PRIVATE EQUITY SUBSCRIPTION AGREEMENT BY AND AMONG 5G WIRELESS COMMUNICATIONS, INC. AND DRH INVESTMENT COMPANY, LLC Dated as of July __, Page
PRIVATE EQUITY SUBSCRIPTION AGREEMENT
BY AND AMONG
5G WIRELESS COMMUNICATIONS, INC.
AND
DRH INVESTMENT COMPANY, LLC
Dated as of July __,
2001
Page
ARTICLE ICERTAIN DEFINITIONS
Section 1.1 DEFINED TERMS.
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........... 1
ARTICLE IIPURCHASE AND SALE OF COMMON STOCK
Section 2.1 INVESTMENTS.
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............... 8
(a) PUTS.
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.................... 8
(b) PUT CANCELLATION.
....................................................................... 8
(c) MAXIMUM AMOUNT OF PUTS.
....................................................... 8
Section 2.2 MECHANICS OF PUTS.
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.. 8
(a) PUT NOTICE.
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(b) DATE OF DELIVERY OF PUT NOTICE.
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Section 2.3 CLOSINGS.
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...................... 9
Section 2.4 TERMINATION OF INVESTMENT OBLIGATION.
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Section 2.5 BLACKOUT SHARES.
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..... 9
Section 2.6 ADDITIONAL SHARES
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. 10
Section 2.7 LIQUIDATED DAMAGES.
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10
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Section 3.1 INTENT.
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.......................... 10
Section 3.2 SOPHISTICATED INVESTOR.
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Section 3.3 AUTHORITY.
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.................. 11
Section 3.4 NOT AN AFFILIATE.
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..... 11
Section 3.5 ORGANIZATION AND STANDING.
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Section 3.6 ABSENCE OF CONFLICTS.
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11
Section 3.7 DISCLOSURE; ACCESS TO INFORMATION.
............................................ 11
Section 3.8 MANNER OF SALE.
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...... 12
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 ORGANIZATION OF THE COMPANY.
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Section 4.2 AUTHORITY.
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.................. 12
Section 4.3 CAPITALIZATION.
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........ 12
Section 4.4 COMMON STOCK.
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....... 12
Section 4.5 SEC DOCUMENTS.
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....... 12
Section 4.6 EXEMPTION FROM REGISTRATION; VALID ISSUANCES.
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Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO
THIS TRANSACTION.
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............ 13
Section 4.8 CORPORATE DOCUMENTS.
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Section 4.9 NO CONFLICTS.
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........... 14
Section 4.10 NO MATERIAL ADVERSE CHANGE.
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Section 4.11 NO UNDISCLOSED LIABILITIES.
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Section 4.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES.
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Section 4.13 NO INTEGRATED OFFERING.
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Section 4.14 LITIGATION AND OTHER PROCEEDINGS.
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Section 4.15 NO MISLEADING OR UNTRUE COMMUNICATION.
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Section 4.16 MATERIAL NON PUBLIC INFORMATION.
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Section 4.17 LICENSES AND PERMITS.
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15
Section 4.18 BUSINESS COMBINATIONS AND DISPOSITIONS.
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Section 4.19 NO INSOLVENCY OR BANKRUPTCY.
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ARTICLE VCOVENANTS OF THE INVESTOR
Section 5.1 COMPLIANCE WITH LAW.
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16
ARTICLE VICOVENANTS OF THE COMPANY
Section 6.1 REGISTRATION RIGHTS. ................................
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Section 6.2 RESERVATION OF COMMON STOCK.
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Section 6.3 LISTING OR QUOTATION OF COMMON STOCK.
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Section 6.4 EXCHANGE ACT REGISTRATION.
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Section 6.5 LEGENDS.
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Section 6.6 CORPORATE EXISTENCE.
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17
Section 6.7 ADDITIONAL SEC DOCUMENTS.
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Section 6.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;
SUSPENSION OF RIGHT TO EXERCISE A PUT.
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Section 6.9 CONSOLIDATION; MERGER.
...................................................................... 18
Section 6.10 ISSUANCE OF THE INVESTOR SHARES.
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Section 6.11 REIMBURSEMENT.
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....... 18
Section 6.12 DILUTION.
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..................... 19
Section 6.13 USE OF PROCEEDS.
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..... 19
Section 6.14 CERTAIN AGREEMENTS.
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19
Section 6.15 RIGHT OF FIRST REFUSAL, SPECIAL DILUTION PROTECTION.
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ARTICLE VIICONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING
Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
TO ISSUE AND SELL COMMON STOCK.
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(a) ACCURACY OF THE INVESTOR'S REPRESENTATION AND WARRANTIES.
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............................. 20
(b) PERFORMANCE BY THE INVESTOR.
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Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO
DELIVER A PUT NOTICE AND THE OBLIGATION OF THE INVESTOR TO PURCHASE PUT
SHARES.
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......................... 20
(a) REGISTRATION OF REGISTRABLE SECURITIES WITH THE SEC. 20
(b) EFFECTIVE REGISTRATION STATEMENT.
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(c) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
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... 21
(d) PERFORMANCE BY THE COMPANY.
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(e) NO INJUNCTION.
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21
(f) ADVERSE CHANGES.
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(g) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK.
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(h) LEGAL OPINION.
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22
(i) PAYMENT OF FEES.
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22
(j) ADEQUACY OF DISCLOSURE.
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(k) TEN PERCENT LIMITATION.
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(l) NO KNOWLEDGE.
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22
(m) TRADING CUSHION.
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22
(n) SHAREHOLDER VOTE.
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(o) OTHER.
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Section 7.3 DUE DILIGENCE REVIEW; NON DISCLOSURE OF NON PUBLIC
INFORMATION.
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ARTICLE VIIILEGENDS
Section 8.1 LEGEND.
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......................... 24
Section 8.2 REMOVAL OF LEGENDS.
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24
Section 8.3 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS.
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Section 8.4 THE INVESTOR'S COMPLIANCE.
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Section 8.5 COVER.
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Section 8.6 DELAY.
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ARTICLE IXNOTICES; INDEMNIFICATION
Section 9.1 NOTICES.
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Section 9.2 INDEMNIFICATION.
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.... 27
Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS.
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ARTICLE XMISCELLANEOUS
Section 10.1 GOVERNING LAW; JURISDICTION.
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Section 10.2 SPECIFIC ENFORCEMENT.
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29
Section 10.3 ASSIGNMENT.
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............... 29
Section 10.4 THIRD PARTY BENEFICIARIES.
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Section 10.5 TERMINATION.
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Section 10.6 ENTIRE AGREEMENT, AMENDMENT; NO WAIVER.
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Section 10.7 FEES AND EXPENSES.
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. 30
Section 10.8 NO BROKERS.
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Section 10.9 COUNTERPARTS.
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Section 10.10 SURVIVAL; SEVERABILITY.
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31
Section 10.11 FURTHER ASSURANCES.
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31
Section 10.12 NO STRICT CONSTRUCTION.
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Section 10.13 EQUITABLE RELIEF.
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..... 31
Section 10.14 TITLE AND SUBTITLES.
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31
Section 10.15 REPORTING ENTITY FOR THE COMMON STOCK.
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Section 10.16 PUBLICITY.
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.................... 31
Section 10.17 JURY TRIAL WAIVER.
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.. 32
EXHIBITS
EXHIBIT A Registration Rights Agreement
EXHIBIT B Put Notice
EXHIBIT C Opinion
EXHIBIT D Closing Certificate
EXHIBIT E Transfer Agent Instructions
THIS PRIVATE EQUITY SUBSCRIPTION AGREEMENT (the "Agreement"), by and among
DRH INVESTMENT COMPANY, LLC, a Delaware limited liability company (the
"Investor"), and 5G WIRELESS COMMUNICATIONS, INC., a corporation organized and
existing under the laws of the State of Nevada (the "Company") is entered into
as of the _____ day of July, 2001.
RECITALS
A. The parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, from time
to time as provided herein, and the Investor shall purchase from the Company,
up to Ten Million Dollars ($10,000,000) of the Common Stock (as defined
below).
B. The Company has requested that certain other investors (the "Debt
Investors") extend credit to the Company in the aggregate amount of $400,000,
pursuant to the terms of a Securities Purchase Agreement of even date herewith
and to be evidenced by one or more the Company's 6% Convertible Notes due July
__, 2006 (the "Convertible Notes"), and the Debt Investors have agreed to make
such extension of credit on the terms and conditions set forth therein.
C. Such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") of the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder (the "Securities Act"),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the
investments in Common Stock to be made hereunder.
NOW, THEREFORE, for good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I CERTAIN DEFINITIONS
Section 1.1 DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings specified or indicated (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"ADDITIONAL SHARES" shall have the meaning specified in Section 2.6.
"AGREEMENT" shall have the meaning specified in the preamble hereof.
"ARTICLES OF INCORPORATION" shall have the meaning specified in Section 4.8.
"BID PRICE" shall mean the closing bid price per share of the Common Stock on
the Principal Market.
"BLACKOUT NOTICE" shall have the meaning specified in the Registration Rights
Agreement.
"BLACKOUT SHARES" shall have the meaning specified in Section 2.5.
"BUSINESS DAY" means any day that is not a Saturday or Sunday, that is neither
a legal holiday nor a day on which commercial banks are authorized or required
by law, regulation or executive order to close in The City of New York.
"BY LAWS" shall have the meaning specified in Section 4.8.
"CLOSING" shall mean one of the closings of a purchase and sale of shares of
Common Stock pursuant to Section 2.1 or the issuance of shares of Common Stock
pursuant to or Sections 2.5, 2.6 or 10.7, as the case may be.
"CLOSING CERTIFICATE" shall mean the certificate required pursuant to Section
7.2(o) of this Agreement, substantially in the form and substance of Exhibit
D.
"CLOSING DATE" shall mean, with respect to a Closing for Put Shares, the third
(3rd) Business Day following the last Trading Day of the Draw Down Pricing
Period related to such Closing, or such earlier date as the Company and the
Investor shall agree, provided all conditions to such Closing have been
satisfied on or before such Closing.
