the "Conversion
Price") in effect on any Conversion Date shall be the lesser
of (A) an amount equal to 110% of the average Per Share Market
Value for the five (5) consecutive Trading Days immediately
preceding the Original Issue Date (the "Fixed Conversion
Price") and (B) an amount equal to 85% of the average Per
Share Market Value for the five (5) consecutive Trading Days
immediately prior to the Conversion Date; provided, however,
that, in any Conversion Notice, a Holder may specify a
Conversion Price higher than the Conversion Price then in
effect; provided further that, if during any period (a
"Black-out Period"), a Holder is unable to trade any Common
Stock issued or issuable upon conversion of Debentures
immediately due to the postponement of filing or delay or
suspension of effectiveness of a registration statement or
because the Company has otherwise informed such Holder that an
existing prospectus cannot be used at that time in the sale or
transfer of such Common Stock, such Holder shall have the
option but not the obligation on any Conversion Date within
ten Trading Days following the expiration of the Black-out
Period of using the Conversion Price applicable on such
Conversion Date or any Conversion Price selected by such
Holder that would have been applicable had such Conversion
Date been at any earlier time during the Black-out Period or
within the ten Trading Days thereafter; provided further, that
in no event shall the Conversion Price be below the Floor
Price. "Floor Price" shall mean $1.00 for the period beginning
on August 10, 2000 and ending on October 14, 2000, $0.64 from
the period beginning on October 14, 2000 and ending on April
14, 2001, and zero thereafter. Notwithstanding the foregoing,
if the Company's revenues for the fiscal year ending December
31, 2000, as shown in the Company's Annual Report on Form 10-K
for the fiscal year ending December 31, 2000, are less than
$13.5 million (such revenues shall be presumed to be less than
13.5 million in the event the Company does not file a Form
10-K by March 31, 2001), then from and after April 1, 2001 the
Floor Price shall be zero."
On the Amendment Closing Date, the Company shall issue and deliver to
each Purchaser a new Debenture certificate (in the same principal
amount issued to such Purchaser on the Initial Closing Date) reflecting
the foregoing amendment with an Original Issue Date (as defined
therein) of April 14, 2000.
6. The definition of "Warrant Price" in the Warrants issued by the Company
on the Initial Closing Date is hereby deleted and replaced with:
""Warrant Price" means a price equal to $2.00, as such price
may be adjusted from time to time as shall result from the
adjustments specified in Section 4 hereof."
The Company shall issue and deliver to each Purchaser on the Amendment
Closing Date new certificates for the Warrants (in the amounts issued
to such Purchaser on the Initial Closing Date) reflecting the foregoing
amendment with an Original Issue Date (as defined therein) of April 14,
2000.
7. The form of Certificate of Designations attached to the Purchase
Agreement shall be superseded and replaced by the Amended Form of
Certificate of Designations attached hereto as Exhibit A.
-2-
8. The Company shall pay the reasonable fees and expenses of Stroock &
Stroock & Xxxxx, counsel for the Purchasers, in connection with the
negotiation and performance of this Amendment.
9. As a condition precedent to the obligations of the Purchasers under
this Amendment (including payment of the Additional Purchase Price),
the Company shall have delivered to the Purchasers an opinion from
counsel to the Company addressed to the Purchasers, in form and
substance satisfactory to the Purchasers, in respect of (i) the
Company's authority to execute and deliver this Amendment, (ii) the
enforceability this Amendment, (iii) the enforceability of the
Transaction Documents (as amended hereby) to which the Company is a
party, and (iv) such other customary legal matters as the Purchasers
shall request.
All provisions of the Transaction Documents, except as amended herein,
shall continue in full force and effect. This Amendment may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
all parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized persons as of the date first
indicated above.
WORLD WIDE WIRELESS
COMMUNICATIONS, INC.
By:____________________________________
Name:
Title:
ESQUIRE TRADING & FINANCE, INC.
By:____________________________________
Name:
Title:
AMRO INTERNATIONAL, S.A.
By:____________________________________
Name:
Title:
XXXXXXX TRUST REG.
By:____________________________________
Name:
Title:
-4-
THE ENDEAVOR CAPITAL FUND, S.A.
By: Endeavor Management, Inc.
By:___________________________
Name:
Title:
THE KESHET FUND, L.P.
By:____________________________________
\ Name:
Title:
KESHET, L.P.
By:____________________________________
\ Name:
Title:
NESHER, LTD.
By:____________________________________
Name:
Title:
TALBIYA B. INVESTMENTS LTD.
