EXHIBIT 4.9
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), is made as of August
4, 2000, by and between Inforetech Wireless Technology, Inc., a corporation
organized under the laws of the State of Nevada, U.S.A., with headquarters
located at Suite 214, 5500 - 152nd Street, Surrey, British Columbia, Canada V3S-
8E7 (the "Company") and Augustine Fund, L.P., an Illinois limited partnership
(the "Buyer").
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Buyer desires to purchase from the Company, and the Company
desires to sell to the Buyer, for the amounts and upon the terms and conditions
stated in this Agreement, at closing ( a "Closing") as herein described, certain
of the Company's convertible notes and warrants as listed and described in
Recitals B(i) and B(ii) immediately below.
(i) US$1,000,000 in aggregate principal amount of the Company's
Series A Eight Percent (8%) Convertible Notes Due August 4,
2003, the form of which is attached hereto as Exhibit A (the
"Notes"), which may be converted into common stock of the
Company, US$0.001 par value per share ("Common Stock"), upon
the terms and conditions hereof and upon the terms and
conditions of the Notes.
(ii) A warrant (the "Warrants") to purchase 100,000 shares of Common
Stock at a purchase price per share equal to the market price
for the Common Stock on the Closing Date (defined below), which
Warrants must be exercised if at all within five (5) years
after the date of issuance. The Warrants shall be substantially
in the form attached hereto as Exhibit B.
The Common Stock into which the Notes may (in accordance with their terms)
be converted shall be referred to herein as the "Conversion Shares." Certain
shares of Common Stock (at the Company's option as described in the Notes) may
be issued to the Buyer in payment of interest (the "Interest Shares"). The
Common Stock received upon exercise of the Warrants shall be referred to as the
"Warrant Shares." The Notes, the Conversion Shares, the Interest Shares (if
any), the Warrants and the Warrant Shares may be collectively referred to herein
as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
(the "Registration Rights Agreement") substantially in the form of Exhibit C
attached hereto pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the Buyer hereby
agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. Purchase. The Buyer hereby agrees to purchase from the
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Company, and the Company agrees to sell to the Buyer, US$1,000,000 in aggregate
principal amount of Notes and the Warrants. The purchase price for the
Securities is $1,000,000 (the "Purchase Price").
b. The Closing. The date of the Closing (the "Closing Date")
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shall be August 4, 2000. The Purchase Price shall be delivered to the Company on
or before the Closing Date. At the Closing, the Company shall deliver the
original Notes and Warrants being purchased at the Closing, duly issued,
authorized and executed by the authorized officers on behalf of the Company, to
the Buyer.
c. Form of Payment. The Buyer shall pay the Purchase Price for
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the Securities purchased at the Closing by wire transfer of immediately
available funds in United States Dollars against delivery of duly executed Notes
and Warrants being purchased by the Buyer hereunder at the Closing.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer understands, agrees with, and represents and warrants to the
Company with respect to its purchase hereunder, that:
a. Investment Purposes; Compliance With 1933 Act. The Buyer is
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purchasing the Securities for its own account for investment only and not with a
view towards, or in connection with, the public sale or distribution thereof,
except pursuant to sales registered under or exempt from the 0000 Xxx. The Buyer
is not purchasing the Securities for the purpose of covering short sale
positions in the Common Stock established on or prior to the Closing Date. The
Buyer agrees to offer, sell or otherwise transfer the Securities only (i) in
accordance with the terms of this Agreement, the Notes and the Warrants, as
applicable, and (ii) pursuant to registration under the 1933 Act or to an
exemption from registration under the 1933 Act and any other applicable
securities laws. The Buyer does not by its representations contained in this
Section 2(a) agree to hold the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time pursuant to a
registration statement or in accordance with an exemption from registration
under the 1933 Act, in all cases in accordance with applicable state and federal
securities laws. The Buyer understands that it shall be a condition to
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the issuance of the Conversion Shares and the Interest Shares (if any) that the
Conversion Shares and the Interest Shares (if any) be and are subject to the
representations set forth in this Section 2(a).
b. Accredited Investor Status. The Buyer is an "accredited
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investor" as that term is defined in Rule 501 (a) of Regulation D. The Buyer has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment made pursuant to
this Agreement. The Buyer is aware that it may be required to bear the economic
risk of an investment made pursuant to this Agreement for an indefinite period
of time, and is able to bear such risk for an indefinite period.
c. Reliance on Exemptions. The Buyer understands the Securities
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are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the applicable United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties,
acknowledgments, understandings, agreements and covenants of the Buyer set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been
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furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask all such questions of the Company as they
have in their discretion deemed advisable. The Buyer understands that its
investment in the Securities involves a high degree of risk. The Buyer has
sought such accounting, legal and tax advice as it has considered necessary to
an informed investment decision with respect to the investment made pursuant to
this Agreement.
e. No Government Review. The Buyer understands that no United
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States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities, nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. The Buyer understands that: (i) except
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as provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless either (a)
subsequently registered thereunder or (b) the Buyer shall have delivered to the
Company an opinion by counsel reasonably satisfactory to the Company, in form,
scope and substance reasonably satisfactory to the Company, to the effect that
the securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, (ii) any sale of
such securities made in reliance on Rule 144 (as hereafter defined) may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which the
seller (or the person though whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder, and (iii) neither the Company nor any
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other person is under any obligation to register such securities under the 1933
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to this Agreement or
the Registration Rights Agreement).
g. Legend. The Buyer understands that until such time as the
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Conversion Shares, the Warrant Shares and the Interest Shares (if any)
(collectively, the "Registrable Securities"), have been registered under the
1933 Act as contemplated by the Registration Rights Agreement or otherwise may
be resold by the Buyer pursuant to Rule 144 (as amended, or any applicable rule
which operates to replace said Rule) promulgated under the 1933 Act ("Rule
144"), the stock certificates representing the Registrable Securities will bear
a restrictive legend (the "Legend") in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
The Legend shall be removed and the Company will issue certificates without
the Legend to the holder of the applicable Notes or any Registrable Securities
upon which the Legend is stamped, in accordance with Section 5(b).
h. Authorization; Enforcement. This Agreement, the Registration
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Rights Agreement and the Pledge and Security Agreement have been duly and
validly authorized, executed and delivered by the Buyer and are each and
collectively valid and binding agreements of the Buyer enforceable in accordance
with their terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company understands, agrees with, and represents and warrants to the
Buyer that:
a. Organization and Qualification. Except with respect to
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registration in British Columbia as extra-provincial companies, the Company and
its subsidiaries are corporations duly organized and existing in good standing
under the laws of the respective jurisdictions in which they are incorporated,
except as would not have a Material Adverse Effect (as defined below), and have
the requisite corporate power to own their properties and to carry on their
business as now being conducted. Each of the Company and its subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary and where
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the failure so to qualify would have a Material Adverse Effect. "Material
Adverse Effect" as used herein means any material adverse effect on the
operations, properties or financial condition of the Company and its
subsidiaries taken as a whole. The Common Stock is eligible to trade and is
listed for trading on the OTC Bulletin Board Market. The Company has received no
notice, either written or oral, with respect to the continued eligibility of the
Common Stock for such listing, and the Company has maintained all requirements
for the continuation of such listing, and the Company does not reasonably
anticipate that the Common Stock will be delisted from the OTC Bulletin Board
Market for the foreseeable future. Seller shall use its best efforts to continue
to have its stock eligible to trade on the OTC Bulletin Board Market or a
comparable national securities market or exchange. The Company has complied with
all requirements of the National Association of Securities Dealers and the OTC
Bulletin Board Market with respect to the issuance of the Securities.
b. Authorization; Enforcement. (i) The Company has the
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requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement and the Pledge and Security
Agreement, to issue and sell the Notes and the Registrable Securities in
accordance with the terms hereof, and to perform its obligations under the Notes
and the Warrants in accordance with the requirements of the same, (ii) the
execution, delivery and performance of this Agreement, the Notes, the
Registration Rights Agreement and the Pledge and Security Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
stockholders is required, (iii) this Agreement, the Registration Rights
Agreement, the Pledge and Security Agreement and, on the Closing Date, the Notes
and Warrants sold at the Closing, have been duly and validly authorized,
executed and delivered by the Company, and (iv) this Agreement, the Notes and
the Warrants (when issued), the Registration Rights Agreement and the Pledge and
Security Agreement constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting, generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application. The Company (and its legal
counsel) has examined this Agreement and is satisfied in its sole discretion
that this Agreement and the accompanying Exhibits, Schedules and the Addenda, if
any, are in accordance with Regulation D and are effective to accomplish the
purposes set forth herein and therein.
c. Capitalization. As of August 1, 2000, the authorized capital
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stock of the Company consists of 100,000,000 shares of Class "A" Common Equity
Voting Stock of which 10,989,522 shares were issued and outstanding; and
10,000,000 shares of Class B Special Voting Non-Equity Common Stock, par value
$0.001, of which 7,002,030 shares were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances. Except as disclosed in
Schedule 3(c) attached, as of the effective date of this Agreement, (i) there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue
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additional shares of capital stock of the Company or any of its subsidiaries,
(ii) there are no outstanding debt securities, and (iii) there are no agreements
or arrangements under which the Company or any of its subsidiaries is obligated
to register the sale of any of its or their securities under the 1933 Act
(except as provided herein and in the Registration Rights Agreement). If
requested by the Buyer, the Company has furnished to the Buyer, and the Buyer
acknowledges receipt of same by its signature hereafter, true and correct copies
of the Company's Certificate of Incorporation, as amended, as in effect on the
date hereof ("Certificate of Incorporation"), and the Company's Bylaws, as in
effect on the date hereof (the "Bylaws").
d. Issuance of Securities. The Registrable Securities are all
----------------------
duly authorized and reserved for issuance, and in all cases upon issuance shall
be validly issued, fully paid and non-assessable, free from all taxes, liens and
charges with respect to the issue thereof, and will not be subject to preemptive
rights or other similar rights of stockholders of the Company.
e. Acknowledgment Regarding Buyer's Purchase of the Securities.
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The Company acknowledges and agrees that the Buyer is not acting as financial
advisor to or fiduciary of the Company (or in any similar capacity with respect
to this Agreement or the transactions contemplated hereby, that this Agreement
and the transactions contemplated hereby, and the relationship between the Buyer
and the Company, are and will be considered "arms-length" notwithstanding any
other or prior agreements or nexus between the Buyer and the Company, whether or
not disclosed, and that any statement made by the Buyer, or any of its
representatives or agents, in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to the Buyer's purchase of the Securities and has not been relied
upon in any way by the Company, its officers or directors. The Company further
represents to the Buyer that the Company's decision to enter into this Agreement
and the transactions contemplated hereby have been based solely upon an
independent evaluation by the Company, its officers and directors.
f. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances which would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the 1933 Act and specifically in accordance with the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the 1933 Act, assuming the accuracy of the
representations and warranties contained herein of the Buyer.
g. No Conflicts. The execution, delivery and performance of
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this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation or Bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or
6
any of its subsidiaries is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect).
