Exhibit 10.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 10th day of
February, 2000 by and between Ursus Telecom Corporation, a Florida corporation
(the "Company"), and the Investors set forth on the signature page affixed
hereto (each an "Investor" and collectively the "Investors").
RECITALS
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended;
B. The Investors wish to purchase, and the Company wishes to sell and
issue to the Investors, upon the terms and conditions stated in this Agreement,
that number of shares of the common stock of the Company, $0.01 par value per
share (the "Common Stock") and that number of warrants to purchase Common Stock
in the form attached hereto as EXHIBIT A (the "Warrants"), as are set forth on
the signature page attached hereto and executed by each such Investor; and
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as EXHIBIT B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder, and applicable state securities laws;
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
1.1 "AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person.
1.2 "AGREEMENTS" means this Agreement, the Registration
Rights Agreement, and the Warrants.
1.3 "CLOSING" means the consummation of the transactions
contemplated by this Agreement, and "CLOSING DATE" means the date of such
Closing.
1.4 "CONTROL" means the possession , direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
1.5 "MARKET PRICE" means the average of the five lowest
closing bid prices of the Common Stock in the twenty-five (25) trading days
immediately preceding the date hereof.
1.6 "MATERIAL ADVERSE EFFECT" means a material adverse
effect on the condition (financial or otherwise), business, assets, or results
of operations of the Company as a whole.
1.7 "PERSON" means an individual, corporation, partnership,
trust, business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.8 "SEC FILINGS" has the meaning set forth in Section 4.6.
1.9 "SECURITIES" means the Shares, the Warrants and the
Warrant Shares (defined below).
1.10 "SHARES" means the shares of Common Stock being
purchased by the Investors hereunder.
1.11 "WARRANT SHARES" means the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants.
1.12 "1933 ACT" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1.13 "1934 ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
2. PURCHASE AND SALE OF THE SHARES AND WARRANTS. Subject to the terms
and conditions of this Agreement, each of the Investors hereby severally, and
not jointly, agrees to purchase, and the Company hereby agrees to sell and issue
to the Investors, the number of Shares and Warrants to purchase the number of
shares of Common Stock set forth on such Investor's signature page attached
hereto. The number of Shares to be purchased by each Investor shall be
determined by dividing such Investor's aggregate purchase price (as such
aggregate purchase price is set forth on such Investor's signature page attached
hereto), by an amount equal to 85% of the Market Price on the date of this
Agreement (the "Purchase Price"). The number of shares of Common Stock
purchasable by the Investors upon exercise of the Warrants shall be as set forth
on such Investor's signature page attached hereto and the exercise price of the
Warrants shall be 115% of the Market Price on the date of this Agreement;
provided, in no event shall the exercise price of the Warrants be less than the
closing bid price of the Common Stock on the day preceding the date of this
Agreement.
3. CLOSING. The Company shall promptly deliver to Investors' counsel,
in trust, a certificate or certificates, registered in such name or names as the
Investors may designate, representing all of the Shares and all of the Warrants,
with instructions that such certificates are to be held for release to the
Investors only upon payment of the Purchase Price to the Company. Upon receipt
by counsel to the Investors of the certificates, each Investor shall promptly
cause a wire transfer in same day funds to be sent to the account of the Company
as instructed in writing by the Company, in an amount representing such
Investor's Purchase Price. On the date the Company receives such funds, the
certificates evidencing the Shares and the Warrants shall be released to the
Investors (and such date shall be deemed the "Closing Date").
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investors that:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of
the Company and its subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and own its properties. Each of the Company and
its subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property makes such qualification or licensing
necessary unless the failure to so qualify would not have a Material Adverse
Effect. The Company's subsidiaries are reflected on SCHEDULE 4.1 hereto.
4.2 AUTHORIZATION. The Company has full power and authority
and has taken all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of the Agreements, (ii) authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities. The
Agreements constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.
4.3 CAPITALIZATION. Set forth on SCHEDULE 4.3 hereto is (a)
the authorized capital stock of the Company on the date hereof; (b) the number
of shares of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company's stock plans; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares and the Warrants) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as set forth on SCHEDULE 4.3, no Person is entitled to
preemptive or similar statutory or contractual rights with respect to any
securities of the Company. Except as set forth on SCHEDULE 4.3, there are no
outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
its subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement, neither the Company nor any
of its subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind. Except as set forth on SCHEDULE 4.3, the Company has no
knowledge of any voting agreements, buy-sell agreements, option or right of
first purchase agreements or other agreements of any kind among any of the
securityholders of the Company relating to the securities of the Company held by
them. Except as set forth on SCHEDULE 4.3, the Company has not granted any
Person the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the account
of any other Person.