By:____________________________________
Name:
Title:
-5-
SCHEDULE 1
Amended Schedule 2 to the
Securities Purchase Agreement
Schedule 2
Purchasers
------------------- ----------------------- --------------- ---------------- ----------------- ------------ ----------
Number of Number of Principal Amount Number of Portion
Name of Purchaser Address of Purchaser Additional Consideration or Stated Value Additional of
Shares Shares of Additional Warrants Additional
Convertible Purchase
Securities, if Price
applicable
------------------- ----------------------- --------------- ---------------- ----------------- ------------ ----------
Esquire Trading & Xxxxxxxxxxxxxxxxxx 00 000,000 140,000 $248,000 285,000 $380,000
Finance Inc. Baar, Xxxxxxxxxxx
XX0000
Fax No.: 000-0000000
Amro c/o Ultra Finance Ltd. 300,000 300,000 $600,000 675,000 $900,000
International S.A. Grossmuenster Xxxxx
00,
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
CH8022
Xxxxxxx Trust Reg. c/o 116,000 120,000 $224,000 255,000 $340,000
Xxxxxxx-Xxxxxxxx-Xxxxxx
Xxxxxxxxxxx 0
0000 Xxxxxxxxxxx
Balzers, Liechtenstien
The Endeavor 14/14 Divrea Xxxxx 0 150,000 $0 0 0
Xxxxxxx Xxxx, Xxxxxx
S.A. Xxxxxxxxx 00000,
Xxxxxx
Fax No.:
011-972-2-5824443
Nesher, Ltd. c/o Ragnall House 8,000 10,000 $32,000 30,000 $40,000
00 Xxxx Xxxx
Xxxxxxx, Xxxx xx Xxx
0X0 0X0, Xxxxxx
Xxxxxxx
Keshet, L.P. Seameadow House 20,000 25,000 $80,000 75,000 $100,000
XxxxxXxxx Xxxxxxx
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx
Xxxxxxx Virgin Islands
The Keshet Fund, c/o KCM, LLC 12,000 15,000 $48,000 45,000 $60,000
L.P. 000 X. 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Talbiya B. Ragnall House, 18 20,000 0 $80,000 75,000 $100,000
Investments Ltd. Xxxx Xxxx, Xxxxxxx,
Xxxx xx Xxx XX0 0XX
Total: 608,000 760,000 $1,312,000 1,440,000 $1,920,000
======= ======= ========== ========= ==========
EXHIBIT A
AMENDED FORM OF CERTIFICATE OF DESIGNATIONS
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF THE SERIES A
PREFERRED STOCK
OF
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
TO BE DESIGNATED
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 78.195 of the Nevada Revised Statutes, we, the
undersigned, ______________ and _______________, being respectively the
__________ and the _________ of World Wide Wireless Communications, Inc. (the
"Company"), a Nevada corporation organized and existing under the General
Corporation Law of the State of Nevada, DO HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors of the Company by
unanimous written consent, and that said resolution has not been rescinded or
amended and is in full force and effect at the date hereof:
RESOLVED, that, pursuant to authority expressly granted to and vested
in the Board of Directors by the provisions of the Articles of Incorporation, as
amended to date, the Board of Directors hereby creates a series of Preferred
Stock of the Company, par value $.01 per share and having a stated value of
$1,000 per share, to be designated "Series A Convertible Preferred Stock" and to
consist of _______________________ (______) shares, and hereby fixes the powers,
designations, preferences and relative, participating, optional and other rights
of the shares of such series, and the qualifications, limitations, or
restrictions thereof (in addition to those provisions set forth in the Articles
of Incorporation, as amended, which are applicable to the Series A Convertible
Preferred Stock), as follows:
Section 1. Designation, Amount, Par Value, Stated Value and Rank. The
series of Preferred Stock shall be designated as Series A Convertible Preferred
Stock (the "Series A Preferred Stock"), and the number of shares so designated
shall be _______ (which shall not be subject to increase without the consent of
the holders of the Series A Preferred Stock ("Holders")). Each share of Series A
Preferred Stock shall have a par value $.01 per share and a stated value of
$1,000 per share (the "Stated Value").
The Series A Preferred Stock shall rank senior to the Junior Securities
(as defined below) and all other series of preferred stock of the Company issued
and outstanding on the Original Issue Date as to distributions and upon
liquidation, dissolution or winding up.
Section 2. Junior Securities. So long as any Series A Preferred Stock
shall remain outstanding, neither the Company nor any subsidiary thereof shall
redeem, purchase or otherwise acquire otherwise than upon conversion or exchange
directly or indirectly any Junior Securities, nor shall the Company directly or
indirectly pay or declare any dividend or make any distribution (other than a
dividend or distribution described in Section 5) upon, nor shall any
distribution be made in respect of, any Junior Securities, nor shall any monies
be set aside for or applied to the purchase or redemption (through a sinking
fund or otherwise) of any Junior Securities.
Section 3. Voting Rights. The holders of Series A Preferred Stock shall
have no right to vote, except as otherwise required by Nevada law. However, so
long as any shares of Series A Preferred Stock are outstanding, the Company
shall not and shall cause its subsidiaries not to, without the written consent
of the holders of 66 2/3% of the shares of the Series A Preferred Stock then
outstanding, (a) amend, alter or change the preferences or rights of any series
or class of capital stock of the Company (including the Series A Preferred
Stock) or the qualifications, limitations or restrictions thereof if such
amendment, alteration or change adversely affects the powers, preferences or
rights given to the Series A Preferred Stock, (b) alter or amend this
Certificate of Designation, (c) authorize or create any class or series of any
class of capital stock ranking as to distribution of assets upon a Liquidation
(as defined in Section 4) or otherwise senior to the Series A Preferred Stock,
(d) amend its Articles of Incorporation, bylaws or other organizational
documents so as to affect adversely any rights of any Holders, (e) increase the
authorized number of shares of Series A Preferred Stock, and (f) enter into any
agreement with respect to the foregoing.
Section 4. Liquidation. Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a "Liquidation"), the Holders
shall be entitled to receive out of the assets of the Company, whether such
assets are capital or surplus, for each share of Series A Preferred Stock an
amount equal to the Aggregate Stated Value (as defined in Section 8) before any
distribution or payment shall be made to the holders of any Junior Securities,
and if the assets of the Company shall be insufficient to pay in full such
amounts, then the entire assets to be distributed to the holders of Series A
Preferred Stock shall be distributed among the holders of Series A Preferred
Stock and the holders of all securities ranking pari passu to the Series A
Preferred Stock ratably in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in full. A sale,
conveyance or disposition of all or substantially all of the assets of the
Company or the effectuation by the Company of a transaction or series of related
transactions in which more than 50% of the voting power of the Company is
disposed of, or a consolidation or merger of the Company with or into any other
company or companies shall not be treated as a Liquidation, but instead shall be
subject to the provisions of Section 6(c)(ix). The Company shall mail written
notice of any such Liquidation, not less than 45 days prior to the payment date
stated therein, to each record holder of Series A Preferred Stock.
Section 5. Dividends. The holders of Series A Preferred Stock shall be
entitled to receive in preference to the holders of Common Stock or any Junior
Securities, annual dividends at the rate of 4.0% per annum, compounded
semi-annually, for each share of Series A Preferred Stock. Such dividends shall
be due and payable upon conversion or redemption of such shares of Series A
Preferred Stock. Dividends shall accrue from the Original Issue Date (as defined
herein), whether or not earned or declared, until such time as the shares of
Series A Preferred Stock have been converted or redeemed as herein provided.
