Exhibit 4.28
PRIVATE EQUITY LINE OF CREDIT AGREEMENT
BETWEEN
AJW PARTNERS, LLC, AJW QUALIFIED PARTNERS, LLC,
AJW OFFSHORE, LTD, NEW MILLENNIUM CAPITAL PARTNERS II, LLC,
EQUILIBRIUM EQUITY, LLC
AND
CENTRAL WIRELESS, INC.
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DATED AS OF OCTOBER __, 2003
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This PRIVATE EQUITY LINE OF CREDIT AGREEMENT is entered into as of the ___
day of October, 2003 (this "Agreement"), by and between AJW Partners, LLC, AJW
Qualified Partners, LLC, AJW Offshore, Ltd., New Millennium Capital Partners II,
LLC, Equilibrium Equity, LLC ("Investor"), and Central Wireless, Inc., a
corporation organized and existing under the laws of the State of Utah (the
"Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to each Investor,
from time to time as provided herein, and each Investor shall purchase his
Proportionate Share of up to $5,000,000 of the Common Stock (as defined below).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 "Average Daily Price" shall be the price based on the VWAP.
Section 1.2 "Bid Price" shall mean the closing bid price (as reported by
Bloomberg, L.P.) of the Common Stock on the Principal Market.
Section 1.3 "Capital Shares" shall mean the Common Stock and any shares of
any other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
Section 1.4 "Closing" shall mean one of the closings of a purchase and
sale of the Common Stock pursuant to Section 2.1.
Section 1.5 "Closing Date" shall mean, with respect to a Closing the first
business day following the Optional Purchase Date related to such Closing with
respect to the five Trading Days of the Valuation Period, provided all
conditions to such Closing have been satisfied on or before such Trading Days.
Section 1.6 "Commitment Amount" shall mean the $5,000,000 up to which the
Investor have agreed to provide to the Company in order to purchase Put Shares
pursuant to the terms and conditions of this Agreement.
Section 1.7 "Commitment Period" shall mean the period commencing on the
earlier to occur of (i) the Effective Date or (ii) such earlier date as the
Company and the Investor may mutually agree in writing, and expiring on the
earliest to occur of (x) the date on which the Investor shall have purchased Put
Shares pursuant to this Agreement for an aggregate Purchase Price of $5,000,000,
(y) the date this Agreement is terminated pursuant to Section 2.5, or (z) the
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date occurring thirty-six (36) months from the date of commencement of the
Commitment Period.
Section 1.8 "Common Stock" shall mean the Company's common stock, $.001
par value per share.
Section 1.9 "Common Stock Equivalents" shall mean any securities that are
convertible into or exchangeable for Common Stock or any Commitment Stocks,
options or other rights to subscribe for or purchase Common Stock or any such
convertible or exchangeable securities.
Section 1.10 "Condition Satisfaction Date" See Section 7.2.
Section 1.11 "Damages" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and costs and expenses of expert witnesses and investigation).
Section 1.12 "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering resale of the
Registrable Securities as set forth in Section 7.2(a).
Section 1.13 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and the regulations promulgated thereunder.
Section 1.14 "Finder's Fee" See Section 13.4.
Section 1.15 [Intentionally omitted.]
Section 1.16 [Intentionally omitted.]
Section 1.17 "Investment Amount" shall mean the dollar amount (within the
range specified in Section 2.2) to be invested by the Investor to purchase Put
Shares with respect to any Optional Purchase Notice as notified by the Company
to the Investor in accordance with Section 2.2 hereof.
Section 1.18 "Legend" See Section 9.1.
Section 1.19 "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform its obligations under any of (a) this Agreement and (b)
the Registration Rights Agreement in any material respect.
Section 1.20 "Maximum Put Amount" shall mean the lower of (i) twenty
percent (20%) of the sum of the Average Daily Price for the five Trading Days
immediately following the
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Optional Purchase Date multiplied by the reported daily trading volume of the
Common Stock on the Principal Market for the same five Trading Days immediately
following the Optional Purchase Date, or (ii) the amount specified in Section
7.2(j).
Section 1.21 [Intentionally omitted.]
Section 1.22 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.23 "Optional Purchase Date" shall mean the Trading Day during
the Commitment Period that an Optional Purchase Notice to sell Common Stock to
the Investor is deemed delivered pursuant to Section 2.2(b) hereof.
Section 1.24 "Optional Purchase Notice" shall mean a written notice to the
Investor setting forth the Investment Amount that the Company intends to sell to
the Investor.
Section 1.25 "Outstanding" when used with reference to Common Shares or
Capital Shares (collectively the "Shares"), shall mean, at any date as of which
the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.26 "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.27 "Principal Market" shall mean the Nasdaq National Market, the
Nasdaq Small-Cap Market, the OTC Bulletin Board, the American Stock Exchange or
the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock. As of the date of this Agreement, the
Nasdaq SmallCap Market is the Principal Market.
Section 1.28 "Proportionate Share" shall mean the proportion of the
Commitment Amount agreed to be purchased by the Investor as set forth on
Schedule A.
Section 1.29 "Purchase Price" as used in this Agreement shall mean the
following: For each Trading Day during a Valuation Period (or such other date on
which the Purchase Price is calculated in accordance with the terms and
conditions of this Agreement) the Purchase Price shall be 87% of the average of
the three (3) intra-Trading Day prices.
Section 1.30 "Put" shall mean each occasion the Company elects to exercise
its right to tender an Optional Purchase Notice requiring the Investor to
purchase a discretionary amount as determined by the Company of the Company's
Common Stock, subject to the terms of this Agreement, which tender must be given
to each Investor for such Investor's Proportionate Share.
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Section 1.31 "Put Shares" shall mean all shares of Common Stock issued or
issuable pursuant to a Put that has occurred or may occur in accordance with the
terms and conditions of this Agreement.
Section 1.32 "Registrable Securities" shall mean the Put Shares and
Commitment Stock Shares until the Registration Statement has been declared
effective by the SEC and all Put Shares and Commitment Stock Shares have been
disposed of pursuant to the Registration Statement.
Section 1.33 "Registration Rights Agreement" shall mean the agreement
regarding the filing of the Registration Statement for the resale of the
Registrable Securities, entered into between the Company and the Investor as of
the Subscription Date.
Section 1.34 "Registration Statement" shall mean a registration statement
on Form S-1 or Form SB-2 (if use of such forms are then available to the Company
pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies and which form shall be available
for the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
Section 1.35 "Regulation D" shall mean Regulation D of the Securities Act.
Section 1.36 "SEC" shall mean the Securities and Exchange Commission.
Section 1.37 "Section 4(2)" shall mean Section 4(2) of the Securities Act.
Section 1.38 "Securities Act" shall mean the United States Securities Act
of 1933, as amended, and the regulations promulgated thereunder.
Section 1.39 "SEC Documents" shall mean the Company's latest Form 10-K as
of the time in question, all Forms 10-Q and 8-K filed thereafter, and the Proxy
Statement for its latest fiscal year as of the time in question until such time
the Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.
Section 1.40 "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.
Section 1.41 "Trading Cushion" shall mean, at any time, the mandatory ten
(10) Trading Days after the most recent Closing Date.
Section 1.42 "Trading Day" shall mean any day during which the New York
Stock Exchange shall be open for business.
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Section 1.43 "Valuation Event" shall mean an event in which the Company at
any time during a Valuation Period takes any of the following actions:
(a) subdivides or combines its Common Stock;
(b) pays a dividend in its Capital Stock or makes any other distribution
of its Capital Shares;
(c) issues any additional Capital Shares ("Additional Capital Shares"),
otherwise than as provided in the foregoing Subsections (a) and (b) above, at a
price per share less, or for other consideration lower, than the Bid Price in
effect on the Trading Day immediately prior to such issuance, or without
consideration;
(d) issues any Commitment Stocks, options or other rights to subscribe for
or purchase any Additional Capital Shares and the price per share for which
Additional Capital Shares may at any time thereafter be issuable pursuant to
such Commitment Stocks, options or other rights shall be less than the Bid Price
in effect immediately prior to such issuance;
(e) issues any securities convertible into or exchangeable for Capital
Shares and the consideration per share for which Additional Capital Shares may
at any time thereafter be issuable pursuant to the terms of such convertible or
exchangeable securities shall be less than the Bid Price in effect immediately
prior to such issuance;
(f) makes a distribution of its assets or evidences of indebtedness to the
holders of its Capital Shares as a dividend in liquidation or by way of return
of capital or other than as a dividend payable out of earnings or surplus
legally available for dividends under applicable law or any distribution to such
holders made in respect of the sale of all or substantially all of the Company's
assets (other than under the circumstances provided for in the foregoing
subsections (a) through (e); or
(g) takes any action affecting the number of Outstanding Capital Shares,
other than an action described in any of the foregoing Subsections (a) through
(f) hereof, inclusive, which in the opinion of the Company's Board of Directors,
determined in good faith, would have a materially adverse effect upon the rights
of the Investor at the time of a Put or Closing Date.
