SECURITIES EXCHANGE AND AMENDMENT AGREEMENT
EXHIBIT
10.2
This
Securities Exchange and Amendment Agreement (this “Agreement”)
is
dated as of December 31, 2007, among GigaBeam Corporation, a Delaware
corporation (the “Company”)
and
each holder identified on the signature pages hereto (each, including its
successors and assigns, a “Holder”
and
collectively the “Holders”).
WHEREAS,
each Holder is party to that certain Senior Convertible Note, dated January
28,
2005 (the “Note”)
pursuant to that certain Securities Purchase Agreement, dated January 28, 2005
(the “Purchase
Agreement”
(together, “Outstanding Transaction Documents”);
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”),
the
Company desires to issue and exchange with each Holder, and each Holder,
severally and not jointly, desires to exchange with the Company, all outstanding
principal, any unpaid interest and all other amounts payable under the Notes
(“Outstanding Debt”) for Preferred Stock as more fully described in this
Agreement; and
WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
and
the Holders have agreed to amend certain terms of the Purchase
Agreement;
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Holder agree as
follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms
that are not otherwise defined herein have the meanings given to such terms
in
the Certificate of Designation (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Holder, any investment fund or managed account that is managed
on a
discretionary basis by the same investment manager as such Holder will be deemed
to be an Affiliate of such Holder.
“Authorized
Shares Deficiency”
shall
have the meaning ascribed to such term in Section 4.3(b).
“Authorized
Share Action”
shall
have the meaning ascribed to such term in Section 4.3(b).
“Certificate
of Designation”
means
the Certificate of Designation to be filed prior to the Closing by the Company
with the Secretary of State of Delaware in the form of Exhibit
A.
“Closing”
means
the closing of the exchange of the Notes and extinguishment of Outstanding
Debt
for Preferred Stock pursuant to Section 2.1.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any other
class
of securities into which such securities may hereafter be reclassified or
changed into.
“Company
Counsel”
means
Xxxxxxx Business Law, with offices located at 0000 Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, XX 00000.
“Conversion
Price”
shall
have the meaning ascribed to such term in the Certificate of
Designation.
“Discussion
Time”
shall
have the meaning ascribed to such term in Section 3.2(f).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Exchange
Amount”
shall
mean, as to each Holder as applicable, as of the Closing, the Outstanding Debt
to be exchanged for the Preferred Stock, in each case to the extent specified
in
Schedule
A
attached
hereto and incorporated herein by reference.
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material
Adverse Effect”
shall
have the meaning assigned to such term in Section 3.1(b).
“Maximum
Rate”
shall
have the meaning ascribed to such term in Section 4.16.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Preferred
Stock”
means
the Company’s Series D Convertible Preferred Stock issued hereunder, having the
rights, preferences and privileges set forth in the Certificate of Designation,
in the form of Exhibit
A
attached
hereto.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
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“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(e).
“Required
Minimum”
means,
as of any date, the maximum aggregate number of shares of Common Stock then
issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon conversion in full
of
all shares of Preferred Stock, ignoring any conversion limits set forth
therein.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities”
means
the Preferred Stock and the Underlying Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Short
Sales”
means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable shares of Common Stock).
“Subsidiary”
means
any subsidiary of the Company as identified in Section 3.1(a).
“Trading
Day”
means
a
day on which the Common Stock is traded on a Trading Market; provided that
if
the Company is not listed or quoted for trading on a Trading Market, “Trading
Day” shall mean “Business Day” unless the context otherwise
requires.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the
New York Stock Exchange or the OTC Bulletin Board.
“Transaction
Documents”
means
this Agreement, the Certificate of Designation, and any other documents or
agreements executed in connection with the transactions contemplated
hereunder.
“Underlying
Shares”
means
the shares of Common Stock issued and issuable upon conversion of the Preferred
Stock.
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ARTICLE
II
EXCHANGE,
RESETS AND AMENDMENTS
2.1 Agreements.
(a) Exchange
of All Outstanding Debt.
On the
Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement
by
the parties hereto, the Company agrees to issue to each Holder shares of
Preferred Stock, and each Holder agrees, severally and not jointly, to accept
the shares of Preferred Stock in exchange for cancelling Outstanding Debt,
as
summarized on Schedule
A
attached
hereto and incorporated herein by reference. Every $1,000 of Outstanding Debt
shall be exchanged for one (1) share of Preferred Stock. Upon the consummation
of the exchange hereunder, all obligations of the Company, including Outstanding
Debt, under the Outstanding Transaction Documents shall be deemed satisfied
in
full and the Company shall have no other obligations thereunder.
