EXHIBIT 4.3
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
This Amended and Restated Securities Purchase Agreement (this
"Agreement") is dated as of September 12, 2002, among Novatel Wireless, Inc., a
Delaware corporation (the "Company"), and the purchasers identified on the
signature pages hereto (each a "Purchaser" and collectively the "Purchasers").
WHEREAS, the Company and each Purchaser previously entered into that
certain Securities Purchase Agreement dated as of September 4, 2002 (the "Old
Agreement") and now desire that the Old Agreement be amended and restated in its
entirety as of the date hereof; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and the Purchasers, severally and not jointly, desire to
purchase from the Company, up to $5,000,000 of the Company's Common Stock (as
defined below) and certain Warrants (as defined below), as more fully described
in this 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 the Purchasers agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.1(j).
"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. With respect to a Purchaser, any investment
fund or managed account that is managed on a discretionary basis by the
same investment manager as such Purchaser will be deemed to be an
Affiliate of such Purchaser.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law
or other governmental action to close.
"Closing" means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.
"Closing Date" means the date of the Closing which shall occur
within ten (10) Trading Days of the date hereof.
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"Closing Price" means on any particular date (a) the last
reported closing bid price per share of Common Stock on such date on
the Principal Market (as reported by Bloomberg L.P. at 4:15 PM (New
York time), or (b) if there is no such price on such date, then the
closing bid price on the Principal Market on the date nearest preceding
such date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for
the closing bid price for regular session trading on such day), or (c)
if the Common Stock is not then listed or quoted on the Principal
Market and if prices for the Common Stock are then reported in the
"pink sheets" published by the National Quotation Bureau Incorporated
(or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) if the shares of Common Stock are not then
publicly traded the fair market value of a share of Common Stock as
determined by an appraiser selected in good faith by the Purchasers of
a majority in interest of the Shares.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, $0.001
par value per share, and any securities into which such common stock
may hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exchangeable for, or otherwise entitles
the holder thereof to receive, Common Stock.
"Company Counsel" means Xxxxxx & Xxxxxxx, counsel to the
Company.
"Disclosure Schedules" means the Disclosure Schedules attached
as Annex I hereto.
"Effective Date" means the date that the Registration
Statement is first declared effective by the Commission.
"Escrow Agent" shall have the meaning set forth in the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement in
substantially the form of Exhibit A hereto executed and delivered
contemporaneously with this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Intellectual Property Rights" shall have the meaning ascribed
to such term in Section 3.1(o).
"Liens" means a lien, charge, security interest, encumbrance,
right of first refusal or other restriction.
"Majority Purchasers" means the Purchaser or Purchasers, as
the case may be, holding a majority of the Shares issued under this
Agreement.
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"Material Adverse Effect" shall have the meaning ascribed to
such term in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such
term in Section 3.1(m).
"Per Share Purchase Price" equals $0.186 per share, subject to
adjustment for reverse and forward stock splits and the like prior to
Closing.
"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 Purchase Agreement" shall mean that certain
Preferred Stock and Warrant Purchase Agreement dated December 21, 2001
among the Company and the purchasers named therein.
"Purchasers' Counsel" means Xxxxxxx & Xxxxxxxxx LLP with
offices located at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
"Purchaser Representative" means that person designated by
Majority Purchasers to serve in such capacity under this Agreement,
which initially shall be Triton West Group, Inc.
"Registration Statement" means a registration statement
meeting the requirements set forth in the Registration Rights Agreement
and covering the resale by the Purchasers of the Shares and the Warrant
Shares.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company
and the Purchasers, in the form of Exhibit B hereto.
"Rule 144," means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rules may be amended from time
to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Securities" means the Shares, the Warrants and the Warrant
Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable
to the Purchasers pursuant to this Agreement.
"Subsidiary" shall have the meaning ascribed to such term in
Section 3.1(a).
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"Trading Day" means (i) a day on which the Common Stock is
traded on a Trading Market, or (ii) if the Common Stock is not listed
on a Trading Market, a day on which the Common Stock is traded on the
over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting
prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in
question: American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Registration
Rights Agreement, the Escrow Agreement, the Warrant and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
"Warrants" means the Common Stock Purchase Warrants, in the
form of Exhibit C, issuable to the Purchasers at Closing, which
warrants shall have an exercise price equal to $0.24.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly with the other Purchasers,
purchase from the Company, (a) a number of Shares equal to the subscription
amount set forth below such Purchaser's address on the signature pages to this
Agreement divided by the Per Share Purchase Price for such subscription amount,
and (b) the Warrants as determined in accordance with Section 2.2(a). The
Closing shall take place at the offices of the Escrow Agent on the date hereof
or at such other location or time as the parties may agree.