4.4 VALID ISSUANCE. The Company has reserved a sufficient
number of shares of Common Stock for the issuance of the Shares pursuant to this
Agreement and upon exercise of the Warrants. The Company will take such steps as
may be necessary to reserve sufficient shares for issuance pursuant to Section 7
below when such issuance is determinable. The Shares and Warrants are duly
authorized, and such Securities, along with the Warrant Shares when issued in
accordance herewith and with the terms of the Warrants, will be duly authorized,
validly issued, fully paid, non-assessable and free and clear of all
encumbrances and restrictions, except for restrictions on transfer imposed by
applicable securities laws.
4.5 CONSENTS. The execution, delivery and performance by the
Company of the Agreements and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws and the requirements of the Nasdaq
Stock Market, which the Company undertakes to file within the applicable time
periods.
4.6 DELIVERY OF SEC FILINGS; BUSINESS. The Company has
provided the Investors with copies of the Company's most recent Annual Report on
Form 10-K for the fiscal year ended March 31, 1999, and all other reports filed
by the Company pursuant to the 1934 Act since the filing of the Annual Report on
Form 10-K and prior to the date hereof (collectively, the "SEC Filings"); which
the Company hereby represents and warrants are all filings required of the
Company pursuant to the 1934 Act for such period. The Company is engaged only in
the business described in the SEC Filings and the SEC Filings contain a complete
and accurate description of the business of the Company.
4.7 USE OF PROCEEDS. The proceeds of the sale of the Common
Stock and the Warrants hereunder shall be used by the Company for working
capital and general corporate purposes.
4.8 NO MATERIAL ADVERSE CHANGE. Since the filing of the
Company's most recent Annual Report on Form 10-K or as otherwise identified and
described in subsequent reports filed by the Company pursuant to the 1934 Act or
as set forth on SCHEDULE 4.8 hereto, there has not been:
(i) any change in the consolidated assets, liabilities,
financial condition or operating results of the Company from that reflected in
the financial statements included in the Company's most recent Quarterly Report
on Form 10-Q, except changes in the ordinary course of business which have not
had, in the aggregate, a Material Adverse Effect;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss, whether
or not covered by insurance to any assets or properties of the Company;
(iv) any waiver by the Company of a valuable right or
of a material debt owed to it not in the ordinary course of business;
(v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company taken as a
whole (as such business is presently conducted and as it is proposed to be
conducted);
(vi) any material change or amendment to a material
contract or arrangement by which the Company or any of its assets or properties
is bound or subject;
(vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company;
(viii) any transaction entered into by the Company
other than in the ordinary course of business; or
(ix) any other event or condition of any character that
might have a Material Adverse Effect.
4.9 SEC FILINGS; MATERIAL CONTRACTS.
(a) The SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) During the preceding two years, each registration
statement and any amendment thereto filed by the Company pursuant to the 1933
Act and the rules and regulations thereunder, as of the date such statement or
amendment became effective, complied as to form in all material respects with
the 1933 Act and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading; and each prospectus filed pursuant to Rule
424(b) under the 1933 Act, as of its issue date and as of the closing of any
sale of securities pursuant thereto did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) Except as set forth on SCHEDULE 4.3 hereto, there
are no agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.
4.10 FORM S-3 ELIGIBILITY. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
S-3 under the 1933 Act.
4.11 NO CONFLICT, BREACH, VIOLATION OR DEFAULT. The
execution, delivery and performance of the Agreements by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company's Certificate of Incorporation or the Company's Bylaws,
both as in effect on the date hereof (copies of which have been provided to the
Investors before the date hereof), or (ii) except where it would not have a
Material Adverse Effect, (a) any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its properties, or (b) except as set
forth on SCHEDULE 4.11, any agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the properties of the
Company is subject.
4.12 TAX MATTERS. The Company has timely prepared and filed
all tax returns required to have been filed by the Company with all appropriate
governmental agencies and timely paid all taxes owed by it. The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company nor, to the knowledge of the Company, any
basis for the assessment of any additional taxes, penalties or interest for any
fiscal period or audits by any federal, state or local taxing authority except
such as which are not material. All material taxes and other assessments and
levies that the Company is required to withhold or to collect for payment have
been duly withheld and collected and paid to the proper governmental entity or
third party when due. There are no tax liens or claims pending or threatened
against the Company or any of its respective assets or property. There are no
outstanding tax sharing agreements or other such arrangements between the
Company and any other corporation or entity.
4.13 TITLE TO PROPERTIES. Except as disclosed in the SEC
Filings or SCHEDULE 4.13, the Company has good and marketable title to all real
properties and all other properties and assets owned by it, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
holds any leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or
currently planned to be made thereof by them.
4.14 CERTIFICATES, AUTHORITIES AND PERMITS. The Company
possesses adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by it and has not received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit that, if determined
adversely to the Company, would individually or in the aggregate have a Material
Adverse Effect.
