SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 2, 2000
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AMERICAN ACCESS TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-3410234
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
37 Skyline Drive, Suite 1101, Lake Mary, Florida 32746
Registrant's telephone number, including area code: (407) 333-1446
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Item 5. Other Events
On May 2, 2000, Registrant entered into a Stock Purchase Agreement with Crescent
International, Ltd. of Geneva, Switzerland ("the Investor"), in which the
Company may issue and sell to the Investor, from time to time, and the Investor
shall purchase, up to $15,000,000 of the Common Stock at the Registrant's
request. The Registrant sold 406,278 shares of Common Stock for $1,900,000, on
May 2, 2000 and issued the Investor a warrant to purchase 128,000 shares of
common stock par value $0.001 per share at the exercise price of $7.0149 per
share until May 2, 2005, subject to extension under certain circumstances.
Additionally, the Investor may purchase additional shares for $0.01 per share in
the event the market price is below $4.6766 at the effective date of the
registration of the initial 406,278 shares purchased. Unless the Company obtains
the requisite approval of its shareholders in accordance with the corporate laws
of Florida, no more than 19.9% of the outstanding shares of Common Stock may be
issued and sold to the Investor. Additional sales of Registrant's common stock
to the Investor is at a price of 92% of average low bid price during a valuation
period and is subject to a number of conditions prior to any additional sales.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following Exhibits are filed herewith:
Exhibit No. Description
- ----------- -----------
1. Stock Purchase Agreement Executed by American Access
Technologies, Inc. and Crescent International, Ltd.
2. Registration Rights Agreement
3. Incentive Warrant
4. Early Put Warrant
5. Closing Statement
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMERICAN ACCESS TECHNOLOGIES, INC.
May 4, 2000 By: s/John Presley
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John Presley, President
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STOCK PURCHASE AGREEMENT
by and between
Crescent International Ltd.
and
American Access Technologies Inc.
dated as of May 2, 2000
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I CERTAIN DEFINITIONS........................................................................1
Section 1.1. "Bid Price"...........................................................................1
Section 1.2. "Capital Shares"......................................................................1
Section 1.3. "Closing".............................................................................1
Section 1.4. "Closing Date"........................................................................2
Section 1.5. "Commitment Period"...................................................................2
Section 1.6. "Common Stock"........................................................................2
Section 1.7. "Condition Satisfaction Date".........................................................2
Section 1.8. "Daily Trading Value".................................................................2
Section 1.9. "Damages".............................................................................2
Section 1.10. "Early Put Shares"....................................................................2
Section 1.11. "Early Put Warrant"...................................................................2
Section 1.12. "Early Put Warrant Shares"............................................................2
Section 1.13. "Effective Date"......................................................................2
Section 1.14. "Exchange Act"........................................................................2
Section 1.15. "Incentive Warrant Shares"............................................................2
Section 1.16. "Incentive Warrant"...................................................................2
Section 1.17. "Investment Amount"...................................................................3
Section 1.18. "Legend"..............................................................................3
Section 1.19. "Lowest Average Price"................................................................3
Section 1.20. "Material Adverse Effect".............................................................3
Section 1.21. "Maximum Commitment Amount"...........................................................3
Section 1.22. "Maximum Put Amount"..................................................................3
Section 1.23. "Minimum Bid Price"...................................................................3
Section 1.24. "Minimum Time Interval"...............................................................3
Section 1.25. "NASD"................................................................................3
Section 1.26. "Outstanding".........................................................................3
Section 1.27. "Person"..............................................................................3
Section 1.28. "Principal Market"....................................................................3
Section 1.29. "Purchase Price"......................................................................4
Section 1.30. "Put".................................................................................4
Section 1.31. "Put Date"............................................................................4
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Section 1.32. "Put Fees"............................................................................4
Section 1.33. "Put Notice"..........................................................................4
Section 1.34. "Put Notice Period"...................................................................4
Section 1.35. "Put Shares"..........................................................................4
Section 1.36. "Registrable Securities"..............................................................4
Section 1.37. "Registration Rights Agreement".......................................................4
Section 1.38. "Registration Statement"..............................................................4
Section 1.39. "Regulation D"........................................................................5
Section 1.40. "SEC".................................................................................5
Section 1.41. "SEC Documents".......................................................................5
Section 1.42. "Section 4(2)"........................................................................5
Section 1.43. "Securities Act"......................................................................5
Section 1.44. "Subscription Date"...................................................................5
Section 1.45. "Subsidiary"..........................................................................5
Section 1.46. "Trading Day".........................................................................5
Section 1.47. "Underwriter".........................................................................5
Section 1.48. "Valuation Period"....................................................................5
Section 1.49. "Warrants"............................................................................5
Section 1.50. "Warrant Shares"......................................................................5
ARTICLE II PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF OBLIGATIONS; INCENTIVE WARRANT...........6
Section 2.1. Investments...........................................................................6
Section 2.2. Mechanics.............................................................................6
Section 2.3. Closings..............................................................................7
Section 2.4. Termination of Agreement and Investment Obligation....................................7
Section 2.5. The Incentive Warrant.................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR.................................................7
Section 3.1. Intent................................................................................7
Section 3.2. Sophisticated Investor................................................................7
Section 3.3. Authority.............................................................................8
Section 3.4. Not an Affiliate......................................................................8
Section 3.5. Organization and Standing.............................................................8
Section 3.6. Absence of Conflicts..................................................................8
Section 3.7. Disclosure; Access to Information.....................................................8
Section 3.8. Manner of Sale........................................................................8
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Section 3.9. Resale Restrictions...................................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................9
Section 4.1. Organization of the Company...........................................................9
Section 4.2. Authority.............................................................................9
Section 4.3. Corporate Documents...................................................................9
Section 4.4. Books and Records.....................................................................9
Section 4.5. Capitalization.......................................................................10
Section 4.6. Registration and Listing of Common Stock.............................................10
Section 4.7. Financial Statements.................................................................10
Section 4.8. SEC Documents........................................................................11
Section 4.9. Exemption from Registration; Valid Issuances; New Issuances..........................11
Section 4.10. No General Solicitation or Advertising in Regard to this Transaction.................11
Section 4.11. No Conflicts.........................................................................12
Section 4.12. No Material Adverse Change...........................................................12
Section 4.13. No Undisclosed Liabilities...........................................................12
Section 4.14. No Undisclosed Events or Circumstances...............................................13
Section 4.15. No Integrated Offering...............................................................13
Section 4.16. Litigation and Other Proceedings.....................................................13
Section 4.17. No Misleading or Untrue Communication................................................13
Section 4.18. Material Non-Public Information......................................................13
ARTICLE V COVENANTS OF THE INVESTOR.................................................................13
Section 5.1. Compliance...........................................................................13
ARTICLE VI COVENANTS OF THE COMPANY..................................................................14
Section 6.1. Registration Rights..................................................................14
Section 6.2. Reservation of Common Stock..........................................................14
Section 6.3. Listing of Common Stock..............................................................14
Section 6.4. Exchange Act Registration............................................................14
Section 6.5. Legends..............................................................................14
Section 6.6. Corporate Existence..................................................................14
Section 6.7. Additional SEC Documents.............................................................15
Section 6.8. Notice of Certain Events Affecting Registration; Suspension of Right to Make a Put...15
Section 6.9. Consolidation; Merger................................................................15
Section 6.10. Issuance of Put Shares, Warrant Shares and Additional Shares.........................15
Section 6.11. Legal Opinion on Subscription Date...................................................16
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Section 6.12. No Similar Arrangement; Right of First Refusal.......................................16
ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING...........................16
Section 7.1. Conditions Precedent to the Obligation of the Company to Issue and Sell Common Stock.16
Section 7.2. Conditions Precedent to the Right of the Company to Deliver a Put Notice and the
Obligation of the Investor to Purchase Put Shares....................................17
Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public Information.......................19
ARTICLE VIII LEGENDS...................................................................................21
Section 8.1. Legends..............................................................................21
Section 8.2. No Other Legend or Stock Transfer Restrictions.......................................22
Section 8.3. Investor's Compliance................................................................22
ARTICLE IX INDEMNIFICATION; ARBITRATION..............................................................22
Section 9.1. Indemnification......................................................................22
Section 9.2. Method of Asserting Indemnification Claims...........................................22
Section 9.3. Arbitration..........................................................................25
ARTICLE X MISCELLANEOUS.............................................................................26
Section 10.1. Put Fees and Transaction Costs.......................................................26
Section 10.2. Reporting Entity for the Common Stock................................................27
Section 10.3. Brokerage............................................................................27
Section 10.4. Notices..............................................................................27
Section 10.5. Assignment...........................................................................28
Section 10.6. Amendment; No Waiver.................................................................28
Section 10.7. Annexes and Exhibits; Entire Agreement...............................................28
Section 10.8. Survival.............................................................................29
Section 10.9. Severability.........................................................................29
Section 10.10. Title and Subtitles..................................................................29
Section 10.11. Counterparts.........................................................................29
Section 10.12. Choice of Law........................................................................29
Section 10.13. Other Expenses.......................................................................29
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This STOCK PURCHASE AGREEMENT is entered into as of the 2nd day of May,
2000 (this "Agreement"), by and between Crescent International Ltd. (the
"Investor"), an entity organized and existing under the laws of Bermuda, and
American Access Technologies Inc., a corporation organized and existing under
the laws of the State of Florida (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase, up to
$15,000,000 of the Common Stock (as defined below); and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the United
States Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "Securities Act"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Bid Price" shall mean the closing bid price as reported
under Section 10.2 of this Agreement.
Section 1.2. "Capital Shares" shall mean the Common Stock and any
shares of any other class of common stock whether now or hereafter authorized,
having the right to participate in the distribution of dividends (as and when
declared) and assets (upon liquidation of the Company).
Section 1.3. "Closing" shall mean one of the closings of a purchase and
sale of the Common Stock pursuant to Section 2.1.
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Section 1.4. "Closing Date" shall mean, with respect to a Closing, the
first Trading Day following the Put Notice Period related to such Closing,
provided all conditions to such Closing have been satisfied on or before such
Trading Day.
Section 1.5. "Commitment Period" shall mean the period commencing on
th- Subscription Date and expiring on the earlier to occur of (i) the date on
which the Investor shall have purchased Put Shares pursuant to this Agreement
for an aggregate Purchase Price of the Maximum Commitment Amount, (ii) the date
this Agreement is terminated pursuant to Section 2.4, or (iii) the date
occurring eighteen (18) months from the Subscription Date.
Section 1.6. "Common Stock" shall mean the Company's common stock,
$0.001 par value per share.
Section 1.7. "Condition Satisfaction Date" shall have the meaning set
forth in Section 7.2 of this Agreement.
Section 1.8. "Daily Trading Value" shall mean, on any Trading Day, the
Bid Price multiplied by the trading volume of the Common Stock.
Section 1.9. "Damages" shall mean any and all losses, claims, damages,
liabilities, costs and expenses (including, without limitation, any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in defense or settlement of, any action, suit or
proceeding between any indemnified party and any indemnifying party or between
any indemnified party and any third party, or otherwise, or any claim asserted).
Section 1.10. "Early Put Shares" shall mean the shares of Common Stock
purchased by the Investor from the Company on the Subscription Date pursuant to
Section 2.1(c).
Section 1.11. "Early Put Warrant" shall mean the Early Put Warrant in
the form of Exhibit C hereto issued pursuant to Section 2.1(d) of this
Agreement.
Section 1.12. "Early Put Warrant Shares" shall mean all shares of
Common Stock issued or issuable pursuant to exercise of the Early Put Warrants.
Section 1.13. "Effective Date" shall mean the earlier to occur of: (i)
the date on which the SEC has declared effective a Registration Statement
registering resale of Registrable Securities as set forth in Section 7.2(a) and
(ii) the date on which such Registrable Securities first become eligible for
resale pursuant to Rule 144 of the Securities Act.
Section 1.14. "Exchange Act" shall mean the United States Securities
Exchange Act of 1934, as amended and the rules and regulations promulgated
thereunder.
Section 1.15. "Incentive Warrant Shares" shall mean all shares of
Common Stock issued or issuable pursuant to exercise of the Incentive Warrant.
Section 1.16. "Incentive Warrant" shall mean the Incentive Warrant in
the form of Exhibit B hereto issued pursuant to Section 2.5 of this Agreement.
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Section 1.17. "Investment Amount" shall mean the dollar amount to be
invested by the Investor to purchase Put Shares with respect to any Put Date as
notified by the Company to the Investor in accordance with Section 2.2 hereof.
Section 1.18. "Legend" shall have the meaning specified in Section 8.1.
Section 1.19. "Lowest Average Price" shall mean the average of the
lowest three consecutive Bid Prices during the applicable Valuation Period.
Section 1.20. "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company or to the Company and such
other entities controlling or controlled by the Company, taken as a whole,
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
its obligations under any of (i) this Agreement, (ii) the Registration Rights
Agreement and (iii) the Warrants.
Section 1.21. "Maximum Commitment Amount" shall mean $15,000,000.
Section 1.22. "Maximum Put Amount" shall mean $1,150,000; provided,
however, that if the Bid Price does not equal or exceed $6.00 on each of the
seven (7) Trading Days immediately preceding the Subscription Date and on each
Trading Day during any Put Notice Period the Maximum Put Amount shall be
$20,000.
Section 1.23. "Minimum Bid Price" shall have the meaning set forth in
Section 7.2(j) of this Agreement.
Section 1.24. "Minimum Time Interval" shall mean the mandatory
twenty-two (22) Trading Days between any two Put Dates.
Section 1.25. "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.26. "Outstanding" when used with reference to Common Stock or
Capital Shares (collectively the "Shares"), shall mean, at any date as of which
the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not refer to any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.27. "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.28. "Principal Market" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange, the Bulletin Board or
the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.
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Section 1.29. "Purchase Price" shall mean, with respect to a Put,
ninety-two percent (92%) of the Lowest Average Price.
Section 1.30. "Put" shall mean the Early Put and each occasion the
Company elects to exercise its right to require the Investor to purchase a
discretionary amount of the Company's Common Stock, subject to the terms and
conditions of this Agreement.
Section 1.31. "Put Date" shall mean the Trading Day during the
Commitment Period that a Put Notice to sell Common Stock to the Investor is
deemed delivered pursuant to Section 2.2(b) hereof.
Section 1.32. "Put Fees" shall have the meaning specified in Section
10.1 hereof.
Section 1.33. "Put Notice" shall mean a written notice to the Investor
setting forth the intended Closing Date and the Investment Amount that the
Company intends to require the Investor to purchase pursuant to the terms of
this Agreement.
Section 1.34. "Put Notice Period" shall mean a period beginning on a
Put Date and ending on a Closing Date; provided that in no event shall a Put
Notice Period be less than seven (7) Trading Days.
Section 1.35. "Put Shares" shall mean all shares of Common Stock issued
or issuable pursuant to a Put that has been exercised or may be exercised in
accordance with the terms and conditions of this Agreement.
Section 1.36. "Registrable Securities" shall mean (i) the Put Shares,
(ii) the Warrant Shares and (iii) any securities issued or issuable with respect
to any of the foregoing by way of exchange, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (w) the applicable Registration Statement has been declared effective by
the SEC and all such Registrable Securities have been disposed of pursuant to
the applicable Registration Statement, (x) all such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (y) such time as all such Registrable Securities have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive legend
or (z) in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Investor, all such Registrable Securities may be
sold without registration or the need for an exemption from any registration
requirements and without any time, volume or manner limitations pursuant to Rule
144(k) (or any similar provision then in effect) under the Securities Act.
Section 1.37. "Registration Rights Agreement" shall mean the
registration rights agreement in the form of Exhibit A hereto.
Section 1.38. "Registration Statement" shall mean a registration
statement on Form S-3 (if use of such form is then available to the Company
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pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies and which counsel for the Company
shall deem appropriate and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and the Warrants
and in accordance with the intended method of distribution of such securities),
for the registration of the resale by the Investor of the Registrable Securities
under the Securities Act.
Section 1.39. "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.40. "SEC" shall mean the Securities and Exchange Commission.
Section 1.41. "SEC Documents" shall mean the Company's latest Form 10-K
as of the time in question, all Forms 10-Q and 8-K filed thereafter, and the
Proxy Statement for its latest fiscal year as of the time in question until such
time the Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.
Section 1.42. "Section 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.43. "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.44. "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.
Section 1.45. "Subsidiary" shall mean any Person in which the Company,
directly or indirectly through Subsidiaries or otherwise, beneficially owns more
than fifty percent (50%) of either the equity interests in, or the voting
control of, such Person.
Section 1.46. "Trading Day" shall mean any day during which the
Principal Market shall be open for business.
Section 1.47. "Underwriter" shall mean any underwriter participating in
any disposition of the Registrable Securities on behalf of the Investor pursuant
to a Registration Statement. Section 1.48. "Valuation Period" shall mean (i)
with respect to the Subscription Date, the twenty-two (22) Trading Day period
immediately preceding the Subscription Date, (ii) with respect to an Effective
Date, the twenty-two (22) Trading Day period immediately preceding such
Effective Date and (iii) with respect to a Closing Date, the twenty-two (22)
Trading Day period immediately preceding the applicable Put Date, during which
the Purchase Price of the Common Stock is determined.
Section 1.49. "Warrants" shall mean the Early Put Warrant and Incentive
Warrant.
Section 1.50. "Warrant Shares" shall mean the Early Put Warrant Shares
and the Incentive Warrant Shares.
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ARTICLE II
PURCHASE AND SALE OF COMMON STOCK;
TERMINATION OF OBLIGATIONS; INCENTIVE WARRANT
Section 2.1. Investments.