2.2 Closing Deliveries.
(a) At the Closing the Company shall deliver or cause to be delivered
to the Escrow Agent on behalf of each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a certificate evidencing a number of Shares equal to the
subscription amount indicated below such Purchaser's name on the
signature page of this Agreement divided by the Per Share Purchase
Price, registered in the name of such Purchaser;
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(iii) a legal opinion of Company Counsel, in the form of
Exhibit D hereto, addressed to the Purchasers;
(iv) the Registration Rights Agreement duly executed by the
Company;
(v) the Escrow Agreement, duly executed by the Company;
(vi) a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire up to
the number of shares of Common Stock equal to 50.85% of the Shares to
be issued to such Purchaser at the Closing; and
(vii) any consents.
(b) At the Closing each Purchaser shall deliver or cause to be
delivered to the Escrow Agent the following:
(i) this Agreement duly executed by such Purchaser;
(ii) the subscription amount indicated below such Purchaser's
address for notice on the signature page of this Agreement, in United
States dollars and in immediately available funds, by wire transfer to
the account of the Escrow Agent;
(iii) the Escrow Agreement, duly executed by such Purchaser;
(iv) the Registration Rights Agreement duly executed by such
Purchaser;
(v) a duly completed and executed Stock Certificate
Questionnaire in the form of Exhibit E hereto; and
(vi) a duly completed and executed Purchaser Questionnaire in
the form of Exhibit F hereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules attached hereto, the
Company hereby makes the following representations and warranties as of the date
hereof and as of the Closing Date to each Purchaser:
(a) Subsidiaries. The Company owns of record all of the issued
and outstanding capital stock of Novatel Wireless Solutions, Inc., a
Delaware corporation ("NWS"), and all of the issued and outstanding
capital stock of Novatel Wireless Technologies, Ltd., an Alberta
corporation ("NWT" and together with NWS, the "Subsidiaries"). Other
than NWS and NWT, and as set forth in the SEC Reports, the Company has
no other Subsidiaries nor does it currently own any capital stock or
other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity.
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(b) Organization and Qualification. Each of the Company and
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 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, would 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 or financial condition of the Company and the Subsidiaries,
taken as a whole, or (iii) adversely impair 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").
(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 thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection therewith.
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, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(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 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) except as set forth on
Schedule 3.1(d) and subject to any approval of the Company's
stockholders as may be required by The Nasdaq Stock Market, conflict
with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (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) result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental
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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 would not
have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. Except as set forth on
Schedule 3.1(d), 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 in connection with the
execution, delivery and performance by the Company of the Transaction
Documents, other than (a) the filing with the Commission of the
Registration Statement, the application(s) to each Trading Market for
the listing of the Shares and Warrant Shares for trading thereon in the
time and manner required thereby, and applicable Blue Sky filings, (b)
such as have already been obtained or such exemptive filings as are
required to be made under applicable securities laws, (c) such as have
already been requested under Section 7 of the Preferred Stock Purchase
Agreement, (d) The Nasdaq Stock Market in connection with the Company's
listing agreement and The Nasdaq Stock Market Marketplace Rules, and
(e) such other filings as may be required following the Closing Date
under the Securities Act, the Exchange Act and the Delaware General
Corporation Law.
(f) Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. The Company has reserved
from its duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to this Agreement and the Warrants.
(g) Capitalization. The capitalization of the Company as of
June 30, 2002 is as described in the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2002. The Company has not issued
any capital stock since June 30, 2002 other than pursuant to the
exercise of employee stock options under the Company's stock option
plans, the issuance of shares of Common Stock to employees pursuant to
the Company's employee stock purchase plan and pursuant to the
conversion or exercise of outstanding Common Stock Equivalents. No
Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as set forth in
Schedule 3.1(g) and except as a result of the purchase and sale of the
Securities, there are no outstanding options, warrants, script rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or
acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary
is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock. Except as set forth in Schedule 3.1(g), the issue and sale of
the Securities will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and
will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under such
securities.
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(h) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto, being collectively referred
to herein as the "SEC Reports" and, together with the Disclosure
Schedules to this Agreement, the "Disclosure Materials") on a timely
basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and
the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be otherwise
specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as
of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(i) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as
disclosed in the SEC Reports, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, and (iii)
the Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and
(v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option
plans and pursuant to the Preferred Stock Purchase Agreement. The
Company does not have pending before the Commission any request for
confidential treatment of information.
(j) Litigation. Except as disclosed in the SEC Reports, there
is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state,
county, local or foreign)
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(collectively, an "Action") which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result
in a Material Adverse Effect.