4.15 NO LABOR DISPUTES. No material labor dispute with the
employees of the Company exists or, to the knowledge of the Company, is
imminent.
4.16 INTELLECTUAL PROPERTY. The Company has sufficient title
or adequate rights or licenses to the inventions, know-how, patents, copyrights,
trademarks, trade names, confidential information and other intellectual
property (collectively, "Intellectual Property Rights"), free and clear of any
material liens, security interests, charges, encumbrances, equities and other
adverse claims, necessary to conduct the business now operated by it, or
presently employed by it, and presently contemplated to be operated by it, and
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property Rights. To
the knowledge of the Company, the Company's patents and other Intellectual
Property Rights and the present activities of the Company do not infringe any
patent, copyright, trademark, trade name or other proprietary rights of any
third party.
4.17 ENVIRONMENTAL MATTERS. The Company is not in violation
of any statute, rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "Environmental Laws"), does not own or operate any
real property contaminated with any substance that is subject to any
Environmental Laws, is not liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is not subject to any claim relating to
any Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.
4.18 LITIGATION. Except as disclosed in the SEC Filings or
on SCHEDULE 4.18 hereto, there are no pending actions, suits or proceedings
against or affecting the Company, its subsidiaries or any of its or their
properties that, if determined adversely to the Company or such subsidiary,
would individually or in the aggregate have a Material Adverse Effect or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material in the context
of the sale of the Securities; and to the Company's knowledge, no such actions,
suits or proceedings are threatened or contemplated.
4.19 FINANCIAL STATEMENTS. The financial statements included
in each SEC Filing present fairly and accurately in all material respects the
consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis. Except as set
forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, to the best of the Company's knowledge, the
Company has no liabilities, contingent or otherwise, except those which
individually or in the aggregate would not have a Material Adverse Effect.
4.20 INSURANCE COVERAGE. The Company maintains in full force
and effect insurance coverage that is customary for comparably situated
companies for the business being conducted and properties owned or leased by the
Company, and the Company reasonably believes such insurance coverage to be
adequate against all liabilities, claims and risks against which it is customary
for comparably situated companies to insure.
4.21 COMPLIANCE WITH NASDAQ CONTINUED LISTING REQUIREMENTS.
The Company is in compliance with all applicable Nasdaq National Market
continued listing requirements. There are no proceedings pending or to the
Company's knowledge threatened against the Company relating to the continued
listing of the Company's Common Stock on the Nasdaq National Market and the
Company has not received any notice of, nor to the knowledge of the Company is
there any basis for, the delisting of the Common Stock from the Nasdaq National
Market.
4.22 ACKNOWLEDGEMENT OF DILUTION. The number of shares of
Common Stock issuable pursuant to this Agreement may increase substantially. The
Company's executive officers and directors have studied and fully understand the
nature of the transactions being contemplated hereunder and recognize that they
have a potential dilutive effect.
4.23 BROKERS AND FINDERS. The Investors shall have no
liability or responsibility for the payment of any commission or finder's fee to
any third party in connection with or resulting from this agreement or the
transactions contemplated by this Agreement by reason of any agreement of or
action taken by the Company. The Investors acknowledge that the Company is
obligated to pay a finder's fee to Xxxxxx LLC equal to 4.5% of the gross
proceeds of this offering plus warrants to acquire 25,000 shares of Common
Stock.
4.24 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the Securities.
4.25 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, under circumstances that would adversely affect reliance by
the Company on Section 4(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of the Securities
under the 0000 Xxx.
4.26 DISCLOSURES. No representation or warranty made under
any Section hereof contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein, in
light of the circumstances under which the statements were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Each of the
Investors hereby severally, and not jointly, represents and warrants to the
Company that:
5.1 ORGANIZATION AND EXISTENCE. The Investor is a validly
existing corporation or limited liability company and has all requisite
corporate or limited liability company power and authority to invest in the
Securities pursuant to this Agreement.
5.2 AUTHORIZATION. The execution, delivery and performance
by the Investor of the Agreements have been duly authorized and the Agreements
will each constitute the valid and legally binding obligation of the Investor,
enforceable against the Investor in accordance with their terms.
5.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be
received by the Investor hereunder will be acquired for the Investor's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Investor is not a registered broker dealer or an entity engaged in the business
of being a broker dealer.
5.4 INVESTMENT EXPERIENCE. The Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment contemplated
hereby.
5.5 DISCLOSURE OF INFORMATION. The Investor has had an
opportunity to receive documents related to the Company and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities. The Investor
acknowledges receipt of the SEC Filings and any other filings which it requested
be made by the Company with the SEC. Neither such inquiries nor any other due
diligence investigation conducted by the Investor shall modify, amend or affect
the Investor's right to rely on the Company's representations and warranties
contained in this Agreement.