(a) Puts. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII
hereof), on any Put Date the Company may exercise a Put by the
delivery of a Put Notice. The number of Put Shares that the
Investor shall receive pursuant to such Put shall be
determined by dividing the Investment Amount specified in the
Put Notice by the Purchase Price with respect to such Put
Date.
(b) Maximum Amount of Puts. Unless the Company obtains the
requisite approval of its shareholders in accordance with the
corporate laws of Florida and the applicable rules of the
Principal Market, no more than 19.9% of the Outstanding shares
of Common Stock may be issued and sold pursuant to Puts and
Warrants.
(c) Early Put. The Company shall issue and sell and the
Investor shall purchase, on the Subscription Date, shares of
the Common Stock for an Investment Amount of $1,900,000 at the
Purchase Price on the Subscription Date (such transaction is
referred to herein as the "Early Put," and all such shares are
referred to herein as the "Early Put Shares"). For the purpose
only of such Early Put, the Investor waives the requirements
of Section 2.2, and the conditions set forth in paragraphs
(a), (b), and (m) of Section 7.2 hereof.
(d) Early Put Warrants. In addition to the Incentive Warrant
(as defined hereinafter), on the Subscription Date, the
Company shall issue to the Investor an Early Put Warrant with
an exercise price of $0.01 for each share of Common Stock.
Section 2.2. Mechanics.
(a) Put Notice. At any time during the Commitment Period, the
Company may deliver a Put Notice to the Investor, subject to
the conditions set forth in Section 7.2; provided, however,
the Investment Amount for each Put as designated by the
Company in the applicable Put Notice shall not be more than
the Maximum Put Amount.
(b) Date of Delivery of Put Notice. A Put Notice shall be
deemed delivered on (i) the Trading Day it is received by
facsimile or otherwise by the Investor if such notice is
received prior to 12:00 noon New York time, or (ii) the
immediately succeeding Trading Day if it is received by
facsimile or otherwise after 12:00 noon New York time on a
Trading Day or at any time on a day which is not a Trading
Day. No Put Notice may be deemed delivered, on a day that is
not a Trading Day.
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Section 2.3. Closings. On each Closing Date for a Put, (i) the Company
shall deliver irrevocable instructions to the transfer agent to prepare and
deliver to the Investor a share certificate in the name of the Investor and in
the amount of the applicable Put Shares and (ii) the Investor shall deliver to
the Company the Investment Amount specified in the Put Notice less certain Put
Fees in accordance with Schedule 10.1 by wire transfer of immediately available
funds to the account designated in the Put Notice. In addition, on or prior to
such Closing Date, each of the Company and the Investor shall deliver to the
other all documents, instruments and writings required to be delivered or
reasonably requested by either of them pursuant to this Agreement in order to
implement and effect the transactions contemplated herein.
Section 2.4. Termination of Agreement and Investment Obligation. The
Company shall have the right to terminate this Agreement at any time upon thirty
(30) days' written notice to the Investor. The Investor shall have the right to
immediately terminate this Agreement (including with respect to any Put, notice
of which has been given but the applicable Closing Date has not yet occurred) in
accordance with Section 6.12 or in the event that: (i) the Registration
Statement with respect to Registrable Securities relating to the Early Put is
not effective within one hundred twenty (120) days following the Subscription
Date, (ii) there shall occur any stop order or suspension of the effectiveness
of the Registration Statement for an aggregate of thirty (30) Trading Days
during the Commitment Period, or (iii) the Company shall at any time fail to
comply with the requirements of Section 6.2, 6.3, 6.4, 6.5, 6.6, 6.8 or 6.9.
Section 2.5. The Incentive Warrant. On the Subscription Date, the
Company shall issue the Incentive Warrant to the Investor. The Incentive Warrant
shall be delivered by the Company to the Investor upon execution of this
Agreement by the parties hereto. The Incentive Warrant Shares shall be
registered for resale pursuant to the Registration Rights Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1. Intent. The Investor is entering into this Agreement for
its own account and the Investor has no view to the distribution of the
Registrable Securities or Warrants and has no present arrangement (whether or
not legally binding) at any time to sell the Registrable Securities or Warrants
to or through any person or entity; provided, however, that by making the
representations herein, the Investor does not agree to hold the Registrable
Securities or Warrants for any minimum or other specific term and reserves the
right to dispose of the Registrable Securities or Warrants at any time pursuant
to the Registration Statement and in accordance with federal and state
securities laws applicable to such disposition.
Section 3.2. Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Common Stock. The Investor
acknowledges that an investment in the Common Stock is speculative and involves
a high degree of risk.
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Section 3.3. Authority. Each of this Agreement and the Registration
Rights Agreement has been duly authorized by all necessary corporate action and
no further consent or authorization of the Investor, or its Board of Directors
or stockholders is required. Each of this Agreement and the Registration Rights
Agreement was validly executed and delivered by the Investor and each is a valid
and binding agreement of the Investor enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
Section 3.4. Not an Affiliate. The Investor is not an officer, director
or "affiliate" (as that term is defined in Rule 405 of the Securities Act) of
the Company.
Section 3.5. Organization and Standing. Investor is duly organized,
validly existing, and in good standing under the laws of Bermuda.
Section 3.6. Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated thereby, and compliance with the
requirements thereof, will not (a) violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Investor, or, to the
Investor's knowledge, (b) violate any provision of any indenture, instrument or
agreement to which Investor is a party or is subject, or by which Investor or
any of its assets is bound, (c) conflict with or constitute a material default
thereunder, (d) result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute a breach of
any fiduciary duty owed by Investor to any third party, or (e) require the
approval of any third-party (that has not been obtained) pursuant to any
material contract to which Investor is subject or to which any of its assets,
operations or management may be subject.
Section 3.7. Disclosure; Access to Information. Investor has received
all documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by Investor. The Investor has
received and reviewed copies of the SEC Documents.
Section 3.8. Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
Section 3.9. Resale Restrictions. It is acknowledged by Investor that
any Registrable Securities and Warrants to be acquired by Investor have not been
registered under the federal securities laws or any applicable state securities
laws in reliance upon exemptions available for non-public or limited offerings.
Investor understands that Investor must bear the economic risk of the investment
in the Registrable Securities and Warrants because the Registrable Securities
and Warrants have not been so registered and therefore are subject to
restrictions upon transfer such that they may not be sold or otherwise
transferred unless registered under the applicable securities laws or an
exemption from such registration is available. Investor will not reoffer, sell,
assign, transfer, pledge, encumber, hypothecate or otherwise dispose of any
Registrable Securities or the Warrants in the absence of an effective
registration statement, qualification or authorization relating thereto under
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federal and applicable state securities laws or an opinion of qualified counsel
satisfactory to the Company to the effect that the proposed transaction in the
Registrable Securities or the Warrants will neither constitute or result in any
violation of the federal or state securities laws. Subject to Section 8.1 of
this Agreement, any certificate or other document that may be issued
representing any shares of Registrable Securities or the Warrants may be
endorsed with a legend to this effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that on the Subscription
Date, each Effective Date and each Closing Date:
Section 4.1. Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Except as set forth in the SEC Documents, the Company does not own more than
fifty percent (50%) of the outstanding capital stock of or control any other
business entity. The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify would not have a
Material Adverse Effect.
Section 4.2. Authority. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement and the Warrants and to issue the
Put Shares, the Warrants and the Warrant Shares; (ii) the execution and delivery
of this Agreement and the Registration Rights Agreement, and the execution,
issuance and delivery of the Warrants, by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required; and (iii) each of
this Agreement and the Registration Rights Agreement has been duly executed and
delivered, and the Warrants have been duly executed, issued and delivered, by
the Company and constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
Section 4.3. Corporate Documents. The Company has furnished or made
available to the Investor true and correct copies of the Company's Articles of
Incorporation, as amended and in effect on the date hereof (the "Articles"), and
the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 4.4. Books and Records. The minute books and other similar
records of the Company and its subsidiaries as made available to Investor prior
to the execution of this Agreement contain a true and complete record, in all
material respects, of all action taken at all meetings and by all written
consents in lieu of meetings of the stockholders, the boards of directors and
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committees of the boards of directors of the Company and the subsidiaries. The
stock transfer ledgers and other similar records of the Company and the
subsidiaries as made available to Investor prior to the execution of this
Agreement accurately reflect all record transfers prior to the execution of this
Agreement in the capital stock of the Company and the subsidiaries. Neither the
Company nor any subsidiary has any of its Books and Records recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Company or a
subsidiary.
Section 4.5. Capitalization. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, of which 4,314,773 shares
are issued. Of such shares issued, 155,100 shares are Treasury stock, and
4,159,673 shares are issued and outstanding. In November and December of 1998,
the Company issued 50,000 shares of Series A 10% senior convertible preferred
stock, none of which are currently issued and outstanding. Except for (i)
employee and director incentive stock options to purchase not more than 800,000
shares of Common Stock with purchase prices of $5.67 per share; and (ii)
warrants to purchase not more than 1,307,375 shares of Common Stock with
purchase prices between $6.375 and $28.875 per share, there are no options,
warrants, or rights to subscribe to, securities, rights or obligations
convertible into or exchangeable for or giving any right to subscribe for any
shares of capital stock of the Company. All of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued and are
fully paid and nonassessable.
Section 4.6. Registration and Listing of Common Stock. The Company has
registered its Common Stock pursuant to Section 12(b) or 12(g) of the Exchange
Act and is in full compliance with all reporting requirements of the Exchange
Act, and the Company has maintained all requirements for the continued listing
or quotation of its Common Stock, and such Common Stock is currently listed or
quoted on the Principal Market. As of the date hereof, the Principal Market is
the Nasdaq SmallCap Market.
Section 4.7. Financial Statements. Prior to the execution of this
Agreement, the Company has delivered to the Investor true and complete copies of
the following financial statements:
(a) the audited balance sheets of the Company and its
consolidated subsidiaries as of December 31, 1999, and the related audited
consolidated statements of operations, stockholders' equity and cash flows for
each of the fiscal years then ended, together with a true and correct copy of
the report on such audited information by Rachlin, Cohen & Holtz, and all
letters from such accountants with respect to the results of such audits; and
The financial statements of the Company delivered to the Investor have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of operations and cash flows for the periods then ended
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(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 4.8. SEC Documents. The Company has delivered or made available
to the Investor true and complete copies of the SEC Documents (including,
without limitation, proxy information and solicitation materials). The Company
has not provided to the Investor any information that, according to applicable
law, rule or regulation, should have been disclosed publicly prior to the date
hereof by the Company, but which has not been so disclosed. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
other federal, state and local laws, rules and regulations applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may include summary notes
and may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
Section 4.9. Exemption from Registration; Valid Issuances; New
Issuances. The sale and issuance of the Warrants, the Warrant Shares, and the
Put Shares in accordance with the terms and on the bases of the representations
and warranties set forth in this Agreement, may and shall be properly issued
pursuant to Rule 4(2), Regulation D and/or any applicable state law. When issued
and paid for as herein provided, the Put Shares and the Warrant Shares shall be
duly and validly issued, fully paid, and nonassessable. Neither the sales of the
Put Shares, the Warrants, or the Warrant Shares pursuant to, nor the Company's
performance of its obligations under, this Agreement, the Registration Rights
Agreement or the Warrants shall (i) result in the creation or imposition of any
liens, charges, claims or other encumbrances upon the Put Shares, the Warrant
Shares, or any of the assets of the Company, or (ii) entitle the holders of
Outstanding Capital Shares to preemptive or other rights to subscribe to or
acquire the Capital Shares or other securities of the Company. The Put Shares
and the Warrant Shares shall not subject the Investor to personal liability by
reason of the ownership thereof. The Put Shares and Warrant Shares have been
duly authorized by the Company, but have not been issued (whether or not
subsequently repurchased by the Company) to any Person, and when issued to the
Investor in accordance with this Agreement and the Warrants will not have been
issued (whether or not subsequently repurchased by the Company) to any Person
other than the Investor.
Section 4.10. No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising with respect to any of the Put Shares, the Warrants, or
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the Warrant Shares, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Common Stock under the Securities Act.
Section 4.11. No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Put Shares, the Warrants and the Warrant Shares do not and will not (i)
result in a violation of the Articles or By-Laws or (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal, state, local or foreign law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or by which any property or asset of the Company is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect) nor is the Company otherwise in
violation of, conflict with or in default under any of the foregoing; provided,
however, that for purposes of the Company's representations and warranties as to
violations of foreign law, rule or regulation referenced in clause (iii), such
representations and warranties are made only to the best of the Company's
knowledge insofar as the execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby are or may be affected by the status of the Investor under
or pursuant to any such foreign law, rule or regulation. The business of the
Company is not being conducted in violation of any law, ordinance or regulation
of any governmental entity, except for possible violations that either singly or
in the aggregate do not and will not have a Material Adverse Effect. The Company
is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or issue and sell the Common Stock
or the Warrants in accordance with the terms hereof (other than any SEC, NASD or
state securities filings that may be required to be made by the Company
subsequent to any Closing, any registration statement that may be filed pursuant
hereto, and any shareholder approval required by the rules applicable to
companies whose common stock trades on the Nasdaq SmallCap Market); provided
that, for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Investor herein.
Section 4.12. No Material Adverse Change. Since December 31, 1998,
except as set forth in the SEC Documents, no event has occurred that would have
a Material Adverse Effect on the Company.
Section 4.13. No Undisclosed Liabilities. Except as set forth in the
SEC Documents, the Company has no liabilities or obligations that are material,
individually or in the aggregate, other than those incurred in the ordinary
course of the Company's businesses since December 31, 1998 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company.
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Section 4.14. No Undisclosed Events or Circumstances. Since December
31, 1998, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced, including, without limitation, as set forth in
the SEC Documents.
Section 4.15. No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement, under circumstances
that would require registration of the Common Stock under the Securities Act.
Section 4.16. Litigation and Other Proceedings. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the best knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which might have a Material Adverse Effect. Except as set
forth in the SEC Documents, no judgment, order, writ, injunction or decree or
award has been issued by or, so far as is known by the Company, requested of any
court, arbitrator or governmental agency which might result in a Material
Adverse Effect.
Section 4.17. No Misleading or Untrue Communication. The Company, any
Person representing the Company, and, to the knowledge of the Company, any other
Person selling or offering to sell the Put Shares, the Warrants or the Warrant
Shares in connection with the transactions contemplated by this Agreement, have
not made, at any time, any oral communication in connection with the offer or
sale of the same which contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements, in
the light of the circumstances under which they were made, not misleading.
Section 4.18. Material Non-Public Information. The Company is not in possession
of, nor has the Company or its agents disclosed to the Investor, any material
non-public information that (i) if disclosed, would, or could reasonably be
expected to have, an effect on the price of the Common Stock or (ii) according
to applicable law, rule or regulation, should have been disclosed publicly by
the Company prior to the date hereof but which has not been so disclosed.
ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1. Compliance. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and the
rules and regulations of the Principal Market on which the Company's Common
Stock is listed.
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ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all respects with the terms thereof.
Section 6.2. Reservation of Common Stock. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligation to issue the Put Shares and the
Warrant Shares; such amount of shares of Common Stock to be reserved shall be
calculated based upon the minimum Purchase Price for the Put Shares under the
terms and conditions of this Agreement and the Exercise Price of the Incentive
Warrant and the maximum number of Early Put Warrant Shares issuable pursuant to
the Early Put Warrant. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by the
number of shares actually delivered.
Section 6.3. Listing of Common Stock. The Company shall exercise best
efforts to maintain the listing of the Common Stock on a Principal Market, and
as soon as practicable (but in any event prior to the Closing Date for any Put)
will cause the Put Shares and the Warrant Shares with respect to such Put to be
listed on the Principal Market. The Company further shall, if the Company
applies to have the Common Stock traded on any other Principal Market, include
in such application the Put Shares and the Warrant Shares, and shall take such
other action as is necessary or desirable in the opinion of the Investor to
cause the Common Stock to be listed on such other Principal Market as promptly
as possible. The Company shall use commercially reasonable efforts to continue
the listing and trading of its Common Stock on the Principal Market (including,
without limitation, maintaining sufficient net tangible assets) and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the NASD and the Principal Market.
Section 6.4. Exchange Act Registration. After each Registration
Statement becomes effective, the Company shall cause the Common Stock covered by
such Registration Statement to continue to be registered under Section 12(g) or
12(b) of the Exchange Act, will comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act.
Section 6.5. Legends. The certificates evidencing the Put Shares and
the Warrant Shares shall be free of legends, except as provided for in Article
VIII.
Section 6.6. Corporate Existence. The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company.
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Section 6.7. Additional SEC Documents. During the Commitment Period,
the Company shall deliver to the Investor, as and when the originals thereof are
submitted to the SEC for filing, copies of all SEC Documents so furnished or
submitted to the SEC.
Section 6.8. Notice of Certain Events Affecting Registration;
Suspension of Right to Make a Put. The Company shall immediately notify the
Investor, but in no event later than two (2) business days by facsimile and by
overnight courier, upon the occurrence of any of the following events in respect
of a Registration Statement or related prospectus in respect of an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or related prospectus; (ii) the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Put Notice during the continuation
of any of the foregoing events. While in possession of material non-public
information received from the Company, the Investor shall not dispose of any
Registrable Securities until such information is disclosed to the public (a
"Restricted Period"); provided that, if such Restricted Period exceeds one
hundred twenty (120) days, the liquidated damages described in Section 1.1(c) of
the Registration Rights Agreement shall be increased to three percent (3.0%)
until such Restricted Period shall have elapsed.
Section 6.9. Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to the Investor
such shares of stock and/or securities as the Investor is entitled to receive
pursuant to this Agreement and the Warrants.