Dividends are payable on the Series A Preferred Stock on the last day of June
and December of each year (each, a "Dividend Date") by increasing the Aggregate
Stated Value by the amount of such dividends. Such increase in the Aggregate
Stated Value shall constitute full payment of such dividends. When any dividends
are added to the Aggregate Stated Value, such dividends shall, for all purposes
of this Certificate of Designation, be deemed to be part of the Aggregate Stated
Value for purposes of determining dividends thereafter payable hereunder and
amounts thereafter convertible into Common Stock hereunder, and all references
herein to the Aggregate Stated Value shall mean the Aggregate Stated Value, as
adjusted pursuant to this Section 5. The dividends so payable will be paid to
the Holders of shares of Series A Preferred Stock of record as they appear on
the stock books of the Company on the record date, which will be the June 15 or
December 15, as the case may be, before the related Dividend Date; provided,
however, that the Company's obligation to a transferee of shares of Series A
Preferred Stock arises only if such transfer, sale or other disposition is made
in accordance with the terms and conditions hereof and the Securities Purchase
Agreement (as defined below). Notwithstanding the foregoing, the Company shall
not be entitled to pay dividends in shares of Series A Preferred Stock and shall
be required to pay such dividends in cash if any event constituting a Triggering
Event (as defined in Section 7), or an event that with the passage of time and
without being cured would constitute a Triggering Event, has occurred and is
continuing on the Dividend Date or the date which is ten (10) Business Days
prior to the Dividend Date, unless otherwise consented to in writing by the
Holder entitled to receive such dividend.
Section 6. Conversion at the Option of the Holder. (a) (i) Each share
of Series A Preferred Stock shall be convertible into shares of Common Stock
(subject to Section 6(a)(ii)) at the Conversion Ratio (as defined below) at the
option of the holder of such share of Series A Preferred Stock in whole or in
part at any time. If any shares of Series A Preferred Stock remain outstanding
on the Maturity Date, then all such shares shall be converted at the Conversion
Ratio as of such date in accordance with this Section 6. To convert shares of
Series A Preferred Stock into shares of Common Stock on any date, the holder of
such shares of Series A Preferred
Stock shall (A) transmit by facsimile (or otherwise deliver), for receipt on or
prior to 11:59 p.m., Eastern time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit 1 (the "Conversion Notice") to
the Company with a copy thereof to the Company's designated transfer agent (the
"Transfer Agent") and (B) if required by Section 6(b)(iv), surrender to a common
carrier for delivery to the Transfer Agent as soon as practicable following such
date the original certificates representing the shares of Series A Preferred
Stock being converted (or an indemnification undertaking with respect to such
shares in the case of their loss, theft or destruction) (the "Preferred Stock
Certificates"). Each Conversion Notice shall specify the Aggregate Stated Value
of the shares of Series A Preferred Stock to be converted. The date as of which
such conversion is to be effected shall be the date the Holder delivers such
Conversion Notice by facsimile (the "Conversion Date") (if such date is not a
Business Day, then the Conversion Date will be the next following Business Day).
Subject to Section 6(b) hereof, each Conversion Notice, once given, shall be
irrevocable. Upon receipt by the Company of a copy of a Conversion Notice, the
Company shall (1) as soon as practicable, but in no event later than within one
(1) Business Day, send, via facsimile, a confirmation of receipt of such
Conversion Notice to such Holder and the Transfer Agent, which confirmation
shall constitute an instruction to the Transfer Agent to process such Conversion
Notice in accordance with the terms herein and (2) on or before the second (2nd)
Trading Day following the date of receipt by the Company of such Conversion
Notice (the "Delivery Date"), (A) issue and deliver to the address as specified
in the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall
be entitled, or (B) provided the Transfer Agent is participating in The
Depository Trust Company ("DTC") Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder shall be entitled to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system.
If the Aggregate Stated Value of shares of Series A Preferred Stock represented
by the Preferred Stock Certificate(s) submitted for conversion, as may be
required pursuant to Section 6(b)(iv), is greater than the Aggregate Stated
Value of shares of Series A Preferred Stock being converted, then the Company
shall, as soon as practicable and in no event later than the Delivery Date and
at its own expense, issue and deliver to the Holder a new Preferred Stock
Certificate representing the Aggregate Stated Value of Series A Preferred Stock
not converted.
(ii) In no event shall a Holder be permitted to convert in
excess of such Aggregate Stated Value of Series A Preferred Stock upon
the conversion of which, (x) the number of shares of Common Stock owned
by such Holder (other than shares of Common Stock issuable upon
conversion of Series A Preferred Stock or upon exercise of the Warrants
(as defined in the Securities Purchase Agreement)) plus (y) the number
of shares of Common Stock issuable upon such conversion of such shares
of Series A Preferred Stock held by such Holder, would be equal to or
exceed (z) 9.999% of the number of shares of Common Stock then issued
and outstanding, including shares issuable on conversion of the shares
of Series A Preferred Stock held by such Holder after application of
this Section 6(a)(ii). As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder. To
the extent that the limitation contained in this Section 6(a)(ii)
applies, the determination of whether shares of Series A Preferred
Stock are convertible (in relation to other securities owned by a
Holder) and of which shares of Series A Preferred Stock are convertible
shall be in the sole discretion of such Holder, and the submission of
shares of Series A Preferred Stock for conversion shall be deemed to be
such Holder's determination of whether such shares of Series A
Preferred Stock are convertible (in relation to other securities owned
by a Holder) and of which shares of Series A Preferred Stock are
convertible, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. Nothing contained herein
shall be deemed to restrict the right of a Holder to convert such
shares of Series A Preferred Stock at such time as such conversion will
not violate the provisions of this paragraph. The provisions of this
Section 6(a)(ii) may be waived by a Holder as to itself (and solely as
to itself) upon not less than 75 days prior notice to the Company, and
the provisions of this Section 6(a)(ii) shall continue to apply until
such 75th day (or later, if stated in the notice of waiver). No
conversion in violation of this paragraph but otherwise in accordance
with this Certificate of Designation shall affect the status of the
securities issued upon such conversion as validly issued, fully-paid
and nonassessable.
(b) (i) Not later than any Delivery Date, the Company will deliver to
the applicable Holder by express courier (A) a certificate or
certificates which shall be free of restrictive legends and trading
restrictions (other than those required by Section 3.1(b) of the
Securities Purchase Agreement) representing the number of shares of
Common Stock being acquired upon the conversion of shares of Series A
Preferred Stock (subject to reduction pursuant to Section 6(a)(ii)) and
(B) to the extent required pursuant to Section 6(b)(iv), a new
Preferred Stock Certificate representing the unconverted Aggregate
Stated Value. If in the case of any Conversion Notice such new
Preferred Stock Certificate(s) are not delivered to or as directed by
the applicable Holder by the fifth (5th) Trading Day after the
applicable Conversion Date, the Holder shall be entitled by written
notice to the Company at any time on or before its receipt of such
Preferred Stock Certificate(s) thereafter, to rescind such conversion,
whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the delivery of such notice
of revocation, except that any amounts described in Sections 6(b)(ii)
and (iii) shall be payable through the date notice of rescission is
given to the Company.