5.6 RESTRICTED SECURITIES. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.7 LEGENDS. It is understood that, until registration for
resale pursuant to the Registration Rights Agreement, certificates evidencing
the Securities may bear one or all of the following legends:
(a) "The shares represented by this certificate may not
be transferred without (i) the opinion of counsel satisfactory to the
corporation that such transfer may lawfully be made without registration under
the Securities Act of 1933 or qualification under applicable state securities
laws; or (ii) such registration or qualification."
(b) If required by the authorities of any state in
connection with the issuance of sale of the Securities, the legend required by
such state authority.
Upon registration for resale pursuant to the Registration
Rights Agreement or upon Rule 144(k) becoming available, the Company shall
promptly cause certificates evidencing the Shares previously issued hereunder
(including Shares issued pursuant to Section 7.1 below) to be replaced with
certificates which do not bear such restrictive legends, and all Warrant Shares
subsequently issued shall not bear such restrictive legends. When the Company is
required to cause unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to an Investor within
ten (10) business days of submission by that Investor of legended stock
certificate(s) to the Company's transfer agent, the Company shall be liable to
the Investor for a penalty equal to 2% of the aggregate Purchase Price of the
Shares evidenced by such certificate(s) for each thirty day period (or portion
thereof) beyond such ten days that the unlegended certificates have not been so
delivered.
5.8 ACCREDITED INVESTOR. The Investor is an accredited
investor as defined in Rule 501(a) of Regulation D, as amended, under the 0000
Xxx.
5.9 NO GENERAL SOLICITATION. The Investor did not learn of
the investment in the Securities as a result of any public advertising or
general solicitation.
6. REGISTRATION RIGHTS AGREEMENT. The parties acknowledge and agree
that part of the inducement for the Investor to enter into this Agreement is the
Company's execution and delivery of the Registration Rights Agreement. The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration Rights Agreement is being duly executed and delivered by the
parties thereto.
7. COVENANTS AND AGREEMENTS OF THE COMPANY.
7.1 PURCHASE PRICE ADJUSTMENTS.
(a) REQUIRED ADJUSTMENTS. Subject to the exclusions
contained in Section 7.1(f) below, if during the period the MFN Period (defined
below) the Company issues or sells any shares of its Common Stock at a Per Share
Selling Price (as defined below) lower than the Purchase Price per share set
forth in Section 2 hereof, the Purchase Price per share of the Shares sold to
the Investors hereunder shall be adjusted downward to equal such lower Per Share
Selling Price and Investors shall be entitled to receive the additional shares
as provided by Section 7.1(c); provided, however, that in the event an Investor
then owns less than 51% of the Shares acquired by it hereunder, such Investor
shall be entitled to additional shares only with respect to the number of Shares
then owned by such Investor as provided in Section 7.1(c). The Company shall
give to the Investors written notice of any such sale within 24 hours of the
closing of any such issuance or sale. For so long as an Investor owns 51% or
more of the Shares originally acquired by such Investor hereunder, such Investor
shall be entitled to the full benefit of the Purchase Price adjustment required
by this Section 7.1. The term "Shares" as used in this Agreement shall include
shares issued to the Investors pursuant to this Section 7.1.
(b) DEFINITIONS.
(i) For the purposes of this Section 7.1, the term
"Per Share Selling Price" as used in this Section 7.1 shall include the amount
actually paid by third parties for each share of Common Stock. In the event a
fee in excess of 5.5% is paid by the Company in connection with such
transaction, any such excess amount shall be deducted from the selling price pro
rata to all shares sold in the transaction to arrive at the Per Share Selling
Price. A sale in a capital raising transaction of shares of Common Stock shall
include the sale or issuance of rights, options, warrants or convertible
securities under which the Company is or may become obligated to issue shares of
Common Stock, and in such circumstances the Per Share Selling Price of the
Common Stock covered thereby shall also include the exercise or conversion price
thereof (in addition to the consideration received by the Company upon such sale
or issuance less the excess fee amount as provided above). In case of any such
security issued within the MFN Period in a "Variable Rate Transaction" or an
"MFN Transaction" (each as defined below), the Per Share Selling Price shall be
deemed to be the lowest conversion or exercise price at which such securities
are converted or exercised or might have been converted or exercised in the case
of a Variable Rate Transaction, or the lowest adjustment price in the case of an
MFN Transaction, over the life of such securities. If shares are issued for a
consideration other than cash, the Per Share Selling Price shall be the fair
value of such consideration as determined in good faith by independent certified
public accountants mutually acceptable to the Company and the Investors.
(ii) The term "Variable Rate Transaction" shall
mean a transaction in which the Company issues or sells (a) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (x) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (y) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock (but
excluding standard stock split anti-dilution provisions), or (b) any securities
of the Company pursuant to an "equity line" structure which provides for the
sale, from time to time, of securities of the Company which are registered for
resale pursuant to the 1933 Act.