Upon each occurrence of any one or more of the foregoing Valuation Events,
the Purchase Price and number of Put Shares to be issued shall be adjusted to
offset the dilutive effect of such one or more Valuation Events.
Section 1.44 "Valuation Period" shall mean the period of five (5) Trading
Days during which the Purchase Price of the Common Stock is determined, which
period shall be with respect to the Purchase Prices on any Optional Purchase
Date, the five (5) Trading Days following the day on which an Optional Purchase
Notice is deemed to be delivered.
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Section 1.45 "VWAP" shall mean the daily volume weighted average price of
the Common Stock on the Principal Market as reported by Bloomberg, L.P. using
the VWAP function.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1 Puts. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article III hereof), on any
Optional Purchase Date the Company may exercise a Put by the delivery of an
Optional Purchase Notice. The number of Put Shares that the Investor shall
receive pursuant to such Put shall be determined by dividing the relevant
portions of the Investment Amount specified in the Optional Purchase Notice by
the corresponding Purchase Prices for each Trading Day during the Valuation
Period.
Section 2.2 Mechanics.
(a) Optional Purchase Notice. At any time during the Commitment Period,
the Company may deliver an Optional Purchase Notice to the Investor, subject to
the conditions set forth in Section 7.2; provided, however, the Investment
Amount for each Put as designated by the Company in the applicable Optional
Purchase Notices shall not be more than the Maximum Put Amount. The Optional
Purchase Notice shall state the commencement date of the Valuation Period which
may not be prior to the delivery of the Optional Purchase Notice. The Optional
Purchase Notice must also state (i) the maximum amount of Common Stock that may
be issued pursuant to Section 1.20, (ii) support for the calculation thereof,
(iii) the amount of Common Stock outstanding on the Optional Purchase Date, and
(iv) the number of shares of Common Stock available for resale by the Investor
pursuant to the Registration Statement.
(b) Date of Delivery of Optional Purchase Notice. An Optional Purchase
Notice shall be deemed delivered on (i) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is received prior to 12:00
noon New York time, or (ii) the immediately succeeding Trading Day if it is
received by facsimile or otherwise after 12:00 noon New York time on a Trading
Day or at any time on a day which is not a Trading Day. No Optional Purchase
Notice may be deemed delivered on a day that is not a Trading Day.
(c) Intentionally Omitted.
(d) Maximum Optional Purchase Notices/Amount. The Company has no
obligation to make any puts under the agreement but if they choose to do so then
there shall be a minimum of ten (10) Trading Days between each Optional Purchase
Notice given during the term of this Agreement. Subject to the terms and
conditions of this Agreement, the Company shall have the right to issue each
Optional Purchase Notice for an Investment Amount up to the Maximum Put Amount.
The Company may not issue an Optional Purchase Notice in connection with any
amount of shares which would exceed the amount permitted to be issued without
approval of the
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Company's shareholders, if such approval is required pursuant to the rules of
the Principal Market.
(e) Trading Halt Limitations and Blackouts. The Investor is not required
to purchase Put Shares for any Trading Day during which trading of the Common
Stock is suspended or halted for three or more hours or for any day during which
any of the events described in Section 6.8 has occurred or is continuing. In
such case, one-fifth (1/5th) of the Investment Amount shall be withdrawn from
the Investment Amount for each such Trading Day.
Section 2.3 Closings. On each Closing Date for a Put the Company shall
deliver to the Investor or to escrow one or more certificates, at the Investor's
option, representing the Put Shares to be purchased by the Investor pursuant to
Section 2.1 herein, after the Optional Purchase Date and on or prior to such
Closing Date, registered in the name of the Investor or, at the Investor's
option, deposit such certificate(s) into such account or accounts belonging to
the Investor designated by the Investor. If the Company is qualified to do so,
delivery of Put Shares shall, at the Investor's election, be made by electronic
transfer. The Investor shall deliver to escrow the Investment Amount specified
in the Optional Purchase Notice by wire transfer of immediately available funds
to an account designated by the Company on or before the Closing Date. In
addition, on or prior to the Closing Date, each of the Company and the Investor
shall deliver all documents, instruments and writings required to be delivered
or reasonably requested by either of them pursuant to this Agreement in order to
implement and effect the transactions contemplated herein. Payment of funds to
the Company and delivery of the certificates to the Investor shall occur out of
escrow in accordance with the escrow agreement referred to in Section 7.2(o)
following (x) the Company's deposit into escrow of the certificates representing
the Put Shares and (y) the Investor's deposit into escrow of the Investment
Amount; provided, however, that to the extent the Company has not paid the fees,
expenses and disbursements of the Investor's counsel in accordance with Section
13.1, the amount of such fees, expenses and disbursements shall be paid in
immediately available funds drawn out of the deposited funds, at the direction
of the Investor, to Investor's counsel with no reduction in the number of Put
Shares issuable to the Investor on such Closing Date.
Section 2.4 Liquidated Damages. In the event the Company issues an
Optional Purchase Notice but fails or refuses to deliver Put Shares on a Closing
Date, the Company will pay the Investor, as liquidated damages for such failure
to deliver, and not as a penalty, five percent (5%) of the applicable Investment
Amount for each seven (7) day period, or part thereof following such failure, in
cash, until such Put Shares have been delivered. The Escrow Agent shall be
directed to pay such liquidated damages to the Investor out of the Investment
Amount delivered by the Investor to the Escrow Agent.
Section 2.5 Termination of Investment Obligation. The obligation of the
Investor to purchase shares of Common Stock, unless waived by Investor, shall
terminate permanently (including with respect to a Closing Date that has not yet
occurred) in the event that (i) there shall occur any stop trade order by the
SEC or Principal Market or suspension by the SEC of the effectiveness of the
Registration Statement for a consecutive five day calendar period or for an
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aggregate of twenty (20) Trading Days during the Commitment Period, for any
reason, or (ii) the Company shall at any time fail to comply with the
requirements of Article VI hereof, without regard to any cure period or written
notice to cure which may be permitted or required.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Each Investor represents and warrants to the Company that:
Section 3.1 Intent. The Investor is entering into this Agreement for its
own account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Common Stock to or through any person or
entity; provided, however, that by making the representations herein, the
Investor does not agree to hold the Common Stock for any minimum or other
specific term and reserves the right to dispose of the Common Stock at any time
in accordance with federal and state securities laws applicable to such
disposition.
Section 3.2 Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) or an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in Common Stock. The Investor acknowledges
that an investment in the Common Stock is speculative and involves a high degree
of risk.
Section 3.3 Authority. This Agreement has been duly authorized and validly
executed and delivered by the Investor and is a valid and binding agreement of
the Investor enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Section 3.4 Not an Affiliate. The Investor is not an officer, director or
to Investor's good faith belief, an "affiliate" (as that term is defined in Rule
405 of the Securities Act) of the Company.
Section 3.5 Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument executed in connection herewith,
and the consummation of the transactions contemplated thereby, and compliance
with the requirements thereof, will not violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Investor, or, to
the Investor's knowledge, (a) violate any provision of any indenture, instrument
or agreement to which Investor is a party or is subject, or by which Investor or
any of its assets is bound, (b) conflict with or constitute a material default
thereunder, (c) result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute a breach of
any fiduciary duty owed by Investor to any third party, or (d) require the
approval of any third-party (which has not been obtained) pursuant to any
material contract,
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agreement, instrument, relationship or legal obligation to which Investor is
subject or to which any of its assets, operations or management may be subject.
Section 3.6 Disclosure; Access to Information. Investor has received all
documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by Investor. The Company is
subject to the periodic reporting requirements of the Exchange Act, and Investor
has had access to copies of any such reports that have been requested by it.