(ii) The Company understands that a delay in the delivery of
the shares of Common Stock upon conversion of shares of Series A
Preferred Stock and failure to deliver a new Preferred Stock
Certificate representing the unconverted Aggregate Stated Value beyond
the Delivery Date could result in economic loss to the Holder. If the
Company fails to deliver to the Holder such certificate or certificates
pursuant to this Section hereunder by the Delivery Date for any reason,
other than due to the action of the Holder, the Company shall pay to
such Holder, in cash, an amount per Trading Day for each Trading Day
the earlier of the date such certificates are delivered or the date the
conversion is rescinded pursuant to Section 6(b)(i) above, together
with interest on such amount at a rate of 15% per annum, accruing until
such amount and any accrued interest thereon is paid in full, equal to
(i) 1% of the Aggregate Stated Value of such shares of Series A
Preferred Stock, plus the accumulated and unpaid dividends thereon,
requested to be converted for the first five Trading Days after the
Delivery Date and (ii) 2% of the Aggregate Stated Value of such shares
of Series A Preferred Stock, plus the accumulated and unpaid dividends
thereon, requested to be converted for each Trading Day thereafter
(which amounts shall be paid as liquidated damages and not as a
penalty). If the Company fails to deliver to the Holder such
certificate or certificates pursuant to this Section prior to the 15th
Trading Day after the Conversion Date, the Company shall, at the
Holder's option, redeem in cash, from funds legally available therefor
at the time of such redemption, all or a portion of the Aggregate
Stated Value of the shares of Series A Preferred Stock then held by
such Holder, plus the accumulated and unpaid dividends thereon, as
requested by such Holder, in cash. The redemption price shall be equal
to the Aggregate Stated Value of such shares of Series A Preferred
Stock requested to be redeemed, plus accumulated and unpaid dividends
thereon, multiplied by the greater of (A) 125% or (B) the applicable
Conversion Ratio as of the date of such redemption multiplied by the
greatest Per Share Market Value on any Trading Day during the period
beginning on the Conversion Date and ending on the date of payment in
full by the Company of such redemption price. If the Holder has
requested that the Company redeem shares of Series A Preferred Stock
pursuant to this Section and the Company fails for any reason to pay
the redemption price, as calculated pursuant to the immediately
preceding sentence, within seven days after such notice is deemed
delivered pursuant to Section 6(a)(i), the Company will pay interest on
the redemption price at a rate of 15% per annum, in cash to such
Holder, accruing from such seventh day until the redemption price and
any accumulated dividends thereon is paid in full (which amount shall
be paid as liquidated damages and not as a penalty). Nothing herein
shall limit a Holder's right to pursue actual damages for the Company's
failure to deliver certificates representing shares of Common Stock
upon conversion within the period specified herein (including, without
limitation, damages relating to any purchase of shares of Common Stock
by such Holder to make delivery on a sale effected in anticipation of
receiving certificates representing shares of Common Stock upon
conversion, such damages to be in an amount equal to (A) the aggregate
amount paid by such Holder for the shares of Common Stock so purchased
minus (B) the aggregate amount of net proceeds, if any, received by
such Holder from the sale of the shares of Common Stock which would
have been issued by the Company pursuant to such conversion),
and such Holder shall have the right to pursue all remedies available
to it at law or in equity (including, without limitation, a decree of
specific performance and/or injunctive relief).
(iii) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such certificate or
certificates pursuant to Section 6(b)(i) by the Delivery Date and if
after the Delivery Date the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Underlying Shares which
the Holder anticipated receiving upon such conversion (a "Buy-In"),
then the Company shall immediately pay in cash to the Holder (in
addition to any remedies available to or elected by the Holder) the
amount by which (A) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the Aggregate Stated Value of the shares of
Series A Preferred Stock for which such conversion was not timely
honored, together with interest thereon at a rate of 15% per annum,
accruing until such amount and any accrued interest thereon is paid in
full (which amount shall be paid as liquidated damages and not as a
penalty). For example, if the Holder purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect
to an attempted conversion of $10,000 Aggregate Stated Value of shares
of Series A Preferred Stock, the Company shall be required to pay the
Holder $1,000, plus interest. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect
of the Buy-In.
(iv) Notwithstanding anything to the contrary set forth
herein, upon conversion of shares of Series A Preferred Stock in
accordance with the terms hereof, the Holder thereof shall not be
required to physically surrender the certificate representing the
shares of Series A Preferred Stock to the Company unless the entire
Aggregate Stated Value of shares of Series A Preferred Stock
represented by the certificate are being converted. The Holder and the
Company shall maintain records showing the Aggregate Stated Value of
shares of Series A Preferred Stock so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to
the Holder and the Company, so as not to require physical surrender of
the certificate representing the shares of Series A Preferred Stock
upon each such conversion. In the event of any dispute or discrepancy,
such records of the Company shall be controlling and determinative in
the absence of manifest error. Notwithstanding the foregoing, if shares
of Series A Preferred Stock represented by a certificate are converted
as aforesaid, the Holder may not transfer the certificate representing
the shares of Series A Preferred Stock unless the Holder first
physically surrenders the certificate representing the shares of Series
A Preferred Stock to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new certificate of
like tenor, registered as the Holder may request, representing in the
aggregate the remaining Aggregate Stated Value of shares of Series A
Preferred Stock represented by such certificate.