(iii) The term "MFN Transaction" shall mean a
transaction in which the Company issues or sells any securities in a capital
raising transaction or series of related transactions (the "New Offering") which
grants to the investor (the "New Investor") the right to receive additional
securities based upon future capital raising transactions of the Company on
terms more favorable than those granted to the New Investor in the New Offering.
(iv) The term "MFN Period" shall mean the period
ending thirty (30) months following the date of this agreement; provided,
however, that if during calendar year 2000 the Company completes a firm
commitment underwritten primary public offering (other than a "shelf"
registration of securities by the Company to which this proviso shall not apply)
of its Common Stock, the MFN period will terminate on the day after the public
sale of such Common Stock.
(c) ADJUSTMENT MECHANISM. If an adjustment of the
Purchase Price is required pursuant to Section 7.1(a), the Company shall deliver
to the Investors within twenty (20) calendar days of the closing of the
transaction giving rise to the adjustment ("Delivery Date") each Investor's
pro-rata share of such number of additional shares of Common Stock equal to (i)
the aggregate Purchase Price paid by the Investor divided by the adjusted per
share purchase price as required under Section 7.1(a), minus (ii) the total
number of shares of Common Stock previously delivered to that Investor
hereunder; provided however, that the Company shall effect such adjustment in
cash, in whole or in part, to the extent required by Section 7.1(d). In the
event the Company fails to deliver the additional shares (or cash, as the case
may be) by the Delivery Date, the Company shall be liable to the Investors for a
penalty equal to 2% of the aggregate Purchase Price adjustment per month (in
each instance to such Investor pro rata in accordance with its participation in
this offering), payable in Common Stock or cash, at each Investor's election.
(d) LIMITATION ON NUMBER OF SHARES.
(i) If by way of any adjustment required by this
Section 7.1, an Investor would receive a number of shares of Common Stock such
that the total number of such shares held by the Investor as of the date of such
adjustment would be greater than 9.90% but less than 13.0% of the total
outstanding Common Stock of the Company, then the Company shall not effect the
adjustment required by this Section to the extent necessary to avoid causing the
aforesaid limitation to be exceeded until 120 days following the date such
adjustment would have otherwise been made.
(ii) If by way of any adjustment required by this
Section 7.1, the Investor would receive a number of shares of Common Stock such
that the total number of such shares held by the Investor as of the date of such
adjustment would equal or exceed 13.0% of the total outstanding Common Stock of
the Company, then the Company shall not effect the adjustment required by this
Section to the extent necessary to avoid causing the aforesaid limitation to be
exceeded until 180 days following the date such adjustment would have otherwise
been made.
(iii) In the event that the Company would be
obligated to issue an amount of shares of Common Stock which, when aggregated
with all shares of Common Stock issued to an Investor, would constitute a breach
of the Company's obligations under the rules or regulations of Nasdaq as they
apply to the Company, or any other principal securities exchange or market upon
which the Common Stock is or becomes traded (the "Cap Regulations"), the Company
shall not be obligated to issue any such shares of Common Stock. Instead, the
Company shall immediately seek shareholder approval of this transaction (with
voting in accordance with the Cap Regulations and other applicable law) if such
approval would, under the Cap Regulations, permit the Company to issue the
shares of Common Stock without violation of the Cap Regulations. If such
shareholder approval will not afford a cure of the breach of the Cap
Regulations, or if such shareholder approval is not obtained within ninety (90)
days, then the Company shall promptly redeem the Investor at a redemption price
equal to 110% of the cash value of the adjustment. Only shares acquired pursuant
to this Agreement will be included in determining whether the limitations would
be exceeded for purposes of this Section 7.1(d)(iii).
(e) CAPITAL ADJUSTMENTS. In case of any stock split or
reverse stock split, stock dividend, reclassification of the common stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of Section 7.1 shall be applied
in a fair, equitable and reasonable manner so as to give effect, as nearly as
may be, to the purposes hereof.
(f) EXCLUSIONS. Section 7.1(a) shall not apply to:
(i) issuances of options to acquire or shares of
Common Stock by the Company pursuant to the provisions of any existing
shareholder-approved option or similar employee benefit plan heretofore adopted
by the Company or issuances of up to 1,000,000 additional shares of Common Stock
to directors or employees of the Company pursuant to the provisions of any
subsequently adopted shareholder-approved option or similar employee benefit
plan; or
(ii) sales of shares of Common Stock by the
Company upon conversion or exercise of any convertible securities, options or
warrants outstanding prior to the date hereof; or
(iii) issuances by the Company of up to 2,000,000
shares of Common Stock in the aggregate so long as within the following
categories (issuances in excess of any of the thresholds in any of the
categories shall be subject to Section 7.1(a)): (A) the issuance by the Company
of up to 750,000 shares of Common Stock during each of the two fifteen (15)
month periods of the MFN Period as consideration for the acquisition by the
Company of one or more privately held entities; (B) the issuance by the Company
of up to 750,000 shares of Common Stock during each of the two fifteen (15)
month periods of the MFN Period as consideration for the acquisition by the
Company of one or more publicly traded companies; (C) the issuance by the
Company of up to 400,000 shares of Common Stock to corporate strategic partners
of the Company in connection with the formation of joint ventures or marketing
agreements; and (D) the issuance by the Company of up to 100,000 shares of
Common Stock to consultants of the Company in consideration for services to be
rendered to the Company.