Section 3.7 Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
Section 4.1 Organization of the Company. The Company is a corporation duly
organized and existing in good standing under the laws of the State of Utah and
has all requisite corporate authority to own its properties and to carry on its
business as now being conducted. Except as set forth in the SEC Documents, the
Company does not have any subsidiaries. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect.
Section 4.2 Authority. (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement and
the Registration Rights Agreement and to issue the Put Shares; (ii) the
execution, issuance and delivery of this Agreement and the Registration Rights
Agreement and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required; and (iii) this Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Company and constitute
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Section 4.3 Capitalization. The authorized and outstanding capital stock
of the Company as of the Subscription Date is set forth on Schedule 4.3 hereto.
Except as set forth in the SEC Documents or Schedule 4.3, as of the Subscription
Date, there are no options, warrants or rights to subscribe for securities,
rights or obligations convertible into or exchangeable for, or
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giving any rights to receive any Capital Shares. All of the outstanding shares
of Common Stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable.
Section 4.4 Common Stock. As of the commencement of and throughout the
Commitment Period, the Company will have registered its Common Stock pursuant to
Section 12(b) or 12(g) of the Exchange Act and be in full compliance with all
reporting requirements of the Exchange Act, and the Company will have maintained
all requirements for the continued listing or quotation of its Common Stock, and
such Common Stock is then listed or quoted on the Principal Market.
Section 4.5 SEC Documents. The Company has delivered or made available to
the Investor true and complete copies of the SEC Documents (including, without
limitation, proxy information and solicitation materials). The Company has not
provided to the Investor any information that, according to applicable law, rule
or regulation, should have been disclosed publicly prior to the date hereof by
the Company, but which has not been so disclosed. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company described above
and/or included in the SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
Section 4.6 Valid Issuances. If made in accordance with this Agreement,
the sale by the Company of the Put Shares and Commitment Stock will be properly
accomplished pursuant to Section 4(2), Regulation D and/or any applicable state
law. The sale by the Company of the Commitment Stock Shares, if made in
accordance with the terms of the Commitment Stock, will be properly accomplished
pursuant to Section 4(2), Regulation D and any applicable state law. When
issued, the Put Shares shall be duly and validly issued, fully paid, and
nonassessable. Neither the sales of the Put Shares and Commitment Stock Shares
pursuant to, nor the Company's performance of its obligations under, this
Agreement or the Registration Rights Agreement will (i) result in the creation
or imposition of any liens, charges, claims or other encumbrances upon the Put
Shares or any of the assets of the Company, or (ii) entitle the holders
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of Outstanding Capital Shares to preemptive or other rights to subscribe to or
acquire the Capital Shares or other securities of the Company. The Put Shares
and Commitment Stock Shares shall not subject the Investor or holder to personal
liability by reason of the possession thereof.
Section 4.7 No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf, if any, (i) has conducted or will
conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to any of the Put Shares or
Commitment Stock Shares, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the sale of the Put Shares or the Commitment Stock
Shares under the Securities Act.
Section 4.8 Corporate Documents. The Company has furnished or made
available to the Investor true and correct copies of the Company's Articles of
Incorporation, as amended and in effect on the date hereof (the "Certificate"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 4.9 No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including, without limitation, the issuance of Common
Stock, Commitment Stock and Commitment Stock Shares do not and will not (i)
result in a violation of the Company's Articles of Incorporation or By-Laws or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect) nor is
the Company otherwise in violation of, conflict with or in default under any of
the foregoing; provided that, for purposes of the Company's representations and
Commitment Stockies as to violations of foreign law, rule or regulation
referenced in clause (iv), such representations and Commitment Stockies are made
only to the best of the Company's knowledge insofar as the execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby are or may be affected by the
status of the Investor under or pursuant to any such foreign law, rule or
regulation. The business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Common Stock in accordance with the terms hereof
other than any SEC,
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NASD, Principal Market or state securities filings that may be required to be
made by the Company subsequent to any Closing, any registration statement that
may be filed pursuant hereto, and any shareholder approval required by the rules
applicable to companies whose common stock trades on the Principal Market.
Section 4.10 No Material Adverse Change. Since the date of the most recent
financial statements included in the SEC Documents, no Material Adverse Effect
has occurred or exists with respect to the Company, except as disclosed in the
SEC Documents.
Section 4.11 No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, and are not
disclosed in the SEC Documents or otherwise publicly announced, other than those
incurred in the ordinary course of the Company's businesses since the date of
the most recent financial statements included in the SEC Documents and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company.
Section 4.12 No Undisclosed Events or Circumstances. Since the date of the
most recent financial statements included in the SEC Documents, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
Section 4.13 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement, under circumstances
that would require registration of the Common Stock under the Securities Act.
Section 4.14 Litigation and Other Proceedings. Except as may be set forth
in the SEC Documents, there are no lawsuits or proceedings pending or to the
best knowledge of the current management and Board of Directors of the Company
threatened, against the Company, nor has the Company received any written or
oral notice of any such action, suit, proceeding or investigation, which might
have a Material Adverse Effect. Except as set forth in the SEC Documents, no
judgment, order, writ, injunction or decree or award has been issued by or, so
far as is known by the Company, requested of any court, arbitrator or
governmental agency which might result in a Material Adverse Effect.
Section 4.15 No Misleading or Untrue Communication. The Company and any
Person representing the Company, in connection with the transactions
contemplated by this Agreement, have not made, at any time, any oral or written
communication in connection with same, which contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
13
Section 4.16 Material Non-Public Information. The Company is not in
possession of, nor has the Company or its agents disclosed to the Investor, any
material non-public information that (i) if disclosed, would, or could
reasonably be expected to have, an effect on the price of the Common Stock or
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1 Compliance with Law. The Investor's trading activities with
respect to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all respects with the terms thereof.
Section 6.2 Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligation to issue the Put
Shares; such amount of shares of Common Stock to be reserved shall be calculated
based upon the minimum Purchase Price therefor under the terms of this
Agreement.
Section 6.3 Listing of Common Stock. The Company shall maintain the
listing of the Common Stock on a Principal Market, and as soon as practicable
(but in any event prior to the commencement of the Commitment Period) to list
the Put Shares and Commitment Stock Shares on the Principal Market. The Company
further shall, if the Company applies to have the Common Stock traded on any
other Principal Market, include in such application the Put Shares, and shall
take such other action as is necessary or desirable in the opinion of the
Investor to cause the Common Stock to be listed on such other Principal Market
as promptly as possible. The Company shall take all action necessary to continue
the listing and trading of its Common Stock on a Principal Market (including,
without limitation, maintaining sufficient net tangible assets) and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of such Principal Market.
Section 6.4 Exchange Act Registration. The Company shall cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange
Act, will comply in all respects with its reporting and filing obligations under
said Act, and will not take any action or file any document (whether or not
permitted by said Act or the rules thereunder) to terminate or suspend such
registration or to terminate or
14
suspend its reporting and filing obligations under said Act. The Company will
take all action to continue the listing and trading of its Common Stock on the
Principal Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market.
Section 6.5 Legends. The certificates evidencing the Common Stock to be
sold by the Investor pursuant to Section 9.1 shall be free of legends.
Section 6.6 Corporate Existence. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company.
Section 6.7 Additional SEC Documents. The Company will deliver to the
Investor, as and when the originals thereof are submitted to the SEC for filing,
copies of all SEC Documents so furnished or submitted to the SEC.
Section 6.8 Blackout Period. Subject to the requirements of Regulation FD
under the Exchange Act, the Company will immediately notify the Investor upon
the occurrence of any of the following events in respect of a Registration
Statement or related prospectus in respect of an offering of Registrable
Securities; (i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to the
Registration Statement or related prospectus; (ii) the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Optional Purchase Notice during
the continuation of any of the foregoing events.
Section 6.9 Expectations Regarding Optional Purchase Notices. Within ten
(10) days after the commencement of each calendar quarter occurring subsequent
to the commencement of the Commitment Period, the Company undertakes to notify
the Investor as to its reasonable
15
expectations as to the dollar amount it intends to raise during such calendar
quarter, if any, through the issuance of Optional Purchase Notices. Such
notification shall constitute only the Company's good faith estimate and shall
in no way obligate the Company to raise such amount, or any amount, or otherwise
limit its ability to deliver Optional Purchase Notices. The failure by the
Company to comply with this provision can be cured by the Company's notifying
the Investor at any time as to its reasonable expectations with respect to the
current calendar quarter.