(c) (i) The conversion price for the shares of Series A Preferred Stock
(the "Conversion Price") in effect on any Conversion Date shall be the
lesser of (A) an amount equal to 110% of the average Per Share Market
Value for the five (5) consecutive Trading Days immediately preceding
the Original Issue Date (the "Fixed Conversion Price") and (B) an
amount equal to 85% of the average Per Share Market Value for the five
(5) consecutive Trading Days immediately prior to the Conversion Date;
provided, however, that, in any Conversion Notice, a Holder may specify
a Conversion Price higher than the Conversion Price then in effect;
provided further that, if during any period (a "Black-out Period"), a
Holder is unable to trade any Common Stock issued or issuable upon
conversion of shares of Series A Preferred Stock immediately due to the
postponement of filing or delay or suspension of effectiveness of a
registration statement or because the Company has otherwise informed
such Holder that an existing prospectus cannot be used at that time in
the sale or transfer of such Common Stock, such Holder shall have the
option but not the obligation on any Conversion Date within ten Trading
Days following the expiration of the Black-out Period of using the
Conversion Price applicable on such Conversion Date or any Conversion
Price selected by such Holder that would have been applicable had such
Conversion Date been at any earlier time during the Black-out Period or
within the ten Trading Days thereafter; provided further, that in no
event shall the Conversion Price be below the Floor Price. "Floor
Price" shall mean $1.00 for the period beginning on August [__], 2000
and ending on October 14, 2000, $0.64 from the period beginning on
April 14, 2000 and ending on the eighteen month anniversary of the
Initial Closing Date (as defined in the Securities Purchase Agreement),
and zero thereafter. Notwithstanding the foregoing, if the Company's
revenues for the fiscal year ending December 31, 2000, as shown in the
Company's Annual Report on Form 10-K for the fiscal year ending
December 31, 2000, are less than $13.5 million, then from and after
April 14, 2001 the Floor Price shall be zero.
(ii) If the Company, at any time while any shares of Series A
Preferred Stock are outstanding, (a) shall pay a stock dividend or
otherwise make a distribution or distributions on shares of its Common
Stock or any other equity security payable in shares of Common Stock,
(b) subdivide outstanding shares of Common Stock into a larger number
of shares, (c) combine outstanding shares of Common Stock into a
smaller number of shares, or (d) issue by reclassification of shares
of Common Stock any shares of capital stock of the Company, the Fixed
Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this
Section 6(c)(ii) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or
re-classification.
(iii) If the Company, at any time while shares of Series A
Preferred Stock are outstanding, shall sell or issue additional shares
of Common Stock or rights or warrants to acquire shares of Common
Stock at a price per share less than the Fixed Conversion Price,
excluding any rights of the holder of the Debentures, the holder of
shares of Series A Preferred Stock or the holders of the Warrants
issued pursuant to the Securities Purchase Agreement to acquire Common
Stock, the Fixed Conversion Price shall be multiplied by a fraction,
of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on the date of
issuance of such shares, rights or warrants plus the number of
additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such shares, rights or warrants plus the number of
shares which the aggregate offering price of the total number of
shares so offered would purchase at such Fixed Conversion Price. Such
adjustment shall be made whenever such shares, rights or warrants are
issued, and shall become effective immediately after the issuance of
such shares, rights or warrants or, if such rights or warrants are
issued to stockholders of the Company, the record date for the
determination of stockholders entitled to receive such rights or
warrants. However, upon the expiration of any right or warrant to
purchase Common Stock the issuance of which resulted in an adjustment
in the Fixed Conversion Price pursuant to this Section 6(c)(iii), if
any such right or warrant shall expire and shall not have been
exercised, the Fixed Conversion Price shall immediately upon such
expiration be re-computed and effective immediately upon such
expiration be increased to the price which it would have been (but
reflecting any other adjustments in the Fixed Conversion Price made
pursuant to the provisions of this Section 6 after the issuance of
such rights or warrants) had the adjustment of the Fixed Conversion
Price made upon the issuance of such rights or warrants been made on
the basis of offering for subscription or purchase only that number of
shares of Common Stock actually purchased upon the exercise of such
rights or warrants actually exercised.
(iv) If the Company, at any time while shares of Series A
Preferred Stock are outstanding, shall distribute to all holders of
Common Stock (and not to holders of shares of Series A Preferred
Stock) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to
in Sections 6(c)(ii) and (iii) above), then in each such case the
Fixed Conversion Price shall be multiplied by a fraction of which the
denominator shall be the Per Share Market Value determined as of the
record date fixed for determination of stockholders entitled to
receive such distribution, and of which the numerator shall be such
Per Share Market Value on such record date less the then fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of
Common Stock as determined by
the Board of Directors in good faith; provided, however, that in the
event of a distribution exceeding ten percent of the net assets of the
Company, such fair market value shall be determined by an Independent
Appraiser (as defined below) selected in good faith by the holders of
a majority in interest of the Aggregate Stated Value of shares of
Series A Preferred Stock plus the Aggregate Principal Amount (as
defined in the Debenture) of Debentures then outstanding; and
provided, further, that the Company, after receipt of the
determination by such Independent Appraiser, shall have the right to
select an additional Independent Appraiser, in good faith, in which
case the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser. In either case the
adjustments shall be described in a statement provided to the Holders
of the portion of assets or evidences of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made
and shall become effective immediately after the record date mentioned
above.
(v) If the Company at any time subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of
its outstanding shares of Common Stock into a greater number of
shares, the Fixed Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any
time combines (by combination, reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Fixed Conversion Price in effect
immediately prior to such combination will be proportionately
increased.
(vi) If the Company in any manner issues or sells Convertible
Securities or Options that are convertible into or exchangeable for
Common Stock at a price which varies or may vary with the market price
of the Common Stock, including by way of one or more reset(s) to a
fixed price (each of the formulations for such variable price being
herein referred to as, a "Variable Price"), and such Variable Price is
not calculated using the same formula used to calculate the Conversion
Price in effect immediately prior to the time of such issue or sale,
the Company shall provide written notice thereof via facsimile and
overnight courier to each holder of shares of Series A Preferred Stock
("Variable Notice") on the date of issuance of such Convertible
Securities or Options. If a holder of shares of Series A Preferred
Stock then outstanding provides written notice to the Company via
facsimile and overnight courier (the "Variable Price Election Notice")
within 10 Business Days of receiving a Variable Notice that such
holder desires to replace the Fixed Conversion Price then in effect
with the Variable Price described in such Variable Notice, then, from
and after the date of the Company's receipt of the Variable Price
Election Notice, the Fixed Conversion Price will automatically be
replaced with the Variable Price for the shares of Series A Preferred
Stock held by such holder. In the event that a holder of shares of
Series A Preferred Stock delivers a Conversion Notice after the
Company's issuance of Convertible Securities with a Variable Price but
before such holder's receipt of the Company's Variable Notice, then
such holder shall have the option by written notice to the Company to
rescind such Conversion Notice or to have the Conversion Price be
equal to such Variable Price for the conversion effected by such
Conversion Notice. As used herein, (A) "Convertible Securities" means
any stock or securities (other than Options) directly or indirectly
convertible into or exchangeable for Common Stock and (B) "Options"
means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.
