SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/x/ Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1999
/ / Transition Report Under Section 13 or 15(d) of
The Exchange Act For the Transition Period from ____________ to ____________
Commission File Number 000-____________
ACCESS POWER, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
FLORIDA 59-3420985
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10033 SAWGRASS DR., W, PONTE VEDRA BEACH, FL 32082
(Address of principal executive office) (Zip Code)
Issuer's telephone number, including area code: (904) 273-2980
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes / X / No / /
At October 20, 1999, there were issued and outstanding 28,741,358
shares of Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes / / No / X /
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION --------------------- Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed and omitted
pursuant to such rules and regulations, although management believes the
disclosures are adequate to make the information presented not misleading. These
interim financial statements should be read in conjunction with the Company's
annual report and most recent financial statements included in its report on
Form 10-KSB for the year ended December 31, 1998 filed with the Securities and
Exchange Commission. The interim financial information included herein is
unaudited; however, such information reflects all the adjustments (consisting
solely of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results of operations and cash flows for the
interim periods. The results of operations for the nine months ended September
30, 1999 are not necessarily indicative of the results to be expected for the
full year.
2
<PAGE>
ACCESS POWER, INC.
(A Development Stage Company)
Balance Sheets
As of September 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
Assets 30-Sep December 31,
------ 1999 1998
---- ----
(unaudited)
Current assets:
<S> <C> <C>
Cash $ 885,191 $ 33,156
Accounts receivable 97,022 29,145
Notes receivable 458,200 30,791
Prepaid expenses 151,138 --
Inventory 18,815 21,770
----------- -----------
Total current assets 1,610,366 114,862
----------- -----------
Property and equipment, net 922,174 1,131,471
Other assets 13,000 16,000
----------- -----------
Total assets $ 2,545,540 $ 1,262,333
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 1,760,364 $ 1,373,978
Unearned revenue 21,490 --
Notes payable 62,500 120,136
----------- -----------
Total current liabilities 1,844,354 1,494,114
----------- -----------
6% Convertible Debenture 1,000,000 --
----------- -----------
Stockholders' equity:
Common stock, $.001 par value, authorized 40,000,000 shares,
issued and outstanding 27,451,358 and 12,325,788 shares
in 1999 and 1998 27,452 12,326
Preferred stock, $.001 par value, authorized 10,000,000 shares,
issued and outstanding 3,952 and 1,050 shares in 1999 and 1998 4 1
Additional paid in capital 3,898,025 2,252,971
Deficit accumulated during the development stage (4,224,295) (2,497,079)
----------- -----------
Total stockholders' equity (298,814) (231,781)
----------- -----------
=========== ===========
Total liabilities and stockholders' equity $ 2,545,540 $ 1,262,333
=========== ===========
</TABLE>
3
<PAGE>
ACCESS POWER, INC.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the nine months ended September 30, 1999
and 1998 and the cumulative period from
October 10, 1996 (date of inception)
through September 30, 1999
For the period
October 10, 1996
1999 1998 through
(unaudited) September 30, 1999
----------- --------------- ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,727,216) $(1,594,748) $(4,224,295)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 244,229 210,287 593,048
Loss on disposal of property and equipment 6,880 33,341
Stock issued for services 234,983 50,625 317,049
Stock issued for interest 14,000 114,375 128,375
Change in operating assets and liabilities:
Accounts receivable (67,877) (20,147) (97,022)
Accounts payable and accrued expenses 386,386 1,224,316 1,760,364
Deferred Revenue 21,490 -- 21,490
Other assets (151,138) -- (174,304)
Inventory 2,955 (30,000) (18,815)
----------- ----------- -----------
Net cash used in operating activities (1,035,308) (45,292) (1,660,769)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of property and equipment 10,050 -- 50,320
Purchase of property and equipment (48,862) (1,103,891) (1,588,717)
Note receivable (427,409) (999) (458,200)
----------- ----------- -----------
Net cash used in investing activities (466,221) (1,104,890) (1,996,597)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of stock 1,411,200 1,025,000 3,480,057
Proceeds from issuance of notes payable 1,072,804 300,000 1,202,829
Principal payments on notes payable (130,440) (200,000) (140,329)
----------- ----------- -----------
Net cash provided by financing activities 2,353,564 1,125,000 4,542,557
----------- ----------- -----------
Net change in cash 852,035 (25,182) 885,191
Cash, at beginning of period 33,156 54,086 --
----------- ----------- -----------
Cash at end of period $ 885,191 $ 28,904 $ 885,191
=========== =========== ===========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ACCESS POWER, INC.
(A Development Stage Company)
Statements of Operations
For the three months and six months ended September 30, 1999 and 1998 and the cumulative period
from October 10, 1996 (date of inception) through September 30, 1999
(unaudited)
For the period
October 10, 1996
Three months ended September 3, Nine months ended September 30, through
1999 1998 1999 1998 September 30, 1999
------------------------------- ------------------------------- ------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Software/hardware sales $ 1,050 $ - $ 9,450 $ 212,092 $ 223,881
Telcommunication services 50,599 29,305 69,999 42,089 123,518
------------ ------------ ------------ ------------ ------------
Total revenue 51,649 29,305 79,449 254,181 347,399
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 315 -- 2,955 152,920 164,605
Product development and marketing 205,444 338,659 851,037 710,533 1,620,193
General and administrative 391,859 350,665 938,142 868,174 2,648,115
------------ ------------ ------------ ------------ ------------
Total costs and expenses 597,618 689,324 1,792,134 1,731,627 4,432,913
------------ ------------ ------------ ------------ ------------
Other income (expense):
Other income (expense) (318) (0) (7,198) 407 1,977
Interest expense (2,833) (3,333) (7,333) (117,708) (140,758)
------------ ------------ ------------ ------------ ------------
Total other income (expense) (3,151) (3,334) (14,531) (117,302) (138,781)
------------ ------------ ------------ ------------ ------------
Net loss $ (549,120) $ (663,353) $ (1,727,216) $ (1,594,748) $ (4,224,295)
============ ============ ============ ============ ============
Net loss per share $ (0.02) $ (0.06) $ (0.07) $ (0.14) $ (0.28)
============ ============ ============ ============ ============
Weighted average number of shares 31,386,691 11,759,000 24,126,030 11,619,463 15,137,504
============ ============ ============ ============ ============
</TABLE>
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS APPEARING
ELSEWHERE IN THIS REPORT.
PLAN OF OPERATION
Overview
- --------
Access Power, Inc. was formed in 1996 to offer Internet-based
communications products and services in the U.S. and international markets. The
Company has created a network of Internet telephony gateway servers and IP and
PSTN (Public Switched Telephone Network) circuits to provide voice and
multimedia communications services, more commonly referred to as Internet
Protocol telephony or IP telephony.
From its inception the Company has devoted most of its efforts to
technical analysis, development, procurement, implementation and testing, and
the establishment of the corporate and technical policies and procedures
necessary to support its business requirements. The Company is a development
stage operation.
Access Power's IP telephony gateway network allows the Company to offer
competitive call rates while providing premium communications features. Access
Power products and services are based on Personal Computer ("PC")-to-PC,
PC-to-Phone, and Phone-to-Phone communications. Customers anywhere in the world
can use their PC and software from the Company to place unlimited calls to
telephones anywhere in the United States, Canada and Puerto Rico for $10 per
month. In addition, customers in the United States can make unlimited calls with
their telephone to another telephone anywhere in the continental United States
for $49 per month and call anywhere in Alaska, Hawaii, Canada, and the United
Kingdom for 7 cents per minute. Calls to over fifty other countries are 29 cents
per minute.
6
<PAGE>
The Company is a reseller of third party PC telephone software called
Internet Phone, and it is having a software product called "e-button" developed
for marketing to companies with Web sites. The e-button is an icon residing on a
Web site that connects a consumer browsing a Web page to a company's call
center. This technology allows corporate customers to voice-activate their Web
site, connecting consumers directly with sales departments, customer service or
technical support.
While in its start-up and current development stages the Company tested
and preliminarily introduced certain products and services new to both the
Company and the communications industry. To date, the Company has not realized
revenues from sales of any products or services in amounts necessary to support
all of its cash operating needs.
Expansion Plans
- ---------------
The Company believes it must expand its gateway network capacity and
its customer base to achieve profitability.
The Company intends to expand its network and customer base
internationally through affiliates and other business relationships, such as the
relationship defined by the Lycos-Bertelsmann agreement. Such expansion will
increase the Company's revenues without causing the Company to incur significant
capital expenditures.
Software Sales
- --------------
To date, the Company has realized only small revenues from the resale
of software to its customers, and it does not expect such sales to become a
significant source of profit in the future. During the next year, however, the
Company does intend to begin marketing the e-button software, and it expects to
realize a fair amount of revenues from those sales.
Marketing
- ---------
The Company has recently begun its effort to market its products and
services. The Company has implemented a public relations and marketing campaign
along with establishing arrangements with web-based communications portals.
Public relations and certain marketing is expected to cost $50,000 and stock
with a market value of approximately $600,000.
Raising Capital
- ---------------
The Company has recently sold 6% convertible debentures in the face
amount of $1,000,000. In addition, the investor purchased a warrant to purchase
an additional $1,000,000 of debentures on the same terms. The Company is of the
opinion that if the warrant is exercised then the aggregate proceeds would be
sufficient to fund the Company for the next twelve months while it deploys its
domestic and international networks.
7
<PAGE>
PERIOD ENDED SEPTEMBER 30, 1999 COMPARED TO PERIOD ENDED SEPTEMBER 30, 1998
REVENUES AND COSTS OF REVENUES. The Company realized no revenue from
the sale of hardware and software in the three months ended September 30, 1998
compared to software sales of $1,050 in the three months ended September 30,
1999 and $9,450 during the nine months ended September 30, 1999 compared to
$212,092 during the previous year. The revenue generated from sale of services
increased $21,294 from $29,305 during the three months ended September 30, 1998
to $50,599 during the three months ended September 30, 1999. The revenue
generated from sale of services increased $ 27,910 from $42,089 during the nine
months ended September 30, 1998 to $69,999 during the nine months ended
September 30, 1999.
EXPENSES. Product development and marketing expenses were $205,444 for
the three months ended September 30, 1999; a decrease of $133,215, or over 39%
of such expenses, from the three months ended September 30, 1998. Depreciation
and amortization expense decreased $39,100, professional fees decreased $30,000,
travel decreased $8,245 and advertising decreased $7,671. For the nine months
ended September 30, 1999 product development and marketing expenses increased
$141,504 or almost 20%. Professional fees for public relations accounted for
$155,000 of this increase. General and administrative expenses increased
$41,194, or 12%, from $350,665 for the three months ended September 30, 1998.
Legal and professional fees increased $20,000. Finder's fees increased $100,000.
Payroll expense decreased $86,082. During the nine months ended September 30,
1999 general and administrative expenses increased $68,968 or 8% to $938,142 of
which finder's fees increased $81,444.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations through
the proceeds from the issuance of equity securities and loans from stockholders
and others. To date, the Company has raised approximately $2,782,700 from the
sale of common stock and preferred stock, and it has borrowed approximately
$1,400,000 from investors and stockholders. Funds from these sources have been
used as working capital to fund the build-out of the Company's network and for
internal operations, including the purchases of capital equipment.
The Company generated negative cash flow from operating activities for
the period from inception (October 10, 1996) through September 30, 1999. The
Company realized negative cash from operating activities for the nine months
ended September 30, 1999 of ($1,035,308) compared to negative cash from
operating activities of ($45,292) primarily due to faster payment being required
by vendors than previously. Investing activities for the period from inception
through September 30, 1999 consisted primarily of equipment purchases to build
out the initial network. Investing activities in the nine months ended September
30, 1999 were $466,221 compared to $1,104,890 during the nine months ended
September 30, 1998.
The timing and amount of the Company's capital requirements will depend
on a number of factors, including demand for the Company's products and services
and the availability of opportunities for international expansion through
affiliations and other business relationships.
8
<PAGE>
The Company expects to invest approximately $1,000,000 over the next
twelve months in capital equipment and software for network expansion. The
Company is performing ongoing cost benefit analysis to ensure that any existing
under utilized equipment is made available for redeployment to prolong the
necessity to acquire new equipment.
The Company raised $75,000 in January 1999 from the sale of 75 shares
of Series A Preferred Stock for $1,000 per share.
The Company received $150,000 and issued 1,500,000 shares of common
stock to an investor in March 1999.
The Company issued 512,000 shares of common stock in exchange for a
debt repayment and the interest due thereon in April 1999.
The Company issued 1,295,000 shares of common stock upon the exercise
of employee stock options for $632,700.
The Company issued $1,000,000 of 6% convertible debentures in September
1999.
The Company has taken steps to reduce the monthly negative cash flow
("burn rate") and lessen the impact of the negative working capital position.
The main step has been the reduction of payroll expenditures, by executives
agreeing to defer pay until further financing is received. The Company's
relations with its current vendors are positive and include a strong credit
history resulting in suppliers and vendors assisting the Company in reducing
short term costs and extending payments. Burn rate reduction is also being
achieved with the suspension of certain general activities and expenses
including but not limited to travel, training and public relations. While the
Company believes that its cash used in operating activities will increase over
the next year, near term cash flow reductions are being considered particularly
in the main expense items of salaries and network management.
The Company's financing activities for the nine months ended September
30, 1999 provided a net total of $2,353,564. Cash at the end of that period was
$885,191. As of October 25, 1999, the Company had cash of $395,000 and working
capital of ($423,800). The Company is currently expending approximately $125,000
per month, which amount includes monthly co-location costs or network
infrastructure, systems maintenance and development, payments for equipment and
general and administrative costs.
The timing and amount of the Company's capital requirements will depend
on a number of factors, including demand for the Company's products and services
and the availability of opportunities for international expansion through
business relationships.
9
<PAGE>
YEAR 2000
Since its inception and as a development stage company the Company has
implemented solutions to the year 2000 problem as it has built its systems
solutions and developed its policies and procedures for both technical and
administrative purposes.
The Company believes it is in a high state of readiness regarding year
2000 and is at minimal risk. Costs associated with year 2000 solutions are
incorporated in all the Company's computer administrative information systems
and technical development.
As standard operating procedure the Company inquires as to the
readiness of any customers and suppliers in handling potential year 2000
problems.
The Company does not foresee substantial direct or indirect costs
associated with its implementation or any affiliates implementation of year 2000
solutions.
There are no assurances that the Company and all of its key suppliers,
customers or third parties upon which it relies will completely address and
solve the potential problem and by not doing so could result in an adverse
material effect on the company, its financial condition or results on
operations.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in the section captioned Management's Discussion and
Analysis of Financial Condition and Results of Operations which are not
historical are "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements represent the
Company's present expectations or beliefs concerning future events. The Company
cautions that such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, the
uncertainty as to the Company's ability to obtain financing on acceptable terms
to finance the Company's operations and growth strategy, acceptance of the
Company's technology and services in the market place, telecommunications
industry trends towards solutions not addressed by the Company's business,
increasing competition in the information technology services market, the
ability to hire, train and retain sufficient qualified personnel, and the
ability to develop and implement operational and financial systems to manage the
Company's growth.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In September 1999 the Company issued $1,000,000 of 6% convertible
debentures to Bamboo Investors, LLC, an investment fund managed by WEC Asset
Management, LLC, as well as a warrant to purchase 200,000 shares of common stock
and a special warrant to purchase an additional $1,000,000 of 6% convertible
debentures coupled with a warrant to purchase 200,000 shares of common stock.
The Company claims an exemption from registration under Section 4(2) of the Act
for this offer and sale. The securities were offered and sold to one investor
who the Company believed was an accredited investor. The investor agreed to
acquire the securities for investment and not with a view to their distribution.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits Filed With This Report
(a) 3.1 Amended Articles of Incorporation of Access Power,
Inc.
4.1 6% Convertible Debenture due September 30, 2001
4.2 Warrant to purchase common stock, par value $.001 per
share, of Access Power, Inc.
10.1 Retainer Agreement dated September 23, 1999, among
Access Power, Inc., Tatum CFO Partners, LLP and
Howard Kaskel
10.2 Securities Purchase Agreement dated as of September
30, 1999, among Access Power, Inc., certain
stockholders of Access Power, Inc. named therein and
Bamboo Investors, LLC
10.3 Warrant to purchase 6% Convertible Debentures and
common stock warrants of Access Power, Inc.
10.4 Registration Rights Agreement, dated as of September
30, 1999, by and among Access Power, Inc. and Bamboo
Investors LLC
10.5 Share Exchange Agreement dated as of September 30,
1999 between Access Power, Inc. and each of Glenn
Smith, and schedule of additional agreements
10.6 Web services agreement as of August 6, 1999 between
Access Power, Inc. and Lycos-Bertelsmann GmbH*
10.7 Consulting Agreement dated as of October 4, 1999
between Access Power, Inc. and Northstar Advertising,
Inc.
27 Financial Data Schedule.
------------------
*Certain portions of this exhibit have been omitted pursuant to a
request for confidential treatment.
(b) No Reports on Form 8-K were filed during this period.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ACCESS POWER, INC.
By: /S/ GLENN A. SMITH Date: October 29, 1999
----------------------------------------
Glenn A. Smith
President
/S/ HOWARD L. KASKEL Date: October 29, 1999
- ------------------------------------
Howard L. Kaskel
Chief Financial Officer
(principal financial and accounting officer)
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
3.1 Amended Articles of Incorporation of Access Power,
Inc.
4.1 6% Convertible Debenture due September 30, 2001
4.2 Warrant to purchase common stock, par value $.001 per
share, of Access Power, Inc.
10.1 Retainer Agreement dated September 23, 1999, among
Access Power, Inc., Tatum CFO Partners, LLP and
Howard Kaskel
10.2 Securities Purchase Agreement dated as of September
30, 1999, among Access Power, Inc., certain
stockholders of Access Power, Inc. named therein and
Bamboo Investors, LLC
10.3 Warrant to purchase 6% Convertible Debentures and
common stock warrants of Access Power, Inc.
10.4 Registration Rights Agreement, dated as of September
30, 1999, by and among Access Power, Inc. and Bamboo
Investors LLC
10.5 Share Exchange Agreement dated as of September 30,
1999 between Access Power, Inc. and each of Glenn
Smith, and schedule of additional agreements
10.6 Web services agreement as of August 6, 1999 between
Access Power, Inc. and Lycos-Bertelsmann GmbH*
10.7 Consulting Agreement dated as of October 4, 1999
between Access Power, Inc. and Northstar Advertising,
Inc.
27 Financial Data Schedule.
ARTICLES OF INCORPORATION
OF
ACCESS POWER, INC.
The undersigned incorporator hereby forms a corporation under
Chapter 607 of the laws of the State of Florida.
ARTICLE I. NAME
----------------
The name of the corporation shall be:
ACCESS POWER, INC.
The address of the principal office of this corporation shall be 61
South Roscoe Road, Ponte Vedra Beach, Florida 32082, and the mailing
address of the corporation shall be the same.
ARTICLE II. NATURE OF BUSINESS
-------------------------------
This corporation may engage or transact in any or all lawful
activities or business permitted under the laws of the United States,
the State of Florida or any other state, country, territory or nation.
ARTICLE III. CAPITAL STOCK
---------------------------
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is 10,000,000 shares of
common stock having no par value per share.
ARTICLE IV. REGISTERED AGENT
-----------------------------
The street address of the initial registered office of the
corporation shall be 1201 Hays Street, Tallahassee, Florida 32301, and
the name of the initial registered agent of the corporation at that
address is Corporation Service Company.
ARTICLE V. TERM OF EXISTING
----------------------------
This corporation is to exist perpetually.
2
<PAGE>
ARTICLE VI. DIRECTORS
---------------------
All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the corporation managed under the
direction of its Board of Directors, subject to any limitation set
forth in these Articles of Incorporation. This corporation shall have
two Directors, initially. The names and addresses of the initial
members of the Board of Directors are:
Glenn A. Smith 61 South Roscoe Road
Ponte Vedra Beach, Florida
32082
Michael L. Pitts 108 Nautilus Lane
Ponte Vedra Beach, Florida
32082
ARTICLE VII. INCORPORATOR
--------------------------
The name and street address of the incorporator to these Articles
of Incorporation:
Corporate Agents, Inc.
1201 Hays Street
Tallahassee, Florida 32301
The undersigned incorporator has executed these Articles of
Incorporation on October 10, 1996.
_______________________________
Incorporator
It's Agent, Deborah D. Skipper
3
<PAGE>
ACCEPTANCE OF REGISTERED AGENT DESIGNATED
-----------------------------------------
IN ARTICLES OF INCORPORATION
----------------------------
Corporation Service Company, a Delaware corporation authorized to
transact business in this State, having a business office identical
with the registered office of the corporation named above, and having
been designated as the Registered Agent in the above and foregoing
Articles, is familiar with and accepts the obligations of the position
on Registered Agent under Section 607.0505, Florida Statutes.
By: __________________________________
It's Agent, Deborah D. Skipper
Authorized Service Representative
Corporation Service Company
4
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ACCESS POWER, INC.
Article III of the articles of incorporation of ACCESS POWER,
INC. was amended by the corporation's board of directors on May 23,
1997. The corporation is filing these articles of amendment to
articles of incorporation pursuant to F.S. 607.06J2.
1. The name of the corporation is ACCESS POWER, INC.
2. Article III of the articles of incorporation of ACCESS
POWER, INC. was amended as follows:
ARTICLE III. CAPITALIZATION
-----------------------------
The total number of shares of capital stock which the Corporation
has the authority to issue is fifty million (50,0000,000). The total
number of shares of common stock which the Corporation is authorized
to issue is forty million (40,000,000) and the par value of each share
of such common stock is one-tenth of one cent ($.001) for an aggregate
par value of forty thousand ($40,000). The total number of shares of
preferred stock which the Corporation is authorized to issue is ten
million (10,000,000) and the par value of each share of such preferred
stock is one-tenth of one cent ($.001) for an aggregate par value of
ten thousand dollars ($10,000). The voting powers, designations,
preferences and relative, participating, optional or other rights, if
any, and the qualifications, limitations or restrictions, if any, of
the preferred stock, in ore or more series, shall be fixed by one or
more resolutions providing for the issuance of such stock adopted by
the Corporations' board of directors (the "Board of Directors"), in
accordance with the provisions of the General Corporation Law of the
State of Florida and the Board of Directors is expressly vested with
authority to adopt one or more such resolutions.
3. The foregoing amendment in articles of incorporation was
duly adopted by the board of directors on May 23, 1997.
In witness whereof, the undersigned Director of this corporation
has executed these articles of amendment on May 23, 1997.
_______________________________________
Glenn A. Smith, Chairman
5
<PAGE>
ARTICLES OF AMENDMENT
OF
ACCESS POWER, INC.
DESIGNATING SERIES A PREFERRED STOCK
Glenn Smith, certifies that he is the President and a Director
ACCESS POWER, INC., a Florida corporation (hereinafter referred to as
the "Corporation" or the "Company"); that the Board of Directors of
the Corporation adopted the following amendments to the Articles of
Incorporation:
FIRST: That at a meeting of the Board of Directors of ACCESS
POWER, INC., on May 7th, 1998 a resolution was duly adopted by the
Board of Directors, without shareholder approval, as provided for in
Article III of the Articles of Amendment to the Articles of
Incorporation of Access Power, Inc. adopted May 23, 1997, setting
forth a proposed amendment to the Articles of Incorporation and
declaring said amendment to be advisable. The resolution setting
forth the proposed amendment is as follows:
The following is hereby appended to the end of Article III of the
Articles of Incorporation.
1. CREATION OF SERIES A CONVERTIBLE PREFERRED STOCK. There is
hereby created a series of preferred stock consisting of 1,000 shares
and designated as the Series A Convertible Preferred Stock, having the
voting powers, preferences, relative, participating, optional and
other special rights and the qualifications, limitations and
restrictions thereof that are set forth below.
2. DIVIDEND PROVISIONS. The holders of shares of Series A
Convertible Preferred Stocks shall be entitled to receive, when and as
declared by the Board of Directors out of any funds at the time
legally available therefor dividends at a par with the holders of
Common Stock as if the Series A Convertible Preferred Stock had been
converted into Common Stock on the record date for the payment of the
dividend. Dividends shall be waived with respect to any series of
Series A convertible Preferred Stock shall rank on a parity with each
other share of Series A Convertible Preferred Stock with respect to
dividends.
3. REDEMPTION PROVISIONS. Each share of the Series A
convertible Preferred Stock is redeemable, at the option of the
Company, upon the terms and conditions set froth herein, prior to the
day the registration statement to be filed by the Company becomes
effective. On the day the registration becomes effective, all rights
of the Company to a redemption of said shares shall be waived, as of 5
P.M. on the previous day, and any notice of redemption after said time
shall be null and void. If notice of redemption is received prior to
the time which said right expires, said shares shall be redeemable in
the following manner at a price of One Thousand Five Hundred
($1,500.00) Dollars per share (the "Redemption Price"). The
Corporation shall have the right to redeem each Share within twenty-
four (24) hours after the Notice of Conversion (as defined in Section
5(a)) is given by a Holder with respect to such Shares. The
Corporation shall effect such redemption by payment to the Holder by
wire transfer or certified check payable to Holder on or before the
Redemption Date, which shall be the later of (i) the fifth (5th)
calendar day after Notice of Conversion or (ii) the date on which the
Holder had delivered the certificates representing the Preferred
Shares proposed to be converted pursuant to Section 5(a)(1). In the
event the Corporation shall not make such payment it shall be deemed
to have waived its right to redemption as to those Shares. The
6
<PAGE>
Corporation shall have the right to redeem less than all of the Shares
which are subject to the Notice of Conversion.
4. LIQUIDATION PROVISIONS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the Series A Convertible Preferred Stock shall be
entitled to receive an amount equal to One Thousand Five Hundred
($1,500.00) Dollars per share. After the full preferential
liquidation amount has been paid to, or determined and set apart for,
all other series of Preferred Stock hereafter authorized and issued,
if any, the remaining assets of the Corporation available for
distribution to shareholders shall be distributed ratably to the
holders of the common stock. In the event the assets of the
Corporation available for distribution to its shareholders are
insufficient to pay the full preferential liquidation amount per share
required to be paid the Corporation's Series A Convertible Preferred
Stock, the entire amount of assets of the Corporation available for
distribution to shareholders shall be paid up to their respective full
liquidation amounts first to the Series A Convertible Preferred Stock,
then to any other series of Preferred Stock hereafter authorized and
issued, all of which amounts shall be distributed ratably among
holders of each such series of Preferred Stock, and the common stock
shall receive nothing. A reorganization or any other consolidation or
merger of the Corporation with or into any other corporation, or any
other sale of all substantially all of the assets of the Corporation,
shall not be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section 4, and the Series A
Convertible Preferred Stock shall be entitled only to (i) the right
provided in any agreement or plan governing the reorganization or
other consolidation, merger or sale of assets transaction, (ii) the
rights contained in the Florida Corporation Law and (iii) the rights
contained in other Sections hereof.
5. CONVERSION PROVISIONS. The holders of shares of Series A
Convertible Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
(a) RIGHT TO CONVERT.
(1) Each share of Series A Convertible Preferred Stock
(the "Preferred Shares") shall be convertible, at the option
of its holder pursuant to the terms set forth herein, into a
number of shares of common stock of the Company at the
initial conversion rate (the "Conversion Rate") defined
below.
The initial Conversion Rate, subject to the adjustments
described below, shall be a number of shares of common stock
(rounded to the nearest whole number equal to $1,000 divided
by the lower of(i) Sixty-five (65%) of the average Market
Price of the common stock for the five trading days
immediately prior to the Conversion Date (defined below) or
(ii) 75% of closing bid price on the day of first
disbursement from escrow, increased proportionately for any
reverse stock split and decreased proportionately for any
forward stock split or stock dividend. For purposes of this
Section 5(a)(1), Market Price shall be the closing bid price
of the common stock on the Conversion Date, as reported by
the National Association of Securities Dealers Automated
Quotation System (NASDAQ) or the closing bid price on the
over the counter market if other than NASDAQ, averaged over
the five trading days prior to the date of conversion.
7
<PAGE>
The Holder shall notify the Corporation, by facsimile
notice to the Corporation at (904) 273-6309, copy by
overnight courier to Access Power, Inc., 10033 Sawgrass
Drive West, Suite 100, Ponte Verda, Florida 32004 of the
Holder's intent to convert (the "Notice of Conversion") in
the form set forth in Section 5(a)(3) hereof, executed by
the holder of the Preferred Share(s) or a specified portion
(as above provided) hereof, and accompanied, if required by
the Company, by proper assignment hereof in blank. Such
conversion shall be effectuated by surrendering the
Preferred Shares to be converted (with a copy, by facsimile
or courier, to the Company) to the Company's registrar and
transfer agent, Atlas Stock Transfer Company, 5899 S. State
Street, Salt Lake City, Utah 84107 ("Transfer Agent"). The
date on which notice of conversion (the "Conversion Date" is
given shall be the date on which the holder has delivered to
the Company, by facsimile or hand delivery, of the Notice of
Conversion duly executed to the Company. The Company shall
cause the Transfer Agent to complete the issuance and
delivery of Common Shares within five (5) calendar days of
receipt of such conversion form, provided that the Company
or its agent has received the Series A Convertible Preferred
Stock certificates which are the subject of the conversion
on or prior to such fifth calendar day.
(2) No less than 25 (or multiple thereof) shares of
Series A Convertible Preferred Stock may be converted at any
one time. No fractional shares of common stock shall be
issued upon conversion of the Series A Convertible Preferred
Stock, in lieu of fractional shares, the number of shares
issuable will be rounded to the nearest whole share.