7.2 LIMITATION ON TRANSACTIONS.
(a) Until the date of effectiveness of the
Registration Statement covering the Shares as contemplated by the Registration
Rights Agreement, without the prior written consent of the Investors (which
consent may be withheld in the Investors' discretion), the Company shall not
issue or sell or agree to issue or sell for cash any securities in a capital
raising transaction, and until the date that is at least 22 trading days (plus
that number of days, if any of an "Allowed Delay" or a "Blackout Period" under
the Registration Rights Agreement) after the Investors have received the
Company's written notice of the effectiveness of the Registration Statement
covering the Shares, a firm commitment underwritten primary public offering
(other than a "shelf" registration of securities by the Company) of the
Company's securities may not be declared effective.
(b) Until the expiration of the MFN Period,
without the prior written consent of the Investors (which consent may be
withheld in the Investors' discretion), the Company shall not (i) issue or sell
or agree to issue or sell for cash any securities in a MFN Transaction; or (ii)
issue or sell, or agree to issue or sell, for cash any securities in a Variable
Rate Transaction.
(c) Subject to any consent or approval rights of
the Investor hereunder, in the event the Company contemplates a private offering
of its equity or debt securities within six months of the date hereof, the
Company agrees that, upon the request of the Investors, the Company shall first
disclose the terms and conditions and other relevant facts of such proposed
transaction to Nasdaq and obtain from Nasdaq its assurance that such transaction
will not be integrated with the offering which is the subject of this Agreement
for purposes of the Nasdaq rules requiring shareholder approval of the issuance
of 20% or more of an issuer's outstanding common stock. In the event the Company
fails to seek or obtain such assurances, then, at the election of an Investor,
the Company shall redeem the Common Stock purchased by such Investor at 120% of
the original per share Purchase Price paid by the Investor for all Common Stock
then held by such Investor.
7.3 RIGHT OF THE INVESTORS TO PARTICIPATE IN FUTURE
TRANSACTIONS. Until the expiration of the MFN Period, the Investors will have a
right to participate in future capital raising transactions on the terms and
conditions set forth in this Section 7.3. During such period, the Company shall
give seven (7) business days advance written notice to the Investor prior to any
non-public offer or sale of any of the Company's equity securities or any
securities convertible into or exchangeable or exercisable for such securities
by providing to the Investors a comprehensive term sheet containing all
significant business terms of such a proposed transaction. The Investors shall
have the right (pro rata in accordance with the Investors' participation in this
offering) to purchase up to 50% of such securities which are the subject of such
a proposed transaction for the same consideration and on the same terms and
conditions as contemplated for such third-party sale. The Investor(s)' rights
hereunder must be exercised in writing by the Investor(s) within five (5)
business days following receipt of the notice from the Company. If, subsequent
to the Company giving notice to an Investor hereunder but prior to the Investor
exercising its right to participate (or the expiration of the five-day period
without response from the Investor), the terms and conditions of the proposed
third-party sale are changed from that disclosed in the comprehensive term sheet
provided to such Investor, the Company shall be required to provide a new notice
to the Investor hereunder and the Investors shall have the right, which must be
exercised within five (5) business days of such new notice, to exercise their
rights to purchase the securities on such changed terms and conditions as
provided hereunder. In the event the Investors do not exercise their rights
hereunder, or affirmatively decline to engage in the proposed transaction with
the Company, then the Company may proceed with such proposed transaction on the
same terms and conditions as noticed to the Investors (assuming the Investors
have consented to the transaction, if required, pursuant to Section 7.2 of this
Agreement). The rights and obligations of this Section 7.3 shall in no way
diminish the other rights of the Investor pursuant to this Section 7.
7.4 OPINION OF COUNSEL. On or prior to the Closing Date, the
Company will deliver to the Investors the opinion of legal counsel to the
Company, in form and substance reasonably acceptable to the Investors,
addressing those legal matters set forth in SCHEDULE 7.4 hereto.
7.5 RESERVATION OF COMMON STOCK PURSUANT TO SECTION 7.1 AND
EXERCISE OF WARRANTS. The Company hereby agrees at all times to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the exercise of the Warrants, such number of shares
of Common Stock as shall from time to time equal the number of shares sufficient
to permit the exercise of the Warrants in accordance with the terms of the
Warrants. In addition, as soon as such number is determinable, the Company
agrees to reserve such shares as may be necessary to permit the issuances to the
Investors required by Section 7.1.
In addition, as soon as such number is determinable, the
Company agrees to reserve such shares as may be necessary to permit the
issuances to the Investors required by Section 7.1.
7.6 REPORTS. For so long as the Investors beneficially own
any of the Securities, the Company will furnish to the Investors the following
reports, each of which shall be provided to the Investors by air mail (within
one week of filing with the SEC, in the case of SEC filings):
(a) QUARTERLY REPORTS. The Company's quarterly
report on Form 10-Q or, in the absence of such report, consolidated balance
sheets of the Company as at the end of such period and the related consolidated
statements of operations, stockholders' equity and cash flows for such period
and for the portion of the Company's fiscal year ended on the last day of such
quarter, all in reasonable detail and certified by a principal financial officer
of the Company to have been prepared in accordance with generally accepted
accounting principles, subject to year-end and audit adjustments.
(b) ANNUAL REPORTS. The Company's Form 10-K or, in
the absence of a Form 10-K, consolidated balance sheets of the Company as at the
end of such year and the related consolidated statements of earnings,
stockholders' equity and cash flows for such year, all in reasonable detail and
accompanied by the report on such consolidated financial statements of an
independent certified public accountant selected by the Company and reasonably
satisfactory to the Investor.
(c) SECURITIES FILINGS. Copies of (i) all notices,
proxy statements, financial statements, reports and documents as the Company
shall send or make available generally to its stockholders or to financial
analysts, promptly after providing same to the stockholders and (ii) all
periodic and special reports, documents and registration statements (other than
on Form S-8) which the Company furnishes or files, or any officer or director of
the Company (in such person's capacity as such) furnishes or files with the SEC.
(d) OTHER INFORMATION. Such other information
relating to the Company as from time to time may reasonably be requested by the
Investors provided the Company produces such information in its ordinary course
of business, and further provided that the Company, solely in its own
discretion, determines that such information is not confidential in nature and
disclosure to the Investor would not be harmful to the Company.
7.7 PRESS RELEASES. Any press release or other publicity
concerning this Agreement or the transactions contemplated by this Agreement
shall be submitted to the Investors for comment at least two (2) business days
prior to issuance, unless the release is required to be issued within a shorter
period of time by law or pursuant to the rules of a national securities
exchange.
7.8 NO CONFLICTING AGREEMENTS. The Company will not take any
action, enter into any agreement or make any commitment that would conflict or
interfere in any material respect with the obligations to the Investors under
the Agreements.
7.9 INSURANCE. So long as the Investors beneficially own any
Securities, the Company shall not materially reduce the insurance coverages set
forth in SCHEDULE 4.20.
7.10 COMPLIANCE WITH LAWS. So long as the Investors
beneficially own any Securities, the Company will use reasonable efforts to
comply with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities, except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.
7.11 LISTING OF UNDERLYING SHARES AND RELATED MATTERS. The
Company hereby agrees, promptly following the Closing of the transactions
contemplated by this Agreement, to take such action to cause the Shares and the
Warrant Shares to be listed on the Nasdaq National Market as promptly as
possible but no later than the effective date of the registration contemplated
by the Registration Rights Agreement. The Company further agrees that if the
Company applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it will include in such application the
Warrant Shares and will take such other action as is necessary to cause such
Common Stock to be so listed. For so long as the Investors beneficially own any
of the Securities, the Company will take all action necessary to continue the
listing and trading of its Common Stock on the Nasdaq National Market and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of such exchange, as applicable, to ensure
the continued eligibility for trading of the Shares and the Warrant Shares
thereon.
7.12 CORPORATE EXISTENCE. So long as the Investors
beneficially own any of the Shares or Warrants, the Company shall maintain its
corporate existence, except in the event of a merger, consolidation or sale of
all or substantially all of the Company's assets, as long as the surviving or
successor entity in such transaction (a) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith, regardless of whether or not the Company would have had a sufficient
number of shares of Common Stock authorized and available for issuance in order
to fulfill its obligations hereunder and effect the exercise in full of all
Warrants outstanding as of the date of such transaction; (b) has no legal,
contractual or other restrictions on its ability to perform the obligations of
the Company hereunder and under the agreements and instruments entered into in
connection herewith; and (c) is a publicly traded corporation whose common stock
and the shares of capital stock issuable upon exercise of the Warrants are (or
would be upon issuance thereof) listed for trading on the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange or the American
Stock Exchange.
8. SURVIVAL. All representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants and agreements as of the date hereof and shall survive the execution
and delivery of this Agreement for a period of three years from the date of this
Agreement; provided, however, that the provisions contained in Section 7 hereof
shall survive in accordance therewith.
9. MISCELLANEOUS.
9.1 SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by a party hereto without the prior written consent of the other party
hereto, except that without the prior written consent of the Company, but after
notice duly given, an Investor may assign its rights and delegate its duties
hereunder in whole or in part to an Affiliate or to a third party acquiring some
portion or all of its Shares in a private transaction, and without the prior
written consent of the Investors, but after notice duly given and in compliance
with this Agreement, the Company may assign its rights and delegate its duties
hereunder to any successor-in-interest corporation in the event of a merger or
consolidation of the Company with or into another corporation, or any merger or
consolidation of another corporation with or into the Company that results
directly or indirectly in an aggregate change in the ownership or control of
more than 50% of the voting rights of the equity securities of the Company, or
the sale of all or substantially all of the Company's assets. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
9.2 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.3 TITLES 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.
9.4 NOTICES. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given only upon delivery to each party to be notified by (i)
personal delivery, (ii) telex or telecopier, upon receipt of confirmation of
complete transmittal, or (iii) an internationally recognized overnight air
courier, addressed to the party to be notified at the address as follows, or at
such other address as such party may designate by ten days' advance written
notice to the other party:
If to the Company:
Ursus Telecom Corporation
000 Xxxxxxxx Xxxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxx
Chief Financial Officer
Fax: (000) 000-0000
If to the Investors, to the addresses set forth on
the signature pages hereto.
9.5 EXPENSES. The parties hereto shall pay their own costs
and expenses in connection herewith, except that the Company shall pay to Tail
Wind, Inc. a sum equal to 1% of the Purchase Price paid by each Investor as and
for reimbursement for legal and due diligence expenses incurred in connection
herewith and such amount shall be paid at Closing from gross proceeds of the
offering.
9.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investors.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.
9.7 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
9.8 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules hereto, and the Registration Rights Agreement constitute the
entire agreement among the parties hereof with respect to the subject matter
hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof
and thereof.
9.9 FURTHER ASSURANCES. The parties shall execute and
deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained.
9.10 APPLICABLE LAW. This 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.
[Remainder of Page Intentionally Blank.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
The Company: URSUS TELECOM CORPORATION
By: /s/ Luca M. Giussani
---------------------
Name: Luca M. Giussani
Title: Chief Exeuctive Officer
The Investor: THE TAIL WIND FUND LTD.
By: /s/ Xxxxx XxXxxxxxx
------------------------
Name: Xxxxx XxXxxxxxx
Title: Director
By: /s/ Xxxx Xxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxx
Title: Director
Aggregate Purchase Price: $4,400,000
Number of Shares of Common Stock: 386,643
Number of Warrants: 248,798
(56,545 per $1 million invested)
Effective per share Purchase Price of Shares: $11.38
Exercise price of Warrants: $15.3956
Address for Notice:
The Tail Wind Fund Ltd.
MeesPierson (Bahamas) Ltd.
Attn: Xxxxx XxXxxxxxx
Windemere House, 000 Xxxx Xxx Xxxxxx
P.O. Box SS 5539, Nassau, Bahamas
Tel: 242/000-0000 Fax: 242/000-0000
with a copy to:
Xxxxx Xxxxx, Esq.
The Tail Wind Fund Ltd.
x/x XXXX
0xx Xxxxx, No. 0 Xxxxxx Xxxxxx
Xxxxxx, XX0X 0XX XX
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
and with a copy to:
Xxxxx Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: XxXxxx Xxxxxx
Telephone: 202/000-0000
Facsimile: 202/508-6200
The Investor: RESONANCE LIMITED
By: /s/ X. Xxxxxx
------------------------
Name: X. Xxxxxx
Title: President
Aggregate Purchase Price: $2,000,000
Number of Shares of Common Stock: 175,747
Number of Warrants: 24,000
(12,000 per $1 million invested)
Effective per share Purchase Price of Shares: $11.38
Exercise price of Warrants: $15.3956
Address for Notice:
[---------------------]
[---------------------]
[---------------------]
[---------------------]
[---------------------]
with a copy to:
Xxxxx Xxxx LLP
000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: XxXxxx Xxxxxx
Telephone: 202/508/6046
Facsimile: 202/508/6200
The Investor: EMERGE CAPITAL
By: /s/ Xxxxxxx xx Xxxxxxxx
------------------------
Name: Xxxxxxx xx Xxxxxxxxx
Title: Director
Aggregate Purchase Price: $600,010.50
Number of Shares of Common Stock: 52,725
Number of Warrants: 7,200
(12,000 per $1 million invested)
Effective per share Purchase Price of Shares: $11.38
Exercise price of Warrants: $15.3956
Address for Notice:
Emerge Capital
00, Xxxxx X'xxxx
X-0000
Xxxxxxxxxx
with a copy to:
Xxxxx Xxxx LLP
000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: XxXxxx Xxxxxx
Telephone: 202/508/6046
Facsimile: 202/508/6200
