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UNITED STATES
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: February 24, 1998
Date of earliest event reported: December 23, 1997
CHADMOORE WIRELESS GROUP, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-20999 84-1058165
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2875 E. Patrick Lane, Suite G 89120
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 740-5633
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4720 Polaris Street, Las Vegas, Nevada 89103
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(Former name or former address, if changed since last report.)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
None.
(b) Exhibits
Exhibit Number and Brief Description
4.5 Certificate of Designation of Rights and Preferences of Convertible
Preferred Stock Series B of the Company (1)
4.6 Form of Stock Purchase Warrant issued in connection with the Series B
8% Convertible Preferred Stock Offshore Subscription Agreement dated on
or about December 10, 1997 (1)
10.15 Form of Series B 8% Convertible Preferred Stock Offshore Subscription
Agreement dated on or about December 10, 1997 (1)
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(1) Filed herewith.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
(a) On December 23, 1997, Registrant concluded a private placement
conducted in accordance with Regulation S ("Regulation S") of the Securities Act
of 1933, as amended. In such placement Registrant sold (i) 219,000 shares of
Series B Convertible Preferred Stock (the "Preferred Stock") and (ii) warrants
("Warrants") to purchase 300,000 shares of the Registrant's common stock
("Common Stock"). The private placement was made through a Distributor, as
defined in Regulation S. The purchase price of a share of Common Stock under the
Warrants is equal to the closing bid price of the shares of Common Stock on the
NASDAQ OTC Bulletin Board as quoted by Bloomberg, LP on the date on which the
Warrant is exercised.
Registrant received the total cash offering price from such
placement of $1,650,000. The Distributor, Settondown Capital International,
Limited, whose principal place of business is Nassau, Bahamas, received a
commission of 16,000 shares of Preferred Stock. No other commission or
underwriter's discount was paid or provided to any person. Under the terms of
the Preferred Stock, Registrant shall pay a dividend on each share of Preferred
Stock at the rate of 8% per annum ("Dividend Shares") of the liquidation
preference of each share of Preferred Stock (which liquidation preference is
$10.00 per share), accruing from date of issuance. The dividend is payable
quarterly in cash or common stock at the option of the Registrant and is
calculated at the price (the "Conversion Price") at which the Preferred Stock
may be converted into shares of common stock of the Registrant ("Conversion
Shares") on the date when converted (the "Conversion Date") or quarterly based
upon the last day of each quarter with the valuation determined as if that was a
Conversion Date. The terms of conversion are set forth in the Certificate of
Designation of Rights and Preferences of Convertible Preferred Stock Series B,
attached hereto at Exhibit 4.5. After expiration of the 40-day restricted period
imposed by Regulation S, the holders of the Preferred Stock and Warrants are
entitled to convert any portion of the Preferred Stock into shares of Common
Stock. In addition, the holder of the Preferred Stock and Warrants are
restricted from converting an amount which would cause them to exceed more than
4.99% beneficial ownership of the Registrant's Common Stock determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. If for any reason, while any of the Preferred Stock and Warrants are
outstanding, Regulation S is rescinded or modified so as to preclude the holders
of the Preferred Stock and Warrants from relying on Regulation S, the holders of
the Preferred Stock and Warrants may demand the registration of the Conversion
Shares pursuant to a Registration Rights Agreement (the "Agreement") between the
Registrant and the holders of the Preferred Stock and Warrants.
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No material relationship exists between any of the holders of
the Preferred Stock and Warrants, or the Distributor, and Registrant or any of
its affiliates, any director or officer of Registrant or any associate of any
such director or officer.
In connection with the offering, the Registrant received
proceeds of $1,650,000. The Distributor received a commission of 16,000 shares
of Preferred Stock. No other commission or underwriters discount was paid or
provided to any person.
Forms of the instruments defining the rights of the holders of
the Preferred Stock and the Warrants are filed herewith as Exhibits 4.5 and 4.6,
respectively.
(b) With respect to the conversion of its Series B 8% Convertible
Preferred Stock ("Preferred Shares") described in subparagraph (a) above, the
Registrant issued shares of its common stock as follows:
On February 9, 1998, a Holder converted 1,000 Preferred
Shares, at the conversion rate of $0.438 per share and was issued 22,831
Conversion Shares and 240 Dividend Shares, respectively.