(l) Compliance. Except as disclosed in the SEC Reports and
other than with respect to the Company's listing agreement with The
Nasdaq Stock Market, neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not
such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has
been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business, except in the
case of clauses (i), (ii) and (iii) as would not have or reasonably be
expected to result in a Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits would not
have or reasonably be expected to result in a Material Adverse Effect
("Material Permits"), and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(n) Title to Assets. Except as set forth in Schedule 3.1(o),
the Company and the Subsidiaries have good and marketable title in fee
simple to all real property owned by them that is material to the
business of the Company and the Subsidiaries and good and marketable
title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for Liens as do not materially affect the
value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other
taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property
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and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases of which
the Company and the Subsidiaries are in compliance.
(o) Patents and Trademarks. Subject to the claims described in
Schedule 3.1(o), to the knowledge of the Company and each Subsidiary,
the Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the
failure to so have could have or reasonably be expected to result in a
Material Adverse Effect (collectively, the "Intellectual Property
Rights"). Except as set forth in Schedule 3.1(o), neither the Company
nor any Subsidiary has received a written notice that the Intellectual
Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person. Except as set forth in the SEC
Reports and in Schedule 3.1(o), to the knowledge of the Company, all
such Intellectual Property Rights are enforceable.
(p) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged.
Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a
significant increase in cost.
(q) Transactions With Affiliates and Employees. Except as set
forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company or
any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner, in each case in excess of $60,000 other
than (a) for payment of salary or consulting fees for services
rendered, (b) reimbursement for expenses incurred on behalf of the
Company and (c) for other employee benefits, including stock option
agreements under any stock option plan of the Company.
(r) Internal Accounting Controls. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets
is compared with the
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existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(s) Certain Fees. Other than a fee payable to U.S. Bancorp
Xxxxx Xxxxxxx Inc., in its capacity as Placement Agent for the
Securities, in respect of the sale of the Securities to the Purchasers
(the "Placement Agent"), no brokerage or finder's fees or commissions
are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due
in connection with the transactions contemplated by this Agreement.
(t) Private Placement. Assuming the accuracy of the Purchasers
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 Purchasers as contemplated
hereby. Subject to any approval of the Company's stockholders as may be
required by The Nasdaq Stock Market, the issuance and sale of the
Securities hereunder does not contravene the rules and regulations of
The Nasdaq Stock Market.
(u) Investment Company. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(v) Registration Rights. Except as set forth in the SEC
Reports, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
(w) Form S-3 Eligibility. Subject to the Company's continued
listing on The Nasdaq Stock Market, the Company is eligible to register
the resale of its Common Stock by the Purchasers under Form S-3
promulgated under the Securities Act.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser 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 thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate action on
the part of such Purchaser. Each Transaction Document to which it is
party has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with terms hereof, will constitute the
valid and legally binding obligation of such Purchaser, enforceable
against it in accordance with its terms.
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(b) Investment Intent. Such Purchaser understands that the
Securities are "restricted securities" and have not been registered
under the Securities Act or any applicable state securities law and is
acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof, has no present intention
of distributing any of such Securities and has no arrangement or
understanding with any other persons regarding the distribution of such
Securities (this representation and warranty not limiting such
Purchaser's right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Securities.
(c) Purchaser Status. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act. Such Purchaser has answered all
questions in the Investor Questionnaire attached hereto as Exhibit E
for use in preparation of the Registration Statement and the answers
thereto are true and correct as of the date hereof and will be true and
correct as of the Closing Date and such Purchaser will notify the
Company immediately of any change in any of such information until such
time as such Purchaser has sold all of its Shares and Warrant Shares or
until the Company is no longer required to keep the Registration
Statement effective. Such Purchaser understands that the issuance of
the Securities to such Purchaser has not been registered under the
Securities Act, or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may
depend upon, among other things, the bona fide nature of such
Purchaser's investment intent as expressed herein.
(d) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks
of such investment. Such Purchaser is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser 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) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities and the merits
and risks of investing in the Securities; (ii) access to information
about the Company and the Subsidiaries and their respective financial
condition, results of
12
operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to
make an informed investment decision with respect to the investment.
Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall
modify, amend or affect such Purchaser's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
(g) International Actions. Such Purchaser acknowledges,
represents and agrees that no action has been or will be taken in any
jurisdiction outside the United States by the Company or the Placement
Agent that would permit an offering of the Securities, or possession or
distribution of offering materials in connection with the issue of the
Securities, in any jurisdiction outside the United States. If such
Purchaser is located outside the United States, it has or will take all
actions necessary for the sale of the Securities to comply with all
applicable laws and regulations in each foreign jurisdiction in which
it purchases, offers, sells or delivers Securities or has in its
possession or distributes any offering material, in all cases at its
own expense.