"COMMITMENT FEE SHARES" shall mean the shares of the Company's Common Stock
issuable to The May Xxxxx Group, Inc. pursuant to the Finder's Agreement.
"COMMITMENT PERIOD" shall mean the period commencing on the earlier to occur
of (a) the Effective Date or (b) such earlier date as the Company and the
Investor shall agree, and expiring on the earlier to occur of (i) the date on
which the Investor shall have purchased Put Shares pursuant to this Agreement
for an aggregate of all Investment Amounts equal to the Maximum Commitment
Amount, (ii) the date this Agreement is terminated pursuant to Section 2.4,
(iii) the date occurring thirty-six (36) months from the date of commencement
of the Commitment Period or (iv) the date occurring forty-two (42) months from
the Subscription Date.
"COMMON STOCK" shall mean the Company's common stock, $0.001 par value per
share, having the right to participate in the distribution of dividends (as
and when declared) and assets (upon liquidation of the Company).
"COMMON STOCK EQUIVALENTS" shall mean any securities that are convertible into
or exchangeable for Common Stock or any warrants, options or other rights to
subscribe for or purchase Common Stock or any such convertible or exchangeable
securities.
"COMPANY" shall have the meaning specified in the preamble to this Agreement.
"CONDITION SATISFACTION DATE" shall have the meaning specified in Section 7.2.
"CONVERTIBLE NOTE" shall have the meaning specified in the Recitals of this
Agreement.
"CONTROLLING PERSON" shall have the meaning specified in Section 9.2.
"DEBT INVESTORS" shall have the meaning given in the preamble of this
Agreement.
"DISCOUNT" shall mean the "Initial Discount," as it may be adjusted pursuant
to Section 6.14 hereof.
"DRAW DOWN FEE" shall have the meaning specified in Section 10.7.
"DRAW DOWN PRICING PERIOD" shall mean the ten (10) Trading Day period
immediately following the Put Date; provided, however, that if a Valuation
Event occurs during any Draw Down Pricing Period, a new Draw Down Pricing
Period shall begin on the Trading Day immediately after the occurrence of such
Valuation Event and end on the tenth (10th) Trading Day thereafter.
"DTC" shall have the meaning specified in Section 2.3.
"DWAC" shall have the meaning specified in Section 2.3.
"EFFECTIVE DATE" shall mean the date on which the SEC first declares effective
a Registration Statement registering resale of the Registrable Securities.
"ESCROW AGENT" shall mean First Union National Bank, Xxx Xxxxx Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"FAST" shall have the meaning specified in Section 2.3.
"FINDER'S AGREEMENT" means the Finder's Agreement of even date herewith
between the Company and The May Xxxxx Group, Inc.
"INDEMNIFIED PARTY" shall have the meaning specified in Section 9.3(a).
"INDEMNIFYING PARTY" shall have the meaning specified in Section 9.3(a).
"INDEMNITY NOTICE" shall have the meaning specified in Section 9.3(b).
"INITIAL DISCOUNT" shall mean nine percent (9%).
"INVESTMENT AMOUNT" shall mean the dollar amount (within the range specified
in Section 2.2) to be invested by the Investor to purchase Put Shares with
respect to any Put Date, as notified by the Company to the Investor in
accordance with Section 2.2.
"INVESTOR" shall have the meaning specified in the preamble to this Agreement.
"INVESTOR SHARES" shall mean the Put Shares, the Blackout Shares and the
Additional Shares, if any.
"LEGEND" shall have the meaning specified in Section 8.1.
"MARKET PRICE" shall mean, with respect to any Put Shares, the lowest Bid
Price during the relevant Draw Down Pricing Period (or Post-Closing Valuation
Period, for purposes of calculating Additional Shares only).
"MATERIAL ADVERSE EFFECT" shall mean any effect on the business, operations,
properties, prospects or financial condition of the Company that is material
and adverse to the Company or to the Company and such other entities
controlling or controlled by the Company, taken as a whole, or any condition,
circumstance, or situation that would prohibit or otherwise materially
interfere with the ability of the Company to enter into and perform its
obligations under either (a) this Agreement or (b) the Registration Rights
Agreement.
"MAXIMUM COMMITMENT AMOUNT" shall mean Ten Million Dollars ($10,000,000),
subject to increase as agreed to in writing by the Company and the Investor.
"MAXIMUM PUT AMOUNT" shall mean, with respect to any single Put, one hundred
fifty percent (150%) of the Weighted Average Volume for the forty (40) trading
days immediately preceding the applicable Put Date, rounded down to the
nearest $50,000 increment.
"MINIMUM ACCEPTABLE PRICE" with respect to any Put Date shall mean 80% of the
lowest Bid Price during the fifteen Trading Day period immediately preceding
such Put Date.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean The Nasdaq Stock Market, Inc.
"NEW BID PRICE" shall have the meaning specified in Section 2.5.
"OLD BID PRICE" shall have the meaning specified in Section 2.5.
"OUTSTANDING" shall mean, with respect to the Common Stock, at any date as of
which the number of shares of Common Stock is to be determined, all issued and
outstanding shares of Common Stock, including all shares of Common Stock
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock; provided, however, that
Outstanding shall not include any shares of Common Stock then directly or
indirectly owned or held by or for the account of the Company.
"PERSON" shall mean an individual, a corporation, a partnership, an association,
a trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"POST-CLOSING EVALUATION PERIOD" shall mean the twenty (20) Trading Day period
immediately following a Closing Date.
"PRINCIPAL MARKET" shall mean the market or exchange which is at a given time
the principal United States trading exchange or market for the Common Stock.
"PURCHASE PRICE" with respect to any Put Shares shall mean the product of (a)
the Market Price of such Shares times (b) 91% (being 100% less the Initial
Discount) or, in the event of an adjustment of the Initial Discount pursuant
to Section 6.14 hereof, 90.1%.
"PUT" shall mean each occasion that the Company issues a Put Notice to the
Investor requiring the Investor to buy Common Stock subject to the terms and
conditions of this Agreement.
"PUT DATE" shall mean the Trading Day during the Commitment Period that a Put
Notice is deemed delivered pursuant to Section 2.2(b).
"PUT NOTICE" shall mean a written notice, substantially in the form of Exhibit
B hereto, to the Investor, as may be applicable, setting forth the Investment
Amount pursuant to the terms of this Agreement.
"PUT SHARES" shall mean all shares of Common Stock issued or issuable pursuant
to a Put that has been exercised or may be exercised in accordance with the
terms and conditions of this Agreement.
"REGISTRABLE SECURITIES" shall mean the (a) Put Shares, (b) the Blackout
Shares, (c) the Additional Shares, and (d) any securities issued or issuable
with respect to any of the foregoing by way of exchange, stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. Additionally, in
the event that the Maximum Commitment Amount is increased upon the consent of
the Investor, any securities issued to the Investor as a result of such
increase shall be deemed Registrable Securities. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a Registration Statement has been declared
effective by the SEC and such Registrable Securities have been sold of
pursuant to a Registration Statement, (ii) such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 are met, (iii) such time as such Registrable Securities have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive
legend or (iv) in the opinion of counsel to the Company acceptable to the
Investor, such Registrable Securities may be sold without registration under
the Securities Act or the need for an exemption from any such registration
requirements and without any time, volume or manner limitations pursuant to
Rule 144(k) (or any similar provision then in effect) under the Securities
Act.
"REGISTRATION RIGHTS AGREEMENT" shall mean the registration rights agreement
in the form of Exhibit A hereto.
"REGISTRATION STATEMENT" shall mean a registration statement on Form S 1 (or
on such other form promulgated by the SEC for which the Company then qualifies
and which counsel for the Company shall deem appropriate and which form shall
be available for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and the
Registration Rights Agreement and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.
"REMAINING PUT SHARES" shall have the meaning specified in Section 2.5.
"RULE 144" shall mean Rule 144 under the Securities Act or any similar
provision then in force under the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"SECTION 4(2)" shall have the meaning specified in the recitals of this
Agreement.
"SECURITIES ACT" shall have the meaning specified in the recitals of this
Agreement.
"SEC DOCUMENTS" shall mean, as of a particular date, the Company's most
recently filed Form 10-K and all documents filed with the SEC subsequent to
the date of such Form 10-K.
"SUBSCRIPTION DATE" shall mean the date on which this Agreement is executed
and delivered by the Company and the Investor.
"TARGET GROSS SALE PRICE" with respect to any Put Shares shall mean the
product of (a) the Purchase Price of such Put Shares times (b) 110%.
"THIRD PARTY CLAIM" shall have the meaning specified in Section 9.3(a).
"THIRD PARTY INVESTOR" shall have the meaning specified in Section 6.15.
"TRADING CUSHION" shall mean a minimum of thirteen (13) Trading Days between
Put Dates, unless a shorter period is agreed to by the Company and the
Investor.
"TRADING DAY" shall mean any day during which the Principal Market shall be
open for business.
"TRANSACTION DOCUMENTS" means this Private Equity Subscription Agreement, the
Registration Rights Agreement, the Finder's Agreement, the Closing
Certificate, and the Transfer Agent Instructions.
"TRANSFER AGENT" shall mean the transfer agent for the Common Stock (and to
any substitute or replacement transfer agent for the Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent).
"TRANSFER AGENT INSTRUCTIONS" shall mean the certificate required pursuant to
Section 8.2, substantially in form and substance as Exhibit E.
"UNDERWRITER" shall mean any underwriter participating in any disposition of
the Registrable Securities on behalf of the Investor pursuant to a
Registration Statement.