(vii) All calculations under this Section 6 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may
be.
(viii) Whenever the Fixed Conversion Price is adjusted
pursuant to Section 6(c)(ii), (iii) (iv), (v) or (vi) (for purposes of
this Section 6(c)(viii), each an "adjustment"), the Company shall
cause its Chief Financial Officer to prepare and execute a certificate
setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on
which the Board made any determination hereunder), and the Conversion
Price after giving effect to such adjustment, and shall cause copies
of such
certificate to be delivered to each Holder promptly after each
adjustment. Any dispute between the Company and the Holders with
respect to the matters set forth in such certificate may at the option
of the Holders be submitted to one of the national accounting firms
currently known as the "big five" selected by the holders of a
majority in interest of the Aggregate Stated Value of shares of Series
A Preferred Stock plus the Aggregate Principal Amount of Debentures
then outstanding, provided that the Company shall have ten days after
receipt of notice from such Holders of their selection of such firm to
object thereto, in which case the holders of a majority in interest of
the Aggregate Stated Value of shares of Series A Preferred Stock plus
the Aggregate Principal Amount of Debentures then outstanding shall
select another such firm and the Company shall have no such right of
objection. The firm selected by the holders of a majority in interest
of the Aggregate Stated Value of shares of Series A Preferred Stock
plus the Aggregate Principal Amount of Debentures then outstanding as
provided in the preceding sentence shall be instructed to deliver a
written opinion as to such matters to the Company and the Holders
within thirty days after submission to it of such dispute. Such
opinion shall be final and binding on the parties hereto. The fees and
expenses of such accounting firm shall be paid by the Company.
(ix) In case the Company after the Original Issue Date shall
do any of the following (each, a "Major Transaction") (a) consolidate
with or merge into any other person and the Company shall not be the
continuing or surviving person of such consolidation or merger, or (b)
permit any other person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving person but, in
connection with such consolidation or merger, any capital stock of the
Company shall be changed into or exchanged for securities of any other
person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other person, or
(d) effect a capital reorganization or reclassification of its capital
stock, the holders of the shares of Series A Preferred Stock then
outstanding shall have the right thereafter to convert such shares
only into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock
following such Major Transaction, and the holders of the shares of
Series A Preferred Stock shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the
Common Stock of the Company into which such shares of Series A
Preferred Stock could have been converted immediately prior to such
Major Transaction would have been entitled; provided, however, that
each Holder shall have the option to require the Company to redeem,
from funds legally available therefor at the time of such redemption,
such Aggregate Stated Value of its shares of Series A Preferred Stock
at a price equal to the Aggregate Stated Value of shares of Series A
Preferred Stock to be redeemed, plus accumulated and unpaid dividends
thereon, multiplied by the greater of (A) 125% or (B) the applicable
Conversion Ratio as of the date of such redemption multiplied by the
greatest Per Share Market Value on any Trading Day during the period
beginning on the date of the closing or the date of the announcement,
as the case may be, of the Major Transaction triggering such
redemption right and ending on the date of payment in full by the
Company of such redemption price. The entire redemption price shall be
paid in cash. If the Holder has requested that the Company redeem
shares of Series A Preferred Stock pursuant to this Section and the
Company fails for any reason to pay the redemption price, as
calculated pursuant to the immediately preceding sentence, within five
days after such notice is deemed delivered pursuant to the preceding
sentence, the Company will pay interest on the redemption price at a
rate of 15% per annum, in cash to such Holder, accruing from such
seventh day until the redemption price and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty). The terms of any such Major Transaction
shall include such terms so as to continue to give to the holder of
shares of Series A Preferred Stock the right to receive the
securities, cash or property set forth in this Section 6(c)(ix) upon
any conversion or redemption following such Major Transaction. This
provision shall similarly apply to successive Major Transactions.
(x) If:
A. the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
B. the Company shall declare a special
nonrecurring cash dividend on or a redemption
of its Common Stock; or
C. the Company shall authorize the granting to
all holders of the Common Stock rights or
warrants to subscribe for or purchase any
shares of capital stock of any class or of
any rights; or
D. the approval of any stockholders of the
Company shall be required in connection with
any Major Transaction; or
E. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or
winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of shares of Series A Preferred Stock, and shall cause
to be mailed to the holders of shares of Series A Preferred Stock at their last
addresses as they shall appear upon the stock books of the Company, at least 30
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange;
provided, however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. Holders are entitled to convert shares
of Series A Preferred Stock during the 30-day period commencing the date of such
notice to the effective date of the event triggering such notice.
(d) If at any time conditions shall arise by reason of action taken by
the Company which in the opinion of the Board of Directors are not adequately
covered by the other provisions hereof and which might materially and adversely
affect the rights of the holders of shares of Series A Preferred Stock
(different than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock) or if at any time any such
conditions are expected to arise by reason of any action contemplated by the
Company, the Company shall mail a written notice briefly describing the action
contemplated and the material adverse effects of such action on the rights of
the holders of shares of Series A Preferred Stock at least 10 calendar days
prior to the effective date of such action, and an Independent Appraiser
selected by the holders of majority in interest of the shares of Series A
Preferred Stock plus the Aggregate Principal Amount of Debentures then
outstanding shall give its opinion as to the adjustment, if any (not
inconsistent with the standards established in this Section 6), of the
Conversion Price (including, if necessary, any adjustment as to the securities
into which shares of Series A Preferred Stock may thereafter be convertible) and
any distribution which is or would be required to preserve without diluting the
rights of the holders of shares of Series A Preferred Stock. The Board of
Directors shall make the adjustment recommended forthwith upon the receipt of
such opinion or opinions or the taking of any such action contemplated, as the
case may be; provided, however, that no such adjustment of the Conversion Price
shall be made which in the opinion of the Independent Appraiser giving the
aforesaid opinion would result in an increase of the Conversion Price to more
than the Conversion Price then in effect.