Section 6.10. Issuance of Put Shares, Warrant Shares and Additional
Shares. The sale of the Put Shares and the issuance of the Warrant Shares
pursuant to exercise of the Warrants shall be made in accordance with the
provisions and requirements of Regulation D and any applicable state law.
Issuance of the Warrant Shares pursuant to exercise of the Warrants through a
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cashless exercise shall be made in accordance with the provisions and
requirements of Section 3(a)(9) under the Securities Act and any applicable
state law.
Section 6.11. Legal Opinion on Subscription Date. The Company's
independent counsel shall deliver to the Investor on the Subscription Date an
opinion in the form of Exhibit D, except for paragraph 7 thereof.
Section 6.12. No Similar Arrangement; Right of First Refusal. The
Company shall refrain from entering into any other agreements, arrangements or
understandings granting to the Company the right to sell shares of its
securities to one or more investors in placements exempt from registration under
the Securities Act until sixty (60) calendar days after this Agreement is
terminated pursuant to Section 2.4 hereof (the "Exclusivity Period"). If the
Company, for the purpose of obtaining any additional financing, wishes to sell
shares of its securities in placements exempt from registration under the
Securities Act during the Exclusivity Period (a "Sale") to a party other than
the Investor (the "Third Party"), the Company shall first offer (the "Offer") to
the Investor, in writing, the right to purchase such shares (the "Offered
Shares") at the bona fide price offered by the Third Party (the "Offer Price").
The Offer shall grant the Investor the right during the five (5) Trading Days
immediately following the date of the Offer to elect to purchase any or all of
the Offered Shares. The Company, in connection with such a Sale, shall refrain
from circumventing or attempting to circumvent the Investor's right of first
refusal by way of making such a Sale to any of its affiliates without first
making an Offer to the Investor. If the Investor so exercises it's right to
purchase any or all of the Offered Shares, the purchase will be treated as a Put
except that the purchase price for the Offered Shares shall be the Offer Price.
The closing and method of payment shall be as provided for in Section 2.2 hereof
and the Closing Date shall be seven (7) Trading Days after the Investor
exercises such right. If the Investor fails to exercise its right to purchase
any or all of the Offered Shares, then during the sixty (60) calendar days
immediately following the expiration of such right, the Company shall be free to
sell any or all of the Offered Shares to a purchaser for a purchase price not
lower than the Offer Price payable on terms and conditions that are not more
favorable to such purchaser than those contained in the Offer. In the event that
the Company effects a Sale to a Third Party, the Investor may immediately
terminate this Agreement.
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING
Section 7.1. Conditions Precedent to the Obligation of the Company to
Issue and Sell Common Stock. The obligation hereunder of the Company to issue
and sell the Put Shares to the Investor incident to each Closing is subject to
the satisfaction, at or before each such Closing, of each of the conditions set
forth below.
(a) Accuracy of the Investor's Representation and Warranties.
The representations and warranties of the Investor shall be
true and correct in all material respects as of the date of
this Agreement and as of the date of each such Closing as
though made at each such time.
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(b) Performance by the Investor. The Investor shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
Section 7.2. Conditions Precedent to the Right of the Company to
Deliver a Put Notice and the Obligation of the Investor to Purchase Put Shares.
Following completion of the Early Put, the right of the Company to deliver a Put
Notice and the obligation of the Investor hereunder to acquire and pay for the
Put Shares incident to a Closing is subject to the satisfaction, on (i) the
applicable Put Date and (ii) the applicable Closing Date (each a "Condition
Satisfaction Date"), of each of the following conditions:
(a) Registration of the Registrable Securities with the SEC.
As set forth in the Registration Rights Agreement, the Company
shall have filed with the SEC either:
(i) a Registration Statement covering the resale of
Registrable Securities relating to the Early Put that
shall have been declared effective by the SEC in no
event later than one hundred twenty (120) days after
the Subscription Date, and a Registration Statement
covering the resale of Registrable Securities
relating to all subsequent Puts that shall have been
declared effective by the SEC prior to any subsequent
Put; or
(ii) a Combined Registration Statement (as defined in
the Registration Rights Agreement) that shall have
been declared effective by the SEC in no event later
than one hundred twenty (120) days after the
Subscription Date.
(b) Effective Registration Statement. As set forth in the
Registration Rights Agreement, the Registration Statement(s)
shall have previously become effective and shall remain
effective on each Condition Satisfaction Date and (i) neither
the Company nor the Investor shall have received notice that
the SEC has issued or intends to issue a stop order with
respect to a Registration Statement or that the SEC otherwise
has suspended or withdrawn the effectiveness of a Registration
Statement, either temporarily or permanently, or intends or
has threatened to do so (unless the SEC's concerns have been
addressed and the Investor is reasonably satisfied that the
SEC no longer is considering or intends to take such action),
(ii) no other suspension of the use or withdrawal of the
effectiveness of such Registration Statement or related
prospectus shall exist and (iii) with respect to the second
Put only, the Company shall have notified the Investor in
accordance with Section 6.8 hereof that the Registration
Statement covering the Registrable Securities relating to the
Early Put has been declared effective by the SEC and (iv) at
least 30 days shall have elapsed since the Initial
Registration Statement (as defined in the Registration Rights
Agreement) has been declared effective by the SEC.
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(c) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be
true and correct as of each Condition Satisfaction Date as
though made at each such time (except for representations and
warranties specifically made as of a particular date).
(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement, the Registration Rights Agreement and the Warrants
to be performed, satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or adopted by any court or governmental
authority of competent jurisdiction that prohibits the
transactions contemplated by this Agreement or otherwise has a
Material Adverse Effect, and no actions, suits or proceedings
shall be in progress, pending or threatened by any Person,
that seek to enjoin or prohibit the transactions contemplated
by this Agreement or otherwise could reasonably be expected to
have a Material Adverse Effect. For purposes of this paragraph
(e), no proceeding shall be deemed pending or threatened
unless one of the parties has received written or oral
notification thereof prior to the applicable Closing Date.
(f) No Suspension of Trading In or Delisting of Common Stock.
The trading of the Common Stock shall not have been suspended
by the SEC, the Principal Market or the NASD and the Common
Stock shall have been approved for listing or quotation on and
shall not have been delisted from the Principal Market. The
issuance of shares of Common Stock with respect to the
applicable Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.
(g) Legal Opinion. The Company shall have caused to be
delivered to the Investor, within five (5) Trading Days of the
effective date of a Registration Statement, an opinion of the
Company's independent counsel in the form of Exhibit D hereto,
addressed to the Investor.
(h) Due Diligence. No dispute between the Company and the
Investor shall exist pursuant to Section 7.3 as to the
adequacy of the disclosure contained in the Registration
Statement.
(i) Five Percent Limitation. On each Closing Date, the number
of Put Shares then to be purchased by the Investor shall not
exceed the number of such shares that, when aggregated with
all other shares of Common Stock and Registrable Securities
then owned by the Investor beneficially or deemed beneficially
owned by the Investor, would result in the Investor owning no
more than 4.9% of all of such Common Stock as would be
outstanding on such Closing Date, as determined in accordance
with Section 13(d) of the Exchange Act and the regulations
promulgated thereunder. For purposes of this Section, in the
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event that the amount of Common Stock outstanding as
determined in accordance with Section 13(d) of the Exchange
Act and the regulations promulgated thereunder is greater on a
Closing Date than on the date upon which the Put Notice
associated with such Closing Date is given, the amount of
Common Stock outstanding on such Closing Date shall govern for
purposes of determining whether the Investor, when aggregating
all purchases of Common Stock made pursuant to this Agreement
and, if any, Warrant Shares would own more than 4.9% of the
Common Stock following such Closing Date.
(j) [INTENTIONALLY OMITTED].
(k) Minimum Average Daily Trading Value. The average of the
Daily Trading Value during the twenty-two (22) Trading Days
immediately preceding the applicable Put Notice Period equals
or exceeds $600,000.
(l) No Knowledge. The Company shall have no knowledge of any
event more likely than not to have the effect of causing any
Registration Statement to be suspended or otherwise
ineffective (which event is more likely than not to occur
within the fifteen Trading Days following the Trading Day on
which such notice is deemed delivered).
(m) Minimum Time Interval. The Minimum Time Interval shall
have elapsed since the immediately preceding Put Date.
(n) Shareholder Vote. The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not
violate the shareholder approval requirements of the Principal
Market.
(o) Other. On each Condition Satisfaction Date, the Investor
shall have received and been reasonably satisfied with such
other certificates and documents as shall have been reasonably
requested by the Investor in order for the Investor to confirm
the Company's satisfaction of the conditions set forth in this
Section 7.2., including, without limitation, a certificate in
substantially the form and substance of Exhibit E hereto,
executed in either case by an executive officer of the Company
and to the effect that all the conditions to such Closing
shall have been satisfied as at the date of each such
certificate.
Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public
Information.
(a) The Company shall make available for inspection and review
by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor
and who are reasonably acceptable to the Company), and any
Underwriter, any Registration Statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for
the purpose of such review, and cause the Company's officers,
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directors and employees to supply all such information
reasonably requested by the Investor or any such
representative, advisor or Underwriter in connection with such
Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made
or submitted by any of them), prior to and from time to time
after the filing and effectiveness of such Registration
Statement for the sole purpose of enabling the Investor and
such representatives, advisors and Underwriters and their
respective accountants and attorneys to conduct initial and
ongoing due diligence with respect to the Company and the
accuracy of such Registration Statement.
(b) Each of the Company, its officers, directors, employees
and agents shall in no event disclose non-public information
to the Investor, advisors to or representatives of the
Investor unless prior to disclosure of such information the
Company identifies such information as being non-public
information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to
accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information
hereunder, require the Investor's advisors and representatives
to enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Investor.
(c) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any investors who
purchase stock in the Company in a public offering, to money
managers or to securities analysts; provided, however, that
notwithstanding anything herein to the contrary, the Company
shall, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and any
Underwriters of any event or the existence of any circumstance
(without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the
Company specifically or generally during the course of due
diligence by such persons or entities), which, if not
disclosed in the prospectus included in the applicable
Registration Statement would cause such prospectus to include
a material misstatement or to omit a material fact required to
be stated therein in order to make the statements, therein, in
light of the circumstances in which they were made, not
misleading. Nothing contained in this Section 7.3 shall be
construed to mean that such persons or entities other than the
Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in
accordance with the terms and conditions of this Agreement and
nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due
diligence by such persons or entities, that such Registration
Statement contains an untrue statement of a material fact or
omits a material fact required to be stated in such
Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they
were made, not misleading.
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ARTICLE VIII
LEGENDS
Section 8.1. Legends. Each of the Warrant and, unless otherwise
provided below, each certificate representing Registrable Securities will bear
the following legend (the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY
SET FORTH IN A STOCK PURCHASE AGREEMENT, DATED AS OF MAY 2, 2000,
BETWEEN AMERICAN ACCESS TECHNOLOGIES INC. AND CRESCENT INTERNATIONAL
LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM AMERICAN ACCESS TECHNOLOGY INC.'S
EXECUTIVE OFFICES.
As soon as practicable after the execution and delivery hereof, but in
any event within five (5) Trading Days hereafter, the Company shall issue to the
transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent) instructions in substantially the form
of Exhibit F hereto, with a copy to the Investor. Other than as required as a
result of change in law, such instructions shall be irrevocable by the Company
from and after the date hereof or from and after the issuance thereof to any
such substitute or replacement transfer agent, as the case may be, except as
otherwise expressly provided in the Registration Rights Agreement. It is the
intent and purpose of such instructions, as provided therein, to require the
transfer agent for the Common Stock from time to time upon transfer of
Registrable Securities by the Investor to issue certificates evidencing such
Registrable Securities free of the Legend during the following periods and under
the following circumstances and without consultation by the transfer agent with
the Company or its counsel and without the need for any further advice or
instruction or documentation to the transfer agent by or from the Company or its
counsel or the Investor:
(a) At any time after the applicable Effective Date, upon
surrender of one or more certificates evidencing Common Stock
that bear the Legend, to the extent accompanied by a notice
requesting the issuance of new certificates free of the Legend
to replace those surrendered; provided that (i) the applicable
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Registration Statement shall then be effective and (ii) if
reasonably requested by the transfer agent the Investor
confirms to the transfer agent that the Investor has
transferred the Registrable Securities pursuant to such
Registration Statement and has complied with the prospectus
delivery requirement.
(b) At any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the
extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered
and containing representations that the Investor is permitted
to dispose of such Registrable Securities without limitation
as to amount or manner of sale pursuant to Rule 144(k) under
the Securities Act.
Section 8.2. No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Common Stock and no instructions or "stop
transfers orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII.
Section 8.3. Investor's Compliance. Nothing in this Article VIII shall
affect in any way the Investor's obligations under any agreement to comply with
all applicable securities laws upon resale of the Common Stock.
ARTICLE IX
INDEMNIFICATION; ARBITRATION
Section 9.1. Indemnification. The Company agrees to indemnify and hold
harmless the Investor, its partners, affiliates, officers, directors, employees,
and duly authorized agents, and each Person or entity, if any, who controls the
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, together with its controlling persons from and against any
Damages, joint or several, and any action in respect thereof to which the
Investor, its partners, affiliates, officers, directors, employees, and duly
authorized agents, and any such controlling person becomes subject to, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement, as such Damages are incurred, unless such
Damages result primarily from the Investor's gross negligence, recklessness or
bad faith in performing its obligations under this Agreement; provided, however,
that the maximum aggregate liability of the Company shall be limited to the
amount actually invested by the Investor under this Agreement, and provided,
further, that in no event shall this provision be deemed to limit any rights to
indemnification arising under the Registration Rights Agreement.
Section 9.2. Method of Asserting Indemnification Claims. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:
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(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section
9.1 (an "Indemnified Party") might seek indemnity under
Section 9.1 is asserted against or sought to be collected from
such Indemnified Party by a person other than the Company, the
Investor or any affiliate of the Company (a "Third Party
Claim"), the Indemnified Party shall deliver a written
notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for
indemnification that is being asserted under any provision of
Section 9.1 against any person (the "Indemnifying Party"),
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness
after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to such Third
Party Claim to the extent that the Indemnifying Party's
ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party shall
notify the Indemnified Party as soon as practicable within the
period ending thirty (30) calendar days following receipt by
the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period")
whether the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party under Section
9.1 and whether the Indemnifying Party desires, at its sole
cost and expense, to defend the Indemnified Party against such
Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant
to this Section 9.2(a), then the Indemnifying Party
shall have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party,
such Third Party Claim by all appropriate
proceedings, which proceedings shall be vigorously
and diligently prosecuted by the Indemnifying Party
to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party in the case of
any settlement that provides for any relief other
than the payment of monetary damages or that provides
for the payment of monetary damages as to which the
Indemnified Party shall not be indemnified in full
pursuant to Section 9.1). The Indemnifying Party
shall have full control of such defense and
proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified
Party may, at the sole cost and expense of the
Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred
to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes
to be necessary or appropriate to protect its
interests; and provided further, that if requested by
the Indemnifying Party, the Indemnified Party will,
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at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant
to this clause (i), and except as provided in the
preceding sentence, the Indemnified Party shall bear
its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the
defense or settlement of a Third Party Claim at any
time if it irrevocably waives its right to indemnity
under Section 9.1 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 9.2(a), or if the
Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute
Period, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings shall be
prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent
of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified
Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this
clause (ii), if the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that
the Indemnifying Party disputes its liability or the
amount of its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below,
the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Party in full
for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this
clause (ii), and the Indemnifying Party shall bear
its own costs and expenses with respect to such
participation.
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(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its
liability or the amount of its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party with
respect to such Third Party Claim, the Damages in the
amount specified in the Claim Notice shall be
conclusively deemed a liability of the Indemnifying
Party under Section 9.1 and the Indemnifying Party
shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying
Party has timely disputed its liability or the amount
of its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through
negotiations within the period of thirty (30)
calendar days immediately following the Dispute
Period, such dispute shall be resolved by arbitration
in accordance with Section 9.3.
(b) In the event any Indemnified Party should have a claim
under Section 9.1 against the Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall
deliver a written notification of a claim for indemnity under
Section 9.1 specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such claim (an "Indemnity Notice") with reasonable
promptness to the Indemnifying Party. The failure by any
Indemnified Party to give the Indemnity Notice shall not
impair such party's rights hereunder except to the extent that
the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the
claim or the amount of the claim described in such Indemnity
Notice, the Damages in the amount specified in the Indemnity
Notice will be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
period of thirty (30) calendar days immediately following the
Dispute Period, such dispute shall be resolved by arbitration
in accordance with Section 9.3.
Section 9.3. Arbitration. Any dispute under this Agreement (including,
without limitation, pursuant to Section 9.2) or the Warrants shall be submitted
to arbitration and shall be finally and conclusively determined by the decision
of a board of arbitration consisting of three (3) members (the "Board of
Arbitration") selected as hereinafter provided. Each of the Company, on the one
hand, and the Investor and/or any other Indemnified Party, on the other hand,
shall select one (1) member and the third member shall be selected by mutual
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agreement of the other members, or if the other members fail to reach agreement
on a third member within twenty (20) days after their selection, such third
member shall thereafter be selected by the American Arbitration Association upon
application made to it for such purpose by the other members. The Board of
Arbitration shall meet on consecutive business days in New York City, New York
or such other place as a majority of the members of the Board of Arbitration
determines more appropriate, and shall reach and render a decision in writing
(concurred in by a majority of the members of the Board of Arbitration). In
connection with rendering its decision, the Board of Arbitration shall adopt and
follow such rules and procedures as a majority of the members of the Board of
Arbitration deems necessary or appropriate. To the extent practicable, decisions
of the Board of Arbitration shall be rendered no more than thirty (30) calendar
days following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to the Company and
the Investor and/or any other Indemnified Party. Any decision made by the Board
of Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the Company and
the Investor and/or any other Indemnified Party and entitled to be enforced to
the fullest extent permitted by law and entered in any court of competent
jurisdiction. The non-prevailing party to any arbitration shall bear the expense
of both parties in relation thereto, including but not limited to the parties'
attorneys' fees, if any, and the expenses and fees of the Board of Arbitration.
ARTICLE X
MISCELLANEOUS
Section 10.1. Put Fees and Transaction Costs. In connection with the
execution of this agreement the following Put Fees and Transaction Costs (as
defined below) are payable by the Company.
(a) Put Fees. The Company shall pay certain fees (the "Put
Fees") to the payee entities in accordance with Schedule 10.1.
Crescent is authorized by the Company to retain and to pay on
behalf of the Company Put Fees, to the payee entities in
accordance with Schedule 10.1.
(b) Transaction Costs. The fees, expenses and disbursements of
the Investor's counsel (the "Investor Legal Fees") shall be
paid as follows: (i) the Investor shall pay the initial
$10,000 of Investor Legal Fees and (ii) the Company shall pay
all Investor Legal Fees in excess of $10,000. The Company
shall pay all the Investor due diligence costs in connection
with the consummation of this Agreement and the transactions
contemplated hereby (the "Due Diligence Costs," and together
with the Investor Legal Fees, the "Transaction Costs"),
provided that the Company's share of the Due Diligence Costs
shall not exceed $15,000. The Company shall pay to the
Investor the Company's share of the Transaction Costs on the
Subscription Date, to the extent such share of the Transaction
Costs can be determined on the Subscription Date. The Company
shall pay its share of the remaining Transaction Costs to the
Investor not later than ten (10) days after receipt of notice
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from the Investor that such amount is due. The Company agrees
to pay its own expenses incident to the performance of its
obligations hereunder.
Section 10.2. Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on the Principal Market on any given Trading Day for the
purposes of this Agreement shall be the Bloomberg L.P. The written mutual
consent of the Investor and the Company shall be required to employ any other
reporting entity.
Section 10.3. Brokerage. Except as disclosed in Section 10.1, each of
the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker which would impose a legal obligation
to pay any fee or commission. The Company on the one hand, and the Investor, on
the other hand, agree to indemnify the other against and hold the other harmless
from any and all liabilities to any persons claiming brokerage commissions or
finder's fees on account of services purported to have been rendered on behalf
of the indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 10.4. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company:
American Access Technologies Inc.
37 Skyline Drive, Suite 1101
Lake Mary, FL 32746
Attention: Lacy Loar
Telephone: (407) 333-1446
Facsimile: (407) 333-2598
with a copy (which shall not constitute notice) to:
Joel Bernstein, Esq. P.A.
11900 Biscayne Blvd., Suite 604
Miami, FL 33181
Telephone: (305) 892-1122
Facsimile: (305) 892-0822
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if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai
1216 Geneva, Cointrin
Switzerland
Attention: Melvyn Craw/Maxi Brezzi
Telephone: +41 22 791 72 56
Facsimile: +41 22 929 53 94
with a copy (which shall not constitute notice) to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Sara Hanks, Esq./Earl S. Zimmerman, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Either party hereto may from time to time change its address or facsimile
number for notices under this Section by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the
other party hereto.
Section 10.5. Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
person. Notwithstanding the foregoing, the Investor's interest in this Agreement
may be assigned at any time, in whole or in part, to any affiliate of the
Investor upon the prior written consent of the Company, which consent shall not
to be unreasonably withheld provided, however, that any such assignment or
transfer shall relieve the Investor of its duties under this Agreement only upon
performance thereof by any such assignee or transferee.
Section 10.6. Amendment; No Waiver. No party shall be liable or bound
to any other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement or therein. Except as
expressly provided in this Agreement, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the either party to
insist on strict compliance with this Agreement, or to exercise any right or
remedy under this Agreement, shall not constitute a waiver of any rights
provided under this Agreement, nor estop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a
right or remedy in the future.
Section 10.7. Annexes and Exhibits; Entire Agreement. All annexes and
exhibits to this Agreement are incorporated herein by reference and shall
constitute part of this Agreement. This Agreement, the Warrants and the
Registration Rights Agreement set forth the entire agreement and understanding
of the parties relating to the subject matter hereof and thereof and supersede
all prior and contemporaneous agreements, negotiations and understandings
between the parties, both oral and written, relating to the subject matter
hereof.
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Section 10.8. Survival. The provisions of Articles VI, VIII, IX and X,
and of Section 7.3, shall survive the termination of this Agreement.
Section 10.9. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10. Title and Subtitles. The titles and subtitles used in
this Agreement are used for the convenience of reference and are not to be
considered in construing or interpreting this Agreement.
Section 10.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 10.12. Choice of Law. This Agreement shall be construed under
the laws of the State of New York.
Section 10.13. Other Expenses. In the event that a dispute between the
parties is not determined by a Board of Arbitration, the non-prevailing party in
any action, suit or proceeding shall bear all investigative, legal and other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
Crescent International Ltd.
By:
-------------------------------------
Name:
Title:
American Access Technologies Inc.
By:
-------------------------------------
Name:
Title:
30
<PAGE>
SCHEDULE 10.1
The Company shall pay to the payee entities the following Put Fees and
Transaction Costs under Section 10.1, which Crescent shall then allocate as
follows:
<TABLE>
<CAPTION>
- ----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Events Triggering the Fees / Transaction Amount on which the fee is Payee Entity Amount
payment Costs calculated
- ----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
<S> <C> <C> <C> <C>
Subscription Date Put Fee Maximum Commitment Amount GreenLight (Switzerland) S.A. $150,000
- ----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Closing Date for a Put Put Fee Investment Amount of the GreenLight (Switzerland) S.A. 1%
Put
- ----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Subscription Date Legal Fees Investor Legal Fees Crescent International Ltd. Investor Legal
- ----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
Subscription Date Due Diligence Costs Due Diligence Costs with a GreenLight (Switzerland) S.A. 100%
maximum amount of $ 15,000
- ----------------------------- -------------------- ------------------------------ ---------------------------------- ---------------
</TABLE>
31
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
32
<PAGE>
EXHIBIT B
FORM OF INCENTIVE WARRANT
33
<PAGE>
EXHIBIT C
FORM OF EARLY PUT WARRANT
34
<PAGE>
EXHIBIT D
[FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL]
May __, 2000
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai, P.O. Box 42
1216 Geneva, Cointrin
Switzerland
Re: Stock Purchase Agreement Between Crescent International Ltd. and
American Access Technologies Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section [6.11] [7.2(g)] of
the Stock Purchase Agreement by and between Crescent International Ltd., a
Bermuda entity (the "Investor") and American Access Technologies Inc. (the
"Company"), dated May 2, 2000 (the "Stock Purchase Agreement"), which provides
for the issuance and sale by the Company of up to $15,000,000 worth of shares of
Common Stock of the Company (the "Put Shares"), a warrant to purchase up to
128,000 shares of Common Stock of the Company (the "Incentive Warrant") and
warrants to purchase a number of shares to be determined in accordance with the
terms of such warrants (the "Early Put Warrants", and together with the
Incentive Warrant, the "Warrants") (the shares of Common Stock issued or
issuable pursuant to exercise of the Warrants are referred to herein as the
"Warrant Shares"). All terms used herein have the meanings defined for them in
the Stock Purchase Agreement unless otherwise defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Stock Purchase Agreement, the Warrants, and the Registration
Rights Agreement between the Investor and the Company, dated May 2, 2000 (the
"Registration Rights Agreement" and together with the Stock Purchase Agreement,
the "Agreements"). As counsel, we have made such legal and factual examinations
and inquires as we have deemed advisable or necessary for the purpose of
rendering this opinion. In addition, we have examined, among other things,
originals or copies of such corporate records of the Company, certificates of
public officials and such other documents and questions of law that we consider
necessary or advisable for the purpose of rendering this opinion. In such
examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us as
originals, the conformity to original documents of all copies submitted to us as
copies thereof, the legal capacity of natural persons, and the due execution and
delivery of all documents (except as to due execution and delivery by the
Company) where due execution and delivery are a prerequisite to the
effectiveness thereof.
35
<PAGE>
As used in this opinion, the expression "to our knowledge" refers to
the current actual knowledge of the attorneys of this firm who have worked on
matters for the Company solely in connection with the Agreements and the
Warrants and the transactions contemplated thereby.
For purposes of this opinion, we have assumed that you have all
requisite power and authority, and have taken any and all necessary corporate
action, to execute and deliver the Agreements, and we are assuming that the
representations and warranties made by the Investor in the Agreements and
pursuant thereto are true and correct.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and has all requisite power
and authority (corporate and other) to carry on its business and to own, lease
and operate its properties and assets as described in the Company's SEC
Documents. To our knowledge, the Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the Company owns or leases property, other than those in which the failure
so to qualify would not have a Material Adverse Effect.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements and the Warrants and to
issue the Put Shares, the Warrants and the Warrant Shares. The execution and
delivery of the Agreements, and the execution, issuance and delivery of the
Warrants, by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
and no further consent or authorization of the Company or its Board of Directors
or stockholders is required. Each of the Agreements has been duly executed and
delivered, and the Warrants have been, and upon issuance will be, duly executed,
issued and delivered, by the Company and each of the Agreements and the Warrants
constitutes, and upon issuance will constitute, valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
3. The execution, delivery and performance of the Agreements and the
Warrants by the Company and the consummation by the Company of the transactions
contemplated thereby, including without limitation the issuance of the Put
Shares, the Warrant and the Warrant Shares, do not and will not (i) result in a
violation of the Company's Articles or By-Laws; (ii) to our knowledge, conflict
with, or constitute a material default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture, instrument or any "lock-up" or similar provision of any underwriting
or similar agreement to which the Company is a party, except for such conflicts,
defaults, terminations, amendments, accelerations and cancellations as would
not, individually or in the aggregate, have a Material Adverse Effect; or (iii)
result in a violation of any federal or state law, rule or regulation applicable
to the Company or by which any property or asset of the Company is bound or
affected, except for such violations as would not, individually or in the
aggregate, have a Material Adverse Effect. To our knowledge, the Company is not
in violation of any terms of its Articles or Bylaws.
36
<PAGE>
4. The issuance of the Put Shares and the Warrants in accordance with
the Stock Purchase Agreement, and the issuance of the Warrant Shares in
accordance with the Warrants, will be exempt from registration under the
Securities Act of 1933 and will be in compliance with Florida state securities
laws. When so issued, the Put Shares and the Warrant Shares will be duly and
validly issued, fully paid and nonassessable, and free of any liens,
encumbrances and preemptive or similar rights contained in the Articles or
Bylaws or, to our knowledge, in any agreement to which the Company is party.
5. To our knowledge, except as disclosed in the SEC Documents, there
are no claims, actions, suits, proceedings or investigations that are pending
against the Company or its properties, or against any officer or director of the
Company in his or her capacity as such, nor has the Company received any written
threat of any such claims, actions, suits, proceedings, or investigations which
are required to be and have not been disclosed in the SEC Documents.
6. To our knowledge, there are no outstanding options, warrants, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any right to
subscribe for or acquire any shares of Common Stock or contracts, commitments,
understanding, or arrangements by which the Company is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock, except as described in the SEC
Documents.
[7. Nothing has come to our attention that has caused us to believe
that the Registration Statement and the Prospectus at the time the Registration
Statement became effective and as of the date of the filing with the Commission
of the Company's most recent Annual Report on Form 10-K or Quarterly Report on
Form 10-Q incorporated by reference into such Registration Statement contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; however,
we express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data derived
therefrom included in the Registration Statement or the Prospectus.] [For
Opinion pursuant to Section 7.2(g).]
This opinion is furnished to the Investor solely for its benefit in
connection with the transactions described above and may not be relied upon by
any other person or for any other purpose without our prior written consent.
Very truly yours,
37
<PAGE>
EXHIBIT E
COMPLIANCE CERTIFICATE
-----------------
The undersigned, __________, hereby certifies, with respect to shares
of common stock of American Access Technologies Inc. (the "Company") issuable in
connection with the Put Notice, dated _____________ (the "Notice"), delivered
pursuant to Article II of the Stock Purchase Agreement, dated May 2, 2000, by
and between the Company and Crescent International Ltd. (the "Agreement"), as
follows:
1. The undersigned is the duly elected [Office] of the Company.
2. The representations and warranties of the Company set forth in
Article V of the Agreement are true and correct in all material respects as
though made on and as of the date hereof.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Closing Date
related to the Notice and has complied in all material respects with all
obligations and conditions contained in Article VII of the Agreement.
The undersigned has executed this Certificate this ____ day of
________, ____.
------------------------------------
Name:
Title:
38
<PAGE>
EXHIBIT F
FORM OF TRANSFER AGENT INSTRUCTIONS
39
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May
2, 2000, is made and entered into by and between American Access Technologies
Inc., a corporation organized and exiting under the laws of the State of Florida
(the "Company"), and Crescent International Ltd., an entity organized and
exiting under the laws of Bermuda (the "Investor").
WHEREAS, the Company and the Investor have entered into that certain
Stock Purchase Agreement, dated as of the date hereof (the "Stock Purchase
Agreement"), pursuant to which the Company will issue, from time to time, to the
Investor up to $15,000,000 worth of shares of common stock, par value $0.001 per
share, of the Company (the "Common Stock");
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor entering into the Stock Purchase Agreement, the Company has issued
to the Investor an incentive warrant dated as of the date hereof, exercisable
from time to time within five (5) years following the date of issuance (the
"Incentive Warrant") for the purchase of an aggregate of up to 128,000 shares of
Common Stock at a price specified in such Incentive Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor entering into the Stock Purchase Agreement, the Company will issue
to the Investor an early put warrant, which may become exercisable from time to
time as described in the Stock Purchase Agreement (the "Early Put Warrant" and
together with the Incentive Warrant, the "Warrants") for the purchase of a
number of shares of Common Stock and at a price to be determined as described in
each such Early Put Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Stock Purchase Agreement, the Company
has agreed to provide the Investor with certain registration rights as described
herein;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrants, and in
the Stock Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Stock Purchase Agreement):
1
<PAGE>
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENTS.
a. Filing of Registration Statements. The Company shall register for
resale all Put Shares issued or issuable to the Investor pursuant to the Stock
Purchase Agreement and all Warrant Shares issued or issuable upon full exercise
of the Warrants. Subject to the terms and conditions of this Agreement, the
Company shall effect such registration in the manner provided in either (i) or
(ii) below. The Company shall file with the SEC either:
(i) on or before the end of a thirty (30) calendar
day period immediately following the Subscription
Date, a registration statement (the "Initial
Registration Statement") on such form promulgated by
the SEC for which the Company qualifies, that counsel
for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable
Securities relating to the Early Put (the "Initial
Shares"), the Incentive Warrant Shares and the Early
Put Warrant Shares. The aggregate number of shares to
be registered under the Initial Registration
Statement shall be equal to two hundred percent
(200%) of the Initial Shares, plus the number of
Incentive Warrant Shares. Prior to any subsequent
Put, the Company shall file with the SEC a
registration statement (the "Subsequent Registration
Statement" and together with the Initial Registration
Statement, the "Registration Statements") on such
form promulgated by the SEC for which the Company
qualifies, that counsel for the Company shall deem
appropriate and which form shall be available for the
sale of the shares of Common Stock to be purchased by
the Investor and any Warrant Shares which have not
previously been registered. The aggregate number of
shares to be registered under the Subsequent
Registration Statement shall be equal to 125% of
(X-Y)/Z, where X is the Maximum Commitment Amount, Y
is the Investment Amount of the Early Put and Z is
92% of the Minimum Bid Price; or
(ii) on or before the end of a twenty (20) calendar
day period immediately following the Subscription
Date, a registration statement (the "Combined
Registration Statement") on such form promulgated by
the SEC for which the Company qualifies, that counsel
for the Company shall deem appropriate and which form
shall be available for the sale of all Put Shares
issued or issuable pursuant to the terms of the Stock
Purchase Agreement and all Warrant Shares issued or
issuable upon full exercise of the Warrants. The
aggregate number of shares to be registered under the
Combined Registration Statement shall be equal to
125% of (A/B)+C, where A is the Maximum Commitment
Amount, B is 92% of the Minimum Bid Price and C is
the number of Incentive Warrant Shares.