"VALUATION EVENT" shall mean an event in which the Company at any time during
a Valuation Period takes any of the following actions:
(a) subdivides or combines the Common Stock;
(b) pays a dividend in shares of Common Stock or makes any other
distribution of shares of Common Stock;
(c) issues any warrants, options or other rights to subscribe for or
purchase shares of Common Stock and the price per share for which shares of
Common Stock may at any time thereafter be issuable pursuant to such warrants,
options or other rights shall be less than the most recent Bid Price in effect
immediately prior to such issuance, excepting that with respect to options
issued in accordance with a Qualified Stock Option Plan and the related Form
S-8 Registration Statement for which the exercise price may be such price as
if set forth in such document even if lower than the Bid Price;
(d) issues any securities convertible into or exchangeable for shares of
Common Stock and the consideration per share for which shares of Common Stock
may at any time thereafter be issuable pursuant to the terms of such
convertible or exchangeable securities shall be less than the most recent Bid
Price immediately prior to such issuance;
(e) issue shares of Common Stock otherwise than as provided in the
foregoing subsections (a) through (d), at a price per share less, or for other
consideration lower, than the most recent Bid Price immediately prior to such
issuance, or without consideration;
(f) makes a distribution of its assets or evidences of indebtedness to
the holders of Common Stock as a dividend in liquidation or by way of return
of capital or other than as a dividend payable out of earnings or surplus
legally available for dividends under applicable law or any distribution to
such holders made in respect of the sale of all or substantially all of
the Company's assets (other than under the circumstances provided for in the
foregoing subsections (a) through (e); or
(g) takes any action affecting the Common Stock, other than an action
described in any of the foregoing subsections (a) through (f) hereof,
inclusive, which in the opinion of the Investor's Board of Directors,
determined in good faith, would adversely affect the trading prices of the
Common Stock.
"WEIGHTED AVERAGE VOLUME" shall mean the average of the product of (a) the Bid
Price times (b) the number of shares of Common Stock traded on the Principal
Market for the relevant days.
"WARRANTS" shall mean the Warrants for the Company's Common Stock issuable to
the May Xxxxx Group pursuant to the Convertible Note.
ARTICLE II PURCHASE AND SALE OF COMMON STOCK
Section 2.1 INVESTMENTS.
(a) PUTS Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII), on any Trading
Day during the Commitment Period the Company may exercise a Put by the
delivery of a Put Notice. The number of Put Shares that the Investor shall
receive pursuant to such Put shall be determined by dividing the Investment
Amount specified in the Put Notice by the Purchase Price applicable to such
Put Date. If the determined number of Put Shares would create a fractional
share of Common Stock, such fractional share shall be disregarded and the
number of shares of Common Stock issuable shall be the next higher number of
shares.
(b) PUT CANCELLATION Any Put Notice delivered pursuant to
Section 2.1(a) shall be deemed null and void, and neither the Company shall be
required to sell shares of Common Stock pursuant to such Put Notice nor shall
the Investor be required to purchase shares of Common Stock pursuant to such
Put Notice, in the event that (i) the Purchase Price shall be less than the
Minimum Acceptable Price or (ii) the aggregate value of (x) all Outstanding
shares of Common Stock held by the Debt Investors, plus (y) shares of Common
Stock which would be Outstanding if effect were given to the conversion rights
under the Convertible Notes, exceeds 150% of the Weighted Average Volume for
the 40 Trading Days immediately preceding such date.
(c) MAXIMUM AMOUNT OF PUTS In no event shall the aggregate of
the Investment Amounts set forth in one or more Put Notices exceed the Maximum
Commitment Amount.
Section 2.2 MECHANICS OF PUTS.
(a) PUT NOTICE At any time during the Commitment Period, the
Company may deliver a Put Notice to the Investor, subject to the conditions
set forth in Section 7.2; provided, however, the Investment Amount for each
Put in the applicable Put Notice shall be $50,000 or an integral multiple
thereof, but shall not be more than the Maximum Put Amount.
(b) DATE OF DELIVERY OF PUT NOTICE A Put Notice shall be deemed
delivered on (i) the Trading Day it is received by facsimile or otherwise by
the Investor if such notice is received on or prior to 12:00 noon New York
time, or (ii) the immediately succeeding Trading Day if it is received by
facsimile or otherwise after 12:00 noon New York time on a Trading Day or at
anytime on a day which is not a Trading Day.
Section 2.3 CLOSINGS (a) In the case of a Put, on or prior to
each Closing Date (1) the Company shall deliver to the Escrow Agent one or
more certificates, at the Investor's option, representing the Put Shares to be
purchased by the Investor pursuant to Section 2.1 hereof, registered in the
name of the Investor and (2) the Investor shall deliver to the Escrow Agent
the relevant Investment Amount by wire transfer of immediately available funds
to an account designated by the Escrow Agent on or before the Closing Date In
the case of a Closing related to the issuance of any other form of Investor
Shares, upon the delivery by the Investor of all required documentation, the
Company shall deliver one or more certificates representing such shares to,
and registered in the name of, the Investor.
(b) In lieu of delivering physical certificates representing the Common Stock
issuable in accordance with subparagraph (a) of this Section 2.3, and provided
that the Transfer Agent then is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of
the Investor, the Company shall use its commercially reasonable efforts to
cause the Transfer Agent to electronically transmit the Put Shares (or other
Investor Shares, if applicable) by crediting the account of such Investor's
prime broker (which shall be specified by the Investor a reasonably sufficient
time in advance) with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system, and provide proof satisfactory to the Escrow Agent of such
delivery. In addition, on or prior to such Closing Date, each of the
Company and such Investor shall deliver to the Escrow Agent all documents,
instruments and writings required to be delivered or reasonably requested by
either of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein. In the case of Put Shares, on the Closing
Date and provided all conditions to Closing have been satisfied by the
Company, the Escrow Agent shall wire transfer to the Company or its counsel
the Investment Amount, less any applicable fees and expenses (which shall be
enumerated).
Section 2.4 TERMINATION OF INVESTMENT OBLIGATION The obligation
of the Investor to purchase shares of Common Stock shall terminate permanently
(including with respect to a Closing Date that has been scheduled but has not
yet occurred) in the event that (a) there shall occur any stop order or
suspension of the effectiveness of any Registration Statement for an aggregate
of thirty (30) Trading Days during the Commitment Period or (b) the Company
shall at any time fail to comply with the requirements of Section 6.3, 6.4, or
6.6 hereof and such failure shall continue for more than thirty (30) days.
Section 2.5 BLACKOUT SHARES In the event that (a) following any
Closing Date, the Company gives a Blackout Notice to the Investor in
accordance with the Registration Rights Agreement, and (b) the Bid Price on
the Trading Day immediately preceding such Blackout Period ("Old Bid Price")
is greater than the Bid Price on the first Trading Day following such Blackout
Period that the Investor may sell its Registrable Securities pursuant to an
effective Registration Statement ("New Bid Price"), then the Company shall
issue to the Investor a number of additional shares of Registrable Securities
(the "Blackout Shares") equal to the number derived from the following formula
(provided that such number is a positive number):
where:
"S" equals the number of Investor Shares held by such Investor immediately
prior to the commencement of the Blackout Period (the "Remaining Put Shares");
"O" equals the Old Bid Price; and
"N" equals the New Bid Price.
The Blackout Shares shall be issued at a Closing, the Closing date of which,
for purposes of this Section only, shall be no later than ten Business Days
following the date of determination of the New Bid Price.
Section 2.6 ADDITIONAL SHARES. In the event that at any time during
the Post-Closing Valuation Period the Market Price of the Company's Common
Stock does not equal or exceed the Target Gross Sale Price, then if the
Investor has sold such Put Shares during the Post-Closing Valuation Period,
the Company shall issue to the Investor cash or such number of additional
shares of Registrable Securities (the "Additional Shares") equal to the
difference between the Target Gross Sale Price and the amount actually
realized by the Investor on the sale of such Put Shares.
Section 2.7 LIQUIDATED DAMAGES Each of the Company and the
Investor acknowledges and agrees that the requirements to issue Blackout
Shares under Section 2.5 or Additional Shares under Section 2.6 shall be
construed as liquidated damages and not a penalty. Each of the Company and the
Investor further acknowledges that (a) the amount of loss or damages likely to
be incurred is incapable or is difficult to precisely estimate, (b) the
amounts specified in such Sections bear a reasonable proportion and are not
plainly or grossly disproportionate to the probable loss likely to be incurred
by the Investor in connection with a Blackout Period under the Registration
Rights Agreement or a decline in Market Price, as the case may be, and (c)
each of the Company and the Investor are sophisticated business parties and
have been represented by sophisticated and able legal and financial counsel
and negotiated this Agreement at arm's length.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1 INTENT The Investor is entering into this Agreement
for its own account and the Investor has no present arrangement (whether or
not legally binding) to sell the Common Stock to or through any person or
entity; provided, however, that by making the representations herein, the
Investor does not agree to hold the Common Stock for any minimum or other
specific term and reserves the right to dispose of the Common Stock at any
time in accordance with federal and state securities laws applicable to such
disposition.
Section 3.2 SOPHISTICATED INVESTOR The Investor is a
sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D)
and an accredited investor (as defined in Rule 501(a) of Regulation D), and
the Investor has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in Common Stock.
The Investor acknowledges that an investment in the Common Stock is
speculative and involves a high degree of risk.
Section 3.3 AUTHORITY (a) The Investor has the requisite
power and authority to enter into and perform its obligations under this
Agreement and the transactions contemplated hereby in accordance with its
terms; (b) the execution and delivery of this Agreement and the Registration
Rights Agreement, and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action and no
further consent or authorization of the Investor or its partners, officers,
directors, managers or members, as the specific case may be, is required; and
(c) this Agreement has been duly authorized and validly executed and delivered
by the Investor and is a valid and binding agreement of the Investor
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally
the enforcement of, creditors' rights and remedies or by other equitable
principles of general application.
Section 3.4 NOT AN AFFILIATE The Investor is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of the Securities
Act) of the Company.
Section 3.5 ORGANIZATION AND STANDING The Investor is a limited
liability company, duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted.