(h) Registration Required. Such Purchaser hereby covenants
with the Company not to make any sale of the Shares and Warrant Shares
without complying with the provisions hereof and of the Registration
Rights Agreement, and without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied (unless
such Purchaser is selling such Shares or Warrant Shares in a
transaction not subject to the prospectus delivery requirement), and
such Purchaser acknowledges that the certificates evidencing the Shares
will be imprinted with a legend that prohibits their transfer except in
accordance therewith.
(i) No Tax or Legal Advice. Such Purchaser understands that
nothing in this Agreement, any other Transaction Document or any other
materials presented to such Purchaser in connection with the purchase
and sale of the Securities constitutes legal, tax or investment advice.
Such Purchaser has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Securities.
The Company acknowledges and agrees that each Purchaser does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Purchasers agree that the Securities may only be
disposed of in compliance with state and federal securities laws. In
connection with any transfer of Securities other than pursuant to an
effective registration statement, to the Company, to
13
an Affiliate of a Purchaser 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, 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 Purchaser under this Agreement and the
Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities
substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE 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. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT.
The Company acknowledges and agrees that a Purchaser 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, if
required under the terms of such arrangement, such Purchaser 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
Purchaser'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 the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.
14
(c) Certificates evidencing the Shares and Warrant Shares
shall not contain any legend (including the legend set forth in Section
4.1(b)), (i) following any sale of such Shares or Warrant Shares
pursuant to an effective registration statement (including the
Registration Statement) covering the resale of such security, or (ii)
following any sale of such Shares or Warrant Shares pursuant to Rule
144, or (iii) if such Shares or Warrant Shares are eligible for sale
under Rule 144(k), subject to the receipt by the Company of an opinion
of counsel to such effect or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the
Commission). The Company agrees that at such time as such legend is no
longer required under this Section 4.1(c), it will, no later than five
Trading Days following the delivery by a Purchaser to the Company or
the Company's transfer agent of a certificate representing Shares or
Warrant Shares, as the case may be, issued with a restrictive legend,
deliver or cause to be delivered to such Purchaser a certificate
representing such Securities that is free from all restrictive and
other legends.
(d) In addition to such Purchaser's other available remedies,
the Company shall pay to a Purchaser, in cash, as liquidated damages
and not as a penalty, for each $1,000 of Shares or Warrant Shares
(based on the Closing Price of the Common Stock on the date such
Securities are submitted to the Company's transfer agent) subject to
Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day
five (5) Trading Days after such damages have begun to accrue) for each
Trading Day after such fifth Trading Day until such certificate is
delivered.
4.2 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such holder of Securities, the Company
shall deliver to such holder a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
4.4 Participation in Future Financing. Subject to the terms and
conditions specified in this Section 4.4, the Company hereby grants to each
Purchaser who holds Shares of the Company's Common Stock a right of first offer
with respect to future issuances by the Company of its Equity Securities (as
hereinafter defined). Each time the Company proposes to offer any
15
shares of, or securities convertible into or exercisable for any shares of, any
class of its capital stock ("Equity Securities"), the Company shall first make
an offering of such Equity Securities to the Purchasers and others with a right
of participation in such financing (the "Stockholders") in accordance with the
following provisions:
(a) The Company shall deliver a notice by certified mail (a
"Notice") to each Stockholder stating (i) its bona fide intention to offer such
Equity Securities, (ii) the number of such Equity Securities to be offered, and
(iii) the price and terms, if any, upon which it proposes to offer such Equity
Securities.
(b) Within 15 calendar days after delivery of the Notice, the
Stockholder may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Equity Securities which
equals the proportion that the sum of the number of shares of Common Stock then
held, by such Stockholder bears to the total number of shares of Common Stock
then outstanding (assuming full conversion and exercise of all convertible or
exercisable securities).
(c) The Company may, during the 60-day period following the
expiration of the period provided in subsection 4.4(b) hereof, offer the
remaining unsubscribed portion of the Equity Securities to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Equity Securities within such period, or if such agreement
is not consummated within 90 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Equity Securities shall not be
offered unless first reoffered to the Stockholders in accordance herewith.
(d) The right of first offer in this Section 4.4 shall not be
applicable (i) to the issuance or sale by the Company of any of its capital
stock pursuant to any benefit, option, restricted stock, stock purchase or
similar plans or arrangements, including pursuant to or upon the exercise of
option rights, warrants or other securities or agreements, (ii) any underwritten
public offering or any other public offering by the Company in which shares are
offered at market price, (iii) to the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (iv) to the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (v) to the issuance of securities to financial
institutions or lessors in connection with commercial credit arrangements,
equipment financings, or similar transactions, (vi) to any issuance in
connection with a stock split, reverse stock split, reclassification,
recapitalization, consolidation, merger or similar event and (vii) to the
issuance of securities that, with unanimous approval of the Board of Directors
of the Company, are not offered to any existing stockholder of the Company.
4.5 Securities Laws Disclosure; Publicity. The Company shall, following
the Closing Date, issue a press release or file a Current Report on Form 8-K, in
each case reasonably acceptable to the Purchaser Representative disclosing the
transactions contemplated hereby and (ii) make such other filings and notices in
the manner and time required by the Commission. The Company and the Purchaser
Representative shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
16
Purchaser shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of any Purchaser and the Purchaser Representative, with respect to any
press release of the Company, which consent shall not unreasonably be withheld,
except if such disclosure is required by law, in which case the disclosing party
shall promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except (i) as
required by federal securities law in connection with the registration statement
contemplated by the Registration Rights Agreement and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.
4.6 Shareholders Rights Plan. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and the Purchasers.
4.7 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.8 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation.
4.9 Reservation and Listing of Securities.
(a) 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.
(b) The Company shall: (i) in the time and manner required by
The Nasdaq Stock Market, prepare and file with The Nasdaq Stock Market
an additional shares listing application covering a number of shares of
Common Stock at least equal to the shares of Common Stock issuable
under this Agreement and pursuant to the Warrants, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for
listing on The Nasdaq Stock Market as soon as possible thereafter, and
(iii) provide to the Purchasers evidence of such listing.
17
ARTICLE V.
CLOSING CONDITION
5.1 Condition of the Company's Obligations. The obligations of the
Company hereunder are subject to (i) the accuracy, when made and on the Closing
Date, of the representations and warranties of the Purchasers contained herein
and (ii) the delivery by the Purchasers of the items set forth in Section 2.2(b)
of this Agreement.
5.2 Condition of the Purchasers' Obligations. The respective
obligations of the Purchasers hereunder are subject to (i) the accuracy, when
made and on the Closing Date, of the representations and warranties of the
Company contained herein and (ii) the delivery by the Company of the items set
forth in Section 2.2(a) of this Agreement.
ARTICLE VI.
MISCELLANEOUS
6.1 Fees and Expenses. The Company agrees to pay up to $20,000 to
Purchasers' Counsel as reimbursement for the Purchasers' Counsel's reasonable
legal, escrow and other reasonable fees and expenses incurred in connection with
the investigation and negotiation of the transaction and the preparation and
negotiation of the Transaction Documents. Except as otherwise set forth in this
Agreement, 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 stamp and other taxes
and duties levied in connection with the sale of the Securities.
6.2 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.
6.3 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 (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or
(iv) 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 follows:
18
(a) if to the Company, to:
Novatel Wireless, Inc.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxxx
Chief Executive Officer
Phone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy mailed to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: J. Xxxxx Xxxxxxxx, Esq.
Phone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to a Purchaser, at its address by such Purchaser's name
on the signature page of this Agreement, or at such other address or
addresses as may have been furnished to the Company in writing.
6.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Majority Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver 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 either party to exercise
any right hereunder in any manner impair the exercise of any such right.
6.5 Construction. 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. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
6.6 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 the Majority Purchasers. Any Purchaser may
assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".
6.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of,
19
nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Sections 6.6 and 6.7.
6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
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, Borough of Manhattan. Each party hereto 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 the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by 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 manner permitted by law. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
6.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and exercise of the
Securities, as applicable.
6.10 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 to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
6.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
20
6.12 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser 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
Purchaser 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.
6.13 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, 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 and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
6.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
6.15 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
6.16 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser 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
21
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
(Signature Page Follows)
22
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
COMPANY:
NOVATEL WIRELESS, INC.
By:
--------------------------------------
Name:
Title:
PURCHASERS:
TRITON WEST GROUP, INC. Address for Notice:
-------------------
c/o Beacon Capital Management
By: Xxxxxxx Xxxxx, 0xx Xxxxx
------------------------------- Xxxxxxxxxx Drive
Name: Road Town, Tortola
Title: British Virgin Islands
Attn: Director
Fax: (000) 000-0000
cc: Triton West Group
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Subscription Amount: $650,000
-------------------
PALISADES MASTER FUND L.P. Address for Notice:
-------------------
c/o PEF Advisors, LLC
By: 0000 Xxxxxxxxx Xxxxx
----------------------------- Xxxxx X000
Name: Xxxxxxx, Xxxxxxx 00000
Title: Attn: Xxxx X. Xxxxxxx
Subscription Amount: $250,000
-------------------
23
XXXXXXXXXXX X.X. Address for Notice:
-------------------
000 Xxxx Xxxxxx Xxxx.
By: Xxxxx 000
------------------------------ Xxxxxxx, Xxxxxxx
Name: X0X 0X0 Xxxxxx
Title: Attn: Fund Manager
Subscription Amount: $600,000
-------------------
SPINNER GLOBAL TECHNOLOGY FUND, LTD. Address for Notice:
------------------
Spinner Asset Management
By: 000 Xxxx Xxx., Xxxxx 0000
------------------------------ Xxx Xxxx, Xxx Xxxx 00000
Name: Attn: Xxxxxx Xxxxxxx
Title: Fax: (000) 000-0000
Subscription Amount: $250,000
-------------------
ALPHA CAPITAL AG Address for Notice:
------------------
By:
------------------------------
Name:
Title:
Subscription Amount: $500,000
-------------------
OTATO LIMITED PARTNERSHIP Address for Notice:
------------------
c/o OTA LLC
By: 0 Xxxxxxxxxxxxxx Xx.
----------------------------- Purdox, NY 1059__
Name: Attn: Xxxx ______
Title: Fax: (000) 000-0000
Subscription Amount: $200,000
-------------------
BRISTOL INVESTMENT FUND, LTD. Address for Notice:
------------------
Bristol DLP, LLC
By: 0000 Xxxxxx Xxxx., 0xx Xxxxx
------------------------------- Xxxxxxxxx, XX 00000
Name:
24
Title: Attn: Xxx Xxxx, Esq.
Fax: (000) 000-0000
Subscription Amount: $300,000
--------------------
25
EXHIBIT A
FORM OF ESCROW AGREEMENT
A-1
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
B-1
EXHIBIT C
FORM OF COMMON STOCK PURCHASE WARRANTS
C-1
EXHIBIT D
FORM OF COMPANY COUNSEL OPINION
D-1
EXHIBIT E
NOVATEL WIRELESS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in
(this is the name that will appear on your stock
certificate(s)). You may use a nominee name if
appropriate: -------------
2. The relationship between the Purchaser and the
registered holder listed in response to item 1 above: -------------
3. The mailing address of the registered holder listed in
response to item 1 above: -------------
4. The Social Security Number or Tax Identification Number
of the registered holder listed in the response to item
1 above: -------------
E-1
EXHIBIT F
NOVATEL WIRELESS, INC.
PURCHASER QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Novatel Wireless, Inc.,
This Purchaser Questionnaire ("Questionnaire") must be completed by
each potential purchaser in connection with the offer and sale of the shares of
the common stock, par value $.001 per share and warrants to purchase common
stock, par value $.001 per share (collectively, the "Securities"), of Novatel
Wireless, Inc. (the "Company"). The Securities are being offered and sold by the
Company without registration under the Securities Act of 1933, as amended (the
"Securities Act"), and the securities laws of certain states, in reliance on the
exemptions contained in Section 4 of the Securities Act and on Regulation D
promulgated thereunder and in reliance on similar exemptions under applicable
state laws. The Company must determine that a potential purchaser meets certain
suitability requirements before offering or selling Securities to such investor.
The purpose of this Questionnaire is to assure the Company that each purchaser
will meet the applicable suitability requirements. The information supplied by
you will be used in determining whether you meet such criteria, and reliance
upon the private offering exemption from registration is based in part on the
information herein supplied.
This Questionnaire does not constitute an offer to sell or a
solicitation of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Company to provide a completed copy of this Questionnaire to such parties as the
Company deems appropriate in order to ensure that the offer and sale of the
Shares will not result in a violation of the Securities Act or the securities
laws of any state and that you otherwise satisfy the suitability standards
applicable to purchasers of the Securities. All potential purchasers must answer
all applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
A. BACKGROUND INFORMATION
Name:
---------------------------------------------------------------------------
Business Address:
---------------------------------------------------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
--------------------------------------------------------
Residence Address:
-------------------------------------------------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
--------------------------------------------------------
F-1
If an individual:
Age: Citizenship: Where registered to vote:
------ ---------- ------------
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
-----------------------------------------------------------------
State of formation: Date of formation:
-------------- ---------------
Social Security or Taxpayer Identification No.
----------------------------------
Send all correspondence to (check one): __ Residence Address __ Business Address
B. STATUS AS ACCREDITED INVESTOR
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Securities Act, as at the time of the sale of the
Securities the undersigned falls within one or more of the following categories
(Please initial one or more, as applicable):(1)
_____(1) a bank as defined in Section 3(a)(2) of the Securities Act, or a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with the investment decisions made
solely by persons that are accredited investors;1
_____(2) a private business development company as defined in Section 202(a)(22)
of the Investment Adviser Act of 1940;
_____(3) an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Shares
offered, with total assets in excess of $5,000,000;
--------
1 As used in this Questionnaire, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at
cost, including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In
determining income, the investor should add to the investor's adjusted gross
income any amounts attributable to tax exempt income received, losses claimed
as a limited partner in any limited partnership, deductions claimed for
depreciation, contributions to an XXX or XXXXX retirement plan, alimony
payments, and any amount by which income from long-term capital gains has been
reduced in arriving at adjusted gross income.
F-2
_____(4) a natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of such person's purchase of the Shares
exceeds $1,000,000;
_____(5) a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
_____(6) a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares offered, whose purchase is directed by
a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; and
_____(7) an entity in which all of the equity owners are accredited investors
(as defined above).
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Company as follows:
1. Any purchase of the Securities would be solely for the account of
the undersigned and not for the account of any other person or with a view to
any resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may be
relied upon by the Company, and the undersigned will notify the Company
immediately of any material change in any of such information occurring prior to
the closing, if any, with respect to the purchase of Securities by the
undersigned or any co-purchaser.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire.
4. The undersigned acknowledges that, subject to the terms of the
Registration Rights Agreement entered into in connection with the Agreement to
which this Questionnaire is attached, there may occasionally be times when the
Company, based on the advice of its counsel, determines that it must suspend the
use of the Prospectus forming a part of the Registration Statement (as such
terms are defined in the Agreement to which this Questionnaire is attached)
until such time as an amendment to the Registration Statement has been filed by
the Company and declared effective by the Securities and Exchange Commission or
until the Company has amended or supplemented such Prospectus. The undersigned
is aware that, in such event, the Securities will not be subject to ready
liquidation, and that any Shares purchased by the undersigned would have to be
held during such suspension. The overall commitment of the undersigned to
investments which are not readily marketable is not excessive in view of the
undersigned's net worth and financial circumstances, and any purchase of the
Securities will not cause such commitment to become excessive. The undersigned
is able to bear the economic risk of an investment in the Securities.
5. The undersigned has carefully considered the potential risks
relating to the Company and a purchase of the Securities, and fully understands
that the Securities are speculative investments which involve a high degree of
risk of loss of the undersigned's entire
F-3
investment. Among others, the undersigned has carefully considered each of the
risks described under the heading "Business Risks and Uncertainties" in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this __ day
of August, 2002, and declares under oath that it is truthful and correct.
Print Name
By:
------------------------------------------
Signature
Title:
---------------------------------------
(required for any purchaser that is a
corporation, partnership, trust or
other entity)
F-4
ANNEX I
DISCLOSURE SCHEDULES
These Disclosure Schedules (the "Disclosure Schedules") are furnished
by Novatel Wireless, Inc., a Delaware corporation (the "Company"), pursuant to
the Amended and Restated Securities Purchase Agreement dated as of September 12,
2002 (the "Agreement"), among the Company and the purchasers identified on the
signature pages thereto.
Nothing in the Disclosure Schedules constitutes an admission of any
liability or obligation of the Company to any third party, nor an admission to
any third party against the Company's interests. Unless otherwise stated, all
statements made herein are made as of the date of execution of the Agreement.
The Disclosure Schedules are qualified in their entirety by reference to
specific provisions of the Agreement.
The representations and warranties made by the Company in the Agreement
are qualified by, and subject to the exceptions noted in, the information set
forth in these Disclosure Schedules. The disclosure of any item or information
in the Disclosure Schedules shall not be construed as an admission that such
item or information is material to the Company, and any inclusion in the
Disclosure Schedules shall expressly not be deemed to constitute an admission,
or otherwise imply, that any such item or information is material or creates
measures for materiality for the purposes of the Agreement.
The items and information reflected in the Disclosure Schedules are not
necessarily limited to matters required by the Agreement to be reflected. Such
additional items and information are set forth for information purposes only and
the Disclosure Schedules do not necessarily include other matters of a similar
nature. Any matter described in any provision, subprovision, section or
subsection of any Disclosure Schedule shall be deemed set forth for all purposes
in any other Disclosure Schedule to the extent such matter is reasonably related
to the Disclosure Schedule in question.
Headings have been inserted on the sections of the Disclosure Schedules
for convenience of reference only and shall to no extent have the effect of
amending or changing the express description of the sections as set forth in the
Agreement. Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Agreement.
SCHEDULE 3.1(d)
NO CONFLICTS
The Company's consummation of the Registration Rights Agreement
conflicts with, and may constitute a breach under, the Amended and Restated
Investors' Rights Agreement, dated June 30, 2002, between the Company and the
persons identified on Exhibit A attached thereto, including without limitation
Section 1.15(c) thereunder.
Pursuant to Section 3.2 of the Warrant to Purchase Stock, dated
November 29, 2001, by the Company in favor of Silicon Valley Bank, the Company
must give Silicon Valley bank 10 days prior written notice if the Company
proposes to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series. In
connection with the Company's obligations under the Preferred Stock Purchase
Agreement, the Company offered the holders of the Company's Series A Preferred
Stock the opportunity to participate in the transactions contemplated by the
Agreement. Although not 10 days prior written notice, the Company notified
Silicon Valley Bank of this offer to participate on September 9, 2002.
Schedule 3.1(d)
SCHEDULE 3.1(g)
CAPITALIZATION
Following is a list of the currently outstanding warrants to purchase
shares of the Company's Common Stock.
Warrants to purchase 10,586,484 shares of Common Stock issued in
connection with the Company's December 2001 private placement currently
exercisable at $1.20 per share. The issuance and sale of the Securities at the
Per Share Purchase Price will not result in a right of any holder thereof to
adjust the exercise price thereof.
Warrants to purchase 560,810 shares of Common Stock issued in
connection with the Company entering into a credit facility in November 2001
currently exercisable for $0.74 per share. The issuance and sale of the
Securities at the Per Share Purchase Price will result in the adjustment of the
exercise price to $0.67 per share and the number of shares of common stock
issuable upon exercise of the warrant will be increased to 618,615 shares.
Warrants to Purchase 1,178,400 shares of Common Stock issued in
connection with the Company's June and July 2000 private placement currently
exercisable at $3.79 per share. The issuance and sale of the Securities at the
Per Share Purchase Price will result in the adjustment of the exercise price to
$3.37 per share.
Warrants to Purchase 2,148,639 shares of Common Stock issued in
connection with the Company's December 1999 private placement currently
exercisable at $1.29 per share. The issuance and sale of the Securities at the
Per Share Purchase Price will result in the adjustment of the exercise price to
$1.16 per share.
Warrants to Purchase 4,680,006 shares of Common Stock issued in
connection with the Company's July 1999 private placement currently exercisable
at $0.77 per share. The issuance and sale of the Securities at the Per Share
Purchase Price will result in the adjustment of the exercise price to $0.186 per
share.
Warrants to Purchase 2,585,130 shares of Common Stock issued in
connection with the Company's December September 1998, April 1998 and December
1997 Private Placements currently exercisable at $0.77 per share. The issuance
and sale of the Securities at the Per Share Purchase Price will result in the
adjustment of the exercise price to $0.186 per share.
Options to purchase an aggregate of 9,136,874 shares of common stock.
Schedule 3.1(g)
SCHEDULE 3.1(o)
INTELLECTUAL PROPERTY RIGHTS
The Company markets certain of its products under the Merlin brand
name. In July 2000, and July 2001, Avaya Communications ("Avaya") indicated to
the Company that it believed the Company's use of such name infringed on Avaya's
proprietary right to such name. The Company believes that the Company's
commercial use of such name does not present any likelihood of confusion with
Avaya's products and Avaya has not communicated further with the Company on this
issue, or otherwise asserted any right against the Company.
The Company has received letters from each of Siemens AG ("Siemens"),
and LM Ericsson ("Ericsson"), dated March 8, 2002 and May 8, 2002, respectively,
that offer to license certain intellectual property rights to the Company in
connection with the Company's use of the GSM standard of wireless technology in
certain of the Company's products, which offer is made on the basis that
wireless modems that use GSM may be infringing on Siemens' and Ericsson's
respective intellectual property rights. The Company is currently in discussions
with each of Siemens and Ericcson.
The Company received a letter from a representative of Digcom, Inc.
("Digcom") offering to license certain intellectual property rights to the
Company in connection with the Company's use of the GSM standard of wireless
technology in certain of the Company's products, which offer is on the basis
that wireless modems that use GSM may be infringing on Digcom's intellectual
property rights. The Company believes that it is validly and lawfully using the
intellectual property for which Digcom is offering the Company a license since
the Company purchases the allegedly infringing component products from a current
licensee of Digcom.
Schedule 3.1(o)