On February 10, 1998, Holder converted 31,719 Preferred
Shares, at the conversion rate of $0.421 per share and was issued 753,420
Conversion Shares and 8,092 Dividend Shares, respectively.
On February 13, 1998, two Holders converted an aggregate 4,500
Preferred Shares, at the conversion rate of $0.432 per share and were issued an
aggregate 104,167 Conversion Shares and an aggregate 1,187 Dividend Shares,
respectively.
On February 17, 1998, a Holder converted 1,000 Preferred
Shares, at the conversion rate of $0.435 per share and was issued 22,989
Conversion Shares and 282 Dividend Shares, respectively.
On February 18, 1998, two Holders converted an aggregate 2,800
Preferred Shares, at the conversion rate of $0.438 per share and were issued an
aggregate 63,927 Conversion Shares and an aggregate 798 Dividend Shares,
respectively.
On February 19, 1998, three Holders converted an aggregate
11,000 Preferred Shares, at the conversion rate of $0.438 per share and were
issued an aggregate 251,141 Conversion Shares and an aggregate 3,192 Dividend
Shares, respectively.
On February 20, 1998, two Holders converted an aggregate
18,000 Preferred Shares, at the conversion rate of $0.446 per share and were
issued an aggregate 403,588 Conversion Shares and an aggregate 5,218 Dividend
Shares, respectively.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHADMOORE WIRELESS GROUP, INC.
By: /s/ Robert W. Moore
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Robert W. Moore, President
Date: February 24, 1998
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EXHIBIT INDEX
Exhibit Number and Brief Description
4.5 Certificate of Designation of Rights and Preferences of Convertible
Preferred Stock Series B of the Company (1)
4.6 Form of Stock Purchase Warrant issued in connection with the Series B
8% Convertible Preferred Stock Offshore Subscription Agreement dated
on or about December 10, 1997 (1)
10.15 Form of Series B 8% Convertible Preferred Stock Offshore Subscription
Agreement dated on or about December 10, 1997 (1)
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(1) Filed herewith.
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EXHIBIT 4.5
CERTIFICATE OF DESIGNATION OF THE
CONVERTIBLE PREFERRED STOCK SERIES B
CHADMOORE WIRELESS GROUP, INC.
The undersigned duly authorized officer of CHADMOORE WIRELESS GROUP,
INC., a Company organized and existing under the Corporation Laws of the State
of Colorado (the "Company"), DOES HEREBY CERTIFY:
That the Certificate of Incorporation of the Company authorized the
creation of up to forty million (40,000,000) shares of the Company's preferred
stock (the "Preferred Stock"); and
That pursuant to the authority conferred upon the Board of Directors
(the "Board") by the Articles of Incorporation of the Company, on December 9,
1997, the Board adopted a resolution creating Series B Preferred Stock
consisting of Two Hundred Nineteen Thousand (219,000) shares of Preferred
Stock, the preferences, limitations, and relative rights of which are set forth
below:
(a) DESIGNATION AND RANK
The designation of the series of Preferred Stock authorized by this
resolution shall be Series B Convertible Preferred Stock (the "Series B
Preferred Stock"). The number of shares of Series B Preferred Stock shall have
a liquidation preference (the "Liquidation Preference") of Ten ($10) Dollars
per share. The Series B Preferred Stock shall rank prior to the Company's
Common Stock and to all other classes and series of equity securities of the
Company now or hereafter authorized, issued, or outstanding, other than any
classes or series of equity securities of the Company ranking on a parity with
or senior to the Series B Preferred Stock as to dividend rights or rights upon
liquidation, winding up or dissolution of the Company. The Series B Preferred
Stock shall be junior to all previous Series of Preferred Stock as to both the
payment of dividends and the distribution of assets upon liquidation,
dissolution, or winding up of the Company, and shall be junior to all
outstanding debt of the Company. The Series B Preferred Stock shall be subject
to the creation of senior stock, parity stock and junior stock to the extent
not expressly prohibited by the Company's Certificate of Incorporation.
(b) DIVIDEND PROVISIONS
(i) The holders of shares of Series B Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefor, prior and in preference to any declaration or payment of any dividend
(payable other than in Common Stock of this Company) on the Common Stock of
this Company, at a per share rate equal to eight (8%) percent per annum of the
amount of the respective Liquidation Preference of the Series B as set forth in
Section (a) hereof. The dividend shall be payable in cash or Common Stock at
the option of the
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Company and shall be calculated at the Conversion Price on the Conversion Date
when converted or quarterly based upon the last day of each quarter with the
valuation determined as if that was a Conversion Date.
(ii) Dividends on Series B Preferred Stock shall be
cumulative.
(c) LIQUIDATION
1. GENERAL. Upon any liquidation, dissolution or winding
up of the Company, the holders of the Series B Preferred Stock shall be
entitled to be paid out of the assets of the Company available for distribution
to stockholders, before any distribution or payment is made upon any Common
Stock or any other stock ranking as to the distribution of assets upon
liquidation, dissolution or winding up of the Company junior to the Series B
Preferred Stock, an amount in cash equal to the amount of any accumulated but
unpaid dividends plus the Liquidation Preference of the Series B Preferred
Stock (collectively, the "Liquidation Value"), and shall not be entitled to any
further payment. Written notice of such liquidation, dissolution or winding
up, stating a payment date, the amount of the payment and the place where the
amounts distributable shall be payable, shall be mailed by certified or
registered mail, return receipt requested, not less than 60 days prior to the
payment date stated therein, to each record holder of any share of Series B
Preferred Stock. Neither the consolidation or merger of the Company into or
with any other company or companies, nor the sale or transfer by the Company of
all or any part of its assets, nor the reduction of the capital stock of the
Company, shall be deemed to be a liquidation, dissolution, or winding up of the
Company for purposes hereof.
2. PARTIAL DISTRIBUTION OF ASSETS. If the amounts
available for distribution with respect to the Series B Preferred Stock and all
other outstanding stock of the Company ranking on a parity with the Series B
Preferred Stock upon liquidation are not sufficient to satisfy the full
liquidation rights of all the outstanding Series B Preferred Stock and stock
ranking on a parity therewith, then the holders of each series of such stock
will share ratably in any such distribution of assets in proportion to the full
respective preferential amount (which in the case of Preferred Stock ranking on
a parity with or senior to Series B may include accumulated dividends) to which
they are entitled.
(d) CONVERSION.
1. GENERAL. Subject to the other provisions hereof
including paragraph (e) herein, each share of the Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after
the later of January 1, 1998 or forty-five (45) days after the date of original
issuance of such share into that number of shares of fully paid and
nonassessable shares of Common Stock which is to be derived from dividing the
Conversion Rate (as defined herein) by the Conversion Price (as defined
herein);
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For purposes of this Certificate, the Conversion Rate shall
mean the Liquidation Preference of $10 per share of Series B Preferred Stock.
For purposes hereof, the Conversion Price shall be determined as of the date
the notice of conversion is received by the Company (the "Conversion Date") and
shall be equal to the average closing bid price of the shares of Common Stock
as quoted by Bloomberg, LP for the five (5) day trading period (the "Average
Price") ending on the day prior to Conversion Date (the "Lookback Period"). If
the difference between the Average Price and the current Market Price (defined
as the closing bid price of the Common Stock on the day prior to the Conversion
Date) is greater than twenty (20%) percent, then the Lookback Period used to
calculate the Average Price shall be increased to twenty (20) trading days. The
closing bid price shall be deemed to be the reported last bid price regular way
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or if the Common Stock is not listed or admitted
to trading on any national securities exchange, the closing bid price as
reported by NASDAQ or such other system then in use, or, if the Common Stock is
not quoted by any such organization, the closing bid price in the
over-the-counter market as furnished by the principal national securities
exchange on which the Common Stock is traded.