Section 6.10 Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Investor such shares of stock and/or securities as
the Investor is entitled to receive pursuant to this Agreement.
Section 6.11 Issuance of Put Shares. The sale and issuance of the Put
Shares and Commitment Stock Shares shall be made in accordance with the
provisions and requirements of applicable state law.
Section 6.12 Use of Proceeds. In the event the Company has outstanding
convertible debentures with the investors in this Agreement, the Company shall
use sixty percent (60%) of the Investment Amount to redeem the outstanding
convertible debentures at a redemption price of 130% of the principal and
interest ("Redemption Amount"). In the event the Company has more than one
convertible debenture outstanding, the Redemption Amount shall be applied to the
last convertible debenture that the Company issued until its redeemed and then
to each prior to last issuance, until all of the convertible debentures are
redeemed.
ARTICLE VII
CONDITIONS TO DELIVERY OF OPTIONAL
PURCHASE NOTICES AND CONDITIONS TO CLOSING
Section 7.1 Conditions Precedent to the Obligation of the Company to Issue
and Sell Common Stock. The obligation hereunder of the Company to issue and sell
the Put Shares to the Investor incident to each Closing is subject to the
satisfaction, at or before each such Closing, of each of the conditions set
forth below.
(a) Accuracy of the Investor's Representation and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date of this Agreement and as of the date of each
such Closing as though made at each such time.
(b) Performance by the Investor. The Investor shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Closing.
16
Section 7.2 Conditions Precedent to the Right of the Company to Deliver an
Optional Purchase Notice and the Obligation of the Investor to Purchase Put
Shares. The right of the Company to deliver an Optional Purchase Notice and the
obligation of the Investor hereunder to acquire and pay for the Put Shares
incident to a Closing is subject to the satisfaction, on (i) the date of
delivery of such Optional Purchase Notice, (ii) for each day during the
Valuation Period; and (iii) the applicable Closing Date (each a "Condition
Satisfaction Date"), of each of the following conditions:
(a) Registration of the Common Stock with the SEC. As set forth in the
Registration Rights Agreement, the Company shall have filed with the SEC a
Registration Statement with respect to the resale of the Registrable Securities
that shall have been declared effective by the SEC prior to the first Optional
Purchase Date, but in no event later than the date set forth in the Registration
Rights Agreement and shall have filed a prospectus supplement on the first
trading day after each Closing Date.
(b) Effective Registration Statement. As set forth in the Registration
Rights Agreement, the Registration Statement shall have previously become
effective and shall remain effective on each Condition Satisfaction Date and (i)
neither the Company nor the Investor shall have received notice that the SEC has
issued or intends to issue a stop order with respect to the Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of the Registration Statement, either temporarily or permanently, or intends or
has threatened to do so, and (ii) no other suspension of the use or withdrawal
of the effectiveness of the Registration Statement or related prospectus shall
exist.
(c) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of each Condition Satisfaction Date as though made at each
such time (except for representations and warranties specifically made as of a
particular date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including each Condition Satisfaction
Date, except for any conditions which have temporarily caused any
representations or warranties herein to be incorrect and which have been
corrected with no continuing impairment to the Company or the Investor.
(d) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Registration Rights Agreement
to be performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
or directly and adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced that may have the effect
of prohibiting or adversely affecting any of the transactions contemplated by
this Agreement.
17
(f) Adverse Changes. Since the date of filing of the Company's most recent
SEC Document, no event that had or is reasonably likely to have a Material
Adverse Effect has occurred.
(g) No Suspension of Trading In or Delisting of Common Stock. The trading
of the Common Stock (including without limitation the Put Shares) shall not have
been suspended by the SEC, the Principal Market or the NASD and the Common Stock
(including without limitation the Put Shares) shall have been approved for
listing or quotation on and shall not have been delisted from the Principal
Market. The issuance of shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder approval requirements of the
Principal Market.
(h) Legal Opinions. The Company shall have caused to be delivered to the
Investor, within five (5) Trading Days of the effective date of the Registration
Statement, an opinion of the Company's independent counsel in the form of
Exhibit B hereto, addressed to the Investor; provided, however, that in the
event that such an opinion cannot be delivered by the Company's independent
counsel to the Investor, the Company shall promptly revise the Registration
Statement and shall not deliver an Optional Purchase Notice. If an Optional
Purchase Notice shall have been delivered in good faith without knowledge by the
Company that an opinion of independent counsel can not be delivered as required,
at the option of the Investor, either the applicable Closing Date shall
automatically be postponed for a period of up to five (5) Trading Days until
such an opinion is delivered to the Investor, or such Closing shall otherwise be
canceled. Liquidated damages determined pursuant to Section 2.4 shall be
calculated and payable on the Closing Date. The Company's independent counsel
shall also deliver to the Investor upon execution of this Agreement an opinion
in the form of Exhibit A to the Investor, addressing, among other things, the
Initial Drawdown, corporate matters and the exemption from registration under
the Securities Act of the issuance of the Registrable Securities by the Company
to the Investor under this Agreement.
(i) Due Diligence. No dispute between the Company and the Investor shall
exist pursuant to Section 8.2(c) as to the adequacy of the disclosure contained
in the Registration Statement.
(j) Beneficial Ownership Limitation. On each Closing Date, the number of
Put Shares then to be purchased by the Investor shall not exceed the number of
such shares that, when aggregated with all other shares of Common Stock then
owned by the Investor beneficially or deemed beneficially owned by the Investor,
would result in the Investor owning more than 4.99% of all of such Common Stock
as would be outstanding on such Closing Date, as determined in accordance with
Section 16 of the Exchange Act and the regulations promulgated thereunder. For
purposes of this Section 7.2(j), in the event that the amount of Common Stock
outstanding as determined in accordance with Section 16 of the Exchange Act and
the regulations promulgated thereunder is greater on a Closing Date than on the
date upon which the Optional Purchase Notice associated with such Closing Date
is given, the amount of Common Stock outstanding on such Closing Date shall
govern for purposes of determining whether the
18
Investor, when aggregating all purchases of Common Stock made pursuant to this
Agreement and, if any, Common Stock, would own more than 4.99% of the Common
Stock following such Closing Date.
(k) Cross Default. The Company shall not be in default of a material term,
covenant, warranty or undertaking of any other agreement to which the Company
and any Investor are parties, nor shall there have occurred an event of default
under any such other agreement
(l) No Knowledge. The Company shall have no knowledge of any event more
likely than not to have the effect of causing such Registration Statement to be
suspended or otherwise ineffective (which event is more likely than not to occur
within the fifteen Trading Days following the Trading Day on which such Notice
is deemed delivered).
(m) Trading Cushion. The Trading Cushion shall have elapsed since the
immediately preceding Optional Purchase Date and Closing Date.
(n) Shareholder Vote. The issuance of shares of Common Stock with respect
to the applicable Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market or the laws of any jurisdiction to which
the Company is subject.
(o) Escrow Agreement. If requested by the Company or any Investor, the
parties hereto shall have entered into a mutually approved escrow agreement for
the Purchase Price due hereunder and the Company shall have agreed to pay the
fees and expenses of the Escrow Agent and not be in default of any such
payments. A form of Escrow Agreement is annexed hereto as Exhibit E2.
(p) Voting Restrictions. The Investor shall not be subject to voting or
other restrictions arising under any applicable "anti-takeover" laws, rules or
regulations.
(q) Other. On each Condition Satisfaction Date, the Investor shall have
received and been reasonably satisfied with such other certificates and
documents as shall have been reasonably requested by the Investor in order for
the Investor to confirm the Company's satisfaction of the conditions set forth
in this Section 7.2., including, without limitation, a certificate in
substantially the form and substance of Exhibit C hereto, executed in either
case by an executive officer of the Company and to the effect that all the
conditions to such Closing shall have been satisfied as at the date of each such
certificate.
ARTICLE VIII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION
Section 8.1 Due Diligence Review. The Company shall make available for
inspection and review by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor and who are
reasonably acceptable to the Company), any underwriter participating in any
disposition of the Registrable Securities on behalf of the Investor
19
pursuant to the Registration Statement, any such registration statement or
amendment or supplement thereto or any blue sky, NASD, Principal Market, or
other filing, all financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and properties of the
Company as may be reasonably necessary for the purpose of such review, and cause
the Company's officers, directors and employees to supply all such information
reasonably requested by the Investor or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investor and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.