(b) Waiver
of Existing Defaults.
Each
Holder hereby agrees to waive, forever more, amounts owed in respect of the
Outstanding Debt and its right to enforce its rights in connection therewith.
Additionally, the Holder hereby agrees to waive any breach of any of the
Outstanding Transaction Documents that relate, directly or indirectly, to an
existing default. Notwithstanding anything herein to the contrary, this waiver
is limited only to the existing defaults and any other past or future Events
of
Default, including a breach of this Agreement.
2.2
Deliveries.
(a) On
or
prior to the Closing Date, the Company shall deliver or cause to be delivered
to
each Holder the following:
(i)
this
Agreement duly executed by the Company;
(ii) one
or
more certificates evidencing the shares of Preferred Stock issuable to such
Holder pursuant to Section 2.1(a).
(b) On
the
Closing Date, each Holder shall deliver or cause to be delivered to the Company
the following:
(i) this
Agreement duly executed by such Holder; and
(ii) such
Holder’s Note representing the securities comprising the Exchange
Amount.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1
Representations
and Warranties of the Company.
The
Company hereby makes the following representations and warranties to each
Holder:
(a) Subsidiaries.
All of
the direct and indirect subsidiaries of the Company are set forth in the
Company’s Annual Report on Form 10-KSB for the year ended December 31, 2006, as
filed with the Commission. The Company owns, directly or indirectly, all of
the
capital stock or other equity interests of each Subsidiary free and clear of
any
Liens, and all of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.
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(b) Organization
and Qualification.
The
Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and
to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
Adverse Effect”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and
the consummation by it of the transactions contemplated hereby and thereby
have
been duly authorized by all necessary action on the part of the Company and
no
further action is required by the Company, its board of directors or its
stockholders in connection therewith other than in connection with the Required
Approvals. Each Transaction Document has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms except
(i)
as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
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(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby do not and will not: (i) conflict with or violate any provision of
the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, 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, result in the creation of any Lien upon any
of
the properties or assets of the Company or any Subsidiary, or give to others
any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which
any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or
a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
(e) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
(other than the Holders) in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than (i) the
Authorized Share Action, (ii) the filing of Form D with the Commission and
such
filings as are required to be made under applicable state securities laws,
(iii) filing of the registration statement contemplated hereby and
(iv) filing of any of the foregoing with the appropriate Trading Market(s)
(collectively, the “Required
Approvals”).
(f) Issuance
of the Securities.
As of
the Closing Date, the Securities will be duly authorized and, when issued and
paid for in accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company or any other Person other than restrictions on transfer
provided for in the Transaction Documents and, if applicable, pledges or other
actions taken by any particular Holder with respect to such Holder’s Securities.
The Underlying Shares, when issued in accordance with the terms of the
Transaction Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company.
(g) Private
Placement.
Assuming the accuracy of the Holders’ representations and warranties set forth
in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Holders as contemplated
hereby.
(h)
Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
6
(i)
Disclosure.
All
disclosure furnished by or on behalf of the Company to the Holders regarding
the
Company, its business and the transactions contemplated hereby, including the
disclosure Schedules to this Agreement, is true and correct and does 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 light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of
this
Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements, in light of the circumstances under which
they
were made and when made, not misleading. The Company acknowledges and agrees
that no Holder makes or has made any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof.
(j)
No
Integrated Offering.
Assuming
the accuracy of the Holders’ representations and warranties set forth in Section
3.2, 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 cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act or any applicable
shareholder approval provision of any Trading Market on which any of the
securities of the Company are listed or designated.
(k)
No
General Solicitation.
Neither
the Company nor any person acting on behalf of the Company has offered or sold
(i) any of the Securities by any form of general solicitation or general
advertising, or (ii) any other securities of the Company with comparable rights
and preferences by any form of general solicitation or general advertising
within two months of the date hereof. The Company has offered such Securities
for sale only to the Holders and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.
(l)
Acknowledgment
Regarding Holders’ Purchase of Securities.
The
Company acknowledges and agrees that, to the best of its knowledge, each of
the
Holders is acting solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated thereby.
The Company further acknowledges that no Holder is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by any Holder or any of their respective representatives or agents in
connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Holders’ purchase of the Securities. The
Company further represents to each Holder that the Company’s decision to enter
into this Agreement and the other Transaction Documents has been based solely
on
the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
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(m)
Acknowledgement
Regarding Holders’ Trading Activity.
Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.16 hereof), it is understood and acknowledged
by the Company (i) that none of the Holders have been asked to agree, nor has
any Holder agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) that
past
or future open market or other transactions by any Holder, including Short
Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) that any Holder, and counter-parties in
“derivative” transactions to which any such Holder is a party, directly or
indirectly, presently may have a “short” position in the Common Stock; and (iv)
that each Holder shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction.
The
Company further understands and acknowledges that (a) one or more Holders may
engage in hedging activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value of the Underlying Shares deliverable with respect to Securities
are being determined and (b) such hedging activities (if any) could reduce
the
value of the existing stockholders' equity interests in the Company at and
after
the time that the hedging activities are being conducted. The Company
acknowledges that such aforementioned hedging activities do not constitute
a
breach of any of the Transaction Documents.
(n)
Regulation
M Compliance.
The Company has not, and to its knowledge no one acting on its behalf has,
(i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
securities of the Company, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid
to
the Company’s placement agent in connection with the placement of the
Securities.
3.2 Representations
and Warranties of the Holders.
Each
Holder hereby, for itself and for no other Holder, represents and warrants
as of
the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority.
Such
Holder is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with full right, corporate
or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder (or,
as
appropriate, is an individual with full right, power and authority to enter
into
and to consummate the transactions contemplated by the Transaction Documents
and
otherwise to carry out his obligations hereunder and thereunder).
The
execution, delivery and performance by such Holder of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such Holder. Each Transaction
Document to which it is a party has been duly executed by such Holder, and
when
delivered by such Holder in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Holder, enforceable against
it
in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium
and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar
as
indemnification and contribution provisions may be limited by applicable
law.
8
(b) Own
Account.
Such
Holder understands that the Securities are “restricted securities” and have not
been registered under the Securities Act or any applicable state securities
law
and is acquiring the Securities as principal for its own account and not with
a
view to or for distributing or reselling such Securities or any part thereof
in
violation of the Securities Act or any applicable state securities law, has
no
present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to distribute
or
regarding the distribution of such Securities in violation of the Securities
Act
or any applicable state securities law (this representation and warranty not
limiting such Holder’s right to sell the Securities in compliance with
applicable federal and state securities laws). Such Holder is acquiring the
Securities hereunder in the ordinary course of its business.
(c) Holder
Status.
At the
time such Holder was offered the Securities, it was, and at the date hereof
it
is, and on each date on which it converts any shares of Preferred Stock or
exercises any Warrants, it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. Such Holder is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
(d) Experience
of Such Holder.
Such
Holder, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in
the
Securities, and has so evaluated the merits and risks of such investment. Such
Holder is able to bear the economic risk of an investment in the Securities
and,
at the present time, is able to afford a complete loss of such
investment.
(e) General
Solicitation.
Such
Holder is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(f) Short
Sales and Confidentiality Prior To The Date Hereof.
Other
than the transaction contemplated hereunder, such Holder has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Holder, executed any disposition, including Short
Sales, in the securities of the Company during the period commencing
from
the time
that such Holder first received a term sheet (written or oral) from the Company
or any other Person setting forth the material terms of the transactions
contemplated hereunder until the date hereof (“Discussion
Time”).
Notwithstanding the foregoing, in the case of a Holder that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Holder's assets and the portfolio managers have no direct knowledge
of
the investment decisions made by the portfolio managers managing other portions
of such Holder's assets, the representation set forth above shall only apply
with respect to the portion of assets managed by the portfolio manager that
made
the investment decision to purchase the Securities covered by this Agreement.
Other than to other Persons party to this Agreement, such Holder has maintained
the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction).
9
(g) No
Commission or Other Recommendation for Solicitation of Exchange.
The
Holder has not received any commission or other remuneration for the
solicitation of any of the participants in, or recommendation with respect
to,
the share exchange contemplated by this Agreement.
ARTICLE
IV
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company
or
to an Affiliate of a Holder or in connection with a pledge as contemplated
in
Section 4.1(b), the Company may require the transferor thereof to provide to
the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing
to
be bound by the terms of this Agreement and shall have the rights of a Holder
under this Agreement.
(b) The
Holders agree to the imprinting, so long as is required by this Section 4.1,
of
a legend on any of the Securities in the following form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
[CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
[EXERCISE] [CONVERSION] OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH
A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
10
The
Company acknowledges and agrees that a Holder may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Holder may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required
in
connection therewith. Further, no notice shall be required of such pledge.
At
the appropriate Holder’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
(c)
Each
Holder, severally and not jointly with the other Holders, agrees that the
removal of the restrictive legend from certificates representing Securities
as
set forth in this Section 4.1 is predicated upon the Company’s reliance that the
Holder will sell any Securities pursuant to either the registration requirements
of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a Registration Statement, they will be sold in compliance with
the
plan of distribution set forth therein.