2
<PAGE>
b. Effectiveness of the Registration Statements. The Company shall use
its best efforts either: (i) to have the Initial Registration Statement declared
effective by the SEC in no event later than one hundred twenty (120) calendar
days after the Subscription Date and to have the Subsequent Registration
Statement declared effective by the SEC prior to any subsequent Put, or (ii) to
have the Combined Registration Statement declared effective by the SEC in on
event later than one hundred twenty (120) calendar days after the Subscription
Date. The Company shall ensure that all Registration Statements remain in effect
for a period ending 180 days following the earlier of termination of the
Commitment Period and termination of the Investor's obligations pursuant to
Section 2.4 of the Stock Purchase Agreement; provided that such period shall be
extended one day for each day after the applicable Effective Date that any
Registration Statement covering Registrable Securities is not effective during
the period such Registration Statement is required to be effective pursuant to
this Agreement; and provided further that the Company shall not be required to
ensure that any Registration Statement covering Registrable Securities remain in
effect for such 180 day period if the shares registered thereunder shall have
become freely tradable pursuant to Rule 144(k) of the Securities Act or have
otherwise been sold.
c. Failure to Obtain or Maintain Effectiveness of Registration
Statements. In the event the Company fails for any reason to obtain the
effectiveness of any Registration Statement within the time periods set forth in
Section 1.1(b) (a "Tardy Registration Statement") or in the event that the
Company fails for any reason to maintain the effectiveness of any Registration
Statement (or the underlying prospectus) covering Registrable Securities (an
"Ineffective Registration Statement" together with a Tardy Registration
Statement, a "Failed Registration Statement") (unless the Registrable Securities
covered by such Registration Statement shall have become freely tradable
pursuant to Rule 144(k) of the Securities Act or have been otherwise sold), for
a period ending 180 days following the earlier of termination of the Commitment
Period and termination of the Investor's obligations pursuant to Section 2.4 of
the Stock Purchase Agreement (provided that such period shall be extended one
day for each day after the applicable Effective Date, that the Registration
Statement covering Registrable Securities, is not effective during the period
such Registration Statement is required to be effective pursuant to this
Agreement), at any time during any period of such ineffectiveness (an
"Ineffective Period"), then, in either event the Company shall pay to the
Investor in immediately available funds into an account designated by the
Investor an amount equal to two percent (2.0%) of the aggregate Purchase Price
of all of the Registrable Securities under any such Failed Registration
Statement then held by the Investor for each calendar month and for each portion
of a calendar month, pro rata, during an Ineffective Period. Such payments shall
be made on the first Trading Day after the earlier to occur of (i) the
expiration of the applicable Ineffective Period and (ii) the last day of each
calendar month during an Ineffective Period.
d. Restricted Period. While in possession of material non-public
information received from the Company, the Investor shall not dispose of any
Registrable Securities until such information is disclosed to the public (a
"Restricted Period"); provided that, if such Restricted Period exceeds one
hundred twenty (120) days, the liquidated damages described in Section 1.1(c)
hereof shall be increased to three percent (3.0%) until such restricted Period
shall have elapsed.
3
<PAGE>
e. Failure to Register Sufficient Number of Shares. If the Early Put
Warrant shall become exercisable for a number of shares in excess of the number
of Early Put Warrant Shares included in the Initial Registration Statement
("Excess Shares"), then the Company shall immediately amend such Registration
Statement (or file a new Registration Statement) to cover the Excess Shares
(such amended or new Registration Statement is referred to herein as an "Excess
Registration Statement") and the Company shall pay to the Investor in
immediately available funds into an account designated by the Investor an amount
equal to one and a half percent (1.5%) of the product of (x) the number of
Excess Shares multiplied by (y) the Bid Price of the Common Stock on the
applicable Effective Date, for each calendar month and for each portion of a
calendar month, pro rata, during the period from the Effective Date of the
applicable Registration Statement and the Effective Date of the applicable
Excess Registration Statement.
f. Liquidated Damages. The Company and the Investor hereby acknowledge
and agree that the sums payable under subsections 1.1(c), 1.1(d) and 1.1(e)
hereof shall constitute liquidated damages and not penalties. The parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to estimate precisely, (ii) the amounts specified
in such subsections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of a
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company will effect the
registration of the Registrable Securities in accordance with the intended
methods of disposition thereof as furnished to the Company by any proposed
seller of such Registrable Securities. Without limiting the foregoing, the
Company in each such case will do the following as expeditiously as possible,
but in no event later than the deadline, if any, prescribed therefor in this
Agreement:
a. The Company shall (i) prepare and file with the SEC the Registration
Statement(s) covering the shares as described in subsection 1.1(a) above; (ii)
use its best efforts to cause such filed Registration Statement(s) to become and
remain effective (pursuant to Rule 415 under the Securities Act or otherwise)
for the period prescribed by Section 1.1(b); (iii) prepare and file with the SEC
such amendments and supplements to each Registration Statement and the
prospectus used in connection therewith as may be necessary to keep each
Registration Statement effective for the time period prescribed by Section
1.1(b); and (iv) comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by each Registration Statement
during such period in accordance with the intended methods of disposition by the
Investor set forth in each Registration Statement.
4
<PAGE>
b. The Company shall file all necessary amendments to each Registration
Statement in order to effectuate the purpose of this Agreement, the Stock
Purchase Agreement, and the Warrants.
c. Five (5) Trading Days prior to filing each Registration Statement or
prospectus, or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein), the
Company shall deliver to the Investor and one firm of counsel representing the
Investor, in accordance with the notice provisions of Section 4.8, copies of
such Registration Statement as proposed to be filed, together with exhibits
thereto, which documents will be subject to review and comment by the Investor
and such counsel, and thereafter deliver to the Investor and such counsel, in
accordance with the notice provisions of Section 4.8, such number of copies of
such Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents or
information as the Investor or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities.
d. The Company shall deliver, in accordance with the notice provisions
of Section 4.8, to each broker as directed by the Investor such number of
conformed copies of such Registration Statement and of each amendment and
supplement thereto (in each case including all exhibits and documents
incorporated by reference), such number of copies of the prospectus contained in
such Registration Statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 promulgated
under the Securities Act relating to the Registrable Securities, and such other
documents, as may be reasonably requested to facilitate the disposition of the
Registrable Securities.
e. After the filing of each Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all commercially reasonable actions required to
prevent the entry of such stop order or to remove it if entered.
f. The Company shall use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as the Investor may reasonably (in light of
its intended plan of distribution) request, and (ii) cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities in the United States as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable the Investor to
consummate the disposition of the Registrable Securities; provided, however,
that the Company will not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (f), subject itself to taxation in any such jurisdiction, or consent
or subject itself to general service of process in any such jurisdiction.
g. The Company shall immediately notify the Investor, but in no event
later than two (2) business days by facsimile and by overnight courier, upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities: (i)
5
<PAGE>
receipt of any request for additional information by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or related prospectus; (ii) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such supplement or amendment to the related prospectus.
h. The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).
i. The Company shall make available to the Investor (and will deliver
to Investor's counsel), subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, concerning any Registration
Statement, and, except during a Blackout Period, will also make available for
inspection by the Investor and any attorney, accountant or other professional
retained by the Investor (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers
and employees to supply all information reasonably requested by any Inspectors
in connection with any Registration Statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided,
however, that prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waive such Inspectors' obligation not to disclose such Records; and, provided,
further, that if failing the entry of a protective order or the waiver by the
Company permitting the disclosure or release of such Records, the Inspectors,
6
<PAGE>
upon advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records that counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Investor agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Investor after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its affiliates unless
and until such information is made generally available to the public. The
Investor further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
j. To the extent required by law or reasonably necessary to effect a
sale of Registrable Securities in accordance with prevailing business practices
at the time of any sale of Registrable Securities pursuant to a Registration
Statement, the Company shall deliver to the Investor a signed counterpart,
addressed to the Investor, of (1) an opinion or opinions of counsel to the
Company and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions of comfort letters, as the case may
be, as the Investor therefor reasonably requests.
k. The Company shall otherwise comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.
l. The Company shall appoint a transfer agent and registrar for all of
the class that includes the Registrable Securities covered by a Registration
Statement not later than the effective date of a Registration Statement.
m. The Company may require the Investor to furnish promptly in writing
to the Company such information as may be legally required in connection with
any registration including, without limitation, all such information as may be
requested by the SEC or the National Association of Securities Dealers. The
Investor agrees to provide such information requested in connection with any
registration within ten (10) Trading Days after receiving such written request
and the Company shall not be responsible for any delays in obtaining or
maintaining the effectiveness of a Registration Statement caused by the
Investor's failure to timely provide such information. Each seller of
Registrable Securities shall notify the Company as promptly as practicable of
any inaccuracy or change in information previously furnished by such seller to
the Company or of the occurrence of any event, in either case as a result of
which any prospectus relating to the Registrable Securities contains or would
contain an untrue statement of a material fact regarding such seller or its
intended method of disposition of such Registrable Securities or omits to state
any material fact regarding such seller or such seller's intended method of
disposition of such Registrable Securities required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and promptly furnish to the Company
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any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such seller or the disposition of such Registrable Securities,
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, in the light
of the circumstances under which they were made, not misleading.
Section 2.2 REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities exchange
listing and fees required by the National Association of Securities Dealers,
(ii) all registration, filing, qualification and other fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities required hereby), (iii) all of the Company's word
processing, duplicating, printing, messenger and delivery expenses, (iv) the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
(v) the fees and expenses incurred by the Company in connection with the listing
of the Registrable Securities, (vi) reasonable fees and disbursements of counsel
for the Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with the delivery by independent
certified public accountants of such special audit(s) or comfort letter(s)
requested pursuant to Section 2.1(j) hereof), (vii) the fees and expenses of any
special experts retained by the Company in connection with such registration,
(viii) premiums and other costs of policies of insurance purchased at the
discretion of the Company against liabilities arising out of any public offering
of the Registrable Securities being registered, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
Section 2.3. BLACKOUT PERIOD. Investor agrees by acquisition of
Registrable Securities that, upon receipt of written notice from the Company of
the occurrence of any event of the kind described in Section 2.1(g)(iv), for a
period not to exceed 120 days (a "Blackout Period") the Investor shall forthwith
discontinue the Investor's offer of the Registrable Securities pursuant to the
Registration Statement relating to such Registrable Securities until the
Investor shall have received copies of the supplemented or amended prospectus
contemplated by Section 2.1(g)(iv) and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in the Investor's possession, of the prospectus
relating to such Registrable Securities at the time of receipt of such notice.
In the event that any Investor uses a prospectus in connection with the offering
and sale of any of the Registrable Securities covered by such prospectus, such
Investor will use only the latest version of such prospectus provided by the
Company to the Investor.
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INDEMNIFICATION AND CONTRIBUTION
Section 3.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Investor, its partners, affiliates, officers,
directors, employees and duly authorized agents, and each Person or entity, if
any, who controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the partners,
Affiliates, officers, directors, employees and duly authorized agents of such
controlling Person or entity (collectively, the "Controlling Persons"), from and
against any and all losses, claims, damages, liabilities, costs and expenses
(including, without limitation, any and all reasonable attorneys' fees and
disbursements and costs and expenses of investigating and defending any such
claim and any and all amounts paid in settlement of, any action, suit or
proceeding between any of the indemnified parties and any indemnifying parties
or between any indemnified party and any third party, or otherwise, or any claim
asserted) (collectively, "Damages"), joint or several, and any action or
proceeding in respect thereof to which the Investor, its partners, affiliates,
officers, directors, employees and duly authorized agents, and any Controlling
Person, may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise, as and
when incurred, insofar as such Damages (or actions or proceedings in respect
thereof) (i) arise out of, or are based upon, any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement, or
in any preliminary prospectus, final prospectus, summary prospectus, documents
filed under the Exchange Act and deemed to be incorporated by reference into any
Registration Statement, application or other document executed by or on behalf
other Company or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Registrable Securities
under the securities or blue sky laws thereof or filed with the SEC, amendment
or supplement relating to the Registrable Securities or (ii) arise out of, or
are based upon, any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse the Investor, its partners, affiliates,
officers, directors, employees and duly authorized agents, and each such
Controlling Person, for any legal and other expenses reasonably incurred by the
Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person, as incurred, in investigating
or defending or preparing to defend against any such Damages or actions or
proceedings; provided, however, that the Company shall not be liable to the
extent that any such Damages arise out of the Investor's failure to send or give
a copy of the final prospectus or supplement to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final prospectus or
supplement; provided, further, that the Company shall not be liable to the
extent that any such Damages arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement, or any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by the Investor or any other
person who participates as a seller or as an underwriter in the offering or sale
of such securities, in either case, in any questionnaire or other request by the
Company, or otherwise specifically stating that it is for use in the preparation
thereof.
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Section 3.2 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party (as defined below) under Section 3.1
shall be asserted and resolved as follows:
a. In the event any claim or demand in respect of which any person
claiming indemnification under any provision of Section 3.1 (an "Indemnified
Party") might seek indemnity under Section 3.1 is asserted against or sought to
be collected from such Indemnified Party by a person other than the Company, the
Investor or any affiliate of the Company (a "Third Party Claim"), the
Indemnified Party shall deliver a written notification, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party's claim for indemnification that is
being asserted under any provision of Section 3.1 against any person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party shall notify the
Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether
the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under Section 3.1 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Indemnified Party with respect to the Third Party Claim pursuant
to this Section 3.2(a), then the Indemnifying Party shall have the right to
defend, with counsel reasonably satisfactory to the Indemnified Party, at the
sole cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings shall be vigorously and diligently
prosecuted by the Indemnifying Party to a final conclusion or will be settled at
the discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
other than the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party shall not be indemnified in
full pursuant to Section 3.1). The Indemnifying Party shall have full control of
such defense and proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying Party's delivery
of the notice referred to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other action that the Indemnified
Party reasonably believes to be necessary or appropriate to protect its
interests; and provided further, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
clause (i), and except as provided in the preceding sentence, the Indemnified
Party shall bear its own costs and expenses with respect to such participation.
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Notwithstanding the foregoing, the Indemnified Party may take over the control
of the defense or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under Section 3.1 with respect to such
Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Third Party Claim pursuant to Section 3.2(a), or if the
Indemnifying Party gives such notice but fails to prosecute vigorously and
diligently or settle the Third Party Claim, or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute Period, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified Party in a reasonable manner
and in good faith or will be settled at the discretion of the Indemnified Party
(with the consent of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will have full control of such
defense and proceedings, including any compromise or settlement thereof;
provided, however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnified Party and its counsel in contesting
any Third Party Claim which the Indemnified Party is contesting. Notwithstanding
the foregoing provisions of this clause (ii), if the Indemnifying Party has
notified the Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability or the amount of its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the manner provided in clause
(iii) below, the Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this clause (ii) or of
the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this clause (ii), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability or the amount of its
liability to the Indemnified Party with respect to the Third Party Claim under
Section 3.1 or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party with respect to such Third Party Claim, the
Damages in the amount specified in the Claim Notice shall be conclusively deemed
a liability of the Indemnifying Party under Section 3.1 and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute, and
if not resolved through negotiations within the period of thirty (30) calendar
days immediately following the Dispute Period, such dispute shall be resolved by
arbitration in accordance with Section 3.3.
b. In the event any Indemnified Party should have a claim under Section
3.1 against the Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver a written notification of a claim for
indemnity under Section 3.1 specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
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amount, determined in good faith, of such claim (an "Indemnity Notice") with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the Damages in the
amount specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party under Section 3.1 and the Indemnifying Party shall pay
the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute, and
if not resolved through negotiations within the period of thirty (30) calendar
days immediately following the Dispute Period, such dispute shall be resolved by
arbitration in accordance with Section 3.3.
Section 3.3. ARBITRATION. Any dispute under this Agreement (including,
without limitation, pursuant Section 3.2) or the Warrants shall be submitted to
arbitration and shall be finally and conclusively determined by the decision of
a board of arbitration consisting of three (3) members (the "Board of
Arbitration") selected as hereinafter provided. Each of the Company, on the one
hand, and the Investor and/or any other Indemnified Party, on the other hand,
shall select one (1) member and the third member shall be selected by mutual
agreement of the other members, or if the other members fail to reach agreement
on a third member within twenty (20) days after their selection, such third
member shall thereafter be selected by the American Arbitration Association upon
application made to it for such purpose by the other members. The Board of
Arbitration shall meet on consecutive business days in New York City, New York
or such other place as a majority of the members of the Board of Arbitration
determines more appropriate, and shall reach and render a decision in writing
(concurred in by a majority of the members of the Board of Arbitration). In
connection with rendering its decision, the Board of Arbitration shall adopt and
follow such rules and procedures as a majority of the members of the Board of
Arbitration deems necessary or appropriate. To the extent practical, decisions
of the Board of Arbitration shall be rendered no more than thirty (30) calendar
days following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to the Company and
the Investor and/or any other Indemnified Party. Any decision made by the Board
of Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the Company and
the Investor and/or any other Indemnified Party and entitled to be enforced to
the fullest extent permitted by law and entered in any court of competent
jurisdiction. The non-prevailing party to any arbitration shall bear the expense
of both parties in relation thereto, including but not limited to the parties'
attorneys' fees, if any, and the expenses and fees of the Board of Arbitration.
Section 3.4. OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
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indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
Section 3.5. CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any Damages
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and the Investor or seller on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Investor or
seller in connection with such statements or omissions, as well as other
equitable considerations. The relative fault of the Company on the one hand and
of the Investor or seller on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor or seller shall in no event be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities of the Investor or seller were sold to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
the Investor or seller has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1. OUTSTANDING REGISTRATION RIGHTS. The Company represents
and warrants to the Investor that there is not in effect on the date hereof any
agreement by the Company pursuant to which any holders of securities of the
Company have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any jurisdiction.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities.
Notwithstanding the foregoing, paragraphs (c) and (d) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.
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Section 4.3. RULE 144. If the Company is required to file reports under
the Exchange Act, the Company will file in a timely manner, information,
documents and reports in compliance with the Securities Act and the Exchange Act
and will, at its expense, promptly take such further action as holders of
Registrable Securities may reasonably request to enable such holders of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act ("Rule 144"), as such Rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If
at any time the Company is not required to file such reports, it will, at its
expense, forthwith upon the written request of any holder of Registrable
Securities who intends to make a sale under Rule 144, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
financial officer, as to whether it has complied with such requirements. This
Section 4.3 shall terminate at the same time as the registration rights as
provided in Section 4.2.
Section 4.4. CERTIFICATE. The Company will, at its expense, forthwith
upon the request of any holder of Registrable Securities, deliver to such holder
a certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by both parties to this Agreement. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
holders of a majority of the then outstanding Registrable Securities.
Notwithstanding the foregoing, the waiver of any provision hereof with respect
to a matter that relates exclusively to the rights of holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least a majority of the
Registrable Securities being sold by such holders; provided that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. No course
of dealing between or among any Person having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. The Investor
may assign its rights under this Agreement to any subsequent holder the
Registrable Securities, provided that the Company shall have the right to
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require any holder of Registrable Securities to execute a counterpart of this
Agreement and agree to be bound by the provisions of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Stock Purchase Agreement, the Warrants and the exhibits and
schedules to such agreements together set forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
Section 4.7. SEVERABILITY. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 4.8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be (i) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (ii) delivered by reputable air courier
service with charges prepaid, or (iii) transmitted by hand delivery, telegram or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company:
American Access Technologies Inc.
37 Skyline Drive, Suite 1101
Lake Mary, FL 32746
Attention: Lacy Loar
Telephone: (407) 333-1446
Facsimile: (407) 333-2598
with a copy (which shall not constitute notice) to:
Joel Bernstein, Esq. P.A.
11900 Biscayne Blvd., Suite 604
Miami, FL 33181
Telephone: (305) 892-1122
Facsimile: (305) 892-0822
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if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai
1216 Geneva, Cointrin
Switzerland
Attention: Melvyn Craw/Maxi Brezzi
Telephone: +41 22 791 72 56
Facsimile: +41 22 929 53 94
with a copy (which shall not constitute notice) to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Sara Hanks, Esq./Earl S.
Zimmerman, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 4.8 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the
other party hereto.
Section 4.9. GOVERNING LAW. This Agreement shall be construed under the
laws of the State of New York.
Section 4.10. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 4.14. REMEDIES. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision may be inadequate
compensation for any loss.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
CRESCENT INTERNATIONAL LIMITED
By:_________________________________
Name:
Title:
AMERICAN ACCESS TECHNOLOGIES INC.
By:_________________________________
Name:
Title:
17
WARRANT
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO A TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE AGREEMENT, DATED
AS OF MAY 2, 2000, BETWEEN AMERICAN ACCESS TECHNOLOGIES INC. AND CRESCENT
INTERNATIONAL LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM AMERICAN ACCESS
TECHNOLOGIES INC.'S EXECUTIVE OFFICES.
May 2, 2000
Warrant to Purchase up to 128,000 Shares of Common Stock of American
Access Technologies Inc. (hereinafter, the "Incentive Warrant").
American Access Technologies Inc., an entity organized and existing
under the laws of the State of Florida (the "Company"), hereby agrees that
Crescent International Ltd. (the "Investor") or any other Warrant Holder is
entitled, on the terms and conditions set forth below, to purchase from the
Company at any time during the Exercise Period (hereinafter defined) up to
128,000 fully paid and nonassessable shares of Common Stock, par value $0.001
per share, of the Company (the "Common Stock"), as the same may be adjusted from
time to time pursuant to Section 6 hereof, at the Exercise Price (hereinafter
defined), as the same may be adjusted pursuant to Section 6 hereof. The resale
of the shares of Common Stock or other securities issuable upon exercise or
exchange of this Incentive Warrant is subject to the provisions of the
Registration Rights Agreement (as defined below).
Section 1. Definitions.
"Aggregate Exercise Price" shall mean, with respect to any
exercise (in whole or in part) of this Incentive Warrant the Exercise Price
multiplied by the total number of shares of Common Stock for which this
Incentive Warrant is being exercised.
"Agreement" shall mean the Stock Purchase Agreement, dated the
date hereof, between the Company and the Investor.
"Capital Shares" shall mean the Common Stock and any shares of
any other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
<PAGE>
"Exercise Date" shall mean, with respect to any exercise (in
whole or in part) of this Incentive Warrant either (i) the date this Incentive
Warrant, the Exercise Notice and the Aggregate Exercise Price are received by
the Company or (ii) the date a copy of the Exercise Notice is sent by facsimile
to the Company, provided that this Incentive Warrant, the original Exercise
Notice, and the Aggregate Exercise Price are received by the Company within five
(5) Trading Days thereafter and provided further that if this Incentive Warrant,
the original Exercise Notice and the Aggregate Exercise Price are not received
within five (5) Trading Days in accordance with clause (ii) above, the Exercise
Date for this clause (ii) shall be the date this Incentive Warrant, the original
Exercise Notice and the Aggregate Exercise Price are received by the Company.
"Exercise Notice" shall mean, with respect to any exercise (in
whole or in part) of this Incentive Warrant the exercise form attached hereto as
Exhibit A, duly executed by the Warrant Holder.
"Exercise Period" shall mean the period beginning on the
Subscription Date and continuing until the expiration of the five-year period
thereafter; provided that such period shall be extended one day for each day
after the Subscription Date, that the Registration Statement covering (i) shares
purchased by the Investor through the first Put, (ii) the Early Put Warrant
Shares related to such Put and (iii) the Incentive Warrant Shares purchasable
through exercise of this Incentive Warrant, is not effective during the period
such Registration Statement is required to be effective pursuant to the
Registration Rights Agreement.
"Exercise Price" as of the date hereof shall mean $7.0149 per
share of Common Stock, subject to the adjustments provided for in Section 6 of
this Incentive Warrant.
"Per Share Warrant Value" shall mean, with respect to any
exercise (in whole or in part) of this Incentive Warrant the difference
resulting from subtracting the Exercise Price from the Bid Price of one share of
Common Stock on the Trading Day immediately preceding the Exercise Date.
"Registration Rights Agreement" shall mean the registration
rights agreement, dated the date hereof between the Company and the Investor.
"Subscription Date" shall mean the date on which the Agreement
is executed and delivered by the parties hereto.
"Warrant Holder" shall mean the Investor or any assignee or
transferee of all or any portion of this Incentive Warrant.
Other capitalized terms used but not defined herein shall have
their respective meanings set forth in the Agreement.
Section 2. Exercise; Cashless Exercise.
(a) Method of Exercise. This Incentive Warrant may be
exercised in whole or in part (but not as to a fractional share of Common
Stock), at any time and from time to time during the Exercise Period, by the
Warrant Holder by (i) the surrender of this Incentive Warrant, the Exercise
Notice and the Aggregate Exercise Price to the Company at the address set forth
in Section 11 hereof or (ii) the delivery by facsimile of an executed and
completed Exercise Notice to the Company and delivery to the Company within five
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<PAGE>
(5) Trading Days thereafter of this Incentive Warrant, the original Exercise
Notice and the Aggregate Exercise Price.
(b) Payment of Aggregate Exercise Price. Subject to paragraph
(c) below, payment of the Aggregate Exercise Price shall be made by check or
bank draft payable to the order of the Company or by wire transfer to an account
designated by the Company. If the amount of the payment received by the Company
is less than the Aggregate Exercise Price, the Warrant Holder will be notified
of the deficiency and shall make payment in that amount within five (5) Trading
Days of such notice. In the event the payment exceeds the Aggregate Exercise
Price, the Company will refund the excess to the Warrant Holder within three (3)
Trading Days of both the receipt of such payment and the knowledge of such
excess.
(c) Cashless Exercise. As an alternative to payment of the
Aggregate Exercise Price in accordance with Section 3(b) above, the Warrant
Holder may elect to effect a cashless exercise by so indicating on the Exercise
Notice and including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, the Warrant Holder shall
surrender this Incentive Warrant for that number of shares of Common Stock
determined by (i) multiplying the number of Incentive Warrant Shares for which
this Incentive Warrant is being exercised by the Per Share Warrant Value and
(ii) dividing the product by the Bid Price of one share of the Common Stock on
the Trading Day immediately preceding the Exercise Date.
(d) Replacement Warrant. In the event that the Incentive
Warrant is not exercised in full, the number of Incentive Warrant Shares shall
be reduced by the number of such Incentive Warrant Shares for which this
Incentive Warrant is exercised, and the Company, at its expense, shall forthwith
issue and deliver to the Warrant Holder a new Incentive Warrant of like tenor in
the name of the Warrant Holder or as the Warrant Holder may request, reflecting
such adjusted number of Incentive Warrant Shares.
Section 3. Ten Percent Limitation. The Warrant Holder may not exercise
this Incentive Warrant such that the number of Incentive Warrant Shares to be
received pursuant to such exercise aggregated with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
by the Warrant Holder would result in the Warrant Holder owning more than 9.9%
of all of such Common Stock as would be outstanding on such Exercise Date, as
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. As of any date prior to the Exercise
Date, the aggregate number of shares of Common Stock into which this Incentive
Warrant is exercisable, together with all other shares of Common Stock then
beneficially owned (as such term is defined in Rule 13(d) under the Exchange
Act) by such Warrant Holder and its affiliates, shall not exceed 9.9% of the
total outstanding shares of Common Stock as of such date.
Section 4. Delivery of Stock Certificates.
(a) Subject to the terms and conditions of this Incentive
Warrant, as soon as practicable after the exercise of this Incentive Warrant in
full or in part, and in any event within five (5) Trading Days thereafter, the
Company at its expense (including, without limitation, the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
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<PAGE>
the Warrant Holder, or as the Warrant Holder may lawfully direct, a certificate
or certificates for the number of validly issued, fully paid and non-assessable
Incentive Warrant Shares to which the Warrant Holder shall be entitled on such
exercise, together with any other stock or other securities or property
(including cash, where applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof; provided, however, that
any such delivery to a location outside of the United States shall also be made
within five (5) Trading Days after the exercise of this Incentive Warrant in
full or in part.
(b) This Incentive Warrant may not be exercised as to
fractional shares of Common Stock. In the event that the exercise of this
Incentive Warrant, in full or in part, would result in the issuance of any
fractional share of Common Stock, then in such event the Warrant Holder shall
receive in cash an amount equal to the Bid Price of such fractional share within
five (5) Trading Days.
Section 5. Representations, Warranties and Covenants of the Company.
(a) The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation for the legal and valid issuance of this Incentive Warrant and the
Incentive Warrant Shares to the Warrant Holder.
(b) At all times during the Exercise Period, the Company shall
take all steps reasonably necessary and within its control to insure that the
Common Stock remains listed or quoted on the Principal Market.
(c) The Incentive Warrant Shares, when issued in accordance
with the terms hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully paid and
non-assessable.
(d) The Company has authorized and reserved for issuance to
the Warrant Holder the requisite number of shares of Common Stock to be issued
pursuant to this Incentive Warrant. The Company shall at all times reserve and
keep available, solely for issuance and delivery as Incentive Warrant Shares
hereunder, such shares of Common Stock as shall from time to time be issuable as
Incentive Warrant Shares, and shall accordingly adjust the number of such shares
of Common Stock promptly upon the occurrence of any of the events specified in
Section 6 hereof.
Section 6. Adjustment of the Exercise Price. The Exercise Price and,
accordingly, the number of Incentive Warrant Shares issuable upon exercise of
the Incentive Warrant, shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Reclassification, Consolidation, Merger; Mandatory Share
Exchange; Sale Transfer or Lease of Assets. If the Company, at any time while
this Incentive Warrant is unexpired and not exercised in full, (i) reclassifies
or changes its Outstanding Capital Shares (other than a change in par value, or
from par value to no par value per share, or from no par value per share to par
value or as a result of a subdivision or combination of outstanding securities
issuable upon exercise of the Incentive Warrant) or (ii) consolidates, merges or
effects a mandatory share exchange (x) with another corporation (other than a
merger or mandatory share exchange with another corporation in which the Company
is a continuing corporation and that does not result in any reclassification or
4
<PAGE>
change, other than a change in par value, or from par value to no par value per
share, or from no par value per share to par value, or (y) as a result of a
subdivision or combination of Outstanding Capital Shares issuable upon exercise
of the Incentive Warrant) or (iii) sells, transfers or leases all or
substantially all of its assets, then in any such event the Company, or such
successor or purchasing corporation, as the case may be, shall, without payment
by the Warrant Holder of any additional consideration therefor, amend this
Incentive Warrant or issue a new Incentive Warrant providing that the Warrant
Holder shall have rights not less favorable to the Warrant Holder than those
then applicable to this Incentive Warrant and to receive upon exercise under
such amendment of this Incentive Warrant or new Incentive Warrant, in lieu of
each share of Common Stock theretofore issuable upon exercise of the Incentive
Warrant hereunder, the kind and amount of shares of stock, other securities,
money or property receivable upon such reclassification, change, consolidation,
merger, mandatory share exchange, lease, sale or transfer by the holder of one
share of Common Stock issuable upon exercise of the Incentive Warrant had the
Incentive Warrant been exercised immediately prior to such reclassification,
change, consolidation, merger, mandatory share exchange or sale or transfer
(without giving effect to the limitation on ownership set forth in Section 3
hereof), and an appropriate provision for the foregoing shall be made by the
Company as part of any such event. Such amended Incentive Warrant or new
Incentive Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
6. The provisions of this Section 6(a) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, mandatory share exchanges,
sales, transfers and leases.
(b) Subdivision or Combination of Shares; Stock Dividends. If
the Company, at any time while this Incentive Warrant is unexpired and not
exercised in full, shall (x) subdivide its Common Stock, (y) combine its Common
Stock or (z) pay a dividend in its Capital Shares, or make any other
distribution of its Capital Shares, then the Exercise Price shall be adjusted,
as of the date the Company shall take a record of the holders of its Capital
Shares for the purpose of effecting such subdivision, combination or dividend or
other distribution (or if no such record is taken, as of the effective date of
such subdivision, combination, dividend or other distribution), to that price
determined by multiplying the Exercise Price in effect immediately prior to such
subdivision, combination, dividend or other distribution by a fraction:
(i) the numerator of which shall be the total number
of Outstanding Capital Shares immediately prior to such subdivision,
combination, dividend or other distribution, and
(ii) the denominator of which shall be the total
number of Outstanding Capital Shares immediately after such subdivision,
combination, dividend or other distribution. The provisions of this Section 6(b)
shall not apply under any of the circumstances for which an adjustment is made
pursuant to Section 6(a).
(c) Liquidating Dividends, Etc. If the Company, at any time
while this Incentive Warrant is unexpired and not exercised in full, makes a
distribution of its assets or evidences of indebtedness to the holders of its
Capital Shares as a dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
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<PAGE>
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections (a) and
(b) while an exercise is pending, then the Warrant Holder shall be entitled to
receive upon such exercise of the Incentive Warrant in addition to the Incentive
Warrant Shares receivable in connection therewith, and without payment of any
consideration other than the Exercise Price, an amount in cash equal to the
value of such distribution per Capital Share multiplied by the number of
Incentive Warrant Shares that, on the record date for such distribution, are
issuable upon such exercise of the Incentive Warrant (without giving effect to
the limitation on ownership set forth in Section 3 hereof), and an appropriate
provision therefor shall be made by the Company as part of any such
distribution. No further adjustment shall be made following any event that
causes a subsequent adjustment in the number of Incentive Warrant Shares
issuable. The value of a distribution that is paid in other than cash shall be
determined in good faith by the Board of Directors of the Company.
(d) Adjustment of Number of Shares. Upon each adjustment of
the Exercise Price pursuant to any provisions of this Section 6, the number of
Incentive Warrant Shares issuable hereunder at the option of the Warrant Holder
shall be calculated, to the nearest one hundredth of a whole share, multiplying
the number of Incentive Warrant Shares issuable prior to an adjustment by a
fraction:
(i) the numerator of which shall be the Exercise
Price before any adjustment pursuant to this Section 6; and
(ii) the denominator of which shall be the Exercise
Price after such adjustment.
(e) Other Action Affecting Capital Shares. In the event after
the date hereof the Company shall take any action affecting the number of
Outstanding Capital Shares, other than an action specifically described in any
of the foregoing subsections (a) through (c) hereof, inclusive (including,
without limitation, a subdivision or combination of Common Stock, or the payment
of a dividend in its Capital Shares or any other distribution in its Warrant
Closing), that in the reasonable opinion of the Warrant Holder would have a
materially adverse effect upon the rights of the Warrant Holder at the time of
exercise of the Incentive Warrant, the Exercise Price shall be adjusted in such
manner and at such time as the Board of Directors on the advice of the Company's
independent public accountants shall in good faith determine to be equitable in
the circumstances.
(f) Notice of Certain Actions; Notice of Adjustments.
(i) In the event the Company shall, at a time while
the Incentive Warrant is unexpired and outstanding, take any action pursuant to
subsections (a) through (e) of this Section 6 that may result in an adjustment
of the Exercise Price, the Company shall notify the Warrant Holder of such
action ten (10) days in advance of its effective date in order to afford to the
Warrant Holder an opportunity to exercise the Incentive Warrant prior to such
action becoming effective.
(ii) Whenever the Exercise Price or number of
Incentive Warrant Shares shall be adjusted pursuant to Section 6 hereof, the
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<PAGE>
Company shall promptly deliver by facsimile, with the original delivered by
express courier service in accordance with Section 10 hereof, a certificate,
which shall be signed by the Company's President or a Vice President and by its
Treasurer or Assistant Treasurer or its Secretary or Assistant Secretary,
setting forth in reasonable detail the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Company's Board of Directors
made any determination hereunder), and the Exercise Price and number of
Incentive Warrant Shares purchasable at that Exercise Price after giving effect
to such adjustment.
Section 7. No 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 this Incentive Warrant, 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
Warrant Holder against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Incentive
Warrant Shares above the amount payable therefor on such exercise, and (b) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Incentive
Warrant Shares on the exercise of this Incentive Warrant.
Section 8. Rights As Stockholder. Prior to exercise of this Incentive
Warrant and except as provided in Section 6 hereof, the Warrant Holder shall not
be entitled to any rights as a stockholder of the Company with respect to the
Incentive Warrant Shares, including (without limitation) the right to vote such
shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the event of any taking by the Company 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, 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 mail to each Warrant
Holder, at least ten (10) 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 or right, and the amount and character of such
dividend, distribution or right.
Section 9. Replacement of Incentive Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Incentive Warrant and, in the case of any such loss, theft or
destruction of the Incentive Warrant, upon 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 Incentive
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Incentive Warrant of like tenor.
Section 10. Restricted Securities.
(a) Registration or Exemption Required. This Incentive Warrant
has been issued in a transaction exempt from the registration requirements of
the Securities Act in reliance upon the provisions of Section 4(2) promulgated
by the SEC under the Securities Act. This Incentive Warrant and the Incentive
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<PAGE>
Warrant Shares issuable upon exercise of this Incentive Warrant may not be
resold except pursuant to an effective registration statement or an exemption to
the registration requirements of the Securities Act and applicable state laws.
(b) Legend. Any replacement Incentive Warrants issued pursuant
to Section 2 hereof and any Incentive Warrant Shares issued upon exercise
hereof, shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES
LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN
A STOCK PURCHASE AGREEMENT, DATED AS OF MAY 2, 2000, BETWEEN
AMERICAN ACCESS TECHNOLOGIES INC. AND CRESCENT INTERNATIONAL
LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE AMERICAN
ACCESS TECHNOLOGIES INC.'S EXECUTIVE OFFICES."
Removal of such legend shall be in accordance with the legend removal
provisions in the Agreement.
(c) No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 10(b) has been or shall be placed on the
share certificates representing the Incentive Warrant Shares and no instructions
or "stop transfer orders," so called, "stock transfer restrictions" or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Section 10.
(d) Assignment. Assuming the conditions of Section 10(a) above
regarding registration or exemption have been satisfied, the Warrant Holder may
sell, transfer, assign, pledge or otherwise dispose of this Incentive Warrant,
in whole or in part. The Warrant Holder shall deliver a written notice to the
Company substantially in the form of the assignment form attached hereto as
Exhibit B (the "Assignment Notice") indicating the person or persons to whom
this Incentive Warrant shall be assigned and the respective number of warrants
to be assigned to each assignee. The Company shall effect the assignment within
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<PAGE>
ten (10) days of receipt of such Assignment Notice, and shall deliver to the
assignee(s) designated by the Warrant Holder a Incentive Warrant or Incentive
Warrants of like tenor and terms for the specified number of shares.
(e) Investor's Compliance. Nothing in this Section 10 shall
affect in any way the Investor's obligations under any agreement to comply with
all applicable securities laws upon resale of the Common Stock.
Section 11. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be deemed duly given (i) upon delivery if hand delivered at
the address designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received), (ii) on the fifth business day after
deposit into the mail, if deposited in the mail, registered or certified, return
receipt requested, postage prepaid, addressed to the address designated below,
(iii) upon delivery if delivered by reputable express courier service to the
address designated below, or (iv) upon confirmation of transmission if
transmitted to the facsimile number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received).
The addresses and facsimile numbers for such communications shall be:
if to the Company:
American Access Technologies Inc.
37 Skyline Drive
Suite 1101
Lake Mary, Florida 32746
Attention: Lacy Loar
Telephone: (407) 333-1446
Facsimile: (407) 333-2598
with a copy (which shall not constitute notice) to:
Joel Bernstein, Esq. P.A.
11900 Biscayne Blvd., Suite 604
Miami, Florida 33181
Telephone: (305) 892-1122
Facsimile: (305) 892-0822
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if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai
1216 Geneva, Cointrin
P.O. Box 42
Switzerland
Attention: Mel Craw/Maxi Brezzi
Telephone: +41 22 791 72 56
Facsimile: +41 22 929 53 94
with a copy (which shall not constitute notice) to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Sara Hanks, Esq./Earl S. Zimmerman, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 13 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the
other party hereto.
Section 12. Miscellaneous. This Incentive 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. The headings in this Incentive Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
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IN WITNESS WHEREOF, this Incentive Warrant was duly executed
by the undersigned, thereunto duly authorized, as of the date first set forth
above.
AMERICAN ACCESS TECHNOLOGIES INC.
By:______________________________
Name:
Title:
Attested:
By:______________________________
Name:
Title:
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EXHIBIT A TO THE INCENTIVE WARRANT
EXERCISE FORM
AMERICAN ACCESS TECHNOLOGIES
The undersigned (the "Registered Holder") hereby irrevocably exercises
the right to purchase __________________ shares of Common Stock of American
Access Technologies, an entity organized and existing under the laws of the
State of Florida (the "Company"), evidenced by the attached Incentive Warrant,
and herewith makes payment of the Exercise Price with respect to such shares in
full in the form of (check the appropriate box) (i) cash or certified check in
the amount of $________; (ii) wire transfer to the Company's account at
__________________, _________, _________ (Account No.:_________); or (iii)
______ Incentive Warrant Shares, which represent the amount of Incentive Warrant
Shares as provided in the attached Incentive Warrant to be canceled in
connection with such exercise, all in accordance with the conditions and
provisions of said Incentive Warrant.
The undersigned requests that stock certificates for such Incentive
Warrant Shares be issued, and a Incentive Warrant representing any unexercised
portion hereof be issued, pursuant to this Incentive Warrant in the name of the
Registered Holder and delivered to the undersigned at the address set forth
below.
Dated:______________________________
____________________________________
Signature of Registered Holder
____________________________________
Name of Registered Holder (Print)
____________________________________
Address
<PAGE>
NOTICE
The signature to the foregoing Exercise Form must correspond to the
name as written upon the face of the attached Incentive Warrant in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B TO THE INCENTIVE WARRANT
ASSIGNMENT
(To be executed by the registered Warrant Holder (the "Registered
Holder") desiring to transfer the Incentive Warrant, in whole or in part.)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the attached
Incentive Warrant hereby sells, assigns or transfers unto the person(s) named
below (the "Assignee") the right to purchase ______________ shares of the Common
Stock of American Access Technologies evidenced by the attached Incentive
Warrant and does hereby irrevocably constitute and appoint
______________________ (attorney) to transfer the number of shares specified of
the said Incentive Warrant on the books of the Company, with full power of
substitution in the premises.
The undersigned requests that such Incentive Warrant be issued, and a
Incentive Warrant representing any unsold, unassigned or non-transferred portion
hereof be issued, pursuant to this Incentive Warrant in the name of the
Registered Holder and delivered to the undersigned at the address set forth
below.
Dated:______________________________
____________________________________
Signature of Registered Holder
____________________________________
Name of Registered Holder (Print)
____________________________________
Address of Registered Holder
____________________________________
Name of Assignee (Print)
____________________________________
Address of Assignee (including zip code number)
<PAGE>
Fill in for new Registration of Incentive Warrant:
- -----------------------------------------
Name
- -----------------------------------------
Address
- -----------------------------------------
Please print name and address of assignee
(including zip code number)
<PAGE>
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the attached Incentive Warrant in every particular,
without alteration or enlargement or any change whatsoever.
WARRANT
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO A TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE AGREEMENT, DATED
AS OF MAY 2, 2000, BETWEEN AMERICAN ACCESS TECHNOLOGIES INC. AND CRESCENT
INTERNATIONAL LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM AMERICAN ACCESS
TECHNOLOGIES INC.'S EXECUTIVE OFFICES.
May 2, 2000
Warrant to Purchase Shares of Common Stock of American Access
Technologies Inc. (hereinafter an "Early Put Warrant"), up to a total number
determined in accordance with Section 2(b) hereof.
American Access Technologies Inc., an entity organized and existing
under the laws of the State of Florida (the "Company"), hereby agrees that
Crescent International Ltd. (the "Investor") or any other Warrant Holder is
entitled, on the terms and conditions set forth below, to purchase from the
Company at any time during the Exercise Period (hereinafter defined) up to a
total number, determined in accordance with Section 2(b) hereof, of fully paid
and nonassessable shares of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock"), as the same may be adjusted from time to time
pursuant to Section 7 hereof, at the Exercise Price (hereinafter defined), as
the same may be adjusted pursuant to Section 7 hereof. The resale of the shares
of Common Stock or other securities issuable upon exercise or exchange of this
Early Put Warrant is subject to the provisions of the Registration Rights
Agreement (as defined below).
Section 1. Definitions.
"Aggregate Exercise Price" shall mean the Exercise Price
multiplied by the total number of shares of Common Stock for which this Early
Put Warrant is being exercised.
"Agreement" shall mean the Stock Purchase Agreement, dated the
date hereof, between the Company and the Investor.
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"Capital Shares" shall mean the Common Stock and any shares of
any other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
"Cash-Out Price" shall mean, with respect to any exercise (in
whole or in part) of this Early Put Warrant, the product of (x) the Bid Price of
one share of Common Stock on the Trading Day immediately preceding the Exercise
Date multiplied by (y) the number of shares of Common Stock for which the
Company elects the Cash-Out Option.
"Exercise Date" shall mean with respect to any exercise (in
whole or in part) of this Early Put Warrant either (i) the date this Early Put
Warrant, the Exercise Notice and the Aggregate Exercise Price are received by
the Company or (ii) the date advanced copy of the Exercise Notice is sent by
facsimile to the Company, provided that this Early Put Warrant, the original
Exercise Notice, and the Aggregate Exercise Price are received by the Company
within five (5) Trading Days thereafter and provided further that if this Early
Put Warrant the original Exercise Notice and the Aggregate Exercise Price are
not received within five (5) Trading Days in accordance with clause (ii) above,
the Exercise Date for this clause (ii) shall be the date this Early Put Warrant,
the original Exercise Notice and the Aggregate Exercise Price are received by
the Company.
"Exercise Notice" shall mean with respect to any exercise (in
whole or in part) of this Early Put Warrant the exercise form attached hereto as
Exhibit A, duly executed by the Warrant Holder.
"Exercise Period" shall mean the period beginning on the
Effective Date applicable to the Put Closing and continuing until the two-year
period thereafter; provided that such period shall be extended one day for each
day after such Effective Date, that the Registration Statement is not effective
during the period the Registration Statement is required to be effective
pursuant to the Registration Rights Agreement.
"Exercise Price" as of the date hereof shall mean $0.01 per
share of Common Stock, subject to the adjustments provided for in Section 7 of
this Early Put Warrant.
"Per Share Early Put Warrant Value" shall mean the difference
resulting from subtracting the Exercise Price from the Bid Price of one share of
Common Stock on the Trading Day immediately preceding the Exercise Date.
"Put Closing" shall mean the closing of the purchase and sale
of 406,278 shares of Common Stock for an Investment Amount equal to $1,900,000,
which occurred on the date hereof.
"Registration Rights Agreement" shall mean the registration
rights agreement, dated the date hereof between the Company and the Investor.
"Subscription Date" shall mean the date on which the Agreement
is executed and delivered by the parties hereto.
"Warrant Holder" shall mean the Investor or any assignee or
transferee of all or any portion of this Early Put Warrant.
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Other capitalized terms used but not defined herein shall have
their respective meanings set forth in the Agreement.
Section 2. Exercisability.
(a) Timing. If the Purchase Price on the Effective Date
applicable to the Put Closing is lower than the Purchase Price on the
Subscription Date with respect to such Put, this Early Put Warrant shall become
immediately exercisable, subject to clause (c) below.
(b) Number of Shares. The number of shares of Common Stock for
which this Early Put Warrant is exercisable (the "Early Put Warrant Shares")
shall be determined by subtracting (x) the Investment Amount divided by the
Purchase Price on the Subscription Date from (y) the Investment Amount divided
by the Purchase Price on the Effective Date applicable to the Put Closing.
(c) Cash Payment in Lieu of Issuance of Shares. In the event
that the Warrant Holder exercises this Early Put Warrant (in whole or in part)
in accordance with Section 3 hereof, then the Company may, in lieu of issuing
shares of Common Stock pursuant to such exercise, pay to the Investor the
Cash-Out Price for any or all of the shares of Common Stock purchasable by the
Investor through the exercise of this Early Put Warrant (such payment, the
"Cash-Out Option"). For avoidance of doubt, the Company may elect such Cash-Out
Option in the event that, inter alia, the number of Early Put Warrant Shares
plus the number of Early Put Shares exceeds the number of shares registered
pursuant to Section 1.1(a) of the Registration Rights Agreement.
(d) Notice of Cash Payment in Lieu of Issuance of Shares. In
the event that the Company elects the "Cash-Out Option" the Company shall
promptly give notice to the Investor of such election on the Trading Day
following surrender of the items described in Section 3(a)(i) or delivery by
facsimile of the Exercise Notice described in Section 3(a)(ii). Such notice from
the Company shall set forth the number of shares of Common Stock for which the
Company elects the Cash-Out Option.
(e) Method of Cash-Out; Effect of Cash-Out. In the event that
the Company elects the Cash-Out Option, then in lieu of delivering stock
certificates as provided in Section 5 hereof, the Company shall deliver by wire
transfer of immediately available funds to an account designated by the Investor
as soon as practicable after delivery by the Company of notice of its election
of the Cash-Out Option and in any event within two (2) Trading Days thereafter,
the Cash-Out Price for any and all shares of Common Stock for which the Company
elects the Cash-Out Option.
Section 3. Exercise; Cashless Exercise.
(a) Method of Exercise. This Early Put Warrant may be
exercised in whole or in part (but not as to a fractional share of Common
Stock), at any time and from time to time during the Exercise Period, by the
Warrant Holder by (i) the surrender of this Early Put Warrant, the Exercise
Notice and the Aggregate Exercise Price to the Company at the address set forth
in Section 12 hereof or (ii) the delivery by facsimile of an executed and
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<PAGE>
completed Exercise Notice to the Company and delivery to the Company within five
(5) Trading Days thereafter of this Early Put Warrant, the original Exercise
Notice and the Aggregate Exercise Price.
(b) Payment of Aggregate Exercise Price. Subject to paragraph
(c) below, payment of the Aggregate Exercise Price shall be made by check or
bank draft payable to the order of the Company or by wire transfer to an account
designated by the Company. If the amount of the payment received by the Company
is less than the Aggregate Exercise Price, the Warrant Holder will be notified
of the deficiency and shall make payment in that amount within five (5) Trading
Days of such notice. In the event the payment exceeds the Aggregate Exercise
Price, the Company will refund the excess to the Warrant Holder within three (3)
Trading Days of both the receipt of such payment and the knowledge of such
excess.
(c) Cashless Exercise. As an alternative to payment of the
Aggregate Exercise Price in accordance with Section 3(b). above, the Warrant
Holder may elect to effect a cashless exercise by so indicating on the Exercise
Notice and including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, the Warrant Holder shall
surrender this Early Put Warrant for that number of shares of Common Stock
determined by (i) multiplying the number of Early Put Warrant Shares for which
this Early Put Warrant is being exercised by the Per Share Early Put Warrant
Value and (ii) dividing the product by the Bid Price of one share of the Common
Stock on the Trading Day immediately preceding the Exercise Date.
(d) Replacement Early Put Warrant. In the event that the Early
Put Warrant is not exercised in full, the number of Early Put Warrant Shares
shall be reduced by the number of such Early Put Warrant Shares for which this
Early Put Warrant is exercised, and the Company, at its expense, shall forthwith
issue and deliver to the Warrant Holder a new Early Put Warrant of like tenor in
the name of the Warrant Holder or as the Warrant Holder may request, reflecting
such adjusted number of Early Put Warrant Shares.
Section 4. Ten Percent Limitation. The Warrant Holder may not exercise
this Early Put Warrant such that the number of Early Put Warrant Shares to be
received pursuant to such exercise aggregated with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
by the Warrant Holder would result in the Warrant Holder owning more than 9.9%
of all of such Common Stock as would be outstanding on such Exercise Date, as
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. As of any date prior to the Exercise
Date, the aggregate number of shares of Common Stock into which this Early Put
Warrant is exercisable, together with all other shares of Common Stock then
beneficially owned (as such term is defined in Rule 13(d) under the Exchange
Act) by such Warrant Holder and its affiliates, shall not exceed 9.9% of the
total outstanding shares of Common Stock as of such date.
Section 5. Delivery of Stock Certificates.
(a) Subject to the terms and conditions of this Early Put
Warrant, as soon as practicable after the exercise of this Early Put Warrant in
full or in part, and in any event within five (5) Trading Days thereafter, the
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<PAGE>
Company at its expense (including, without limitation, the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Warrant Holder, or as the Warrant Holder may lawfully direct, a certificate
or certificates for the number of validly issued, fully paid and non-assessable
Early Put Warrant Shares to which the Warrant Holder shall be entitled on such
exercise, together with any other stock or other securities or property
(including cash, where applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof; provided, however, that
any such delivery to a location outside of the United States shall also be made
within five (5) Trading Days after the exercise of this Early Put Warrant in
full or in part.
(b) This Early Put Warrant may not be exercised as to
fractional shares of Common Stock. In the event that the exercise of this Early
Put Warrant, in full or in part, would result in the issuance of any fractional
share of Common Stock, then in such event the Warrant Holder shall receive in
cash an amount equal to the Bid Price of such fractional share within five (5)
Trading Days.
Section 6. Representations, Warranties and Covenants of the Company.
(a) The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation for the legal and valid issuance of this Early Put Warrant and the
Early Put Warrant Shares to the Warrant Holder.
(b) At all times during the Exercise Period, the Company shall
take all steps reasonably necessary and within its control to insure that the
Common Stock remains listed or quoted on the Principal Market.
(c) The Early Put Warrant Shares, when issued in accordance
with the terms hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully paid and
non-assessable.
(d) The Company has authorized and reserved for issuance to
the Warrant Holder the requisite number of shares of Common Stock to be issued
pursuant to this Early Put Warrant. The Company shall at all times reserve and
keep available, solely for issuance and delivery as Early Put Warrant Shares
hereunder, such shares of Common Stock as shall from time to time be issuable as
Early Put Warrant Shares, and shall accordingly adjust the number of such shares
of Common Stock promptly upon the occurrence of any of the events specified in
Section 7 hereof.
Section 7. Adjustment of the Exercise Price. The Exercise Price and,
accordingly, the number of Early Put Warrant Shares issuable upon exercise of
the Early Put Warrant, shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Reclassification, Consolidation, Merger or Mandatory Share
Exchange. If the Company, at any time while this Early Put Warrant is unexpired
and not exercised in full, (i) reclassifies or changes its Outstanding Capital
Shares or (ii) consolidates, merges or effects a mandatory share exchange (x)
with or into another corporation (other than a merger or mandatory share
exchange with another corporation in which the Company is a continuing
corporation and that does not result in any reclassification or change, or (y)
as a result of a subdivision or combination of Outstanding Capital Shares
5
<PAGE>
issuable upon exercise of this Early Put Warrant) or (iii) sells, transfers or
leases all or substantially all of its assets, then in any such event the
Company, or such successor or purchasing corporation, as the case may be, shall,
without payment by the Warrant Holder of any additional consideration therefor
amend this Early Put Warrant or issue a new warrant providing that the Warrant
Holder shall have rights not less favorable to the Holder than those then
applicable to this Early Put Warrant and to receive upon exercise under such
amendment of this Early Put Warrant or new warrant, in lieu of each share of
Common Stock theretofore issuable upon exercise of this Early Put Warrant
hereunder, the kind and amount of shares of stock, other securities, money or
property receivable upon such reclassification, change, consolidation, merger,
mandatory share exchange, lease, sale or transfer by the holder of one share of
Common Stock issuable upon exercise of this Early Put Warrant had this Early Put
Warrant been exercised immediately prior to such reclassification, change,
consolidation, merger, mandatory share exchange or sale or transfer (without
giving effect to the limitation on ownership set forth in Section 4 hereof) and
an appropriate provision for the foregoing shall be made by the Company as part
of any such event. Such amended warrant or new warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The provisions of this Section 7(a)
a. shall similarly apply to successive reclassifications, changes,
consolidations, mergers, mandatory share exchanges, sales, transfers and leases.
(b) Subdivision or Combination of Shares; Stock Dividends. If
the Company, at any time after the Effective Date while this Early Put Warrant
is unexpired and not exercised in full, (x) shall subdivide its Common Stock,
(y) shall combine its Common Stock, (z) shall pay a dividend in its Capital
Shares, or make any other distribution of its Capital Shares, then the Exercise
Price shall be adjusted, as of the date the Company shall take a record of the
holders of its Capital Shares for the purpose effecting such subdivision,
combination or dividend or other distribution (or if no such record is taken, as
of the effective date of such subdivision, combination, dividend or other
distribution), to that price determined by multiplying the Exercise Price in
effect immediately prior to such subdivision, combination, dividend or other
distribution by a fraction:
(i) the numerator of which shall be the total number
of Outstanding Capital Shares immediately prior to such subdivision,
combination, dividend or other distribution, and
(ii) the denominator of which shall be the total
number of Outstanding Capital Shares immediately after such subdivision,
combination, dividend or other distribution. The provisions of this Section 7(b)
. shall not apply under any of the circumstances for which an adjustment is made
pursuant to Section 7(a).
(c) Liquidating Dividends, Etc. If the Company, at any time
while this Early Put Warrant is unexpired and not exercised in full, makes a
distribution of its assets or evidences of indebtedness to the holders of its
Capital Shares as a dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections (a)
through (b)) while an exercise is pending, then the Warrant Holder shall be
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<PAGE>
entitled to receive upon such exercise of the Early Put Warrant in addition to
the Early Put Warrant Shares receivable in connection therewith, and without
payment of any consideration other than the Exercise Price, an amount in cash
equal to the value of such distribution per Capital Share multiplied by the
number of Early Put Warrant Shares that, on the record date for such
distribution, are issuable upon such exercise of the Early Put Warrant (with no
further adjustment being made following any event which causes a subsequent
adjustment in the number of Early Put Warrant Shares issuable), and an
appropriate provision therefor shall be made a part of any such distribution.
The value of a distribution that is paid in other than cash shall be determined
in good faith by the Board of Directors of the Company.
(d) Adjustment of Number of Shares. Upon each adjustment of
the Exercise Price pursuant to any provisions of this Section 7, the number of
Early Put Warrant Shares issuable hereunder at the option of the Warrant Holder
shall be calculated, to the nearest one hundredth of a whole share, multiplying
the number of Early Put Warrant Shares issuable prior to an adjustment by a
fraction:
(i) the numerator of which shall be the Exercise
Price before any adjustment pursuant to this Section 7; and
(ii) the denominator of which shall be the Exercise
Price after such adjustment.
(e) Other Action Affecting Capital Shares. In the event after
the date hereof the Company shall take any action affecting the number of
Outstanding Capital Shares, other than an action specifically described in any
of the foregoing subsections (a) through (e) hereof, inclusive, (including
without limitation a subdivision or combination of Common Stock, or the payment
of a dividend in its Capital Shares or any other distribution in its Warrant
Closing), that in the reasonable opinion of the Warrant Holder would have a
materially adverse effect upon the rights of the Warrant Holder at the time of
exercise of the Early Put Warrant, the Exercise Price shall be adjusted in such
manner and at such time as the Board of Directors on the advice of the Company's
independent public accountants shall in good faith determine to be equitable in
the circumstances.
(f) Notice of Certain Actions; Notice of Adjustments.
(i) In the event the Company shall, at a time while
the Early Put Warrant is unexpired and outstanding, take any action pursuant to
subsections (a) through (e) of this Section 7 that may result in an adjustment
of the Exercise Price, the Company shall notify the Warrant Holder of such
action ten (10) days in advance of its effective date in order to afford to the
Warrant Holder an opportunity to exercise the Early Put Warrant prior to such
action becoming effective.
(ii) Notice of Adjustments. Whenever the Exercise
Price or number of Early Put Warrant Shares shall be adjusted pursuant to
Section 7 hereof, the Company shall promptly deliver by facsimile with the
original delivered by express courier service in accordance with Section 12
hereof; a certificate, which shall be signed by the Company's President or a
Vice President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
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was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the Exercise Price and
number of Early Put Warrant Shares purchasable at that Exercise Price after
giving effect to such adjustment.
Section 8. No 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 this Early Put Warrant, 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
Warrant Holder against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Early Put
Warrant Shares above the amount payable therefor on such exercise, and (b) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Early Put
Warrant Shares on the exercise of this Early Put Warrant.
Section 9. Rights As Stockholder. Prior to exercise of this Early Put
Warrant and except as provided in Section 7 hereof, the Warrant Holder shall not
be entitled to any rights as a stockholder of the Company with respect to the
Early Put Warrant Shares, including (without limitation) the right to vote such
shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the event of any taking by the Company 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, 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 mail to each Warrant
Holder, at least ten (10) 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 or right, and the amount and character of such
dividend, distribution or right.
Section 10. Replacement of Early Put Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Early Put Warrant and, in the case of any such loss, theft or
destruction of the Early Put Warrant, upon 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 Early Put
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Early Put Warrant of like tenor.
Section 11. Restricted Securities.
(a) Registration or Exemption Required. This Early Put Warrant
has been issued in a transaction exempt from the registration requirements of
the Securities Act in reliance upon the provisions of Section 4(2) promulgated
by the SEC under the Securities Act. This Early Put Warrant and the Early Put
Warrant Shares issuable upon exercise of this Early Put Warrant may not be
resold except pursuant to an effective registration statement or an exemption to
the registration requirements of the Securities Act and applicable state laws.
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(b) Legend. Any replacement Early Put Warrants issued pursuant
to Section 2 hereof and any Early Put Warrant Shares issued upon exercise
hereof, shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES
LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN
A STOCK PURCHASE AGREEMENT, DATED AS OF MAY 2, 2000, BETWEEN
AMERICAN ACCESS TECHNOLOGIES INC. AND CRESCENT INTERNATIONAL
LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE AMERICAN
ACCESS TECHNOLOGIES INC.'S EXECUTIVE OFFICES."
Removal of such legend shall be in accordance with the
legend removal provisions in the Agreement.
(c) No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 11 (b) has been or shall be placed on
the share certificates representing the Early Put Warrant Shares and no
instructions or "stop transfer orders," so called, "stock transfer restrictions"
or other restrictions have been or shall be given to the Company's transfer
agent with respect thereto other than as expressly set forth in this Section 11.
(d) Assignment. Assuming the conditions of Section 11 (a)
above regarding registration or exemption have been satisfied, the Warrant
Holder may sell, transfer, assign, pledge or otherwise dispose of this Early Put
Warrant, in whole or in part. The Warrant Holder shall deliver a written notice
to the Company substantially in the form of the assignment form attached hereto
as Exhibit B (the "Assignment Notice"), indicating the person or persons to whom
this Early Put Warrant shall be assigned and the respective number of warrants
to be assigned to each assignee. The Company shall effect the assignment within
ten (10) days of receipt of such Assignment Notice, and shall deliver to the
assignee(s) designated by the Warrant Holder a Early Put Warrant or Early Put
Warrants of like tenor and terms for the specified number of shares.
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(e) Investor's Compliance. Nothing in this Section 11 shall
affect in any way the Investor's obligations under any agreement to comply with
all applicable securities laws upon resale of the Common Stock.
Section 12. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be deemed duly given (i) upon delivery if hand delivered at
the address designated below (if delivered on a business day during normal
business hours where such notice is to be received) or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received), (ii) on the fifth business
day after deposit into the mail, if deposited in the mail, registered or
certified, return receipt requested, postage prepaid, addressed to the address
designated below, (iii) upon delivery delivered by reputable express courier
service to the address designated below, or (iv) upon confirmation of
transmission if transmitted by facsimile to the facsimile number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses and facsimile numbers for such communications shall be:
if to the Company:
American Access Technologies Inc.
37 Skyline Drive
Suite 1101
Lake Mary, Florida 32746
Attention: Lacy Loar
Telephone: (407) 333-1446
Facsimile: (407) 333-2598
with a copy (which shall not constitute notice) to:
Joel Bernstein, Esq. P.A.
11900 Biscayne Blvd., Suite 604
Miami, Florida 33181
Telephone: (305) 892-1122
Facsimile: (305) 892-0822
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai
P.O. Box 42
1216 Geneva, Cointrin
Switzerland
Attention: Mel Craw/Maxi Brezzi
Telephone: +41 22 791 72 56
Facsimile: +41 22 929 53 94
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with a copy (which shall not constitute notice) to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Sara Hanks, Esq./Earl S. Zimmerman, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Either party hereto may from time to time change its address
or facsimile number for notices under this Section 14 by giving at least ten
(10) days' prior written notice of such changed address or facsimile number to
the other party hereto.
Section 13. Miscellaneous. This Early Put 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. The headings in this Early Put Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
11
<PAGE>
IN WITNESS WHEREOF, this Early Put Warrant was duly executed
by the undersigned, thereunto duly authorized, as of the date first set forth
above.
AMERICAN ACCESS TECHNOLOGIES INC.
By:___________________________
Name:
Title:
Attested:
By:___________________________
Name:
Title: Secretary
12
<PAGE>
EXHIBIT A TO THE EARLY PUT WARRANT
EXERCISE FORM
AMERICAN ACCESS TECHNOLOGIES INC.
The undersigned (the "Registered Holder") hereby irrevocably exercises
the right to purchase __________________ shares of Common Stock of American
Access Technologies Inc., an entity organized and existing under the laws of the
State of Florida (the "Company"), evidenced by the attached Early Put Warrant,
and herewith makes payment of the Exercise Price with respect to such shares in
full in the form of (check the appropriate box) (i) cash or certified check in
the amount of $________; (ii) wire transfer to the Company's account at
__________________, _________, _________ (Account No.:_________); or (iii)
______ Early Put Warrant Shares, which represent the amount of Early Put Warrant
Shares as provided in the attached Early Put Warrant to be canceled in
connection with such exercise, all in accordance with the conditions and
provisions of said Early Put Warrant.
The undersigned requests that stock certificates for such Early Put Warrant
Shares be issued, and a Early Put Warrant representing any unexercised portion
hereof be issued, pursuant to this Early Put Warrant in the name of the
registered Registered Holder and delivered to the undersigned at the address set
forth below.
Dated:______________________________________
____________________________________________
Signature of Registered Holder
____________________________________________
Name of Registered Holder (Print)
____________________________________________
Address
<PAGE>
NOTICE
The signature to the foregoing Exercise Form must correspond to the
name as written upon the face of the attached Early Put Warrant in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B TO THE EARLY PUT WARRANT
ASSIGNMENT
(To be executed by the registered Warrant Holder (the "Registered
Holder") desiring to transfer the Early Put Warrant, in whole or in part.)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the attached
Early Put Warrant hereby sells, assigns or transfers unto the person(s) named
below (the "Assignee") the right to purchase ______________ shares of the Common
Stock of American Access Technologies Inc. evidenced by the attached Early Put
Warrant and does hereby irrevocably constitute and appoint
______________________ (attorney) to transfer the number of shares specified of
the said Early Put Warrant on the books of the Company, with full power of
substitution in the premises.
The undersigned requests that such Early Put Warrant be issued, and a
Early Put Warrant representing any unsold, unassigned or non-transferred portion
hereof be issued, pursuant to this Early Put Warrant in the name of the
Registered Holder and delivered to the undersigned at the address set forth
below.
Dated:______________________________________
____________________________________________
Signature of Registered Holder
____________________________________________
Name of Registered Holder (Print)
____________________________________________
Address of Registered Holder
____________________________________________
Address of Assignee (including zip code number)
____________________________________________
<PAGE>
Fill in for new Registration of Early Put Warrant:
- -----------------------------------------
Name
- -----------------------------------------
Address
- -----------------------------------------
Please print name and address of assignee
(including zip code number)
<PAGE>
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the attached Early Put Warrant in every particular,
without alteration or enlargement or any change whatsoever.
CLOSING STATEMENT
<TABLE>
<CAPTION>
======================================================== ===========================================================
<S> <C>
Closing Date........................................ May 2, 2000 ("Closing Date")
- -------------------------------------------------------- -----------------------------------------------------------
Investor............................................ Crescent International Ltd. ("Investor")
- -------------------------------------------------------- -----------------------------------------------------------
Company............................................. American Access Technologies Inc. ("Company")
- -------------------------------------------------------- -----------------------------------------------------------
Transaction......................................... This closing represented the initial closing of the
purchased sale by the Company to Investor of shares of
the Company's Common Stock pursuant to Stock Purchase
Agreement dated May 2, 2000 (the "Stock Purchase
Agreement"). Capitalized terms not otherwise defined
herein shall have the meaning assigned by the Stock
Purchase Agreement.
- -------------------------------------------------------- -----------------------------------------------------------
Maximum Commitment Amount........................... $15,000,000
- -------------------------------------------------------- -----------------------------------------------------------
Discounted Market Price $4.6766
on the Subscription Date.........................
- -------------------------------------------------------- -----------------------------------------------------------
Shares of Common Stock Sold......................... 406,278
- -------------------------------------------------------- -----------------------------------------------------------
Closing Disbursements:
1. Aggregate Investment Amount..................... $ 1,900,000
2. Less: Put Fee (Schedule 10.1)................... $ 150,000
3. Less: Put Fee (1.0% - Schedule 10.1)............ $ 19,000
4. Less: Class Action Legal Opinion Fee............ $ 2,080
5. Less: Transaction Costs......................... $ 5,035
6. Net to Company.................................. $ 1,723,885
- --------------------------------------------------------------------------------------------------------------------
Actions at Closing:
- -------------------------------------------------------- -----------------------------------------------------------
1. Stock Purchase Agreement........................ The Investor and the Company executed the Stock Purchase
Agreement.
- -------------------------------------------------------- -----------------------------------------------------------
2. Registration Rights Agreement................... The Investor and the Company executed the Registration
Rights Agreement.
- -------------------------------------------------------- -----------------------------------------------------------
3. Incentive Warrant............................... The Company executed and delivered the Incentive Warrant
to the Investor.
- -------------------------------------------------------- -----------------------------------------------------------
4. Early Put Warrants.............................. The Company executed and delivered an Early Put Warrant
to the Investor.
- -------------------------------------------------------- -----------------------------------------------------------
<PAGE>
- -------------------------------------------------------- -----------------------------------------------------------
5. Instructions to Transfer Agent.................. The Company executed and delivered irrevocable Issuance
Instructions to the Transfer Agent and the Transfer Agent
confirmed and accepted such instructions. A copy of such
instructions and acceptance has been received by the
Investor's legal counsel.
- -------------------------------------------------------- -----------------------------------------------------------
6. Legal Opinion.................................... Joel Bernstein, Esq. P.A. delivered a legal opinion.
- -------------------------------------------------------- -----------------------------------------------------------
7. Wire Transfer.................................... Upon confirmation of above actions by Investor's legal
counsel, Investor will wire to the Company the Net Amount
of $1,723,885, indicated on the front page hereof, and
thereafter deliver to the Transfer Agent a Wire Transfer
Notice indicating completion of delivery by wire transfer
to the Company the Net Amount of $1,723,885.
- -------------------------------------------------------- -----------------------------------------------------------
Acknowledged and Agreed:
Crescent International Ltd. American Access Technologies Inc.
By: By:
---------------------------------------------- -------------------------------
======================================================== ===========================================================
================================================================ ===================================================
Total Pursuant to the Stock Purchase Agreement $ 15,000,000.00
- ---------------------------------------------------------------- ---------------------------------------------------
Early Put ($1,900,000.00)
- ---------------------------------------------------------------- ---------------------------------------------------
Subsequent Put/Closing ($.00)
- ---------------------------------------------------------------- ---------------------------------------------------
Remaining Balance $13,100,000.00
================================================================ ===================================================
</TABLE>