Section 8.2 Non-Disclosure of Non-Public Information.
(a) The Company represents and Commitment Stocks that the Company and its
officers, directors, employees and agents have not disclosed any non-public
information to the Investor or advisors to or representatives of the Investor.
The Company covenants and agrees that it shall refrain from disclosing, and
shall cause its officers, directors, employees and agents to refrain from
disclosing, unless prior to disclosure of such information the Company
identifies such information as being non-public information and provides the
Investor, such advisors and representatives with the opportunity to accept or
refuse to accept such non-public information for review. The Company may, as a
condition to disclosing any non-public information hereunder, require the
Investor's advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Investor.
(b) The Company acknowledges and understands that the Investor is entering
into this Agreement and the Registration Rights Agreement at the request of the
Company and in good faith reliance on the Company's representation set forth in
Section 4.16 that neither it nor its agents have disclosed to the Investor any
material non-public information.
(c) Nothing herein shall require the Company to disclose non-public
information to the Investor or its advisors or representatives, and the Company
represents that it does not disseminate non-public information to any Investor
who purchase stock in the Company in a public offering, to money managers or to
securities analysts, in violation of Regulation FD of the Exchange Act provided,
subject to its compliance with Regulation FD of the Exchange Act, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives of the
Investor and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting non-public information
(whether or not requested of the Company specifically or generally during the
course of due diligence by such persons or entities), which, if not disclosed in
the prospectus included in the Registration Statement would cause such
prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the
20
statements, therein, in light of the circumstances in which they were made, not
misleading. Nothing contained in this Section 8.2 shall be construed to mean
that such persons or entities other than the Investor (without the written
consent of the Investor prior to disclosure of such information) may not obtain
non-public information in the course of conducting due diligence in accordance
with the terms of this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of their opinion that based on
such due diligence by such persons or entities, that the Registration Statement
contains an untrue statement of a material fact or omits a material fact
required to be stated in the Registration Statement or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
Section 8.3 Confidentiality. The Company agrees that it will not publicly
or privately disclose the identities of the Investor, Commitment Stock
Recipients, or Finders unless expressly agreed to in writing by the Investor or
otherwise required by law.
ARTICLE IX
LEGENDS
Section 9.1 Legends. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend (the
"Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY
SET FORTH IN A PRIVATE EQUITY LINE OF CREDIT AGREEMENT AMONG CENTRAL
WIRELESS, INC. AND CERTAIN INVESTOR DATED DATE. A COPY OF THE PORTION
OF THE AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED
FROM THE COMPANY'S EXECUTIVE OFFICES.
Upon the execution and delivery hereof, the Company is issuing to the
transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent)
21
instructions in substantially the form of Exhibit D hereto. Such instructions
shall be irrevocable by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be, except as otherwise expressly provided in the Registration
Rights Agreement. It is the intent and purpose of such instructions, as provided
therein, to require the transfer agent for the Common Stock from time to time
upon transfer of Registrable Securities by the Investor to issue certificates
evidencing such Registrable Securities free of the Legend during the following
periods and under the following circumstances and without consultation by the
transfer agent with the Company or its counsel and without the need for any
further advice or instruction or documentation to the transfer agent by or from
the Company or its counsel or the Investor:
(a) at any time after the Effective Date, upon surrender of one or more
certificates evidencing Common Stock that bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered, or prior to issuance of a certificate;
provided that (i) the Registration Statement shall then be effective; (ii) the
Investor confirms to the transfer agent that it has sold, pledged or otherwise
transferred or agreed to sell, pledge or otherwise transfer such Common Stock in
a bona fide transaction to a third party that is not an affiliate of the
Company; and (iii) the Investor or sales agent confirms to the transfer agent
that the Investor or sales agent has complied with the prospectus delivery
requirement; and
(b) at any time upon any surrender of one or more certificates evidencing
Registrable Securities that bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the Legend to replace
those surrendered and containing representations that (i) the Investor is
permitted to dispose of such Registrable Securities without limitation as to
amount or manner of sale pursuant to Rule 144(k) under the Securities Act or
(ii) the Investor has sold, pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Registrable Securities in a manner other than
pursuant to an effective registration statement, to a transferee who will upon
such transfer be entitled to freely tradeable securities. Any of the notices
referred to above in this Section 9.1 may be sent by facsimile to the Company's
transfer agent.
Section 9.2 No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 9.1 has been or shall be placed on the
share certificates representing the Common Stock and no instructions or "stop
transfers orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article IX.
ARTICLE X
CHOICE OF LAW/VENUE
Section 10.1 Choice of Law/Venue. This Agreement and the Registration
Rights Agreement shall be governed by and construed in accordance with the laws
of the State of New York without regard to principles of conflicts of laws. Any
action brought by either party
22
against the other concerning the transactions contemplated by this Agreement or
the Registration Rights Agreement shall be brought only in the state courts of
New York or in the federal courts located in the state of New York. Both parties
and the individuals executing this Agreement and other agreements on behalf of
the Company agree to submit to the jurisdiction of such courts and waive trial
by jury. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.
ARTICLE XI
ASSIGNMENT; ENTIRE AGREEMENT, AMENDMENT; TERMINATION
Section 11.1 Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
person.
Section 11.2 Termination. This Agreement shall terminate thirty-six (36)
months after the commencement of the Commitment Period; provided, however, that
the provisions of Articles VI, VIII, IX, X, XI, XII, XIII and XIV shall survive
the termination of this Agreement.
Section 11.3 Entire Agreement, Amendment. This Agreement and the
Registration Rights Agreement constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof,
and no party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth in
this Agreement or therein. Except as expressly provided in this Agreement,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by both parties hereto.
ARTICLE XII
NOTICES; INDEMNIFICATION
Section 12.1 Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or
23
(b) on the second business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such communications
shall be:
If to Central Wireless, Inc.:
Central Wireless, Inc.
0000 X. Xxxxxxx Xxxxx
Xxxxx X
Xxxxxxxx, XX 00000
Attn Xxxxxxx X. Brand, CEO
Telecopier: (000) 000-0000
With a copy to (which communication shall not constitute
notice):
Xxxxxxxxxxx & Xxxxxxxx LLP
Miami Center, 20th Floor
000 Xxxxx Xxxxxxxx, Xxxx.
Xxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Investor:
AJW Partners, LLC
AJW Qualified Partners, LLC
AJW Offshore, Ltd.
New Millennium Capital Partners II, LLC
Equilibrium Equity, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
With a copy to (which communication shall not constitute
notice):
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
24
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 12.1 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the other
party hereto.
Section 12.2 Indemnification.
(a) The Company agrees to indemnify and hold harmless the Investor, its
partners, Affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the Controlling Persons (as defined in the Registration Rights
Agreement) from and against any Damages, joint or several, and any action in
respect thereof to which the Investor, its partners, Affiliates, officers,
directors, employees, and duly authorized agents, and any such Controlling
Person becomes subject to, resulting from, arising out of or relating to any
misrepresentation, breach of Commitment Stocky or nonfulfillment of or failure
to perform any covenant or agreement on the part of Company contained in this
Agreement in any event as such Damages are incurred.
(b) The Investor agrees to indemnify and hold harmless the Company, its
partners, Affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the Controlling Persons (as defined in the Registration Rights
Agreement) from and against any Damages, joint or several, and any action in
respect thereof to which the Company, its partners, Affiliates, officers,
directors, employees, and duly authorized agents, and any such Controlling
Person becomes subject to, resulting from, arising out of or relating to any
misrepresentation, breach of Commitment Stocky or nonfulfillment of or failure
to perform any covenant or agreement on the part of Investor contained in this
Agreement in an aggregate amount not to exceed one-third of each such Investor's
Proportionate Share.
Section 12.3 Method of Asserting Indemnification Claims. All claims for
indemnification by any Indemnified Party (as defined below) under Section 12.2
will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any person
claiming indemnification under any provision of Section 12.2 (an "Indemnified
Party") might seek indemnity under Section 12.2 is asserted against or sought to
be collected from such Indemnified Party by a person other than the Company, the
Investor or any affiliate of the Company (a "Third Party Claim"), the
Indemnified Party shall deliver a written notification, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party's claim for indemnification that is
being asserted under any provision of Section 12.2 against any person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
25
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether
the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under Section 12.2 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant to this Section 12.3(a),
then the Indemnifying Party will have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at the sole cost and expense
of the Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
which affects the Indemnified Party, other than the payment of monetary damages,
or that provides for the payment of monetary damages as to which the Indemnified
Party will not be indemnified in full pursuant to Section 12.2). The
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party may, at the sole cost and expense of the Indemnified Party, at
any time prior to the Indemnifying Party's delivery of the notice referred to in
the first sentence of this clause 1, file any motion, answer or other pleadings
or take any other action that the Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests; and provided further, that if
requested by the Indemnifying Party, the Indemnified Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnifying Party in contesting any Third Party Claim that the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause 1, and except as provided in the
preceding sentence, the Indemnified Party will bear its own costs and expenses
with respect to such participation. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives its right to indemnity
under Section 12.2 with respect to such Third Party Claim.
(c) If the Indemnifying Party fails to notify the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 12.3(a), or if the Indemnifying Party gives such
notice but fails to prosecute vigorously and diligently or settle the Third
Party Claim, or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party will have the right to
defend, at the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate
26
proceedings, which proceedings will be prosecuted by the Indemnified Party in a
reasonable manner and in good faith or will be settled at the discretion of the
Indemnified Party (with the consent of the Indemnifying Party, which consent
will not be unreasonably withheld). The Indemnified Party will have full control
of such defense and proceedings, including any compromise or settlement thereof;
provided, however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnified Party and its counsel in contesting
any Third Party Claim which the Indemnified Party is contesting. Notwithstanding
the foregoing provisions of this clause 2, if the Indemnifying Party has
notified the Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability or the amount of its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the manner provided in clause 3
below, the Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this clause 2 or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party will reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this clause 2, and the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
(d) If the Indemnifying Party notifies the Indemnified Party that it does
not dispute its liability or the amount of its liability to the Indemnified
Party with respect to the Third Party Claim under Section 12.2 or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes its liability or the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the loss in the amount specified
in the Claim Notice will be conclusively deemed a liability of the Indemnifying
Party under Section 12.2 and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. In the event any Indemnified Party
should have a claim under Section 12.2 against the Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party shall deliver a written
notification of a claim for indemnity under Section 12.2 specifying the nature
of and basis for such claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such claim (an
"Indemnity Notice") with reasonable promptness to the Indemnifying Party. The
failure by any Indemnified Party to give the Indemnity Notice shall not impair
such party's rights hereunder except to the extent that the Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes the claim or the amount of the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 12.2 and
the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand.
27
ARTICLE XIII
FEES; EXPENSES; COMMITMENT STOCK
Section 13.1 [Intentionally Omitted].
Section 13.2 Timely Delivery. In the event any Commitment Stocks are not
timely delivered, the Investor shall have no obligation to purchase Put Shares
pursuant to this Agreement.
Section 13.3 Fees and Expenses. Each of the Company and the Investor
agrees to pay its own expenses incident to the performance of its obligations
hereunder, except that the Company shall pay the fees, and reasonable expenses
and disbursements of the Investor's counsel, Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx,
LLP, in an amount of $15,000, which shall be payable on or before the
Subscription Date.
Section 13.4 Finders. Each of the parties hereto represents that it has
had no dealings in connection with this transaction with any finder or broker
who will demand payment of any fee or commission from the Company or Investor
except as described on Schedule 13 ("Finder"). The Company agrees to pay to the
Finder the fee set forth on Schedule 13 ("Finder's Fee"). The Finder's Fee shall
be paid out of the escrow account established for deposit of Investment Amounts
on the Closing Date with respect to which Finder's Fees are payable. A default
by the Company of the Company's obligations to the Finder shall be deemed a
default under the Agreement, and shall terminate the Investor's obligation to
comply with any Optional Purchase Notices provided such default is not due to a
failure by an escrow agent to comply with his obligations. The Company on the
one hand, and the Investor, on the other hand, agree to indemnify the other
against and hold the other harmless from any and all liabilities to any other
persons claiming brokerage commissions or finder's fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby and
arising out of such party's actions.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument. This Agreement may be delivered by
telecopier transmission which such copy shall be deemed an original executed
Agreement.
Section 14.2 Entire Agreement. This Agreement, the Exhibits hereto, the
documents delivered in connection herewith, and the Registration Rights
Agreement set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes
28
all prior and contemporaneous agreements, negotiations and understandings
between the parties, both oral and written relating to the subject matter
hereof. The terms and conditions of all Exhibits to this Agreement are
incorporated herein by this reference and shall constitute part of this
Agreement as if fully set forth herein.
Section 14.3 Survival; Severability. The representations, Commitment
Stockies, covenants and agreements of the parties hereto shall survive each
Closing hereunder. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes the economic benefit of this Agreement to any party.
Section 14.4 Title and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 14.5 Reporting Entity for the Common Stock. The reporting entity
relied upon for the determination of the Bid Price, VWAP, trading price or
trading volume of the Common Stock on any given Trading Day for the purposes of
this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ any
other reporting entity.
Section 14.6 Remedies for Breach. The Company and each Investor
acknowledges that the other party's remedy at law for the breach of the
provisions provided in this Agreement is inadequate. Therefore, the Company and
each Investor agrees that a breach or violation of this Agreement by the
Company, on the one hand, and the Investor, on the other hand, will entitle the
other party, as a matter of right, to an injunction or other equitable relief,
issued by any court or arbitration panel of competent jurisdiction, restraining
any further or continued breach or violation of this Agreement. Such right to an
injunction will be cumulative and in addition to, and not in lieu of, any other
remedies to which the Company and the Investor may show themselves justly
entitled.
Section 14.7 Publicity. Except as required by applicable law, neither the
Company nor the Investor shall issue any press release or otherwise make any
public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement without the
prior consent of the other party, which consent shall not be unreasonably
withheld or delayed.
Section 14.8 Confidentiality. Investor agrees to maintain the
confidentiality of all information about the Company received from any officer,
employee or agent of the Company, until such time as that confidential
information is released to the public generally as contemplated by Regulation FD
of the Exchange Act other than as a result of any disclosure by Investor.
29
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Private Equity
Line of Credit Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
CENTRAL WIRELESS, INC.
By: ____________________________________
Name:
Title:
AJW PARTNERS, LLC
By: ____________________________________
Name:
Title:
Proportionate Share _________ %
AJW QUALIFIED PARTNERS, LLC
By: ____________________________________
Name:
Title:
Proportionate Share _________ %
AJW OFFSHORE, LTD.
By: ____________________________________
Name:
Title:
Proportionate Share _________ %
30
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: ____________________________________
Name:
Title:
Proportionate Share _________ %
EQUILIBRIUM EQUITY, LLC
By: ____________________________________
Name:
Title:
Proportionate Share _________ %
31
EXHIBIT A
[FORM OF LEGAL OPINION]
April ____, 2002
TO: Investor's Full Name
We have acted as counsel to Central Wireless, Inc., a Utah corporation
(the "Company") in connection with the offer and sale by the Company of shares
of the Company's $.001 par value common stock ("Common Stock") and issuance of
Commitment Stock ("Commitment Stocks") to the Investor and Commitment Stock
Recipients identified on Schedule A hereto, pursuant to the exemption from
registration under the Securities Act of 1933, as amended (the "Act) as set
forth in Regulation D ("Regulation D") promulgated thereunder. Capitalized terms
used herein and not otherwise defined shall have the meaning assigned to them in
the Private Equity Line of Credit Agreement (the "Agreement") by and between the
Company and Investor entered into at or about the date hereof. The Agreement,
and the agreements described below are sometimes hereinafter referred to
collectively as the "Documents".
In connection with the opinions expressed herein, we have made such
examination of law as we considered appropriate or advisable for purposes
hereof. As to matters of fact material to the opinions expressed herein, we have
relied, with your permission, upon the representations and warrantis as to
factual matters contained in and made by the Company and the Purchaser pursuant
to the Documents and upon certificates and statements of certain government
officials and of officers of the Company as described below. We have also
examined originals or copies of certain corporate documents or records of the
Company as described below:
(a) Form of Agreement
(b) Form of Common Stock Certificate
(c) Escrow Agreement - Exhibit E1 to Agreement
(e) Registration Rights Agreement between Company and Investor
(f) Certificate of Incorporation of the Company as amended
(g) Bylaws of the Company
(h) Minutes of the action of the Company's Board of Directors, including
unanimous Board of Directors approval of the Documents, a copy of which is
annexed hereto.
32
In rendering this opinion, we have, with your permission, assumed: (a) the
authenticity of all documents submitted to us as originals; (b) the conformity
to the originals of all documents submitted to us as copies; (c) the genuiness
of all signatures; (d) the legal capacity of natural persons; (e) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties contained in all of such documents; (f) the due authorization,
execution and delivery of all such documents by Investors, and the legal, valid
and binding effect thereof on Investors; and (g) that the Company and the
Purchasers will act in accordance with their respective representations and
warranties as set forth in the Documents.
We are members of the bar of the State of Utah. We express no opinion as
to the laws of any jurisdiction other than New York and the federal laws of the
United States of America. We express no opinion with respect to the effect or
application of any other laws. Special rulings of authorities administering any
of such laws or opinions of other counsel have not been sought or obtained by us
in connection with rendering the opinions expressed herein.
1. The Company and each of its subsidiaries is duly incorporated, validly
existing and in good standing in the states of their incorporation; have
qualified to do business in each state where required unless the failure to do
so would not have a material impact in the Company's operations; and have the
requisite corporate power and authority to conduct their business, and to own,
lease and operate their properties.
2. The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Documents. The Documents, and the
issuance of the Common Stock and Commitment Stock have been (a) duly approved by
the Board of Directors of the Company, and (b) all such Common Stock, and
Commitment Stock, when issued pursuant to the Agreement and upon delivery, shall
be validly issued and outstanding, fully paid and non assessable.
3. The execution, delivery and performance of the Documents by the Company
and the consummation of the transactions contemplated thereby, will not, with or
without the giving of notice or the passage of time or both:
(a) Violate the provisions of the Certificate of Incorporation or bylaws
of the Company;
(b) To the best of counsel's knowledge, violate any judgment, decree,
order or award of any court binding upon the Company; or
(c) Violate or conflict with any material contract to which the Company is
a party.
4. The Documents constitute the valid and legally binding obligations of
the Company and are enforceable against the Company in accordance with their
respective terms.
33
5. The Common Stock, and Commitment Stock have not been registered under
the Securities Act of 1933, as amended (the "Act") or under the laws of any
state or other jurisdiction, and are and will be issued pursuant to a valid
exemption from registration.
Our opinions expressed above are specifically subject to the following
limitations, exceptions, qualifications and assumptions:
A. The effect of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting the relief of debtors or the rights
and remedies of creditors generally, including without limitation the effect of
statutory or other law regarding fraudulent conveyances and preferential
transfers.
B. Limitations imposed by state law, federal law or general equitable
principles upon the specific enforceability of any of the remedies, covenants or
other provisions of any applicable agreement and upon the availability of
injunctive relief or other equitable remedies, regardless of whether enforcement
of any such agreement is considered in a proceeding in equity or at law.
This opinion is rendered as of the date first written above, is solely for
your benefit in connection with the Agreement and may not be relief upon or used
by, circulated, quoted, or referred to nor may any copies hereof by delivered to
any other person without our prior written consent. We disclaim any obligation
to update this opinion letter or to advise you of facts, circumstances, events
or developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
Very truly yours,
34
EXHIBIT B
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
WITHIN 5 TRADING DAYS FOLLOWING EFFECTIVE DATE OF
REGISTRATION STATEMENT
TO: [Investor's name
And address]
We have acted as counsel to Central Wireless, Inc., a Utah corporation
(the "Company"), in connection with the Private Equity Line of Credit Agreement
between the Company and you, dated as of October __, 2003 (the "Line of Credit
Agreement"), pursuant to which the Company will issue to you from time to time
shares of Common Stock, $____ par value (the "Put Shares") and the Registration
Rights Agreement between you and the Company, dated October __, 2003 (the
"Registration Rights Agreement," and together with the Line of Credit Agreement,
the "Agreements"). This opinion is rendered to you pursuant to Section 7.2(h) of
the Line of Credit Agreement. Capitalized terms used without definition in this
opinion have the meanings given to them in the Line of Credit Agreement.
In connection with this opinion, we have assumed the authenticity of all
records, documents, and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all records, documents, and instruments submitted
to us as copies. We have also assumed that there are no facts or circumstances
relating to you that might prevent you from enforcing any of the rights to which
our opinion relates. We have based our opinion upon our review of the following
records, documents and instruments:
(a) The Articles of Incorporation of the Company, as amended to date (the
"Articles"), certified by the Secretary of State of the State of Utah as of
_______________ and certified to us by an officer of the Company as being
complete and in full force and effect as of the date of this opinion;
(b) The Bylaws of the Company certified to us by an officer of the Company
as being complete and in full force and effect as of the date of this opinion
(the "Bylaws");
(c) Records certified to us by an officer of the Company as constituting
all records of proceedings and actions of the Board of Directors and the
shareholders of the Company relating to the transactions contemplated by the
Agreement;
(d) The Agreements;
35
(e) A certificate related to the good standing of the Company issued by
the Secretary of State of the State of Utah dated _____________;
(f) A Certificate of the Chief Executive Officer of the Company as to
certain factual matters (the "Officer's Certificate");
(g) The SEC Documents.
With your consent, we have based our opinion expressed in paragraph 1
below as to the good standing of the Company solely upon the documents
enumerated in (e) and (f) above.
Where our opinion relates to our "knowledge," such knowledge is based upon
our examination of the records, documents, instruments, and certificates
enumerated or described above and the actual knowledge of attorneys in this firm
who are currently involved in substantive legal representation of the Company on
matters related to the Agreements. With your consent, we have not examined any
records of any court, administrative tribunal or other similar entity in
connection with our opinion expressed in paragraph 2 of Part III below. We have
assumed for purposes of our opinion to the effect that the Put Shares are fully
paid and that the consideration for such Put Shares will be received by the
Company in accordance with the Line of Credit Agreement.
We express no opinion as to any anti-fraud provisions of applicable
federal or state securities laws, any tax, anti-trust, land use, export, safety,
environmental or hazardous materials laws, rules or regulations.
This opinion is limited to the federal laws of the United States of
America and the laws of the States of Utah and New York. We disclaim any opinion
as to the laws of any other jurisdiction and we further disclaim any opinion as
to any statute, rule, regulation, ordinance, order or other promulgation of any
regional or local governmental body.
Based upon the foregoing and our examination of such questions of law as
we have deemed necessary or appropriate for the purpose of this opinion, and
subject to the limitations and qualifications expressed below, it is our opinion
that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of [jurisdiction of incorporation] and
has all requisite power and authority to carry on its business and to own, lease
and operate its properties and assets as described in the SEC Documents. To our
knowledge the Company does not have any subsidiaries other than as set forth in
the SEC Documents.
2. To our knowledge, except as described in the SEC Documents, there are
no claims, actions, suits, proceedings or investigations that are pending
against the Company or its properties, or to our knowledge, any officer or
director of the Company in his or her capacity as such, nor to our knowledge has
the Company received any written threat of any such claims, actions, suits,
proceedings or investigations.
36
3. To our knowledge, except as described in the Company's representations
and warranties contained in Article IV of the Line of Credit Agreement, there
are no outstanding options, Commitment Stocks, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any right to subscribe for or
acquire, any shares of Common Stock, or contracts, commitments, understanding,
or arrangements by which the Company is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock.
4. Subject to the accuracy of your representations in Article III of the
Line of Credit Agreement on the date hereof and on the date of issuance of any
Put Shares and Commitment Stock Shares, and the statement in the Officer's
Certificate that the Company has not offered or sold, and will not offer or
sell, any Put Shares by means of advertising or public solicitation, the
issuance of the Commitment Stock Shares in conformity with the terms of the Line
of Credit Agreement constitutes transactions exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended. The Put
Shares and the Commitment Stock Shares, when issued in compliance with the Line
of Credit Agreement and Registration Rights Agreement, will be duly authorized,
validly issued, fully paid, and non-assessable and free of preemptive rights set
forth in the Articles, Bylaws and any agreement filed as an exhibit to the SEC
Documents, provided, however, that the Put Shares and Commitment Stock Shares
may be subject to restrictions on transfer under state and federal securities
laws, but only to the extent set forth in the Line of Credit Agreement.
5. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements and to issue the Put
Shares.
6. Each of the Agreements has been duly authorized, executed and delivered
by the Company and the consummation by it of the transactions contemplated
thereby has been duly authorized by all necessary corporate action and no
further consent or authorization of the Company's board of directors or
shareholders is required. Each of the Agreements has been duly executed and
delivered on the part of the
Company and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject, as to enforcement,
(i) to bankruptcy, insolvency, reorganization, arrangement, moratorium, and
other laws of general applicability relating to or affecting creditors' rights,
(ii) to general principles of equity, whether such enforcement is
considered in a proceeding in equity or at law, and (iii) to limitations imposed
by applicable law or public policy on the enforceability of the indemnification
provisions contained in the Agreements.
7. The execution, delivery and performance of and compliance with the
respective terms of each of the Agreements, and issuance of the Put Shares in
accordance with the Line of Credit Agreement, will not violate any provision of
the Articles or Bylaws or any law applicable to the Company.
37
8. The holders of the Common Stock will not be subject to the provisions
of the States of Utah anti-takeover statutes.
In connection with the registration of the Put Shares and Commitment Stock
Shares, we advised the Company as to the requirements of the Securities Act and
the applicable Rules and Regulations and rendered other legal advice and
assistance in the course of preparation of the Registration Statement and
Prospectus, including review and discussion of the contents thereof. On the
basis of the information that was developed in the course of the performance of
such services considered in the light of our understanding of the Securities
Act, including the requirements of Forms S-1 and SB-2, we have no reason to
believe that (i) the Registration Statement (other than the financial statements
and related statements and schedules, as to which we express no belief) as of
its Effective Date contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or (ii) the Prospectus (other
than the financial statements and related statements and schedules, as to which
we express no belief) as of the Effective Date of the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The limitations inherent in the independent verification of
factual matters and the character of determinations involved in the registration
process are such, however, that except as set forth in this opinion letter we do
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus.
Our opinions expressed above are specifically subject to the following
limitations, exceptions, qualifications and assumptions:
A. The effect of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting the relief of debtors or the rights
and remedies of creditors generally, including without limitation the effect of
statutory or other law regarding fraudulent conveyances and preferential
transfers.
B. Limitations imposed by state law, federal law or general equitable
principles upon the specific enforceability of any of the remedies, covenants or
other provisions of any applicable agreement and upon the availability of
injunctive relief or other equitable remedies, regardless of whether enforcement
of any such agreement is considered in a proceeding in equity or at law.
This opinion is rendered as of the date first written above, is solely for
your benefit in connection with the Agreement and may not be relief upon or used
by, circulated, quoted, or referred to nor may any copies hereof by delivered to
any other person without our prior written consent. We disclaim any obligation
to update this opinion letter or to advise you of facts, circumstances, events
or developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
Very truly yours,
38
EXHIBIT C
COMPLIANCE CERTIFICATE
----------------------------------
The undersigned, Xxxxxxx X. Brand, hereby certifies, with respect to the
shares of Common Stock of Central Wireless, Inc. (the "Company") issuable in
connection with the Optional Purchase Notice, dated (the "Notice"), delivered
pursuant to Article II of the Private Equity Line of Credit Agreement, dated
_________________, by and among the Company and certain Investor (the
"Agreement"), as follows:
1. The undersigned is the duly elected Chief Executive Officer of the
Company.
2. The representations and warranties of the Company set forth in the
Agreement are true and correct in all material respects as though made on and as
of the date hereof.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Closing Date
related to the Notice and has complied in all material respects with all
obligations and conditions contained in the Agreement.
4. The amount of Common Stock remaining registered in an effective
registration statement on behalf of each Investor as of this date is set forth
on the schedule hereto.
The undersigned has executed this Certificate this ____ day of
____________.
CENTRAL WIRELESS, INC.
By:_____________________________________
Xxxxxxx X. Brand
Chief Executive Officer
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EXHIBIT D
INSTRUCTIONS TO TRANSFER AGENT
-------------------------------------
[TRANSFER AGENT]
Dear Sirs:
Reference is made to the Private Equity Line of Credit Agreement (the
"Agreement"), dated as of October __, 2003 among certain Investor (the
"Investor") and Central Wireless, Inc. (the "Company"). Pursuant to the
Agreement, subject to the terms and conditions set forth in the Agreement the
Investor has agreed to purchase from the Company and the Company has agreed to
sell to the Investor from time to time during the term of the Agreement shares
of Common Stock of the Company, $.001 par value (the "Common Stock"). As a
condition to the effectiveness of the Agreement, the Company has agreed to issue
to you, as the transfer agent for the Common Stock (the "Transfer Agent"), these
instructions relating to the Common Stock to be issued to the Investor (or a
permitted assignee) pursuant to the Agreement. All terms used herein and not
otherwise defined shall have the meaning set forth in the Agreement.
1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
Pursuant to the Agreement, the Company is required to prepare and file
with the Commission, and maintain the effectiveness of, a registration statement
or registration statements registering the resale of the Common Stock to be
acquired by the Investor under the Agreement. The Company will advise the
Transfer Agent in writing of the effectiveness of any such registration
statement promptly upon its being declared effective. The Transfer Agent shall
be entitled to rely on such advice and shall assume that the effectiveness of
such registration statement remains in effect unless the Transfer Agent is
otherwise advised in writing by the Company and shall not be required to
independently confirm the continued effectiveness of such registration
statement. In the circumstances set forth in the following two paragraphs, the
Transfer Agent shall deliver to the Investor certificates representing Common
Stock not bearing the Legend without requiring further advice or instruction or
additional documentation from the Company or its counsel or the Investor or its
counsel or any other party (other than as described in such paragraphs).
At any time after the effective date of the applicable registration
statement (provided that the Company has not informed the Transfer Agent in
writing that such registration statement is not effective) upon any surrender of
one or more certificates evidencing Common Stock which bear the Legend, to the
extent accompanied by a notice requesting the issuance of new
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certificates free of the Legend to replace those surrendered, the Transfer Agent
shall deliver to the Investor the certificates representing the Common Stock not
bearing the Legend, in such names and denominations as the Investor shall
request, provided that:
(a) in connection with such event, the Investor (or its permitted
assignee) shall confirm in writing to the Transfer Agent that (i) the Investor
confirms to the transfer agent that it has sold, pledged or otherwise
transferred or agreed to sell, pledge or otherwise transfer such Common Stock in
a bona fide transaction to a transferee that is not an affiliate of the Company;
and (ii) the Investor confirms to the transfer agent that the Investor has
complied with the prospectus delivery requirement;
(b) the Investor (or its permitted assignee) shall represent that it is
permitted to dispose thereof with limitation as to amount of manner of sale
pursuant to Rule 144(k) under the Securities Act; or
(c) the Investor, its permitted assignee, or either of their brokers
confirms to the transfer agent that (i) the Investor has held the shares of
Common Stock for at least one year, (ii) counting the shares surrendered as
being sold upon the date the unlegended Certificates would be delivered to the
Investor (or the Trading Day immediately following if such date is not a Trading
Day), the Investor will not have sold more than the greater of (a) one percent
(1%) of the total number of outstanding shares of Common Stock or (b) the
average weekly trading volume of the Common Stock for the preceding four weeks
during the three months ending upon such delivery date (or the Trading Day
immediately following if such date is not a Trading Day), and (iii) the Investor
has complied with the manner of sale and notice requirements of Rule 144 under
the Securities Act.
Any advice, notice or instructions to the Transfer Agent required or
permitted to be given hereunder may be transmitted via facsimile to the Transfer
Agent's facsimile number of __________.
2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK
In connection with any Closing pursuant to which the Investor acquires
Common Stock under the Agreement, the Transfer Agent shall deliver certificates
representing Common Stock (with or without the Legend, as appropriate) as
promptly as practicable, but in no event later than three business days, after
such Closing.
3. FEES OF TRANSFER AGENT; INDEMNIFICATION
The Company agrees to pay the Transfer Agent for all fees incurred in
connection with these Irrevocable Instructions. The Company agrees to indemnify
the Transfer Agent and its officers, employees and agents, against any losses,
claims, damages or liabilities, joint or several, to which it or they become
subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.
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4. THIRD PARTY BENEFICIARY
The Company and the Transfer Agent acknowledge and agree that the Investor
is an express third party beneficiary of these Irrevocable Instructions and
shall be entitled to rely upon, and enforce, the provisions hereof.
CENTRAL WIRELESS, INC.
By:_____________________________________
Xxxxxxx X. Brand
Chief Executive Officer
AGREED:
[TRANSFER AGENT]
By:_____________________________________
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