(3) Upon receipt of a Notice of Conversion, the
Corporation shall absolutely and unconditionally be
obligated to cause a certificate or certificates
representing the number of shares of Common Stock to which
the converting holder or Preferred Shares shall be entitled
as provided herein, which shares shall constitute fully paid
and nonassessable shares of Common Stock to be issued to,
delivered by overnight courier to, and received by such
holder by the fifth (5th) calendar day following the
Conversion Date, unless the company has duly redeemed the
Preferred Shares which are the subject of the Notice of
Conversion in accordance with Section 3 hereof. Such
delivery shall be made at such address as a holder may
designate thereof in its Notice of Conversion or in its
written instructions submitted together therewith. In the
event the Company fails to deliver the shares of Common
Stock in accordance with the terms and conditions set forth
herein, the Company shall be liable for the payment of a
penalty and shall be unconditionally obligated to pay the
Converting Shareholder(s) an additional monetary penalty of
8
<PAGE>
$200.00 per $10,000 converted per day after five (5) days
should the converted shares not be delivered to the
Converting Shareholder(s) as provided for in Section
________.
(4) The form of conversion Certificate shall read
substantially as follows:
The undersigned holder (the "Holder") is surrendering to
Access Power, Inc., a Florida corporation (the "Company"),
one or more certificates representing shares of Series A
Convertible Preferred Stock of the Company (the "Preferred
Stock") in connection with the conversion of all or a
portion of the Preferred Stock into shares of Common Stock,
$.001 par value per share, of the Company (the "Common
Stock") as set forth below.
1. The Holder understands that the Preferred Stock
was issued by the Company pursuant to the exemption from
registration under the United States Securities Act of 1933,
as amended (the "Securities Act"), provided by Regulation D
promulgated thereunder.
2. The Holder represents and warrants that all offers
and sales of the Common Stock issued to the Holder upon such
conversion of the Preferred Stock shall be made (a) pursuant
to an effective registration statement under the Securities
Act, (b) in compliance with Rule 144, or (c) pursuant to
some other exemption from registration.
Number of Shares of Preferred Stock being converted:
______________________________________
Applicable Conversion Price:___________________________
Number of Shares of Common Stock Issuable:_____________
Date of conversion:____________________________________
Delivery Instructions for certificates of Common Stock and
for new certificates representing any remaining shares of
Preferred Stock;
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
NAME OF HOLDER:
_________________________
_________________________
(Signature of Holder)
9
<PAGE>
(b) Adjustments to Conversion Rate
------------------------------
(1) RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. if
the common stick issuable on conversion of the Series A
Convertible Preferred Stock shall be changed into the same
or a different number of shares of any other class or
classes of stock, whether by capital reorganization,
reclassification, reverse stock split or forward stock split
or stock dividend or otherwise (other than a subdivision or
combination of shares provided for above), the holders of
the Series A Convertible Preferred Stock shall, upon its
conversion, be entitled to receive, in lieu of the common
stock which the holders would have become entitled to
received but for such change, a number of shares of such
other class or classes of stock that would have been subject
to receipt by the holders if they had exercised their rights
of conversion of the Series A Convertible Preferred Stock
immediately before that change.
(2) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALE
OF ASSETS. If at any time there shall be a capital
reorganization of the Corporation's common stock (other than
a subdivision, combination , reclassification or exchange of
shares provided for elsewhere in this Section (b) or merger
of the Corporation into another corporation, or the sale of
the Corporation's properties and assets as, an entirety to
any other person), then, as a part of such reorganization,
merger or sale, lawful provision shall be made so that the
holders of the Series A Convertible Preferred Stock shall
thereafter be entitled to receive upon conversion of the
Series A Convertible Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A
Convertible Preferred Stock, the number of shares of stock
or other securities or property of the Corporation, or of
the successor corporation resulting from such merger, to
which holders of the common stock deliverable upon
conversion of the Series A Convertible Preferred Stock would
have been entitled on such capital reorganization, merger or
sale if the Series A Convertible Preferred Stock had been
converted immediately before that capital reorganization,
merger or sale to the end that the provisions of this
paragraph (b)(3) (including adjustment of the Conversion
Rate then in effect and number of shares purchasable upon
conversion of the Series A Convertible Preferred Stock)
shall be applicable after that event as nearly equivalent as
may be practicable.
(3) In the event (a) the Company does not file a
registration statement under the Securities Act of 1933
covering the Common Stock issuable upon conversion of the
Series A Convertible Preferred Stock within 30 days of the
closing (the "Closing Date"), (b) the registration statement
is not declared effective within 120 days of the Closing
Date or (c) the Company does not issue the Common Shares
within the time limits set forth in the penultimate sentence
of Section 5(a)(1), Conversion Rate shall be adjusted to
increase the number of shares of common stock assessable by
5%. The foregoing adjustments are cumulative and not
exclusive.
10
<PAGE>
(c) NO IMPAIRMENT. The Corporation will not, by
amendment of its Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets,
merger, dissolution, or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in
the carrying out of all the provision of this Section 5 and
in the taking of all such actions as may be necessary or
appropriate in order to protect the Conversion Rights of the
holders of the Series A Convertible Preferred Stock against
impairment.
(d) CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the
Conversion Rate for any shares of Series A Convertible
Preferred Stock, the Corporation at its expense shall
promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to
each holder of Series A Convertible Preferred Stock effected
thereby a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon the
written request at any time of any holder of Series A
Convertible Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion
Rate at the time in effect, and (iii) the number of common
stock and the amount, if any, of other property which at the
time would be received upon the conversion of such holder's
shares of Series A Convertible Preferred Stock.
(e) NOTICES OF RECORD DATE. In the vent of the
establishment by the Corporation of a record of the holders
of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the
Corporation shall mail to each holder of Series A Preferred
Stock at least twenty (20) days prior to the date specified
therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution and the amount and character of such dividend
or distribution.
(f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of common stock
solely for the purpose of effecting the conversion of the
shares of the Series A Convertible Preferred Stock such
number of its shares of common stock as shall from time to
time be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, and if
at any time the number of authorized but unissued shares of
common stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Preferred
Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of common stock to such
number of shares as shall be sufficient for such purpose.
11
<PAGE>
(g) NOTICES. Any notices required by the provisions
of this Paragraph (e) to be given to the holders of shares
of Series A Convertible Preferred Stock shall be deemed
given if deposited in the United Sate mail, postage prepaid,
and addressed to each holder of record at its address
appearing on the books of the Corporation.
In witness whereof, the undersigned President and Director
of this corporation has executed these articles of amendment on May 21, 1998.
________________________________
Glenn Smith, Chairman
12
<PAGE>
EXHIBIT I
CERTIFICATE OF CONVERSION
The undersigned holder (the "Holder") is surrendering to
Access Power, Inc., a Florida corporation (the "Company"),
one or more certificates representing shares of Series A
Convertible Preferred Stock of the Company (the "Preferred
Stock") in connection with the conversion of all or a
portion of the Preferred Stock into shares of Common Stock,
$.001 par value per share, of the Company (the "Common
Stock") as set forth below.
1. The Holder understands that the Preferred Stock
was issued by the Company pursuant to the exemption from
registration under the United States Securities Act of 1933,
as amended (the "Securities Act"), provided by Regulation D
promulgated thereunder.
2. The Holder represents and warrants that all offers
and sales of the Common Stock issued to the Holder upon such
conversion of the Preferred Stock shall be made (a) pursuant
to an effective registration statement under the Securities
Act, (b) in compliance with Rule 144, or (c) pursuant to
some other exemption from registration.
Number of Shares of Preferred Stock being converted: ________
Applicable Conversion Price: ________________________________
Number of Shares of Common Stock Issuable:___________________
Date of conversion: _________________________________________
Delivery Instructions for certificates of Common Stock and
for new certificates representing any remaining shares of
Preferred Stock;
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
NAME OF HOLDER:
_______________________________
_______________________________
(Signature of Holder)
13
<PAGE>
ARTICLES OF AMENDMENT
OF
ACCESS POWER, INC.
Glenn Smith, certifies that he is the President and a Director
ACCESS POWER, INC., a Florida corporation (hereinafter referred to as
the "Corporation"); that the Board of Directors of the Corporation
adopted the following amendments to the Articles of Incorporation on
November 19, 1998 without the need for the approval of stockholders:
The name of the corporation is ACCESS POWER, INC.
Article III of the Articles of Incorporation of the Corporation,
as previously amended, is further amended by changing
paragraph 1 of the designation of the Corporation's Series A
Convertible Preferred Stock to provide that the number of
shares of authorized Preferred Stock designated as Series A
Convertible Preferred Stock shall be increased from 1000 to
1,200 shares.
In witness whereof, the undersigned President and Director of the
Corporation has executed these articles of amendment on November 19,
1998.
/s/ Glenn Smith
Glenn Smith, Chairman
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
ACCESS POWER, INC.
Pursuant to the provisions of section 607.1006, Florida Statutes, this
Florida profit corporation adopts the following articles of amendment to its
articles of incorporation:
I.
The name of the corporation is Access Power, Inc. (hereinafter referred
to as the "Corporation").
II.
The Corporation's Articles of Incorporation are amended by adding at
the end of Article III the following:
"SERIES B CONVERTIBLE PREFERRED STOCK
-------------------------------------
SERIES B CONVERTIBLE PREFERRED STOCK. There is established within the
Corporation's authorized Preferred Stock a series to be designated "Series B
Convertible Preferred Stock" consisting of four thousand (4,000) shares (the
"Series B Preferred Stock") and having the powers, preferences and other rights
and the qualifications, limitations and restrictions set forth herein. The
following is a statement of the powers, designations, preferences, privileges,
rights, qualifications, limitations and restrictions of the Series B Preferred
Stock:
1. DIVIDENDS; OTHER DISTRIBUTIONS. The holders of the Series B
Preferred Stock shall receive no preference with respect to dividends or other
distributions (other than any distribution described in Section 2 of this
Article III) that shall be declared or paid on any of the Corporation's common
stock, par value $0.001 (the "Common Stock"), provided, however, any dividend
(including any share dividend) or other distribution on the Common Stock as
declared by the board of directors, if any, shall be made to the holders of
Common Stock and Series B Preferred Stock, pro rata, determined as of the record
date as a fraction of such dividend or distribution, the numerator of which is
the sum of the number of shares of Common Stock then held by each holder thereof
plus the number of shares of Common Stock which they then have the right to
acquire upon conversion of the shares of Series B Preferred Stock then held by
them ("Conversion Shares") and the denominator of which is the sum of the
aggregate number of shares then outstanding of (i) Common Stock, plus (ii)
Conversion Shares, plus (iii) all other Common Stock equivalents resulting from
any other series or class of Preferred Stock having rights to share in dividends
and distributions of the Company PARI PASSU with the Common Stock.
1
<PAGE>
2. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the shareholders of the Corporation shall be made in the
following manner:
(a) Except as may be limited by (b) below, the holders of the
Series B Preferred Stock shall be entitled to receive, prior to and in
preference to any distribution of any of the assets or surplus funds of
the Corporation available for distribution to its shareholders (the
"Available Funds"), whether from capital, surplus, earnings, or
otherwise to the holders of the Common Stock or any other equity
security of the Corporation, by reason of their ownership of such stock
or equity security, the amount of $0.001 per share (the "Series B
Preference Amount"). If the amount of the Available Funds is
insufficient to permit the payment to all holders of the Series B
Preferred Stock of their full Series B Preference Amount, then all of
the Available Funds shall be distributed among the holders of the then
outstanding Series B Preferred Stock pro rata, determined by
multiplying the amount of the Available Funds by a fraction, the
numerator of which is the number of shares of Series B Preferred Stock
then held by each holder thereof and the denominator of which is the
sum of the aggregate number of shares then outstanding of (i) Series B
Preferred Stock plus (ii) all other series or classes of Preferred
Stock having liquidation rights PARI PASSU with the Series B Preferred
Stock.
(b) If, upon the completion of the distributions contemplated
by Section 2(a) of this Article III, Available Funds remain available
for distribution by the Corporation, such remaining Available Funds, if
any, shall be distributed among the holders of Common Stock and Series
B Preferred Stock, pro rata, determined by multiplying the amount of
the remaining Available Funds by a fraction, the numerator of which is
the sum of the number of shares of Common Stock then held by each
holder thereof plus the number of Conversion Shares which they then
have the right to acquire and the denominator of which is the sum of
the aggregate number of shares then outstanding of (i) Common Stock,
plus (ii) Conversion Shares, plus (iii) all other Common Stock
equivalents resulting from any other series or class of Preferred Stock
having rights to share in the proceeds of a liquidation of the Company
PARI PASSU with the Common Stock, provided, however, that in no case
may the holders of Series B Preferred Stock receive more than the
greater of the Series B Preference Amount and the amount that would
have been distributable to them as holders of Common Stock if all
shares of Series B Preferred Stock had been converted and the Series B
Preference Amount was not payable.
(c) Written notice of liquidation stating a payment date and
the aggregate amount of the Series B Preference Amount due shall be
provided by mail, postage prepaid, or by facsimile, not less than 20
days prior to the payment date stated therein, to the record holders of
the Series B Preferred Stock, such notice to be addressed to each such
holder at its address as shown in the records of the Corporation.
3. VOTING RIGHTS. The holders of the Series B Preferred Stock shall be
entitled to vote the number of votes as is equal to the number of shares of
Common Stock into which such holder's shares of Series B Preferred Stock could
be converted at the record date for determination of the shareholders entitled
2
<PAGE>
to vote on any matters, or, if no such record date is established, at the date
such vote is taken or any written consent of shareholders is solicited, and
shall have voting rights and powers equal to the voting rights and powers of the
Common Stock (except as otherwise expressly provided herein or required by law)
such votes to be counted together with all other shares of stock of the
Corporation having general voting power and not separately as a class.
4. CONVERSION. The holders of the Series B Preferred Stock shall have
conversion rights as follows (the "Series B Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Series B Preferred Stock,
into one thousand (1000) fully paid and nonassessable shares of Common
Stock (the "Conversion Rate"). No amount shall be payable by a
shareholder in respect of the conversion of any share of Series B
Preferred Stock.
(b) MECHANICS OF CONVERSION. No fractional shares of Common
Stock shall be issued upon conversion of Series B Preferred Stock. All
shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series B Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether
the conversion would result in the issuance of any fractional share.
If, after the aforementioned aggregation, the conversion would result
in the issuance of a fraction of a share of Common Stock, the
Corporation shall, in lieu of issuing any fractional shares to which
the holder would be otherwise entitled, pay cash equal to the fair
market value of such fractional share on the date of conversion, which
fair market value shall be determined in good faith by the Board of
Directors. Before any holder of Series B Preferred Stock shall be
entitled to convert the same into full shares of Common Stock and to
receive certificates therefor, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the Corporation or of any transfer agent for the Series B Preferred
Stock or the Common Stock, and shall give written notice to the
Corporation at such office that such holder elects to convert the same.
The Corporation shall, as soon as practicable thereafter, issue and
deliver at the office of the Corporation or at such transfer agent's
office to such holder of Series B Preferred Stock, (i) a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled as aforesaid, and (ii) cash or a check payable
to the holder of such Series B Preferred Stock in the amount of any
cash amounts payable in lieu of the conversion into fractional shares
of Common Stock. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the Series B Preferred Stock to be converted or delivery
of the written conversion notice, whichever is later, and the person or
persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or
holders of such Common Stock on the date of such conversion.
(c) ADJUSTMENT TO SERIES B CONVERSION RATE. The Conversion
Rate from time to time in effect shall be subject to adjustment from
time to time (i) in case the Corporation shall at any time subdivide
the outstanding shares of Common Stock, the Conversion Rate in effect
3
<PAGE>
immediately prior to such subdivision shall be proportionately
increased, and (ii) in case the Corporation shall at any time combine
the outstanding shares of Common Stock, the Conversion Rate in effect
immediately prior to such combination shall be proportionately
decreased, effective at the close of business on the date of such
subdivision or combination, as the case may be.
5. GENERAL PROVISIONS.
(a) ISSUE TAXES. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue or delivery
of shares of Common Stock on conversion of Series B Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be
obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such conversion or
income tax of the holder of the Series B Preferred Stock.
(b) NO RE-ISSUANCE OF SERIES B PREFERRED STOCK. No shares of
Series B Preferred Stock acquired by the Corporation by reason of
redemption, purchase, conversion or otherwise shall be reissued, and
any such shares shall be canceled, retired, and eliminated from the
shares which the Corporation shall be authorized to issue; PROVIDED,
HOWEVER, that any such redeemed or purchased shares of Series B
Preferred Stock shall be eliminated from the shares which the
Corporation shall be authorized to issue only upon the filing with the
Secretary of State of the State of Florida a certificate of amendment
of these Articles of Incorporation in compliance with the General
Corporation Law of the State of Florida."
III.
These Articles of Amendment to the Articles of Incorporation were
adopted by the Board of Directors without the need for approval of common
shareholders, pursuant to the authority granted to the Board of Directors by
Section 607, Florida Statutes, and the Corporation's Articles of Incorporation,
all as of the 29th day of September, 1999.
IN WITNESS WHEREOF, these Articles of Amendment to the Articles of
Incorporation have been signed on behalf of the Corporation as of the 29th day
of September, 1999.
ACCESS POWER, INC.
By: /s/ Glenn Smith
Name: Glenn Smith
Title: CEO, President, Chairman
4
THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION SHALL NO LONGER BE REQUIRED.
FORM OF 6% CONVERTIBLE DEBENTURE DUE SEPTEMBER 30, 2001
$1,000,000 September 30, 1999
New York, New York
1. CONSIDERATION. FOR VALUE RECEIVED, ACCESS POWER, INC., a
Florida corporation (the "undersigned" or the "Company"), hereby promises to pay
to the order of BAMBOO INVESTORS LLC, , at its offices located at One World
Trade Center, Suite 4563, New York, New York 10048 or at such other place as the
holder hereof (the "holder" or the "Registered Holder") shall designate to the
undersigned in writing, in lawful money of the United States of America or in
New York Clearing House Funds, the principal amount of one million ($1,000,000)
Dollars , and to pay interest (computed on the basis of a 360-day year and the
actual number of days elapsed) on the unpaid principal amount hereof at the rate
of six (6%) percent per annum, compounded quarterly, on the first day of each
January, April, July and October of each year, for the period from September 30,
1999 until the Maturity Date. The undersigned promises to pay the said principal
sum and interest in accordance with the terms of this Debenture.
2. PAYMENT. On September 30, 2001 (the "Maturity Date") the
undersigned shall pay the holder all accrued and unpaid principal and interest
on this Debenture. At the Company's option, any interest payment required to be
paid on this Debenture may be made in the form of the issuance to the holder of
the Company's common stock, par value $.001 per share (the "Common Stock"), with
the number of shares of such Common Stock to be payable in lieu of such interest
payments to be determined in accordance with the provisions of Section 6, as if
such interest payment were a portion of the principal amount of the Debenture to
be converted into Common Stock.
Principal and interest shall be payable at the most recent
address as the Registered Holder shall have designated to the Company in
writing. No payment of the principal of this Debenture may be made prior to the
Maturity Date by the Company without the consent of the Registered Holder,
except as otherwise provided herein.
1
<PAGE>
3. OVERDUE INTEREST PAYMENTS. Interest on the indebtedness
evidenced by this Debenture after default or maturity accelerated or otherwise
shall be due and payable at the rate of ten (10%) percent per annum, subject to
the limitations of applicable law.
4. HOLIDAYS. If this Debenture or any installment hereof
becomes due and payable on a Saturday, Sunday or public holiday under the laws
of the State of New York, the due date hereof shall be extended to the next
succeeding business day and interest shall be payable at the rate of six (6%)
percent per annum during such extension. All payments received by the holder
shall be applied first to the payment of all accrued interest payable hereunder.
5. ISSUANCE OF DEBENTURES. This Debenture has been issued by
the Company pursuant to the authorization of the Board of Directors of the
Company (the "Board") and issued pursuant to a Securities Purchase Agreement,
dated as of September 30, 1999, by and between the Company and the Purchaser and
other parties identified therein (the "Securities Purchase Agreement"). Pursuant
to the Securities Purchase Agreement, the Company issued $1,000,000 principal
amount of the Debentures, warrants to purchase (the "Common Stock Warrants")
200,000 shares of the Company's Common Stock and warrants to purchase (the
"Special Warrants") $1,000,000 principal amount of the Company's 6% Convertible
Debentures due 2001 (the "Warrant Debentures") and warrants (the "Special Common
Stock Warrants") to purchase 200,000 shares of the Company's Common Stock. The
Securities Purchase Agreement contains certain additional terms that are binding
upon the Company and each Registered Holder of the Debentures. A copy of the
Securities Purchase Agreement may be obtained by any registered holder of the
Debentures from the Company upon written request. Capitalized terms used but not
defined herein shall have the meanings set forth in the Securities Purchase
Agreement, including the Exhibits thereto. This Debenture and the other 6%
Convertible Debentures due 2001 issued by the Company pursuant to the terms of
the Securities Purchase Agreement, together with any debentures from time to
time issued in replacement thereof, whether pursuant to transfer and assignment,
partial conversion thereof or otherwise, are collectively referred to herein as
the "Debentures."
6. CONVERSION. (a) Subject to and in compliance with the
provisions hereof, the holder shall have the right to convert all or a portion
of the outstanding principal amount of this Debenture, and all accrued and
unpaid interest thereon, into such number of shares of Common Stock (the shares
of Common Stock issuable upon conversion of, and issuable in lieu of interest
payments on, this Debenture are hereinafter referred to as the "Conversion
Shares") as shall equal the quotient obtained by dividing (x) the principal
amount of this Debenture to be converted by (y) the Applicable Conversion Price
(as hereinafter defined) and by surrender of this Debenture, such surrender to
be made in the manner provided herein.
(b) For purposes hereof the term "Applicable
Conversion Price" shall mean the lesser of (i) $0.45 (the "Fixed Price") and
(ii) the product obtained by multiplying (x) the Average Closing Price (as
hereinafter defined) by (y) .75.
For purposes hereof the "Average Closing Price" with
2
<PAGE>
respect to any conversion elected to be made by the holder shall be the average
of the three lowest daily closing bid prices (each such price is referred to
individually as a "Floating Reference Price" and, collectively, as the "Floating
Reference Prices") during the twenty two (22) trading days immediately preceding
the date on which the holder gives the Company a written notice of the holder's
election to convert outstanding principal of, and accrued interest on, this
Debenture or the Company gives them notice of intent to convert the interest due
under Section 2 of this Debenture. The closing bid price on any trading day
shall be (a) if the Common Stock is then listed or quoted on either the OTC:BB,
the NASDAQ SmallCap Market or the NASDAQ National Market, the reported closing
bid price for the Common Stock as reported by Bloomberg, L.P. ("Bloomberg") or
The Wall Street Journal (the "Journal") on such day (or, if not so reported, as
otherwise reported by The NASDAQ Small Cap Market, NASDAQ National Market or the
OTC:BB, as the case may be), (b) if the Common Stock is listed on either the
American Stock Exchange or New York Stock Exchange, the closing bid price for
the Common Stock on such exchange on such day as reported by Bloomberg or the
Journal or (c) if neither (a) nor (b) apply but the Common Stock is quoted in
the over-the-counter market, another recognized exchange, or on the pink sheets,
the last reported bid price thereof on such date. If the prices of the Common
Stock cannot be calculated on such date on any of the foregoing bases, such
prices on such date shall be the fair market value as mutually determined by the
Company and the Registered Holder for which the calculation is required in order
to determine the Applicable Conversion Price; PROVIDED, HOWEVER, that if the
Company and the Registered Holder are unable to mutually determine the fair
market value, such fair market value shall be determined by a nationally
recognized investment banking firm or firm of independent chartered accountants
of recognized standing (which firm may be the firm that regularly examines the
financial statements of the Company) (an "Appraiser") selected in good faith by
the Board and holders of a majority in interest of the Debentures with respect
to which a conversion Notice has been given. "Trading day" shall mean any day on
which the Company's Common Stock is traded for any period on the principal
securities exchange or other securities market on which the Common Stock is then
being traded.
(c) If, during any period following September 30,
1999 (the "Original Issue Date"), as a result of the occurrence of any of the
events set forth in Section 3(f) or 3(g) of the Registration Rights Agreement,
dated as of September 30, 1999, by and between the Company and the Purchaser set
forth therein (the "Registration Rights Agreement"), the Purchaser is not able
to sell shares of Common Stock issuable upon conversion of, or in lieu of
interest payments on, this Debenture pursuant to a registration statement filed
pursuant to such agreement, the Registered Holder shall have the right, for any
purpose under this Debenture during such period and thereafter, to designate as
the Applicable Conversion Price any Conversion Price that would have been
applicable during such period had the Registered Holder delivered a Notice of
Conversion with respect to any portion of this Debenture.
(d) The Registere Holder shall convert this Debenture
in accordance with Section 6(b) of the Securities Purchase Agreement. If the
Company fails to deliver to the holder a ertificate or certificates for shares
of Common Stock in the period set forth in the Securities Purchase Agreement,
the Company shall make certain payments to the holder in accordance with Section
6(d) of the Securities Purchase Agreement.
3
<PAGE>
(e) If the entire outstanding principal amount of
this Debenture is not converted, the Company shall also issue and deliver to
such holder a new Debenture of like tenor in the principal amount equal to the
principal which was not converted and dated the Original Issue Date. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the date on which a Notice of Conversion shall have been
delivered as aforesaid, and the person or persons in whose name or names any
certificate of certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on such date.
(f) All shares of Common Stock delivered upon
conversion of, or in lieu of interest payments on, this Debenture will, upon
delivery, be duly authorized, validly issued and fully paid and nonassessable.
(g) No fractional shares of Common Stock shall be
issued upon conversion of, or in lieu of interest payments on, this Debenture.
Instead of any fractional share of Common Stock which would otherwise be
deliverable upon the conversion of, or in lieu of interest payments on, the
principal of this Debenture, the Company shall pay to the holder an amount in
cash (computed to the nearest cent) equal to the Average Closing Price
multiplied by the fraction of a share of Common Stock represented by such
fractional interest.
(h) The issuance of certificates for shares of Common
Stock upon any conversion of, or in lieu of interest payments on, this Debenture
shall be made without charge to the payee hereof for any tax or other expense in
respect to the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued only in the
name of the registered holder of this Debenture.
7. REDEMPTION BY COMPANY. (a) If, after the Original Issue
Date, there shall occur a Change in Control of the Company (as defined below),
then, at the option of the Registered Holder, the Company shall, on the
effective date of and subject to the consummation of such Change in Control,
redeem this Debenture for cash from the Registered Holder at a redemption price
equal to 125% of the aggregate principal and accrued interest outstanding under
this Debenture. Nothing in this subsection shall limit the Registered Holder's
right to convert this Debenture on or prior to such Change in Control. For
purposes hereof, a "Change in Control" shall be deemed to have occurred if (A)
any person or group (as defined for purposes of Regulation 13D of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than a person who
is, (x) an officer of the Company on the Original Issue Date, (y) beneficial
owner on the Original Issue Date of at least five percent (5%) of the
outstanding Common Stock on such date or (z) a member of the Board of Directors
of the Company on the Original Issue Date, shall have become the beneficial
owner or
4
<PAGE>
owners of more than 50% of the outstanding voting stock of the Company; (B)
there shall have occurred a merger or consolidation in which the Company or an
affiliate of the Company is not the survivor or in which holders of the Common
Stock of the Company shall have become entitled to receive cash, securities of
the Company other than voting common stock or securities of any other person;
(C) at any time persons constituting the Existing Board of Directors cease for
any reason whatsoever to constitute at least a majority of the members of the
Board of Directors of the Company; or (D) there shall have occurred a sale of
all or substantially all the assets of the Company. For purposes hereof, the
term "Existing Board of Directors" shall mean the persons constituting the Board
of Directors of the Company on the date hereof, together with (i) each new
director appointed by a vote of the majority of the members of the Existing
Board of Directors who are in office immediately prior to such appointment and
(ii) each new director whose election, or nomination for election by the
Company's stockholders is approved by a vote of the majority of the members of
the Existing Board of Directors who are in office immediately prior to the
election or nomination of such director.
(b) If the Company shall be required to redeem the
Debentures pursuant to any of the terms or conditions set forth in this Section
7, the Company shall remit the redemption price to the Registered Holder thereof
immediately upon such redemption.
8. COVENANTS.
(a) The Company will pay all taxes, assessments and
governmental charges lawfully levied or assessed upon it, its property and any
part thereof, and upon its income for profits, and any part thereof, before the
same shall become delinquent; and will duly observe, and conform to, all lawful
requirements of any governmental authority relative to any of its property, and
all covenants, terms and conditions upon or under which any of its property is
held; provided that nothing in this Section shall require the Company to observe
or conform to any requirement of governmental authority so long as the validity
thereof shall be contested in good faith by appropriate proceedings or to pay
any such tax, assessment or governmental charges so long as the validity thereof
shall be contested in good faith by appropriate proceedings and adequate
reserves with respect thereto shall have been set aside on the books of the
Company.
(b) Subject to the other provisions of this Debenture,
the Company at all times will maintain its corporate existence and right to
carry on its business and will duly procure all necessary renewals and
extensions thereof and use its best efforts to maintain, preserve and renew all
of its rights, powers, privileges and franchises; PROVIDED, HOWEVER, that
nothing herein contained shall be construed to prevent the Company from ceasing
or omitting to exercise any rights, powers, privileges or franchises which, in
the judgment of the Board, can no longer be profitably exercised, nor to prevent
the consolidation, merger or liquidation of any subsidiary or subsidiaries of
the Company with or into the Company.
(c) The Company will at no time close its stock
transfer books against the transfer of any shares of Common Stock issued or
issuable upon the conversion of, or in lieu of interest payments on, the
Debentures, in any manner which interferes with the timely conversion of such
Debentures.
(d) As used in this Debenture, the term "Common
Stock" shall mean the Company's authorized common stock, par value $0.001 and
all stock of any class or classes (however designated) of the Company,
5
<PAGE>
authorized on or after the date hereof, the holders of which shall have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and the
holders of which shall ordinarily be entitled to vote for the election of the
directors of the Company. The Company shall not, without the prior written
consent of the Registered Holder of this Debenture, issue any shares of its
capital stock, other than: (i) as permitted by Section 5 of the Securities
Purchase Agreement, (ii) in exchange for Debentures as provided hereunder, (iii)
upon exercise of the Common Stock Warrants and Special Common Stock Warrants in
accordance with the terms thereof or (iv) upon conversion of the Warrant
Debentures in accordance with the terms thereof.
(e) The Company will not, by amendment of its Articles
of Incorporation or By-laws or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder or
pursuant to the Securities Purchase Agreement by the Company, and will at all
times assist in good faith in the carrying out of all the provisions of this
Debenture and the Securities Purchase Agreement and in the taking of all such
action as may be necessary or appropriate in order to protect the conversion
rights of the Registered Holders of the Debentures against impairment.
9. LIMITATION ON CERTAIN CORPORATE ACTS. The Company hereby
covenants and agrees that upon any consolidation or merger or upon the transfer
of all or substantially all of the property or assets of the Company, the due
and punctual payment of the principal and interest on all the Debentures
according to their tenor and the due and punctual performance and observance of
all the terms, covenants and conditions of the Debentures and the Securities
Purchase Agreement to be kept and performed by the Company shall be expressly
assumed by the corporation formed by such consolidation, or into which the
Company shall have merged or by the purchaser of such property or assets; and
such assumption shall be an express condition of such merger or consolidation
agreement or agreement for the transfer of property or assets.
10. EVENTS OF DEFAULT. In case one or more of the following
events of default shall have occurred:
(a) default in the due and punctual payment of interest
upon or principal of any of the Debentures as and when the same becomes due and
payable either at maturity or otherwise; or
(b) failure to deliver the shares of Common Stock
required to be delivered upon conversion of, or in lieu of interest payments on,
the Debentures in the manner and at the time required by Section 6 of the
Securities Purchase Agreement; or
(c) failure of the Company, at any time after the 90th
day following the Closing Date, to have authorized the number of shares of
Common Stock issuable upon conversion of, or in lieu of interest payments on,
the Debentures and, the Warrant Debentures, or exercise of the Common Stock
Warrants and the Special Common Stock Warrants; or
6
<PAGE>
(d) failure on the part of the Company to duly observe
or perform any of its other covenants or agreements contained in, or to cure any
material breach in a material representation or covenant contained in, the
Securities Purchase Agreement, the Debentures or the Registration Rights
Agreement for a period of ten (10) business days after the date on which written
notice of such failure or breach requiring the same to be remedied has been
given by a Registered Holder to the Company; or
(e) a decree or order by a court having jurisdiction
has been entered adjudging the Company (or any Material Subsidiary (as herein
after defined)) bankrupt or insolvent, or approving a petition seeking
reorganization of the Company (or any Material Subsidiary) under any applicable
bankruptcy law and such decree or order has continued undischarged or unstayed
for a period of thirty (30) days; or a decree or order of a court having
jurisdiction for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company (or any Material Subsidiary)
or of all or substantially all of its property, or for the winding-up or
liquidation of its affairs, has been entered, and has remained in force
undischarged or unstayed for a period of thirty (30) days; or
(f) the Company (or any Material Subsidiary) institutes
proceedings to be adjudicated a voluntary bankrupt, or consents to the filing of
a bankruptcy proceeding against it, or files a petition or answer or consent
seeking reorganization under applicable law, or consents to the filing of any
such petition or to the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of all or substantially all of its
property, or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as they become due; or if the
Company (or any Material Subsidiary) shall suffer any writ of attachment or
execution or any similar process to be issued or levied against it or any
significant part of its property which is not released, stayed, bonded or
vacated within thirty (30) days after its issue or levy; or if the Company (or
any Material Subsidiary) takes corporate action in furtherance of any of the
aforesaid purposes or conditions; or
(g) if any default shall occur under any indenture
mortgage, agreement, instrument or commitment, other than the agreement listed
on Schedule 3r to the Securities Purchase Agreement, evidencing or under which
there is at the time outstanding any indebtedness of the Company (or a Material
Subsidiary), in excess of $50,000, or which results in such indebtedness, in an
aggregate amount (with other defaulted indebtedness) in excess of $50,000
becoming due and payable prior to its due date and if such indenture or
instrument so requires, the holder or holders thereof (or a trustee on their
behalf) shall have declared such indebtedness due and payable; or
(h) if any of the Company or its subsidiaries shall
default in the observance or performance of any material term or provision of a
material agreement to which it is a party or by which it is bound, and such
default is not waived or cured within the applicable grace period; or
7
<PAGE>
(i) if a final judgment which, either alone or together
with other outstanding final judgments against the Company and its subsidiaries,
exceeds an aggregate of $50,000 shall be rendered against the Company (or any
Material Subsidiary) and such judgment shall have continued undischarged or
unstayed for thirty (30) days after entry thereof;
then, in each and every such case other than those specified in clauses (e) and
(f) above, so long as such event of default has not been remedied and unless the
principal of all the Debentures has already become due and payable, the holder
of this Debenture, by notice in writing to the Company, may declare the
principal of this Debenture and the interest accrued thereon, if not already due
and payable, to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything herein
contained to the contrary notwithstanding and, upon the occurrence of the events
specified in clauses (e) and (f) above, such principal and interest shall
automatically become and shall be due and payable immediately without any action
on the part of any holder of Debentures, anything herein contained to the
contrary notwithstanding.
For purposes of this Section 10, "Material Subsidiary"
means any subsidiary with respect to which the Company has directly or
indirectly invested, loaned, advanced or guaranteed the obligations of, an
aggregate amount exceeding fifteen percent (15%) of the Company's gross assets,
or the Company's proportionate share of the assets or net income of which (based
on the subsidiary's most recent financial statements) exceed fifteen percent
(15%) of the Company's gross assets or net income, respectively, or the gross
revenues of which exceed fifteen percent (15%) of the gross revenues of the
Company based upon the most recent financial statements of such subsidiary and
the Company.
11. TRANSFERABILITY. This Debenture is transferable, in whole
or in part, only in accordance with the terms of Section 6 of the Securities
Purchase Agreement. The Registered Holder may submit a written request, in
person or by his duly authorized attorney, for a transfer of this Debenture on
the register of the Company maintained at its principal offices. The Company may
deem and treat the person in whose name this Debenture is registered as the
absolute owner hereof, for the purpose of receiving payment of the principal
thereof and interest hereon, whether or not the same shall be overdue, and for
all other purposes whatsoever, including but without limitation, the giving of
any written notices required hereunder, and the Company shall not be
affected by any notice to the contrary.
12. STOCK SPLITS; DIVIDENDS; ADJUSTMENTS; REORGANIZATIONS.
(a) If the Company, at any time after the Original
Issue Date, (i) shall pay a stock dividend or otherwise make a distribution or
distributions on any equity securities (including investments or securities
convertible into or exchangeable for such equity securities) in shares of Common
8
<PAGE>
Stock, (ii) issue any securities payable in shares of Common Stock, (iii)
subdivide the outstanding shares of Common Stock into a larger number of shares,
(iv) combine outstanding shares of Common Stock into a smaller number of shares,
the Fixed Price and each Floating Reference Price prior to the date of any such
occurrence (collectively, the "Reference Prices") shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section 12(a) shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of an issuance, a subdivision or a combination.
(b) In the event that the Company, at any time after
the Original Issue Date, issues or sells any Common Stock or securities which
are convertible into or exchangeable for its Common Stock or any convertible or
exchangeable securities, or any warrants or other rights to subscribe for or to
purchase or any options for the purchase of its Common Stock or any such
convertible or exchangeable securities (other than (i) up to 500,000 shares of
Common Stock issued to employees of the Company, pursuant to benefit plans of
the Company or pursuant to actions taken by the Board of Directors of the
Company, (ii) shares issued upon exercise of options, warrants or rights
outstanding on the date of the Securities Purchase Agreement and listed in
Schedule 3b to the Securities Purchase Agreement or (iii) shares issued to
consultants of the Company in lieu of cash payments for services rendered,
provided that the aggregate Market Value for Shares of Common Stock (determined
in each case on the date of issuance) issued to consultants shall not exceed
$500,000 in any calendar year) at an effective purchase price per share which is
less than the Fixed Price then in effect, then the Fixed Price in effect
immediately prior to such issue or sale shall be reduced effective concurrently
with such issue or sale to an amount determined by multiplying such Fixed Price
then in effect by a fraction, (x) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale, plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would purchase
at such Fixed Price then in effect; and (y) the denominator of which shall be
the number of shares of Common Stock of the Company outstanding immediately
after such issue or sale.
For the purposes of the foregoing adjustment, in the case
of the issuance of any convertible or exchangeable securities, warrants, options
or other rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("Exchangeable Securities"), the maximum number of shares of Common
Stock issuable upon exercise, conversion or exchange of such Exchangeable
Securities shall be deemed to be outstanding, provided that no further
adjustment shall be made upon the actual issuance of Common Stock upon exercise,
exchange or conversion of such Exchangeable Securities.
(c) If the Company, at any time after the Original
Issue Date, shall distribute to all holders of Shares of Common Stock evidences
of its indebtedness or assets or rights or warrants to subscribe for or purchase
any security (excluding those referred to in Section 12(b) above) then in each
such case the Fixed Price thereafter shall be determined by multiplying the
9
<PAGE>
Fixed Price in effect immediately prior to the record date fixed for
determination of shareholders entitled to receive such distribution by a
fraction of which the denominator shall be the Market Price for Shares of Common
Stock (as defined below) determined as of the record date mentioned above, and
of which the numerator shall be such Market Price for Shares of Common Stock on
such record date less the then fair market value at such record date of the
portion of such assets or evidences of indebtedness so distributed applicable to
one outstanding share of Common Stock as determined by the Board in good faith;
PROVIDED, however that in the event of a distribution exceeding 25% of the net
assets of the Company, such fair market value shall be determined by an
Appraiser selected in good faith by the Board and holders of a majority in
interest of the Debentures. In either case the adjustments shall be described in
a statement provided to all holders of Debentures of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one outstanding share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
"Market Price for Shares of Common Stock" shall mean the
price of one share of Common Stock determined as follows:
(i) If the Common Stock is then listed or
quoted on either the OTC: BB, the NASDAQ SmallCap Market or the NASDAQ National
Market, the reported closing price for the Common Stock as reported by Bloomberg
or the Journal on such day (or, if not so reported, as otherwise reported by The
NASDAQ Small Cap Market, NASDAQ National Market or the OTC:BB, as the case may
be);
(ii) If the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, the closing price for the
Common Stock on such exchange on such day as reported by Bloomberg or the
Journal;
(iii) If neither (i) nor (ii) apply but the
Common Stock is quoted in the over-the-counter market, another recognized
exchange or on the pink sheets, the last reported price thereof on such date;
and
(iv) If none of clauses (i), (ii) or (iii) above
applies, the market value as determined by a nationally recognized investment
banking firm or other nationally recognized financial advisor retained by the
Company for such purpose, taking into consideration, among other factors, the
earnings history, book value and prospects for the Company, and the prices at
which shares of Common Stock recently have been traded. Such determination shall
be conclusive and binding on all persons.
(d) (1) In the event that at any time or from time to
time after the Original Issue Date, the Common Stock issuable upon the
conversion of, or in lieu of interest payments on, the Debentures is changed
into the same or a different number of shares of any class or classes of stock,
whether by merger, consolidation, recapitalization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
or reorganization provided for elsewhere in this Paragraph 12), then and as a
condition to each such event provision shall be made in a manner reasonably
10
<PAGE>
acceptable to the holders of Debentures so that each holder of Debentures shall
have the right thereafter to convert such Debenture into, and to receive in lieu
of interest payments, the kind of stock receivable upon such recapitalization,
reclassification or other change by holders of shares of Common Stock, all
subject to further adjustment as provided herein. In such event, the formulae
set forth herein for conversion and redemption shall be equitably adjusted to
reflect such change in number of shares or, if shares of a new class of stock
are issued, to reflect the market price of the class or classes of stock
(applying the same factors used in determining the Fixed Price) issued in
connection with the above described transaction.
(2) If at any time or from time to time after
the Closing Date there is a capital reorganization of the Common Stock,
including by way of a sale of all or substantially all of the assets of the
Company (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Paragraph
12), then, as a part of and a condition to such reorganization, provision shall
be made in a manner reasonably acceptable to the holders of the Debentures so
that the holders of the Debentures shall thereafter be entitled to receive upon
conversion of, or in lieu of interest payments on, the Debentures the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock deliverable upon conversion, or in lieu of interest
payments on, the Debentures would have been entitled on such capital
reorganization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Paragraph 12 with respect to the rights of
the holders of the Debentures after the reorganization to the end that the
provisions of this Paragraph 12 shall be applicable after that event and be as
nearly equivalent as may be practicable, including, by way of illustration and
not limitation, by equitably adjusting the formulae set forth herein for
conversion and redemption to reflect the market price of the securities or
property (applying the same factors used in determining the Market Price for
Shares of Common Stock) issued in connection with the above described
transaction.
(e) If at any time during the period ending twelve
(12) months after the Original Issue Date, the Company sells or agrees to sell
(including pursuant to a letter of intent, term sheet, or similar means) shares
of Common Stock or securities or options convertible into, exercisable for, or
exchangeable for, shares of Common Stock (other than (i) a sale pursuant to a
bona fide registered public offering of shares of Common Stock by the Company
conducted on the basis of a firm commitment underwriting raising at least
$10,000,000, (ii) up to 500,000 shares of Common Stock issued to employees of
the Company pursuant to benefit plans of the Company or pursuant to actions
taken by the Board of Directors of the Company (iii) shares issued upon exercise
of options, warrants or rights outstanding on the date of the Securities
Purchase Agreement and listed in Schedule 3b to the Securities Purchase
Agreement or (iv) shares issued to consultants of the Company in lieu of cash
payments for services rendered, provided that the aggregate Market Value for
Shares of Common Stock (determined in each case on the date of issuance) issued
to consultants shall not exceed $500,000 in any calendar year) then, if the
effective or maximum sales price of the shares of Common Stock with respect to
such transaction (including the effective or maximum conversion exercise or
exchange price) ("Other Price") is less than the Fixed Price of the Debentures
11
<PAGE>
at such time, the Company, at the option of a holder exercised by written notice
to the Company, shall adjust the Fixed Price applicable to the Debentures of
such holder not yet converted in form and substance reasonably satisfactory to
such holder of Debentures so that the conversion price applicable to those
Debentures shall, in no event, be greater, after giving effect to all other
adjustments contained therein, than the Other Price.
(f) Whenever any element of the Applicable Conversion
Price is adjusted pursuant to Section 12(a), (b), (c), (d) or (e), the Company
shall promptly mail to each holder of the Debentures, a notice setting forth the
Applicable Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
(g) In the event of any taking by the Company of a
record date of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any security or right convertible or exchangeable into or
entitling the holder thereof to receive additional shares of Common Stock, or
any right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right,
the Company, shall deliver to each holder of Debentures at least thirty 30 days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution,
security or right and the amount and character of such dividend, distribution,
security or right.
13. REMEDIES CUMULATIVE. The rights, powers and remedies given
to the payee under this Debenture shall be in addition to all rights, powers and
remedies given to it by virtue of the Securities Purchase Agreement, any
document or instrument executed in connection therewith, or any statute or rule
of law.
14. NON-WAIVER. Any forbearance, failure or delay by the payee
in exercising any right, power or remedy under this Debenture, the Securities
Purchase Agreement, any documents or instruments executed in connection
therewith or otherwise available to the payee shall not be deemed to be a waiver
of such right, power or remedy, nor shall any single or partial exercise of any
right, power or remedy preclude the further exercise thereof.
15. MODIFICATIONS AND WAIVERS. No modification or waiver of
any provision of this Debenture, the Securities Purchase Agreement or any
documents or instruments executed in connection therewith shall be effective
unless it shall be in writing and signed by the payee, and any such modification
or waiver shall apply only in the specific instance for which given.
16. ATTORNEY'S FEES. If this Debenture shall not be paid when
due and shall be placed by the Registered Holder hereof in the hands of an
attorney for collection, through legal proceedings or otherwise, or if this
Debenture shall not be converted into shares of Common Stock on the Conversion
Date (as defined in section 6(b) of the Securities Purchase Agreement), subject
to the provisions of Section 6 hereof, and an action is brought by the
Registered Holder with respect thereto, the Company shall pay reasonable
attorney's fees to the Registered Holder hereof, together with reasonable costs
and expenses of collection or enforcement incurred in connection with any such
action.
12
<PAGE>
17. ENFORCEMENT; SPECIFIC PERFORMANCE. (a) In case any one or
more Events of Default shall occur and be continuing, a Registered Holder of a
Debenture then outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law. Each holder
agrees that it will give written notice to the other holders prior to
instituting any such action.
(b) The Company expressly agrees that each Registered
Holder may not have adequate remedies at law if the Company does not perform its
obligations under this Debenture. Upon a breach of the terms or covenants of
this Debenture by the Company, the Registered Holder shall, each in addition to
all other remedies, be entitled to obtain injunctive relief, and an order for
specific performance of the Company's obligations hereunder.
18. MISCELLANEOUS. This Debenture and the rights and
obligations of the parties hereto, shall be governed, construed and interpreted
according to the laws of the State of New York. The Company agrees that any
final judgment after exhaustion of all appeals or the expiration of time to
appeal in any such action or proceeding shall be conclusive and binding, and may
be enforced in any federal or state court in the United States by suit on the
judgment or in any other manner provided by law. Nothing contained in this
Debenture shall affect or limit the right of the Registered Holder to serve any
process or notice or motion or other application in any other manner permitted
by law, or limit or affect the right of the Registered Holder to bring any
action or proceeding against the Company or any of its property in the courts of
any other jurisdiction. The Company hereby consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Debenture, and hereby waives, to
the maximum extent permitted by law, any objection, including any objections
based on FORUM NON CONVENIENS, to the bringing of any such proceeding in such
jurisdictions.
19. PAYEE DEFINED. The term "payee" as used herein shall be
deemed to include the payee and its successors, endorsees and assigns.
20. WAIVER OF PRESENTMENT, ETC. The undersigned hereby waives
presentment, demand for payment, protest, notice of protest and notice of
non-payment hereof.
21. HEADINGS. The headings contained in this Debenture are for
reference purposes only and shall not affect the meaning of interpretation of
this Debenture.
22. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be effective
upon personal delivery, via facsimile (upon receipt of confirmation of
error-free transmission) or two business days following deposit of such notice
13
<PAGE>
with an internationally recognized courier service, with postage prepaid and
addressed to the parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.
COMPANY: ACCESS POWER, INC.
10033 Sawgrass Dr. West, Suite 100
Ponte Vedra Beach, Florida 32082
Att.: Maurice Matovich
Tel.: (904) 273-2980
Fax: (904) 273-6390
With a copy to:
Kilpatrick Stockton, LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309
Att: Dennis J. Stockwell, Esq.
Tel.: (404) 815-6500
Fax: (404) 815-6555
14
<PAGE>
REGISTERED HOLDER: Bamboo Investments LLC
c/o WEC Asset Management LLC
One World Trade Center
Suite 4563
New York, New York 10048
Att.: Ethan E. Benovitz
Tel.: (212) 775-9299
Fax: (212) 775-9311
14
<PAGE>
With a copy to:
Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Att.: Steven Huttler, Esq.
Tel.: (212) 479-6136
Fax: (212) 479-6275
[SIGNATURE PAGE FOLLOWS]
15
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Debenture to
be executed as of the date first written above.
ACCESS POWER, INC.
By: Glenn Smith
Name: Glenn Smith
Title: President/CEO
16
<PAGE>
NOTICE OF CONVERSION
The conversion form appearing below should only be executed by
the Registered Holder desiring to convert all or part of the principal amount of
the Debenture attached hereto.
CONVERSION FORM
Date: ____________________________________________
TO: ACCESS POWER, INC.
The undersigned hereby exercises the conversion privilege upon
the terms and conditions set forth in the attached Debenture, to the extent of
the maximum number of shares of Common Stock issuable pursuant to the terms of
Section 6 of the Debenture, and accordingly, authorizes the Company to apply
$__________ principal amount of the attached Debenture (including any accrued
and unpaid interest thereon) to payment in full for such shares of Common Stock.
Please register such shares and make delivery thereof as follows:
Registered in the Name of (Giving First or Middle Name in Full)
Name ________________________________________________________
(Please Print)
Address______________________________________________________
Without waiving any rights the undersigned may have pursuant
to the terms of the attached Debenture, the undersigned hereby advises the
Company that it believes the number of shares of Common Stock issuable as a
result of this Notice of Conversion is ________________________.
17
<PAGE>
DELIVERY INSTRUCTIONS
To be completed ONLY if Certificates are to be mailed to
persons other than the Registered Holder.
Name________________________________________________
(Please Print)
Address_____________________________________________
Signature __________________________________________
18
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfer unto _______________________________________________________ the within
Debenture and all rights thereunder, hereby irrevocably authorizing the Company
to transfer said Debenture on the books of the Company, with full power of
substitution in the premises.
Dated:______________________________________________________
Signature:__________________________________________________
Print Name:_________________________________________________
19
THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.001 PER SHARE
OF
ACCESS POWER, INC.
Void after September 30, 2002 Right to Purchase 200,000 shares of Common Stock
(subject to adjustment)
No. 1
PREAMBLE
This certifies that, for value received, BAMBOO INVESTORS LLC, or
registered assigns ("Warrantholder"), is entitled to purchase from ACCESS POWER,
INC. (the "Company"), subject to the provisions of this Warrant, at any time and
from time to time until 5:00 p.m. Eastern Standard Time on September 30, 2002,
200,000 shares of the Company's Common Stock, par value $.001 per share (the
"Warrant Shares"). The purchase price payable upon the exercise of this Warrant
shall be $0.45 per Warrant Share (such price, as adjusted from time to time upon
the occurrence of the contingencies set forth in Section III of this Warrant, is
herein after referred to as the "Warrant Price"). The Warrant Price and the
number of Warrant Shares which the Warrantholder is entitled to purchase are
subject to adjustment upon the occurrence of the contingencies set forth in
Section III of this Warrant.
This Warrant is one of the Warrants to Purchase Common Stock (the
"Warrants"), evidencing the right to purchase Common Stock of the Company,
issued pursuant to a Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated September 30, 1999, between the Company
<PAGE>
and the Purchaser and other parties identified therein. The Securities Purchase
Agreement contains certain additional terms that are binding upon the Company
and each Warrantholder. A copy of the Securities Purchase Agreement may be
obtained by any registered Warrantholder from the Company upon written request.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Securities Purchase Agreement, including the Exhibits thereto.
This Warrant is subject to the following terms and conditions:
I. EXERCISE OF WARRANT.
(a) This Warrant may be exercised in whole or
in part but not for a fractional share. Upon delivery of this Warrant at the
offices of the Company or at such other address as the Company may designate by
notice in writing to the registered holder hereof with the Subscription Form
annexed hereto duly executed, accompanied by payment of the Warrant Price for
the number of Warrant Shares purchased (in cash, by certified, cashier's or
other check acceptable to the Company, or any combination of the foregoing), the
registered holder of this Warrant shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased. Such certificate or
certificates shall be promptly delivered to the Warrantholder. Upon any partial
exercise of this Warrant, the Company shall promptly execute and deliver a new
Warrant of like tenor for the balance of the Warrant Shares purchasable
hereunder.
(b) The Warrant Shares deliverable hereunder
shall, upon issuance, be fully paid and non-assessable and the Company agrees
that at all times during the term of this Warrant it shall cause to be reserved
for issuance such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of this Warrant.
(c) The Company will, at the time of the
exercise, exchange or transfer of this Warrant, upon the request of the
registered Warrantholder hereof, acknowledge in writing its continuing
obligation to afford to such Warrantholder or transferee any rights (including,
without limitation, any right to registration of the Company's shares of Common
Stock) to which such Warrantholder or transferee shall continue to be entitled
after such exercise, exchange or transfer in accordance with the provisions of
this Warrant, provided that if the registered Warrantholder of this Warrant
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Warrantholder or
transferee any such rights.
II. TRANSFER OR ASSIGNMENT OF WARRANT. Any assignment or
transfer of this Warrant shall be made by surrender of this Warrant at the
offices of the Company or at such other address as the Company may designate in
writing to the registered holder hereof with the Assignment Form annexed hereto
duly executed and accompanied by payment of any requisite transfer taxes, and
the Company shall, without charge, execute and deliver a new Warrant of like
tenor in the name of the assignee for the portion so assigned in case of only a
partial assignment, with a new Warrant of like tenor to the assignor for the
balance of the Warrant Shares purchasable.
III. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARES --
ANTI-DILUTION PROVISIONS.
A. (1) Except as hereinafter provided, in
case the Company shall at any time after the date
hereof issue any shares of Common Stock (including
shares held in the Company's treasury) without
consideration, then, and thereafter successively upon
2
<PAGE>
each issuance, the Warrant Price in effect
immediately prior to each such issuance shall
forthwith be reduced to a price determined by
multiplying the Warrant Price in effect immediately
prior to such issuance by a fraction:
(a) the numerator of which shall
be the total number of shares
of Common Stock outstanding
immediately prior to such
issuance, and
(b) the denominator of which shall
be the total number of shares
of Common Stock outstanding
immediately after such
issuance.
For the purposes of any computation to be made in accordance
with the provisions of this clause (1), the following provisions shall be
applicable:
(i) Shares of Common Stock
issuable by way of
dividend or other
distribution on any
stock of the Company
shall be deemed to
have been issued and
to be outstanding at
the close of business
on the record date
fixed for the deter-
mination of stock-
holders entitled to
receive such dividend
or other distribution
and shall be deemed
to have been issued
without consideration.
Shares of Common Stock
issued otherwise than
as a dividend or other
distribution, shall be
deemed to have been
issued and to be
outstanding at the
close of business on
the date of issue.
(ii) The number of shares
of Common Stock at any
time outstanding shall
not include any shares
then owned or held by
or for the account of
the Company.
(2) In case the Company shall at any
time subdivide or combine the outstanding
shares of Common Stock, the Warrant Price
shall forthwith be proportionately decreased
in the case of the subdivision or
proportionately increased in the case of
combination to the nearest one cent. Any
such adjustment shall become effective
at the close of business on the date that
such subdivision or combination shall become
effective.
B. In the event of an adjustment of the
Warrant Price, the number of shares of Common Stock
(or reclassified stock) issuable upon exercise of
this Warrant after such justment shall be
equal to the number determined by dividing:
3
<PAGE>
(1) an amount equal to the product of
(i) the number of shares of Common
Stock issuable upon exercise of this
Warrant immediately prior to such
adjustment, and (ii) the Warrant
Price immediately prior to such
adjustment, by
(2) the Warrant Price immediately after
such adjustment.
C. In the case of (1) any reorganization or
reclassification of the outstanding shares of Common Stock
(other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination) or (2) any consolidation of the
Company with, or merger of the Company with, another
corporation, or in the case of any sale, lease or conveyance
of all, or substantially all, of the property, assets,
business and goodwill of the Company as an entity, the holder
of this Warrant shall thereafter have the right upon exercise
to purchase the kind and amount of shares of stock and other
securities and property receivable upon such reorganization,
reclassification, consolidation, merger or sale by a holder of
the number of shares of Common Stock which the holder of this
Warrant would have received had all Warrant Shares issuable
upon exercise of this Warrant been issued immediately prior to
such reorganization, reclassification, consolidation, merger
or sale, at a price equal to the Warrant Price then in effect
pertaining to this Warrant (the kind, amount and price of such
stock and other securities to be subject to adjustment as
herein provided). The Company shall not effect a transaction
of the type described in clause (2) of this sub-paragraph (D)
unless upon or prior to the consummation thereof, the
Company's successor corporation, or if the Company shall be
the surviving company in any such transaction but is not the
issuer of the shares of stock, securities or other property to
be delivered to the holders of the Company's outstanding
shares of Common Stock at the effective time thereof, then
such issuer, shall assume in writing the obligation hereunder
to deliver to the Warrantholder of this Warrant such shares of
stock, securities, cash or other property as such holder shall
be entitled to purchase in accordance with the provisions
hereof.
D. In case the Company shall, at any time prior to
the expiration of this Warrant and prior to the exercise
thereof, dissolve, liquidate or wind up its affairs, the
Warrantholder shall be entitled, upon the exercise thereof, to
receive, in lieu of the Warrant Shares of the Company which it
would have been entitled to receive, the same kind and amount
of assets as would have been issued, distributed or paid to it
4
<PAGE>
upon such Warrant Shares of the Company, had it been the
holder of record of shares of Common Stock receivable upon the
exercise of this Warrant on the record date for the
determination of those entitled to receive any such
liquidating distribution. After any such dissolution,
liquidation or winding up which shall result in any
distribution in excess of the Warrant Price provided for by
this Warrant, the Warrantholder may at its option exercise the
same without making payment of the aggregate Warrant Price and
in such case the Company shall upon the distribution to said
Warrantholder consider that the aggregate Warrant Price has
been paid in full to it and in making settlement to said
Warrantholder, shall deduct from the amount payable to such
Warrantholder an amount equal to the aggregate Warrant Price.
Except as otherwise expressly provided in the prior paragraph,
in the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its
expense deliver or cause to be delivered the stock and other
securities and property (including cash, where applicable)
receivable by the holders of the Warrants after the effective
date of such dissolution pursuant to this sub-paragraph (E) to
a bank or trust company having its principal office in New
York City, as trustee for the holder or holders of the
Warrants.
E Except as otherwise expressly provided in this
Section III, upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred
to in this Section III, this Warrant shall continue in full
force and effect and the terms hereof shall be applicable to
the shares of stock and other securities and property
receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger
or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities, including, in
the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company,
whether or not such person shall have expressly assumed the
terms of this Warrant.
F. In case the Company shall, at any time prior to
the expiration of this Warrant and prior to the exercise
thereof make a distribution of assets (other than cash) or
securities of the Company to its stockholders (the
"Distribution") the Warrantholder shall be entitled, upon the
exercise thereof, to receive, in addition to the Warrant
Shares it is entitled to receive, the same kind and amount of
assets or securities as would have been distributed to it in
the Distribution had it been the holder of record of shares of
Common Stock receivable upon exercise of this Warrant on the
record date for determination of those entitled to receive the
Distribution.
G. Irrespective of any adjustments in the number of
Warrant Shares and the Warrant Price or the number or kind of
shares purchasable upon exercise of this Warrant, this Warrant
may continue to express the same price and number and kind of
shares as originally issued.
IV. OFFICER'S CERTIFICATE. Whenever the number of Warrant
Shares and the Warrant Price shall be adjusted pursuant to the provisions
hereof, the Company shall forthwith file at its principal executive office an
officers' certificate, signed by the Chairman of the Board, President, or one of
the Vice Presidents of the Company and by its Chief Financial Officer or one of
its Treasurers or Assistant Treasurers, stating the adjusted number of Warrant
5
<PAGE>
Shares and the new Warrant Price calculated to the nearest one hundredth and
setting forth in reasonable detail the method of calculation and the facts
requiring such adjustment and upon which such calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment hereunder is
required. A copy of such statement shall be mailed to the Warrantholder at its
address in the records of the Company in accordance with the notice provision of
the Securities Purchase Agreement. The Company will forthwith mail a copy of
each such certificate to each holder of a Warrant, and will, on the written
request at any time of any holder of a Warrant, furnish to such holder a like
certificate setting forth the Warrant Price and the number and type of Shares at
the time in effect and showing how it was calculated.
V. CHARGES, TAXES AND EXPENSES. The issuance of certificates
for Warrant Shares upon any exercise of this Warrant shall be made without
charge to the Warrantholder for any tax or other expense in respect to the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued only in the name of the
Warrantholder.
VI. NO DILUTION OR IMPAIRMENT. The Company will not, by
amendment of its Articles of Incorporation or By-laws, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of the Warrants, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holders of the Warrants, as specified herein and in the
Securities Purchase Agreement, against dilution (to the extent specifically
provided herein) or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any shares of
stock receivable on the exercise of the Warrants above the amount payable
therefor on such exercise, and (b) will not effect a subdivision or split up of
shares or similar transaction with respect to any class of the Common Stock
without effecting an equivalent transaction with respect to all other classes of
Common Stock.
VII. NOTICE OF RECORD DATE. In case
(a) of any taking by the Company of a record of
the holders of any class of its securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive any other right;
or
(b) of any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the Company to
or consolidation or merger of the Company with or any voluntary or involuntary
dissolution, liquidation or winding up of the Company; or
(c) events shall have occurred resulting in the
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any record is to
be taken for the purpose of any such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which any such reorganization, reclassification, recapitalization,
6
<PAGE>
transfer, consolidation, merger, dissolution, liquidation or winding up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall be mailed at least thirty (30) days prior to
the date specified in such notice on which any such action is to be taken.
VIII. EXCHANGE OF WARRANTS. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company, at its expense, will
issue and deliver to or on the order of the holder thereof a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (on payment
by such holder or any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant or Warrants so surrendered.
IX. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
X. WARRANT AGENT. The Company may, by written notice to each
holder of a Warrant, appoint an agent having an office in New York, New York,
for the purpose of issuing shares of Common Stock on the exercise of the
Warrants pursuant to Section I, exchanging Warrants pursuant to Section VIII,
and replacing Warrants pursuant to Section IX, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
XI. REMEDIES. The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
XII. NEGOTIABILITY, ETC. This Warrant is issued upon the
following terms, to all of which each Warrantholder or owner hereof by the
taking hereof consents and agrees:
(a) subject to the terms of Section II of this
Warrant and Section 5 of the Securities Purchase Agreement, title to this
Warrant may be transferred by endorsement (by the Warrantholder hereof executing
the form of assignment at the end hereof) and delivery in the same manner as in
the case of a negotiable instrument transferable by endorsement and delivery;
7
<PAGE>
(b) any person in possession of this Warrant
properly endorsed is authorized to represent himself as absolute owner hereof
and is empowered to transfer absolute title hereto by endorsement and delivery
hereof to a bona fide purchaser hereof for value; each prior taker or owner
waives and renounces all of his equities or rights in this Warrant in favor of
each such bona fide purchaser, and each such bona fide purchaser shall acquire
absolute title hereto and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of
the Company, the Company may treat the register Warrantholder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
XIII. NOTICES. All notices and other communications from the
Company to the registered Warrantholder of this Warrant shall be given in
writing (unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error- free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed,
to such address as may have been furnished to the Company in writing by such
registered Warrantholder or, until any such registered Warrantholder furnishes
to the Company an address, then to, and at the address of, the last registered
Warrantholder of this Warrant who has so furnished an address to the Company.
XIV. MISCELLANEOUS.
(a) The terms of this Warrant shall be binding
upon and shall inure to the benefit of any successors or assigns of the Company
and of the holder or holders hereof and of the shares of Common Stock issued or
issuable upon the exercise hereof.
(b) Except as otherwise set forth herein, no
holder of this Warrant, as such, shall be entitled to vote or receive dividends
or be deemed to be a stockholder of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the holder of
this Warrant, as such, any rights of a stockholder of the Company or any right
to vote, give or withhold consent to any corporate action, receive notice of
meetings, receive dividends or subscription rights, or otherwise.
(c) Receipt of this Warrant by the holder
hereof shall constitute acceptance of an agreement to the foregoing terms and
conditions.
(d) The Warrant and the performance of the
parties hereunder shall be construed and interpreted in accordance with the laws
of the State of New York and the parties hereunder consent and agree that the
State and Federal Courts which sit in the State of New York and the County of
New York shall have exclusive jurisdiction with respect to all controversies and
disputes arising hereunder.
8
<PAGE>
(e) This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
[SIGNATURE PAGE FOLLOWS]
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer and its corporate seal to be affixed
hereto.
Dated: September 30, 1999
ACCESS POWER, INC.
BY: /s/ Glenn Smith
Name: Glenn Smith
Title: President/CEO
10
<PAGE>
SUBSCRIPTION FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXERCISE THE WARRANT)
TO: ACCESS POWER, INC.
The undersigned hereby exercises the right to purchase _______
shares of Common Stock, par value $.001 per share, covered by the attached
Warrant in accordance with the terms and conditions thereof, and herewith makes
payment of the Warrant Price for such shares in full. The undersigned requests
that a certificate for such shares of Common Stock be registered in the name of
___________________________________, whose address is ______________________
________________________, and that such Certificate be delivered to , whose
address is _____________________________________________.
_______________________________________
NAME (please print)
________________________________________
SIGNATURE
(Signature must conform in all respects to
the name of the registered Warrantholder, as
specified on the face of the Warrant.)
_________________________________________
SOCIAL SECURITY NUMBER (or Other
Identifying Number of Holder)
_________________________________________
ADDRESS
DATED:__________________
<PAGE>
ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED WARRANTHOLDER
IF HE DESIRES TO TRANSFER THE WARRANT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________ (please print name and address of
transferee) the right to purchase shares of Common Stock of ACCESS POWER, INC.,
evidenced by the within Warrant, and does hereby irrevocably constitute and
appoint _____________________________ Attorney to transfer the said Warrant on
the books of the Company, with full power of substitution.
_______________________________________
NAME (please print)
________________________________________
SIGNATURE
(Signature must conform in all respects to
the name of the registered Warrantholder, as
specified on the face of the Warrant.)
_________________________________________
SOCIAL SECURITY NUMBER (or Other
Identifying Number of Holder)
IN THE PRESENCE OF:
___________________________________
TATUM CFO
PARTNERS, L.L.P.
RETAINER AGREEMENT
This Agreement is entered into on September 23, 1999 by Access Power, Inc. (the
"Company"), Tatum CFO Partners, LLP ("Tatum") and Howard Kaskel ("the CFO")
(collectively, the "parties").
WHEREAS, the Company wishes to engage the CFO to provide certain services and
Tatum wishes that the CFO provide such services in return for certain
consideration; the parties after full and careful negotiation agree as follows:
I. SERVICES; FEES AND PAYMENTS
A. Beginning on September 1, 1999, (the "effective date"), the CFO will
perform, under the title Chief Financial Officer, CFO Services for a total
monthly fee of $10,800 (the "Monthly Fee").
B. The CFO will provide CFO Services for four (4) days per week.
C. The Company will pay the CFO directly according the Company's normal
payroll process a portion of the Monthly Fee equal to $9,000 (the
"Salary"); and will pay Tatum the remaining portion of $1,800.00 ("Retainer
Fee").
D. If this Agreement commences or concludes other than at the beginning or end
of a month, each portion of the Monthly Fee shall be prorated for that
month.
E. The Company also will pay Tatum the incentive bonus set forth in Schedule
A.
F. The Company will pay all amounts owed Tatum no later than the 15th day of
the month for which amounts are invoiced.
G. The Company will promptly reimburse the CFO for travel and out-of-pocket
business expenses.
H. In the case that the CFO provides CFO Services in excess of 4 days per
week, the Company will pay an additional $660 daily fee (the "Additional
Daily Fee").
I. The Company will pay the CFO directly according the Company's normal
payroll process 83.33% of the Additional Daily Fee (the "Additional
Salary"), and will pay Tatum the remaining 16.67% portion ("Additional
Retainer Fee").
II. CFO SERVICES
A. CFO Services is defined as those certain services as specified and directed
by the Company from time to time and which the CFO is able to perform
within the time allotted under this agreement.
III. THE RELATIONSHIP OF THE CFO AND THE COMPANY
A. The Company, Tatum and the CFO agree that the CFO will be an employee of
the Company.
B. As an employee of the Company, the CFO will work under the exclusive
management and authority of the Company.
C. Unless agreed to in writing by all parties, the CFO is not an officer, an
executive officer, or a director of the Company, and the title CFO or Chief
Financial Officer does not confer that status
D. The CFO will be eligible for vacation and holidays consistent with the
Company's policy as it applies to senior management, except that any
initial delay period will not apply.
E. The CFO elects not to participate in the Company's employment retirement
plan or any other employee benefit plan, and waives any coverage that may
otherwise exist. The Company will not include the CFO as participant in any
such plan, unless required to do so by law for plan qualification. However,
notwithstanding the foregoing, the CFO may participate (without company
matching payments) in the Company's 401(k) plan, if such a plan is
provided. The CFO waives any past or present claim it may have against the
Company for any discrimination.
IV. THE RELATIONSHIP OF TATUM AND THE COMPANY
A. The Company, Tatum and the CFO agree that for purposes of this Agreement,
Tatum's relationship with the Company is to make the CFO available to the
Company to provide CFO services. However, the Company is solely responsible
for its evaluation, management and use of the CFO and the CFO Services.
<PAGE>
V. THE RELATIONSHIP OF TATUM AND THE CFO
A. The Company, Tatum and the CFO agree that for purposes of this Agreement,
Tatum's relationship with the CFO is to make available to the CFO certain
resources of Tatum. These resources are not warranted or guaranteed in any
way and the Company is solely responsibility for its evaluation, management
and use of these resources.
VI. STANDARD DISCLAIMERS
A. Neither Tatum nor the CFO will be liable for Y2K related losses, costs,
damages or expenses.
B. Tatum will not be liable for any non-compliance with federal, state or
local laws or regulations.
C. The Company agrees that reports, projections and/or forecasts can be
prepared only at the Company's direction and reflect the judgment of the
Company. Tatum makes no representation or warranty as to the accuracy or
reliability of reports, projections and/or forecasts; and will not be held
liable for any claims of reliance on such reports, projections and/or
forecasts.
VII. INDEMNITY; JOINT DEFENSE; LIABILITY LIMITATIONS; ARBITRATION; INSURANCE
A. The Company agrees to indemnify Tatum to the full extent permitted by law
for any losses, costs, damages and expenses, including attorneys' fees, as
such are incurred, in connection with (1) any cause of action, suit or
other proceeding arising in connection with Tatum's engagement by the
Company under this Agreement, the CFO's employment with the Company or the
CFO's activities while employed by the Company, and (2) any legal
proceeding in which Tatum may be required or agree to participate, but in
which Tatum is not a party.
This indemnification does not apply to actions taken by Tatum in bad faith.
B. If the Company and Tatum are defendants in any action, suit, or other
proceeding, the defense of Tatum will be represented by counsel selected by
Tatum.
C. The Company and Tatum agree to binding arbitration under the rules of the
American Arbitration Association ("AAA"), to take place in the AAA's
Atlanta office, if any dispute arises between them.
D. The Parties recognize and agree that any breach by Tatum of this Agreement
would result in injury that would be impossible to accurately ascertain.
Therefore, Tatum shall pay to the Company as liquidated damages, and not as
a penalty, an amount equal to two full months of Retainer Fee. The parties
agree that this amount of liquidated damages represents a reasonable
approximation of the damages that would be incurred as a result of a breach
by Tatum of this Agreement.
E. In any event, at any time, Tatum may pay a sum equal to the total Retainer
Fee paid under this Agreement for the most recent four months, which
payment the Company agrees shall serve as final satisfaction and accord for
any and all such liabilities of Tatum under this Agreement.
F. As a precondition for recovery of any alleged liability, the Company shall
give Tatum notice, in writing, the alleged basis for liability within
thirty (30) days of discovering the circumstances giving rise to such
alleged liability, and no legal or other action shall be taken by the
Company against Tatum more than (60) days after such notice has been given
or (ii) less than thirty (30) days after such notice has been given, in
order that Tatum shall have the opportunity to investigate in a timely
manner and, where possible, correct of rectify the alleged basis for
liability.
G. Tatum will not be liable in any event for incidental or consequential
damages including without limitation any interruption of business or loss
of business, profit, or good will.
H. To the extent the Company has directors' and officers' liability insurance
("including entity coverage") and/or errors and omissions liability
insurance in effect, the Company will provide such insurance coverage for
the CFO.
VIII. GENERAL TERMS AND CONDITIONS
A. This Agreement may be canceled by either party effective on no less than 30
days' advance written notice. However, Tatum retains the right to terminate
this agreement immediately if the Company has not remained current with its
obligations to Tatum under this Agreement, the Company is not in compliance
with any government regulatory entity, or by death or disability of the
CFO.
<PAGE>
B. The provisions on the attached Schedule A are incorporated by reference as
if set forth herein, and the provisions concerning the bonus in Schedule A
will survive any cancellation of this Agreement.
C. Neither the Company, Tatum nor the CFO shall be deemed to have waived any
rights or remedies accruing under this Agreement unless such waiver is in
writing and signed by the party electing to waive the right or remedy.
D. This Agreement is governed by Georgia law.
E. The terms of this Agreement are severable, and they may not be amended
except in writing signed by the parties. This Agreement binds and benefits
the successors of the parties.
F. This Agreement contains the entire agreement between the parties,
superseding any prior oral or written statements or agreements.
G. The persons signing below are authorized to sign on behalf of each party,
and their signatures are all necessary signatures.
TATUM CFO PARTNERS, LLP The COMPANY The CFO
/s/ Richard D. Hissam /s/ Glenn A. Smith /s/ Howard L.Kaskel
Signature Signature Signature
Richard D. Hissam Glenn A. Smith Howard L. Kaskel
Area Partner CEO
9/23/99 9/23/99 9/23/99
- ------- ------- -------
Date Date Date
<PAGE>
SCHEDULE A TO TATUM RETAINER AGREEMENT
The Company will provide to Tatum CFO, on an annual basis, during the term of
this Agreement, an amount of stock options commensurate to the number of options
granted to the other executive officers of the Company. Such on-going options
will be issued upon the same terms and at the same time as such grant is made
for said officers of the Company. Seventy-five percent of such options will be
granted to the CFO and twenty-five percent of such options will be granted to
Tatum CFO.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of September 30, 1999, is
entered into by and among ACCESS POWER, INC., a Florida corporation (the
"Company") and Maurice Matovich, Glenn Smith, Tod Smith, and Howard L. Kaskel
(each, individually a "Shareholder" and , collectively, the "Shareholders") and
BAMBOO INVESTORS LLC, a Delaware limited partnership (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and the Purchasers are executing and delivering
this Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and/or Section 4(2) of the Securities Act.
WHEREAS, the Purchaser wishes to purchase, and the Company wishes to
issue, upon the terms and subject to the conditions of this Agreement,
$1,000,000 principal amount of the Company's 6% Convertible Debentures due 2001
(the "Debentures"), Warrants to purchase 200,000 shares of Common Stock of the
Company (the "Common Stock Warrants") and Warrants (the "Special Warrants" and,
together with the Debentures and the Common Stock Warrants, the "Securities") to
purchase $1,000,000 principal amount of the Company's 6% Convertible Debentures
due 2001 (the "Warrant Debentures") and warrants (the "Special Common Stock
Warrants") to purchase 200,000 shares of Common Stock. The Debentures and the
Warrant Debentures are convertible, at the holder's option, into the Company's
common stock, par value $.001 per share (the "Common Stock"), on the terms set
forth therein, the Common Stock Warrants and Special Common Stock Warrants may
be exercised for the purchase of Common Stock, on the terms set forth therein,
and the Special Warrants may be exercised for the purchase of Warrant Debentures
and Special Common Stock Warrants, on the terms set forth therein.
WHEREAS, in order to induce the Purchaser to enter into the
transactions contemplated hereby, the Shareholders have agreed to enter into
certain other covenants set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE
CLOSING. The Purchaser hereby agrees to purchase from the Company
on the Closing Date (as defined herein) the Debentures, the Common Stock
Warrants and the Special Warrants for an aggregate purchase price of $1,000,100
which shall be payable in same day funds. The Debentures shall be issued in
substantially the form attached hereto as Exhibit A, the Common Stock Warrants
shall be issued in substantially the form attached hereto as Exhibit B and the
Special Warrants shall be issued in substantially the form attached hereto as
Exhibit C.
1
<PAGE>
The Securities to be purchased by the Purchaser hereunder, in
definitive form, and in such denominations and registered in such names as the
Purchaser or its representative, if any, may request upon notice to the Company,
shall be delivered by or on behalf of the Company for the account of the
Purchaser, against payment by or on behalf of the Purchaser of the purchase
price therefor by wire transfer to an account of the Company, all at the offices
of Kronish Lieb Weiner & Hellman LLP, at 9:30 a.m., New York time on September
30, 1999, or at such other time and date as the Purchaser (or its
representative, as the case may be) and the Company may agree upon in writing,
such date being referred to herein as the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER: ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Purchaser represents and warrants to, and covenants and agrees
with, the Company and the Shareholders as follows:
a. The Purchaser and each of its equity owners is (i) experienced
in making investments of the kind described in this Agreement and the related
documents, (ii) able, by reason of the business and financial experience of its
management, to protect its own interests in connection with the transactions
described in this Agreement and the related documents, (iii) able to afford the
entire loss of its investment in the Securities; and (iv) is an accredited
investor as defined in Rule 501 of Regulation D promulgated by the commission.
b. All subsequent ffers and sales of the Debentures, the Common
Stock Warrants, the Special Warrants, Warrant Debentures, Special Common Stock
Warrants and the Common Stock issuable upon conversion or exercise of, or in
lieu of interest payments on, the Debentures, Warrant Debentures, Special Common
Stock Warrants or Common Stock Warrants it shall have purchased, shall be made
pursuant to an effective registration statement under the Securities Act or
pursuant to an applicable exemption from such registration.
c. The Purchaser understands that the Securities are being
offered and sold to it in reliance upon exemptions from the registration
requirements of the United States federal securities laws, and that the Company
is relying upon the truth and accuracy of the Purchaser's representations and
warranties, and the Purchaser's compliance with its agreements, each as set
forth herein, in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.
d. The Purchaser: (A) has been provided with sufficient
information with respect to the business of the Company and such documents
relating to the Company as the Purchaser has requested and the Purchaser has
carefully reviewed the same including, without limitation, the Company's Form
10-KSB for the fiscal year ended December 31, 1998 and Forms 10-QSB for the
quarters ended March 31 and June 30, 1999 filed with the Securities and Exchange
Commission (the "Commission"), (B) has been provided with such additional
information with respect to the Company and its business and financial condition
2
<PAGE>
as the Purchaser, or its agent or attorney, has requested, and (C) has had
access to management of the Company and the opportunity to discuss the
information provided by management of the Company, and any questions that the
Purchaser had with respect thereto have been answered to the full satisfaction
of the Purchaser.
e. The Purchaser has the requisite corporate power and authority
to enter into this Agreement, and the registration rights agreement, dated as of
the date hereof, between the Company and the Purchaser (the "Registration Rights
Agreement").
f. This Agreement, the Registration Rights Agreement, and the
transactions contemplated hereby and thereby, have been duly and validly
authorized by the Purchaser; and such agreements, when executed and delivered by
the Purchaser, the Company and the Shareholders (as applicable) will each be a
valid and binding agreement of the Purchaser, enforceable in accordance with
their respective terms, except to the extent that enforcement of each such
agreement may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and to general principles of equity.
3. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Purchaser that:
a. ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
The Company has no subsidiaries. The Company is duly qualified as a foreign
corporation in all jurisdictions in which the failure to so qualify would have a
material adverse effect on the Company.
b. CAPITALIZATION. On the date hereof, the authorized capital of
the Company consists of 40,000,000 shares of Common Stock, par value $.001 per
share, of which 32,719,527 shares are issued and outstanding (prior to the
consummation of the exchange required by Section 5(w) hereof) and 10,000,000
shares of Preferred Stock, par value $.001 per share, of which one thousand
(1,000) shares have been designated as Series A Preferred Stock, none of which
are outstanding, and four thousand (4,000) shares have been designated as Series
B Convertible Preferred Stock, of which 3,702 shares will be issued in exchange
for the cancellation of 3,702,000 shares of Common Stock immediately prior to
the Closing. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights. Schedule 3b sets forth all of the options, warrants and
convertible securities of the Company, and any other rights to acquire
securities of the Company (collectively, the Derivative Securities, (ii) the
issue date of such Derivative Securities, (iii) the number of shares of Common
Stock of the Company into which such Derivative Securities are convertible as of
the date hereof, (iv) the conversion or exercise price or prices of such
Derivative Securities as of the date hereof, (v) the expiration date of any
conversion or exercise rights held by the owners of such Derivative Securities
and (vi) any registration rights associated with such Derivative Securities.
3
<PAGE>
c. CONCERNING THE COMMON STOCK, THE COMMON STOCK WARRANTS, THE
DEBENTURES AND THE SPECIAL WARRANTS. The Common Stock issuable upon conversion
of, or in lieu of interest payments on, the Debentures and the Warrant
Debentures, and upon exercise of the Common Stock Warrants and the Special
Common Stock Warrants, when issued, shall be duly and validly issued, fully paid
and non-assessable, will not be subject to preemptive rights and will not
subject the holder thereof to personal liability by reason of being such a
holder. The Warrant Debentures, when issued, shall be duly and validly
authorized for issuance and, when issued in accordance with the terms of the
Special Warrants, will be the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. There are currently no preemptive rights of any
stockholder of the Company, as such, to acquire the Securities or the Common
Stock issuable to the Purchaser pursuant to the terms of the Debentures, the
Warrant Debentures, the Special Common Stock Warrants and the Common Stock
Warrants or the Warrant Debentures or Special Common Stock Warrants issuable to
the Purchaser pursuant to the terms of the Special Warrants.
d. REPORTING COMPANY STATUS. The Company is a reporting company
under Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and has filed all materials and documents required to be filed
with the Commission pursuant to its reporting obligations thereunder. Trading in
the Common Stock currently is quoted on NASD's OTC Bulletin Board (the
"OTC:BB"), and the Company is not aware of any pending or contemplated action or
proceeding of any kind to suspend trading of the Common Stock.
e. AUTHORIZED SHARES. Immediately after the Closing, the Company
will have available 10,982,473 authorized and unissued shares of Common Stock to
effect the conversion of the Debentures and the Warrant Debentures and for the
exercise of the Common Stock Warrants and Special Common Stock Warrants. The
Company understands and acknowledges the potentially dilutive effect to the
Common Stock of the issuance of shares of Common Stock upon conversion of the
Debentures and the Warrant Debentures and the exercise of the Common Stock
Warrants and the Special Common Stock Warrants. The Company further acknowledges
that its obligation to issue Warrant Debentures and Special Common Stock
Warrants upon exercise of the Special Warrants and to issue shares of Common
Stock upon conversion of the Debentures and Warrant Debentures and upon exercise
of the Common Stock Warrants and Special Common Stock Warrants is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company and notwithstanding
the commencement of any case under 11 U.S.C. Section 101 ET SEQ. (the
"Bankruptcy Code"). In the event the Company becomes a debtor under the
Bankruptcy Code, the Company hereby waives to the fullest extent permitted any
rights to relief it may have under 11 U.S.C. Section 362 in respect of the
conversion of the Debentures and the Warrant Debentures and the exercise of the
Common Stock Warrants, the Special Common Stock Warrants and the Special
Warrants. The Company agrees, without cost or expense to the Purchaser, to take
or consent to any and all action necessary to effectuate relief under 11 U.S.C.
Section 362.
4
<PAGE>
f. LEGALITY. The Company has the requisite corporate power and
authority to enter into this Agreement and the Registration Rights Agreement,
and to issue and deliver the Debentures, the Common Stock Warrants and the
Special Warrants, the Warrant Debentures and Special Common Stock Warrants
issuable upon exercise of the Special Warrants, the Common Stock issuable upon
conversion of, or in lieu of interest payments on, the Debentures and the
Warrant Debentures (to the extent of its authorized and unissued Common Stock,
including any future increase to such authorized and unissued Common Stock) and
the Common Stock issuable upon the exercise of the Common Stock Warrants and
Special Common Stock Warrants (to the extent of its authorized and unissued
Common Stock, including any future increase to such authorized and unissued
Common Stock). Each of the Shareholders has the requisite capacity to enter into
this Agreement.
g. TRANSACTION AGREEMENTS. This Agreement, the Registration Rights
Agreement, the Debentures, the Warrant Debentures, the Special Warrants, the
Common Stock Warrants and the Special Common Stock Warrants (collectively, the
"Primary Documents"), and the transactions contemplated hereby and thereby, have
been duly and validly authorized by the Company; this Agreement has been duly
executed and delivered by the Company and the Shareholders and this Agreement
is, and the other Primary Documents, when executed and delivered by the Company
will each be, a valid and binding agreement of the Company and the Shareholders,
as applicable, enforceable in accordance with their respective terms, except to
the extent that enforcement of each of the Primary Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and to general principles of equity.
h. NON-CONTRAVENTION. The execution and delivery of this Agreement
and each of the other Primary Documents, and the consummation by the Company and
the Shareholders of the transactions contemplated by this Agreement and each of
the other Primary Documents, does not and will not conflict with or result in a
breach by the Company or any Shareholder of any of the terms or provisions of,
or constitute a default under, the Articles of Incorporation or By-laws of the
Company, or any material indenture, mortgage, deed of trust or other agreement
or instrument to which the Company or any Shareholder is a party or by which
they or any of their properties or assets are bound, or any existing applicable
law, rule, or regulation or any applicable decree, judgment or order of any
court or United States or foreign federal or state regulatory body,
administrative agency, or any other governmental body having jurisdiction over
the Company, any Shareholder or any of their properties or assets. Except as set
forth on Schedule 3h, neither the filing of the registration statement required
to be filed by the Company pursuant to the Registration Rights Agreement nor the
offering or sale of the Securities as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied on or prior
to the Closing Date, for or relating to the registration of any shares of the
Common Stock.
i. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company or any Shareholder for the entry into or the performance of this
5
<PAGE>
Agreement and the other Primary Documents provided, however, the performance of
this Agreement and the other Primary Documents are subject to compliance with
the registration requirements of the Commission.
j. SEC FILINGS. Except as set forth in Schedule 3j, none of the
reports or documents filed by the Company with the Commission contained, at the
time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein, or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
k. STABILIZATION. Neither the Company, any Shareholder, nor any of
their respective affiliates, has taken or may take, directly or indirectly, any
action designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock.
l. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company's public filings with the Commission, since December 31, 1998, there has
been no material adverse change nor any material adverse development in the
business, properties, operations, financial condition, prospects, outstanding
securities or results of operations of the Company.
m. FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public generally) that has not
been disclosed in writing to the Purchaser (i) that could reasonably be expected
to have a material adverse effect upon the condition (financial or otherwise) or
the earnings, business affairs, properties or assets of the Company or (ii) that
could reasonably be expected to materially and adversely affect the ability of
the Company or any Shareholder to perform the obligations set forth in the
Primary Documents.
n. TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company has
good and marketable title to all of its material properties and assets, both
real and personal, and has good title to all its leasehold interests, in each
case subject only to mortgages, pledges, liens, security interests, conditional
sale agreements, encumbrances or charges created in the ordinary course of
business.
o. PATENTS AND OTHER PROPRIETARY RIGHTS. The Company has
sufficient title and ownership of all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for the conduct of its business as now conducted and as proposed to be
conducted, and such business does not and would not conflict with or constitute
an infringement on the rights of others.
p. PERMITS. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business as now
conducted, the lack of which would materially and adversely affect the business
or financial condition of the Company. The Company is not in default in any
respect under any of such franchises, permits, licenses or similar authority.
6
<PAGE>
q. ABSENCE OF LITIGATION. Except as disclosed in the Company's
public filings with the Commission, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company threatened against or affecting the Company
or any Shareholder, in which an unfavorable decision, ruling or finding would
have a material adverse effect on the properties, business, condition (financial
or other) or results of operations of the Company or the transactions
contemplated by the Primary Documents, or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company or any
Shareholder to perform its obligations under, the Primary Documents.
r. NO DEFAULT. Except as set forth on Schedule 3r, the Company is
not in default in the performance or observance of any obligation, covenant or
condition contained in any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it or its property
may be bound.
s. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the
Company's public filings with the Commission and as set forth on Schedule 3s,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors or affiliates that, had they existed
on December 31, 1998, would have been required to be disclosed in the Company's
Annual Report on Form 10KSB for the year ended December 31, 1998.
t. EMPLOYMENT MATTERS. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
u. TAXES. All applicable tax returns required to be filed by the
Company have been prepared and filed in compliance with all applicable laws, or
if not yet filed, have been granted extensions of the filing dates which
extensions have not expired, and all taxes, assessments, fees and other
governmental charges upon the Company, or upon any of its properties, income or
franchises, shown in such returns and on assessments received by the Company to
be due and payable have been paid, or adequate reserves therefor have been set
up if any of such taxes are being contested in good faith; or if any of such tax
returns have not been filed or if any such taxes have not been paid or so
reserved for, the failure to so file or to pay would not in the aggregate have a
material adverse effect on the business or financial condition of the Company.
v. FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any
of its directors, officers or other employees has (i) used any Company funds for
any unlawful contribution, endorsement, gift, entertainment or other unlawful
7
<PAGE>
expense relating to any political activity; (ii) made any direct or indirect
unlawful payment of Company funds to any foreign or domestic government official
or employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other similar payment to any person.
w. INTERNAL CONTROLS. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
x. INVESTMENT COMPANY ACT. The Company is not conducting, and will
not conduct, its business in a manner which would cause it to become, an
"investment company," as defined in Section 3(a) of the Investment Company Act
of 1940, as amended.
y. AGENT FEES. Other than a $100,000 cash payment to, and warrants
to purchase 100,000 shares of Common Stock (which warrants shall be identical in
all material respects to the Common Stock Warrants issued to Purchaser) to be
issued to, Paul Revere Capital Corp. as placement agent, neither the Company nor
any Shareholder has incurred any liability for any finder's or brokerage fees or
agent's commissions in connection with the offer and sale of the Securities
contemplated by this Agreement.
z. PRIVATE OFFERING. Subject to the accuracy of the Purchaser's
representations and warranties set forth in Section 2 hereof, (i) the offer,
sale and issuance of the Securities, , (ii) the issuance of Common Stock in lieu
of interest payments on the Debentures and the Warrant Debentures and (iii) the
conversion and/or exercise of the Securities, the Warrant Debentures and the
Special Common Stock Warrants into shares of Common Stock, Warrant Debentures or
Special Common Stock Warrants, each as contemplated by this Agreement and the
other Primary Documents, are exempt from the registration requirements of the
Securities Act. The Company agrees that neither the Company nor anyone acting on
its behalf will offer any of the Securities or any similar securities for
issuance or sale, or solicit any offer to acquire any of the same from anyone in
a transaction which, if consummated, would be subject to integration with the
offer and sale of Securities contemplated hereunder so as to render the issuance
and sale of such securities subject to the registration requirements of the
Securities Act. The Company has not offered or sold the Securities by any form
of general solicitation or general advertising, as such terms are used in Rule
502(c) under the Securities Act.
aa. FULL DISCLOSURE. The representations and warranties of the
Company and the Shareholders set forth in this Agreement (and the schedules
8
<PAGE>
hereto) do not contain any untrue statement of a material fact or omit any
material fact necessary to make the statements contained herein, in light of the
circumstances under which they were made, not misleading.
4. REPRESENTATIONS OF THE SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant to the
Purchaser that:
a. LEGALITY. Each of the Shareholders has the requisite capacity
to enter into this Agreement.
b. TRANSACTION AGREEMENTS. This Agreement has been duly executed
and delivered by each of the Shareholders and is a valid and binding agreement
of the Shareholders, enforceable in accordance with its terms, except to the
extent that enforcement of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights generally and to
general principles of equity.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement
by the Shareholders and the consummation by the Shareholders of the transactions
contemplated by this Agreement does not and will not conflict with or result in
a breach by any Shareholder of any material indenture, mortgage, deed of trust
or other agreement or instrument to which any Shareholder is a party or by which
they or any of their properties or assets are bound, or any existing applicable
law, rule, or regulation or any applicable decree, judgment or order of any
court or United States or foreign federal or state regulatory body,
administrative agency, or any other governmental body having jurisdiction over
any Shareholder or any of their properties or assets.
d. OWNERSHIP OF CAPITAL STOCK. Schedule 4d sets forth all of the
shares of Common Stock and Preferred Stock and all of the Derivative Securities
held by the Shareholders.
e. APPROVALS. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, stock
exchange or market is required to be obtained by any Shareholder for the entry
into or the performance of this Agreement by the Shareholders.
f. STABILIZATION. No Shareholder, nor any of their respective
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
shares of Common Stock.
g. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of any Shareholder, threatened against or affecting any
Shareholder, in which an unfavorable decision, ruling or finding would adversely
affect the validity or enforceability of, or the authority or ability of any
Shareholder to perform its obligations under, this Agreement.
9
<PAGE>
h. FULL DISCLOSURE. The representations and warranties of the
Shareholders set forth in this Agreement do not contain any untrue statement of
a material fact or omit any material fact necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. TRANSFER RESTRICTIONS. The Purchaser acknowledges that, except
as provided in the Registration Rights Agreement, (1) neither the Common Stock
issuable upon conversion of, or in lieu of interest payments on, the Debentures
and Warrant Debentures or upon exercise of the Common Stock Warrants and Special
Common Stock Warrants, nor the Warrant Debentures and Special Common Stock
Warrants issuable upon exercise of the Special Warrants (collectively, the
"Underlying Securities") nor the Securities, have been, and are not being,
registered under the Securities Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) they are transferred pursuant to an
exemption from such registration; and (2) any sale of the Securities or
Underlying Securities made in reliance upon Rule 144 under the Securities Act
may be made only in accordance with the terms of said Rule. The provisions of
Section 5(a) and 5(b) hereof, together with the rights of the Purchaser under
this Agreement and the other Primary Documents, shall be binding upon any
subsequent transferee of the Securities.
b. RESTRICTIVE LEGEND. The Purchaser acknowledges and agrees that,
until such time as the Securities or the Underlying Securities shall have been
registered under the Securities Act and offered and sold in a transaction which
complies with such registration or the Purchaser demonstrates to the reasonable
satisfaction of the Company and its counsel that such registration shall no
longer be required, such securities may be subject to a stop-transfer order
placed against the transfer of such securities, and such securities shall bear a
restrictive legend in substantially the following form:
THESE SECURITIES (INCLUDING ANY UNDERLYING
SECURITIES) HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION SHALL NO
LONGER BE REQUIRED.
c. FILINGS. The Company undertakes and agrees that it will make
all required filings in connection with the sale of the Securities and/or
Underlying Securities to the Purchaser as required by United States laws and
10
<PAGE>
regulations, or by any domestic securities exchange or trading market, and if
applicable, the filing of a notice on Form D (at such time and in such manner as
required by the Rules and Regulations of the Commission), and to provide copies
thereof to the Purchaser promptly after such filing or filings.
d. OTC LISTING. The Company agrees and covenants that it will not
seek to have trading of its Common Stock in the over-the-counter market
suspended or terminated, will use its best efforts to maintain its eligibility
for trading quotation on the OTC:BB (including, encouraging one or more
broker-dealers to act as "market makers" in the Common Stock on the
over-the-counter market and providing all information to such parties as shall
be required to maintain such eligibility) and, if such trading of its Common
Stock is suspended or terminated, will use its best efforts to requalify its
Common Stock or otherwise cause such trading to resume.
e. REPORTING STATUS. So long as the Purchaser beneficially owns
any of the Securities or the Underlying Securities, the Company shall timely
file all reports required to be filed with the Commission pursuant to Section 13
or 15(d) of the Exchange Act and shall not terminate its status as an issuer
required to file reports under the Exchange Act or cease such filings, even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
f. STATE SECURITIES FILINGS. The Company shall from time to
time promptly take such action as the Purchaser or any of its representatives,
if applicable, may reasonably request to qualify the Securities and the
Underlying Securities for offering and sale by the Purchaser under the
securities laws (other than United States federal securities laws) of the
jurisdictions in the United States as shall be so identified to the Company, and
to comply with such laws so as to permit the continuance of sales therein,
provided that in connection therewith, the Company shall not be required (i) to
qualify as a foreign corporation or to file a general consent to the service of
process in any jurisdiction or (ii) to qualify the Securities or the Underlying
Securities for offering and sale by the Purchaser in more than five such
jurisdictions.
g. USE OF PROCEEDS. The Company will use all of the net proceeds
from the issuance of the Securities for working capital.
h. RESERVATION OF COMMON STOCK; INCREASE AUTHORIZED COMMON STOCK.
Concurrently herewith, the Company will reserve for the purpose of issuance upon
conversion of, or in lieu of interest payments on, the Debentures and the
Warrant Debentures and the exercise of the Common Stock Warrants and Special
Common Stock Warrants all shares of Common Stock not currently required to be
reserved for other purposes. The Purchaser acknowledges that at the Closing Date
the Company had at least 10,982,000 shares of authorized Common Stock available
for reservation as required herewith. The Company will use its best efforts to
cause its Articles of Incorporation to be amended so as to increase the number
of shares of Common Stock authorized for issuance by at least 40 million and,
11
<PAGE>
immediately after effecting such amendment, cause to be reserved for the purpose
of issuance under the terms of the Securities and Underlying Securities, as
applicable, a number of shares of Common Stock that is no less than the Minimum
Conversion Shares (as defined in the Registration Rights Agreement) on such
date. If on any ten trading days during any 20 consecutive trading day period,
the number of shares reserved by the Company pursuant to this provision is less
than the Minimum Conversion Shares, the Company will promptly reserve for
issuance additional shares of Common Stock so that after reserving such
additional shares, the number of shares so reserved is at least equal to the
Minimum Conversion Shares on such date. Each Shareholder hereby agrees to vote
all shares of Common Stock held by such Shareholder in favor of any resolution
submitted to the shareholders of the Company for the purpose of permitting the
Company to increase the number of shares of authorized and unissued Common Stock
in satisfaction hereof.
i. RESTRICTIONS ON CERTAIN FUTURE FINANCINGS. The provisions of
this Section 5(i) shall apply at any time during the period commencing on the
date hereof and ending on the later of (a) a date that is one hundred and eighty
(180) days following the date of effectiveness of the registration statement
covering the Common Stock, Common Stock Warrants and Special Common Stock
Warrants contemplated by the Registration Rights Agreement (the "Required
Registration Statement"); PROVIDED that if the Purchaser shall be unable to sell
Registrable Securities (as defined in the Registration Rights Agreement)
pursuant to the Required Registration Statement for any number of days after the
effectiveness of the Required Registration Statement other than as a result of
any action or inaction by the Purchaser, the provisions of this Section 5(i)
shall apply for an additional number of days equal to the number of days during
which the Purchaser is unable to sell Registrable Securities and (b) the earlier
of (x) a date that is one hundred and eighty (180) days following the date the
Special Warrant is exercised or (y) the expiration date of the Special Warrant.
The Company agrees that if it shall reach an agreement to enter into a
transaction to offer to issue or sell any equity securities (including any
security convertible into, or exercisable or exchangeable into, or exercisable
for, such an equity security) in a financing, the Company will promptly give to
the Purchaser written notice, via facsimile, of the terms and conditions of such
proposed transaction (the "ROFR Notice"), including the securities proposed to
be issued or sold, the proposed consideration, the identity of the proposed
offeree and the date (which may not be more than 60 days after such ROFR Notice)
on which the proposed transaction is to occur (the "Proposed Sale Date") .
Purchaser shall have a right of first refusal to commit to provide the funds
pursuant to the terms as outlined in the ROFR Notice. Purchaser shall have ten
(10) business days to reply in writing after receipt of the ROFR Notice from the
Company. In the event such written reply is not received by the Company within
such ten business day period, the Company shall have the right to conclude a
transaction within 60 days with the investor or investors provided in the ROFR
Notice.
j. ADDITIONAL REGISTRATION STATEMENTS. At any time during the
period commencing on the date hereof and ending on the later of (a) a date that
is one hundred and eighty (180) days following the date of effectiveness of the
Required Registration Statement; PROVIDED that if the Purchaser shall be unable
to sell Registrable Securities (as defined in the Registration Rights Agreement)
pursuant to the Required Registration Statement for any number of days after the
effectiveness of the Required Registration Statement other than as a result of
any action or inaction by the Purchaser, the provisions of this Section 5(j)
shall apply for an additional number of days equal to the number of days during
which the Purchaser is unable to sell Registrable Securities and (b) the earlier
of (x) a date that is one hundred and eighty (180) days following the date the
Special Warrant is exercised and (y) the expiration date of the Special Warrant,
12
<PAGE>
the Company agrees that it will not cause any registration statement under the
Securities Act (other than the Required Registration Statement and registration
statements on Form S-8 covering the sale of not more than an aggregate of
500,000 shares of Common Stock to officers, directors, employees and consultants
of the Company) to be declared effective by the Commission.
k. AUTHORIZATIONS AND APPROVALS. The Company agrees to use its
best efforts (including obtaining any required vote of its stockholders) to
obtain any authorization or approval of the issuance of the Common Stock
issuable upon conversion of, or in lieu of interest on, the Debentures and the
Warrant Debentures and exercise of the Common Stock Warrants and Special Common
Stock Warrants, if such authorization or approval is required by any applicable
law, rule or regulation (including any Nasdaq rules, if such rules are
applicable to the Company).
l. RETURN OF DEBENTURES ON CONVERSION AND WARRANTS ON EXERCISE
(i) Upon any conversion by the Purchaser of less than all of the aggregate
principal amount outstanding under a Debenture or Warrant Debenture pursuant to
the terms thereof, the Company shall issue and deliver to the Purchaser within
two (2) business days of the later of (x) the Conversion Date for such partial
conversion and (y) the date of receipt by the Company of the Debentures or
Warrant Debentures so converted, a new certificate or certificates for the
principal amount of such Debenture or Warrant Debenture which the Purchaser has
not yet elected to convert (with the number of and denominations of such new
certificate(s) designated by the Purchaser).
(ii) Upon any partial exercise by the Purchaser of the Common Stock
Warrants or Special Common Stock Warrants, the Company shall issue and deliver
to the Purchaser within two (2) business days of the later of (x) the Conversion
Date for such partial exercise or (y)the date of receipt by the Company of the
Common Stock Warrants or Special Common Stock Warrants so exercised, new Common
Stock Warrants or Special Common Stock Warrants representing the Common Stock
Warrants or Special Common Stock Warrants which the Purchaser has not yet
elected to exercised, in accordance with the terms thereof.
(iii) Upon any partial exercise by the Purchaser of the Special
Warrants, the Company shall issue and deliver to the Purchaser within two (2)
business days of the later of (x) the Conversion Date with respect to such
partial exercise or (y) the date of receipt by the Company of the Special
Warrants so exercised, new Special Warrants representing the Special Warrants
which the Purchaser has not yet elected to exercise, in accordance with the
terms thereof.
m. REPLACEMENT DEBENTURES AND WARRANTS. (i) The certificate
representing the Debentures or Warrant Debentures held by the Purchaser shall be
exchangeable, at the option of the Purchaser, at any time and from time to time
at the office of Company, for certificates with different denominations
representing an equal aggregate principal amount of Debentures or Warrant
Debentures, as the case may be, as requested by the Purchaser upon surrendering
the same. No service charge will be made for such registration or transfer or
exchange.
(ii) The Common Stock Warrants and Special Common Stock Warrants will
be exchangeable, at the option of the Purchaser, at any time and from time to
time at the office of the Company, for other Common Stock Warrants or Special
13
<PAGE>
Common Stock Warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Common Stock as are
purchasable under such Common Stock Warrants or Special Common Stock Warrants.
No service charge will be made for such transfer or exchange.
(iii) The Special Warrants will be exchangeable, at the option of the
Purchaser, at any time and from time to time at the office of the Company, for
other Special Warrants of different denominations entitling the holder thereof
to purchase in the aggregate the same principal amount of Warrant Debentures and
the same number of Special Common Stock Warrants as are purchasable under such
Special Warrants. No service charge will be made for such transfer or exchange.
n. DIVIDENDS OR DISTRIBUTIONS; PURCHASES OF EQUITY SECURITIES. So
long as any Debentures, Warrant Debentures or Special Warrants remain
outstanding, the Company agrees that it shall not without the written consent of
the holder of a majority in principal amount of such securities (after giving
effect to the exercise of the Special Warrants), (a) declare or pay any
dividends or make any distributions to any holder or holders of Common Stock, or
(b) purchase or otherwise acquire for value, directly or indirectly, any shares
of Common Stock or equity security of the Company.
o. NO SENIOR INDEBTEDNESS. Until the later of (a) the six month
anniversary of the Closing Date and (b) the earlier of (x) the six month
anniversary of the exercise of the Special Warrant and (y) the expiration of the
Special Warrant, the Company shall not create, incur, assume, guarantee, secure
or in any manner become liable in respect of any indebtedness, or permit any
liens, claims or encumbrances to exist against the Company or any of its assets
unless PARI PASSU or junior to the Debentures and the Warrant Debentures in all
respects, except for obligations of the Company under capital leases or purchase
money obligations incurred for the purpose of financing all or any part of the
purchase price of property (including intellectual property, such as software),
plant or equipment used in the business of the Company and except for liens
securing such indebtedness (provided such liens are limited to the property
subject to such capital lease or acquired with such purchase money financing)
and mortgages, deeds of trust, pledges, liens, security interests or other
charges or encumbrances for (i) taxes, assessments or governmental charges or
levies on property, in each case, not yet due and payable, (ii) arising out of
pledges or deposits under laws or regulations pertaining to workmen's
compensation, unemployment insurance, old age pensions or other social security
or retirement benefits or similar legislation, (iii) securing the performance of
bids, tenders, service contracts, statutory obligations and surety bonds in an
amount not to exceed $100,000 in the aggregate, (iv) zoning restrictions,
easements and rights of restrictions of record on the use of real property,
provided such restrictions do not impair the use of the real property, (v)
arising by operation of law in favor of the owner or sublessor of leased
premises, and (vi) arising from any litigation or proceeding which is being
contested in good faith and for which adequate reserves have been set aside.
p. MAINTENANCE OF CORPORATE EXISTENCE, PROPERTIES AND LEASES; TAXES.
(i) The Company shall maintain in full force and effect its corporate existence,
rights and franchises and all material terms of licenses and other rights to use
14
<PAGE>
licenses, trademarks, trade names, service marks, copyrights, patents or
processes owned or possessed by it and necessary to the conduct of its business.
(ii) The Company shall keep each of its properties necessary to the
conduct of its business in good repair, working order and condition, reasonable
wear and tear excepted, and from time to time make all necessary and proper
repairs, renewals, replacements, additions and improvements thereto; and the
Company shall at all times comply with each material provision of all leases to
which it is a party or under which it occupies property.
(iii) The Company shall promptly pay and discharge, or cause to be paid
and discharged when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, assets,
property or business of the Company and all claims or indebtedness (including,
without limitation, claims or demands of workmen, materialmen, vendors,
suppliers, mechanics, carriers, warehousemen and landlords) which, if unpaid
might become a lien upon the assets or property of the Company; PROVIDED,
HOWEVER, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall be contested timely and in good faith by appropriate
proceedings, if the Company shall have set aside on its books adequate reserves
with respect thereto, and the failure to pay shall not be prejudicial in any
material respect to the holders of the Securities or the Underlying Securities,
and PROVIDED, FURTHER, that the Company will pay or cause to be paid any such
tax, assessment, charge or levy forthwith upon the commencement of proceedings
to foreclose any lien which may have attached as security therefor. The Company
shall pay or cause to be paid in a timely manner all other indebtedness incident
to the operations of the Company.
q. BASIC FINANCIAL INFORMATION. The Company shall furnish the
following reports to the Purchaser (or any transferee of any Securities or
Underlying Securities), so long as the Purchaser (or any such transferee) is a
holder of any Securities or Underlying Securities:
(i) within forty-five (45) days after the end of each of the quarterly
accounting periods in each fiscal year, unaudited consolidated statements of
income and retained earnings and cash flows of the Company and its subsidiaries
for such quarterly period and for the period from the beginning of such fiscal
year to the end of such quarterly period, setting forth in each case comparisons
to corresponding periods in the preceding fiscal year, together with
consolidated balance sheets of the Company and its subsidiaries as at the end of
such quarterly period, which statements will be prepared in accordance with
generally accepted accounting principles, consistently applied;
(ii) within ninety (90) days after the end of each fiscal year,
consolidated statements of income and retained earnings and cash flows of the
Company and its subsidiaries for the period from the beginning of each fiscal
year to the end of such fiscal year, and consolidated balance sheets as at the
end of such fiscal year, setting forth in each case in comparative form
corresponding figures for the preceding fiscal year, which statements will be
15
<PAGE>
prepared in accordance with generally accepted accounting principles,
consistently applied (except as approved by the accounting firm examining such
statements and disclosed by the Company), and will be accompanied by a report
thereon of certified public accountants.
(iii) promptly as legally permitted, any additional reports or other
detailed information concerning significant aspects of the operations and
condition, financial or otherwise, of the Company and its subsidiaries, given to
the Company by its independent accountants;
(iv) within ten (10) days after transmission or receipt thereof, copies
of all financial statements, proxy statements and reports which the Company
sends to its stockholders or directors, and copies of all registration
statements and all regular, special or periodic reports which it or any of its
officers or directors (in such capacities) files with the Commission or with any
securities exchange on which any of the securities of the Company are then
listed or proposed to be listed, and copies of material communications sent to
or received from directors or committees of the Board of Directors of the
Company or any of its subsidiaries and copies of all material communications
sent to and received from any lender to the Company; and
(v) with reasonable promptness such other information and financial
data concerning the Company as any person entitled to receive materials under
this Section 5(q) may reasonably request.
Notwithstanding the foregoing, so long as the Company is making
publicly filed reports under the Exchange Act, the Company's obligations under
Section 5(q)(i) and (ii) shall be deemed satisfied.
r. NOTICE OF ADVERSE CHANGE. The Company shall promptly give
notice to all holders of any Debenture, Warrant Debenture or Special Warrant
(but in any event within seven (7) days) after becoming aware of the existence
of any condition or event which constitutes, or the occurrence of, any of the
following:
(i) any Event of Default under the Debentures or Warrant Debentures;
(ii) the institution of an action, suit or proceeding against the
Company before any court, administrative agency or arbitrator, including,
without limitation, any action of a foreign government or instrumentality,
which, if adversely decided, could materially adversely affect the business,
prospects, properties, financial condition or results of operations of the
Company, whether or not arising in the ordinary course of business; or
(iii) any information relating to the Company which could reasonably be
expected to materially and adversely affect the assets, property, business or
condition (financial or otherwise) of the Company or its ability to perform the
terms of this Agreement.
Any notice given under this Section 5(r) shall specify the nature and
period of existence of the condition, event, information, development or
circumstance, the anticipated effect hereof and what actions the Company has
taken and/or proposes to take with respect thereto.
16
<PAGE>
s. COMPLIANCE WITH AGREEMENTS; COMPLIANCE WITH LAWS. The Company
shall comply with the material terms and conditions of all material agreements,
commitments or instruments to which the Company is a party or by which it may be
bound. The Company shall duly comply in all material respects with any material
laws, ordinances, rules and regulations of any foreign. federal, state or local
government or any agency thereof, or any writ, order or decree, and conform to
all valid requirements of governmental authorities relating to the conduct of
its businesses, properties or assets, including, but not limited to, the
requirements of ERISA, the Environmental Protection Act, the Occupational Safety
and Health Act, the Foreign Corrupt Practices Act and the rules and regulations
of each of the agencies administering such acts.
t. PROTECTION OF LICENSES, ETC. The Company shall maintain, defend
and protect to the best of its ability licenses and sublicences (and to the
extent the Company is a licensee or sublicensee under any license or sublicense,
as permitted by the license or sublicense agreement), trademarks, trade names,
service marks, patents and applications therefor and other proprietary
information owned or used by it and shall keep duplicate copies of any licenses,
trademarks, service marks or patents owned or used by it, if any, at a secure
place selected by the Company.
u. ACCOUNTS AND RECORDS; INSPECTIONS. (i) The Company shall keep
true records and books of account in which full, true and correct entries will
be made of all dealings or transactions in relation to the business and affairs
of the Company in accordance with generally accepted accounting principles
applied on a consistent basis.
(ii) The Company shall permit each holder of any Securities or
Underlying Securities or any of such holder's officers, employees or
representatives during regular business hours of the Company, upon reasonable
notice and as often as such holder may reasonably request, to visit and inspect
the offices and properties of the Company and (i) to make extracts or copies of
the books, accounts and records of the Company, and (ii) to discuss the affairs,
finances and accounts of the Company, with the Company's directors and officers,
its independent pubic accountants, consultants and attorneys.
(iii) Nothing contained in this Section 5(u) shall be construed to
limit any rights which a holder of any Securities or Underlying Securities (a
"Holder") may have with respect to the books and records of the Company, to
inspect its properties or to discuss its affairs, finances and accounts.
v. WAIVER BY SHAREHOLDERS; NEGATIVE PLEDGE. During the period
commencing on the date hereof and terminating on the earlier to occur of (a) the
date on which no Common Stock Warrants, Special Common Stock Warrants, Special
Warrants, Debentures or Warrant Debentures remain outstanding and (b) the date
on which the amendment to the Company's Articles of Incorporation required by
Section 5(h) hereof has been declared effective provided that on such date the
Company has reserved for issuance pursuant to the terms of the Securities and
Underlying Securities a number of shares of Common Stock at least equal to the
Minimum Conversion Amount (such period, the "Restriction Period") each
Shareholder hereby agrees (i) not to exercise or convert, and hereby waives any
rights it may have to exercise or convert, any outstanding Derivative Securities
17
<PAGE>
and (ii) not to accept any grants or awards of shares of Common Stock to which
such Shareholder may be entitled pursuant to the terms of any plans operated by
the Company or any agreement between the Company and such Shareholder. In
furtherance of the foregoing, during the Restriction Period, each Shareholder
agrees not to assign, sell or otherwise transfer any Derivative Securities owned
by it or any right to receive any shares of Common Stock from the Company, and
any purported transfer of such Derivative Securities or such rights during the
Restriction Period shall be void, and the Company shall not recognize any such
transfer, unless the transferee of such Derivative Securities or such rights
agrees in writing with the Company and the Purchaser to be bound by the terms
hereof. Each Shareholder agrees that, and the Company hereby undertakes to
ensure that, during the Restriction Period, each certificate representing Common
Stock, Preferred Stock or Derivative Securities held by a Shareholder may be
subject to a stop-transfer order placed against the transfer of such securities
and each such certificate shall bear a restrictive legend substantially in the
following form:
THESE SECURITIES (INCLUDING ANY UNDERLYING
SECURITIES) ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ON EXERCISE OR CONVERSION IN
ACCORDANCE WITH THE TERMS OF THAT CERTAIN
SECURITIES PURCHASE AGREEMENT DATED AS OF
SEPTEMBER 30, 1999, A COPY OF WHICH IS AVAILABLE
UPON REQUEST FROM THE COMPANY.
Notwithstanding the foregoing, the terms of this covenant shall apply
to Howard Kaskel only for so long as such individual is an employee or
independent contractor of the Company or in any other manner, directly or
indirectly, receives payment for services rendered to the Company.
w. EXCHANGE OF SHARES OF COMMON STOCK FOR SHARES OF PREFERRED STOCK.
On or prior to the Closing Date, each Shareholder shall exchange shares of
Common Stock held by such Shareholder for shares of a series of preferred stock
with such rights, preferences and designations as shall be acceptable to the
Purchaser. The number of shares of Common Stock to be exchanged by each
Shareholder is, and the number of shares of Preferred Stock held by each
Shareholder after such exchange shall be, as set forth on Schedule 5w.
x. SHORT SALES. The Purchaser agrees that it will not enter into
any short sale transactions with respect to the shares of Common Stock issuable
upon the conversion of the Debentures or Warrant Debentures.
y. FURTHER ASSURANCES. From time to time the Company and the
Shareholders shall execute and deliver to the Purchaser and the Purchaser shall
execute and deliver to the Company and the Shareholders such other instruments,
certificates, agreements and documents and take such other action and do all
other things as may be reasonably requested by the other party in order to
implement or effectuate the terms and provisions of this Agreement and any of
the Securities or Underlying Securities.
18
<PAGE>
6. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that no instruction, other than the
instructions referred to in this Section 6 and stop transfer instructions to
give effect to Sections 5(a) and 5(b) hereof prior to the registration and sale
of the Securities and the Underlying Securities in the manner contemplated by
the Registration Rights Agreement, will be given by the Company to the transfer
agent with respect to these securities and that the Securities and the
Underlying Securities shall
otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement, the Registration Rights
Agreement and applicable law. Nothing in this Section shall affect in any way
the Purchaser's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities or Underlying Securities. If the
Purchaser provides the Company with an opinion of counsel reasonably
satisfactory (as to both the identity of such counsel and the content of such
opinion) to the Company and its counsel that registration of a resale by the
Purchaser of any of the Securities or Underlying Securities in accordance with
clause (1)(B) of Section 5(a) of this Agreement is not required under the
Securities Act, the Company shall permit the transfer of the Securities or
Underlying Securities and, in the case of the Common Stock, promptly instruct
the Company's transfer agent to issue one or more certificates for Common Stock
without legend in such names and in such denominations as specified by the
Purchaser.
b. (i) The Purchaser shall exercise its right to convert the Debentures
or Warrant Debentures or to exercise the Common Stock Warrants, Special Common
Stock Warrants or Special Warrants by faxing an executed and completed Notice of
Conversion or Form of Election to Purchase, as applicable, to the Company, and
delivering within two (2) business days thereafter, the original Notice of
Conversion (and the related original debentures) or Form of Election to Purchase
(and the related original warrants and applicable exercise price) to the Company
by hand delivery or by express courier, duly endorsed. Each date on which a
Notice of Conversion or Form of Election to Purchase is faxed to and received in
accordance with the provisions hereof, if such date is a business day, or, if
such date is not a business day, the next business day, shall be deemed a
"Conversion Date." The Company will transmit the Warrant Debentures, the Special
Common Stock Warrants or the certificates representing the Common Stock issuable
19
<PAGE>
upon conversion of any Debenture or Warrant Debenture or upon exercise of any
Common Stock Warrants or Special Common Stock Warrants to the Purchaser via
express courier as soon as practicable, but in all events no later than three
(3) business days after the Conversion Date, provided that if the Notice of
Conversion or Form of Election is faxed to and received by the Company in
accordance with the provisions hereof after 5:00 p.m. New York City Time on the
Conversion Date, such date shall be no later than four (4) business days after
the Conversion Date (each such delivery date, is referred to herein as a
"Delivery Date") and, in the event of a partial exercise or conversion, shall
return any Debentures, Warrant Debentures, Common Stock Warrants, Special Common
Stock Warrants or Special Warrants not so exercised or converted in accordance
with the provisions of Section 5(l) hereof. For purposes of this Agreement, such
conversion of the Debentures or Warrant Debentures or the exercise of the Common
Stock Warrants, Special Common Stock Warrants or Special Warrants shall be
deemed to have been made immediately prior to the close of business on the
Conversion Date.
(ii) Notwithstanding anything to the contrary contained herein or in
any of the other Primary Documents, in the event of a partial exercise or
conversion, during the period commencing when the Purchaser delivers an original
Debenture, Warrant Debenture, Common Stock Warrant, Special Common Stock Warrant
or Special Warrant to the Company, (or deposits such security with an
internationally recognized courier service in accordance with the notice
provisions hereof) and terminating when the Purchaser receives the certificates
representing the securities not so exercised or converted in accordance with the
provisions of Section 5(l) hereof, the Purchaser may convert or exercise the
securities required to be issued to the Purchaser in accordance with Section
5(l), notwithstanding the fact that the certificates representing such
securities have not yet been issued and delivered to the Purchaser, by
transmitting a Notice of Conversion and/or Election to Purchase (substantially
in the form attached to the securities delivered to the Company) in accordance
with Section 6(b)(i). If securities are converted or exercised in accordance
with this Section 6(b)(ii), the Purchaser shall not be required to deliver to
the Company the related original certificates until two (2) business days after
receipt of such certificates by the Purchaser or, if such certificates have not
yet been issued or dispatched for delivery to the Purchaser, such certificates
shall be deemed to have been delivered by the Company to the Purchaser and
subsequently delivered by the Purchaser to the Company.
c. In lieu of delivering physical certificates representing the Common
Stock issuable upon the conversion of, or in lieu of interest payments on, the
Debentures or Warrant Debentures or the exercise of the Common Stock Warrants or
Special Common Stock Warrants, provided the Company's transfer agent is
participating in the Depositary Trust Company ("DTC") Fast Automated Securities
Transfer program, on the written request of the Purchaser, who shall have
previously instructed the Purchaser's prime broker to confirm such request to
the Company's transfer agent, the Company shall cause its transfer agent to
electronically transmit such Common Stock to the Purchaser by crediting the
account of the Purchaser's prime broker with DTC through its Deposit Withdrawal
Agent Commission ("DWAC") system no later than the applicable Delivery Date.
d. The Company understands that a delay in the issuance of Common Stock
beyond the applicable Delivery Date could result in an economic loss to the
Purchaser. As compensation to the Purchaser for such loss, the Company agrees to
pay to the Purchaser for late issuance of Common Stock upon conversion of, or in
lieu of interest payments on, the Debentures or Warrant Debentures or upon
exercise of the Common Stock Warrants or Special Common Stock Warrants the sum
of $5,000 per day for each $100,000 in aggregate principal amount of Debentures
or Warrant Debentures that are being converted or all shares of Common Stock
issuable in lieu of interest payments on the Debentures or Warrant Debentures or
all shares of Common Stock issuable upon the exercise of the Common Stock
Warrants or Special Common Stock Warrants (the "Delay Payment Amount") PROVIDED,
20
<PAGE>
(A) no Delay Payment Amount shall be due with respect to any day prior to the
effective date of the Required Registration Statement, (B) no Delay Payment
Amount shall be due with respect to any delay in the issuance of Common Stock
upon conversion of the Warrant Debentures or exercise of the Special Common
Stock Warrants for any day prior to the date on which the amendment to the
Company's Articles of Incorporation required to be filed pursuant to Section
5(h) hereof is effective and (C) the payment by the Company of the Delay Payment
Amounts required by this Section 6(d) shall not, and the fact that Delay Payment
Amounts are not due under certain circumstances shall not be construed to,
relieve the Company of its obligation to deliver Common Stock pursuant to the
terms of the Primary Documents. The Company shall pay any payments that are
payable to the Purchaser pursuant to this Section 6 in immediately available
funds upon demand. Nothing herein shall limit the Purchaser's right to pursue
actual damages for failure by the Company to so issue and deliver Common Stock
to the Purchaser. Furthermore, in addition to any other remedies which may be
available to the Purchaser, in the event that the failure by the Company for any
reason to effect delivery of such Common Stock, Special Common Stock Warrants or
Warrant Debentures within five (5) business days after the relevant Delivery
Date, the Purchaser will be entitled to revoke the relevant Notice of Conversion
or Form of Election to Purchase by delivering a notice to such effect to the
Company, whereupon the Company and the Purchaser shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion
or Form of Election to Purchase. For purposes of this Section 6, "business day"
shall mean any day in which the financial markets of New York are officially
open for the conduct of business therein other than the Friday immediately
following Thanksgiving Day.
7. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO ISSUE THE
SECURITIES.
Purchaser understands that the Company's obligation to issue the
Securities on the Closing Date to Purchaser pursuant to this Agreement is
conditioned upon:
a. The accuracy on the Closing Date of the representations and
warranties of Purchaser contained in this Agreement as if made on such Closing
Date and the performance by Purchaser on or before such Closing Date of all
covenants and agreements of Purchaser required to be performed on or before such
Closing Date;
b. The absence or inapplicability of any and all laws, rules
or regulations prohibiting or restricting the transactions contemplated hereby,
or requiring any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE THE
SECURITIES.
The Company and the Shareholders understand that Purchaser's obligation
to purchase the Securities is conditioned upon:
21
<PAGE>
a. The accuracy on the Closing Date of the representations and
warranties of the Company and the Shareholders contained in this Agreement as if
made on the Closing Date, and the performance by the Company and the
Shareholders on or before the Closing Date of all covenants and agreements of
the Company and the Shareholders required to be performed on or before the
Closing Date;
b. On the Closing Date, the Purchaser shall have received an opinion of
counsel for the Company and the Shareholders, dated the Closing Date, in form,
scope and substance reasonably satisfactory to Purchaser, to the effect set
forth in E attached hereto;
c. The Company shall have executed and delivered a signed counterpart
to the Registration Rights Agreement, which agreement shall be substantially in
the form set forth as Exhibit D attached hereto;
d. The Company and the Shareholders shall have effected the exchange of
the shares of Common Stock listed on Schedule 5w for an equivalent number of the
shares of a series of preferred stock with rights, preferences and designations
acceptable to the Purchaser.
e. On the Closing Date, the Purchaser shall have received a certificate
executed by (i) the President or the Chairman of the Company and (ii) the Chief
Financial Officer of the Company, stating that all of the representations and
warranties of the Company set forth in this Agreement are accurate as of the
Closing Date and that the Company has performed all of its covenants and
agreements required to be performed under this Agreement on or before the
Closing Date;
f. On the Closing Date, the Purchaser shall have received a certificate
executed by each Shareholder, stating that all of the representations and
warranties of the Shareholder set forth in this Agreement are accurate as of the
Closing Date and that the Shareholder has performed all of its covenants and
agreements required to be performed under this Agreement on or before the
Closing Date;
g. On the Closing Date, the Purchaser shall have received from the
Company and the Shareholders such other certificates and documents as it or its
representative, if applicable, shall reasonably request, and all proceedings
taken by the Company or the Shareholders in connection with the Primary
Documents as contemplated by this Agreement and the other Primary Documents and
all documents and papers relating to such Primary Documents shall be
satisfactory to the Purchaser;
h. On or prior to the Closing Date, there shall not have occurred any
of the following: (i) a suspension or material limitation in the trading of
securities generally on the New York Stock Exchange or Nasdaq; (ii) a general
moratorium on commercial banking activities in New York declared by the
applicable banking authorities; (iii) the outbreak or escalation of hostilities
involving the United States, or the declaration by the United States of a
national emergency or war; or (iv) a change in international, political,
financial or economic conditions, if the effect of any such event, in the
22
<PAGE>
reasonable judgment of the Purchaser, makes it impracticable or inadvisable to
proceed with the purchase of the Securities on the terms and in the manner
contemplated in this Agreement and in the other Primary Documents.
9. EXPENSES.
The Company covenants and agrees with the Purchaser that the Company
will pay or cause to be paid the following: (a) the reasonable fees,
disbursements and expenses of the Purchaser's counsel in connection with the
issuance of the Securities payable on the Closing Date, (b) all expenses in
connection with registration or qualification of the Securities and Underlying
Securities for offering and sale under state securities laws as provided in
Section 5(f) hereof, and (c) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section, including the fees and disbursements of the
Company's and Shareholders' counsel, accountants and other professional
advisors, if any. If the Company or any Shareholder fails to satisfy its
obligations or to satisfy any condition set forth in this Agreement as a result
of which the Securities are not delivered to the Purchaser on the terms and
conditions set forth herein, the Company shall reimburse the Purchaser for any
out-of-pocket expenses reasonably incurred in making preparations for the
purchase, sale and delivery of the Securities not so delivered.
10. GOVERNING LAW; MISCELLANEOUS
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York, without regard to principles of conflict of
laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the City of New York or the state courts
of the State of New York sitting in the City of New York in connection with any
dispute arising under this Agreement or any of the transactions contemplated
hereby, and hereby waives, to the maximum extent permitted by law, any
objection, including any objections based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. This Agreement may be
signed in one or more counterparts, each of which shall be deemed an original.
The headings of this Agreement are for convenience of reference only and shall
not form part of, or affect the interpretation of this Agreement. This Agreement
and each of the Primary Documents have been entered into freely by each of the
parties, following consultation with their respective counsel, and shall be
interpreted fairly in accordance with its respective terms, without any
construction in favor of or against either party. 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 or the validity or unenforceability of this
Agreement in any other jurisdiction. This Agreement shall inure to the benefit
of, and be binding upon the successors and assigns of each of the parties
hereto, including any transferees of the Securities or the Underlying Securities
and any transferees of securities held by the Shareholders subject to Section
5(v) hereof. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement. This Agreement supersedes
all prior agreements and understandings among the parties hereto with respect to
the subject matter hereof.
23
<PAGE>
11. NOTICES.
Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to the parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by five days advance written notice to each
of the other parties hereto.
COMPANY: ACCESS POWER, INC.
10033 Sawgrass Dr. West, Suite 100
Ponte Vedra Beach, Florida 32082
Att.: Maurice Matovich
Tel.: (904) 273-2980
Fax: (904) 273-6390
WITH A COPY TO:
Kilpatrick Stockton, LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309
Att: Dennis J. Stockwell, Esq.
Tel.: (404) 815-6500
Fax: (404 ) 815-6555
24
<PAGE>
STOCKHOLDERS: c/o ACCESS POWER, INC.
10033 Sawgrass Dr. West, Suite 100
Ponte Vedra Beach, Florida 32082
Att.: Maurice Matovich
Tel.: (904) 273-2980
Fax: (904) 273-6390
WITH A COPY TO:
Kilpatrick Stockton, LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309
Att: Dennis J. Stockwell, Esq.
Tel.: (404) 815-6500
Fax: (404 ) 815-6555
PURCHASER: Bamboo Investors LLC
c/o WEC Asset Management LLC
One World Trade Center
Suite 4563
New York, New York 10048
Att.: Ethan E. Benovitz
Tel.: (212) 775-9299
Fax: (212) 775-9311
WITH A COPY TO:
Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Att.: Steven Huttler, Esq.
Tel.: (212) 479-6136
Fax: (212) 479-6275
25
<PAGE>
12. SURVIVAL.
The agreements, covenants representations and warranties of the
Company, the Shareholders and the Purchaser shall survive the execution and
delivery of this Agreement and the delivery of the Securities hereunder.
[SIGNATURE PAGE FOLLOWS]
26
<PAGE>
IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly
executed by each of the undersigned.
ACCESS POWER, INC.
By: /s/ Glenn Smith
Name: Glenn Smith
Title: President/CEO
/s/ Maurice Matovich
MAURICE MATOVICH
/s/ Glenn Smith
GLENN SMITH
/s/ Tod Smith
TOD SMITH
/s/ Howard L. Kaskel
HOWARD L. KASKEL
BAMBOO INVESTORS LLC
By: WEC Asset Management LLC,
Manager
By: /s/ Ethan E. Benovitz
Name: Ethan E. Benovitz
Title: Managing Director
27
<PAGE>
EXHIBIT INDEX
EXHIBIT A FORM OF DEBENTURE
EXHIBIT B FORM OF COMMON STOCK WARRANT
EXHIBIT C FORM OF SPECIAL WARRANT
EXHIBIT D FORM OF REGISTRATION RIGHTS
AGREEMENT
EXHIBIT E FORM OF OPINION OF COUNSEL
28
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ACCESS POWER, INC.
WARRANT TO PURCHASE
6% CONVERTIBLE DEBENTURES
AND COMMON STOCK WARRANTS
The Transferability of this Warrant is
Restricted as Provided in Section 2.
Void after September 30, 2001 Right to Purchase $1,000,000
Aggregate Principal Amount of 6%
Convertible Debentures due 2001 and
Warrants to Purchase 200,000 Shares
of Common Stock (subject to
adjustment)
No. 1
PREAMBLE
Access Power, Inc. (the "Company"), a Florida corporation, hereby
certifies that, for value received, BAMBOO INVESTORS LLC, whose address is One
World Trade Center, Suite 4563, New York, New York 10048, or its registered
assigns (hereinafter, the "Registered Holder"), is, subject to the terms set
forth herein, entitled to purchase from the Company at any time or from time to
time before the expiration of this Warrant under Section 15 hereof (such time,
the "Expiration Time"), up to (x) $1,000,000 aggregate principal amount of 6%
Convertible Debentures due 2001 (the "Warrant Debentures") of the Company, at
the purchase price of $1,000 per $1,000 of aggregate principal amount of Warrant
Debentures (the "Warrant Debenture Purchase Price") and (y) Warrants (the
"Special Common Stock Warrants") to purchase up to 200,000 Shares of Common
Stock, at a purchase price of $1 per 2,000 shares subject to such warrants (the
"Special Warrants Purchase Price").
Subject to the terms set forth herein, at the election of the Company
on not less than seven (7) business days nor more than twenty (20) business days
prior written notice (such notice being referred to as the "Mandatory Exercise
<PAGE>
Notice" and the closing date specified in such notice being referred to as the
"Mandatory Closing Date"), the Registered Holder shall at any time or from time
to time before the 180th day after the Closing Date be required to exercise this
Warrant and purchase up to $1,000,000 aggregate principal amount of Warrant
Debentures (minus any such Warrant Debentures previously purchased hereunder),
at the Warrant Debenture Purchase Price; provided that the Registered Holder
shall not be required to exercise and purchase any such Warrant Debentures if at
any time from and after the delivery to the Registered Holder of the Mandatory
Exercise Notice through the Mandatory Closing Date (the "Interim Period") any of
the Closing Conditions (as defined below) shall not have been satisfied.
This Warrant is one of the Warrants to Purchase 6% Convertible
Debentures and Common Stock Warrants (the "Warrants") evidencing the right to
purchase 6% Convertible Debentures due 2001 of the Company and warrants to
purchase Shares of Common Stock of the Company, identical in terms (other than,
with respect to the Debentures, the date on which interest will start to accrue)
to the debentures and common stock warrants issued pursuant to the Securities
Purchase Agreement (the "Securities Purchase Agreement"), dated September 30,
1999, between the Company and the Purchaser and other parties named therein. The
Securities Purchase Agreement contains certain additional terms that are binding
upon the Company and each Registered Holder of the Warrants. A copy of the
Securities Purchase Agreement, including the Exhibits thereto, may be obtained
by any Registered Holders of the Warrants from the Company upon written request.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Securities Purchase Agreement, including the Exhibits thereto.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The "Closing Bid Price" on any Trading Day shall be (a) if
the Common Stock is then listed or quoted on either the OTC:
BB, the NASDAQ SmallCap Market or the NASDAQ National Market,
the reported closing bid price for the Common Stock as
reported by Bloomberg, L.P. ("Bloomberg") or The Wall Street
Journal (the "Journal") on such day (or, if not so reported,
as otherwise reported by the Nasdaq Small Cap Market, the
NASDAQ National Market or the OTC: BB, as the case may be),
(b) if the Common Stock is listed on either the American
Stock Exchange or New York Stock Exchange, the closing bid
price for the Common Stock on such exchange on such day as
reported by Bloomberg or the Journal or (c) if neither (a)
nor (b) apply but the Common Stock is quoted in the over-the-
counter market, another recognized exchange or on the pink
sheets, the last reported "bid" price thereof on the date of
valuation.
(b)
The term "Company" includes any corporation which shall
succeed to or assume the obligations of the Company
hereunder.
(c) The term "Common Stock" includes all shares of any class or
classes (however designated) of the Company, authorized on or
after the date hereof, the holders of which shall have the
right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on
2
<PAGE>
any shares entitled to preference, and the holders of which
shall ordinarily be entitled to vote for the election of
directors of the Company (even though the right so to vote
has been suspended by the happening of a contingency).
(d) The term "Major Transaction" shall be deemed to have occurred
at such time as any of the following events occurs: (i) the
consolidation, merger or other business combination of the
Company with or into another person (other than pursuant to
migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company); (ii) the
sale or transfer of all or substantially all of the Company's
assets; or (iii) consummation of a purchase, tender or
exchange offer made to the holders of more than 30% of the
outstanding shares of Common Stock.
(e) The term "Material Adverse Change" means any change, event,
result or happening involving, directly or indirectly, the
Company or any of its subsidiaries resulting in a material
adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries,
taken as a whole.
(f)
The term "Pro Rata Share" shall mean the maximum number of
shares of Common Stock subject to Special Common Stock
Warrants issuable hereunder multiplied by a fraction, the
numerator of which is the aggregate principal amount of
Warrant Debentures designated in the Election to Purchase and
the denominator of which is aggregate principal amount of
Warrant Debentures issuable hereunder.
(g) "Trading day" shall mean any day on which the Company's
Common Stock is traded for any period on the principal
securities exchange or other securities market on which the
Common Stock is then being traded.
(h) The term "Triggering Event" shall be deemed to have occurred
at such time as any of the following events occurs: (i) the
failure of the Required Registration Statement to be declared
effective by the Securities and Exchange Commission on or
prior to the Required Effectiveness Date; (ii) while the
Required Registration Statement is required to be maintained
effective pursuant to the terms of the Registration Rights
Agreement, the effectiveness of the Required Registration
Statement lapses for any reason (including, without
limitation, the issuance of a stop order) or is unavailable
to the holder of Securities or Underlying Securities for sale
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 five consecutive
trading days; (iii) the suspension from listing or the
failure of the Common Stock to be quoted on the OTC: BB or
listed on the Nasdaq SmallCap Market, the Nasdaq National
Market, The New York Stock Exchange, Inc. or The American
Stock Exchange, Inc. for a period of five consecutive days;
(iv) the Company's notice to any holder of any convertible
3
<PAGE>
securities of the Company, including by way of public
announcement, at any time, of its intention not to comply
with proper requests for conversion of such convertible
securities; (v) a material breach by the Company of any
representation, warranty, covenant or other term or condition
of the Securities Purchase Agreement, the Registration Rights
Agreement, this Warrant or any other agreement, document,
certificate or other instrument delivered in connection with
the transactions contemplated thereby or hereby; (vi) Glen
Smith ceases to hold at least one of the offices of Chief
Executive Officer or President of the Company prior to the
Expiration Time for any reason other than because of (x)
death or disability or (y) resignation or removal, provided
that such resignation or removal is with the consent of the
holders of at least two-thirds of the aggregate principal
amount of Debentures and Warrant Debentures outstanding
(after giving effect to the exercise in full of all the
outstanding Warrants) or (vii) a Change of Control (as
defined in the Warrant Debentures).
1. REGISTRATION RIGHTS. The rights of the holders of Warrants to register
Special Common Stock Warrants issuable upon exercise of the Warrants (and the
shares of Common Stock issuable upon conversion of, or in lieu of interest
payments on, the Warrant Debentures or upon exercise of such special Common
Stock Warrants) shall be as stated in the Registration Rights Agreement, which
agreement is Exhibit D to the Securities Purchase Agreement.
2. RESTRICTED STOCK. If, at the time of any transfer or exchange of this
Warrant, any Warrant Debentures or any Special Common Stock Warrants issuable
upon exercise of this Warrant (other than a transfer or exchange not involving a
change in the beneficial ownership of this Warrant or any such Warrant
Debentures or such Special Common Stock Warrants), such Warrant, such Warrant
Debentures or such Special Common Stock Warrants shall not be registered under
the Securities Act, the Company's obligation to transfer such Warrant, such
Warrant Debentures or such Special Common Stock Warrants shall be subject to the
provisions of Section 6 of the Securities Purchase Agreement.
3. EXERCISE OF WARRANT.
3.1. Exercise in Full. The holder of this Warrant may, and shall on the
----------------
Mandatory Closing Date provided the Mandatory Exercise Notice is given and the
Closing Conditions are satisfied, exercise this Warrant in full by surrendering
this Warrant, with the form of Election to Purchase at the end hereof duly
executed by such holder, to the Company in the manner set forth in Section 6 of
the Securities Purchase Agreement; provided, that, in no event shall this
Warrant be exercised after the Expiration Time. The surrendered Warrant shall be
accompanied by payment, in cash or by certified or official bank check payable
to the order of the Company, in an amount equal to the Warrant Debenture
Purchase Price for the full aggregate principal amount of Warrant Debentures
then purchasable hereunder plus the Special Warrants Purchase Price for the full
number of Special Common Stock Warrants purchasable hereunder.
3.2. Partial Exercise. This Warrant may, and shall on the Mandatory
-----------------
Closing Date provided the Mandatory Exercise Notice is given and the Closing
Conditions are satisfied as required above, be exercised in part by surrender of
4
<PAGE>
this Warrant in the manner provided in Subsection 3.1, except that the exercise
price shall be equal to the Warrant Purchase Price for the aggregate principal
amount of Warrant Debentures as shall be designated by the holder or the
Company, as applicable, in the Election to Purchase plus the Special Warrants
Purchase Price for the Pro Rata Share of Special Common Stock Warrants issuable
hereunder and, provided, that, in no event shall this Warrant be exercised after
the Expiration Time. On any such partial exercise, subject to the provisions of
Section 2 hereof, the Company, at its expense, will forthwith issue and deliver
to or upon the order of the Registered Holder hereof a new Warrant or Warrants
of like tenor, in the name of the Registered Holder hereof or as such Registered
Holder may request, calling in the aggregate on the face or faces thereof for
the aggregate principal amount of Warrant Debentures and the aggregate number of
Special Common Stock Warrants equal to the number of such Warrant Debentures and
Special Common Stock Warrants called for on the face of this Warrant minus the
number of such Warrant Debentures and Special Common Stock Warrants designated
by the Registered Holder or the Company, if applicable, in the applicable
Election to Purchase.
3.3. Concurrent Exercise. Notwithstanding anything to the contrary
--------------------
contained herein or in any of the other Primary Documents, the Registered Holder
hereof may at the same time exercise this Warrant and request conversion of the
Warrant Debentures issuable upon such exercise and exercise the Special Common
Stock Warrants issuable upon such exercise, notwithstanding the fact that the
Warrant Debentures and/or Special Common Stock Warrants have not yet been
issued. Such concurrent conversion shall be effected by marking the box labeled
Concurrent Exercise/Conversion Elected on the Election to Purchase and
transmitting with such Election to Purchase a Notice of Conversion for the
Warrant Debentures and/or an Election to Purchase for the Special Common Stock
Warrants in the manner set forth in Section 6 of the Securities Purchase
Agreement. If concurrent conversion is elected, the exercise of this Warrant,
the conversion of the Warrant Debentures and the exercise of the Special Common
Stock Warrants shall all be deemed to have been made immediately prior to the
close of business on the Conversion Date applicable to the Election to Purchase
for this Warrant and the Warrant Debentures and Special Common Stock Warrants
issuable upon such exercise shall be deemed to have been issued by the Company
and delivered to the Company by the Holder hereof.
3.4 Accelerated Expiration. At the option of the Company and
------------------------
notwithstanding the satisfaction of any Closing Conditions to a mandatory
exercise hereunder, if the Company at any time after the first anniversary of
the Closing Date presents to Holder a written, bona fide, irrevocable offer from
a third party ("Bona Fide Offer") to purchase indebtedness of the Company
(through the purchase of a convertible debenture or other evidence of
indebtedness of the Company or otherwise) or purchase equity securities of the
Company, in each case in an amount equal to not less than the aggregate face
amount of Warrant Debentures which a Holder may purchase under this Warrant and
all other Warrants outstanding at that time, and in the case of a Bona Fide
Offer to purchase indebtedness of the Company, on terms no less favorable to the
Company than those of the Warrant Debentures, then this Warrant shall expire at
5:00 p.m., New York City time, on the thirtieth day after the date a copy of the
Bona Fide Offer was presented to Holder unless earlier exercised by the Holder.
3.5. Company Acknowledgment. The Company will, at the time of the
-----------------------
exercise, exchange or transfer of this Warrant, upon the request of the
Registered Holder hereof, acknowledge in writing its continuing obligation to
5
<PAGE>
afford to such Registered Holder or transferee any rights (including, without
limitation, any right to registration of the Company's shares of Common Stock)
to which such Registered Holder or transferee shall continue to be entitled
after such exercise, exchange or transfer in accordance with the provisions of
this Warrant, provided that if the Registered Holder of this Warrant shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such Registered Holder or transferee any
such rights.
4. DELIVERY OF WARRANT DEBENTURE AND SPECIAL COMMON STOCK WARRANTS UPON
EXERCISE. Following the exercise of this Warrant in full or in part, within the
time periods and in the manner provided by Section 6(b) of the Securities
Purchase Agreement, the Company, at its expense (including the payment by it of
any applicable issue taxes), will cause to be issued in the name of and
delivered to the Registered Holder hereof, or as such Registered Holder (upon
payment by such Registered Holder of any applicable transfer taxes) may direct,
a certificate or certificates for the aggregate principal amount of Warrant
Debentures and the aggregate Number of Special Common Stock Warrants to which
such Registered Holder shall be entitled on such exercise. The Warrant
Debentures to be issued upon exercise hereof shall be substantially in the form
attached hereto as Annex C and the Special Common Stock Warrants to be issued
hereunder shall be substantially in the form attached hereto as Annex D.
5. CLOSING CONDITIONS. Notwithstanding anything herein to the contrary, the
Company shall not be permitted to deliver a Mandatory Exercise Notice, nor shall
the Registered Holder be required to exercise and purchase on a Mandatory
Closing Date any Warrant Debentures and Special Common Stock Warrants, unless in
either case each of the following conditions (each a "Closing Condition, and,
collectively, the "Closing Conditions") is satisfied: (i) the Required
Registration Statement: (a) shall have been declared effective, (b) shall have
remained effective for at least 60 consecutive days after the effectiveness
date, (c) shall remain effective at all times during the applicable Interim
Period and (d) shall cover resales of the shares of Common Stock issuable upon
conversion of the Warrant Debentures and exercise of the Special Common Stock
Warrants; (ii) the Closing Bid for the Common Stock shall not be less than $0.35
per share on any Trading Day during the Interim Period; (iii) during the period
beginning on the original issue date of this Warrant and ending on and including
the applicable Mandatory Closing Date, there shall not have occurred (A) a
public announcement of a Major Transaction which has not been abandoned or
terminated on or prior to the date the Mandatory Exercise Notice is given or the
Mandatory Closing Date, as the case may be, (B) a Triggering Event or (C) a
Material Adverse Change; (iv) at all times during the period beginning on the
original issue date of this Warrant and ending on and including the applicable
Mandatory Closing Date, the Common Stock shall have been quoted on the OTC: BB
and the Company shall not have been notified of any pending or threatened
proceeding or other action to suspend trading of the Common Stock; (v) the
Company's Articles of Incorporation shall be in full force and effect and shall
not have been amended since the original issue date of this Warrant other than
by any amendment whose sole effect is to increase the authorized Common Stock of
the Company or to eliminate the authorized but unissued Series A Preferred Stock
from the authorized capital stock of the Company; (vi) the representations and
warranties of the Company in the Securities Purchase Agreement shall be true and
correct as of the date when made and as of the applicable Mandatory Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
6
<PAGE>
complied with the covenants, agreements and conditions required by the Primary
Documents to be performed, satisfied or complied with by the Company at or prior
to the Closing Date (and the Registered Holder of this Warrant shall have
received a certificate, executed by the Chief Executive Officer of the Company,
dated as of the applicable Mandatory Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by such holder) and the
Registered Holder shall have received all opinions and certificates required
pursuant to the terms of the Primary Documents to be delivered on, and dated as
of, the Closing Date, in each case delivered on and dated as of the Mandatory
Closing Date; (vii) as of the applicable Mandatory Closing Date, the Company
shall have available for issuance and shall have reserved out of its authorized
and unissued Common Stock, solely for the purpose of effecting the conversion or
exercise of Securities, the Warrant Debentures and the Special Common Stock
Warrants, a number of shares at least equal to the Minimum Conversion Shares,
and (viii) no more than 180 days shall have elapsed since the issue date of this
Warrant.
6. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its Articles
of Incorporation or By-laws, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of the
Warrants, as specified herein and in the Securities Purchase Agreement, against
dilution or other impairment.
7. Notice of Record Date. In case of
(a) any taking by the Company of a record of the holders of any class
of its securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or any voluntary or involuntary dissolution, liquidation or winding
up of the Company, or
(c) events shall have occurred resulting in the voluntary or
involuntary dissolution, liquidation or winding up of the Company, then and in
each such event the Company will mail or cause to be mailed to each holder of a
Warrant a notice specifying (i) the date on which any record is to be taken for
the purpose of any such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, (ii) the date on which
any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding up, and
(iii) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of such
7
<PAGE>
proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed at
least thirty (30) days prior to the date specified in such notice on which any
such action is to be taken.
8. EXCHANGE OF WARRANTS. On surrender for exchange of any Warrant, properly
endorsed, to the Company, the Company, at its expense, will issue and deliver to
or (subject to Section 2) on the order of the holder thereof a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (on payment
by such holder or any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the aggregate principal amount of
Warrant Debentures and number of Special Common Stock Warrants called for on the
face or faces of the Warrant or Warrants so surrendered.
9. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any Warrant and, in
the case of any such loss, theft or destruction of any Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
10. WARRANT AGENT. The Company may, by written notice to each holder of a
Warrant, appoint an agent having an office in New York, New York, for the
purpose of issuing Warrant Debentures and Special Common Stock Warrants on the
exercise of the Warrants pursuant to Section 3, exchanging Warrants pursuant to
Section 8, and replacing Warrants pursuant to Section 9, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
11. REMEDIES. The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that, without prejudice to any other right or
remedy to which a holder of a Warrant may be entitled, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise (without establishing the likelihood of irreparable injury
or posting bond or other security), and the Company waives in any action or
proceeding brought to enforce this Agreement the defense that there exists an
adequate remedy at law.
12. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to all
of which each Registered Holder or owner hereof by the taking hereof consents
and agrees:
(a) subject to the terms of Section 5 of the Securities
Purchase Agreement, title to this Warrant may be transferred by endorsement (by
the Registered Holder hereof executing the form of assignment at the end hereof)
and delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery;
(b) any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
8
<PAGE>
of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the Registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
13. NOTICES. All notices and other communications from the Company to the
Registered Holder of this Warrant shall be given in writing and shall be
effective upon personal delivery, via facsimile (upon receipt of confirmation of
error-free transmission) or two business days following deposit of such notice
with an internationally recognized courier service, with postage prepaid and
addressed, to such address as may have been furnished to the Company in writing
by such Registered Holder or, until any such Registered Holder furnishes to the
Company an address, then to, and at the address of, the last Registered Holder
of this Warrant who has so furnished an address to the Company.
14. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant is being delivered in the State of New York and, except for
provisions with respect to internal corporate matters of the Company which shall
be governed by the corporate laws of the State of Florida, shall be construed
and enforced in accordance with and governed by the laws of the State of New
York, without regard to principles of conflict of laws. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. All nouns and pronouns used herein shall be
deemed to refer to the masculine, feminine or neuter, as the identity of the
person or persons to whom reference is made herein may require.
15. EXPIRATION. The right to exercise this Warrant shall expire at 5:00 p.m.,
New York time, on September 30, 2001 or on such earlier date as provided in
Section 3.4.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Warrant as of
September 30, 1999.
ACCESS POWER, INC.
By /s/ Glenn Smith
Name: Glenn Smith
Title: President/CEO
<PAGE>
Annex A
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase $_____________ aggregate principal
amount of Warrant Debentures and the associated Pro Rata Share of Special Common
Stock Warrants and herewith tenders in payment for such securities a certified
or official bank check payable in New York Clearing House Funds to the order of
ACCESS POWER, INC. in the amount of $__________, all in accordance with the
terms hereof. The undersigned requests that a certificate for such Warrant
Debentures and Special Common Stock Warrants be registered in the name of
_________________________, whose address is _________________________________
and that such Certificate be delivered to ___________________________,whose
address is ______________________
Dated:
Name: ______________________________________
Signature: _________________________________
(Signature must conform in all respects to the name of the Registered
Holder, as specified on the face of the Warrant.)
_____________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
/ / Concurrent Exercise/Conversion Elected
<PAGE>
Annex B
FORM OF ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO TRANSFER THE
WARRANT.)
FOR VALUE RECEIVED, ____________________
hereby sells, assigns and transfers unto
_____________________________________________
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does so
hereby irrevocably constitute and appoint _____________________ Attorney, to
transfer the within Warrant on the books of the within-named Company, with full
power of substitution.
Dated:
Name: ______________________________________
Signature: _________________________________
(Signature must conform in all respects to the name of the Registered
Holder, as specified on the face of the Warrant.)
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE>
Annex C
FORM OF WARRANT DEBENTURE
<PAGE>
Annex D
FORM OF SPECIAL COMMON STOCK WARRANT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 30, 1999
(this "Agreement"), is entered into by and among ACCESS POWER, INC., a Florida
corporation (the "Company") and BAMBOO INVESTORS LLC, a Delaware limited
partnership (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of
September 30, 1999, among the Purchaser, the Company and certain other parties
(the "Securities Purchase Agreement"), the Company has agreed to issue and sell
to the Purchaser $1,000,000 principal amount of the Company's 6% Convertible
Debentures due 2001 (the "Debentures"), Warrants to purchase 200,000 shares of
Common Stock of the Company (the "Common Stock Warrants") and Warrants (the
"Special Warrants" and, together with the Debentures and the Common Stock
Warrants, the "Securities") to purchase $1,000,000 principal amount of the
Company's 6% Convertible Debentures due 2001 (the "Warrant Debentures") and
Warrants (the "Special Common Stock Warrants") to purchase 200,000 Shares of
Common Stock.
WHEREAS, pursuant to the terms of the Special Warrants, upon exercise
of the Special Warrants, the Company will issue Warrant Debentures and Special
Common Stock Warrants to the Purchaser.
WHEREAS, pursuant to the terms of the Debentures, the Warrant
Debentures, the Special Common Stock Warrants, and the Common Stock Warrants,
(i) upon the conversion of, and in lieu of interest payments on, the Debentures
and the Warrant Debentures and (ii) upon exercise of the Common Stock Warrants
and Special Common Stock Warrants, the Company will issue shares of the
Company's common stock, par value $.001 per share (the "Common Stock") (the
shares of Common Stock issued or issuable to the Purchaser upon the conversion
of, or in lieu of interest payments on, the Debentures and the Warrant
Debentures or upon the exercise of the Common Stock Warrants and Special Common
Stock Warrants are collectively referred to herein as the "Shares") to the
Purchaser.
WHEREAS, to induce the Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser hereby agree as follows:
<PAGE>
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Minimum Conversion Shares" on any date means a number of
shares equal to the greater of (x) 10,982,000 or (y) at least two (2) times the
sum of: (a) the number of shares of Common Stock that are issuable upon
conversion of the Debentures on such date, without regard to any limitation on
any holder's ability to convert the Debentures, (b) the number of shares of
Common Stock that would be issuable upon conversion of the Warrant Debentures on
such date, without regard to whether the Special Warrants have been exercised or
any limitation on any holder's ability to convert the Warrant Debentures, (c)
the number of shares of Common Stock issuable in lieu of interest payments on
the Debentures and the Warrant Debentures assuming that all such interest is
paid in shares of Common Stock and, if the Special Warrants have not been
exercised on or prior to such date, assuming that the Special Warrants were
exercised and the Warrant Debentures were issued on such date and (d) the number
of shares of Common Stock issuable upon exercise of the Common Stock Warrants
and Special Common Stock Warrants, without regard to whether the Special
Warrants have been exercised or any limitation on any holder's ability to
exercise the Special Common Stock Warrants.
(ii) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing one or more Registration Statement
or Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering securities
on a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the Securities and Exchange
Commission (the "Commission").
(iii) "Registrable Securities" means collectively, the Shares,
the Common Stock Warrants and the Special Common Stock Warrants.
(iv) "Registration Statement" means a registration statement
of the Company under the Securities Act.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Securities Purchase Agreement, the
Debentures, the Warrant Debentures or the Common Stock Warrants, as the case may
be.
2. REGISTRTAION.
(a) MANDATORY REGISTRATION. The Company shall prepare and, as soon as
practicable but in no event later than thirty (30) days after the Closing Date
(the "Required Filing Date"), file with the Commission a Registration Statement
on Form SB-2, or an amendment to any pending Registration Statement on Form SB-2
of the Company, covering resales of (a) the Common Stock Warrants the Special
Common Stock Warrants and (b) the Minimum Conversion Shares on the filing date.
In the event that Form SB-2 is unavailable for such a registration, the Company
shall use such
2
<PAGE>
other form as is available for such a registration. Such Registration Statement
or amended Registration Statement, as the case may be, shall state that, in
accordance with Rule 416 under the Securities Act, it also covers such
indeterminate number of additional Shares as may become issuable upon conversion
of the Debentures or Warrant Debentures or exercise of the Common Stock Warrants
or Special Common Stock Warrants (i) to prevent dilution resulting from stock
splits, stock dividends or similar transactions and (ii) to the extent
consistent with the interpretations of the Commission of such rule at such time,
resulting from any adjustment in the applicable Conversion Price of the
Debentures and Warrant Debentures or the Exercise Price of the Common Stock
Warrants or Special Common Stock Warrants. If for any 10 business days during
any 20 consecutive business day period the Minimum Conversion Shares exceed the
total number of Shares so registered, the Company shall (i) if such Registration
Statement has not been declared effective by the Commission at that time and if
the Company does not reasonably believe that it will cause a delay in going
effective, amend the Registration Statement filed by the Company pursuant to the
preceding portions of this paragraph, to register all of such Minimum Conversion
Shares, or (ii) in all other instances, file with the Commission an additional
Registration Statement on SB-2 (or, in the event that Form SB-2 is unavailable
for such a registration, on such other form as is available) to register all of
such Minimum Conversion Shares that have not already been so registered. The
Company shall use its best efforts to cause any such Registration Statement or
amended Registration Statement, as the case may be, to become effective within
the earliest to occur of (i) ninety (90) days following the Closing Date; (ii)
if the Commission elects not to conduct a review of the Registration Statement,
the date which is five business days after the date upon which either the
Company or its counsel is so notified, whether orally or in writing; or (iii) if
the Registration Statement is reviewed by the Commission, the date which is five
business days after the date upon which the Company or its counsel is notified
by the Commission, whether orally or in writing, that the Commission has no
further comments with respect to the Registration Statement, or that the
Registration Statement may be declared effective. The earliest of such dates is
referred to herein as the "Required Effective Date." Notwithstanding the use of
the terms "Required Filing Date" and "Required Effective Date" herein, the
Company shall at all times use its best efforts to file each required
Registration Statement or amendment to a Registration Statement as soon as
possible after the Closing Date or after the date the Company becomes obligated
to file such Registration Statement or amendment, as the case may be, and to
cause each such Registration Statement or amendment to become effective as soon
as possible thereafter. Except as set forth on Schedule 2(a), no securities of
the Company other than the Registrable Securities shall be included in any such
Registration Statement. The Company shall keep each Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier of
(i) the date on which all of the Registrable Securities have been sold (ii) the
date on which the Registrable Securities (in the opinion of counsel to the
Purchaser) may be immediately sold without restriction (including without
limitation as to volume by each holder thereof) without registration under the
Securities Act and (iii) two years from the effective date of such Registration
Statement (the "Registration Period").
3
<PAGE>
(b) PAYMENTS BY THE COMPANY.
(i) (A) If the Registration Statement covering the Registrable
Securities is not filed in proper form with the Commission on or prior to the
Required Filing Date, (B) if the Registration Statement covering the Registrable
Securities is not effective on or prior to the Required Effective Date, (C) if
the number of Shares reserved by the Company for issuance shall be insufficient
for issuance upon the conversion of the Debentures and the exercise of the
Common Stock Warrants and, at any time after the 90th day following the Closing
Date, the number of Shares reserved by the Company for issuance shall be
insufficient for issuance upon the conversion of the Debentures and the Warrant
Debentures and the exercise of the Common Stock Warrants and the Special Common
Stock Warrants, or (D) upon the occurrence of a Blackout Event (as described in
Section 3(f) or Section 3(g) below) (each of the events described in clauses (A)
through (D) of this paragraph are referred to herein as a "Registration
Default"), the Company will make payments to the Purchaser in such amounts and
at such times as shall be determined pursuant to this Section 2(b).
(ii) The amount (the "Periodic Amount") to be paid by the
Company to the Purchaser for each thirty (30) day period, or portion thereof,
during which a Registration Default shall be in effect (each such period, a
"Default Period") shall be equal to two percent (2%) of the sum of (a) the
principal amount of Debentures and Warrant Debentures outstanding and (b) the
principal amount of Debentures and Warrant Debentures converted into shares of
Common Stock (the "Purchase Price"); PROVIDED, with respect to any Default
Period during which the relevant Registration Defaults shall have been cured,
the Periodic Amount shall be PRO RATED for the number of days during such period
during which the Registration Defaults were pending; and PROVIDED FURTHER, that
the payment of such Periodic Amounts shall not relieve the Company from its
continuing obligations to register the Registrable Securities pursuant to
Section 2(a).
(iii) Each Periodic Amount shall be payable by the Company, in
cash or other immediately available funds, to the Purchaser on the last day of
each month during which a Registration Default occurred or was continuing,
without demand therefor by the Purchaser. If the Company shall not remit the
Periodic Amounts payable to the Purchaser as set forth in paragraph (ii) above,
the Company will pay the Purchaser reasonable costs of collection, including
attorneys' fees, in addition to the Periodic Amounts.
(iv) The parties acknowledge that the damages which may be
incurred by the Purchaser if the Registration Statement is not filed by the
Required Filing Date, if the Registration Statement has not been declared
effective by the Required Effective Date, if an insufficient number of shares of
Common Stock shall be reserved for issuance, or if the provisions of Section
3(f) or 3(g) become applicable, may be difficult to ascertain. The parties agree
that the Periodic Amount represents a reasonable estimate on the part of the
parties, as of the date of this Agreement, of the amount of such damages.
(c) PIGGYBACK REGISTRATION. (i) If at any time or from time to
time, the Company shall determine to register any of its securities, for its own
account or the account of any of its
4
<PAGE>
shareholders, other than a Registration on Form S-8 or pursuant to an
acquisition transaction on Form S-4, the Company will:
(A) provide the Purchaser written notice thereof as soon as
practicable prior to filing the Registration Statement; and
(B) include in such Registration Statement and in any
underwriting involved therein, all of the Registrable
Securities specified in a written request by the Purchaser
made within fifteen (15) days after receipt of such written
notice from the Company.
(ii) If the Registration is for a registered public offering
involving an underwriting, the Company shall so advise the Purchaser as a part
of the written notice given pursuant to this Section. In such event, the rights
of the Purchaser hereunder shall include participation in such underwriting and
the inclusion of the Registrable Securities in the underwriting to the extent
provided herein. To the extent that the Purchaser proposes to distribute its
securities through such underwriting, the Purchaser shall (together with the
Company and any other securityholders of the Company distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Section, if the managing underwriter of such underwriting determines that
marketing factors require a limitation of the number of shares to be offered in
connection with such underwriting, the managing underwriter may limit the number
of Registrable Securities to be included in the Registration and underwriting
(PROVIDED, HOWEVER, that (a) the Registrable Securities shall not be excluded
from such underwritten offering prior to the exclusion of any securities held by
officers and directors of the Company or their affiliates, (b) the Registrable
Securities shall be entitled to at least the same priority in an underwritten
offering as any securities included in such offering by any of the Company's
other existing securityholders, and (c) the Company shall not enter into any
agreement that would provide any securityholder with priority in connection with
an underwritten offering greater than the priority granted to the Purchaser
hereunder). The Company shall so advise any of its other securityholders who are
distributing their securities through such underwriting pursuant to their
respective piggyback registration rights, and the number of shares of
Registrable Securities and other securities that may be included in the
registration and underwriting shall be allocated among the Purchaser and all
other securityholders of the Company in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by the Purchaser and such
other securityholders at the time of the filing of the registration statement.
If the Purchaser disapproves of the terms of any such underwriting, it may elect
to withdraw therefrom by written notice to the Company. Any Registrable
Securities so excluded or withdrawn from such underwriting shall be withdrawn
from such Registration.
(d) ELIGIBILITY FOR FORM SB-2. The Company represents and warrants that
it meets all of the requirements for the use of Form SB-2 for the Registration
of the sale by the Purchaser and any transferee who purchases the Registrable
Securities, and the Company shall file all reports
5
<PAGE>
required to be filed by the Company with the Commission in a timely manner, and
shall take such other actions as may be necessary to maintain such eligibility
for the use of Form SB-2.
(e) PRIORITY IN FILING. The Company covenants that beginning on the
Closing Date and ending on the later of (i) a date that is one hundred and
eighty (180) days after the Registration Statement filed pursuant to Section
2(a) of this Agreement becomes effective ( PROVIDED that if, after the effective
date of such Registration Statement, the Purchaser shall be unable to sell
Registrable Securities pursuant to such Registration Statement for any number of
days for any reasons other than as a result of any action or inaction on the
part of Purchaser, the provisions of this Section 2(e) shall apply for an
additional number of days equal to the number of days during which the Purchaser
is unable to sell Registrable Securities pursuant to such Registration
Statement) and (ii) the earlier of (x) a date that is one hundred and eighty
(180) days following the date the Special Warrant is exercised or (y) the
expiration date of the Special Warrant, the Company will not cause any
Registration Statement (other than a Registration Statement required by Section
2(a) hereof and registration statements on Form S-8 covering the sale of not
more than an aggregate of 500,000 shares of Common Stock to officers, directors,
employees and consultants of the Company) to be declared effective by the
Commission, without the written consent of the Purchaser.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall do each of the following:
(a) Prepare and file with the Commission the Registration Statements
required by Section 2 of this Agreement and such amendments (including
post-effective amendments) and supplements to the Registration Statements and
the prospectuses used in connection with such Registration Statements, each in
such form as to which the Purchaser and its counsel shall not have objected, as
may be necessary to keep the Registration effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all of the
Registrable Securities of the Company covered by the Registration Statements
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statements;
(b) Furnish to the Purchaser, if the Registrable Securities of the
Purchaser are included in the Registration Statement and the Purchaser is listed
as a selling security holder in the prospectus which is part of such
Registration Statement, and its legal counsel identified to the Company,
promptly after the same is prepared and publicly distributed, filed with the
Commission, or received by the Company, a copy of the Registration Statement,
each preliminary prospectus, each final prospectus, and all amendments and
supplements thereto and such other documents, as the Purchaser may reasonably
request in order to facilitate the disposition of its Registrable Securities;
(c) Furnish to the Purchaser and its counsel copies of any
correspondence between the Company and the Commission with respect to any
Registration Statement or amendment or supplement thereto filed pursuant to this
Agreement;
6
<PAGE>
(d) Use all reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statements under such other
securities or blue sky laws of such jurisdictions as the Purchaser may
reasonably request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions, provided that in connection therewith, the Company shall not be
required to (x) qualify as a foreign corporation or to file a general consent to
the service of process in any jurisdiction or (y) qualify the resale of the
Registrable Securities in more than five such jurisdictions;
(e) List such securities on all national securities exchanges on which
any securities of the Company are then listed, and file any filings required by
such exchanges;
(f) As promptly as practicable after becoming aware of such event,
notify the Purchaser of the occurrence of any event, as a result of which the
prospectus included in any Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and to use its
best efforts to promptly prepare a supplement or amendment to such Registration
Statement or other appropriate filing with the Commission to correct such untrue
statement or omission, and to deliver a number of copies of such supplement or
amendment to the Purchaser as the Purchaser may reasonably request;
(g) As promptly as practicable after becoming aware of such event,
notify the Purchaser (and, in the event of an underwritten offering, the
managing underwriters) of the issuance by the Commission of any stop order or
other suspension of the effectiveness of any Registration Statement at the
earliest possible time, and to use its best efforts to promptly obtain the
withdrawal of such stop order or other suspension of effectiveness (the
occurrence of any of the events described in paragraphs (f) and (g) of this
Section 3 is referred to herein as a "Blackout Event");
(h) During the period commencing upon (i) the Purchaser's receipt of a
notification pursuant to Section 3(f) above or (ii) the entry of a stop order or
other suspension of the effectiveness of the Registration Statement described in
Section 3(g) above, and ending at such time as (x) the Company shall have
completed the applicable filings (and if applicable, such filings shall have
been declared effective) and shall have delivered to the Purchaser the documents
required pursuant to Section 3(f) above or (y) such stop order or other
suspension of the effectiveness of the Registration Statement shall have been
removed, the Company shall be liable to remit the payments required to be paid
to the Purchaser pursuant to Section 2(b) above;
(i) Suspend the use of any prospectus used in connection with any
Registration Statement only in the event, and for such period of time as, such a
suspension is required by the rules and regulations of the Commission;
7
<PAGE>
(j) Enter into such customary agreements for secondary offerings
(including a customary underwriting agreement with the underwriter or
underwriters, if any) and take all such other actions reasonably requested by
the Purchaser in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities. If an underwriting agreement is
entered into and the Registrable Securities are to be sold in an underwritten
offering the Company shall:
(i) make such representations and warranties to the Purchaser
and the underwriter or underwriters, in form, substance and scope as
are customarily made by issuers to selling stockholders and
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, opinions of independent
counsel to the Company (which counsel and opinions shall be reasonably
satisfactory in form, scope and substance to Purchaser and the
underwriter(s), and their counsel), (A) on and dated as of the
effective day of the applicable Registration Statement (and the date of
delivery of any Registrable Securities sold pursuant thereto) stating
that (x) such Registration Statement complies in all material respects
with the requirements of the Securities Act and the rules and
regulations of the Commission thereunder, (y) to the best of such
counsel's knowledge such Registration Statement does not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (z) the documents incorporated by reference
in the prospectus accompanying such Registration Statement, at the time
they were filed with the Commission or as amended, complied in all
material respects with the requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the rules and regulations
thereunder and, to the best of such counsel's knowledge when read
together with the other information in such prospectus, do not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(iii) cause to be delivered, immediately prior to the
effectiveness of the applicable Registration Statement (and, at the
time of delivery of any Registrable Securities sold pursuant thereto),
a "comfort" letter from the Company's independent certified public
accountants addressed to the Purchaser and each underwriter, stating
that such accountants are independent public accountants within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and covering
such financial and accounting matters as are customarily covered by
letters of the independent certified public accountants delivered in
connection with secondary offerings;
(iv) enter into an underwriting agreement which shall include
customary indemnification and contribution provisions to and from the
underwriters and procedures for secondary underwritten offerings;
(v) deliver such documents and certificates as may be
reasonably requested by any purchaser of the Registrable Securities
8
<PAGE>
being sold or the managing underwriter or underwriters, to evidence
compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement; and
(vi) deliver to the Purchaser on the effective day of the
applicable Registration Statement (and on the date of delivery of any
Registrable Securities sold pursuant thereto), a certificate in form
and substance as shall be reasonably satisfactory to the Purchaser,
executed by an executive officer of the Company and to the effect that
all the representations and warranties of the Company contained in the
Securities Purchase Agreement are still true and correct except as
disclosed in such certificate;
(k) Make available for inspection by the Purchaser, their
representative(s), any underwriter participating in any disposition pursuant to
a Registration Statement, and any attorney or accountant retained by the
Purchaser or underwriter, all financial and other records customary for purposes
of a Purchaser's and underwriters' due diligence examination of the Company and
review of any Registration Statement, all filings made with the Commission
subsequent to the Closing, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement, provided
that such parties agree to keep such information confidential;
(l) Cooperate with the Purchaser to facilitate the timely preparation
and delivery of certificates for the Registrable Securities to be offered
pursuant to any Registration Statement and to enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case may
be, as the Purchaser may reasonably request, and registered in such names as the
Purchaser may request subject to any restrictions on transfer applicable to such
Registrable Securities; and, within three (3) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the
Commission, the Company shall deliver, and shall cause legal counsel selected by
the Company to deliver, to the transfer agent for the Registrable Securities
(with copies to the Purchaser) an appropriate instruction and opinion of such
counsel; and
(m) Permit counsel to the Purchaser to review the Registration
Statement and all amendments and supplements thereto within a reasonable period
of time (but not less than 5 business days) prior to each filing, and to
incorporate those changes, if provided to the Company or its counsel within such
5 business day period, reasonably suggested by such counsel.
4. OBLIGATIONS OF THE PURCHASER.
In connection with the registration of the Registrable Securities, the
Purchaser shall have the following obligations:
(a) Furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities. The intended method or methods of
disposition and/or sale (Plan of Distribution) of the Registrable Securities as
9
<PAGE>
so provided by the Purchaser shall be included without alteration in any
Registration Statement covering the Registrable Securities and shall not be
changed without written consent of the Purchaser. At least five (5) business
days prior to the first anticipated filing date of any Registration Statement,
the Company shall notify the Purchaser of the information the Company requires
from the Purchaser if the Purchaser elects to have any of its Registrable
Securities included in such Registration Statement; and
(b) The Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any Blackout Event of the kind described in Section
3(f) or 3(g) above, it will immediately discontinue disposition of its
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(g) shall be furnished to the
Purchaser.
5. EXPENSES OF REGISTRATION.
Other than underwriting discounts and commissions, all expenses
incurred in connection with registrations, filings or qualifications pursuant to
this Agreement, including, without limitation, all registration, listing, and
qualification fees, printing and accounting fees, and the fees and disbursements
of counsel for the Company, and the reasonable fees of one counsel to the
Purchaser with respect to each Registration Statement filed pursuant hereto,
shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) The Company will indemnify and hold harmless the Purchaser, each of
its officers, directors and partners, and each person, if any, who controls the
Purchaser within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading, (ii) any
untrue or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the
Commission) or the omission or alleged omission to state therein any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state or foreign securities law or any rule or regulation under the Securities
Act, the Exchange Act or any state or foreign securities law (the matters in
foregoing clauses (i) through (iii) being, collectively, "Violations"). The
Company shall, subject to the provisions of Section 6(b) below, reimburse the
10
<PAGE>
Purchaser, promptly as such expenses are incurred and are due and payable, for
any legal and other costs, expenses and disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise, including without
limitation, the costs, expenses and disbursements, as and when incurred, of
investigating, preparing or defending any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which the
Purchaser is a party), incurred by it in connection with the investigation or
defense of any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall not
(i) apply to any Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; (ii) with respect to any preliminary
prospectus, inure to the benefit of any such person from whom the person
asserting any such Claim purchased the Registrable Securities that are the
subject thereof (or to the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected in the final prospectus, as then amended or
supplemented, if such final prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (iii) be available to the extent that such
Claim is based upon a failure of the Purchaser to deliver or to cause to be
delivered the prospectus made available by the Company, if such prospectus was
timely made available by the Company pursuant to Section 3(b) hereof; or (iv)
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Purchaser
pursuant to Section 9. The Purchaser will indemnify the Company and its officers
and directors against any Claims arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company, by or on behalf of the Purchaser, expressly for use in
connection with the preparation of the Registration Statement, subject to such
limitations and conditions as are applicable to the Indemnification provided by
the Company in this Section 6.
(b) Promptly after receipt by an Indemnified Person under this Section
6 of notice of the commencement of any action (including any governmental
action), such Indemnified Person shall, if a Claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and to the extent
that the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person;
PROVIDED, HOWEVER, that an Indemnified Person shall have the right to retain its
own counsel with the reasonable fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person and any other party represented by
such counsel in such proceeding. In such event, the Company shall pay for only
one legal counsel for the Purchaser, and such legal counsel shall be selected by
the Purchaser. The failure to deliver written notice to an indemnifying party
11
<PAGE>
within a reasonable time after the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person under
this Section 6, except to the extent that the indemnifying party is materially
prejudiced in its ability to defend such action. The indemnification required by
this Section 6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
(c) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of an unconditional and irrevocable release from all
liability in respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that any provisions
relating to indemnification or contribution contained in the underwriting
agreements entered into among the Company, the underwriters and the Purchaser in
connection with an underwritten public offering are in conflict with the
foregoing provisions, the provisions in such underwriting agreements shall be
controlling as to the Registrable Securities included in the public offering;
PROVIDED, HOWEVER, that if, as a result of this Section 6(d), the Purchaser, its
officers, directors, partners or any person controlling the Purchaser is or are
held liable with respect to any Claim for which they would be entitled to
indemnification hereunder but for this Section 6(d) in an amount which exceeds
the aggregate proceeds received by the Purchaser from the sale of Registrable
Securities included in a registration pursuant to such underwriting agreement
(the "Excess Liability"), the Company shall reimburse the Purchaser for such
Excess Liability.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited under applicable law, the indemnifying party agrees to
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the Indemnified Person on the other hand in connection with the
statements or omissions which resulted in such Claim, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the Indemnified Person shall be determined by reference to, among other
things, whether the untrue statement of a material fact or the omission to state
a material fact on which such Claim is based relates to information supplied by
the indemnifying party or by the Indemnified Person, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the forgoing, (a) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation and (b) contribution by any seller of
Registrable Securities shall be limited in amount to the net proceeds received
by such seller from the sale of such Registrable Securities. The Company and the
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by PRO RATA allocation (even if the Purchaser
and any other party were treated as one entity for such purpose) or by any other
12
<PAGE>
method of allocation that does not take account of the equitable considerations
referred to in this Section.
8. REPORTS UNDER EXCHANGE ACT.
With a view to making available to the Purchaser the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the Commission that may at any time permit the Purchaser to sell securities
of the Company to the public without registration ("Rule 144"), the Company
agrees to:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) furnish to the Purchaser, so long as the Purchaser owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or periodic
report of the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably requested to
permit the Purchaser to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assigned by the Purchaser to any
transferee of all or any portion of the Securities or Shares held by the
Purchaser if: (a) such transfer is permitted by the Securities Purchase
Agreement and the Purchaser agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment; (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee and (ii) the
Securities or Shares with respect to which such registration rights are being
transferred or assigned; (c) at or before the time the Company receives the
written notice contemplated by clause (b) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (d) the transferee of the relevant Securities or Shares
complies with the restrictions on the Purchaser set forth in Section 5 of the
Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and holders of 75% of the Registrable Securities from time to time. Any
13
<PAGE>
amendment or waiver effected in accordance with this Section 10 shall be binding
upon the Purchaser and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of the
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by five days advance written notice to
each of the other parties hereto.
COMPANY: ACCESS POWER, INC.
10033 Sawgrass Dr. West, Suite 100
Ponte Vedra Beach, Florida 32082
Att.: Maurice Matovich
Tel.: (904) 273-2980
Fax: (904) 273-6390
WITH A COPY TO:
Kilpatrick Stockton LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309
Att: Dennis J. Stockwell, Esq.
Tel.: (404) 815-6500
Fax: (404) 815-6555
14
<PAGE>
PURCHASER: Bamboo Investors LLC
c/o WEC Asset Management LLC
One World Trade Center
Suite 4563
New York, New York 10048
Att.: Ethan E. Benovitz
Tel.: (212) 775-9299
Fax: (212) 775-9311
WITH A COPY TO:
Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Att.: Steven Huttler, Esq.
Tel.: (212) 479-6136
Fax: (212) 479-6275
<PAGE>
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York, except for provisions with respect to
internal corporate matters of the Company which shall be governed by the
corporate laws of the State of Florida. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on FORUM NON CONVENIENS, to the bringing of any such
proceeding in such jurisdictions. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. This Agreement has been entered into
freely by each of the parties, following consultation with their respective
counsel, and shall be interpreted fairly in accordance with its terms, without
any construction in favor of or against either party. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such validity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
15
<PAGE>
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth, or referred to
herein and in the other Primary Documents. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The Company acknowledges that any failure by the Company to perform
its obligations under Section 2(a), or any delay in such performance could
result in direct damages to the Purchaser, and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed.
ACCESS POWER, INC.
By: /s/ Glenn Smith
Name: Glenn Smith
Title: President/CEO
BAMBOO INVESTORS LLC
By: WEC Asset Management LLC, Manager
By: /s/Ethan E. Benovitz
Name: Ethan E. Benovitz
Title: Managing Director
16
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT (the "AGREEMENT"), made and entered into as of September
30, 1999, by and among ACCESS POWER, INC., a Florida corporation (the "COMPANY")
and Glenn Smith, a resident of Florida (the "SHAREHOLDER"),
W I T N E S S E T H :
WHEREAS, the Company intends to enter into a Securities Purchase
Agreement, dated the date hereof with the purchaser named therein, the
Shareholder and certain other shareholders of the Company (the "SECURITIES
PURCHASE AGREEMENT"), providing for the issuance of the securities specified
therein, including debentures ("DEBENTURES") convertible into, and warrants
("WARRANTS") exercisable for, shares of Common Stock of the Company ("COMMON
SHARES"); and
WHEREAS, in order to consummate the purchase of the Debentures and
Warrants the purchaser thereof is requesting that the Company increase its
available authorized but unissued shares of Common Stock; and
WHEREAS, the Company must reacquire shares of its Common Stock to
increase its authorized Common Stock within the time necessary to consummate the
transactions contemplated in the Securities Purchase Agreement; and
WHEREAS, Shareholder is willing to exchange Common Shares currently
held by Shareholder for Series B Convertible Preferred Stock of the Company
("PREFERRED STOCK"), immediately prior to the closing of the Securities Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1. EXCHANGE OF SHARES.
Immediately prior to the closing of the Securities Purchase
Agreement:
(a) Shareholder will sell, transfer, and assign to Company all
of Shareholder's right, title, and interest in and to that number of Common
Shares indicated next to his signature below and currently held by Shareholder
(the "EXCHANGE SHARES") and shall deliver the certificate(s) representing
ownership of the Exchange Shares to the Company at its principal office.
(b) The Company shall issue to Shareholder that number of
shares of Preferred Stock indicated next to his signature below (the "PREFERRED
SHARES") in exchange for the Exchange Shares.
2. CONVERSION OF PREFERRED SHARES.
(a) Shareholder shall not be entitled to convert any of the
Preferred Shares into Common Shares prior to the expiration of the Restriction
Period, as defined in Section 5.v of the Securities Purchase Agreement.
(b) Shareholder shall immediately convert all of the Preferred
Shares into Common Shares upon the expiration of the Restriction Period, or as
soon thereafter as the Company has available Common Shares for issuance upon
such conversion.
<PAGE>
3. SUCCESSORS AND ASSIGNS.
All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and assigns of the Company and Shareholder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ACCESS POWER, INC.
By: /s/ Tod R. Smith
Title:
Number of Common Shares
to be exchanged: SHAREHOLDER:
2,662,000 /s/ Glenn Smith
Print Name: Glenn Smith
Number of shares of Series B
Convertible Preferred Stock
to be issued in exchange:
2,662
<PAGE>
Schedule of Agreements
A Share Exchange Agreement in this form also was entered into on
September 30, 1999 with the below-named officers and directors with respect to
the number of shares indicated:
Shares of Common Shares of Series B Convertible
Name Stock Exchanged Preferred Stock Issued
- ---- --------------- ----------------------
Maurice Matovich 450,000 450
Tod Smith 640,000 640
Howard Kaskel* 200,000 200
* Section 2(a) of Mr. Kaskel's agreement varies from the above form and reads as
follows:
"Shareholder shall not be entitled to convert any of the Preferred Shares into
Common Shares until the earlier to occur of (i) the expiration of the
Restriction Period, as defined in Section 5.v of the Securities Purchase
Agreement, and (ii) such time as the undersigned Shareholder, Howard Kaskel, is
not an employee or independent contractor of the Company or in any other manner,
directly or indirectly, receives payment for services rendered to the Company."
AGREEMENT
---------
This Term Sheet is by and between Lycos-Bertelsmann GmbH. a German
Corporation with a principal place of business at Carl-Bertelsmann-Strasse,
161L, Postfach 310, D-33311, Gutersloh, Germany, ("Lycos"), and Access Power ,
Inc. a US company with a principal place of business at 10033 Sawgrass Drive
West, Suite 100, Ponte Vedra Beach, FL 32082 USA ("Access Power")
Recitals
--------
A. Lycos-Bertelsmann is the owner or licensee of certain Pan-European
Web services (collectively, the "Lycos-Bertelsmann Services", together with all
localized adaptations including operated by Lycos-Bertelsmann' subsidiaries,
joint ventures and licensees in Europe, the "Lycos Site");
B. Access Power, Inc. the operator of a Web site accessible through the
URL WWW.ACCESSPOWER.COM, (the Access Power site) that provides on-line
telecommunications products and services over the Internet
Overview
- --------
Lycos-Bertelsmann will place banners, promotional buttons, text links and other
hyperlinks from Lycos and Tripod to the Access Power site.
Terms
-----
1/ Lycos-Bertelsmann' Obligations:
-------------------------------
Lycos Advertising Impressions. Lycos shall provide advertising links
-----------------------------
promoting the Access Power site within the Lycos sites. Lycos shall
provide these advertising impressions in accordance with Lycos'
standard advertising terms and conditions.
Tripod Advertising Impressions. Lycos shall provide links promoting the
------------------------------
Access Power site for members within the European Tripod Sites). Lycos
shall designate Access Power as a PREMIER PARTNER.
Impression Guarantees. Lycos guarantees during the term of this
----------------------
agreement it shall provide Access Power with ___________ impressions as
follows: (i) __________ impressions in year ___ (as described in
Section 1 above) (ii) __________ impressions in year ___ (as described
in Section 1 above). Access Power shall have the right, at its own
expense, to audit Lycos's books and records for the purpose of
verifying impressions served. Such audits will be made not more than
once per year, and not less than (10) ten days written notice, during
regular business hours, by auditors reasonably acceptable to Lycos.
Such audits shall not interfere with Lycos's normal business. In the
event that Lycos has not delivered ___________ impressions by the end
of the Term, Lycos will continue to deliver impressions until that
level of impressions is received. Lycos and Access Power will work
together during the term of this Agreement to determine the most
effective distribution of the advertising impressions between the Lycos
sites and the European Tripod Sites.
2/ Access Power, Inc.'s Obligations:
---------------------------------
Integration. Access Power shall provide Lycos with any assistance
-----------
requested by Lycos in establishing links between Lycos and the Access
Power Site.
Lycos Integration Fees. During the period beginning on the Effective
------------------------
Date, Access Power shall pay Lycos-Bertelsmann ________ payable as
follows: (i) ________ within __ days of the Effective Date; (ii) four
installment payments of _______ due ___________________.
Lycos Transaction Fees. In addition to the integration fees outlined
------------------------
above, during the term and for two years thereafter, for a total of
four years, Access Power shall owe Lycos-Bertelsmann a percentage of
any sales made by users referred to the Access Power Site through the
impressions outlined in Section 1. Initially, Access Power shall owe
Lycos-Bertelsmann ___ of the Net Sales Revenue. Lycos' percentage of
the Net Sales shall be credited dollar for dollar against the
integration fee outlined above, until such time as the full amount of
the integration fee has been offset. At such time, the percentage share
due Lycos shall decrease to ___ of the Net Sales Revenue, and Access
Power shall commence paying Lycos its share of the Net Sales Revenue
within thirty (30) days of such occurrence. Access Power will promote
the Net.Caller service on the Lycos sites.
3/ Term:
-----
The term ("Term") of this Agreement shall commence on the Effective
Date and continue for two years unless terminated earlier as provided
below. The effective date will be the first day of implementation but
no later than September 1st 1999.
4/ Marks: Lycos hereby grants to Access Power the non-exclusive,
-----
non-transferable right to use the Lycos Marks solely for the purposes
of co-branding specified in this Agreement. Access Power hereby grants
Lycos the non-exclusive, non-transferable right to use the Access Power
2
<PAGE>
Marks solely for the purposes specified in this Agreement. Except as
expressly stated herein, neither party shall make any other use of the
other party's marks. Upon request of either party, the other party
shall provide appropriate attribution of the use of the requesting
party's marks. (E.g., "Go Get It R is a registered service mark of
Lycos, Inc. All Rights Reserved.").
5/ Representations and Warranties: Each party hereby represents and
-------------------------------
warrants as follows:
a. Corporate Power. Such party is duly organized and validly
----------------
existing under the laws of the state of its incorporation and has full
corporate power and authority to enter into this Agreement and to carry
out the provisions hereof.
b. Due Authorization. Such party is duly authorized to execute
-----------------
and deliver this Agreement and to perform its obligations hereunder.
c. Binding Agreement. This Agreement is a legal and valid
------------------
obligation binding upon it and enforceable with its terms. The
execution, delivery and performance of this Agreement by such party
does not conflict with any agreement, instrument or understanding, oral
or written, to which it is a party or by which it may be bound, nor
violate any law or regulation of any court, governmental body or
administrative or other agency having jurisdiction over it.
d. Intellectual Property Rights. Such party has the full and
-----------------------------
exclusive right to grant or otherwise permit the other party to access
the Access Power Site content and to use the trademarks, logos and
trade names as set forth on this Agreement, and that it is aware of no
claims by any third parties adverse to any of such property rights.
The representations and warranties and covenants in this Section 5 are
continuous in nature and shall be deemed to have been given by each
party at execution of this Agreement and at each stage of performance
hereunder. These representations, warranties and covenants shall
survive termination or expiration of this Agreement.
6/ Limitation of Warranty. EXCEPT AS EXPRESSLY WARRANTED IN SECTION 5
----------------------
ABOVE, EACH PARTY EXPRESSLY DISCLAIMS ANY FURTHER WARRANTIES, EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.
7/ Indemnification.
----------------
a. Access Power Indemnity. Access Power will at all times
------------------------
indemnify and hold harmless Lycos and its officers, directors,
shareholders, employees, accountants, attorneys, agents, successors and
assigns from and against any and all third party claims, damages,
liabilities, costs and expenses, including reasonable legal fees and
expenses, arising out of or related to any breach of any warranty,
representation, covenant or agreement made by Access Power in this
Agreement. Lycos shall give Access Power prompt written notice of any
claim, action or demand for which indemnity is claimed. Access Power
shall have the right, but not the obligation, to control the defense
and/or settlement of any claim in which it is named as a party. Lycos
shall have the right to participate in any defense of a claim by Access
Power with counsel of Lycos' choice at Lycos' own expense. The
foregoing indemnity is conditioned upon: prompt written notice by Lycos
to Access Power of any claim, action or demand for which indemnity is
claimed; complete control of the defense and settlement thereof by
Access Power; and such reasonable cooperation by Lycos in the defense
as Access Power may request.
b. Lycos Indemnity. Lycos will at all times defend, indemnify
---------------
and hold harmless Access Power and its officers, directors,
shareholders, employees, accountants, attorneys, agents, successors and
assigns from and against any and all third party claims, damages,
liabilities, costs and expenses, including reasonable legal fees and
3
<PAGE>
expenses, arising out of or related to any breach of any warranty,
representation, covenant or agreement made by Lycos in this Agreement.
Access Power shall give Lycos prompt written notice of any claim,
action or demand for which indemnity is claimed. Lycos shall have the
right, but not the obligation, to control the defense and/or settlement
of any claim in which it is named as a party. Access Power shall have
the right to participate in any defense of a claim by Lycos with
counsel defense of Access Power chosen at its own expense. The
foregoing indemnity is conditioned upon; prompt written notice by
Access Power to Lycos of any claim, action or demand for which
indemnity is claimed; complete control of the defense and settlement
thereof by Lycos; and such reasonable cooperation by Access Power in
the defense of Lycos may request.
8/ Confidentiality, Press Releases.
-------------------------------
a. Non-disclosure Agreement. The parties agree and
--------------------------
acknowledge that, as a result of negotiating,
entering into and performing this Agreement, each
party has and will have access to certain of the
other party's Confidential Information (as defined
below). Each party also understands and agrees that
misuse and/or disclosure of that information could
adversely affect the other party's business.
Accordingly, the parties agree that, during the Term
of this Agreement and thereafter, each party shall
use and reproduce the other party's Confidential
Information only for purposes of this Agreement and
only to the extent necessary for such purpose and
shall restrict disclosure of the other party's
Confidential Information to its employees,
consultants or independent contractors with a need to
know and shall not disclose the other party's
Confidential Information to any third party without
the prior written approval of the other party .
Notwithstanding the foregoing, it shall not be a
breach of this Agreement for either party to disclose
Confidential Information of the other party if
required to do so under law or in a judicial or other
governmental investigation or proceeding, provided
the other party has been given prior notice and the
disclosing party has sought all available safeguards
against widespread dissemination prior to such
disclosure.
b. Confidential Information Defined. As used in this
----------------------------------
Agreement, the term "Confidential Information" refers
to: (i) the terms and conditions of this Agreement;
(ii) each party's trade secrets, business plans,
strategies, methods and/or practices; and (iii) other
information relating to either party that is not
generally known to the public, including information
about either party's personnel, products, customers,
marketing strategies, services or future business
plans. Notwithstanding the foregoing, the term
"Confidential Information" specifically excludes (A)
information that is now in the public domain or
subsequently enters the public domain by publication
or otherwise through no action or fault of the other
party; (B) information that is known to either party
without restriction, prior to receipt from the other
party under this Agreement, from its own independent
sources as evidenced by such party's written records,
and which was not acquired, directly or indirectly,
from the other party; (C) information that either
party receives from any third party reasonably known
by such receiving party to have a legal right to
transmit such information, and not under any
obligation to keep such information confidential; and
(D) information independently developed by either
party's employees or agents provided that either
party can show that those same employees or agents
had no access to the Confidential Information
received hereunder.
c. Press Releases. Lycos and Access Power will
jointly prepare at least one press release concerning
the existence of this Agreement and the terms hereof.
Otherwise, no public statements concerning the
existence or terms of this Agreement shall be made or
released to any medium except with the prior approval
of Lycos and Access Power or as required by law,
except where such information is already clearly in
the public domain or the subject of existing jointly
approved press releases.
4
<PAGE>
9/ Termination. Either party may terminate this Agreement if (a)
-----------
the other party files a petition for bankruptcy or is adjudicated
bankrupt; (b) a petition in bankruptcy is filed against the other party
and such petition is not dismissed within sixty (60) days of the filing
date; (c) the other party becomes insolvent or makes an assignment for
the benefit of its creditors pursuant to any bankruptcy law; (d) a
receiver is appointed for the other party or its business; (e) upon the
occurrence of a material breach by the other party if such breach is
not cured within thirty (30) days after written notice is received by
the breaching party identifying the matter constituting the material
breach; (f) after 1 year either party may exercise the right to
terminate the agreement under this clause, 9/(f), in which case, Lycos
must give 90 days notice to Access Power and agrees to waive any
further payments from Access Power. Equally, should Access Power
exercise this clause, 9(f), then they shall give 90 days notice to
Lycos-Bertelsmann and remain liable for any subsequent monthly
guaranteed payments falling due under the terms of this agreement, as
well as remain liable to Lycos-Bertelsmann ___ of the Net Sales Revenue
on Sales made by the users referred to the Access Power Site through
the impressions outlined in Section 1 prior to the termination of the
agreement.; (g) by mutual consent of the parties
10/ Force Majeure. In the event that either party is prevented from
--------------
performing, or is unable to perform, any of its obligations under this
Agreement due to any cause beyond the reasonable control of the party
invoking this provision, the affected party's performance shall be
excused and the time for performance shall be extended for the period
of delay or inability to perform due to such occurrence.
11/ Relationship of Parties. Access Power and Lycos are independent
------------------------
contractors under this Agreement, and nothing herein shall be construed
to create a partnership, joint venture or agency relationship between
Access Power and Lycos. Neither party has authority to enter into
agreements of any kind on behalf of the other.
12/ Assignment, Binding Effect. Neither Lycos nor Access Power may
----------------------------
assign this Agreement or any of its rights or delegate any of its
duties under this Agreement without the prior written consent of the
other.
13/ Choice of Law and Forum. This Agreement, its interpretation,
-------------------------
performance or any breach thereof, shall be construed in accordance
with, and all questions with respect thereto shall be determined by,
the laws of the Commonwealth of Massachusetts applicable to contracts
entered into and wholly to be performed within said state. Access Power
hereby consents to the personal jurisdiction of the Commonwealth of
Massachusetts, acknowledges that venue is proper in any state or
Federal court in the Commonwealth of Massachusetts, agrees that any
action related to this Agreement must be brought in a state or Federal
court in the Commonwealth of Massachusetts, and waives any objection
Access Power has or may have in the future with respect to any of the
foregoing.
14/ Good Faith. The parties agree to act in good faith with respect to
----------
each provision of this Agreement and any dispute that may arise related
hereto.
15/ Additional Documents/information. The parties agree to sign and/or
--------------------------------
provide such additional documents and/or information as may reasonably
be required to carry out the intent of this Agreement and to effectuate
its purposes.
16/ Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
17/ No Waiver. The waiver by either party of a breach or a default of
---------
any provision of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either party
to exercise or avail itself of any right, power or privilege that it
has, or may have hereunder, operate as a waiver of any right, power or
privilege by such party.
18/ Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.
5
<PAGE>
19/ Severability. Each provision of this Agreement shall be severable
------------
from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
20/ Notices. All notice required to be given under this Agreement must
-------
be given in writing and delivered either in hand, by certified mail,
return receipt requested, postage pre-paid, or by Federal Express or
other recognized overnight delivery service, all delivery charges
pre-paid, and addressed:
If to Lycos-Bertelsmann:Lycos-Bertelsmann-Bertelsmann GmbH & Co KG
Carl-Bertelsmann-Strasse, 161L
Postfach 315, D-33311 Gutersloh, Germany
Fax No.: (+49) 5241 80 61655
Attention: Controller
With a copy to: Business Development Director
Lycos-Bertelsmann GmbH & Co KG
400-2 Totten Pond Road
Waltham MA 02154
Fax No.: (781) 370 2600
If to Access Power, Inc.:
Access Power, Inc.
10033 Sawgrass Drive West, Suite 100
Ponte Vedra Beach, FL 32082
Attention: Chief Operating Officer
22/ Entire Agreement. This Agreement contains the entire understanding
----------------
of the parties hereto with respect to the transactions and matters
contemplated hereby, supersede all previous agreements between
Lycos-Bertelsmann and Access Power concerning the subject matter, and
cannot be amended except by writing signed by both parties. No party
hereto has relied on any statement, representation or promise of any
other party or with any other officer, agent, employee or attorney for
the other party in executing this Agreement except as expressly stated
herein.
23/ Limitations of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY
------------------------
BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS
AGREEMENT (INCLUDING SUCH DAMAGES INCURRED BY THIRD PARTIES), SUCH AS,
BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST
BUSINESS. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR DAMAGES IN
EXCESS OF THE AMOUNT RECEIVED BY THE OTHER PARTY UNDER THIS AGREEMENT,
PROVIDED THAT THIS SECTION DOES NOT LIMIT EITHER PARTY'S LIABILITY TO
THE OTHER FOR (A) WILLFUL AND MALICIOUS MISCONDUCT; (B) DIRECT DAMAGES
TO REAL OR TANGIBLE PERSONAL PROPERTY; (C) BODILY INJURY OR DEATH
CAUSED BY NEGLIGENCE; OR (D) INDEMNIFICATION OBLIGATIONS HEREUNDER.
6
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of the date set forth above.
Access Power, Inc. Lycos Bertelsmann GmbH & CO.
By: /s/ Glenn Smith By: /s/ Christoph Mohn
Name: Glenn Smith Name: Christoph Mohn
Title: CEO Title: CEO
Date: July 27, 1999 Date: August 6th
7
CONSULTING AGREEMENT
Agreement made this 4th day of October, 1999, between ACCESS POWER INC.
(the "Corporation") and
NORTHSTAR ADVERTISING, INC. (the "Consultant").
In consideration of the mutual promises contained in this Agreement,
the contracting parties agree as follows:
RECITALS:
The Corporation desires to engage the services of the Consultant to
perform consulting services for the Corporation relating to all phases of the
Corporation's public relations in the areas of investor and broker/dealer
relations as such may pertain to the operation of the Corporation's business
(the "Services").
The Consultant desires to provide the Services to the Corporation.
AGREEMENT
TERM
1. The respective duties and obligations of the parties shall be for a
period of twelve (12) months commencing on the date hereof. This Agreement may
be terminated by either of the parties only in accordance with the terms and
conditions set forth in Paragraph 7, below.
SERVICES PROVIDED BY CONSULTANT
2. Consultant will provide the Services in connection with the
Corporation's "public relations" dealings with NASD broker/dealers and the
investing public. (At no time shall the Consultant provide services, which would
require Consultant to be registered and licensed with any federal or state
regulatory body or self-regulatory agency.) During the term of this Agreement,
Consultant will provide those services customarily provided by a public
relations firm to a Corporation, including but not necessarily limited to the
following:
(a) Aiding the Corporation in developing a marketing plan
directed at informing the public of the business of the Corporation;
(b) Providing assistance and expertise in devising an
advertising campaign in conjunction with the marketing campaign set forth in (a)
above;
(c) Advise the Corporation and provide assistance in dealing
with institutional investors as it pertains to offerings of the Corporation's
securities;
(d) Aid and assist the Corporation in its efforts to secure
"market makers" to trade the Corporation's common stock by providing such
information as may be required;
(e) Aid and advise the Corporation in establishing a means of
securing nationwide interest in the Corporation's securities;
<PAGE>
(f) Aid and consult with the Corporation in the preparation
and dissemination of press releases and news announcements;
(g) Aid and consult with the Corporation in the preparation
and dissemination of all "due diligence" package requested by and furnished to
NASD registered broker/dealers, and/or other institutional and/or fund managers
requesting such information from the Corporation;
(h) Aid and consult with the Corporation in providing the
necessary due diligence materials in connection with any merger or acquisition
the Corporation may contemplate and/or enter into during the term of this
Agreement; and
(i) Aid and consult with the Corporation with shareholder
solicitations.
COMPENSATION
3. In consideration for the services provided by Consultant to
Corporation, the Corporation shall pay or cause to be delivered to the
Consultant, on the execution of this Agreement, the following:
(a) 1.3 million shares of FREE TRADING common stock, fully
paid and nonassessable, of the Corporation.
COMPLIANCE
4. In the event the Shares are not presently trading on any recognized
market, the Shares sold to Consultant will, at that particular time, be "free
trading," or, if a registration statement is contemplated, the Shares shall have
"piggy back" registration rights and will, at the expense of the Corporation, be
included in any such registration statement filed pursuant to the Securities Act
of 1933, as amended (the "Securities Act"). For purposes of this Agreement, the
OTC Bulletin Board shall be deemed to be a recognized market.
REPRESENTATION OF CORPORATION
5. The Corporation, upon entering this Agreement, hereby warrants and
guarantees to the Consultant that all statements, either written or oral, made
by the Corporation to the Consultant are true and accurate, and contain no
misstatements of a material fact. The Corporation acknowledges that the
information it delivers to the Consultant will be used by the Consultant in
preparing materials regarding the Corporation's business, including but not
necessarily limited to, its financial condition for dissemination to the public.
Therefore, in accordance with Paragraph 6, below, the Corporation shall hold
harmless the Consultant from any and all errors, omissions, misstatements,
negligent or intentional misrepresentations, in connection with all information
furnished by Corporation to Consultant, in accordance with and pursuant to the
terms and conditions of this Agreement for the purpose or purposes consistent
with the services to be rendered by the Consultant in accordance with the terms
of this Agreement. The Corporation further represents and warrants that as to
all matters set forth within this Agreement, the Corporation has had independent
legal counsel and will continue to retain independent legal counsel to advise
the Corporation on all matters concerning, but not necessarily limited to,
corporate law, corporate relations, investor relations, all matters concerning
and in connection with the Corporation activities regarding the Securities Act,
the Exchange Act, and state Blue Sky laws.
<PAGE>
LIMITED LIABILITY
6. (a) With regard to the services to be performed by the Consultant
pursuant to the terms of this Agreement, the Consultant shall not be liable to
the Corporation, or to anyone who may claim any right due to any relationship
with the Corporation, or any acts or omissions in the performance of services on
the part of the Consultant, or on the part of the agents or employees of the
consultant, except when said acts or omissions of the Consultant are due to its
willful misconduct or culpable negligence. The Corporation shall hold Consultant
free and harmless from any obligations, costs, claims, judgments, attorney's
fees, and attachments arising from or growing out of the services rendered to
the Corporation pursuant to the terms of this Agreement or in any way connected
with the rendering of its services, except when the same shall arise due to the
willful misconduct or culpable negligence of the Consultant and the Consultant
is adjudged to be guilty of willful misconduct or culpable negligence by a court
of competent jurisdiction.
(b) The Consultant shall use the disclaimer set forth on
Exhibit B hereto in all communications related to the Corporation.
TERMINATION
7. This Agreement may be terminated by the Corporation upon the giving
of not less than sixty (60) days written notice to the Consultant at the address
set forth in Paragraph 8, below. In the event this Agreement is terminated by
the Corporation, all compensation paid by Corporation to the Consultant shall be
deemed earned. Upon termination, the Corporation shall be responsible and shall
pay to Consultant any and all fees and costs due and/or accrued by Consultant
for and on behalf of the Corporation.
NOTICES
8. Notices to be sent pursuant to the terms and conditions of this
Agreement shall be sent as follows:
AS TO CONSULTANT:
Northstar Advertising, Inc.
4545 S. Atlantic Avenue
Suite 3106
Daytona Beach, Florida 32127
AS TO CORPORATION:
Access Power
Suite 100
10033 Sawgrass Drive W.
Ponte Vedra Beach, FL 32082
ATTORNEY'S FEES
9. In the event any litigation or controversy, including arbitration,
arises out of or in connection with this Agreement between the parties hereto,
the prevailing party in such litigation, arbitration or controversy, shall be
entitled to recover from the other party or parties, all reasonable attorneys'
fees, expenses and of litigation costs, including those associated within the
appellate or post judgment collection proceedings.
<PAGE>
ARBITRATION
10. In connection with any controversy or claim arising out of or
relating to this Agreement, the parties hereto agree that such controversy shall
be submitted to arbitration, in conformity with the Federal Arbitration Act
(Section 9 U.S. Code Section 901 ET SEQ.), and shall be conducted in accordance
with the Rules of the American Arbitration Association. Any judgment rendered as
a result of the arbitration of any dispute herein, shall upon being rendered by
the arbitrators be submitted to a court of competent jurisdiction within the
State of Florida or in any state where a party to this action maintains its
principal business or is incorporated.
GOVERNING LAW
11. This Agreement shall be construed under and in accordance with the
laws of the State of Florida, and all obligations of the parties created under
it are to be performed in Volusia County, Florida. Further, in any controversy
arising out of this Agreement, the venue for said arbitration shall be in
Volusia County, Florida, and all parties hereby consent to the venue as the
proper jurisdiction for said proceedings provided herein.
PARTIES BOUND
12. This Agreement shall be binding on and inure to the benefit of the
contracting parties and their respective heirs, executors, administrators, legal
representatives, successors, and assigns when permitted by this Agreement.
LEGAL CONSTRUCTION
13. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, the invalidity, illegality, or unenforceability shall not affect
any other provision, and this Agreement shall be construed as if the invalid,
illegal, or unenforceable provision had never been contained in it.
PRIOR AGREEMENT SUPERSEDED
14. This Agreement constitutes the entire Agreement of the contracting
parties and supersedes any prior understandings or agreements between the
respective parties. This Agreement may only be modified or changed by written
agreement signed by all parties hereto.
MULTIPLE COPIES OR COUNTERPARTS OF AGREEMENT
15. The original and one or more copies of this Agreement may be
executed by one or more of the parties hereto. In such event, all of such
executed copies shall have the same force and effect as the executed original,
and all of such counterparts taken together shall have the effect of a fully
executed original. This Agreement may be signed by the parties and copies hereof
delivered to each party by way of facsimile transmission and such facsimile
copies shall be deemed original copies for all purposes if original copies of
the parties' signatures are not delivered.
HEADINGS
16. Headings used throughout this Agreement are for reference and
convenience, and in no way define, limit or describe the scope or intent of this
Agreement or effect its provisions.
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands as of the date
written above.
NORTHSTAR ADVERTISING, INC.
By: /S/ RAYLEN FARRA
Raylen Farra, President/CEO
ACCESS POWER, INC,
By: /S/ GLENN SMITH
Glenn Smith, President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001041588
<NAME> ACCESS POWER, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 885,191
<SECURITIES> 0
<RECEIVABLES> 555,222
<ALLOWANCES> 0
<INVENTORY> 18,815
<CURRENT-ASSETS> 1,610,366
<PP&E> 1,489,096
<DEPRECIATION> 566,922
<TOTAL-ASSETS> 2,545,540
<CURRENT-LIABILITIES> 1,844,354
<BONDS> 0
0
4
<COMMON> 27,452
<OTHER-SE> (326,270)
<TOTAL-LIABILITY-AND-EQUITY> 2,545,540
<SALES> 51,649
<TOTAL-REVENUES> 51,649
<CGS> 315
<TOTAL-COSTS> 597,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,833
<INCOME-PRETAX> 549,120
<INCOME-TAX> 0
<INCOME-CONTINUING> 549,120
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 549,120
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