4.2
Acknowledgment
of Dilution.
The
Company acknowledges that the issuance of the Securities will result in
substantial dilution of the outstanding shares of Common Stock. The Company
further acknowledges that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Underlying Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless
of
the effect of any such dilution or any claim the Company may have against any
Holder and regardless of the dilutive effect that such issuance may have on
the
ownership of the other stockholders of the Company.
4.3 Reservation
and Listing of Securities.
(a) Subject
to Sections 4.3(b) and (c), the Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in full
under the Transaction Documents.
11
(b) Subject
to Section 4.3(c), if, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than 100% of (i) the
Required Minimum on such date, minus (ii) the number of shares of Common Stock
previously issued pursuant to the Transaction Documents (an “Authorized
Share Deficiency”)
then
the Company shall immediately take commercially reasonable efforts to provide
the Company with authorized shares of Common Stock in an amount sufficient
to
allow the Company to reserve the Required Minimum. Without limiting the
generality of the forgoing sentence, as soon as practicable after the date
of
the occurrence of an Authorized Share Deficiency, but in no event later than
forty-five (45) days after the occurrence of such Authorized Share Deficiency,
the Company shall use its best efforts to obtain stockholder approval of an
increase in the number of authorized shares of Common Stock (such action, an
“Authorized
Share Action”);
provided that the Company will not be required at any time to authorize a number
of shares of Common Stock greater than the maximum remaining number of shares
of
Common Stock that could possibly be issued after such time pursuant to the
Transaction Documents and any other agreements binding on the Company, including
any Underlying Shares issuable upon conversion in full of all Preferred Stock,
ignoring any conversion limits set forth therein.
(c) The
Holders acknowledge that the Company does not have sufficient Common Stock
authorized as of the Closing Date to reserve the Required Minimum and meet
its
other reserve requirements. Notwithstanding Section 4.3(a) and 4.3(b) to the
contrary, the parties agree that: (i) such failure shall not be considered
an
Authorized Share Deficiency until August 1, 2008; (ii) prior to such date,
the
Company shall use its best efforts to take an Authorized Share Action; (iii)
the
Holders, to the extent each owns any Common Stock or Preferred Stock, will
vote
in favor of the Authorized Share Action; and (iv) pending such Authorized Share
Action, the Company will reserve all unreserved Common Stock with respect to
the
Securities.
(d) The
Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the Required Minimum on the date of such application,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing on such Trading Market as soon as possible thereafter,
(iii) provide to the Holders evidence of such listing, and (iv) maintain the
listing of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market.
4.4 Equal
Treatment of Holders.
No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision constitutes
a
separate right granted to each Holder by the Company and negotiated separately
by each Holder, and is intended for the Company to treat the Holders as a class
and shall not in any way be construed as the Holders acting in concert or as
a
group with respect to the purchase, disposition or voting of Securities or
otherwise.
12
4.5
Short
Sales and Confidentiality After The Date Hereof.
Each
Holder severally and not jointly with the other Holders covenants that neither
it nor any Affiliate acting on its behalf or pursuant to any understanding
with
it will execute any Short Sales during the period commencing at the Discussion
Time and ending at the time that the transactions contemplated by this Agreement
are first publicly announced. Each
Holder, severally and not jointly with the other Holders, covenants that until
such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company, such Holder will maintain the confidentiality of
all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Each Holder understands and
acknowledges, severally and not jointly with any other Holder, that the
Commission currently takes the position that coverage of short sales of shares
of the Common Stock “against the box” prior to the Effective Date of the
Registration Statement with the Securities is a violation of Section 5 of the
Securities Act, as set forth in Item 65, Section A, of the Manual of Publicly
Available Telephone Interpretations, dated July 1997, compiled by the Office
of
Chief Counsel, Division of Corporation Finance. Notwithstanding
the foregoing, no Holder makes any representation, warranty or covenant hereby
that it will not engage in Short Sales in the securities of the Company after
the time that the transactions contemplated by this Agreement are first publicly
announced. Notwithstanding
the foregoing, in the case of a Holder that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Holder’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions
of
such Holder’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this Agreement.
4.6 Form
D; Blue Sky Filings.
The
Company agrees to timely file, if necessary, a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof,
promptly upon request of any Holder. The Company shall take such action as
the
Company shall reasonably determine is necessary in order to obtain an exemption
for, or to qualify the Securities for, sale to the Holders at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any
Holder.
ARTICLE
V
MISCELLANEOUS
5.1
Termination.
This Agreement may be terminated by any Holder, as to such Holder’s obligations
hereunder only and without any effect whatsoever on the obligations between
the
Company and the other Holders, by written notice to the other parties, if the
Closing has not been consummated on or before December 31, 2007; provided,
however,
that
such termination will not affect the right of any party to xxx for any breach
by
the other party (or parties).
5.2
Fees
and Expenses.
Except
as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to
the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes
and
duties levied in connection with the delivery of any Securities to the
Holders.
5.3
Entire
Agreement.
The
Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
13
5.4 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading
Day
or via “.pdf” data file via e-mail at the e-mail address provided to the Company
by a Holder, (b) the next Trading Day after the date of such transmission,
if
such notice or communication is delivered on a day that is not a Trading Day
or
later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
2nd
Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.5 Amendments;
Waivers.
No
provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed by the Company and all holders of
Preferred Stock then outstanding, or, in the case of a waiver, by the party
against whom enforcement of any such waived provision is sought. No waiver
of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise
any
right hereunder in any manner impair the exercise of any such
right.
5.6 Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Holder (provided that nothing herein shall prevent the Company
from assigning the remaining obligations after the Closing Date through merger
or comparable corporate transactions consummated in accordance with applicable
law). Any Holder may assign any or all of its rights under this Agreement to
any
Person to whom such Holder assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Holders.”
5.8 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
14
5.9 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced
in
accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively
in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect
to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for
such
proceeding. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. The parties hereby waive all rights to a trial by
jury.
If either party shall commence an action or proceeding to enforce any provisions
of the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
5.10 Survival.
The
representations and warranties shall survive the Closing and the delivery of
Securities for the applicable statue of limitations.
5.11 Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
hereunder, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
5.12 Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction.
5.13 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) any of the other Transaction Documents, whenever any
Holder exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then such Holder may rescind or withdraw, in
its
sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to
its
future actions and rights.
5.14 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof (in the case of mutilation),
or
in lieu of and substitution therefor, a new certificate or instrument, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction. The applicant for a new certificate or instrument under
such circumstances shall also pay any reasonable third-party costs (including
customary indemnity) associated with the issuance of such replacement
Securities.
15
5.15 Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder under any Transaction Document are several and not
joint with the obligations of any other Holder, and no Holder shall be
responsible in any way for the performance or non-performance of the obligations
of any other Holder under any Transaction Document. Nothing contained herein
or
in any other Transaction Document, and no action taken by any Holder pursuant
thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert or as a group
with
respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Holder shall be entitled to independently protect and enforce
its rights, including without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose. The Company has elected to provide all Holders
with
the same terms and Transaction Documents for the convenience of the Company
and
not because it was required or requested to do so by the Holders.
5.16 Construction.
The
parties agree that each of them and/or their respective counsel has reviewed
and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
5.17 Effectiveness
of Agreement.
This
Agreement shall not be effective unless and until all Holders shall have
agreed
to
the terms and conditions hereunder. Other than the indemnification provisions
included therein, the rights and obligations of the Company to the Holders
under
this Agreement shall supersede and replace the rights and obligations of the
Company to the Holders under the Purchase Agreements and the other agreements
entered into in connection therewith.
[Signature
Page Follows]
16
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Exchange and
Amendment Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
|
GIGABEAM
CORPORATION
|
Address/Facsimile
Number/E-mail
Address
for Notice:
|
||
|
By:
|
/s/
S. Xxx Xxxxxxxx
|
GigaBeam
Corporation
|
|
|
Name:
S. Xxx Xxxxxxxx
|
Attention:
S. Xxx Xxxxxxxx
|
||
|
Title:
Chief Executive Officer
|
0000
Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
|
||
|
Xxxxxx,
XX 00000
|
|||
|
Facsimile:
(000) 000-0000
|
|||
|
With
a copy to (which shall not constitute notice):
Xxx
Xxxxxxx, Esq.
|
Xxxxxxx
Business Law
Attention:
Xxx Xxxxxxx, Esq.
0000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Facsimile:
(000) 000-0000
|
||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR HOLDER FOLLOWS]
17
[HOLDER
SIGNATURE PAGES TO GGBM SECURITIES EXCHANGE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Exchange Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Holder: ____________________________________________________
Signature
of Authorized Signatory of Holder:
__________________________
Name
of
Authorized Signatory: ____________________________________
Title
of
Authorized Signatory: _____________________________________
Email
Address of Authorized Signatory:
___________________________________________
Fax
Number of Authorized Signatory:
_________________________________________
Address
for Notice of Holder:
Address
for Delivery of Securities for Holder (if not same as above):
Shares
of
Series D Preferred Stock: ____________
[SIGNATURE
PAGES CONTINUE]
18