(e) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of shares of Series A Preferred Stock free from
preemptive rights or any other actual contingent purchase rights of persons
other than the holders of shares of Series A Preferred Stock, not less than 200%
of such number of shares of Common Stock as shall (subject to any additional
requirements of the Company as to reservation of such shares set forth in the
Securities Purchase Agreement) be issuable (taking into account the adjustments
of Section 6(c)) upon the conversion of all
outstanding shares of Series A Preferred Stock (without regard to any
limitations on conversions or exercise thereof). The Company covenants that all
shares of Common Stock that shall be so issuable shall, upon issue, be duly and
validly authorized, issued and fully paid, nonassessable and freely tradable.
(f) Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction
of a share based on the Per Share Market Value at such time. If the Company
elects not, or is unable, to make such a cash payment, the Holder shall be
entitled to receive, in lieu of the final fraction of a share, one whole share
of Common Stock.
(g) The issuance of certificates for shares of Common Stock on
conversion of shares of Series A Preferred Stock shall be made without charge to
the holders thereof for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificate.
(h) Shares of Series A Preferred Stock converted into Common Stock
shall be canceled and retired by the Company.
(i) Whenever notice is required to be given under this Certificate of
Designation, unless otherwise provided herein, such notice shall be given in
accordance with Section 5.3 of the Securities Purchase Agreement.
(j) In the event a Holder shall elect to convert any shares of Series A
Preferred Stock as provided herein, the Company cannot refuse conversion based
on any claim that such Holder or any one associated or affiliated with such
Holder has been engaged in any violation of law, contract, agreement or for any
other reason, unless, an injunction from a court, on notice, restraining and/or
adjoining conversion of all or of said shares of Series A Preferred Stock shall
have been issued and the Company posts a surety bond for the benefit of such
Holder in the amount equal to 130% of the Aggregate Stated Value of shares of
Series A Preferred Stock sought to be converted, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Holder in the event it obtains
judgment.
Section 7. Triggering Events.
Each of the following shall constitute a triggering event (a
"Triggering Event"), whatever the reason for such Triggering Event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any administrative, governmental or non-governmental body or otherwise
howsoever:
(a) the Company shall default in any payment of any amounts due under
the Transaction Documents when and as due (whether at maturity, upon
acceleration or otherwise); or
(b) the Company shall fail duly to perform or observe any term,
covenant or agreement contained in any of this Certificate of Designation, in
the Debentures, in the Securities Purchase Agreement or in the Registration
Rights Agreement for a period of seven days after the date on which written
notice of such failure shall first have been given to the Company; or
(c) (i) a final judgment shall be entered by any court against the
Company for the payment of money which together with all other outstanding final
judgments against the Company exceeds $150,000 in the aggregate, or (ii) a
warrant of attachment or execution or similar process shall be issued or levied
against any of the Company's property which exceeds in value $150,000 in the
aggregate, and if, within 30 days after the entry, issue or levy thereof, such
judgment, warrant or process shall not have been paid or discharged; or
(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part of
the property of it or ordering the winding-up or liquidation of the affairs of
it and such decree or order shall remain unstayed and in effect for a period of
30 days; or
(e) the Company shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial part of
its property, or shall make any general assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become due or
shall take any corporate action in furtherance of any of the foregoing; or
(f) an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding indebtedness for
borrowed money in excess of $150,000, inclusive of accrued interest, accrued
premium, if any, or any additional amounts payable, shall happen and be
continuing and such default shall involve the failure to pay the principal of
such indebtedness (or any part thereof), when due and payable after the
expiration of any applicable grace period with respect thereto, or such
indebtedness shall have been accelerated so that the same shall be or become due
and payable prior to the date on which the same would otherwise have become due
and payable, and failure to pay shall not have been cured by the Company within
30 days after such failure or such acceleration shall not be rescinded or
annulled within 30 days after notice thereof shall have first been given to the
Company; provided that if such event of default under such indenture or
instrument shall be remedied or cured by the Company or waived by the holders of
such indebtedness, then the Triggering Event hereunder by reason thereof shall
be deemed likewise to have been thereupon remedied, cured or waived without
further action upon the part of any of the holders of shares of Series A
Preferred Stock; or
(g) trading in the Common Stock shall have been suspended for more than
ten Trading Days or the Common Stock is delisted from any principal market or
exchange (including, but not limited to, the OTC Bulletin Board, The Nasdaq
SmallCap Market and the Nasdaq National Market) on which the Common Stock is
then listed for trading; or
(h) the Company fails to timely deliver the shares of Common Stock to
the Holder or a replacement Preferred Stock Certificate representing any
unconverted portion of Series A Preferred Stock pursuant to this Certificate of
Designation; or
(i) the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities (as defined in the Registration Rights
Agreement) or the initiation of any proceedings for that purpose.
With the exception of a Triggering Event specified in clauses (d) or (e) above,
upon the occurrence and continuance of a Triggering Event, the Holder may
declare the Aggregate Stated Value of and dividends accumulated on the shares of
Series A Preferred Stock and all other amounts owing under the Transaction
Documents to be forthwith due and payable by giving written notice thereof to
the Company without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, anything in the Transaction Documents
to the contrary notwithstanding. Upon the occurrence and continuance of a
Triggering Event specified in clauses (d) or (e) above, such Aggregate Stated
Value, accumulated dividends, interest and other amounts shall thereupon and
concurrently therewith become automatically due and payable all without any
action by the Holder and without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in the Transaction
Documents to the contrary notwithstanding.
Interest on overdue amounts, if any, shall accrue from the date on
which such interest (and other amounts, if any) were due and payable to the date
such interest (and other amounts, if any) are paid or duly provided for, at a
rate of 15% per annum (to the extent payment of such interest shall be legally
enforceable).
Section 8. Definitions. For the purposes hereof, the following terms
shall have the following meanings:
"Aggregate Stated Value" means, with respect to the shares of Series A
Preferred Stock, the sum of (a) the stated value thereof, plus (b) accumulated
but unpaid dividends thereon (whether or not earned or declared).
"Common Stock" means the common stock, $.001 par value per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Conversion Ratio" means the number of shares of Common Stock issuable
upon conversion of each share of Series A Preferred Stock determined by the
application of the following formula where "D" equals the accumulated and unpaid
dividends on the Aggregate Stated Value of shares of Series A Preferred Stock so
converted as of the Conversion Date:
Aggregate Stated Value to be Converted + D
------------------------------------------
Conversion Price
"Debenture" shall have the meaning ascribed to it in the Securities
Purchase Agreement.
"Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company) that is regularly engaged in the business of
appraising the capital stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Company or any
Holder.
"Junior Securities" means the Common Stock and all other equity
securities of the Company which are junior in rights and liquidation preference
to the Series A Preferred Stock.
"Maturity Date" shall mean April 14, 2005.
"Original Issue Date" shall mean the date of the first issuance of any
shares of Series A Preferred Stock regardless of the number of transfers of any
particular shares of Series A Preferred Stock and regardless of the number of
certificates which may be issued to evidence such shares of Series A Preferred
Stock.
"Per Share Market Value" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on The Nasdaq SmallCap
Market, the Nasdaq National Market, the OTC Bulletin Board or other registered
national stock exchange on which the Common Stock is then listed or if there is
no such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on The Nasdaq Small-Cap Market, the Nasdaq National
Market, the OTC Bulletin Board or any registered national stock exchange, the
closing bid price for a share of Common Stock in the over-the-counter market (as
reported by NASDAQ or in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not then publicly
traded, then the fair market value of a share of Common Stock as determined by
an Independent Appraiser selected in good faith by the holders of a majority in
interest of the shares of Series A Preferred Stock plus the Aggregate Principal
Amount of Debentures then outstanding; provided, however, that the Company,
after receipt of the determination by such Independent Appraiser, shall have the
right to select an additional Independent Appraiser, in which case, the fair
market value shall be equal to the average of the determinations by each such
Independent Appraiser; and provided, further that all determinations of the Per
Share Market Value shall be appropriately adjusted for any stock dividends,
stock splits or other similar transactions during such period. The determination
of fair market value by an Independent Appraiser shall be based upon the fair
market value of the Company determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In
determining the fair market value of any shares of Common
Stock, no consideration shall be given to any restrictions on transfer of the
Common Stock imposed by agreement or by federal or state securities laws, or to
the existence or absence of, or any limitations on, voting rights.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Original Issue Date, by and among the Company and the
original Holders.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated April 14, 2000, as amended as of August [__], 2000, among the
Company and the original holders of the Debentures.
"Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq National Market, The Nasdaq SmallCap Market or other registered
national stock exchange on which the Common Stock has been listed, or (b) if the
Common Stock is not listed on the Nasdaq National Market, The Nasdaq SmallCap
Market or any registered national stock exchange, a day or which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day
on which the Common Stock is quoted in the over-the-counter market as reported
by the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding its functions of reporting prices); provided, however, that in
the event that the Common Stock is not listed or quoted as set forth in (a), (b)
and (c) hereof, then Trading Day shall mean any day except Saturday, Sunday and
any day which shall be a legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other government
action to close.
"Underlying Shares" means the number of shares of Common Stock into
which the Debentures or the shares of Series A Preferred Stock are convertible
in accordance with the terms hereof, the Debentures and the Securities Purchase
Agreement.
Section 9. Purchase Rights. If at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights" ), then the holders of shares of
Series A Preferred Stock will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which such holder could
have acquired if such holder had held the number of shares of Common Stock
acquirable upon complete conversion of the shares of Series A Preferred Stock
(without taking into account any limitations or restrictions on the
convertibility of the shares of Series A Preferred Stock) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
Section 10. Taxes. The Company shall pay any and all taxes attributable
to the issuance and delivery of Common Stock or other securities upon conversion
of the shares of Series A Preferred Stock.
Section 11. No Impairment. The Company shall not by any action
including, without limitation, amending the articles of incorporation or the
by-laws of the Company, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Certificate of Designation, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of the Holder against
dilution (to the extent specifically provided herein) or impairment. Without
limiting the generality of the foregoing, the Company will (i) not permit the
par value, if any, of its Common Stock to exceed the then effective Conversion
Price, (ii) not amend or modify any provision of the articles of incorporation
or by-laws of the Company in any manner that would adversely affect in any way
the powers, preferences or relative participating, optional or other special
rights of the Common Stock or which
would adversely affect the rights of the Holders of the shares of Series A
Preferred Stock, (iii) take all such action as may be reasonably necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of the shares of Series A Preferred Stock, and (iv) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be reasonably necessary to
enable the Company to perform its obligations under this Certificate of
Designation.
Section 12. Countersignature and Registration. The shares of Series A
Preferred Stock shall not become valid or obligatory for any purpose until the
shares of Series A Preferred Stock shall have been duly executed by the Company
and such signature attested to by an authorized Officer thereof.
Section 13. Warranty of the Company. The Company hereby certifies and
warrants that all acts, conditions and things required to be done and performed
and to have happened (including, but not limited to, the Shareholder Approval)
precedent to the creation and issuance of this Certificate of Designation and
the Series A Preferred Stock, and to constitute the same as legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
have been done and performed and have happened in due and strict compliance with
all applicable laws.
Section 14. Descriptive Headings. The descriptive headings appearing
herein are for convenience of reference only and shall not alter, limit or
define the provisions hereof.
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IN WITNESS WHEREOF, we have subscribed this document on the date
indicated below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Dated: ______ ___, 2000
--------------------------------
Name:
Title:
--------------------------------
Name:
Title:
ATTEST:
----------------------------------
Name:
Title:
EXHIBIT 1
CONVERSION NOTICE
Reference is made to the Certificate of Designation, Powers, Preferences and
Rights of the Series of Preferred Stock of World Wide Wireless Communications,
Inc. (the "Company") to be designated 4.0% Series A Convertible Preferred Stock
(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 4% Series A Convertible Preferred Stock, par value $.01 per share
and stated value $1,000 per share (the "Preferred Shares"), of World Wide
Wireless Communications, Inc., a Nevada 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:
---------------
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:__________________________________________
Account Number (if electronic book entry transfer):_______________________
Transaction Code Number (if electronic book entry
transfer):____________________________________________________________
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated April 14, 2000
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By:______________________________________
Name:
Title:
