SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of November 2, 2011, among World Surveillance Group Inc., a Delaware corporation (the "COMPANY"), and the purchasers identified on the signature pages hereto (each a "PURCHASER" and collectively the "PURCHASERS"); and
"AFFILIATE" means, with respect to any Person, any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of Florida are authorized or required by law or other governmental action to close.
"CLOSING(S)" means each closing of the purchase and sale of Shares and Warrants pursuant to Sections 2.1 and 2.2.
"CLOSING DATE(S)" means each Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers' obligations to pay the Subscription Amount(s) and (ii) the Company's obligations to deliver the Shares and Warrants have been satisfied or waived.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, $0.00001 par value per share, and any securities into which such common stock may hereafter be reclassified.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"LIENS" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to such term in Section 3.1(b).
"PER SHARE PURCHASE PRICE" equals $0.075 subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
"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.
"PROCEEDING" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“PURCHASER” means a party that executes a signature page(s) hereto and purchases Shares and Warrants pursuant to the terms and conditions of this Securities Purchase Agreement at the Initial or Subsequent Closing(s).
"REQUIRED APPROVALS" shall have the meaning ascribed to such term in Section 3.1(e).
"RULE 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
"SEC REPORTS" shall have the meaning ascribed to such term in Section 3.1(h).
"SECURITIES" means the Shares, the Warrants and the Warrant Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock issued to each Purchaser pursuant to this Agreement.
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"SUBSCRIPTION AMOUNT(S)" means, as to each Purchaser, the amount(s) set forth below such Purchaser's signature block on the signature page(s) hereto, which amount shall be equal to the number of Shares being purchased by such Purchaser hereunder multiplied by the Per Share Purchase Price, in United States dollars and in immediately available funds.
"SUBSIDIARY" shall mean the subsidiaries of the Company, if any, set forth in the SEC Reports.
"TRADING DAY" means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by OTC Group Markets Inc. (or any similar organization or agency succeeding its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall mean a Business Day.
"TRADING MARKET" means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: The Pink Sheets, the OTC Bulletin Board, the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market.
"TRANSACTION DOCUMENTS" means this Agreement, the Warrants and any other documents or agreements executed in connection with the transactions contemplated hereunder.
"WARRANTS" means the Common Stock Purchase Warrants, in the form of Exhibit A hereto, issuable to the Purchasers at the Closing(s), which warrants shall be exercisable immediately upon issuance for a term of 36 months at a per share exercise price equal to $0.21.
"WARRANT SHARES" means the shares of Common Stock issuable upon exercise of the Warrants. The aggregate number of Warrant Shares for which a Warrant shall be issued to each Purchaser shall be equal to 100% of the number of shares of Common Stock purchased by such Purchaser on the applicable Closing Date(s).
On the terms and subject to the conditions set forth in this Agreement, on the initial Closing Date (the “Initial Closing”), each Purchaser shall purchase from the Company, severally and not jointly with the other Purchasers, and the Company shall issue and sell to each Purchaser, (a) a number of Shares equal to such Purchaser's Subscription Amount divided by the Per Share Purchase Price and (b) a Warrant for a number of Warrant Shares, each as set forth on such Purchaser’s initial signature page hereto. Upon satisfaction of the conditions set forth in Section 2.3, the Initial Closing shall occur at the offices of the Company or such other location as the parties shall mutually agree.
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Subsequent to the Initial Closing, the Purchasers may purchase additional Shares and Warrants (up to an aggregate total value of $1,000,000 when combined with the value of the Shares and Warrants in the Initial Closing) on the same terms and conditions as the Initial Closing and as set forth herein (each, a “Subsequent Closing”).
(a) As a condition to each of the Purchaser’s obligations hereunder, on each Closing Date (unless otherwise noted below), the Company shall deliver or cause to be delivered to each such Purchaser the following:
(i) this Agreement duly executed by the Company (on the date of the Initial Closing only);
(ii) a stock certificate evidencing that number of Shares equal to such Purchaser's Subscription Amount (for that number of Shares as are being purchased by such Purchaser at such Closing) divided by the Per Share Purchase Price as set forth on such Purchaser’s signature page hereto, registered in the name of such Purchaser; and
(iii) a Warrant, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire that number of Warrant Shares, as set forth on such Purchaser’s signature page hereto.
(b) As a condition to the Company’s obligations hereunder, on each Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser; and
(ii) such Purchaser's Subscription Amount (for that number of Shares as are being purchased by such Purchaser at such Closing) by wire transfer of immediately available funds to the account of the Company in accordance with the Company’s written wire transfer instructions as set forth in Schedule 1 hereto.
(c) As a condition to a party’s (the Company’s or each Purchaser’s, as the case may be) obligations hereunder, all representations and warranties of the other party (the Purchasers or the Company, as the case may be) contained herein shall be true and correct in all material respects as of each Closing Date.
(d) As a condition to a party’s (the Company’s or each Purchaser’s, as the case may be) obligations hereunder, all obligations, covenants and agreements of the other party (the Purchasers or the Company, as the case may be) required to be performed, satisfied or complied with at or prior to each Closing Date shall have been performed, satisfied or complied with as of such Closing Date.
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(e) As a condition to the respective obligations hereto of each Purchaser and the Company, any approvals or authorizations of all United States and other governmental, regulatory or judicial authorities required for the consummation of the transactions contemplated hereby shall have been obtained or made and shall be in full force and effect and all waiting periods required by United States and other applicable law shall have expired, if any, and no provision of any applicable United States or other law and no judgment, injunction, order or decree of any governmental entity shall prohibit the purchase and sale of the Securities as contemplated by this Agreement on each Closing Date.
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(p) PLACEMENT AGENT. No broker, finder or investment banker is entitled to any financial advisory, brokerage, finder’s or other fee or commission in connection with this Agreement or the Warrant or the transactions contemplated hereby or thereby based upon arrangements made by the Company, other than Basis Financial, LLC, North Miami Beach, Florida (“Basis”). Basis and the Company have entered into an Investment Banking Agreement dated October 27, 2011 (the “Basis Agreement”), whereby, for a term of three months, which term may be extended by the Company for an additional three months, Basis has agreed to provide the Company certain financial advisory services and to assist in this or other securities offerings. Basis is serving as the placement agent in connection with the offer and sale of the Securities (the “Placement Agent”). For its services, Basis is entitled to receive a ten (10) percent cash and a five (5) percent stock commission from the Company, which shares shall be restricted pursuant to Rule 144 promulgated pursuant to the Securities Act, and valued at $0.075 per share, on all principal money raised on behalf of the Company for which closings have occurred pursuant solely to performance by Basis of the Services in accordance with the terms of the Basis Agreement.
The Purchasers each acknowledge and agree that the Company does not make and has not made any representations and warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.1.
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(b) INVESTMENT INTENT. Such Purchaser understands that the Securities are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and may not be offered for sale, sold, assigned or transferred unless (i) subsequently registered under the Securities Act, or (ii) such Purchaser shall have delivered to the Company an opinion of counsel in a form acceptable to the Company to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (iii) such Purchaser provides the Company with assurances and proper documentation including an opinion of counsel that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto). Such Purchaser is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof, has no present intention of distributing any of such Securities and has no arrangement or understanding with any other Persons regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser's right to sell the Securities in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities (this representation and warranty not limiting such Purchaser's right to sell the Securities in compliance with applicable federal and state securities laws). Such Purchaser understands that any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC promulgated thereunder. Such Purchaser further understands that neither the Company nor any other Person is under any obligation whatsoever to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.
(d) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
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(f) RELIANCE ON EXEMPTIONS. Such Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the United States federal and state securities laws and that the Company is relying on the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Securities.
(h) NO GOVERNMENTAL REVIEW. Such Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
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The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2.
(a) The Purchasers hereby agree that the Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser, the Company shall require the transferor thereof to provide to the Company an opinion of counsel, the form and substance of which opinion shall be satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.
(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of a legend on any of the Securities in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE TRANSFERRED, OFFERED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE ACCEPTABLE TO THE COMPANY.
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In addition, the Purchasers agree that all certificates or other instruments representing the Warrant will also bear a legend substantially to the following effect:
THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE PURCHASER REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.
(c) Certificates evidencing the Shares and Warrant Shares shall not be required to contain any legend (including the legend set forth in Section 4.1(b)), (i) while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), or (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144 (provided that a Purchaser provides the Company with reasonable assurances and proper documentation including an opinion of counsel that such Securities are eligible for sale, assignment or transfer under Rule 144), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant Shares, such Warrant Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), it will, following the delivery by a Purchaser to the Company or the Company's transfer agent of a certificate representing Shares or Warrant Shares, as the case may be, issued with a restrictive legend (such date, the "LEGEND REMOVAL DATE") (endorsed or with stock powers attached, signature guaranteed, and otherwise in a form necessary to affect the reissuance and/or transfer, if applicable) and proper documentation, including an opinion of counsel when required, related thereto, deliver or cause to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.
(d) Each Purchaser, severally and not jointly with the other Purchasers, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company's reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that such legends will be removed only with proper documentation, including an opinion of counsel when required, provided to the Company or its transfer agent.
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5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
5.8 GOVERNING LAW. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in Brevard County, Florida. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Brevard County, Florida, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by delivering a copy thereof via overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement, any of the Transaction Documents or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
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(SIGNATURE PAGES FOLLOW)
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
By:
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/s/ Xxxxx Xxxxxxxx
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Name:
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Xxxxx Xxxxxxxx
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Title:
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President and Chief Executive Officer
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Address for Notice:
Personal or Courier Delivery:
Xxxxx Xxxx 000, Xxxxxxxx X0-000X, Xxxx 0000
Xxxxxxx Xxxxx Xxxxxx, XX 00000
Attn: General Counsel
Mail Delivery:
Mail Code : SWC
Xxxxxxx Xxxxx Xxxxxx, XX 00000
Attn: General Counsel
Fax: 000-000-0000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
PURCHASER NAME:
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By:
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/s/ Xxxxxxx X. Xxxxx
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Name:
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Xxxxxxx X. Xxxxx
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Title:
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ADDRESS FOR NOTICE
000 Xxxxx 000 Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax:
Subscription Amount:
$ 99,999.98
Shares: 1,333,333
Warrant Shares: @ $0.21 = 1,333,333
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IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
PURCHASER NAME:
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By:
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/s/ Xxxxx X. Xxxxxxxx
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Name:
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Xxxxx X. Xxxxxxxx
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Title:
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ADDRESS FOR NOTICE
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Fax:
Subscription Amount:
$ 9,999.98
Shares: 133,333
Warrant Shares: @ $0.21 = 133,333
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IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
PURCHASER NAME:
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By:
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Name:
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Title:
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ADDRESS FOR NOTICE
Attn:
Fax:
Subscription Amount:
$ _______________
Shares: ______________
Warrant Shares: @ $0.21 = ______________
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SCHEDULE 1
Wire Transfer Instructions of Company
Xxxxx Xxxx 000, Xxxxxxxx X0-000X, Xxxx 0000
Xxxxxxx Xxxxx Xxxxxx, XX 00000
Bank FIRST
0000 X. Xxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
ABA: 000000000
ACCT # 100054410
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