Section 3.6 ABSENCE OF CONFLICTS The execution and delivery of
this Agreement and any other document or instrument contemplated hereby, and
the consummation of the transactions contemplated hereby and thereby, and
compliance with the requirements hereof and thereof, will not (a) violate any
law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Investor, (b) violate any provision of the Investor's
Certificate of Formation or Limited Liability Company Operating Agreement
applicable charter documents, any indenture, instrument or agreement to which
the Investor is a party or is subject, or by which the Investor or any of its
assets is bound, or conflict with or constitute a material default thereunder,
(c) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by the Investor to any third party, or (d) require the
approval of any third party (that has not been obtained in writing) pursuant
to any material contract, instrument, agreement, relationship or legal
obligation to which the Investor is subject or to which any of its assets,
operations or management may be subject.
Section 3.7 DISCLOSURE; ACCESS TO INFORMATION The Investor has
received all documents, records, books and other information pertaining to the
Investor's investment in the Company that have been requested by the Investor.
The Investor has reviewed copies of the SEC Documents.
Section 3.8 MANNER OF SALE At no time was the Investor presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
Section 4.1 ORGANIZATION OF THE COMPANY The Company is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Nevada and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify would not have
a Material Adverse Effect.
Section 4.2 AUTHORITY (a) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
the Transaction Documents and to issue the Investor Shares; (b) the execution
and delivery of the Transaction Documents by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required; and (c) each of the Transaction Documents has been duly executed and
delivered by the Company and constitutes valid and binding obligations of the
Company enforceable against the Company in accordance with its respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable
principles of general application.
Section 4.3 CAPITALIZATION As of July 11, 2001, the authorized
capital stock of the Company consisted of 150,000,000 shares of Common Stock,
of which 29,207,156 shares were issued and outstanding. There are no
options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company. All of the
outstanding shares of Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and non assessable. The foregoing
is exclusive of such additional shares of Company Common Stock or Warrants as
is required to be issued pursuant to this Agreement or other Transaction
Documents.
Section 4.4 COMMON STOCK The Company is in full compliance with
all reporting requirements of the Exchange Act, and the Company has maintained
all requirements for the continued listing or quotation of the Common Stock,
and such Common Stock is currently listed or quoted on the Principal Market.
As of the date of this Agreement, the Principal Market is the OTC Bulletin
Board maintained by the NASD.
Section 4.5 SEC DOCUMENTS The Company has delivered or made
available through Xxxxx to the Investor true and complete copies of the SEC
Documents (including, without limitation, proxy information and solicitation
materials). The Company has not provided to the Investor any information that,
according to applicable law, rule or regulation, should have been disclosed
publicly prior to the date hereof by the Company, but which has not been so
disclosed. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and other federal and state laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except (a) as may be otherwise indicated in such financial
statements or the notes thereto or (b) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended.
Section 4.6 EXEMPTION FROM REGISTRATION; VALID ISSUANCES The
sale and issuance of the Investor Shares, in accordance with the terms and on
the bases of the representations and warranties set forth in this Agreement,
may and shall be properly issued by the Company to the Investor pursuant to
the exemptions from registration under Section 4(2) and Regulation D of the
Securities Act and under any applicable exemptions from registration under
"blue sky" laws. When issued as herein provided, the Investor Shares shall be
duly and validly issued, fully paid, and non assessable. Neither the sales of
the Investor Shares pursuant to, nor the Company's performance of its
obligations under, the Transaction Documents shall (a) result in the creation
or imposition of any liens, charges, claims or other encumbrances upon the
Investor Shares or any of the assets of the Company, or (b) entitle the
holders of Outstanding Common Stock to preemptive or other rights to subscribe
to or acquire the Common Stock or other securities of the Company. The
Investor Shares shall not subject the Investor to personal liability by reason
of the ownership thereof.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION Neither the Company nor any of its affiliates nor any
Person acting on its or their behalf (a) has conducted or will conduct any
general solicitation or general advertising (as those terms are used in Rule
502(c) of Regulation D) with respect to any of the Investor Shares, or (b)
made any offers or sales of any security or solicited any offers to buy any
security under any circumstances that would require registration of the Common
Stock under the Securities Act.
Section 4.8 CORPORATE DOCUMENTS The Company has furnished or
made available to the Investor true, correct and complete copies of the
Company's Articles of Incorporation, as amended and in effect on the date
hereof (the "Articles of Incorporation"), and the Company's By Laws, as
amended and in effect on the date hereof (the "By Laws").
Section 4.9 NO CONFLICTS The execution, delivery and performance
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Investor Shares do not and will not (a) result in a violation of the
Articles of Incorporation or By Laws or (b) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock up" or similar provision of any underwriting or
similar agreement to which the Company is a party, or (c) result in a
violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of
the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect) nor is
the Company otherwise in violation of, conflict with or in default under any
of the foregoing; provided, however, that for purposes of the Company's
representations and warranties as to violations of foreign law, rule or
regulation referenced in clause (c), such representations and warranties are
made only to the best of the Company's knowledge insofar as the execution,
delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby are or may
be affected by the status of the Investor under or pursuant to any such
foreign law, rule or regulation. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate
do not and will not have a Material Adverse Effect. The Company is not
required under federal, state or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or issue and sell the
Common Stock in accordance with the terms hereof (other than any SEC, NASD or
state securities filings that may be required to be made by the Company
subsequent to any Closing, any registration statement that may be filed
pursuant hereto, and any shareholder approval required by the rules applicable
to companies whose common stock trades on the Nasdaq National Market; it being
understood that the Company's Common Stock is not listed for trading on
NASDAQ); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Investor herein.
Section 4.10 NO MATERIAL ADVERSE CHANGE Since March 31, 2001, no
event has occurred that would have a Material Adverse Effect on the Company,
except as disclosed in the SEC Documents.
Section 4.11 NO UNDISCLOSED LIABILITIES The Company has no
liabilities or obligations that are material, individually or in the
aggregate, and that are not disclosed in the SEC Documents or otherwise
publicly announced, other than those incurred in the ordinary course of the
Company's businesses since March 31, 2001, and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company.
Section 4.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES Since March
31, 2001, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which
has not been so publicly announced or disclosed in the SEC Documents.
Section 4.13 NO INTEGRATED OFFERING Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any
offers to buy any security, other than pursuant to this Agreement, under
circumstances that would require registration of the Common Stock under the
Securities Act.
Section 4.14 LITIGATION AND OTHER PROCEEDINGS Except as may be
set forth in the SEC Documents, there are no lawsuits or proceedings pending
or to the best knowledge of the Company threatened, against the Company by any
Person, nor has the Company received any written or oral notice of any such
action, suit, proceeding or investigation, which would have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, so far as is known by the
Company, requested of any court, arbitrator or governmental agency which would
have a Material Adverse Effect. The Company is not in default under any
contract or commitment to which it is a party or by which its assets are
bound, which default would have a material adverse effect on the business,
assets, financial conditions or results of operations of the Company taken as
a whole.
Section 4.15 NO MISLEADING OR UNTRUE COMMUNICATION The Company,
any Person authorized to represent the Company, and, to the knowledge of the
Company, any other Person authorized to sell or offer to sell the Investor
Shares in connection with the transactions contemplated by this Agreement,
have not made, at any time, any communication in connection with the offer
or sale of the same which contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements,
in the light of the circumstances under which they were made, not misleading.
Section 4.16 MATERIAL NON PUBLIC INFORMATION The Company is not
in possession of, nor has the Company or its agents disclosed or will disclose
to the Investor, any material non public information that (a) if disclosed,
would reasonably be expected to have a materially adverse effect on the price
of the Common Stock or (b) according to applicable law, rule or regulation,
should have been disclosed publicly by the Company prior to the date hereof
but which has not been so disclosed.
Section 4.17 LICENSES AND PERMITS The Company has all requisite
material licenses, permits and authority (collectively, "Licenses") that are
necessary for the conduct of its business, such Licenses are in full force and
effect, and no proceeding is pending or, to the Company's knowledge,
threatened to suspend, revoke or limit any License which is material the
operations of the Company.
Section 4.18 BUSINESS COMBINATIONS AND DISPOSITIONS All
documents and instruments in connection with any merger, consolidation or
similar business combination (a "Business Combination") to which the Company
or any of its subsidiaries is or was a party within the past five years, or
any disposition by the Company or any of its subsidiaries of any subsidiary or
of all or substantially all of the assets of the Company or any subsidiary (a
"Disposition") within the past five years, have been duly executed and
delivered by the parties thereto, and if required, filed with the government
offices having jurisdiction over such Business Combination or Disposition.
All such Business Combinations have been consummated, and if the Company or
any subsidiary of the Company was the acquiring party, the Company or such
subsidiary has acquired or succeeded to the full legal right, power and
authority to own and operate the assets and Licenses acquired. No default
or event giving rise to a default under any agreement or instrument in
connection with any such Business Combination or Disposition has occurred
which would cause such Business Combination or Disposition to be revoked,
dissolved or otherwise set aside.
Section 4.19 NO INSOLVENCY OR BANKRUPTCY The Company is not (a)
the subject of any voluntary or involuntary petition under any bankruptcy,
insolvency or similar law affecting creditors generally, (b) is not the
subject of any liquidation, or (c) has not had a receiver or similar Person
appointed for any of its property.
Section 4.1 NO OTHER REGISTRATION RIGHTS The Company has not
entered into any agreement with any Person (other than the Investor for the
registration of the Investor Shares or the Debt Investors for the registration
of the conversion shares under the Convertible Notes), in respect of the
registration of the Company's securities.
ARTICLE V COVENANTS OF THE INVESTOR
Section 5.1 COMPLIANCE WITH LAW The Investor's trading
activities with respect to shares of the Common Stock will be in compliance
with all applicable state and federal securities laws, rules and regulations
and the rules and regulations of the NASD and the Principal Market on which
the Common Stock is listed.
ARTICLE VI COVENANTS OF THE COMPANY
Section 6.1 REGISTRATION RIGHTS The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the
Company shall comply in all respects with the terms thereof.
Section 6.2 RESERVATION OF COMMON STOCK As of July 11, 2001, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights, 40,000,000 shares of Common Stock for the
purpose of enabling the Company to satisfy any obligation to issue the
Investor Shares. If at any time the Company is obligated to deliver shares
of Common Stock to the Investor pursuant to this Agreement and the Company
does not have a sufficient number of authorized but unissued and unreserved
shares to deliver the requisite number of shares, the Company shall deliver to
the Investor such number of shares that the Company has authorized but
unissued and unreserved. In either case, the Company shall, at its
expense, promptly seek and use its best efforts to obtain shareholder approval
as required under the corporate laws of the State of Nevada to increase the
number of shares of Common Stock it is authorized to issue, in order to meet
all of its obligations to issue Investor Shares under this Agreement, such
that the Company shall have reserved for issuance under this Agreement at
least 100% of the shares required for issuance under the Maximum Commitment
Amount, based upon the then applicable Market Price as if a Put Date occurred
within five days prior to the date of the proxy statement prepared by the
Company in connection with such authorization, less twice the number of Put
Shares that may have been issued under this Agreement. Under no
circumstances shall the Company issue a Put Notice requiring the Investor to
purchase more shares of Common Stock than the Company has authority to issue
based upon the then number of shares of Common Stock outstanding or reserved
for issuance. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by
the number of shares actually delivered hereunder.
Section 6.3 LISTING OR QUOTATION OF COMMON STOCK The Company
shall maintain the listing or quotation, as the case may be, of the Common
Stock on a Principal Market, and will cause the Investor Shares to be listed
or quoted, as the case may be, on the Principal Market. The Company shall use
its commercially reasonable efforts to continue the listing or quotation, as
the case may be, and trading of the Common Stock on the Principal Market
(including, without limitation, maintaining sufficient net tangible assets if
so required by the Principal Market) and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the NASD and the Principal Market.
Section 6.4 EXCHANGE ACT REGISTRATION The Company shall take all
commercially reasonable steps to cause the Common Stock to be registered under
Section 12(g) or 12(b) of the Exchange Act, will use its commercially
reasonable efforts to comply in all material respects with its reporting and
filing obligations under said Act, and will not take any action or file any
document (whether or not permitted by said Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under said Act.
Section 6.5 LEGENDS The certificates evidencing the Investor
Shares shall be free of legends, except as provided for in Article VIII.
Section 6.6 CORPORATE EXISTENCE The Company shall use its best
and diligent efforts to preserve and continue the corporate existence of the
Company.
Section 6.7 ADDITIONAL SEC DOCUMENTS The Company shall deliver
to the Investor, promptly after the originals thereof are submitted to the SEC
for filing, copies of all SEC Documents so furnished or submitted to the SEC,
unless otherwise available on Xxxxx.
Section 6.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION
OF RIGHT TO EXERCISE A PUT (i) The Company shall promptly notify the
Investor upon the occurrence of any of the following events in respect of a
registration statement or related prospectus in respect of an offering of
Registrable Securities: (a) receipt of any request for additional information
by the SEC or any other federal or state governmental authority during the
period of effectiveness of the registration statement or for amendments or
supplements to the registration statement or related prospectus; (b) the
issuance by the SEC or any other federal or state governmental authority of
any stop order suspending the effectiveness of any Registration Statement or
the initiation of any proceedings for that purpose; (c) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or written threat of any proceeding for such
purpose; (d) the happening of any event that makes any statement made in such
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in the registration statement,
related prospectus or documents so that, in the case of a Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the related
prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and (e) the Company's reasonable determination
that a post effective amendment to the registration statement would be
appropriate; in such event, the Company shall promptly make available to the
Investor any such supplement or amendment to the related prospectus.
(ii) The Company shall not deliver to the Investor any Put Notice
during the continuation of any of the events enumerated in subparagraph (i)
above.
Section 6.9 CONSOLIDATION; MERGER The Company shall not, at any
time after the date hereof, effect any merger or consolidation of the Company
with or into, or a transfer of all or substantially all of the assets of the
Company to, another entity unless the resulting successor or acquiring entity
(if not the Company) assumes by written instrument the duties and obligations
set forth in this Agreement and the Registration Rights Agreement, including
without limitation the obligation to deliver to the Investor such shares of
stock and/or securities as the Investor is entitled to receive pursuant to
this Agreement. Upon the consummation of any such merger, consolidation or
transfer, the Investor may terminate this Agreement, or indicate that it
wishes that the Agreement continue in full force and effect as if the common
stock of the successor or acquiring entity were Common Stock. In the event
that the Investor desires that the Agreement continue in full force and
effect, the successor or acquiring entity will file a Registration Statement
for its common stock to provide for the resale of such common stock by the
Investor pursuant to this Agreement.
Section 6.10 ISSUANCE OF THE INVESTOR SHARES The sale of the Put
Shares, or the issuance of the Commitment Fee Shares, the Blackout Shares and
the Additional Shares, if any, shall be made in accordance with the provisions
and requirements of Regulation D under the Securities Act and any applicable
state law.
Section 6.11 REIMBURSEMENT If (i) the Investor, other than by
reason of its gross negligence or willful misconduct, becomes involved in any
capacity in any action, proceeding or investigation brought by any shareholder
of the Company, in connection with or as a result of the consummation of the
transactions contemplated by the Transaction Documents, or if the Investor is
impleaded in any such action, proceeding or investigation by any person, or
(ii) the Investor, other than by reason of its gross negligence or willful
misconduct or by reason of its trading of the Common Stock in a manner that is
illegal under the federal securities laws, becomes involved in any capacity in
any action, proceeding or investigation brought by the SEC against or
involving the Company or in connection with or as a result of the consummation
of the transactions contemplated by the Transaction Documents, or if the
Investor is impleaded in any such action, proceeding or investigation by any
person, then in any such case, the Company will promptly reimburse the
Investor for its legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as such
expenses are incurred. The reimbursement obligations of the Company under
this section shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
affiliates of the Investor that are actually named in such action, proceeding
or investigation, and partners, directors, managers, agents, employees and
Controlling Persons (if any), as the case may be, of the Investor and any such
affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Investor and any such affiliate and any such Person.
Section 6.12 DILUTION The number of shares of Common Stock
issuable as Put Shares may increase substantially in certain circumstances,
including, but not necessarily limited to, the circumstance wherein the
trading price of the Common Stock declines during the period between the
Effective Date and the end of the Commitment Period. The Company's
executive officers and directors have studied and fully understand the nature
of the transactions contemplated by this Agreement and recognize that 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 specifically acknowledges that
its obligation to issue the Investor Shares is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.
Section 6.13 USE OF PROCEEDS The Company will use the proceeds
received hereunder (excluding amounts paid by the Company for legal fees,
finder's fees and escrow fees in connection with the sale of the Common Stock)
for general working capital purposes and to reacquire the shares of any
subsidiary of the Company over which the Company has control, as defined in
the Securities Act, as of the Subscription Date. Unless specifically
consented to in writing, in advance in each instance by the Investor, the
Company shall not, directly or indirectly, use such proceeds for the repayment
of any outstanding loan by the Company to any other Person.
Section 6.14 CERTAIN AGREEMENTS (i) The Company covenants
and agrees that it will not, without the prior written consent of the
Investor, enter into any subsequent or further offer or sale of Common Stock
or Common Stock Equivalents (collectively, "New Common Stock") with any
third party pursuant to a transaction which in any manner permits the sale of
the New Common Stock on any date which is thirty (30) days prior to or subsequen
t to any Closing Date.
(ii) In the event the Company breaches the provisions of this
Article, the Discount for all future issuances shall be amended to be equal to
110% (i.e., 9.9%) of the Initial Discount set forth herein and the Investor
may terminate its obligations under this Agreement.
Section 6.15 RIGHT OF FIRST REFUSAL, SPECIAL DILUTION PROTECTION
(i) The Company covenants and agrees that if during the
period from the date hereof through and including the date which is thirty
(30) days after the Effective Date, the Company offers to enter into any
transaction (a "New Transaction") with any Person (a "Third Party Investor")
for the sale of Common Stock, the Company shall notify the Investor in writing
of all of the terms of such offer (a "New Transaction Offer"). The
Investor shall have the right (the "Right of First Refusal"), exercisable by
written notice given to the Company by the close of business on the fifth
business day after the Investor's receipt of the New Transaction Offer (the
"Right of First Refusal Expiration Date"), to participate in all or any part
of the New Transaction Offer on the terms so specified.
(ii) If, and only if, the Investor does not exercise the
Right of First Refusal in full, the Company may consummate the remaining
portion of the New Transaction with any Third Party Investor on the terms
specified in the New Transaction Offer within ninety (90) days of the Right of
First Refusal Expiration Date.
(iii) If the terms of the New Transaction to be consummated
with Third Party Investor differ from the terms specified in the New
Transaction Offer so that the terms are more beneficial in any respect to the
Third Party Investor, the Company shall give the Investor a New Transaction
Offer relating to the terms of the New Transaction, as so changed, and the
Investor's Right of First Refusal and the preceding terms of this Section 6.15
shall apply with respect to such changed terms.
ARTICLE VII CONDITIONS TO DELIVERY OFPUT NOTICES AND CONDITIONS TO CLOSING
Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
ISSUE AND SELL COMMON STOCK The obligation hereunder of the Company to
issue and sell the Put Shares to the Investor incident to each Closing is
subject to the satisfaction, at or before each such Closing, of each of the
conditions set forth below.
(a) ACCURACY OF THE INVESTOR'S REPRESENTATION AND WARRANTIES
The representations and warranties of the Investor shall be true and correct
in all material respects as of the date of this Agreement and as of the date
of each such Closing as though made at each such time, except for changes
which have not had a Material Adverse Effect (substituting in the definition
of such term "the Investor" for "the Company").
(b) PERFORMANCE BY THE INVESTOR The Investor shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Investor at or prior to such Closing.
Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER
A PUT NOTICE AND THE OBLIGATION OF THE INVESTOR TO PURCHASE PUT SHARES
The right of the Company to deliver a Put Notice and the obligation of the
Investor hereunder to acquire and pay for the Put Shares incident to a Closing
is subject to the satisfaction, on (a) the date of delivery of such Put Notice
and (b) the applicable Closing Date (each, a "Condition Satisfaction Date"),
of each of the following conditions:
(a) REGISTRATION OF REGISTRABLE SECURITIES WITH THE SEC As set
forth in the Registration Rights Agreement, the Company shall have filed with
the SEC, within 45 days of the date of this Agreement, a Registration
Statement with respect to the resale of the Registrable Securities by
Investor, and the Company shall use its best efforts to cause such
Registration Statement to be declared effective by the SEC prior to the first
Put Date. The Investor may assign this Agreement, the Transaction
Documents and the rights contained herein and therein to any subsidiary or
affiliate of the Investor until the filing of the Registration Statement.
(b) EFFECTIVE REGISTRATION STATEMENT The Registration Statement
relating to the shares of Common Stock subject to a future Closing (and any
prior Registration Statement relating to other Registrable Securities) shall
remain effective on each Condition Satisfaction Date and (i) neither the
Company nor the Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to such Registration Statement or
that the SEC otherwise has suspended or withdrawn the effectiveness of such
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC's concerns have been addressed and the
Investor or its counsel has been advised by the SEC that it no longer is
considering or intends to take such action), and (ii) no other suspension of
the use or withdrawal of the effectiveness of such Registration Statement or
related prospectus shall exist.
(c) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company shall be true and correct in
all material respects as of each Condition Satisfaction Date as though made at
each such time (except for representations and warranties specifically made as
of a particular date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including each Condition
Satisfaction Date, except for any conditions which have temporarily caused any
representations or warranties herein to be incorrect and which have been correct
ed with no continuing impairment to the Company or the Investor.
(d) PERFORMANCE BY THE COMPANY The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Registration
Rights Agreement to be performed, satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.
(e) NO INJUNCTION No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or adopted by any court or governmental authority of competent
jurisdiction that prohibits or directly and materially adversely affects any
of the transactions contemplated by this Agreement, and no proceeding shall
have been commenced that may have the effect of prohibiting or materially
adversely affecting any of the transactions contemplated by this Agreement.
(f) ADVERSE CHANGES Since the Subscription Date, no event
that had or is reasonably likely to have a Material Adverse Effect has
occurred, unless the effect of such event has been cured by the Company, to
the same effect as if such event had not occurred.
(g) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK
The trading of the Common Stock shall not have been suspended by the SEC, the
Principal Market or the NASD and the Common Stock shall have been approved for
listing or quotation on and shall not have been delisted from, or no longer
quoted on, the Principal Market.
(h) LEGAL OPINION On each Closing Date, the Company shall have
caused to be delivered to the Investor an opinion of the Company's legal
counsel, in the form of Exhibit C hereto, addressed to the Investor.
(i) PAYMENT OF FEES All fees related to a Put, the legal
fees of Sidley Xxxxxx Xxxxx & Xxxx <span style='font-size:10.0pt'> LLP , any
outstanding liquidated damages or charges (including but not limited to
amounts due under Sections 2.8, 8.5 and 10.7) and any other fees which the
Company is obligated to pay to the Investor pursuant to this Agreement in
respect of any Closing, shall be due and payable on the relevant Closing Date.
(j) ADEQUACY OF DISCLOSURE The investor shall not, after
consultation with its counsel, have a reasonable basis for concluding that the
Registration Statement or prospectus relating to the sale of the Common Stock
contains a material misstatement or omission that the Company, after a request
by the Investor, shall have failed to cure.
(k) TEN PERCENT LIMITATION On each Closing Date, the number of
Put Shares then to be purchased by the Investor shall not exceed the number of
such shares that, when aggregated with all other shares of Registrable
Securities then owned by the Investor beneficially or deemed beneficially
owned by the Investor, would result in the Investor owning no more than 9.9%
of all of such Common Stock as would be outstanding on such Closing Date, as
determined in accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder. For purposes of this Section 7.2(k), in
the event that the amount of Common Stock outstanding as determined in
accordance with Section 16 of the Exchange Act and the regulations promulgated
thereunder is greater on a Closing Date than on the date upon which the Put
Notice associated with such Closing Date is given, the amount of Common Stock
outstanding on such Closing Date shall govern for purposes of determining
whether the Investor, when aggregating all purchases of Common Stock made
pursuant to this Agreement and Investor Shares, if any, would own more than
9.9% of the Common Stock following such Closing Date.
(l) NO KNOWLEDGE The Company shall have no knowledge of any ev
ent reasonably likely to cause any Registration Statement to be suspended or
otherwise not in effect.
(m) TRADING CUSHION The Trading Cushion shall have elapsed since
the immediately preceding Put Date.
(n) SHAREHOLDER VOTE The issuance of shares of Common Stock
with respect to the applicable Closing shall not violate the shareholder
approval requirements, if any, of the Principal Market.
(o) OTHER On each Condition Satisfaction Date, the Investor
shall have received such other certificates and documents as shall have been
reasonably requested by the Investor in order for the Investor to confirm the
Company's satisfaction of the conditions set forth in this Section 7.2,
including, without limitation, (i) a certificate in substantially the form and
substance of Exhibit D hereto, executed by an executive officer of the Company
and to the effect that all the conditions to such Closing shall have been
satisfied as at the date of each such certificate, (ii) as of the Closing
Date, a certificate of the Secretary of the Company, with attached by-laws,
incumbency certificate and a certificate of good standing and charter
documents certified by the Secretary of State of the Company's jurisdiction of
incorporation, and (iii) as of the Closing Date, certificates evidencing the
Common Stock.
Section 7.3 DUE DILIGENCE REVIEW; NON DISCLOSURE OF NON PUBLIC
INFORMATION
(a) The Company shall make available for inspection and review by the
Investor, advisors to and representatives of the Investor (who may or may not
be affiliated with the Investor and who are reasonably acceptable to the
Company), any Underwriter, any Registration Statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all financial and
other records, all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company's officers,
directors and employees to supply all such information reasonably requested by
the Investor or any such representative, advisor or Underwriter in connection
with such Registration Statement (including, without limitation, in response
to all questions and other inquiries reasonably made or submitted by any of
them), prior to and from time to time after the filing and effectiveness of
such Registration Statement for the sole purpose of enabling the Investor and
such representatives, advisors and Underwriters and their respective
accountants and attorneys to conduct initial and ongoing due diligence with
respect to the Company and the accuracy of such Registration Statement.
(b) Each of the Company, its officers, directors, employees and agents
shall in no event disclose non public information to the Investor, advisors
to or representatives of the Investor unless prior to disclosure of such
information the Company identifies such information as being non public
information and provides the Investor, such advisors and representatives with
the opportunity to accept or refuse to accept such non public information for
review. The Company may, as a condition to disclosing any non public
information hereunder, require the Investor's advisors and representatives to
enter into a confidentiality agreement in form and substance reasonably
satisfactory to the Company and the Investor.
(c) Nothing herein shall require the Company to disclose non public
information to the Investor or its advisors or representatives, and the
Company represents that it does not disseminate non public information to any
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 shall, as hereinabove provided,
immediately notify the advisors and representatives of the Investor and 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 a
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements therein, in light of the circumstances in which they
were made, not misleading. Nothing contained in this Section 7.3 shall be
construed to mean that such persons or entities other than the Investor
(without the written consent of the Investor prior to disclosure of such
information) may not obtain non public information in the course of
conducting due diligence in accordance with the terms and conditions of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by
such persons or entities, any 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.
ARTICLE VIII LEGENDS
Section 8.1 LEGEND Until such time as a Registration Statement
has been filed with and declared effective by the SEC, any shares of Common
Stock issued pursuant to this Agreement shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY
SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A) TO 5G WIRELESS COMMUNICATIONS,
INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO RULE 144 UNDER
THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT; EACH HOLDER OF THIS CERTIFICATE AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS SECURITY OR ANY SECURITY ISSUED UPON CONVERSION
HEREOF IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY PROPOSED TRANSFER PURSUANT TO CLAUSES (B), (C) OR (D)
ABOVE, THE COMPANY MAY REQUIRE THAT THE TRANSFEROR FURNISH IT WITH AN OPINION
OF COUNSEL CONFIRMING THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", AND "UNITED STATES" HAVE THE RESPECTIVE MEANINGS ASSIGNED TO
THEM IN REGULATION S UNDER THE SECURITIES ACT."
Section 8.2 REMOVAL OF LEGENDS As soon as practicable after the
effectiveness of a Registration Statement with respect to any Investor Shares,
the Company shall issue to the Transfer Agent Instructions in substantially
the form of Exhibit E hereto. Such instructions shall be irrevocable by the
Company from and after the date thereof or from and after the issuance thereof
except as otherwise expressly provided in the Registration Rights Agreement.
It is the intent and purpose of such instructions, as provided therein, to
require the Transfer Agent to issue to the Investor certificates evidencing
shares of Common Stock incident to a Closing (free of the Legend, without
consultation by the transfer agent with the Company or its counsel and without
the need for any further advice or instruction or documentation to the
Transfer Agent by or from the Company or its counsel or the Investor; provided
that (a) such Registration Statement shall then be effective, and (b) the
Investor confirms in writing to the transfer agent and the Company that the
Investor is transferring the shares to a named transferee and that, in
connection with the Investor's sale of such shares to the transferee, the
Investor complied with the prospectus delivery requirement under the
Securities Act) or, at any time after the Effective Date, upon surrender of
one or more certificates evidencing Common Stock that bear the Legend, to the
extent accompanied by a notice requesting the issuance of new certificates
free of the Legend to replace those surrendered).
Section 8.3 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS Other
than as specified in Section 8.1, no other legend has been or shall be placed
on the share certificates representing the Common Stock and no instructions or
"stop transfers orders," "stock transfer restrictions" or other restrictions
have been or shall be given to the Company's transfer agent with respect
thereto, other than as expressly set forth in this Article VIII.
Section 8.4 THE INVESTOR'S COMPLIANCE Nothing in this Article
VIII shall affect in any way the Investor's obligations under any agreement to
comply with all applicable securities laws upon resale of the Common Stock.
Section 8.5 COVER If the Company fails for any reason to deliver
the Investor Shares on the Closing Date and the Investor purchases, in an open
market transaction or otherwise, shares of Common Stock (the "Covering
Shares") in order to make delivery in satisfaction of a sale of Common Stock
by the Investor (the "Sold Shares"), which delivery the Investor anticipated
to make using the Investor Shares (a "Buy-In"), then the Company shall pay to
the Investor, in addition to all other amounts contemplated in other
provisions of the Transaction Documents, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) the Investor's total purchase price
(including brokerage commissions, if any) for the Covering Shares over (y) the
net proceeds (after brokerage commissions, if any) received by the Investor
from the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment
Amount to the Investor in immediately available funds immediately upon demand
by the Investor. By way of illustration and not in limitation of the
foregoing, if the Investor purchases Covering Shares having a total purchase
price (including brokerage commissions) of $11,000 to cover a Buy-In with
respect to shares of Common Stock that it sold for net proceeds of $10,000,
the Buy-In Adjustment Amount that the Company will be required to pay to the
Investor will be $1,000.
Section 8.6 DELAY The Company understands that a delay in the
issuance of the Investor Shares beyond the Closing Date could result in
economic loss to the Investor. On and after the Effective Date as
compensation to the Investor for such loss, the Company agrees to pay late
payments to the Investor for late issuance of Investor Shares in accordance
with the following schedule (where "No. of Days Late" is defined as the number
of days beyond the Closing Date):
Late Payment For Each
No. of Days Late $10,000 of Common Stock
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
Over 10 $1,000 + $200 for each
Business
Day late beyond 10 days
The Company shall pay any payments incurred under this Section 8.5 in
immediately available funds upon demand. Nothing herein shall limit the
Investor's right to pursue actual damages for the Company's failure to issue
and deliver the Investor Shares to the Investor, except to the extent that
such late payments shall constitute payment for and offset any such actual
damages alleged by the Investor, and any Buy In Adjustment Amount.
ARTICLE IX NOTICES; INDEMNIFICATION
Section 9.1 NOTICES All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (a) personally
served, (b) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (c) delivered by reputable air courier service
with charges prepaid, or (d) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice given in accordance
herewith. Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (i) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (ii) on the second business day following the date of mailing by express
courier service or on the fifth business day after deposited in the mail, in
each case, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Investor:
DRH Investment Company, LLC
000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
If to the Company:
5G Wireless Communications, Inc.
0000 X. Xxxxxx Xxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Telephone No.: 000-000-0000
Telecopier No.: 604-207-0565
with a copy by fax (which shall not constitute notice) to:
Xxxxxxx Xxx, Esq.
Xxxxxxx Xxx Law Office
0000 Xxxxxx Xxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 9.1 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the other
party hereto.
Section 9.2 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Investor and
each Person, if any, who controls the Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact included in any
Registration Statement (or any amendment or supplement thereto) or this
Agreement, or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 9.2(c)
below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the Investor
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to (x) any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Investor expressly for use in any Registration Statement (or
any amendment or supplement thereto).
(b) The Investor agrees to indemnify and hold harmless the Company, its
directors and each Person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions or alleged untrue statements or
omissions made in any Registration Statement (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Investor expressly for use in any Registration Statement
(or any amendment or supplement thereto).
Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS (a)
Each Person seeking indemnification under this Section (an "Indemnified
Party") shall give notice as promptly as reasonably practicable to each Person
against whom indemnification is being asserted (an "Indemnifying Party") of
any action commenced against the Indemnified Party in respect of which
indemnity may be sought hereunder, but failure to so notify an Indemnifying
Party shall not relieve such Indemnifying Party from any liability hereunder
to the extent it is not materially prejudiced as a result thereof and in any
event shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. In the case of Investor parties
indemnified pursuant to Section 9.2(a) above, counsel to the Indemnified
Parties shall be selected by the Investor, and, in the case of Company parties
indemnified pursuant to Section 9.2(b) above, counsel to the Indemnified
Parties shall be selected by the Company. An Indemnifying Party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the Indemnifying Party shall not (except with the
consent of the Indemnified Party) also be counsel to the Indemnified
Party. In no event shall the Indemnifying Parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all Indemnified Parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this
Article IX (whether or not the Indemnified Parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes
an unconditional release of each Indemnified Party from all liability arising
out of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Party.
(b) If at any time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified Party for fees and expenses of
counsel, such Indemnifying Party agrees that it shall be liable for any
settlement of the nature contemplated by Section 9.2(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such Indemnifying Party of the aforesaid request, (ii) such
Indemnifying Party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into, and (iii) such
Indemnifying Party shall not have reimbursed such Indemnified Party in
accordance with such request prior to the date of such settlement.
ARTICLE X MISCELLANEOUS
Section 10.1 GOVERNING LAW; JURISDICTION This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New
York without regard to the principles of conflicts of law. Each of the Company
and the Investor hereby submits to the exclusive jurisdiction of the United
States Federal and state courts located in New York with respect to any
dispute arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby.
Section 10.2 SPECIFIC ENFORCEMENT The Company and the Investor
acknowledge and agree that irreparable damage would occur to the Investor in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Investor shall be entitled to an injunction or
injunctions to cure breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.
Section 10.3 ASSIGNMENT This Agreement shall be binding upon and
inure to the benefit of the Company and the Investor and their respective
successors and permitted assigns. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
Person.
Section 10.4 THIRD PARTY BENEFICIARIES This Agreement is
intended for the benefit of the Company and the Investor and their respective
successors and permitted assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person. Notwithstanding the
foregoing, the provisions of this Agreement shall inure to the benefit of, and
be enforceable by, any affiliate of the Investor which is a transferee of any
of the Common Stock purchased or acquired by the Investor hereunder with
respect to the Common Stock held by such Person.
Section 10.5 TERMINATION.<span style='color: red'> This Agreement
shall terminate at the termination of the Commitment Period (unless extended
by the agreement of the Company and the Investor); provided, however, that the
provisions of Article VI, VIII, IX and Sections 10.1, 10.2, 10.4, 10.7, 10.10,
10.11, 10.12 and 10.17 shall survive the termination of this Agreement.
Section 10.6 ENTIRE AGREEMENT, AMENDMENT; NO WAIVER This
Agreement and the instruments referenced herein contain the entire
understanding of the Company and the Investor with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Investor 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.
Section 10.7 FEES AND EXPENSES (i) Each of the Company and the
Investor agrees to pay its own expenses in connection with the preparation of
this Agreement and any amendments thereof, and performance of its obligations
hereunder, except that the Company shall pay Sidley, Austin, Xxxxx & Xxxx
llp fees of $15,000 on the Subscription Date in connection with the issuance
of the Convertible Notes, and in connection with the Put transaction, $10,000
at the initial Closing and $3,000 at each subsequent Closing, plus customary
disbursements. In addition, the Company shall pay all reasonable fees and
expenses incurred by the Investor in connection with any amendments,
modifications or waivers of this Agreement or the Registration Rights
Agreement or incurred in connection with the enforcement of this Agreement and
the Registration Rights Agreement, including, without limitation, all
reasonable attorneys fees and expenses. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the
Registrable Securities pursuant hereto.
(ii) On each Closing Date, the Escrow Agent shall withhold from the
cash amount otherwise due to the Company, and shall pay to May Xxxxx Group, an
amount (the "Draw Down Fee") equal to five (5) percent of the Investment
Amount specified in the related Put Notice. The payment of the Draw Down
Fee shall have no effect on the calculation of Put Shares pursuant to Article
II otherwise payable to the Investor.
(iii) On the Subscription Date, the Company shall issue the
Commitment Fee Shares and Warrants, and shall pay any cash fees due and owing,
to the May Xxxxx Group pursuant to the terms of the Convertible Notes and
Finder's Fee Agreement.
Section 10.8 NO BROKERS Each of the Company and the Investor
represents that it has had no dealings in connection with this transaction
with any finder or broker who will demand payment of any fee or commission
from the other party other than May Xxxxx Group as provided in Section
10.7. The Company on the one hand, and the Investor, on the other hand,
agree to indemnify the other against and hold the other harmless from any and
all liabilities to any persons claiming brokerage commissions or finder's fees
on account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 10.9 COUNTERPARTS This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original
instrument, which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. This Agreement, once executed by a party, may be delivered to the
other parties hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the parties so delivering this Agreement.
Section 10.10 SURVIVAL; SEVERABILITY The representations,
warranties, covenants and agreements of the Company set forth in this
Agreement shall survive each Closing hereunder for a period of one (1) year
thereafter. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
Section 10.11 FURTHER ASSURANCES 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.
Section 10.12 NO STRICT CONSTRUCTION The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party.
Section 10.13 EQUITABLE RELIEF The Company recognizes that in
the event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Investor. The Company therefore agrees that the Investor shall
be entitled to temporary and permanent injunctive relief in any such case.
Section 10.14 TITLE AND SUBTITLES The titles and subtitles used
in this Agreement are used for the convenience of reference and are not to be
considered in construing or interpreting this Agreement.
Section 10.15 REPORTING ENTITY FOR THE COMMON STOCK The
reporting entity relied upon for the determination of the Bid Price and the
trading volume of the Common Stock on any given Trading Day for the purposes
of this Agreement shall be Bloomberg L.P. or any successor thereto. The
written mutual consent of the Investor and the Company shall be required to
employ any other reporting entity.
Section 10.16 PUBLICITY The Company and the Investor shall
consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and no
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other parties, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law, in which such
case the disclosing party shall provide the other parties with prior notice of
such public statement. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Investor without the prior written consent
of the Investor, except to the extent required by law. The Investor
acknowledges that this Agreement and all or part of the Transaction Documents
may be deemed to be "material contracts" as that term is defined by Item
601(b)(10) of Regulation S-K, and that the Company may therefore be required
to file such documents as exhibits to reports or registration statements filed
under the Securities Act or the Exchange Act. The Investor further agrees
that the status of such documents and materials as material contracts shall be
determined solely by the Company, in consultation with its counsel.
Section 10.17 JURY TRIAL WAIVER The Company and the Investor
hereby waive a trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other in respect of any matter
arising out of or in connection with the Transaction Documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Private Equity
Subscription Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
5G WIRELESS COMMUNICATIONS, INC.,a Nevada corporation
By:___________________________________
Name:
Title:
DRH INVESTMENT COMPANY, LLC,a Delaware limited liability company
By:____________________________________
Name:
Title:
Exhibit A
Registration Rights Agreement
Exhibit B
[5G Wireless Communications, Inc. Letterhead]
[Date]
DRH Investment Company, LLC
000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: Put Notice with respect to Common Stock of
5G Wireless Communications, Inc.
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Private Equity Subscription Agreement dated
July __, 2001 (the "Subscription Agreement"), by and between 5G Wireless
Communications, Inc. and DRH Investment Company, LLC, the undersigned hereby
gives notice to you that you are hereby required to purchase Common Stock,
$0.001 par value per share, of the Company in an Investment Amount of
$________. The Closing is to take place on _________ __, 200_.
All conditions precedent to the right of the Company to deliver this Put
Notice as specified in Section 7.2 of the Subscription Agreement and the
obligation of the Investor thereunder to pay for the Put Shares have been
satisfied as of the date hereof.
Terms capitalized and not otherwise defined herein shall have the meanings
attributed them in the Subscription Agreement.
Very truly yours,
5G Wireless Communications, Inc.
By: _______________________________
Name:
Title:
Exhibit C
FORM OF OPINION OF COMPANY COUNSEL
TO BE DELIVERED
PURSUANT TO SECTION 7.2(h)
(i) The Company has been duly incorporated, is validly
existing and is in good standing as a corporation under the laws of the State
of Nevada.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under the
Transaction Documents.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) The Transaction Documents have been duly executed and
delivered by the Company, and each constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its
terms.
(v) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus (except for subsequent
issuances, if any, pursuant to the Subscription Agreement); all of the issued
and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; and none
of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any securityholder of
the Company.
(vi) The Investor Shares have been duly authorized for
issuance and sale to the Investor pursuant to the Subscription Agreement and,
when issued and delivered by the Company pursuant to the Subscription
Agreement, will be fully paid, validly issued and non-assessable; no holder of
the Investor Shares is or will be subject to personal liability by reason of
being such a holder; and the Investor Shares conform to the description
thereof contain and in the Prospectus. The Company has reserved an
adequate number of shares of Common Stock for issuance pursuant to the
Subscription Agreement.
(vii) The issuance of the Investor Shares is not subject to
preemptive or other similar rights of any securityholder of the Company.
(viii) Each of the subsidiaries of the Company has been duly
incorporated and is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to be in good
standing or so to qualify, where applicable, would not result in a Material
Adverse Effect; except as otherwise disclosed in the Prospectus, all of the
issued and outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable and are
owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of the outstanding shares of capital stock of any subsidiary was issued
in violation of the preemptive or similar rights of any securityholder of such
subsidiary.
(ix) The Transaction Documents have been duly authorized,
executed and delivered by the Company.
(x) The Registration Statement has been declared effective
under the 1933 Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required by Rule
424(b); and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(xi) The Registration Statement and the Prospectus,
excluding the documents incorporated by reference therein, and each amendment
to the Registration Statement and amendment or supplement to the Prospectus,
as of their respective effective or issue dates (other than the financial
statements and related schedules, financial data and statistical information
included in or omitted from such financial statements, as to which we need
express no opinion), complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xii) The documents incorporated by reference in the
Prospectus (other than the financial statements and related schedules,
financial data and statistical information included in or omitted from such
financial statements, as to which we need express no opinion), when they were
filed with the Commission, complied as to form in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder.
(xiii) The form of certificates used to evidence the Investor
Shares comply in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and by-laws of
the Company and the requirements of the market[s] in which the Common Stock
trade and are listed or are quoted.
(xiv) To the best of our knowledge, except as otherwise
disclosed in the Registration Statement and Prospectus, there is not pending
or threatened any action, suit, proceeding, inquiry or investigation, to which
the Company or any subsidiary is a party, or to which the property of the
Company or any subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which may reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the assets, properties or
operations thereof, taken as a whole, or the consummation of the transactions
contemplated in the Transaction Documents or the performance by the Company of
its obligations thereunder.
(xv) The information in the Prospectus under "Description of
Stock" and in the Registration Statement under Item 15, to the extent that it
constitutes matters of law, summaries of legal matters, the Company's charter
and by-laws or legal proceedings, or legal conclusions, has been reviewed by
us and is correct in all material respects.
(xvi) All descriptions in the Registration Statement and the
Prospectus of contracts and other documents to which the Company or its
subsidiaries are a party are accurate in all material respects.
(xvii) To the best of our knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws. Based solely on
inquiries we have made of the Company's Executive Vice President/Chief
Financial Officer, Senior Vice President/General Counsel/Secretary, Vice
President/Treasurer and Vice President/Controller, no default by the Company
or any subsidiary exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or
the Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement, except for defaults which would not have a Material
Adverse Effect.
(xviii) The execution, delivery and performance of the Transaction
Documents and the Registration Statement and the consummation of the
transactions contemplated therein (including the issuance and sale of the
Investor Shares and the Investor use of the proceeds from the sale of the
Investor Shares as described in the Prospectus under the caption "Use Of
Proceeds") and compliance by the Company with its obligations under the
Transaction Documents do not and will not, whether with or without the giving
of notice or lapse of time or both, conflict with or constitute a breach of,
or a default or repayment event under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Company or any such subsidiary is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any such subsidiary is subject, nor will
such action result in any violation of the provisions of the charter or
by-laws of the Company or any such subsidiary, or any applicable law, statute,
rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any such subsidiary or any of their
respective assets, properties, or operations.
(xix) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
(xx) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under the
1933 Act and the 1933 Act Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states, as to
which we need express no opinion) is necessary or required in connection with
the due authorization, execution and delivery of the Transaction Documents or
for the offering, issuance or sale of the Investor Shares.
(xxi) Further, although we are not passing upon and do not
assume any responsibility for, the accuracy and completeness of the statements
(except as covered by (v), (xiv) and (xv)) contained in the Registration
Statement, Prospectus, or any amendment or supplement thereto, we advise you,
on the basis of the discussions and inquiries concerning various legal and
related subjects and reviews of and reports on certain corporate records,
documents and proceedings and conferences with representatives of the Company
at which certain portions of the Registration Statement and the Prospectus
were discussed (relying as to materiality to a certain extent upon the
opinions and representations of the Company), no facts have come to our
attention that would lead us to believe that the Registration Statement or any
amendment thereto (other than the financial statements and related schedules,
financial data and statistical information included in or omitted from such
financial statements, as to which we need express no opinion), at the time
such Registration Statement or any such amendment became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto
(other than the financial statements and related schedules, financial data and
statistical information included in or omitted from such financial statements,
as to which we need express no opinion), at the time the Prospectus was
issued, at the time any such amendment or supplement was issued or at the date
hereof, included or includes an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Exhibit D
CLOSING CERTIFICATE
The undersigned officer of 5G Wireless Communications, Inc., a Nevada
corporation (the "Company") does hereby deliver this certificate on behalf of
the Company pursuant to Section 7.2(o) of the Private Equity Subscription
Agreement dated July ___, 2001 (the "Agreement") between the Company and DRH
Investment Company LLC (the "Investor"), and hereby certifies that:
(A) the representations and warranties of the Company contained in Article
IV of the Agreement were true and accurate in all material respects on the
date of the Agreement and are true and accurate in all material respects as of
the date of this Certificate; and
(B) the Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to the date hereof; and
(C) the Company has filed with the SEC a Registration Statement No.
[ ] with respect to the resale of Registrable Securities by the
Investor which has been declared effective by the SEC on [date]; and (i) the
Company has not received notice that the SEC has issued or intends to issue a
stop order with respect to such Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has threatened to
do so, and (ii) no other suspension of the use or withdrawal of the
effectiveness of such Registration Statement or related prospectus shall
exist; and
(D) the Company has no knowledge of any event reasonably likely to cause
any Registration Statement to be suspended or otherwise ineffective; and
(E) the trading of the Common Stock has not been suspended by the SEC, the
Principal Market or the NASD and the Common Stock has been approved for
listing or quotation on and shall not have been deleted from, or no longer
quoted on, the Principal Market; and
(F) the Registration Statement does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and
(G) for purposes of determining compliance with Section 7.2(k) of this
Agreement, the aggregate number of shares of Common Stock owned by the
Investor as of [Closing Date], after giving effect to the Put, is [number]
shares.; and
(H) the issuance of shares of Common Stock with respect to the Closing on
the date hereof shall not violate the shareholder approval requirements of the
Principal Market.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Agreement.
Dated: ________________ 5G Wireless Communications,
Inc.
______________________________
Name:
Title: Exhibit E
[5G Wireless Communications, Inc. Letterhead]
[Date]
[Name of Transfer Agent]
[Address]
Attn: [ ]
Re: 5G Wireless Communications, Inc. Common Stock
Ladies and Gentlemen:
Reference is made to the Private Equity Subscription Agreement dated July __,
2001 (the "Subscription Agreement"), by and between 5G Wireless
Communications, Inc. (the "Company") and DRH Investment Company, LLC (the
"Investor"), and to the Registration Rights Agreement (the "Registration
Rights Agreement") of even date therewith between the Investor and the
Company. Capitalized terms used but not defined herein shall have the
meanings given to them in the Subscription Agreement and Registration Rights
Agreement.
The undersigned hereby gives notice to you that the Company has complied with
the terms of the Subscription Agreement and Registration Rights Agreement with
respect to the registration of the Common Stock owned by the Investor.
Accordingly, pursuant to Section 8.2 of the Subscription Agreement, you are
hereby instructed, as Transfer Agent, to cancel Certificate No.(s) __________
upon delivery to you of same by the Investor and to reissue a certificate to
the Investor for the same number of shares, without a restrictive legend.
Very truly yours,
5G Wireless Communications, Inc.
Name:
Title:
