--------------
EXHIBIT 10.104
--------------
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of October 9,
2000 by and between USURF AMERICA, INC., a Nevada corporation (the
"Company"), and FUSION CAPITAL FUND II, LLC (together with its permitted
assigns, the "Buyer"). Capitalized terms used herein and not otherwise
defined herein are defined in Section 10 hereof.
WHEREAS
Subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company, up to Ten Million Dollars ($10,000,000) of the Company's common
stock, par value $.0001 per share (the "Common Stock"). The shares of
Common Stock to be purchased hereunder are referred to herein as the
"Purchase Shares."
NOW THEREFORE, the Company and the Buyer hereby agree as follows
1. PURCHASE OF COMMON STOCK.
Subject to the terms and conditions set forth in Sections 6, 7 and 9
below, the Company hereby agrees to sell to the Buyer, and the Buyer hereby
agrees to purchase from the Company, shares of Common Stock as follows
(a) Commencement of Purchases of Common Stock. The purchase and
sale of Common Stock hereunder shall commence (the "Commencement") within
five (5) Trading Days following the date of satisfaction (or waiver) of the
conditions to the Commencement set forth in Sections 6 and 7 below (or such
later date as is mutually agreed to by the Company and the Buyer), (the
date of such Commencement, the "Commencement Date")
(b) Buyer's Purchase Rights and Obligations. Subject to the
provisions of Section 1(d), the Buyer(i) shall purchase shares of Common Stock
during each Monthly Period equal to the Monthly Base Amount at the Purchase
Price in accordance with Section 1(e), and (ii) at any time on or after the
Maturity Date, shall have the right to purchase shares of Common Stock up
to the entire remaining Available Amount at the Purchase Price in
accordance with Section 1(e). Within three (3) Trading Days of receipt of
Purchase Shares, the Buyer shall pay to the Company an amount equal to the
Purchase Amount with respect to such Purchase Shares as full payment for
the Purchase Shares so received. The Company shall not issue any
fraction of a share of Common Stock upon any purchase. All shares of
Common Stock (including fractions thereof) issuable upon a purchase under
this Agreement shall be aggregated for purposes of determining whether the
purchase would result in the issuance of a fraction of a share of Common
Stock. If, after the aforementioned aggregation, the issuance would result
in the issuance of a fraction of a share of Common Stock, the Company shall
round such fraction of a share of Common Stock up or down to the nearest
whole share. All payments made under this Agreement shall be made in
lawful money of the United States of America by check or wire transfer of
immediately available funds to such account as the Company may from time to
time designate by written notice in accordance with the provisions of this
Agreement. Whenever any amount expressed to be due by the terms of this
Agreement is due on any day which is not a Trading Day, the same shall
instead be due on the next succeeding day which is a Trading Day.
(c) Company's Mandatory Purchase Rights. If (A) the Closing Sale Price of
the Common Stock on each of the five (5) Trading Days immediately prior to
the first Trading Day of any Monthly Period is at least $5.00 and (B) no
Event of Default has occurred and is continuing, then the Company shall
have the right, so long as no Event of Default has occurred and is
continuing and so long as the Sale Price of the Common Stock remains at
least $5.00, by delivering written notice (a "Mandatory Purchase Notice")
to the Buyer on or prior to the first Trading Day of such Monthly Period to
require that the Buyer purchase at the Purchase Price such Available Amount
as specified by the Company in the Mandatory Purchase Notice during the
next two Monthly Periods on such Trading Days during such Monthly Periods
as the Buyer shall determine. The Company acknowledges and agrees that the
Company's mandatory purchase rights represent an agreement by the Buyer to
extend financial accommodations to the Company. Accordingly, it shall be a
condition to the exercise of the Company's Mandatory Purchase Rights that
no Event of Default shall have occurred and is continuing, and the
Company's delivery of a Mandatory Purchase Notice shall be deemed a
representation to the Buyer that no Event of Default has occurred and is
continuing. The Company may revoke a Mandatory Purchase Notice, in whole
or in part, by delivering written notice thereof to the Buyer (a
"Revocation of Mandatory Purchase Notice"). A Revocation of Mandatory
Purchase Notice shall be effective only as to Purchase Notices which are in
excess of the Monthly Base Amount and which have a Purchase Date later than
three (3) Trading Days after receipt by the Buyer of the Revocation of
Mandatory Purchase Notice. Any Purchase Notices submitted by the Buyer
which have a Purchase Date on or prior to the third (3rd) Trading Day after
receipt by the Buyer of the Revocation of Mandatory Purchase Notice must be
honored by the Company as otherwise provided herein.
(d) Limitations on Purchases.
(i) Exchange Cap Limitation. The Company shall not effect any purchase
under this Agreement and the Buyer shall not have the right to purchase
shares of Common Stock under this Agreement to the extent that after giving
effect to such purchase the "Exchange Cap" shall be deemed to be reached.
The "Exchange Cap" shall be deemed to be reached at such time if, upon
submission of a Purchase Notice under this Agreement, the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock
which the Company may issue under this Agreement without breaching the
Company's obligations under the rules or regulations of the Principal Market.
(ii) Limitation on Beneficial Ownership. The Company shall not effect any
sale under this Agreement and the Buyer shall not have the right to
purchase shares of Common Stock under this Agreement to the extent that
after giving effect to such purchase the Buyer together with its affiliates
would beneficially own in excess of 9.9% of the outstanding shares of the
Common Stock following such purchase. For purposes hereof, the number of
shares of Common Stock beneficially owned by the Buyer and its affiliates
or acquired by the Buyer and its affiliates, as the case may be, shall
include the number of shares of Common Stock issuable in connection with a
Purchase Notice under this Agreement with respect to which the
determination is being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (1) a purchase of the remaining
Available Amount which has not been submitted for purchase, and (2)
exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company (including, without limitation, any
warrants) subject to a limitation on conversion or exercise analogous to
the limitation contained herein beneficially owned by the Buyer and its
affiliates. If the 9.99% limitation is ever reached, this shall not effect
or limit the Buyer's obligation to purchase the Monthly Base Amount or the
Company's Mandatory Purchase Rights as otherwise provided in this
Agreement. For purposes of this Section, in determining the number of
outstanding shares of Common Stock the Buyer may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most
recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other written communication by the
Company or its transfer agent setting forth the number of shares of Common
Stock outstanding. Upon the reasonable written or oral request of the
Buyer, the Company shall promptly confirm orally and in writing to the
Buyer the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to any purchases under this Agreement by the Buyer since the
date as of which such number of outstanding shares of Common Stock was
reported. Except as otherwise set forth herein, for purposes of this
Section 1(d)(ii), beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended.
(iii) Company's Right to Suspend Purchases. If at any time the Closing
Sale Price of the Common Stock is below the Fixed Purchase Price for three
consecutive Trading Days, the Company shall have three (3) Trading Days
from the last day of such three consecutive Trading Day Period to give
written notice (a "Purchase Suspension Notice") to the Buyer suspending any
and all purchases by the Buyer under this Agreement. The Purchase
Suspension Notice shall be effective only for Purchase Notices which have a
Purchase Date later than three (3) Trading Days after receipt of the
Purchase Suspension Notice by the Buyer. Any Purchase Notices submitted by
the Buyer which have a Purchase Date on or prior to the third (3rd) Trading
Day after receipt by the Buyer of the Company's Purchase Suspension Notice
must be honored by the Company as otherwise provided herein. Such purchase
suspension shall continue in effect until the earlier of(A) revocation in
writing by the Company, at its sole discretion; or (B) such time as the
Sale Price of the Common Stock is above the Fixed Purchase Price.
(e) Mechanics of Purchasing. The purchase of shares of Common Stock under
this Agreement shall be conducted in the following manner
(i) Buyer's Delivery Requirements. To purchase shares of Common Stock
under this Agreement on any date, the Buyer shall transmit by facsimile (or
otherwise deliver) on or prior to 1159 p.m., Central Time on such date, a
copy of a fully executed notice of purchase substantially in the form
attached hereto as Exhibit A (the "Purchase Notice") to the Company.
(ii) Company's Response. Upon receipt by the Company of a copy of a
Purchase Notice, the Company shall as soon as practicable, but in no event
later than one (1) Trading Day after receipt of such Purchase Notice, send
via facsimile (or otherwise deliver), a confirmation of receipt of such
Purchase Notice in the form attached hereto as Exhibit B (a "Company
Confirmation of Purchase Notice") to (1) the Buyer and (2) along with a
copy of the Purchase Notice, the Company's designated transfer agent (the
"Transfer Agent"), which confirmation shall constitute an irrevocable
instruction to the Transfer Agent to process such Purchase Notice in
accordance with the terms herein. Upon receipt by the Transfer Agent of a
copy of the executed Purchase Notice and a copy of the applicable Company
Confirmation of Purchase Notice, the Transfer Agent shall, on the first
(1st) Trading Day following the date of receipt of the Company Confirmation
of Purchase Notice, (A) provided the Transfer Agent is participating in The
Depository Trust Company's ("The DTC") Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to which
the Buyer shall be entitled to the Buyer's or its designee's balance
account with The DTC through its Deposit Withdrawal At Custodian ("DWAC")
system, or (B) if the Transfer Agent is not participating in The DTC Fast
Automated Securities Transfer Program and DWAC system, issue and surrender
to a common carrier for overnight delivery to the address as specified in
the Purchase Notice, a certificate, registered in the name of the Buyer or
its designee, for the number of shares of Common Stock to which the Buyer
shall be entitled.
(iii) Dispute Resolution. In the case of a dispute as to the determination
of the Purchase Price or the arithmetic calculation of the Purchase Rate,
the Company shall instruct the Transfer Agent to issue to the Buyer the
number of shares of Common Stock that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the Buyer via
facsimile within one (1) Trading Day of receipt of the Buyer's Purchase
Notice. If the Buyer and the Company are unable to agree upon the
determination of the Purchase Price or arithmetic calculation of the
Purchase Rate within one (1) Trading Day of such disputed determination or
arithmetic calculation being submitted to the Buyer, then the Company shall
within one (1) Trading Day submit via facsimile (A) the disputed
determination of the Purchase Price to an independent, reputable investment
bank selected by the Company and approved by the Buyer or (B) the disputed
arithmetic calculation of the Purchase Rate to the Company's independent,
outside accountant. The Company shall cause the investment bank or the
accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Buyer of the results no later
than the fifth (5th) day after the date it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent manifest error.
(iv) Record Holder. The person or persons entitled to receive the shares
of Common Stock issuable upon a purchase under this Agreement shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Purchase Date.
(v) Company's Failure to Timely Deliver Shares. If within five (5) Trading
Days after the Company's receipt of a copy of the Purchase Notice properly
submitted in accordance with the term and conditions of this Agreement
(subject to extension in accordance with Section 1(e)(iii) for a good faith
dispute made in accordance with the terms of Section 1(e)(iii)) (the "Share
Delivery Period"), the Transfer Agent shall fail to issue Purchase Shares
via credit to the Buyer's account with DTC for the number of Purchase
Shares to which such Buyer is entitled upon such Buyer's submission of the
applicable Purchase Notice (a "Purchase Failure"), in addition to all other
available remedies which such Buyer may pursue under applicable laws and
this Agreement (including indemnification obligations of the Company set
forth in Section 8 hereof), the Company shall pay in cash, on demand,
additional damages to the Buyer for each day after such fifth (5th) Trading
Day that the issuance of such Purchase Shares is not timely effected, in an
amount equal to 1.5% of the product of (I) the number of Purchase Shares
not issued to the Buyer on a timely basis pursuant to Section 1(e)(ii) and
to which such Buyer is entitled and (II) the Closing Sale Price of the
Common Stock on the Purchase Date.
(vi) Book Entry. Notwithstanding anything to the contrary set forth
herein, upon purchase of any portion of the Available Amount in accordance
with the terms hereof, the Buyer shall not be required to physically
surrender this Agreement to the Company. The Buyer and the Company shall
each maintain records showing the remaining Available Amount and the dates
and Purchase Amounts for each purchase or shall use such other method,
reasonably satisfactory to the Buyer and the Company, so as not to require
physical surrender of this Agreement upon each purchase. The Buyer and any
assignee, by acceptance of this Agreement, acknowledge and agree that, by
reason of the provisions of this paragraph, following purchase of any
portion of the Available Amount, the remaining Available Amount under this
Agreement shall be less than the aggregate Available Amount set forth on
the face hereof.
(f) Taxes. The Company shall pay any and all taxes that may be payable
with respect to the issuance and delivery of any shares of Common Stock to
the Buyer made under of this Agreement.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company that
(a) Investment Purpose. The Buyer is entering into this Agreement and
acquiring the Commitment Shares and the Warrants (each as defined in
Section 7(b) hereof) (this Agreement, the Commitment Shares and the
Warrants are collectively referred to herein as the "Securities"), for its
own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof; provided
however, by making the representations herein, the Buyer does not agree to
hold any of the Securities for any minimum or other specific term.
(b) Accredited Investor Status. The Buyer is an "accredited investor" as
that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on Exemptions. The Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy
of, and the Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Securities.
(d) Information. The Buyer has been furnished with all materials relating
to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been reasonably
requested by the Buyer, including, without limitation, the SEC Documents
(as defined in Section 3(f) hereof). The Buyer understands that its
investment in the Securities involves a high degree of risk. The Buyer (i)
is able to bear the economic risk of an investment in the Securities
including a total loss, (ii) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of the proposed investment in the Securities and (iii) has had an
opportunity to ask questions of and receive answers from the officers of
the Company concerning the financial condition and business of the Company
and others matters related to an investment in the Securities. Neither
such inquiries nor any other due diligence investigations conducted by the
Buyer or its representatives shall modify, amend or affect the Buyer's
right to rely on the Company's representations and warranties contained in
Section 3 below. The Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities. The Buyer
acknowledges that the Company currently lacks capital with which to
exploit, on a full-scale basis, its wireless Internet access and other
wireless products and that the Company expects that it may remain in
substantially the same position unless the Company is able to obtain
additional funding.
(e) No Governmental Review. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities nor have
such authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. The Buyer understands that except as provided in
the Registration Rights Agreement (as defined in Section 6(a) hereof)(i)
the Securities have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder or
(B) an exemption exists permitting such Securities to be sold, assigned or
transferred without such registration; (ii) any sale of the Securities made
in reliance on Rule 144 may be made only in accordance with the terms of
Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 0000 Xxx) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation to
register such securities under the 1933 Act or any state securities laws or
to comply with the terms and conditions of any exemption thereunder.
(g) Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid
and binding agreement of the Buyer enforceable against the Buyer in
accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors' rights and
remedies.
(h) Residency. The Buyer is a resident of the State of Illinois.
(i) No Prior Short Selling. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, associates, representatives or affiliates engaged in or
effected, in any manner whatsoever, directly or indirectly, any (i) "short
sale" (as such term is defined in Rule 3b 3 of the 0000 Xxx) of the Common
Stock or (ii) hedging transaction, which establishes a net short position
with respect to the Common Stock.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that
(a) Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the
Company, directly or indirectly, owns 50% or more of the voting stock or
capital stock or other similar equity interests) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite
corporate power and authority to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good
standing could not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means any
material adverse effect on any of(i) the business, properties, assets,
operations, results of operations or financial condition of the Company and
its Subsidiaries, if any, taken as a whole, (ii) the value of the Common
Stock, (iii) the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith or (iv) the authority
or ability of the Company to perform its obligations under the Transaction
Documents (as defined in Section 2(b) hereof). The Company has no
Subsidiaries except as set forth on Schedule 3(a).
(b) Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Warrant Agreement (as defined in
Section 7(b) hereof), the Registration Rights Agreement (as defined in
Section 6(a) hereof) and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the
execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation, the issuance of the Commitment Shares and the
reservation for issuance and the issuance of the Purchase Shares issuable
under this Agreement, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the
Company, its Board of Directors or its shareholders, (iii) this Agreement
has been, and each other Transaction Document shall be on the Commencement
Date, duly executed and delivered by the Company and (iv) this Agreement
constitutes, and each other Transaction Document upon its execution on
behalf of the Company, shall constitute, the valid and binding obligations
of the Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
(c) Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of (i) 100,000,000 shares of Common Stock, of which as
of the date hereof, 15,105,010 shares are issued and outstanding no shares
are held as treasury shares, no shares are reserved for issuance pursuant
to the Company's stock option plans, 395,477 shares are issuable and
reserved for issuance pursuant to securities (other than stock options
issued pursuant to the Company's stock option plans) exercisable or
exchangeable for, or convertible into, shares of Common Stock and (ii) no
shares of Preferred Stock are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and
are fully paid and nonassessable. Except as disclosed in Schedule 3(c),
(i) no shares of the Company's capital stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company, (ii) there are no outstanding debt securities,
(iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, any shares of capital stock of
the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv)
there are no agreements or arrangements under which the Company or any of
its Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights Agreement),
(v) there are no outstanding securities or instruments of the Company or
any of its Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to
redeem a security of the Company or any of its Subsidiaries, (vi) there are
no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in
this Agreement and (vii) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or
agreement. The Company has furnished to the Buyer true and correct copies
of the Company's Certificate of Incorporation, as amended and as in effect
on the date hereof (the "Certificate of Incorporation"), and the Company's
By-laws, as amended and as in effect on the date hereof (the "By-laws"),
and summaries of the terms of all securities convertible into or
exercisable for Common Stock, if any, and copies of any documents
containing the material rights of the holders thereof in respect thereto.
(d) Issuance of Securities. The Commitment Shares have been duly
authorized and, upon issuance in accordance with the terms hereof, shall be
(i) validly issued, fully paid and non-assessable and (ii) free from all
taxes, liens and charges with respect to the issue thereof. 4,000,000
shares of Common Stock have been duly authorized and reserved for issuance
upon purchase under this Agreement. Upon issuance and payment therefore in
accordance with the terms and conditions of this Agreement, the Purchase
Shares shall be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
(e) No Conflicts. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of the Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Purchase Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or
the By-laws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market applicable to the Company or any of its Subsidiaries) or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected, except in the case of conflicts, defaults and violations
under clause (ii), which could not reasonably be expected to result in a
Material Adverse Effect. Except as disclosed in Schedule 3(e), neither the
Company nor its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or By-laws or their organizational charter or by-laws,
respectively. Except as disclosed in Schedule 3(e), neither the Company
nor any of its Subsidiaries is in violation of any term of or in default
under any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations or amendments which could not reasonably
be expected to have a Material Adverse Effect. The business of the Company
and its Subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, ordinance, regulation of any governmental entity,
except for possible violations, the sanctions for which either individually
or in the aggregate could not reasonably be expected to have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and
as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self-regulatory
agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in
accordance with the terms hereof or thereof. Except as disclosed in
Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence shall be obtained or effected on or prior to the
Commencement Date,. Except as disclosed in Schedule 3(e), the Company is
not and has not been since January 1, 1999, in violation of the listing
requirements of the Principal Market.
(f) SEC Documents; Financial Statements. Except as disclosed in Schedule
3(f), since January 1, 1999, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing
filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents").
As of their respective dates (except as they have been correctly amended),
the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC (except as they may have been
correctly amended), 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. As of their respective dates
(except as they have been correctly amended), the financial statements of
the Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or
the notes thereto or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
(g) Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since June 30, 2000, there has been no material adverse change in the
business, properties, operations, financial condition or results of
operations of the Company or its Subsidiaries. The Company has not taken
any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or any of
its Subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.
(h) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the
Company, the Common Stock or any of the Company's Subsidiaries or any of
the Company's or the Company's Subsidiaries' officers or directors in their
capacities as such, which could reasonably be expected to have a Material
Adverse Effect. A description of each action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body which, as of the date of this
Agreement, is pending or threatened in writing against or affecting the
Company, the Common Stock or any of the Company's Subsidiaries or any of
the Company's or the Company's Subsidiaries' officers or directors in their
capacities as such, is set forth in Schedule 3(h).
(i) Acknowledgment Regarding Buyer's Status. The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the
Buyer is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by the
Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Buyer's purchase of the Securities. The
Company further represents to the Buyer that the Company's decision to
enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives and advisors.
(j) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning
of Regulation D under the 0000 Xxx) in connection with the offer or sale of
the Securities.
(k) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause this
offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the Company or
any of its Subsidiaries take any action or steps that would require
registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.
(l) Dilutive Effect. The Company understands and acknowledges that the
number of Purchase Shares purchasable under this Agreement will increase in
certain circumstances. The Company further acknowledges that its
obligation to issue Purchase Shares under this Agreement in accordance with
the term and conditions hereof is absolute and unconditional regardless of
the dilutive effect that such issuance may have on the ownership interests
of other shareholders of the Company.
(m) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. Except as set forth on Schedule
3(m), none of the Company's material trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights have expired or
terminated, or, by the terms and conditions thereof, could expire or
terminate within two years from the date of this Agreement. The Company
and its Subsidiaries do not have any knowledge of any infringement by the
Company or its Subsidiaries of any material trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others and, except as set forth on
Schedule 3(m), there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened against,
the Company or its Subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service marks,
service xxxx registrations, trade secret or other infringement, which could
reasonably be expected to have a Material Adverse Effect.
(n) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where, in each of the three foregoing clauses, the failure to so
comply could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(o) Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(o) or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and any of its Subsidiaries. Any real property and facilities held
under lease by the Company and any of its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its Subsidiaries.
(p) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its Subsidiaries, taken as a whole.
(q) Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(r) Tax Status. The Company and each of its Subsidiaries has made or filed
all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and
other governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(s) Transactions With Affiliates. Except as set forth on Schedule 3(s) and
other than the grant or exercise of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has an interest or is an officer,
director, trustee or partner.
(t) Application of Takeover Protections. The Company and its board of
directors have taken or will take prior to the Commencement Date all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under
the Certificate of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Buyer as a result
of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and the Buyer's
ownership of the Securities.
(u) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from corporate funds; violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any
unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
4. COVENANTS.
(a) Filing of Registration Statement. The Company shall within five (5)
Trading Days from the date hereof file a new registration statement
covering the sale of at least 4,445,000 shares of Common Stock. The Buyer
and its counsel shall have a reasonable opportunity to review and comment
upon such registration statement or amendment to such registration
statement and any related prospectus prior to its filing with the SEC. The
Company shall use its best efforts to have such registration statement or
amendment declared effective by the SEC at the earliest possible date.
(b) Blue Sky. The Company shall, on or before the Commencement Date, take
such action, if any, as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Commitment Shares and
the Purchase Shares for sale to the Buyer pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyer
on or prior to the Commencement Date. The Company shall make all filings
and reports relating to the offer and sale of the Commitment Shares and the
Purchase Shares required under applicable securities or "Blue Sky" laws of
the states of the United States following the Commencement Date.
(c) No Variable Priced Financing. Other than pursuant to this Agreement,
the Company agrees that beginning on the date of this Agreement and ending
on the date of termination of this Agreement (as provided in Section 9(k)
hereof), neither the Company nor any of its Subsidiaries shall, without the
prior written consent of the Buyer, contract for any equity financing
(including any debt financing with an equity component) or issue any equity
securities of the Company or any Subsidiary or securities convertible or
exchangeable into or for equity securities of the Company or any Subsidiary
(including debt securities with an equity component) which, in any case (i)
are convertible into or exchangeable for an indeterminate number of shares
of common stock, (ii) are convertible into or exchangeable for Common Stock
at a price which varies with the market price of the Common Stock, (iii)
directly or indirectly provide for any "re-set" or adjustment of the
purchase price, conversion rate or exercise price after the issuance of the
security, or (iv) contain any "make-whole" provision based upon, directly
or indirectly, the market price of the Common Stock after the issuance of
the security, in each case, other than reasonable and customary
anti-dilution adjustments for issuance of shares of Common Stock at a price
which is below the market price of the Common Stock.
(d) Listing. The Company shall promptly secure the listing of all of the
Purchase Shares, Commitment Shares and Warrant Shares upon each national
securities exchange and automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all such securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for quotation on the Principal
Market. Neither the Company nor any of its Subsidiaries shall take any
action that would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market. The Company shall
promptly, and in no event later than the following Trading Day, provide to
the Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay
all fees and expenses in connection with satisfying its obligations under
this Section.
(e) Limitation on Short Sales and Hedging Transactions. The Buyer agrees
that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and
its agents, representatives and affiliates shall not in any manner
whatsoever enter into or effect, directly or indirectly, any (i) "short
sale" (as such term is defined in Rule 3b-3 of the 0000 Xxx) of the Common
Stock or (ii) hedging transaction, which establishes a net short position
with respect to the Common Stock; provided, however, that such restrictions
shall not apply (i) if the Buyer submits after a sale of shares of Common
Stock a Purchase Notice entitling the Buyer to receive a number of shares
of Common Stock at least equal to the number of shares so sold or (ii) if
an Event of Default has occurred, including any failure by the Company to
timely issue any Purchase Shares required to be issued pursuant to the
terms of this Agreement.
(f) Limitation on Sales of Commitment Shares. The Buyer agrees that the
Buyer shall not transfer or sell the Commitment Shares (as defined in
Section 7(b) hereof) until the earlier of (X) 750 calendar days from the
date of Commencement or (Y) until this Agreement has been terminated,
provided, however, that such restrictions shall not apply(i) in connection
with any transfers to or among affiliates (as defined in the Securities
Exchange Act of 1934, as amended), (ii) in connection with any pledge in
connection with a bona fide loan or margin account, or (iii) if an Event of
Default has occurred, or any event which, after notice and/or lapse of
time, would become an Event of Default, including any failure by the
Company to timely issue Purchase Shares under this Agreement.
Notwithstanding the forgoing, the Buyer may transfer Commitment Shares to a
third party in order to settle a sale made by the Buyer where the Buyer
reasonably expects the Company to deliver Purchase Shares to the Buyer
under this Agreement so long as the Buyer maintains ownership of the same
overall number of shares of Common Stock by "replacing" the Commitment
Shares so transferred with Purchase Shares when the Purchase Shares are
actually issued by the Company to the Buyer.
(g) Due Diligence. The Buyer shall have the right, from time to time as
the Buyer may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company and its
officers and employees shall reasonably cooperate with the Buyer in
connection with any reasonable request by the Buyer related to the Buyer's
due diligence of the Company.
(h) Reservation of Shares. The Company shall, so long as any Available
Amount is outstanding, reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the purchase of
the Available Amount, such number of shares of Common Stock as shall from
time to time be sufficient to effect the purchase of the entire remaining
Available Amount, without regard to any restrictions or limitations on
purchases. The Company shall reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting
the purchase of the Warrant Shares, 645,000 Common Stock.
5. TRANSFER AGENT INSTRUCTIONS.
All of the Purchase Shares, Commitment Shares and Warrant Shares (as
defined in Section 7(b) hereof) (so long as the a registration statement is
available for the resale of the Warrant Shares at the time of issuance of
the respective Warrant Shares) to be issued under this Agreement shall be
issued without any restrictive legend and shall be issued by the Company's
transfer agent via The DTC Fast Automated Securities Transfer Program, by
crediting the appropriate number of shares of Common Stock to which the
Buyer shall be entitled to the Buyer's or its designee's balance account
with The DTC through The DTC DWAC system. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue Purchase Shares and Warrant Shares (so long as the a
registration statement is available for the resale of the Warrant Shares at
the time of issuance of the respective Warrant Shares) in the name of the
Buyer or its respective nominee(s), for the Purchase Shares (the
"Irrevocable Transfer Agent Instructions"). The Company warrants to the
Buyer that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, will be given by the Company to
its transfer agent with respect to the Purchase Shares and the Warrant
Shares, and that the Commitment Shares, the Purchase Shares and the Warrant
Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement subject to the provisions of Section 4(f) in
the case of the Commitment Shares.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE
SALES OF SHARES OF COMMON STOCK.
The obligation of the Company hereunder to commence sales of the Purchase
Shares is subject to the satisfaction of each of the following conditions
on or before the Commencement Date, provided that these conditions are for
the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing the Buyer with prior written notice thereof
(a) The Buyer shall have executed each of the Transaction Documents to
which it is a party and delivered the same to the Company including the
Registration Rights Agreement substantially in the form of Exhibit C hereto
(the "Registration Rights Agreement").
(b) Subject to the Company's compliance with Section 4(a), a registration
statement covering the sale of the Commitment Shares, the Warrant Shares
and at least 3,000,000 Purchase Shares shall have been declared effective
under the 1933 Act by the SEC and no stop order with respect to the
Registration Statement shall be pending or threatened by the SEC.
(c) The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Commencement Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the
Commencement Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE
PURCHASES OF SHARES OF COMMON STOCK.
The obligation of the Buyer to commence purchases of Purchase Shares under
this Agreement is subject to the satisfaction, on or before the
Commencement Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer
at any time in its sole discretion by providing the Company with prior
written notice thereof
(a) The Company shall have executed each of the Transaction Documents and
delivered the same to the Buyer including the Registration Rights Agreement
substantially in the form of Exhibit C hereto.
(b) The Company shall have issued to the Buyer (A) 800,000 shares of
Common Stock (the "Commitment Shares") and (B) 645,000 common stock
purchase warrants, (the "Warrants") in a form of warrant agreement
acceptable to the Buyer (the Warrant Agreement"). The Warrants shall be
exercisable for a period of five (5) years from the Commencement Date,
granting the Buyer the right to purchase 645,000 shares of Common Stock
(the "Warrant Shares") at the following prices(1) 215,000 Warrant Shares
for $1.50, (2) 215,000 Warrant Shares for $2.00 per share and (3) 215,000
Warrant Shares for $2.50 per share. The number of Commitment Shares and
Warrant Shares shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction occurring on or prior to the Commencement Date. The Commitment
Shares and the Warrant Shares (so long as the a registration statement is
available for the resale of the Warrant Shares at the time of issuance of
the respective Warrant Shares) shall be issued to the Buyer without any
restrictive legend and shall be issued by the Company's transfer agent via
The DTC Fast Automated Securities Transfer Program, by crediting the
appropriate number of shares of Common Stock to which the Buyer shall be
entitled to the Buyer's or its designee's balance account with The DTC
through The DTC DWAC system.
(c) The Common Stock shall be authorized for quotation on the Principal
Market, trading in the Common Stock shall not have been within the last 365
days suspended by the SEC or the Principal Market and the Purchase Shares
and the Commitment Shares shall be approved for listing upon the Principal
Market.
(d) The Buyer shall have received the opinions of the Company's legal
counsel dated as of the Commencement Date in the form of Exhibit D attached
hereto.
(e) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 3 above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the date when made
and as of the Commencement Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Commencement Date. The Buyer shall have received a certificate, executed
by the CEO, President or CFO of the Company, dated as of the Commencement
Date, to the foregoing effect in the form attached hereto as Exhibit E.
(f) The Board of Directors of the Company shall have adopted resolutions in
the form attached hereto as Exhibit F which shall be in full force and
effect without any amendment or supplement thereto as of the Commencement
Date.
(g) As of the Commencement Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting
purchases hereunder, at least 3,000,000 shares of Common Stock.
(h) The Irrevocable Transfer Agent Instructions, in the form of Exhibit G
attached hereto, shall have been delivered to and acknowledged in writing
by the Company and the Company's transfer agent.
(i) The Company shall have delivered to the Buyer a certificate evidencing
the incorporation and good standing of the Company in the State of Nevada
issued by the Secretary of State of the State of Louisiana as of a date
within ten (10) Trading Days of the Commencement Date.
(j) The Company shall have delivered to the Buyer a certified copy of the
Certificate of Incorporation as certified by the Secretary of State of the
State of Nevada within ten (10) Trading Days of the Commencement Date.
(k) The Company shall have delivered to the Buyer a secretary's certificate
executed by the Secretary of the Company, dated as of the Commencement
Date, in the form attached hereto as Exhibit H.
(l) A registration statement covering the sale of all of the Commitment
Shares, the Warrant Shares and at least 3,000,000 Purchase Shares shall
have been declared effective under the 1933 Act by the SEC and no stop
order with respect to the registration statement shall be pending or
threatened by the SEC. The Company shall have prepared and delivered to
the Buyer a final form of Prospectus to be used by the Buyer in connection
with any sales of any Commitment Shares or any Purchase Shares. The Company
shall have made all filings under all applicable federal and state
securities laws necessary to consummate the issuance of the Commitment
Shares and the Purchase Shares pursuant to this Agreement in compliance
with such laws.
(m) No Event of Default has occurred, or any event which, after notice
and/or lapse of time, would become an Event of Default has occurred.
(n) On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the
Buyer, in order to render inapplicable any control share acquisition,
business combination, shareholder rights plan or poison pill (including any
distribution under a rights agreement) or other similar anti-takeover
provision under the Certificate of Incorporation or the laws of the state
of its incorporation which is or could become applicable to the Buyer as a
result of the transactions contemplated by this Agreement, including,
without limitation, the Company's issuance of the Securities and the
Buyer's ownership of the Securities.
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of
the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Buyer and
all of its affiliates, shareholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person's agents or
other representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys'
fees and disbursements (the "Indemnified Liabilities"), incurred by any
Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated
hereby or thereby, or (c) any cause of action, suit or claim brought or
made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction
Documents or any other certificate, instrument or document contemplated
hereby or thereby. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
9. EVENTS OF DEFAULT.
An "Event of Default" shall be deemed to have occurred at any time as any
of the following events occurs
(a) while any registration statement is required to be maintained effective
pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such registration statement lapses for any reason
(including, without limitation, the issuance of a stop order) or is
unavailable to the Buyer for sale of all of the Registrable Securities (as
defined in the Registration Rights Agreement) in accordance with the terms
of the Registration Rights Agreement, and such lapse or unavailability
continues for a period of ten (10) consecutive Trading Days or for more
than an aggregate of thirty (30) Trading Days in any 365-day period;
(b) the suspension from trading or failure of the Common Stock to be listed
on the Principal Market for a period of ten (10) consecutive Trading Days
or for more than an aggregate of thirty (30) Trading Days in any 365-day
period;
(c) the failure of the Company or the Common Stock to fully meet the
requirements for continued listing on the Principal Market for a period of
ten (10) consecutive Trading Days or for more than an aggregate of thirty
(30) Trading Days in any 365-day period;
(d) the Company's or the Transfer Agent's notice, verbal or written, to
the Buyer, including by way of public announcement, at any time, of its
intention not to comply with a proper request for purchase of Purchase
Shares under this Agreement that is tendered in accordance with the
provisions of this Agreement, or the failure of the Company to deliver a
Company Confirmation of Purchase Notice to the Buyer and to the Transfer
Agent in accordance with the provisions of this Agreement within two (2)
Trading Days after the receipt by the Company of a Purchase Notice (subject
to extension in accordance with Section 1(e)(iii) for a good faith dispute
made in accordance with the terms of Section 1(e)(iii)); or the failure for
any reason by the Transfer Agent to issue Purchase Shares to the Buyer
within five (5) Trading Days after the applicable Purchase Date;
(e) if at any time after the Commencement Date, the "Exchange Cap" is
reached (the "Exchange Cap" shall be deemed to be reached at such time if,
upon submission of a Purchase Notice under this Agreement, the issuance of
such shares of Common Stock would exceed that number of shares of Common
Stock which the Company may issue under this Agreement without breaching
the Company's obligations under the rules or regulations of the Principal
Market);
(f) the Company breaches any representation, warranty, covenant or other
term or condition under any Transaction Document if such breach could have
a Material Adverse Effect and except, in the case of a breach of a covenant
which is reasonably curable, only if such breach continues for a period of
at least ten (10) Trading Days;
(g) any payment default under any contract whatsoever or any acceleration
prior to maturity of any mortgage, indenture, contract or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or for money borrowed the
repayment of which is guaranteed by the Company, whether such indebtedness
or guarantee now exists or shall be created hereafter, which in any case,
is in excess of $1,000,000;
(h) if any Person commences a proceeding against the Company pursuant to or
within the meaning of any Bankruptcy Law;
(i) if the Company pursuant to or within the meaning of any Bankruptcy Law;
(A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment
of a Custodian of it or for all or substantially all of its property, (D)
makes a general assignment for the benefit of its creditors, (E) becomes
insolvent, or (F) is generally unable to pay its debts as the same become
due; or
(j) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that; (A) is for relief against the Company in an
involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the
Company or any Subsidiary.
In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k)
hereof, so long as an Event of Default has occurred and is continuing, or
if any event which, after notice and/or lapse of time, would become an
Event of Default, has occurred and is continuing, the Buyer shall not be
obligated to purchase any shares of Common Stock under this Agreement. If
pursuant to or within the meaning of any Bankruptcy Law, the Company
commences a voluntary case or any Person commences a proceeding against the
Company, a Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an
Event of Default as described in Sections 9(h), 9(i) and 9(j) hereof) this
Agreement shall automatically terminate without any liability or payment to
the Company without further action or notice by any Person. No such
termination of this Agreement under Section 11(k)(i) shall affect the
Company's or the Buyer's obligations under this Agreement with respect to
pending purchases and the Company and the Buyer shall complete their
respective obligations with respect to any pending purchases under this
Agreement.
10. CERTAIN DEFINED TERMS.
For purposes of this Agreement, the following terms shall have the
following meanings
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "Available Amount" means initially Ten Million Dollars ($10,000,000) in
the aggregate which amount shall be reduced by the Purchase Amount as the
Buyer purchases shares of Common Stock pursuant to Section 1 hereof.
(c) "Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
(d) [Intentionally Omitted]
(e) "Closing Sale Price" means, for any security as of any date, the last
closing trade price for such security on the Principal Market as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing trade price
of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg.
(f) [Intentionally Omitted]
(g) "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
(h) "Fixed Purchase Price" means $20.00, appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction.
(i) "Major Transaction" means any of the following(A) the consolidation,
merger or other business combination of the Company into another Person
(other than pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company); (B) any
transaction by the Company, including the contract, license, sale or
acquisition by the Company of securities, services, assets or property,
which involves or which could reasonably be expected to involve a fair
value of $5,000,000 or more in a single transaction or series of related
transactions; (C) the issuance of debt or equity securities in a
transaction or a series of related transactions involving the receipt by
the Company of aggregate proceeds of $5,000,000 (including fees and
expenses paid with respect to the issuance thereof) or more with any entity
other than the Buyer or any of its affiliates; or (D) a purchase, tender or
exchange offer made by any person other than the Buyer or any of the
Buyer's affiliates to the holders of more than 50% of the outstanding
shares of Common Stock.
(j) "Mandatory Purchase Rights" means the mandatory purchase rights of the
Company pursuant to Section 1(c).
(k) "Maturity Date" means the date that is 750 calendar days (25 Monthly
Periods) from the Commencement Date, which such date may be extended by up
to an additional three months by the Company, in its sole discretion, by
written notice to the Buyer..
(l) "Monthly Base Amount" means Four Hundred Thousand Dollars ($400,000)
per Monthly Period.
(m) "Monthly Period" means each successive 30 calendar day period
commencing with the Commencement Date.
(n) "Person" means an individual or entity including any limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(o) "Principal Market" means The American Stock Exchange.
(p) "Purchase Amount means the portion of the Available Amount submitted in
a Purchase Notice to be used to purchase Common Stock pursuant to Section 1
hereof.
(q) "Purchase Date" means the actual date that the Buyer submits a Purchase
Notice to the Company to purchase Common Stock hereunder so long as the
Buyer shall transmit by facsimile (or otherwise deliver) to the Company on
or prior to 1159 p.m., Central Time on such date.
(r) "Purchase Price" means, as of any Purchase Date or other date of
determination, the lower of the (A) Fixed Purchase Price and (B) the
Variable Purchase Price, each in effect as of such date.
(s) "Purchase Rate" means the number of shares of Common Stock issuable
upon purchase of a Purchase Amount as determined in accordance with the
following formulaPurchase Amount divided by the Purchase Price.
(t) "Sale Price" means, for any security as of any date, the trade price
for such security on the Principal Market as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or trading
market for such security, the trade price of such security on the principal
securities exchange or trading market where such security is listed or
traded as reported by Bloomberg.
(u) "SEC" means the United States Securities and Exchange Commission.
(v) "Trading Day" means any day on which the Principal Market is open for
customary trading.
(w) "Variable Purchase Price" means, as of any Purchase Date or other date
of determination, the lower of(A) the lowest Sale Price of the Common Stock
on the Purchase Date or such other date of determination or (B)the
arithmetic average of any three (3) Closing Sale Prices for the Common
Stock, selected by the Buyer, during the fifteen (15) consecutive Trading
Days ending on the Trading Day immediately preceding such Purchase Date or
other date of determination (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction).
11. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
State of Nevada shall govern all issues concerning the relative rights of
the Company and its shareholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement
and the other Transaction Documents shall be governed by the internal laws
of the State of Illinois, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Illinois or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Illinois. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of Chicago, for the adjudication of any dispute
hereunder or under the other Transaction Documents or in connection
herewith or therewith, or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party
and delivered to the other party; provided that a facsimile signature shall
be considered due execution and shall be binding upon the signatory thereto
with the same force and effect as if the signature were an original, not a
facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor the
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the Buyer,
and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.
(f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered(i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one Trading Day after
deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be
If to the Company
USURF America, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
Attention Xxxxx Xxxxxx
With a copy to
Xxxxxx & Xxxxxx
000 Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
Attention Xxxx Xxxxxx
If to the Buyer
Fusion Capital Fund II, LLC
000 Xxxxxxxxxxx Xxxx Xxxxx, Xxxxx 0-000
Xxxxxxx, XX 00000
Telephone 000-000-0000
Facsimile 000-000-0000
Attention Xxxxxx X. Xxxxxx
If to the Transfer Agent
Securities Transfer Corporation
0000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
Attention Xxxxx Xxxxxx, Xx.
or at such other address and/or facsimile number and/or to the attention of
such other person as the recipient party has specified by written notice
given to each other party three (3) Trading Days prior to the effectiveness
of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the
time, date, and recipient facsimile number or (C) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii)
or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer, including by
merger or consolidation. The Buyer may not assign its rights under this
Agreement without the consent of the Company, other than to an affiliate of
the Buyer controlled by Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxxxxxx.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
(i) Publicity. The Buyer shall have the right to approve before issuance
any press releases or any other public disclosure (including any filings
with the SEC) with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure
(including any filings with the SEC) with respect to such transactions as
is required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
(j) 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.
(k) Termination. This Agreement may be terminated only as follows
(i) By the Buyer any time an Event of Default exists without any liability
or payment to the Company. However, if pursuant to or within the meaning
of any Bankruptcy Law, the Company commences a voluntary case or any Person
commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company
makes a general assignment for the benefit of its creditors, (any of which
would be an Event of Default as described in Sections 9(h), 9(i) and 9(j)
hereof) this Agreement shall automatically terminate without any liability
or payment to the Company without further action or notice by any Person.
No such termination of this Agreement under this Section 11(k)(i) shall
affect the Company's or the Buyer's obligations under this Agreement with
respect to pending purchases and the Company and the Buyer shall complete
their respective obligations with respect to any pending purchases under
this Agreement.
(ii) In the event that the Commencement shall not have occurred, the
Company shall have the option to terminate this Agreement for any reason or
for no reason without liability of any party to any other party. If this
Agreement is terminated pursuant to this Section 11(k)(ii), the Company
shall issue to the Buyer the 800,000 Commitment Shares immediately prior to
the termination hereof. The number of Commitment Shares shall be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction.
(iii) In the event that the Commencement shall not have occurred on or
before December 31, 2000, due to the failure to satisfy the conditions set
forth in Sections 6 and 7 above with respect to the Commencement (and the
nonbreaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement at the
close of business on such date without liability of any party to any other
party. If this Agreement is terminated pursuant to this Section 11(k)(iii)
prior to the Commencement other than solely as a result of any material
breach of the Buyer's obligation hereunder, the Company shall issue to the
Buyer the 800,000 Commitment Shares immediately upon the termination
hereof. The number of Commitment Shares shall be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction.
(iv) If by the Maturity Date, for any reason or for no reason the full
Available Amount under this Agreement has not been purchased as provided
for in Section 1 of this Agreement, by the Buyer without any liability or
payment to the Company.
(v) At any time after the Commencement Date, and so long as the Company
has provided appropriate notice as described below, if during any ten (10)
consecutive Trading Days the Closing Sale Price of the Common Stock is
below the Fixed Purchase Price for each of such ten (10) Trading Days, the
Company shall have three (3) Trading Days to give written notice (a
"Company Termination Notice") to the Buyer electing to terminate this
Agreement without any liability or payment to the Buyer (a "Company
Termination"). The Company Termination Notice shall not be effective until
three (3) Trading Days after it has been received by the Buyer. Any
Purchase Notices submitted by the Buyer which have a Purchase Date on or
prior to the third (3rd) Trading Day after receipt by the Buyer of the
Company Termination Notice, must be honored by the Company as otherwise
provided herein. The Company may not deliver a Company Termination Notice
or otherwise effect a Company Termination in anticipation of or in
connection with a Major Transaction until such Major Transaction (whether
or not consummated) has been publicly disclosed for a period of at least
sixty (60) Trading Days. In the event that within sixty (60) Trading Days
of a Company Termination, the Company publicly discloses that a Major
Transaction has been consummated or may be consummated, the Buyer shall be
entitled to the following payment equal to the Purchase Rate (determined as
of the date of the Company Termination Notice assuming a Purchase Amount
equal to the remaining Available Amount) multiplied by the amount, if any
that (A) the arithmetic average of the Closing Sale Price for the Common
Stock for the ten (10) Trading Days following either(1) the public
disclosure of the Major Transaction or (2) the consummation of the Major
Transaction, as selected by the Buyer, exceeds (B) the Purchase Price
determined as of the date the Company Termination is effected. Any
payments under the previous sentence shall be made either in the form of
cash or registered, freely tradable shares of Common Stock, eleven (11)
Trading Days following either(1) the public disclosure of the Major
Transaction or (2) the consummation of the Major Transaction, as selected
by the Buyer. To the extent that such payment has not been paid by the
fifth (5th) Trading Date after its due date, the Buyer shall be entitled to
interest in an amount equal to one percent (1.0%) of the unpaid amount per
day, payable on demand. If paid in shares of Common Stock, the "dollar
value" per share of Common Stock shall be the average of the Closing Sale
Prices of the Common Stock for the five (5) consecutive Trading Days prior
to the payment date.
(vi) This Agreement shall automatically terminate on the date that the
Company sells and the Buyer purchases Ten Million Dollars ($10,000,000) of
Common Stock as provided herein, without any action or notice on the part
of any party.
Except as set forth in Sections 11(k)(i) and 11(k)(vi), any termination of
this Agreement pursuant to this Section 11(k) shall be effected by written
notice from the Company to the Buyer, or the Buyer to the Company, as the
case may be, setting forth the basis for the termination hereof. The
representations and warranties of the Company and the Buyer contained in
Sections 2 and 3 hereof, the indemnification provisions set forth in
Section 8 hereof and the agreements and covenants set forth in Section 11,
shall survive the Commencement and any termination of this Agreement. No
termination of this Agreement shall effect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.
(l) Financial Advisor, Placement Agent, Broker or Finder. The Company
acknowledges to the Buyer that it has engaged Gruntal & Co., L.L.C. as its
financial advisor in connection with the transactions contemplated hereby.
The Company represents and warrants to the Buyer that it has not retained
any other financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby. The Buyer represents
and warrants to the Company that it has not engaged any financial advisor,
placement agent, broker or finder in connection with the transactions
contemplated hereby. The Company shall be responsible for the payment of
any fees or commissions, if any, of any financial advisor, placement agent,
broker or finder relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold the Buyer harmless
against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any
such claim.
(m) 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.
(n) Remedies, Other Obligations, Breaches and Injunctive Relief. The
Buyer's remedies provided in this Agreement shall be cumulative and in
addition to all other remedies available to the Buyer under this Agreement,
at law or in equity (including a decree of specific performance and/or
other injunctive relief), no remedy of the Buyer contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit the Buyer's right to pursue actual
damages for any failure by the Company to comply with the terms of this
Agreement. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer and that the remedy at
law for any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
(o) Changes to the Terms of this Agreement. This Agreement and any
provision hereof may only be amended by an instrument in writing signed by
the Company and the Buyer. The term "Agreement" and all reference thereto,
as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so
amended or supplemented.
(p) Enforcement Costs. If(i) this Agreement is placed by the Buyer
in the hands of an attorney for enforcement or is enforced by the Buyer through
any legal proceeding; or (ii) an attorney is retained to represent the
Buyer in any bankruptcy, reorganization, receivership or other proceedings
affecting creditors' rights and involving a claim under this Agreement; or
(iii) an attorney is retained to represent the Buyer in any other
proceedings whatsoever in connection with this Agreement, then the Company
shall pay to the Buyer, as incurred by the Buyer, all reasonable costs and
expenses including attorneys' fees incurred in connection therewith, in
addition to all other amounts due hereunder.
(q) Failure or Indulgence Not Waiver. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof or of any other
right, power or privilege.
* * * * *
IN WITNESS WHEREOF, the Buyer and the Company have caused this Common Stock
Purchase Agreement to be duly executed as of the date first written above.
THE COMPANY
USURF AMERICA, INC.
By /s/ Xxxxx X. Xxxxxx
Name Xxxxx X. Xxxxxx
Title President
BUYER
FUSION CAPITAL FUND II, LLC
BY: FUSION CAPITAL PARTNERS II, LLC
BY: SGM HOLDINGS CORP.
By /s/ Xxxxxx X. Xxxxxx
Name Xxxxxx X. Xxxxxx
Title President
SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(c) Capitalization
Schedule 3(e) Conflicts
Schedule 3(f) 1934 Act Filings
Schedule 3(g) Material Changes
Schedule 3(h) Litigation
Schedule 3(m) Intellectual Property
Schedule 3(o) Liens
Schedule 3(s) Certain Transactions
EXHIBITS
Exhibit A Form of Purchase Notice
Exhibit B Form of Company Confirmation of Purchase Notice
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Company Counsel Opinion
Exhibit E Form of Officer's Certificate
Exhibit F Form of Resolutions of Board of Directors of the Company
Exhibit G Form of Irrevocable Transfer Agent Instructions
Exhibit H Form of Secretary's Certificate
DISCLOSURE SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(c) - Capitalization
(i.)
(ii.)
(iii.)
(iv.)
(v.)
(vi.)
(vii.)
Schedule 3(e) - No Conflicts
Schedule 3(f) - 1934 Act Filings
Schedule 3(g) - Absence of Certain Changes
Schedule 3(h) - Litigation
Schedule 3(m) - Intellectual Property Rights
Schedule 3(o) - Title
Schedule 3(s) - Transactions with Affiliates
EXHIBIT A
FORM OF PURCHASE NOTICE
Reference is made to the Common Stock Purchase Agreement (the "Common
Stock Purchase Agreement") between USURF AMERICA, INC. (the "Company") and
FUSION CAPITAL FUND II, LLC dated __________. In accordance with and
pursuant to the Common Stock Purchase Agreement, the undersigned hereby
elects to purchase shares of common stock, par value $.0001 per share (the
"Common Stock"), of the Company for the Available Amount indicated below of
as of the date specified below.
Purchase Date
Monthly Period Dates
Initial Available Amount $10,000,000.00
Monthly Base Amount $400,000.00
Remaining Available Amount
prior to this purchase $
Remaining Monthly Base Amount
prior to this purchase $
Available Amount to be purchased $
Remaining Available Amount
after this purchase $
Remaining Monthly Base Amount
after this purchase $
Please confirm the following information
Purchase Price per share $
Fixed Purchase Price of $20.00
Low Sale Price on Date Hereof
Average of 3/15 Closing Sale Prices for _______($___), _______($___)
and _______($___).
Number of shares of Common Stock to be issued
Please issue the shares of Common Stock in the following name and to the
following address
Issue to
Authorized Signature
Name
Title
Phone #
Broker DTC Participant Code ________________
Account Number* ________________
* Note that receiving broker must initiate transaction on DWAC System.
EXHIBIT B
FORM OF COMPANY CONFIRMATION OF PURCHASE NOTICE
Reference is made to the Common Stock Purchase Agreement (the "Common
Stock Purchase Agreement") between USURF AMERICA, INC. (the "Company") and
FUSION CAPITAL FUND II, LLC dated ________. In accordance with and
pursuant to the Common Stock Purchase Agreement, the undersigned hereby
confirms and authorizes the issuance of shares of common stock, par value
$.0001 per share (the "Common Stock") of the Company, in connection with
the Purchase Notice (as defined in the Common Stock Purchase Agreement)
attached hereto. Specifically, the Company hereby confirms the following
information
Purchase Date
Monthly Period Dates
Initial Available Amount $10,000,000.00
Monthly Base Amount $400,000.00
Remaining Available Amount
prior to this purchase $
Remaining Monthly Base Amount
prior to this purchase $
Available Amount to be purchased $
Remaining Available Amount
after this purchase $
Remaining Monthly Base Amount
after this purchase $
Purchase Price per share $
Number of shares of Common
Stock to be issued
The shares of Common Stock shall be issued in the name and to the address
as set forth in the applicable Purchase Notice.
Authorized Signature
Name
Title
Phone #
Fax #
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
[Sent separately]
EXHIBIT D
FORM OF COMPANY COUNSEL OPINION
Capitalized terms used herein but not defined herein, have the meaning
set forth in the Common Stock Purchase Agreement. Based on the foregoing, and
subject to the assumptions and qualifications set forth herein, we are of
the opinion that
1. The Company is a corporation existing and in good standing under the
laws of the State of Nevada. The Company is qualified to do business as a
foreign corporation and is in good standing in the States of Louisiana.
2. The Company has the corporate power to execute and deliver, and perform
its obligations under, each Transaction Document to which it is a party.
The Company has the corporate power to conduct its business as, to the best
of our knowledge, it is now conducted, and to own and use the properties
owned and used by it.
3. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Company. The execution
and delivery of the Transaction Documents by the Company, the performance
of the obligations of the Company thereunder and the consummation by it of
the transactions contemplated therein have been duly authorized and
approved by the Company's Board of Directors and no further consent,
approval or authorization of the Company, its Board of Directors or its
stockholders is required. The Transaction Documents to which the Company
is a party have been duly executed and delivered by the Company and are the
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms except as such enforceability may be
limited by general principals of equity or applicable bankruptcy,
insolvency, liquidation or similar laws relating to, or affecting
creditor's rights and remedies.
4. The execution, delivery and performance by the Company of the
Transaction Documents, the consummation by the Company of the transactions
contemplated thereby including the offering, sale and issuance of the
Commitment Shares, the Warrants and the Purchase Shares in accordance with
the terms and conditions of the Common Stock Purchase Agreement, and
fulfillment and compliance with terms of the Transaction Documents, does
not and shall not(i)conflict with, constitute a breach of or default (or an
event which, with the giving of notice or lapse of time or both,
constitutes or could constitute a breach or a default), under (a) the
Certificate of Incorporation or the Bylaws of the Company, (b) any material
agreement, note, lease, mortgage, deed or other material instrument to
which to our knowledge the Company is a party or by which the Company or
any of its assets are bound, (ii)result in any violation of any statute,
law, rule or regulation applicable to the Company, or (iii) to our
knowledge, violate any order, writ, injunction or decree applicable to the
Company or any of its subsidiaries.
5. The issuance of the Purchase Shares and Warrant Shares pursuant to the
terms and conditions of the Transaction Documents has been duly authorized.
3,000,000 shares of Common Stock have been properly reserved for issuance
under the Common Stock Purchase Agreement. 645,000 shares of Common Stock
have been properly reserved for issuance under the Warrant Agreement. When
issued and paid for in accordance with the Common Stock Purchase Agreement,
the Purchase Shares shall be validly issued, fully paid and non-assessable,
to our knowledge, free of all taxes, liens, charges, restrictions, rights
of first refusal and preemptive rights. When issued and paid for in
accordance with the Warrant Agreement, the Warrant Shares shall be validly
issued, fully paid and non-assessable, to our knowledge, free of all taxes,
liens, charges, restrictions, rights of first refusal and preemptive
rights. To our knowledge, the execution and delivery of the Registration
Rights Agreement do not, and the performance by the Company of its
obligations thereunder shall not, give rise to any rights of any other
person for the registration under the Securities Act of any shares of
Common Stock or other securities of the Company which have not been waived.
6. As of the date hereof, the authorized capital stock of the Company
consists of (i) ___________ shares of common stock, par value $_____ per
share, of which to our knowledge ___________ shares are issued and
outstanding, and (ii) ________ shares of preferred stock, par value $_____
per share of which to our knowledge ________ shares are issued and
outstanding. Except as set forth on Schedule 3(c) of the Common Stock
Purchase Agreement, to our knowledge, there are no outstanding shares of
capital stock or other securities convertible into or exchangeable or
exercisable for shares of the capital stock of the Company.
7. Assuming the accuracy of the representations and your compliance with
the covenants made by you in the Transaction Documents, the offering, sale
and issuance of the Commitment Shares and the Warrants to you pursuant to
the Transaction Documents is exempt from registration under the 1933 Act
and the securities laws and regulations of the States of Nevada and
Louisiana.
8. Other then which has been obtained and completed prior to the date
hereof, no authorization, approval, consent, filing or other order of any
federal or state governmental body, regulatory agency, or stock exchange or
market, or any court, or, to our knowledge, any third party is required to
be obtained by the Company to enter into and perform its obligations under
the Transaction Documents or for the Company to issue and sell the Purchase
Shares and Warrant Shares as contemplated by the Transaction Documents.
9. The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act. To our knowledge, since January 1, 1999, the Company has
been in compliance with the reporting requirements of the Exchange Act
applicable to it. To our knowledge, since January 1, 1999, the Company has
not received any written notice from the Principal Market stating that the
Company has not been in compliance with any of the rules and regulations
(including the requirements for continued listing) of the Principal Market.
We further advise you that to our knowledge, except as disclosed on
Schedule 3(h) in the Common Stock Purchase Agreement, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public
board or body, any governmental agency, any stock exchange or market, or
self-regulatory organization, which has been threatened in writing or which
is currently pending against the Company, any of its subsidiaries, any
officers or directors of the Company or any of its subsidiaries or any of
the properties of the Company or any of its subsidiaries.
In addition, we have participated in the preparation of the SEC
Documents and the Registration Statement (SEC File #________) covering the sale
of the Purchase Shares, the Commitment Shares and the Warrant Shares including
the prospectus dated ____________, contained therein and in conferences
with officers and other representatives of the Company (including the
Company's independent auditors) during which the contents of the SEC
Documents, the Registration Statement and related matters were discussed
and reviewed and, although we are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the SEC Documents or the Registration Statement, on the basis
of the information that was developed in the course of the performance of
the services referred to above, considered in the light of our
understanding of the applicable law, nothing came to our attention that
caused us to believe that the SEC Documents or the Registration Statement
(other than the financial statements and schedules and the other financial
and statistical data included therein, as to which we express no belief),
as of their dates, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
EXHIBIT E
FORM OF OFFICER'S CERTIFICATE
This Officer's Certificate ("Certificate") is being delivered pursuant to
Section 7(e) of that certain Common Stock Purchase Agreement dated as of
_________, 2000 ("Common Stock Purchase Agreement"), by and between USURF
AMERICA, INC., a Nevada corporation (the "Company"), and FUSION CAPITAL
FUND II, LLC (the "Buyer"). Terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Common Stock Purchase
Agreement.
The undersigned, ___________, ______________ of the Company, hereby
certifies as follows
1. I am the _____________ of the Company and make the statements contained
in this Certificate;
2. The representations and warranties of the Company contained in the
Common Stock Purchase Agreement are true and correct as of the date hereof;
3. The Company has performed, satisfied and complied in all material
respects with covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Commencement Date.
IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
___________.
______________________
Name
Title
The undersigned as Secretary of USURF America, Inc., a Nevada corporation,
hereby certifies that ___________ is the duly elected, appointed, qualified
and acting ________ of _________ and that the signature appearing above is
his genuine signature.
___________________________________
Secretary
EXHIBIT F
FORM OF COMPANY RESOLUTIONS
WHEREAS, there has been presented to the Board of Directors of USURF
America, Inc., (the "Corporation") a draft of a Common Stock Purchase
Agreement (the "Purchase Agreement") by and among the Corporation and
Fusion Capital Fund II, LLC ("Fusion"), providing for the purchase by
Fusion of up to Ten Million Dollars ($10,000,000) of the Corporation's
common stock, par value $___ (the "Common Stock"); and
WHEREAS, after careful consideration of the Purchase Agreement, the
documents incident thereto and other factors deemed relevant by the Board
of Directors, the Board of Directors has determined that it is advisable
and in the best interests of the Corporation to engage in to transactions
contemplated by the Purchase Agreement.
Transaction Documents
RESOLVED, that the transactions described in the Purchase Agreement are
hereby approved and ____________________________________________ (the
"Authorized Officers") are severally authorized to execute and deliver the
Purchase Agreement, and any other agreements or documents contemplated
thereby (including, without limitation, a warrant agreement for the
purchase of 645,000 shares of the Company's Common Stock (the "Warrant
Agreement"), a registration rights agreement (the "Registration Rights
Agreement") providing for the sale of the shares of the Company's Common
Stock issuable in respect of the Purchase Agreement) on behalf of the
Corporation, with such amendments, changes, additions and deletions as the
Authorized Officers may deem to be appropriate and approve on behalf of,
the Corporation, such approval to be conclusively evidenced by the
signature of an Authorized Officer thereon; and
FURTHER RESOLVED, that the terms and provisions of the Warrant Agreement by
and among the Corporation and Fusion are hereby approved and the Authorized
Officers are authorized to execute and deliver the Warrant Agreement
(pursuant to the terms of the Purchase Agreement), with such amendments,
changes, additions and deletions as the Authorized Officer may deem
appropriate and approve on behalf of, an Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon; and
FURTHER RESOLVED, that the terms and provisions of the Registration Rights
Agreement by and among the Corporation and Fusion are hereby approved and
the Authorized Officers are authorized to execute and deliver the
Registration Rights Agreement (pursuant to the terms of the Purchase
Agreement), with such amendments, changes, additions and deletions as the
Authorized Officer may deem appropriate and approve on behalf of, an
Corporation, such approval to be conclusively evidenced by the signature of
an Authorized Officer thereon; and
FURTHER RESOLVED, that the terms and provisions of the Form of Transfer
Agent Instructions (the "Instructions") are hereby approved and the
Authorized Officers are authorized to execute and deliver the Instructions
(pursuant to the terms of the Purchase Agreement), with such amendments,
changes, additions and deletions as the Authorized Officers may deem
appropriate and approve on behalf of, the Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon; and
Execution of Purchase Agreement
FURTHER RESOLVED, that the Corporation be and it hereby is authorized to
execute the Purchase Agreement providing for the purchase of common stock
of the Corporation having an aggregate value of up to $10,000,000; and
Issuance of Common Stock
FURTHER RESOLVED, that the Corporation is hereby authorized to issue the
Commitment Shares (as defined in the Purchase Agreement) and that, upon
issuance of the Commitment Shares pursuant to the Purchase Agreement, the
Commitment Shares shall be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof; and
FURTHER RESOLVED, that the Corporation is hereby authorized to issue
645,000 Warrant Shares (as defined in the Purchase Agreement) and that,
upon issuance of the Warrant Shares pursuant to the Warrant Agreement, the
Warrant Shares shall be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof; and
FURTHER RESOLVED, that the Corporation is hereby authorized to issue shares
of Common Stock upon the purchase of shares of Common Stock up to the
available amount under the Purchase Agreement (the "Purchase Shares") in
accordance with the terms of the Purchase Agreement and that, upon issuance
of the Purchase Shares pursuant to the Purchase Agreement, the Purchase
Shares will be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof; and
FURTHER RESOLVED, that the Corporation shall initially reserve 3,000,000
shares of Common Stock for issuance as Purchase Shares under the Purchase
Agreement.
FURTHER RESOLVED, that the Corporation shall initially reserve 645,000
shares of Common Stock for issuance as Warrant Shares under the Warrant
Agreement.
Registration Statement
The management of the Corporation has prepared an initial draft of a
Registration Statement on Form ___ (the "Registration Statement") in order
to register the sale of the Purchase Shares, the Commitment Shares and the
warrant Shares (collectively, the "Shares"); and
The Board of Directors has determined to approve the Registration Statement
and to authorize the appropriate officers of the Corporation to take all
such actions as they may deem appropriate to effect the offering; and
NOW, THEREFORE, BE IT RESOLVED, that the officers and directors of the
Corporation be, and each of them hereby is, authorized and directed, with
the assistance of counsel and accountants for the Corporation, to prepare,
execute and file with the Securities and Exchange Commission (the
"Commission") the Registration Statement, which Registration Statement
shall be filed substantially in the form presented to the Board of
Directors, with such changes therein as the Chief Executive Officer of the
Corporation or any Vice President of the Corporation shall deem desirable
and in the best interest of the Corporation and its shareholders (such
officer's execution thereof including such changes shall be deemed to
evidence conclusively such determination); and
FURTHER RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized and directed, with the assistance of counsel and
accountants for the Corporation, to prepare, execute and file with the
Commission all amendments, including post-effective amendments, and
supplements to the Registration Statement, and all certificates, exhibits,
schedules, documents and other instruments relating to the Registration
Statement, as such officers shall deem necessary or appropriate (such
officer's execution and filing thereof shall be deemed to evidence
conclusively such determination); and
FURTHER RESOLVED, that the execution of the Registration Statement and of
any amendments and supplements thereto by the officers and directors of the
Corporation be, and the same hereby is, specifically authorized either
personally or by the Authorized Officers as such officer's or director's
true and lawful attorneys-in-fact and agents; and
FURTHER RESOLVED, that the Authorized Officers are hereby is designated as
"Agent for Service" of the Corporation in connection with the Registration
Statement and the filing thereof with the Commission, and the Authorized
Officers hereby are, authorized to receive communications and notices from
the Commission with respect to the Registration Statement; and
FURTHER RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized and directed to pay all fees, costs and expenses that
may be incurred by the Corporation in connection with the Registration
Statement; and
FURTHER RESOLVED, that it is desirable and in the best interest of the
Corporation that the Shares be qualified or registered for sale in various
states; that the officers of the Corporation be, and each of them hereby
is, authorized to determine the states in which appropriate action shall be
taken to qualify or register for sale all or such part of the Shares as
they may deem advisable; that said officers be, and each of them hereby is,
authorized to perform on behalf of the Corporation any and all such acts as
they may deem necessary or advisable in order to comply with the applicable
laws of any such states, and in connection therewith to execute and file
all requisite papers and documents, including, but not limited to,
applications, reports, surety bonds, irrevocable consents, appointments of
attorneys for service of process and resolutions; and the execution by such
officers of any such paper or document or the doing by them of any act in
connection with the foregoing matters shall conclusively establish their
authority therefor from the Corporation and the approval and ratification
by the Corporation of the papers and documents so executed and the actions
so taken; and
FURTHER RESOLVED, that if, in any state where the securities to be
registered or qualified for sale to the public, or where the Corporation is
to be registered in connection with the public offering of the Shares, a
prescribed form of resolution or resolutions is required to be adopted by
the Board of Directors, each such resolution shall be deemed to have been
and hereby is adopted, and the Secretary is hereby authorized to certify
the adoption of all such resolutions as though such resolutions were now
presented to and adopted by the Board of Directors; and
FURTHER RESOLVED, that the officers of the Corporation with the
assistance of counsel be, and each of them hereby is, authorized and
directed to take all necessary steps and do all other things necessary and
appropriate to effect the listing of the Shares on the American Stock
Exchange.
Approval of Actions
RESOLVED, that, without limiting the foregoing, the Authorized Officers
are, and each of them hereby is, authorized and directed to proceed on
behalf of the Corporation and to take all such steps as deemed necessary or
appropriate, with the advice and assistance of counsel, to cause the
Corporation to consummate the agreements referred to herein and to perform
its obligations under such agreements; and
RESOLVED, that the Authorized Officers be, and each of them hereby is,
authorized, empowered and directed on behalf of and in the name of the
Corporation, to take or cause to be taken all such further actions and to
execute and deliver or cause to be executed and delivered all such further
agreements, amendments, documents, certificates, reports, schedules,
applications, notices, letters and undertakings and to incur and pay all
such fees and expenses as in their judgment shall be necessary, proper or
desirable to carry into effect the purpose and intent of any and all of the
foregoing resolutions, and that all actions heretofore taken by any officer
or director of the Corporation in connection with the transactions
contemplated by the agreements described herein are hereby approved,
ratified and confirmed in all respects.
EXHIBIT G
FORM OF TRANSFER AGENT INSTRUCTIONS
[Commencement Date]
[TRANSFER AGENT]
[Address]
Attn __________________
Ladies and Gentlemen
Reference is made to that certain Common Stock Purchase Agreement (the
"Common Stock Purchase Agreement"), dated as of ____________, 2000, by and
between USURF AMERCIA, INC., a Nevada corporation (the "Company"), and
FUSION CAPITAL FUND II, LLC (together with its assigns, the "Buyer"),
pursuant to which the Company may sell to the Buyer up to Ten Million
Dollars ($10,000,000) of the Company's common stock, par value $___ per
share (the "Common Stock"). The shares of Common Stock to be purchased
thereunder are referred to herein as, the "Purchase Shares." In addition,
the Company has issued to the Buyer 645,000 common stock purchase warrants
(the "Warrants") granting the Buyer the right to purchase from the Company
645,000 shares of Common Stock (the "Warrant Shares"). This letter shall
serve as our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time) to issue the
Purchase Shares to the Buyer from time to time upon surrender to you of a
properly completed and duly executed Purchase Notice, in the form attached
hereto as Exhibit I, and a Company Confirmation of Purchase Notice, in the
form attached hereto as Exhibit II. This letter shall also serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue the Warrant Shares to
the Buyer from time to time upon surrender to you of a properly completed
and duly executed Warrant Exercise Notice, in the form attached hereto as
Exhibit IV, and a Company Confirmation of Warrant Exercise Notice, in the
form attached hereto as Exhibit V.
Specifically in regard to the issuance of Purchase Shares, upon receipt by
the Company of a copy of a Purchase Notice, the Company shall as soon as
practicable, but in no event later than one (1) Trading Day (as defined
below) after receipt of such Purchase Notice, send, via facsimile, a
Company Confirmation of Purchase Notice to the Buyer and to you, which
confirmation shall constitute an irrevocable instruction to you to process
such Purchase Notice in accordance with the terms of these instructions and
the Company Confirmation of Purchase Notice. Upon your receipt of a copy
of the executed Purchase Notice and a copy of the applicable Company
Confirmation of Purchase Notice, you shall use your best efforts to, within
one (1) Trading Day following the date of receipt of the Company
Confirmation of Purchase Notice, (A) issue and surrender to a common
carrier for overnight delivery to the address as specified in the Purchase
Notice, a certificate, registered in the name of the Buyer or its designee,
for the number of shares of Common Stock to which the Buyer shall be
entitled as set forth in the Company Confirmation of Purchase Notice or (B)
provided that (1) a registration statement is available for the sale of the
Purchase Shares at the time of issuance of the respective Purchase Shares
and (2) you are participating in The Depository Trust Company ("DTC") Fast
Automated Securities Transfer Program, upon the request of the Buyer,
credit such aggregate number of shares of Common Stock to which the Buyer
shall be entitled to the Buyer's or its designee's balance account with DTC
through its Deposit Withdrawal At Custodian ("DWAC") system provided the
Buyer causes its bank or broker to initiate the DWAC transaction.
("Trading Day" shall mean any day on which the American Stock Exchange is
open for customary trading.)
Specifically in regard to Warrant Shares, upon receipt by the Company of a
copy of a Warrant Exercise Notice, the Company shall as soon as
practicable, but in no event later than one (1) Trading Day after receipt
of such Warrant Exercise Notice, send, via facsimile, a Company
Confirmation of Warrant Exercise Notice to the Buyer and to you, which
confirmation shall constitute an irrevocable instruction to you to process
such Warrant Exercise Notice in accordance with the terms of these
instructions and the Company Confirmation of Warrant Exercise Notice. Upon
your receipt of a copy of the executed Warrant Exercise Notice and a copy
of the applicable Company Confirmation of Warrant Exercise Notice, you
shall use your best efforts to, within one (1) Trading Day following the
date of receipt of the Company Confirmation of Warrant Exercise Notice, (A)
issue and surrender to a common carrier for overnight delivery to the
address as specified in the Purchase Notice, a certificate, registered in
the name of the Buyer or its designee, for the number of shares of Common
Stock to which the Buyer shall be entitled as set forth in the Company
Confirmation of Purchase Notice or (B) provided that (1) a registration
statement is available for the sale of the Warrant Shares at the time of
issuance of the respective Warrant Shares and (2) you are participating in
The DTC Fast Automated Securities Transfer Program, upon the request of the
Buyer, credit such aggregate number of shares of Common Stock to which the
Buyer shall be entitled to the Buyer's or its designee's balance account
with DTC through its DWAC system provided the Buyer causes its bank or
broker to initiate the DWAC transaction.
The Company hereby confirms to you and the Buyer that certificates
representing the Purchase Shares or the Warrant Shares shall not bear any
legend restricting transfer of the Purchase Shares thereby and should not
be subject to any stop-transfer restrictions and shall otherwise be freely
transferable on the books and records of the Company provided that the
Company counsel delivers the Notice of Effectiveness set forth in Exhibit
III attached hereto, and that if the Purchase Shares or Warrant Shares are
not registered for sale under the Securities Act of 1933, as amended, then
the certificates for the Purchase Shares or Warrant Shares shall bear the
following legend
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT."
The Company hereby confirms to you and the Buyer that no instructions other
than as contemplated herein will be given to you by the Company with
respect to the Purchase Shares or Warrant Shares.
Please be advised that the Buyer is relying upon this letter as an
inducement to purchase shares of Common Stock under the Common Stock
Purchase Agreement and, accordingly, the Buyer is a third party beneficiary
to these instructions.
Should you have any questions concerning this matter, please contact me at
(___) ___-____.
Very truly yours,
USURF AMERCIA, INC.
By__________________________
Name _______________________
Its _______________________
ACKNOWLEDGED AND AGREED
[TRANSFER AGENT]
By
Name
Title
Date
cc FUSION CAPITAL FUND II, LLC
EXHIBIT I
TO TRANSFER AGENT INSTRUCTIONS
FORM OF PURCHASE NOTICE
See attached.
[Attach Exhibit A to Common Stock Purchase Agreement.]
EXHIBIT II
TO TRANSFER AGENT INSTRUCTIONS
FORM OF COMPANY CONFIRMATION OF PURCHASE NOTICE
See attached.
[Attach Exhibit B to Common Stock Purchase Agreement.]
EXHIBIT III
TO TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Date]
[TRANSFER AGENT]
[Address]
Attn __________________
Ladies and Gentlemen
We are counsel to USURF AMERICA, INC., a Nevada corporation (the
"Company"), and have represented the Company in connection with that
certain Common Stock Purchase Agreement (the "Common Stock Purchase
Agreement") entered into by and among the Company and FUSION CAPITAL FUND
II, LLC (the "Buyer") pursuant to which (i) the Company may sell to the
Buyer up to ___________ Dollars ($___________) of the Company's common
stock, par value $____ per share (the "Common Stock" and the shares of
Common Stock to be purchased thereunder are referred to herein as, the
"Purchase Shares"), and (ii) the Company has agreed to issue to the Buyer
_______ shares of Common Stock (the "Commitment Shares"). Pursuant to the
Common Stock Purchase Agreement, the Company also has entered into a
Warrant Agreement with the Buyer (the "Warrant Agreement") pursuant to
which the Company has issued to the Buyer 645,000 common stock purchase
warrants (the "Warrants") granting the Buyer the right to purchase from the
Company 645,000 shares of Common Stock (the "Warrant Shares"). Pursuant to
the Common Stock Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Buyer (the "Registration Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the Purchase Shares, the Commitment Shares and the Warrant Shares
under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Common Stock Purchase
Agreement and the Registration Rights Agreement, on _____________, the
Company filed a Registration Statement (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the sale of the Purchase Shares and the Commitment Shares.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and the Purchase Shares, the Commitment Shares and the Warrant Shares are
available for sale under the 1933 Act pursuant to the Registration Statement.
The Buyer has confirmed it shall comply with all securities laws and
regulations applicable to it including applicable prospectus delivery
requirements upon sale of the Commitment Shares, the Warrant Shares or the
Purchase Shares.
Very truly yours,
[Company Counsel]
By____________________
cc FUSION CAPITAL FUND II, LLC
EXHIBIT IV
TO TRANSFER AGENT INSTRUCTIONS
FORM OF WARRANT EXERCISE NOTICE
See attached.
[Attach Exhibit 1 to Warrant Agreement.]
EXHIBIT V
TO TRANSFER AGENT INSTRUCTIONS
FORM OF COMPANY CONFIRMATION WARRANT EXERCISE NOTICE
See attached.
[Attach Exhibit 2 to Warrant Agreement.]
EXHIBIT H
FORM OF SECRETARY'S CERTIFICATE
This Secretary's Certificate ("Certificate") is being delivered pursuant
to Section 7(k) of that certain Common Stock Purchase Agreement dated as of
__________, 2000 ("Common Stock Purchase Agreement"), by and between USURF
AMERICA, INC., a Nevada corporation (the "Company") and FUSION CAPITAL FUND
II, LLC (the "Buyer"), pursuant to which the Company may sell to the Buyer
up to Ten Million Dollars ($10,000,000) of the Company's Common Stock, par
value $.0001 per share (the "Common Stock"). Terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Common
Stock Purchase Agreement.
The undersigned, ____________, Secretary of the Company, hereby certifies
as follows
1. I am the Secretary of the Company and make the statements contained in
this Secretary's Certificate.
2. Attached hereto as Exhibit A and Exhibit B are true, correct and
complete copies of the Company's bylaws ("Bylaws") and Certificate of
Incorporation ("Articles"), in each case, as amended through the date
hereof, and no action has been taken by the Company, its directors,
officers or shareholders, in contemplation of the filing of any further
amendment relating to or affecting the Bylaws or Articles.
3. Attached hereto as Exhibit C are true, correct and complete copies of
the resolutions duly adopted by the Board of Directors of the Company on
_____________, at which a quorum was present and acting throughout. Such
resolutions have not been amended, modified or rescinded and remain in full
force and effect and such resolutions are the only resolutions adopted by
the Company's Board of Directors, or any committee thereof, or the
shareholders of the Company relating to or affecting (i) the entering into
and performance of the Common Stock Purchase Agreement, or the issuance,
offering and sale of the Purchase Shares and the Commitment Shares and (ii)
and the performance of the Company of its obligation under the Transaction
Documents as contemplated therein.
4. As of the date hereof, the authorized, issued and reserved capital stock
of the Company is as set forth on Exhibit D hereto.
IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
____________.
____________.
_________________________
Secretary
The undersigned as ___________ of __________, a ________ corporation,
hereby certifies that ____________ is the duly elected, appointed,
qualified and acting Secretary of _________, and that the signature
appearing above is his genuine signature.
________________________________