Except as set forth in Schedule 3(g), neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation or other
organizational documents, and neither the Company nor any of its/subsidiaries is
in default (and no event has occurred which, with notice or lapse of time or
both, would put the Company or any of its subsidiaries in default) under, nor
has there occurred any event giving others (with notice or lapse of time or
both) any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible defaults or rights as would not, in
the aggregate or individually, have a Material Adverse Effect. The business of
the Company and its subsidiaries is not being conducted, and shall not be
conducted so long as the Buyer owns any of the Securities, in violation of any
law, ordinance or regulation of any governmental entity, except for possible
violations which neither singly or in the aggregate would have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act and any applicable state securities laws (any of
which exceptions are set forth in Schedule 3(g)), the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, the Notes, the
Registration Rights Agreement or the Pledge and Security Agreement in accordance
with the terms hereof and thereof, or to perform its obligations with respect to
the Notes exactly as described in the Notes once issued.
h. Financial Statements. The Company has delivered to the Buyer
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as requested by the Buyer true and complete copies of the Company's audited
financial statements. As of their respective dates, the financial statements of
the Company complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer (including the
information referred to in Section 2(d) of this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading. Except as set forth in the
financial statements of the Company or referenced in the Schedules to this
Agreement, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to the
date of such financial statements and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial
statements, in each case of clause (i) and (ii) next above which, individually
or in the aggregate, are not material to the financial condition, business,
operations, properties, operating results or prospects of the Company. The said
financial statements contain a complete and accurate list of all material
undischarged written and oral contracts, agreements, leases or other instruments
to which the Company or any subsidiary is a party or by which the Company
7
or any subsidiary is subject (each a "Contract"). None of the Company, its
subsidiaries or, to the best of the Company's knowledge, any of the other
parties thereto, is in breach or violation of any Contract, which breach or
violation would have a Material Adverse Effect. No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become a default by
the Company or its subsidiaries thereunder which would have a Material Adverse
Effect.
i. Absence of Certain Changes. Except as disclosed in Schedule
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3(i) (attached if applicable), since December 31, 1999, there has been no
material adverse change and no material adverse development in the business,
properties, operation, financial condition, results of operations or prospects
of the Company. The Company has not taken any steps, and does not currently have
any reasonable expectation of taking any steps, to seek protection pursuant to
any bankruptcy law nor does the Company have any knowledge that its creditors
intend to initiate involuntary bankruptcy proceedings. The Company shall, at
least until Buyer no longer holds any of the Securities, maintain its corporate
existence in good standing and shall pay all taxes when due except for taxes it
reasonably disputes.
j. Absence of Litigation. Except as set forth in Schedule 3(j)
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(attached if applicable), there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, wherein
an unfavorable decision, ruling or finding would have a Material Adverse Effect
or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of the documents contemplated herein.
k. Foreign Corrupt Practices. Neither the Company nor any of
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its subsidiaries, nor any officer, director or other person acting on behalf of
the Company or any subsidiary has, in the course of his actions for or on behalf
of the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity, made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
l. Brokers; No General Solicitation. Except for Xxxxxxx
--------------------------------
Advisors, the Company has taken no action that would give rise to any claim by
any person for brokerage commissions, finder's fees or similar payments relating
to this Agreement and the transactions contemplated hereby, other than the
attorney's fees of the Buyer. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
nor any person acting for the Company, or any such distributor, has conducted
any "general solicitation," as described in Rule 502(c) under Regulation D, with
respect to the Securities being offered hereby.
m. Acknowledgment of Dilution. The number of Conversion Shares
--------------------------
issuable upon conversion of the Notes may increase substantially in certain
circumstances, including the circumstance wherein the trading price of the
Common Stock declines. The
8
Company's executive officers and directors have studied and fully understand the
nature of the securities being sold hereunder and recognize they have a
potential dilutive effect. The board of directors of the Company has concluded
in its good faith business judgment that such issuance is in the best interests
of the Company. The Company acknowledges that its obligation to issue Conversion
Shares upon conversion of the Notes is binding upon it and enforceable
regardless of the dilution that such issuance may have on the ownership
interests of other stockholders.
n. Eligibility to File Registration Statement. The Company is
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currently eligible to file a registration statement with the SEC either on Form
S-1 or Form SB-2 under the 0000 Xxx.
o. (Intentionally Omitted.)
p. Non-Disclosure of Non-Public Information.
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(a) The Company shall in no event disclose non-public
information to the Buyer, advisors to or representatives of the Buyer
unless prior to such disclosure of information the Company marks such
information as "non-public information - confidential" and provides the
Buyer, such advisors and representatives with the opportunity to accept or
refuse to accept such non-public information for review. The Company may,
as a condition to disclosing any non-public information hereunder, require
the Buyer, its advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Buyer.
(b) Nothing herein shall require the Company to disclose
non-public information to the Buyer, its advisors or representatives, and
the Company represents that it does not disseminate non-public information
to investors who purchase stock in the Company in a public offering, to
money managers or to securities analysts; provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives
of the Buyer and, if any, underwriters, of any event or the existence of
any circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting non-public
information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the registration
statement to be filed pursuant to the Registration Rights Agreement, would
cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading. Nothing herein shall be construed to mean that such persons or
entities other than the Buyer (without the written consent of the Buyer
prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with
the terms of this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of their opinion that, based
upon such due diligence by such persons or entities, that the registration
statement contains an untrue statement of a material fact or omits a
material fact required to be stated in such registration statement or
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
9
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
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to satisfy each of the conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.
b. Securities Laws. The Company agrees to timely file a Form D
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(or equivalent form required by applicable state law) with respect to the
Securities if and as required under Regulation D and applicable state securities
laws and to provide a copy thereof to the Buyer promptly after such filing. The
Company shall take such action as is necessary to sell the Securities being sold
to the Buyer at the Closing under applicable securities laws of the United
States and provincial laws of Canada, and shall if specifically so requested
provide evidence of any such action so taken to the Buyer.
c. Reporting Status. As of the date of this Agreement, the
----------------
Company is subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). So long as the
Buyer beneficially owns any of the Securities, the Company shall file all
reports required to be filed by the Company with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations hereunder would permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the
---------------
sale of the Securities for general corporate purposes and working capital.
e. Financial Information. Until such time as the Buyer no
---------------------
longer beneficially owns any Securities, the Company agrees to send the
following reports to the Buyer: (i) after filing with the SEC, a copy of each of
its Annual Reports on Form 10-KSB, its quarterly Reports on Form 10-QSB, and any
reports filed on Form 8-K; and (ii) as soon as practicable after release
thereof, copies of all press releases issued by the Company or any of its
subsidiaries.
f. Reservation of Shares. The Company shall at all times have
---------------------
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the issuance of all of the Conversion
Shares, the Warrant Shares and the Interest Shares (if any). Prior to complete
conversion of the Notes and exercise of the Warrants, the Company shall not
reduce the number of shares of Common Stock reserved for issuance hereunder
without the written consent of the Buyer except for a reduction proportionate to
a reverse stock split effected for a business purpose other than affecting the
requirements of this Section, which reverse stock split affects all shares of
Common Stock equally.
g. Listing. Upon the Closing, the Company shall promptly secure
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the listing of the Registrable Securities underlying the Notes and the Warrants
then purchased by the Buyer upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of shares of
Registrable Securities from time to time issued under the terms of this
Agreement and the Registration Rights Agreement. The Company shall at all times
comply in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National
10
Association of Securities Dealers and the OTC Bulletin Board Market (and such
other national securities exchange on which the Common Stock may be listed, as
applicable).
h. Prospectus Delivery Requirement. The Buyer understands that
-------------------------------
the 1933 Act requires delivery of a prospectus relating to the Common Stock in
connection with any sale thereof pursuant to a registration statement under the
1933 Act covering any resale by the Buyer of the Common Stock being sold, and
the Buyer shall comply with any applicable prospectus delivery requirements of
the 1933 Act in connection with any such sale.
i. Intentional Acts or Omissions. Neither party shall
-----------------------------
intentionally perform any act which if performed, or omit to perform any act
which if omitted to be performed, would prevent or excuse the performance of
this Agreement or any of the transactions contemplated hereby.
j. No Shorting. As a material inducement for the Company to
-----------
enter into this Agreement, the Buyer represents that it has not as of the date
hereof, and covenants on behalf of itself and its affiliates that neither Buyer
nor any affiliate of Buyer will at any time in which the Buyer or any affiliate
of the Buyer beneficially owns any of the Securities, engage in any short sales
of, or hedging or arbitrage transactions with respect to, the Common Stock, or
buy "put" options or similar instruments with respect to the Common Stock. The
parties acknowledge that under NASD rules, a sale of common stock of a company
on the date of a conversion of a convertible security into common stock of such
company is not a "short sale," notwithstanding the possibility that a sale may
have been made prior to the delivery of a conversion notice. Accordingly, the
parties acknowledge that a sale of Common Stock on the date a conversion is made
in accordance with the terms of the Notes is not a short sale for purposes of
this Section.
k. Expenses. The Company agrees to pay to or at the direction
--------
of the Buyer at the Closing the sum of $5,000 as reimbursement for the
attorney's fees and expenses of the Buyer incurred by it in connection with the
transactions contemplated by this Agreement.
l. [Intentionally omitted.]
m. Restriction on Below Market Issuance of Securities. Should
--------------------------------------------------
the Company elect to complete any private equity financing within six (6) months
after the Closing Date, the Buyer shall have the "right of first refusal" with
respect to such private equity financing, such that the Company will present in
writing all material terms agreed to between the Company and the proposed
investor(s) in such private equity financing, and the Buyer shall have at least
seven (7) business days to agree or refuse to accept all or any portion of an
investment in such private equity financing, under the terms presented to the
Buyer. If the terms of such private equity financing are modified after
presentation to the Buyer, then the modified terms shall also be presented to
the Buyer, and the Buyer shall be provided an additional seven (7) business days
to agree or refuse to accept all or any portion of an investment in such private
equity financing, under the modified terms as presented to the Buyer. The
Company covenants that it will not register said shares until such time as all
of the Notes issued or to be issued to the
11
Buyer under this Agreement have been converted into Common Stock pursuant to
their terms by the Buyer, without the Buyer's prior express written consent.
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. Transfer Agent Instructions. The Company shall instruct its
---------------------------
transfer agent to issue certificates, registered in the name of the Buyer or its
nominee, for the Conversion Shares, the Warrant Shares and the Interest Shares
(if any) in accordance with the terms of the applicable Notes and Warrants and
in such amounts as specified from time to time by the Buyer to the Company, upon
conversion of the Notes or exercise of the Warrants (as applicable). All such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement only to the extent required by applicable law and as specified in the
Transaction Documents. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the Conversion Shares, the
Warrant Shares and the Interest Shares (if any) prior to the registration of
same under the 1933 Act, will be given by the Company to its transfer agent and
that the Conversion Shares, the Warrant Shares and the Interest Shares (if any)
shall otherwise be freely transferable on the books and records of the Company
as and to the extent permitted by applicable law and provided by this Agreement,
the Warrants and the Registration Rights Agreement. Nothing in this Section
shall affect in any way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Conversion Shares, the Warrant
Shares and/or the Interest Shares (if any). If the Buyer (x) provides the
Company with an opinion of counsel reasonably satisfactory to Company that
registration by the Buyer of the Notes, the Warrants, the Warrant Shares, the
Conversion Shares and/or the Interest Shares (if any) is not required under the
1933 Act, or (y) transfers Securities to an affiliate which is an accredited
investor (in accordance with the provisions of this Agreement) or in compliance
with Rule 144, then in either instance the Company shall permit the said
transfer, and if applicable promptly (and in all events within two (2) trading
days) instruct its transfer agent to issue one or more certificates in such name
and in such denominations as specified by the Buyer.
b. Removal of Legends. The Legend shall be removed and the
------------------
Company shall issue a certificate without such Legend to the holder of any
Security upon which it is stamped, and a certificate for a security shall be
originally issued without the Legend, if, unless otherwise required by state
securities laws, (x) the sale of such Security is registered under the 1933 Act,
or (y) such holder provides the Company with an opinion by counsel reasonably
satisfactory to the Company, that is in form, substance and scope reasonably
satisfactory to the Company, to the effect that a public sale or transfer of
such Security may be made without registration under the 1933 Act or (z) such
holder provides the Company with assurances reasonably satisfactory to the
Company and its counsel, that such Security can be sold pursuant to Rule 144.
The Buyer agrees that its sale of all Securities, including those represented by
a certificate(s) from which the Legend has been removed, or which were
originally issued without the Legend, shall be made only pursuant to an
effective registration statement (and to deliver a prospectus in connection with
such sale) or in compliance with an exemption from the registration requirements
of the 1933 Act. In the event the Legend is removed from any Security or any
Security is issued without the Legend and thereafter the effectiveness of a
registration statement covering the sales of such Security is suspended or the
Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon reasonable
12
advance notice to the holder of such Security, the Company shall be entitled to
require that the Legend be placed upon any such Security which cannot then be
sold pursuant to an effective registration statement or Rule 144 or with respect
to which the opinion referred to in clause (y) next above has not been rendered,
which Legend shall be removed when such Security may be sold pursuant to an
effective registration statement or Rule 144 (or such holder provides the
opinion with respect thereto described in clause (y) next above.
c. Conversion of Notes. Subject to the limitations set forth
-------------------
below, after 180 days following the Closing Date, the Buyer shall have the right
to convert the Notes sold hereunder by delivering via facsimile an executed and
completed Notice of Conversion (as defined in the Notes) to the Company and
delivering within two (2) business days thereafter the original Notice of
Conversion by express courier to the Company. Each date on which a Notice of
Conversion is telecopied to the Company in accordance with the provisions hereof
shall be deemed a "Conversion Date." The Company will transmit the certificates
representing the shares of Common Stock issuable upon conversion of any Notes
(along with a replacement Note representing the amount of principal of said Note
not so converted, if such Note was submitted by the Buyer along with a Notice of
Conversion) to the Buyer via express courier, within five (5) business days
after the relevant Conversion Date ("Deadline"). Time is of the essence with
respect to the requirements of the immediately preceding sentence. The Buyer may
not convert the Notes for 180 days after the Closing Date. In addition, the
Buyer may not convert the Notes for ten (10) trading days if the closing price
of the Common Stock falls to or below the Price Floor. If the price is greater
than the Price Floor after such 10-trading-day period, conversions may resume.
If the price remains at or below the Price Floor at the end of the 10-trading-
day period, a new 10-trading-day period shall commence during which the Notes
may not be converted. There are two Price Floors, $5.25 and $3.50 per Share.
Notwithstanding the foregoing, the maximum aggregate number of trading days
during which the Notes may not be converted for each Price Floor pursuant to
this paragraph shall not exceed sixty (60).
Notwithstanding anything herein to the contrary, the Buyer shall not have
the right, and the Company shall not have the obligation, to convert all or any
portion of the Notes if and to the extent that the issuance to the Buyer of
shares of Common Stock upon such conversion would result in the Buyer being
deemed the "beneficial owner" of more than 4.9% of the then outstanding shares
of Common Stock within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules promulgated hereunder. If any court of
competent jurisdiction shall determine that the foregoing limitation is
ineffective to prevent the Buyer from being deemed the beneficial owner of more
than 4.9% of the then outstanding shares of Common Stock, then the Company shall
redeem so many of such Buyer's Notes as necessary to cause such Buyer to be
deemed the beneficial owner of not more than 4.9% of the then outstanding shares
of Common Stock. Such redemption shall be for cash at a redemption price equal
to the sum of (i) 125% of the principal value of the Notes and (ii) any accrued
and unpaid interest to the date of such redemption.
d. Injunctive Relief for Breach. The Company acknowledges that
----------------------------
the remedy at law for a breach of its obligations under Sections 5(a), 5(b) and
5(c) above will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly the Company agrees
that the remedy at law for a breach of its obligations under such Sections would
be inadequate and agrees, in the event of a breach or threatened
13
breach by the Company of the provisions of such Sections, the Buyer shall be
entitled, in addition to all other remedies at law or in equity, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
e. Liquidated Damages for Non-Delivery of Certificates. In
---------------------------------------------------
addition to the provisions of Section 5(d) above, the Company understands and
agrees that a delay in the issuance of the Certificates beyond the Deadline
could result in substantial economic loss and other damages to the Buyer. As
partial compensation to the Buyer for such loss, the Company agrees to pay
liquidated damages (and which the Company acknowledges is not a penalty) to the
Buyer for issuance and delivery of the Certificates after the Deadline, in
accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond fourteen (14) days from the date
of delivery by the Buyer to the Company of a facsimile Notice of Conversion (or,
if later, from the date on which all other necessary documentation duly executed
and in proper form required for conversion of Notes as described in this
Agreement, including the original Notice of Conversion for the portion of the
relevant Note(s) to be converted, all in accordance with this Agreement only if
such necessary documentation has not been delivered to the Company within the
two (2) business day period after the facsimile delivery to the Company of the
Notice of Conversion required in this Agreement)):
No. Business Days Late Liquidated Damages
---------------------- ------------------
(in US)
1 $300
2 $400
3 $500
4 $600
5 $700
6 $800
7 $900
8 $1,000
9 $1,000
10 $1,500
11+ $1,500 + $500 for each
Business Day Late
beyond 11 days
The Company shall pay the Buyer any liquidated damages incurred as called
for under this Section 5(e) by certified or cashier's check upon the earlier of
(i) issuance of the Certificates to the Buyer or (ii) each monthly anniversary
of the receipt by the Company of the Buyer's Notice of Conversion. Nothing
herein shall limit the Buyer's right to pursue actual damages for the Company's
failure to issue and deliver the Certificates to the Buyer in accordance with
the terms of this Agreement or for breach by the Company of this Agreement.
14
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell Notes at the Closing is
subject to the satisfaction, on or before the Closing Date as described herein,
of each of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
a. The parties shall have executed this Agreement, the
Registration Rights Agreement and the Pledge and Security Agreement, and the
parties shall have delivered the respective documents or signature pages thereof
(via facsimile or otherwise) to the other parties.
b. The Buyer shall have delivered to the Escrow Agent on behalf
of the Company the Purchase Price for the Notes and Warrants purchased at the
Closing, by wire transfer of immediately available funds pursuant to the wiring
instructions provided by the Company.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any self
regulatory organization having authority over the matters contemplated hereby
which restricts or prohibits the consummation of any of the transactions
contemplated herein.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer to purchase Notes and Warrants is subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions, provided that these conditions are for the sole benefit of the Buyer
and may be waived by the Buyer at any time in its sole discretion:
a. The parties shall have executed this Agreement, the
Registration Rights Agreement and the Pledge and Security Agreement, the parties
shall have delivered the respective documents or signature pages thereof (via
facsimile or otherwise) to the other parties.
b. The representations and warranties of the Company shall be
true and correct in all material respects as of the date made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer may
require a certificate, executed by the Chief Executive Officer of the Company,
dated as of the Closing
15
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer.
c. With respect to the Closing, the Company shall have issued
and have duly executed by the authorized officers of the Company, and delivered
to the Buyer, the Notes and Warrant being sold at the Closing (via facsimile or
otherwise) provided that any permitted facsimile of such documents shall be
followed with physical delivery of the original instrument or security within
two (2) business days after facsimile of same.
d. The Common Stock shall be authorized for quotation on the
OTC Bulletin Board Market and trading in the Common Stock on such market shall
not have been suspended by the SEC or other relevant regulatory agency.
e. The Company shall not have received, as of the Closing Date,
from the National Association of Securities Dealers, any written or oral
communication as to its actual or potential ineligibility for continued listing
of the Common Stock on the OTC Bulletin Board Market.
f. The Company's counsel shall have delivered to the Buyer the
legal opinion attached hereto as Exhibit E. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction or any self regulatory organization having authority over the
matters contemplated hereby which restricts or prohibits the consummation of any
of the transactions contemplated herein.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
-------------
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws. In the event of any litigation regarding
the interpretation or application of this Agreement, the parties irrevocably
consent to jurisdiction in any of the state or federal courts located in the
State of Delaware and waive their rights to object to venue in any such court,
regardless of the convenience or inconvenience thereof to any party. Service of
process in any civil action relating to or arising out of this Agreement
(including also all Exhibits or Addenda hereto) or the transaction(s)
contemplated herein may be accomplished in any manner provided by law. The
parties hereto agree that a final, non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and signature pages from such counterparts have been delivered. In the
event any signature page is delivered by facsimile transmission (which the
parties agree is an acceptable form of delivery), the party using such means of
delivery shall cause three (3) additional originally executed signature pages to
be physically delivered within two (2) business days of the execution and
delivery hereof.
16
c. Headings; Gender, Etc. The headings of this Agreement are
---------------------
for convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holidays, the date shall
be construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday.
d. Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the
----------------------------
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under
-------
the terms of this Agreement shall be sent by U. S. Mail or delivered personally
or by courier or via facsimile (if via facsimile, to be followed within three
(3) business days by an original of the notice document via U.S. Mail or
courier) and shall be effective five (5) days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Inforetech Wireless Technology, Inc.
0000 - 000xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx, Xxxxxxxx, Xxxxxx X0X-0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to the Buyer, at the address on the signature page of this Agreement. Each
party shall provide written notice to the other party of any change in address.
g. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their respective successors and
assigns. Neither the Company nor the Buyer shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
(which consent shall not be unreasonably withheld), and in any event any
assignee of the Buyer shall be an accredited investor (as defined in Regulation
D), in the written opinion of counsel who is reasonably satisfactory to Seller
and in
17
form, substance and scope reasonably satisfactory to the Seller. Notwithstanding
the foregoing, if applicable, any of the entities constituting the Buyer (if
greater than one (1) entity) may assign its rights hereunder to any of its
"affiliates," as that term is defined under the 1934 Act, without the consent of
the Company; provided, however, that any such assignment shall not release such
assigning entity from its obligations hereunder unless such obligations are
assumed by such affiliate and the Company has prior to such assignment and
assumption consented in writing to the same; and no such assignment shall be
made unless it is made in accordance with any applicable securities laws of any
applicable jurisdiction. Any request for an assignment made hereunder by the
Buyer shall be accompanied by a legal opinion in form, substance and scope
reasonably satisfactory to the Company, that such assignment is proper under
applicable law. Notwithstanding anything herein to the contrary, Buyer may
pledge the Securities as collateral for a bona fide loan pursuant to a security
agreement with a third party lender, and such pledge shall not be considered an
assignment in violation of this Agreement so long as it is made in compliance
with all applicable law.
h. No Third Party Beneficiaries. This Agreement is intended for
----------------------------
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. Unless this Agreement is terminated under Section
--------
8(1), the representations and warranties of the Company and the Buyer contained
in Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5
and 8 shall survive the final Closing of the purchase and sale of Securities
purchased and sold hereby.
j. Publicity. The Company and the Buyer shall have the right to
---------
review before issuance by the other, any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without prior consultation with or
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations.
k. Further Assurance. Each party shall do and perform, or cause
-----------------
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing shall not have
-----------
occurred on or before ten (10) business days from the date hereof, this
Agreement shall terminate at the close of business on such date. Neither party
may unilaterally terminate this Agreement after the Closing for any reason other
than a material breach of this Agreement by the non-terminating party. Such
termination shall not be the sole remedy for a breach of this Agreement by the
nonterminating party, and each party shall retain all of its rights hereunder at
law or in equity. Notwithstanding anything herein to the contrary, a party whose
breach of a covenant or representation and warranty or failure to satisfy a
condition prevented the Closing shall not be entitled to terminate this
Agreement.
18
m. Remedies. No provision of this Agreement providing for any
--------
specific remedy to a party shall be construed to limit such party to the
specific remedy described, and any other remedy that would otherwise be
available to such party at law or in equity shall be so available. Nothing in
this Agreement shall limit any rights a party may have with any applicable
federal or state securities laws with respect to the transactions contemplated
hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
[SIGNATURE PAGE FOLLOWS]
List of Exhibits
Exhibit A Form of Notes
Exhibit B Warrant to Purchase Common Stock
Exhibit C Registration Rights Agreement
Exhibit D Pledge and Security Agreement
Exhibit E Legal Opinion
19
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT DATED
August 4, 2000
COMPANY:
INFORETECH WIRELESS TECHNOLOGY, INC.
By: ___________________________________
(authorized signatory)
Title:_________________________________
BUYER:
AUGUSTINE FUND, X.X.
Xxxxxxxxx Capital Management, L.L.C., its
General Partner
By: ___________________________________
Xxxxxx X. Xxxxxxxxx, Member
BUYER'S ADDRESS:
000 Xxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
20
SECURITIES PURCHASE AGREEMENT
Schedule 3(c)
Outstanding Options to Purchase Common Stock:
--------------------------------------------
(Class "A" only)
4,000,000 authorized; 1,810,000 have been granted at $1.00; 150,000 have been
granted at $3.00; 285,000 have been granted at $7.00; 60,000 have been granted
at $5.00. Put and call agreements with Xxxxxx Family re Class "A" and "B:
Preference Shares of Inforetech 2000 and Class "B" Shares of Inforetech that
upon exercise would result in issuance of 6,902,030 Class A Shares.
Outstanding Warrants to Purchase Common Stock:
---------------------------------------------
(Class "A" only)
1,786,500
Promissory Notes Convertible Into Common Stock:
----------------------------------------------
(457,280 plus warrant for 160,000 Class "A";
170,750 Class "A")
Commitments to Sell and Register Common Stock:
---------------------------------------------
(350,000 shares of Class "A" Shares and Warrants
Subscriptions
-------------
Subscriptions for 222,223 Class "A" Shares
21
SECURITIES PURCHASE AGREEMENT
Schedule 3(g)
Registration of all the Registrable Securities under the Securities Act of
1933, as amended, requires the filing of a registration statement with the
Securities and Exchange Commission (or an amendment to a registration statement
previously filed) and a declaration of effectiveness of the registration
statement by the Securities and Exchange Commission.
Schedule 3(i)
NONE
Schedule 3(j)
NONE
22
EXHIBIT A (Form of Notes)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
DATE: August 4, 2000
NOTE #_____
U.S.$1,000,000
INFORETECH WIRELESS TECHNOLOGY, INC.
SERIES "A"EIGHT PERCENT (8%) CONVERTIBLE NOTE DUE August 4, 2003
THIS NOTE is one of a duly authorized issue of Notes (a "Note" or the
"Notes") of Inforetech Wireless Technology, Inc., a corporation duly organized
and validly existing under the laws of the State of Nevada, U.S.A. (the
"Company") designated as its Series "A" Eight Percent (8%) Convertible Notes Due
August 4, 2003.
FOR VALUE RECEIVED, the Company promises to pay to AUGUSTINE FUND, L.P.,
the registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of One million United States Dollars ($1,000,000) on August 4,
2003 (the "Maturity Date"), and to pay interest on the principal sum
outstanding, at the rate of eight percent (8%) per annum due and payable in
quarterly installments in arrears, on March 31, June 30, September 30, and
December 31 of each year during the term of this Note, with the first such
payment to be made on September 30, 2000. Accrual of interest on the outstanding
principal amount, payable in cash or common stock of the Company at the
Company's option, shall commence on the date hereof and shall continue until
payment in full of the outstanding principal amount has been made or
-1-
duly provided for. The interest so payable will be paid to the person in whose
name this Note (or one or more predecessor Notes) is registered on the records
of the Company regarding registration and transfers of the Note (the "Note
Register"); provided, however, that the Company's obligation to a transferee of
this Note arises only if such transfer, sale or other disposition is made in
accordance with the terms and conditions of that Securities Purchase Agreement
of even date herewith between the Company and Augustine Fund, L.P. (the
"Securities Purchase Agreement").
The principal of, and interest on, this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Note Register of the Company as designated in writing by the Holder hereof
from time to time. The Company will pay the outstanding principal of and any and
all accrued and unpaid interest due upon this Note on the Maturity Date, less
any amounts required by law to be deducted or withheld, to the record Holder of
this Note as of the fifth business day (as defined in the Securities Purchase
Agreement) prior to the Maturity Date and addressed to such Holder at the last
address appearing on the Note Register. The forwarding of such funds shall
constitute a payment of outstanding principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Note to
the extent of the sum represented by such payment plus any amounts so deducted
or withheld. Except as herein provided, this Note may not be prepaid without the
prior written consent of the Holder.
This Note is subject to the following additional provisions:
1. Note Exchangeable. The Note is exchangeable commencing thirty (30)
-----------------
days from the date hereof for an equal aggregate principal amount of Notes of
different authorized denominations, as requested by the Holder surrendering the
same, but not of denominations of less than $10,000 without the Company's
written consent. No service charge will be made for such registration or
transfer or exchange.
2. Withholding. The Company shall be entitled to withhold from all
-----------
payments of principal or interest pursuant to this Note any amounts required to
be withheld under the applicable provisions of the United States income tax or
other applicable laws at the time of such payments.
3. Transfer/Exchange of Note; Registered Holder; Opinion of Counsel;
-----------------------------------------------------------------
Legend. This Note has been issued subject to investment representations of the
------
original purchaser hereof and may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended (the "1933 Act") and applicable
state securities laws. Prior to due presentment for transfer of this Note, the
Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's Note Register as the owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not his Note be overdue, and neither the Company nor any such agent
shall be affected or bound by notice to the contrary.
The Holder understands and acknowledges by its acceptance hereof that (i)
except as provided in the Securities Purchase Agreement and in that Registration
Rights Agreement attached as Exhibit C to the Securities Purchase Agreement (the
"Registration Rights Agreement"), both
-2-
such documents incorporated herein by reference, this Note and the shares of
common stock in the Company issuable upon conversion thereof as herein provided
("Conversion Shares") have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (a) subsequently registered thereunder, or (b)
the Holder shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, substance and scope to the Company, to the effect that the
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration; (ii) any sale of
such securities made in reliance on Rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other regulation and/or exemption under the 1933 Act or the rules and
regulations of the United States Securities and Exchange Commission (the "SEC")
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws (other than pursuant to the terms of the Securities Purchase
Agreement and the Registration Rights Agreement) or to comply with the terms and
conditions of any exemption thereunder.
Any Conversion Shares issued upon conversion of this Note, and if
applicable, any common stock of the Company issued in payment of interest as
herein provided, shall, if and only to the extent required by law, bear legends
in similar form to the legends set forth on the first page of this Note.
4. Conversion of Note into Common Stock; Redemption by the Company.
---------------------------------------------------------------
(a) Subject to the limitations set forth in this section, the Holder of
this Note is entitled, at its option, at any time commencing one hundred eighty
(180) days after the date first written at the top of this Note, to convert all
or a portion of the original principal face amount of this Note into shares of
Class A common equity voting stock in the Company,$0.001 par value per share
(defined hereinafter as the "Common Stock"), at a conversion price (the
"Conversion Price") for each share of Common Stock equal to the lesser of
(x)$5.25; or (y) 75% of the average of the closing bid prices for the Common
Stock for the five (5) trading days immediately preceding the Conversion Date
(as hereinafter defined), as quoted by Bloomberg. Such conversion shall be
achieved by submitting to the Company the fully completed form of conversion
notice attached hereto as Exhibit I (a "Notice of Conversion"), executed by the
Holder of this Note evidencing such Holder's intention to convert this Note or
the specified portion (as herein provided) hereof. A Notice of Conversion may be
submitted via facsimile to the Company at the telecopier number for the Company
provided in the Securities Purchase Agreement (or at such other number as
requested in advance of such conversion in writing by the Company), and if so
submitted the original Notice of Conversion shall be delivered to the Company
within two (2) business days. The Company and the Holder shall each keep records
with respect to the portion of this Note then being converted and all portions
previously converted; upon receipt by the Holder of the requisite Conversion
Shares, the outstanding principal amount of the Note shall be reduced by the
amount specified in the Notice of Conversion resulting in such Conversion
Shares. The Company may from time to time, but is not required to, instruct the
Holder and the Holder shall surrender this Note along with the Notice of
-3-
Conversion for the purposes of making a notation thereon as to the amount of
principal being converted, or of canceling this Note and issuing a new Note in
the same form with the principal amount of such Note reduced by the amount
converted. Such new or notated Note shall be delivered to the Holder within
three (3) business days after such Holder's surrender to the Company. No
fractional shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share. Accrued interest on the converted portion of the Note shall be
payable upon conversion thereof, in cash or Common Stock at the Conversion
Price, at the Company's option. The date on which a notice of conversion is
given (the "Conversion Date") shall be deemed to be either the date on which the
Company receives from the Holder an original Notice of Conversion duly executed,
or, if earlier, the date set forth in such Notice of Conversion if the original
Notice of Conversion is received by the Company within two (2) business days
thereafter.
In all cases, the Company shall deliver the Conversion Shares to the Holder
within five (5) business days after the Conversion Date with respect to such
Conversion Shares being delivered, and at the address specified in the Notice of
Conversion. The Company acknowledges that the Securities Purchase Agreement
requires that the Company pay liquidated damages for late or non-delivery of
Conversion Shares.
The Holder may not convert the Notes for 180 days after the Closing Date.
In addition, the Holder may not convert the Notes for ten (10) trading days
after the closing price of the Common Stock falls to or below the Price Floor.
If the price is greater than the Price Floor after such 10-trading-day period,
conversions may resume. If the price remains at or below the Price Floor at the
end of the 10-trading-day period, a new 10-trading-day period shall commence
during which the Notes may not be converted. There are two Price Floors,$5.25
and$3.50 per Share. Notwithstanding the foregoing, the maximum aggregate number
of trading days during which the Notes may not be converted for each Price Floor
pursuant to this paragraph shall not exceed sixty (60).
Notwithstanding anything herein to the contrary, the Holder shall not have
the right, and the Company shall not have the obligation, to convert all or any
portion of the Notes if and to the extent that the issuance to the Holder of
shares of Common Stock upon such conversion would result in the Holder being
deemed the "beneficial owner" of more than 4.9% of the then outstanding shares
of Common Stock within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules promulgated hereunder. If any court of
competent jurisdiction shall determine that the foregoing limitation is
ineffective to prevent the Holder from being deemed the beneficial owner of more
than 4.9% of the then outstanding shares of Common Stock, then the Company shall
redeem so many of such Holder's Notes as necessary to cause such Holder to be
deemed the beneficial owner of not more than 4.9% of the then outstanding shares
of Common Stock. Such redemption shall be for cash at a redemption price equal
to the sum of (i) 125% of the principal value of the Notes and (ii) any accrued
and unpaid interest to the date of such redemption.
-4-
Other than a conversion made on the Maturity Date in accordance with this
paragraph, conversions of this Note must be effected in increments of at
least$10,000 of principal amount of this Note (or such lesser outstanding
principal amount of this Note).
(b) For 180 days after the Closing Date, the Company shall have the right
(but not the obligation) to redeem all or any portion of this Note, provided the
previous day's closing price of the Common Stock is at least $8.07, and the
Company is not then in violation of any of its obligations under this Note or
under the Securities Purchase Agreement or any addenda thereto, under the
following conditions. At any time prior to delivery of any Notice of Conversion
(in this Section 4(b), a "Notice") to the Company by the Holder in accordance
with the terms of this Note, the Company may give to the Holder notice (a
"Redemption Notice") that it intends to pay the Holder the Cash Redemption
Amount (as hereinafter defined) with respect to all or such portion of the Note
referred to in the Redemption Notice. The "Cash Redemption Amount" shall be
equal to 125% of the face amount of the portion of the Note to be redeemed
pursuant to the Redemption Notice, plus accrued interest, and shall be paid to
the Holder according to the Holder's written instructions to the Company within
three (3) business days after delivery of the Redemption Notice with respect to
such Note or portion thereof to be redeemed. If the Company does not redeem
within the time limits herein specified and according to the terms of this
Section 4(b), then unless waived by the Holder, the Redemption Notice shall be
null and void, and the Holder may convert all or such portion of this Note as
the Holder in its discretion determines. Notwithstanding anything herein to the
contrary, upon receipt of a Redemption Notice, the Holder can elect to convert
any or all of the Note at the Conversion Price in Section 4(a) or accept the
Company's redemption.
5. Obligations of the Company Herein are Unconditional. No provision of
---------------------------------------------------
this Note shall alter or impair the obligation of the Company, which obligation
is absolute and unconditional, to repay the principal amount of this Note at the
time, place, rate, and in the coin currency, hereinabove stated. This Note and
all other Notes now or hereafter issued in replacement of this Note on the same
or similar terms are direct obligations of the Company. This Note ranks at least
equally with all other Notes now or hereafter issued under the terms set forth
herein. The Conversion Price and number of shares of Common Stock issuable upon
conversion shall be subject to adjustment from time to time as provided in
Section 6 below.
6. Adjustments.
-----------
(a) In the event the Company should at any time or from time to time,
after the date of this Note, fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock (equal to at least 10% or more of
the Company's then issued and outstanding shares of Common Stock) or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend, distribution, split or subdivision if no record date is fixed),
the Conversion Price shall be appropriately decreased so that
-5-
the number of shares of Common Stock issuable on conversion of this Note shall
be increased in proportion to such increase in the aggregate number of shares of
Common Stock outstanding and those issuable with respect to such Common Stock
Equivalents.
(b) If the number of shares of Common Stock outstanding at any time after
the date of this Note is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable upon conversion of this Note shall be decreased in
proportion to such decrease in outstanding shares.
(c) In case of any reclassification, capital reorganization or other
change of outstanding shares of the Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change in the rights and restrictions of outstanding
shares of Common Stock), the Company shall cause effective provision to be made
so that the Holder shall have the right thereafter, by converting this Note, to
receive the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been received upon conversion of the Note
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Company acting in good faith.
7. Reservation of Shares. The Company shall at all times reserve and keep
---------------------
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Note, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the outstanding principal amount, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Note, in addition to such other remedies as
shall be available to Holder, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase the number of
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including without limitation, using its best
efforts to obtain the requisite stockholder approval necessary to increase the
number of authorized shares of the Company's Common Stock.
8. Note Holder Not Deemed a Stockholder. No Holder, as such, of this
------------------------------------
Note shall be entitled (prior to conversion of this Note into Common Stock, and
only then to the extent of such conversion) to vote or receive dividends or be
deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Note be construed to confer upon the Holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold
-6-
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Note of the Conversion
Shares which he or she is then entitled to receive upon the due conversion of
all or a portion of this Note. Notwithstanding the foregoing, the Company will
provide the Holder with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
9. No Limitation on Corporate Action. No provisions of this Note and no
---------------------------------
right or option granted or conferred hereunder shall in any way limit, affect or
abridge the exercise by the Company of any of its corporate rights or powers to
recapitalize, amend its Certificate of Incorporation, reorganize, consolidate or
merge with or into another corporation, or to transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.
10. Representations of Holder. Upon conversion of all or a portion of
-------------------------
this Note, the Holder shall confirm in writing, in a form reasonably
satisfactory to the Company, that the Conversion Shares so purchased are being
acquired solely for the Holder's own account and not as a nominee for any other
party, and that such Holder is an Accredited Investor (as defined in Rule 501(a)
of Regulation D promulgated under the 1933 Act). The Company acknowledges that
Holder's duly executed certification on the Notice of Conversion is satisfactory
confirmation of the facts set forth in the immediately preceding sentence. If
such Holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such Holder's conversion of all or a
portion of the Note that the Company receive such other representations as the
Company considers reasonably necessary to assure the Company that the issuance
of its securities upon conversion of the Note shall not violate any United
States or state securities laws.
11. Waiver of Demand, Presentment, Etc. The Company hereby expressly
----------------------------------
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.
12. Attorney's Fees. The Company agrees to pay all costs and expenses,
---------------
including without limitation reasonable attorney's fees, which may be incurred
by the Holder in collecting any amount due under this Note or in enforcing any
of Holder's conversion rights as described herein.
13. Default. If one or more of the following described "Events of
-------
Default" shall occur:
(a) The Company shall continue in default in the payment of principal or
interest on this Note for a period of ten (10) days after a notice of
default is received by the Company with respect to any such payment; or
(b) Any of the representations or warranties made by the Company herein,
in the Securities Purchase Agreement, the Registration Rights Agreement, or
in any certificate or
-7-
financial or other written statement heretofore or hereafter furnished by
or on behalf of the Company in connection with the execution and delivery
of this Note or the Securities Purchase Agreement or the Registration
Rights Agreement shall be false or misleading in any material respect at
the time made and the Holder shall have provided seven (7) days prior
written notice to the Company of the alleged misrepresentation or breach of
warranty and the same shall continue uncured for a period of seven (7) days
after such written notice from the Holder; or
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of
the Company under this Note or the Securities Purchase Agreement and such
failure shall continue uncured for a period of seven (7) days after written
notice from the Holder of such failure; or
(d) The Company shall either: (i) become insolvent; (ii) admit in writing
its inability to pay its debts generally or as they become due; (iii) make
an assignment for the benefit of creditors or commence proceedings for its
dissolution; or (iv) apply for, or consent to the appointment of, a
trustee, liquidator, or receiver for its or for a substantial part of its
property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without the Company's
consent and such appointment is not discharged within sixty (60) days after
such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter; or
(g) Any money judgment, writ or Note of attachment, or similar process in
excess of $500,000 in the aggregate shall be entered or filed against the
Company or any of its properties or assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any
event later than five (5) days prior to the date of any proposed sale
thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed within sixty days
after such institution or the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in, any such
proceeding; or
(i) The Company shall have its Common Stock delisted from the OTC Bulletin
Board Market or suspended from trading thereon, and shall not have its
Common Stock relisted on the same or another national securities exchange,
or have such suspension lifted, as the case may be, within ten (10)
business days; or
-8-
(j) The Company shall have received a notice of default on the payment of
any debt(s) aggregating in excess of$500,000 beyond any applicable grace
period;
then, or at any time thereafter, and in any and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
in one instance shall not be deemed to be a waiver in another instance or for
any other prior or subsequent Event of Default) at the option of the Holder and
in the Holder's sole discretion, the Holder may immediately accelerate the
maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Company, anything
herein or in any Note or other instrument contained to the contrary
notwithstanding, and the Holder may immediately, and upon the expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law or equity.
14. Note a General Obligation of the Company. This Note represents a
----------------------------------------
general obligation of the Company, however, it is secured by collateral owned by
Xxxxxx X. Xxxxxx, Xx. as set forth in that certain Pledge and Security
Agreement. If the Company defaults on its obligation to convert this Note and
deliver Common Stock to the Holder, that portion of the collateral which is
delivered to the Holder shall reduce this Note as if the Common Stock were
received by the Holder through a conversion of this Note.
15. Enforceability. In case any provision of this Note is held by a court
--------------
of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Note will not in any way be
affected or impaired thereby.
16. Entire Agreement. This Note and Exhibit I attached hereto, the
----------------
Securities Purchase Agreement and the Exhibits attached thereto, the
Registration Rights Agreement and the Exhibits attached thereto (if any) and the
Pledge and Security Agreement constitute the full and entire understanding
between the Company and the Holder with respect to the subject matter hereof and
thereof. Neither this Note nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
Company and the Holder.
17. Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the state of Delaware without giving effect to
applicable principles of conflict of law.
18. Headings. Headings in this Note are for convenience only, and shall
--------
not be used in the construction of this Note.
-9-
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized, all as of the date first
hereinabove written.
INFORETECH WIRELESS TECHNOLOGY, INC.
By: __________________________________
(authorized signatory)
______________________________________
Title
-10-
EXHIBIT I
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in Order to Convert the Note)
The Undersigned hereby irrevocably elects to convert $_____________ of the
Series "A" Eight Percent (8%) Convertible Note Due August 4, 2003, into shares
of Common Stock of Inforetech Wireless Technology, Inc.(the "Company"),
according to the terms and conditions set forth in such Note, as of the date
written below. If securities are to be issued to a person other than the
Undersigned, the Undersigned agrees to pay all applicable transfer taxes with
respect thereto.
The Undersigned represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D promulgated by
the SEC under the 1933 Act.
The Undersigned also represents that the Conversion Shares are being
acquired for the Holder's own account and not as a nominee for any other party.
The Undersigned represents and warrants that all offers and sales by the
Undersigned of the Conversion Shares shall be made pursuant to registration of
the same under the 1933 Act, or pursuant to an exemption from registration under
the 1933 Act. The Undersigned acknowledges that the Conversion Shares shall if
(and only if) required by law contain the legend contained on page 1 of the
Note.
Conversion Date:*
Applicable Conversion Price:
Holder (Print True Legal Name):
(Signature of Duly Authorized Representative of Holder)
Address of Holder:
* This original Notice of Conversion must be received by the Company by the
second business day following the Conversion Date.
-11-
EXHIBIT B
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES
LAWS (COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE LAWS.
INFORETECH WIRELESS TECHNOLOGY, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.____ Number of Shares: 100,000
Date of Issuance: August 4, 2000
Inforetech Wireless Technology, Inc., a Nevada corporation (the "Company"),
hereby certifies that, for value received, Augustine Fund, L.P., and permitted
assigns, the registered holder hereof ("Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time after the date hereof, but not after 5:00 P.M. Central time
on the Expiration Date (as defined herein) One hundred thousand (100,000) fully
paid and nonassessable shares of Common Stock (as defined herein) of the Company
(each a "Warrant Share" and collectively the "Warrant Shares") at a purchase
price per share equal to the closing bid price for the Common Stock on the date
of this Warrant (the "Exercise Price") in lawful money of the United States. The
number of Warrant Shares purchasable hereunder and the Exercise Price are
subject to adjustment as provided in Section 9 below.
Section 1.
(a) Definitions. The following words and terms used in this Warrant
-----------
shall have the following meanings:
"Common Stock" means (a) the Company's Class A common equity voting
stock and (b) any capital stock into which such Common Stock shall have been
changed or any capital stock resulting from a reclassification of such Common
Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
"Expiration Date" means the date which is five (5) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Chicago or the
State of Illinois (a "Holiday"), the next preceding date that is not a Holiday.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be a per share price equal to the closing
bid price for the Common Stock on the date of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein
(A) to the Company shall be deemed to include the Company's successors; and (B)
to any applicable law defined or referred to herein, shall be deemed references
to such applicable law as the same may have been or may be amended or
supplemented from time to time.
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes
the masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
-------------------
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Central time on the Expiration Date. The rights represented by this Warrant may
be exercised by the Holder, as a whole or from time to time in part (except that
this Warrant shall not be exercisable as to a fractional share) by (i) delivery
of a written notice, in the form of the exercise form attached as Exhibit I
hereto (an "Exercise Form"), of the Holder's election to exercise this Warrant,
which notice shall specify the number of Warrant Shares to be purchased, (ii)
payment to the Company of an amount equal to the Warrant Exercise Price
multiplied by the number of Warrant Shares as to which the Warrant is being
exercised (plus any applicable issue or transfer taxes) in immediately available
2
funds (either by wire transfer or a certified or cashier's check drawn on a
United States bank), for the number of Warrant Shares as to which this Warrant
shall have been exercised, and (iii) the surrender of this Warrant, properly
endorsed, at the principal office of the Company (or at such other agency or
office of the Company as the Company may designate by notice to the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company
shall submit the disputed calculations to an independent accounting firm of
national standing via facsimile within two (2) business days of receipt of the
Exercise Form. The accountant shall audit the calculations and notify the
Company and the Holder of the results no later than two (2) business days from
the date it receives the disputed calculations. The
3
accountant's calculation shall be deemed conclusive absent manifest error. The
Company shall then issue the appropriate number of shares of Common Stock in
accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees that
----------------------------
all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or taxes
-----
attributable to the initial issuance of the Warrant Shares or any permitted
transfer involved in the issue or delivery of any certificates for Warrant
Shares in a name other than that of the registered holder hereof or upon any
permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such, of this
---------------------------------------
Warrant shall be entitled to vote or receive dividends or be deemed the holder
of shares of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this Warrant and
---------------------------------
no right or option granted or conferred hereunder shall in any way limit, affect
or abridge the exercise by the Company of any of its corporate rights or powers
to recapitalize, amend its Certificate of Incorporation, reorganize, consolidate
or merge with or into another corporation, or to transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
-------------------------
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder's exercise of the Warrant that
the
4
Company receive such other representations as the Company considers reasonably
necessary to assure the Company that the issuance of its securities upon
exercise of the Warrant shall not violate any United States or state securities
laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) The holder of this Warrant understands that (i) this Warrant and
the Warrant Shares have not been and are not being registered under the
Securities Act or any state securities laws (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement), and may
not be offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
-----------
(a) Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change in the rights and
restrictions of outstanding shares of Common Stock), the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and number of
shares of stock or other securities or property (including cash) receivable upon
such reclassification, capital reorganization or other change, consolidation or
merger by a holder of the number of shares of Common Stock that could have been
purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall
--------------------------
effect a stock dividend, a stock split, a stock combination, or a reverse stock
split of the Common Stock, the number of Warrant Shares purchasable hereunder
and the Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting
5
in good faith. The number of shares, as so adjusted, shall be rounded down to
the nearest whole number and the Warrant Exercise Price shall be rounded to the
nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
--------------------------------------------
lost, stolen or destroyed, the Company shall, on receipt of an indemnification
undertaking reasonably satisfactory to the Company, issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen or destroyed. In the event
the holder hereof asserts such loss, theft or destruction of this Warrant, the
Company may require such holder to post a bond issued by a surety reasonably
satisfactory to the Company with respect to the issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under the
------
terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Inforetech Wireless Technology, Inc.
000 - 000xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx Xxxxxxxx X0X- 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be changed,
-------------
waived, discharged, or terminated only by an instrument in writing signed by the
party or holder hereof against which enforcement of such change, waiver,
discharge or termination is sought. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the laws
of the State of Delaware. Headings are for convenience only and shall not affect
the meaning or construction of any of the provisions hereof. This Warrant shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is August 4, 2000. This Warrant, in
----
all events, shall be wholly void and of no effect after the close of business on
the Expiration Date, except that notwithstanding any other provisions hereof,
the provisions of Section 8 shall continue in full force and effect after such
date as to any Warrant Shares or other securities issued upon the exercise of
this Warrant.
[SIGNATURE PAGE FOLLOWS]
6
[SIGNATURE PAGE TO WARRANT #_____ DATED August 4, 2000]
INFORETECH WIRELESS TECHNOLOGY, INC.
By:___________________________________
(authorized signatory)
Title_________________________________
7
EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
Inforetech Wireless Technology, Inc.
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of
U.S.$_____________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:______________________, 200__.
HOLDER ______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
Address:_____________________________
_____________________________
_____________________________
Number of Warrant Shares
Being Purchased: ____________________________
8
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August
4, 2000, by and between Inforetech Wireless Technology, Inc., a corporation
organized under the laws of the State of Nevada, U.S.A., with headquarters
located at 5500 - 152/nd/ Street, Suite 214, Surrey, British Columbia, Canada
V35 8E7 (the "Company"), and the buyer set forth on the execution page hereof
(the "Buyer").
RECITALS
A. In connection with the Securities Purchase Agreement by and between the
parties of even date herewith (the "Securities Purchase Agreement"), the Company
has agreed, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to issue and sell to the Buyer (i) a number of the Company's
Series "A" Eight Percent (8%) Convertible Notes Due August 4, 2003 (the "Notes")
and (ii) a number of Warrants (as defined in the Securities Purchase Agreement).
The Notes are convertible in accordance with their respective terms into Class A
common equity voting stock of the Company, $0.001 par value per share ("Common
Stock"). The Warrants are exercisable in accordance with their terms into Common
Stock. The Common Stock into which the Notes are convertible may be referred to
herein as the "Conversion Shares." The Common Stock into which the Warrants are
exercisable may be referred to herein as the "Warrant Shares." In accordance
with the terms of the Notes, shares of Common Stock may be issued in payment of
interest ("Interest Shares").
B. The Buyer has agreed to purchase and pay for the Notes and the Warrants
as provided in the Securities Purchase Agreement. Upon each such purchase, the
Company will issue and deliver the Notes and the Warrants to the Buyer.
C. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by all parties hereto, the Company
and the Buyer hereby agree as follows:
-1-
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
i. "Investor" or "Investors" means the Buyer and any permitted
transferee(s) or assignee(s) thereof to whom the Buyer assigns this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 hereof.
ii. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
iii. "Registrable Securities" means the Conversion Shares and the
Interest Shares (if any) underlying or issued in accordance with or upon
conversion of the Notes, the Warrants, the Warrant Shares, and any shares of
capital stock issued or issuable from time to time (with any adjustments) on or
in exchange for or otherwise with respect to either of the foregoing (including
without limitation any shares issued pursuant to Section 2(b) hereinafter).
iv. "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed under the 0000 Xxx.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration.
-----------------------
i. The Company shall use its best efforts to prepare, and, on or
before the date that is sixty (60) days after the date of the Closing, file with
the SEC a Registration Statement or Registration Statements (as necessary) on
Form SB-2 (or, if such form is unavailable for such a registration, on such
other form as is available for such a registration of all of the Registrable
Securities) (any of which may contain a combined prospectus with other
registrations by the Company), covering the resale of all of the Registrable
Securities, which Registration Statement(s), to the extent allowable under the
1933 Act and the rules promulgated thereunder (including without limitation Rule
416), shall state that such Registration Statement(s) also covers such
indeterminate number of additional shares (the "Indeterminate Shares") of Common
Stock as may become issuable upon conversion of the Notes to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
ii. To the extent the Indeterminate Shares for any reason can not
be registered under the Registration Statement(s) required under Section 2(a)(i)
above, then with
-2-
respect to such Indeterminate Shares, the Company shall use its best efforts to
prepare, and, on or before the date that is fifteen (15) days after the
Indeterminate Shares become issuable, file with the SEC a Registration Statement
or Registration Statements (as necessary) on Form SB-2 (or, if such form is
unavailable for such a registration, on such other form as is available for such
a registration of all of the Indeterminate Shares) (any of which may contain a
combined prospectus with other registrations by the Company), covering the
resale of all of the Indeterminate Shares.
A copy of the Registration Statement(s) (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided to (and subject to the approval of the Buyer, which approval shall not
be unreasonably withheld or denied) the Buyer and its counsel prior to its
filing or other submission.
b. Liquidated Damages. The Company shall use its best efforts
------------------
to obtain effectiveness of the Registration Statement as soon as practicable. If
(i) the Registration Statement(s) covering the Registrable Securities required
to be filed by the Company pursuant to Section 2(a) hereof is not declared
effective by the SEC within one hundred eighty (180) days after the Closing Date
(other than by reason of any act or failure to act in a timely manner by the
Investor or its counsel) (the "Registration Deadline") or if, after the
Registration Statement has been declared effective by the SEC, sales cannot be
made pursuant to the Registration Statement (by reason of a suspension, a stop
order, the Company's failure to update the Registration Statement, or any other
reason outside the control of the Investor), or (ii) the Common Stock is not
listed or included for quotation on the OTC Bulletin Board Market, the National
Association of Securities Dealers Automated Quotation system Small Cap Market
("NASDAQ Small Cap"), or another United States national securities exchange or
market; then in either case (in either case, a "Delay") the Company will make
payments to the Investors, as liquidated damages and in such amounts and at such
times as shall be determined pursuant to this Section 2(b) as relief for the
damages to the Investor by reason of any such delay in or reduction of its
ability to sell the Registrable Securities (which remedy shall be exclusive of
any other remedies available at law or in equity), an amount to be determined as
follows. The discount multiplier in the Conversion Price, as defined in the
Securities Purchase Agreement and Note, shall be decreased 1% for every week
beyond 180 days after the Closing Date that the Registration Statement is not
declared effective by the SEC, provided, however, that there shall be excluded
from such period any delays which are reasonably attributable to changes
required by the Investor in the Registration Statement with respect to
information relating to the Investor, including, without limitation, changes to
the plan of distribution, or to the failure of the Investor to conduct its
review of the registration statement pursuant to Section 2(a) above in a
reasonably prompt manner; (ii) the number of months (prorated for partial
months) that sales cannot be made pursuant to the Registration Statement after
the Registration Statement has been declared effective by the SEC; and (iii) the
number of months (prorated for partial months) that the Common Stock is not
listed or included for quotation on the NASDAQ Small Cap or another United
States national exchange after the Registration Statement has been declared
effective.
By way of illustration, if the Registration Statement were to become
effective eight weeks after the end of the Registration Deadline, the discount
multiplier for subsequent conversions would be 75% minus 8% or 67%.
-3-
c. Piggy-Back Registrations. If at any time prior to the
------------------------
expiration of the Registration Period (as hereinafter defined) the Company shall
file with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its equity
securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans) the Company shall
send to the Investor written notice of such determination and, if within twenty
(20) days after receipt of such notice, such Investor shall so request in
writing, the Company, to the extent permitted by law, shall include in such
Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' reasonable good faith judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then
only such limited portion of the Registrable Securities with respect to which
such Investor has requested inclusion hereunder will be included in the
Registration Statement; provided that no portion of the equity securities which
the Company is offering for its own account shall be excluded; provided, further
that the Company shall be entitled to exclude Registrable Securities to the
extent necessary to avoid breaching obligations existing prior to the date
hereof to other stockholders of the Company.
Any exclusion of Registrable Securities shall be made pro rata among the
Investors seeking to include Registrable Securities, in proportion to the number
of Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such Registration Statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights or whose registration rights existed prior
to the date hereof. No right of the Investor to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any registration
required under Section 2(a) hereof. If an offering in connection with which an
Investor is entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.
3. RELATED OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Company shall have the following obligations:
a. The Company shall use its best efforts to cause such Registration
Statement(s) relating to Registrable Securities to become effective as soon as
possible after such
-4-
filing, but in no event later than the Registration Deadline, and keep the
Registration Statement(s) effective pursuant to Rule 415 at all times until the
earlier of (i) the date on which all of the Registrable Securities have been
sold (and no further Registrable Securities may be issued in the future), (ii)
the date as of which the Investors may immediately sell all of the Registrable
Securities without restriction pursuant to Rule 144 promulgated under the 1933
Act (or successor thereto) or otherwise, or (iii) the date on which none of the
Notes is outstanding (the "Registration Period"), which Registration
Statement(s) (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement. In the event
the number of shares available under a Registration Statement filed pursuant to
this Agreement is insufficient to cover all of the Registrable Securities issued
or issuable upon conversion of the Notes, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within fifteen (15) days after the need therefor arises (based on the market
price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement(s) promptly after the same
is prepared and publicly distributed, filed with the SEC, or received by the
Company, (i) one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto in each case relating to such Registration Statement (other than any
portion thereof which contains information for which the Company has sought
confidential treatment) and, in the case of the Registration Statement referred
to in Section 2(a), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement; and (ii)
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned (or to be owned) by such Investor.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement(s)
under such other securities or "blue sky" laws of such jurisdictions in the
United States as each Investor who holds (or has the right to hold) Registrable
Securities being offered reasonably requests (but in no event greater
-5-
than three states in the Unites States), (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause more than nominal expense or burden to the Company, or (e) make any change
in its charter or bylaws, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders.
e. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request.
f. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.
g. The Company is subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act").
For so long as the Buyer beneficially owns any of the Securities, the Company
shall file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations hereunder would permit such termination.
h. At the request of the Investor, but no more than three (3) times
in any one ninety (90) day period, the Company shall furnish, on the date of
effectiveness of the Registration Statement and thereafter from time to time on
such dates as the Investor may reasonably request an opinion, dated as of such
requested date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the Company's transfer agent
and/or to the Investors. Such opinion shall be substantially as set forth in
Exhibit I attached hereto.
-6-
i. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors are
so notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance reasonably satisfactory to the
Company) with the Company with respect thereto, substantially in the form of
this Section 3(i). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential.
j. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
k. The Company shall cooperate with the Investors who hold
Registrable Securities being offered to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, the Investors may reasonably request and registered in such names as the
Investors may request. Not later than the date on which any Registration
Statement registering the resale of Registrable Securities is declared
effective, the Company shall deliver (at its
-7-
expense) to its transfer agent instructions, accompanied by any required opinion
of counsel, that permit sales of unlegended securities in a timely fashion that
complies with then mandated securities settlement procedures for regular way
market transactions.
l. Upon the Closing, the Company shall promptly secure the listing of
the Registrable Securities then underlying the Notes then purchased by the Buyer
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of shares of Registrable Securities from time to time
issued under the terms of this Agreement and the Registration Rights Agreement.
The Company shall at all times comply in all respects with the Company's
reporting, filing and other obligations under the by-laws or rules of the
National Association of Securities Dealers and the OTC Bulletin Board Market
(and such other national exchange on which the Common Stock may be listed, as
applicable).
m. The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
n. The Company shall comply with all applicable laws relating to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the 1933 Act and the Securities Exchange Act of
1934, as amended, and all the rules and regulations promulgated by the SEC).
o. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to a Registration Statement.
4. OTHER OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
a. At least fifteen (15) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Investor of
the information the Company requires from each such Investor if such Investor
elects to have any of such Investor's Registrable Securities included in the
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement(s) hereunder, unless such Investor
-8-
has notified the Company in writing of such Investor's election to exclude all
of such Investor's Registrable Securities from the Registration Statement.
c. In the event Investors holding a majority of the Registrable
Securities being registered determine to engage the services of an underwriter,
each Investor agrees to enter into and perform such Investor's obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor notifies the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement(s) covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses incurred by the Company
pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION. The Company agrees to pay all reasonable
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company. If Investors who hold a majority of Registrable
Securities undertake to resell the Registrable Securities in an underwritten
public offering, the Company will reasonably cooperate as is customarily
required in an underwritten public offering. The Investors who participate in
such a public offering shall pay all expenses incurred in connection with such
registration, whether incurred by them or the Company, including without
limitation, underwriting discounts and commissions, all registration, listing
and qualification fees, printing charges, and fees and disbursements of
accountants and counsel for the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend each Investor who holds such Registrable Securities, the
directors, officers and each person who controls any Investor within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), if any, and any underwriter (as defined in the 0000 Xxx) for the
Investors, and the directors and the officers of, and each person, if any, who
controls, any such underwriter within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) (collectively, together with actions,
proceedings or inquiries by any regulatory or self regulatory organization,
whether commenced or threatened, in respect thereof, "Claims") to which any of
them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or the omission or alleged omission to state a material
fact therein required to be stated or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of the material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such prospectus
was timely made available by the Company pursuant to Section 3(c) hereof; (iii)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company or the failure of the Investor to comply with federal or state law
relating to the offering or sale of the Registrable Securities; and (iv) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation
-10-
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement or to the
extent such Claim is based upon any violation or alleged violation by the
Investor of the 1933 Act, 1934 Act or any other law; and such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party
-11-
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Company shall pay reasonable fees for only one
separate legal counsel for the Investors, and such legal counsel shall be
selected by the Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates;
provided, that the Company shall have the right to approve the selection of
counsel and legal fees and expenses of such firm shall be reasonable. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation, and (iii) contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit the investors
to sell securities of the Company to the public without registration ("Rule
144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the
-12-
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to
Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assignable by the Investors to any transferee of all or any
portion of Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws,
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein, (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement, (vi) such transferee shall submit evidence
reasonably satisfactory to the Company that the Transferee is an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the 1933 Act; and (vii) in the event the assignment occurs subsequent to the
date of effectiveness of the Registration Statement required to be filed
pursuant to Section 2(a), the transferee agrees to pay all reasonable expenses
of amending or supplementing such Registration Statement to reflect such
assignment. Notwithstanding anything herein to the contrary, no assignment of
the rights represented by this Agreement shall be effective unless in compliance
with any applicable securities laws of any applicable jurisdiction.
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by registered or certified mail, return receipt
requested, or delivered personally or by courier and shall be effective five
days after being placed in the mail, if mailed,
-13-
or upon receipt, if delivered personally or by courier or facsimile, in each
case properly addressed to the party to receive such notice. The addresses for
such communications shall be:
If to the Company: Inforetech Wireless Technology, Inc.
0000 - 000/xx/ Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to the Buyer, at the address on the signature page of the Securities
Purchase Agreement. Each party shall provide written notice to the other party
of any change in address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in accordance
with the laws of the state of Delaware without regard to the principles of
conflict of laws. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. The Company irrevocably consents to the
jurisdiction of the state and federal courts of the state of Delaware in any
suit or proceeding arising out of or based on this Agreement and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in such courts. The Company irrevocably waives the defense of inconvenient forum
to the maintenance of such suit or proceeding. Service of process in any civil
action relating to or arising out of this Agreement (including also all Exhibits
or Addenda hereto) or the transaction(s) contemplated herein may be accomplished
in any manner provided by law.
e. This Agreement, the Pledge and Security Agreement, the Notes, the
Warrants, and the Securities Purchase Agreement (including all exhibits and
addenda thereto) constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement and the other agreements previously
identified supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto
-14-
by facsimile transmission of the signature page of this Agreement bearing the
signature of the party so delivering this Agreement to the Escrow Agent, with
the original executed Agreement to be delivered to the Escrow Agent via
overnight delivery.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
[SIGNATURE PAGE FOLLOWS]
-15-
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT DATED
August 4, 2000]
COMPANY:
INFORETECH WIRELESS TECHNOLOGY, INC.
By:__________________________________________
(authorized signatory)
Title:_______________________________________
BUYER:
AUGUSTINE FUND, L.P.
By: Augustine Capital Management, L.L.C., General Partner
By:____________________________________________
Xxxxxx X. Xxxxxxxxx, Member
BUYER'S ADDRESS:
000 Xxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-16-
EXHIBIT I TO REGISTRATION RIGHTS AGREEMENT
[DATE]
[NAME AND ADDRESS OF BUYER]
[NAME AND ADDRESS OF COMPANY'S TRANSFER AGENT]
Re: Registration of Certain Securities of Inforetech Wireless Technology,
Inc.
Ladies and Gentlemen:
We are counsel to Inforetech Wireless Technology, Inc., a Nevada
Corporation (the "Company"), whose stock is traded on the OTC Bulletin Board
Market utilizing the symbol "WYRE." We understand that Augustine Fund, L.P. (the
"Holder") has purchased from the Company (a) a number of shares of the Company's
Series A Eight Percent (8%) Convertible Notes Due August 4, 2003 (the "Notes"),
and (b) a number of warrants (the "Warrants") to purchase common stock of the
Company, $0.001 par value per share ("Common Stock"). The Notes are convertible
in accordance with their terms and the terms of the Securities Purchase
Agreement (as hereinafter defined) into Common Stock. The Notes and the Warrants
were purchased pursuant to a Securities Purchase Agreement between the Company
and the Holder dated as of August 4, 2000 (including all Exhibits and Addenda
thereto, the "Securities Purchase Agreement").
Pursuant to a Registration Rights Agreement between the Company and the
Holder dated as of August 4, 2000, the Company agreed with the Holder, among
other things, to register the Common Stock into which the Notes (and, as
applicable, Common Stock issued (i) in payment of interest on the Notes and/or
(ii) in payment of certain penalties for late or non-registration of the said
Common Stock) are convertible and into which the Warrants are exercisable
(collectively, the "Registrable Securities") under the Securities Act of 1933,
as amended (the "1933 Act"), upon the terms provided in the Registration Rights
Agreement. In connection with the Company's obligations under the Securities
Purchase Agreement and the Registration Rights Agreement, the Company is a
reporting issuer under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and has filed a registration statement on Form SB-2, No.
___________, on [DATE SB-2 WAS FILED OR AMENDED TO INCLUDE THE REGISTRABLE
SECURITIES] (the "Registration Statement") with the United States Securities and
Exchange Commission relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder.
[OTHER INTRODUCTORY AND SCOPE OF EXAMINATION LANGUAGE TO BE INSERTED, AS IS
USUAL AND CUSTOMARY FOR SUCH OPINION LETTERS.]
Based upon the foregoing, we are of the opinion that the Registrable
Securities have been registered under the 1933 Act and may thus be resold by you
pursuant to the Registration Statement.
Very truly yours,
[NAME OF LAWYER/FIRM]
-17-
SHARE PLEDGE AND SECURITY AGREEMENT
THIS AGREEMENT made as of the 4/th/ day of August, 2000.
AMONG:
XXXXXX XXXX XXXXXX, XX.,
of 2385 - 000 X Xxxxxx, Xxxxx Xxxx,
Xxxxxxx Xxxxxxxx
(herein "Xxxxxx")
OF THE FIRST PART
AND:
AUGUSTINE FUND L.P.,
Of 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
(herein "Augustine")
OF THE SECOND PART
AND:
XXXXXX XXXXXXXXXX,
Barristers and Solicitors,
of 1880 - 0000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(herein "HG")
OF THE THIRD PART
WHEREAS:
X. Xxxxxxxxx has agreed to advance to Inforetech Wireless Technology Inc.
("Wireless") a loan in the amount of $1,000,000, which loan is evidence by
a Note (the "Convertible Note"), convertible into Class A Common Equity
Voting Stock (the "Class A Shares") of Wireless;
2
X. Xxxxxx owns certain Units, each Unit consisting of a Class A Preferred
Share (the "Inforetech A Shares") of Inforetech Golf Technology 2000 Inc.
("Inforetech"), a subsidiary of Wireless, and a Class B Special Voting Non-
Equity Stock (the "Class B Shares") of Wireless;
C. The Inforetech A Shares were originally Class A Preferred Shares of
Inforetech Holdings Inc. ("Holding") and were converted into the Inforetech
A Shares (on a one for one basis) on the amalgamation of Holdings and
Inforetech;
X. Xxxxxx has the right to "Put" the Units to Wireless and Wireless has the
right to "Call" the Units pursuant to certain Put and Call Agreements,
copies of which are attached hereto as Schedules "A" and "B", respectively.
The Call may only be exercised by Wireless if Xxxxxx exercises a redemption
privilege in regard to the Inforetech A Shares. Pursuant to the Put and
Call Agreements, each Unit would be exchanged for one Class A Share;
X. Xxxxxx has agreed to enter into this Agreement and has agreed to pledge to
Augustine his right to receive up to 1,000,000 Class A Shares as security
for the conversion right granted to Augustine by Wireless pursuant to the
Convertible Note and in order to perfect such pledge has agreed to deliver
the "Security Documents" provided for herein to Xxxxxx Xxxxxxxxxx, all in
accordance with the terms and conditions contained herein.
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the respective covenants and agreements hereinafter contained
and other good and valuable consideration (the receipt and sufficiency whereof
is hereby acknowledged by the parties hereto), the parties hereto covenant and
agree each with the other as follows:
1. Augustine and Xxxxxx hereby appoint HG, and HG hereby agrees to act
as, escrow agent in accordance with the terms and conditions of this Agreement.
2. Xxxxxx agrees to deliver to HG the following, to be held by HG and
delivered in accordance with the terms hereof:
(a) Share certificates registered in the name of Xxxxxx for a
minimum of 1,000,000 Inforetech A Shares;
(b) Share certificates in the name of Xxxxxx for a minimum of
1,000,000 Class B Shares;
(c) A letter and direction, irrevocable during the term of this
Agreement, to Wireless authorizing HG, on behalf of Xxxxxx,
to exercise a Put or Puts with respect to the Units
deposited hereunder;
(d) A treasury order, or treasury orders, undated directing the
transfer agent for Wireless to issue Class A shares upon
exercise of the Put or Puts hereunder;
(e) A general direction to the transfer agent for Wireless
authorizing such transfer agent to issue Class A shares, to
a maximum of
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1,000,000 Class A shares pursuant to the terms of this
Agreement on the direction of HG;
(f) A grant of a Power of Attorney by Xxxxxx and Wireless,
authorizing HG to execute any and all such document as may
be necessary to comply with the terms and conditions of this
Agreement and to cause the Class A shares to be issued and
delivered to Augustine in accordance with the terms of this
Agreement, including without limiting the generality of the
foregoing, directions, treasury orders, stock powers of
attorney, notices of exercise of Puts;
(g) Such further and other documents as may be reasonably
requested by the parties hereto in order to fulfill the
terms and conditions herein contained, all of which are
herein referred to as the "Security Documents".
3. The shares pledged hereunder are currently represented by one share
certificate for the Inforetech A Shares and one share certificate for the Class
B Shares. Xxxxxx agrees that in the event the pledge is exercised in part, from
time to time, he shall cause Inforetech and Wireless, if requested by HG, to
deliver new share certificates, in the denominations requested by HG, to replace
the currently pledged shares for the unexercised balance of the amount pledged.
Further, Xxxxxx shall be entitled, from time to time, to have the certificate or
certificates for the Inforetech A Shares and the Class B Shares broken down in
certificates for lesser denominations of Inforetech A Shares and Class B Shares
and shall be entitled to have certificates delivered to him for any Inforetech A
Shares and Class B Shares in excess of the number of such shares required to be
deposited hereunder.
4. Xxxxxx agrees not to exercise the redemption privilege with respect to
the Inforetech A Shares delivered hereunder.
5. Subject as hereinafter provided, the Security Documents shall be held
and retained by HG as general and continuing collateral security and as a pledge
and charge to secure the delivery of Class A Shares to Augustine by Wireless
upon conversion of the Convertible Note, from time to time. During the term of
this agreement, the Inforetech A Shares and the Class B Shares (together the
"Pledged Shares") represented by the certificates delivered hereunder shall not
be transferred, assigned, hypothecated or otherwise alienated by Xxxxxx without
the prior written consent of Augustine.
6. The Pledged Shares shall remain the property of Xxxxxx unless and
until a default occurs and the Pledged Shares are Put to Wireless and Class A
Shares are issued and delivered by HG to Augustine pursuant to clause 9 hereof,
in which event all the right, title and interest of Xxxxxx in and to that
portion of the Pledged Shares as have been Put to Wireless and converted into
Class A Shares shall cease and the interest in the Class A Shares issued on
exercise of the Put in regard thereto shall pass to Augustine.
7. Xxxxxx shall be entitled to exercise all voting rights in respect of
the Pledged Shares for which the Put right has not been exercised hereunder.
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8. Upon the payment, cancellation, conversion and discharge of the
Convertible Note, HG shall forthwith re-deliver to Xxxxxx the Security
Documents. In determining whether the Convertible Note has been, converted,
cancelled or discharged, Xxxxxx shall deliver notice of the same to HG and a
request for delivery of the Security Documents to him. Upon receipt of such
Notice, HG shall immediately deliver the same to Augustine, who shall have ten
(10) business days to dispute the same.
If Augustine disputes, in good faith, the cancellation, conversion or
discharge of the Convertible Note, HG shall continue to hold the Security
Documents "In Trust" until resolution of the dispute and delivery of
instructions duly executed by Xxxxxx and Xxxxxxxxx or until receipt of an order
by a court of competent jurisdiction. In the event of a dispute HG shall have
the right to apply for an order to interplead the Security Documents to the
Supreme Court of British Columbia, whereupon HG's obligations hereunder shall
cease.
9. If default is made by Wireless in the delivery of Class A Shares on
exercise of the conversion right contained within the Convertible Note and
Augustine gives notice of such default to HG, HG shall forthwith give notice to
Xxxxxx of such default and, if delivery of the appropriate number of Class A
Shares is not made by Wireless within ten (10) days of the giving of such notice
by HG to Xxxxxx, XX shall deliver cause such number of the Pledged Shares as may
be necessary to be Put to Wireless and Class A Shares issued therefore and
delivered to Augustine.
If Xxxxxx disputes, in good faith, the default, HG shall continue to
hold the Security Documents "In Trust" until resolution of the dispute and
delivery of instructions duly executed by Xxxxxx and Augustine or until receipt
of an order by a court of competent jurisdiction. In the event of a dispute HG
shall have the right to apply for an order to interplead the Security Documents
to the Supreme Court of British Columbia, whereupon HG's obligations hereunder
shall cease.
10. Xxxxxx hereby irrevocably constitutes and appoints HG his true and
lawful attorney and agent-in-fact to do all acts and execute and deliver all
such agreements, instruments and documents as HG may deem necessary and
desirable to exercise all or any portion of the Put and to effect delivery of
Class A Shares to Augustine in accordance with the terms hereof and Xxxxxx
agrees to ratify and confirm all such acts of HG as its attorney and to
indemnify and save harmless HG from all claims, loss or damage suffered in so
doing.
11. If the Pledged Shares or any of them are changed, classified or
reclassified, subdivided, consolidated or converted into a different number of
class of shares or otherwise, the shares or other securities resulting from such
change, classification, reclassification, subdivision or conversion shall be
delivered to and held by HG in place of the Pledged Shares and the provisions
hereof shall apply thereto.
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12. Until such time as HG is required to execute on the Security Documents
and execute the Put rights and Deliver Class A Shares to Augustine, Xxxxxx shall
be entitled to receive all cash dividends paid in respect of any of the Pledged
Shares.
13. The fees and expenses of HG for acting hereunder shall be borne by
Xxxxxx.
14. The obligation of HG to exercise the Put and deliver the Class A Shares
to Augustine pursuant to clauses 8 or 9 hereof, as the case may be, shall be
subject:
(a) to the prior payment to HG of any exigible security transfer taxes, it
being understood that if such taxes are paid by the parties hereto who
are not liable therefor under the statute or statutes levying the same,
such taxes shall be recoverable by those parties from those so liable;
and
(b) to the prior payment to HG of all its costs and expenses herein including
reasonable compensation for acting hereunder.
15. The acceptance by HG of its duties and obligations under this Agreement
is subject to the following terms and conditions, which the parties to this
Agreement hereby agree shall govern and control with respect to its rights,
duties, liabilities and immunities:
(a) HG shall not be responsible or liable in any manner whatever for the
sufficiency, correctness, genuineness or validity of any security
deposited with it;
(b) HG shall be protected in acting upon any written notice, request, waiver,
consent, receipt, statutory declaration or other paper or document
furnished to it, and signed by Xxxxxx, Wireless or Augustine (or officers
and directors thereof), not only as to its due execution and the validity
and effectiveness of its provisions but also as to the truth and
acceptability of any information therein contained, which it in good
faith believes to be genuine and what it purports to be;
(c) except for its acts of negligence or misconduct, HG shall not be liable
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law;
(d) HG may consult with and obtain advice from legal counsel in the event of
any question as to any of the provisions hereof or its duties hereunder,
and it shall incur no liability and shall be fully protected in acting in
good faith in accordance with the opinion and instructions of such
counsel. The cost of such services shall be added to and be a part of
HG's fee hereunder; and
(e) HG shall have no duties except those which are expressly set forth
herein, and it shall not be bound by any notice of a claim or demand with
respect thereto, or any waiver, modification, amendment, termination or
rescission of this Agreement, unless received by it in writing, and
signed by Xxxxxx and Xxxxxxxxx and, if its duties herein are affected,
unless it shall have given its prior written consent thereto.
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16. This Agreement may be amended or cancelled by and upon written notice to
HG at any time given jointly by Xxxxxx and Augustine but the duties or
responsibilities of HG may not be increased without its consent.
17. Any notices or other communications required or permitted hereunder shall
be sufficiently given if sent by registered mail, postage prepaid:
If to Augustine:
Augustine Fund L.P.
000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
If to Xxxxxx:
Xxxxxx Xxxx Xxxxxx, Xx.,
of 2385 - 000 X Xxxxxx, Xxxxx Xxxx,
Xxxxxxx Xxxxxxxx
If to HG:
Xxxxxx Xxxxxxxxxx
Barristers & Solicitors
0000 - 0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Fax: (000) 000-0000
or in any case to such other address as shall be furnished in writing by any
such party to all of the other parties hereto. Such notices or other
communications so given shall be deemed to have been given on the second day
after the date so mailed.
(Balance of this page intentionally left blank)
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18. This Agreement shall enure to the benefit of and shall be binding upon
the parties hereto and their respective heirs, legal personal representatives,
successors and assigns.
IN WITNESS WHEREOF the parties hereto have duly caused this agreement to
be executed.
SIGNED, SEALED AND DELIVERED )
by XXXXXX XXXX XXXXXX, XX. )
in the presence of: )
)
___________________________ ) ________________________________
Signature of Witness ) XXXXXX XXXX XXXXXX
)
___________________________ )
Name (print) )
)
___________________________ )
Address )
)
___________________________ )
Occupation )
AUGUSTINE FUND L.P.
By: Augustine Capital Management, L.L.C., its General Partner
By:_______________________________
Xxxxxx X. Dusynski, Member
XXXXXX GREENSLADE
Per:_______________________
Authorized Signatory