In the event that the Common Stock issuable upon conversion of
the Series B Preferred Stock is not delivered within five (5) business days of
receipt by the Company of a valid Notice of Conversion and the Series B
Preferred Stock to be converted is received within three (3) business days from
the Conversion Date, the Company shall pay to the purchaser, in immediately
available funds, upon demand, as liquidated damages for such failure and not as
a penalty, for each $100,000 of the Series B Preferred Stock sought to be
converted, $500 for each of the first ten (10) days and $1,000 per day
thereafter that the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock are not delivered, which liquidated damages shall run
from the sixth business day after the Conversion Date. Any and all payments
required pursuant to this paragraph shall be payable in shares of Common Stock
and not in cash. The number of such shares shall be determined by dividing the
total sum payable by the Conversion Price.
2. LIMITATIONS. The convertibility of the Series B
Preferred Stock shall be restricted such that the portion of the Series B
Preferred Stock which, if otherwise converted, would result in Subscriber or
the Holder being deemed the beneficial owner, in accordance with Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, of 4.99% or more of the then
issued and outstanding Common Stock, shall not be convertible.
3. MECHANICS OF CONVERSION. The holder of the Series B
Preferred Stock shall exercise its right to convert the Series B Preferred
Stock by telecopying an executed and completed notice of conversion to the
Company and delivering the original notice of conversion and the certificate
representing the Series B Preferred Stock to the Company by express courier
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within three (3) business days. Each business date on which a notice of
conversion is telecopied to and received by the Company in accordance with the
provisions hereof shall be deemed a Conversion Date. The Company will use its
best efforts to transmit the certificates representing shares of Common Stock
issuable upon conversion of any Series B Preferred Stock (together with the
certificates representing the Series B Preferred Stock not so converted) to the
holder via express courier, by electronic transfer or otherwise within five (5)
business days after the Conversion Date if the Company has received the
original notice of conversion and Series B Preferred Stock certificate being so
converted by such date. The person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such date. If
certificates for Common Stock are not delivered within five (5) business days
of actual receipt of a duly completed election to convert and the certificate
to be converted is not recovered within three (3) business days, then the
purchaser of the Series B Preferred Stock will be entitled to revoke the
relevant notice of conversion by delivering a notice to such effect to the
Company whereupon the Company and the purchaser shall each be restored to their
respective positions immediately prior to the delivery of such notice of
conversion.
4. ADJUSTMENT PROVISIONS. The number of shares of Common
Stock issuable upon the conversion of the Series B Preferred Stock and the
Conversion Price shall be subject to adjustment as follows:
(i) In case the Company shall (i) pay a dividend
on Common Stock in Common Stock or securities convertible into, exchangeable
for or otherwise entitling a holder thereof to receive Common Stock, (ii)
declare a dividend payable in cash on its Common Stock and at substantially the
same time offer its shareholder a right to purchase new Common Stock (or
securities convertible into, exchangeable for or other entitling a holder
thereof to receive Common Stock) from proceeds of such dividend (all Common
Stock so issued shall be deemed to have been issued as a stock dividend), (iii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iv) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (v) issue by
reclassification of its Common Stock any shares of Common Stock of the Company,
the number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock immediately prior thereto shall be adjusted so that the holders
of the Series B Preferred Stock shall be entitled to receive after the
happening of any of the events described above that number and kind of shares
as the holders would have received had such Series B Preferred Stock been
converted immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this subdivision shall
become effective immediately after the close of business on the record date in
the case of a stock dividend and shall become effective immediately after the
close of business on the record date in the case of a stock split, subdivision,
combination or reclassification.
(ii) Any adjustment in the numbers of shares of
Common Stock issuable hereunder otherwise required to be made by this Section
(d)(4) will not have to be made
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if such adjustment would not require an increase or decrease in one percent
(1%) or more in the number of shares of Common Stock issuable upon conversion
of the Series B Preferred Stock. No adjustment in the Conversion Rate will be
made for the issuance of shares of capital stock to directors, employees or
independent contractors pursuant to the Company's or any of its subsidiaries'
stock option, stock ownership or other benefit plans or arrangements or trusts
related thereto or for issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of dividends or interest payable on
securities of the Company and the investment of additional optional amounts in
shares of Common Stock under such plan.
(iii) Whenever the number of shares of Common Stock
issuable upon the conversion of the Series B Preferred Stock is adjusted, as
herein provided, the Conversion Price shall be adjusted (to the nearest cent)
by multiplying such Conversion Price immediately prior to such adjustment by a
fraction of which the numerator shall be the number of shares of Common Stock
issuable upon the exercise of each share of Series B Preferred Stock
immediately prior to such adjustment, and of which the denominator shall be the
number of shares of Common Stock issuable immediately thereafter.
5. MERGERS, ETC. In the case of any (i) consolidation or
merger of the Company into any entity (other than a consolidation or merger
that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), (ii) sale,
transfer, lease or conveyance of all or substantially all of the assets of the
Company as an entirety or substantially as an entirety, or (iii)
reclassification, capital reorganization or change of the Common Stock (other
than solely a change in par value, or from par value to no par value), in each
case as a result of which shares of Common Stock shall be converted into the
right to receive stock, securities or other property (including cash or any
combination thereof), each holder of a share of Series B Preferred Stock then
outstanding shall have the right thereafter to convert such share only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer, capital reorganization or
reclassification by a holder of the number of shares of Common Stock of the
Company into which such shares of Series B Preferred Stock would have been
converted immediately prior to such consolidation, merger, sale, transfer,
capital reorganization or reclassification, assuming such holder (A) is not an
entity with which the Company consolidated or into which such sale or transfer
was made, as the case may be ("constituent entity"), or an affiliate of the
constituent entity, and (B) failed to exercise his or her rights of election,
if any, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer (provided that if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Company held immediately prior to such consolidation,
merger, sale or transfer by other than a constituent entity or an affiliate
thereof and in respect of which the Company merged into the Company or to which
such rights or election shall not have been
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exercised ("non-electing share"), then for the purpose of this Section (d)(5)
the kind and amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). If necessary, appropriate adjustment shall be made in the
application of the provision set forth herein with respect to the rights and
interest thereafter of the holders of shares of Series B Preferred Stock, to
the end that the provisions set forth herein shall thereafter correspondingly
be made applicable, as nearly as may reasonably be, in relation to any shares
of stock or other securities or property thereafter deliverable on the
conversion of the shares. The above provisions shall similarly apply to
successive consolidations, mergers, sales, transfers, capital reorganizations
and reclassifications. The Company shall not effect any such consolidation,
merger, sale or transfer unless prior to or simultaneously with the
consummation thereof the successor Company or entity (if other than the
Company) resulting from such consolidation, merger, sale or transfer shall
assume, by written instrument, the obligation to deliver to the holder of each
share of Series B Preferred Stock such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holder may be entitled to
receive under this Section (d)(5).
6. NO IMPAIRMENT. This Company will not, by amendment of
its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section (d) and in taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of Series B Preferred Stock against
impairment; provided, however, that the Company may reincorporate under the
laws of Nevada; but provided, further, that the terms of such reincorporation
shall cause the holders of the Series B Preferred Stock to receive replacement
preferred stock with rights as substantially similar to those replaced as is
reasonably possible under the laws of Nevada.
7. FRACTIONAL SHARES. Any fractional shares issuable
upon conversion of the Series B Preferred Stock shall be rounded to the nearest
whole share or, at the election of the Company, the Company shall pay the
holder thereof an amount in cash equal to the closing bid price thereof.
Whether or not fractional shares are issuable upon conversion shall be
determined on the basis of the total number of shares of Series B Preferred
Stock the holder is due at the time converting the Series B Preferred Stock to
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
8. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price of Series B Preferred
Stock pursuant to Section (d)(4), the Company, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of such Series B
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Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment are
based. The Company shall, upon written request at any time of any holder of
Series B Preferred Stock, furnish or cause to be furnished to such holder a
certificate setting forth (A) the Conversion Price at the time in effect, and
(B) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Series B Preferred Stock.
9. RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION.
The Company shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of shares of Series B Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Series B Preferred Stock. If at any time the
number of authorized but unissued shares of Common Stock shall be insufficient
to satisfy the conversion rights hereunder, in addition to such other remedies
as shall be available to the holder of Series B Preferred Stock, the Company
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
10. STATUS OF CONVERTED SHARES. In the event any shares
of Series B Preferred Stock shall be converted pursuant to Section (d) hereof,
the shares so converted shall be canceled, and shall not be issuable by the
Company, and shall have the status of authorized but unissued shares of
Preferred Stock and may be reissued by the Company at anytime as shares of any
series of Preferred Stock other than Series B Preferred Stock.
(e) REDEMPTION
1. PERMISSIVE REDEMPTION BY THE COMPANY. The Company has
the right to redeem the Series B Preferred Stock, in whole or in part, in cash
at Liquidation Preference of the Series B Preferred Stock plus accrued
dividends at any time by thereafter providing thirty (30) days prior written
notice to the holders of the Series B Preferred Stock. The Company shall,
within two (2) days after the Redemption Date (which shall be defined as the
thirtieth (30th) day after such notice is given), wire transfer the appropriate
amount of funds into an escrow account. On the Redemption Date, the Holder's
right to convert the Series B Preferred Stock shall terminate and be canceled
immediately. In the event the Company does not wire transfer the appropriate
amount of funds into the escrow account within the two (2) day period, then it
shall have waived its right to redeem the Series B Preferred Stock at any time.
In the event of any partial redemption, the Liquidation Preference of the
Series B Preferred Stock shall be reduced by the amount of Liquidation
Preference paid by the Company in respect of such redemption.
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2. NOTICE OF REDEMPTION. Notice of any redemption,
setting forth (i) the Redemption Date and the place fixed for redemption, (ii)
the Redemption Price, (iii) a statement that dividends on the shares of Series
B Preferred Stock to be redeemed will cease to accrue on such Redemption Date,
and (iv) a statement of or reference to the conversion right set forth in
Section (d) hereof (including that the right to give a notice of conversion in
respect of any shares to be redeemed shall terminate on the of Redemption
Date), shall be mailed, postage prepaid, at least thirty (30) days prior to the
Redemption Date to each holder of record of the Series B Preferred Stock to be
redeemed at their address as the same shall appear on the books of the Company.
If fewer than all the shares of the Series B Preferred Stock owned by such
holder are then to be redeemed, the notice shall specify the number of shares
thereof that are to be redeemed and, if practicable, the numbers of the
certificates representing such shares.
3. MECHANICS OF REDEMPTION. At any time up to the date
immediately prior to the Redemption Date, the holders shall have the right to
convert the Series B Preferred Stock into Common Stock as more fully provided
in Section (d) hereof. Unless so converted, at the close of business on the
Redemption Date, subject to the conditions described in paragraph (e)(1)
herein, each share of Series B Preferred Stock to be redeemed shall be
automatically canceled and converted into a right to receive the Redemption
Price, and all rights of the Series B Preferred Stock, including the right to
conversion shall cease without further action. Immediately following the
Redemption Date, holders of the Series B Preferred Stock shall surrender their
certificates at the office of the Company or any transfer agent therefor, duly
endorsed and with signature guaranteed.
4. ADJUSTMENT OF CALL PRICE. The Redemption Price shall
be adjusted proportionally upon any adjustment of the Conversion Price under
Section (d)(4) hereof in the event of any stock dividend, stock split,
combination of shares or similar event.
5. RETIRED SHARES. Shares of Series B Preferred Stock
redeemed, purchased or otherwise acquired for value by the Company, including
by redemption in accordance with Section (e) hereof, shall after such
acquisition, have the status of authorized and unissued shares of Preferred
Stock and may be reissued by the Company at any time as shares of any Series of
Preferred Stock other than as shares of Series B Preferred Stock.
(f) NOTICES.
1. UPON THE COMPANY. Any notice pursuant to the terms
thereof to be given or made by a holder of shares of Series B Preferred Stock
to or upon the Company shall be sufficiently given or made if sent by facsimile
or by mail, postage prepaid, addressed (until another address is sent by the
Company to the holder) as follows:
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Chadmoore Wireless Group, Inc.
4720 Polaris Street
Las Vegas, Nevada 89103
2. UPON SERIES B PREFERRED STOCK HOLDERS. Any notice
pursuant to the terms hereof to be given or made by the Company to or upon any
holder of shares of Series B Preferred Stock shall be sufficiently given or
made if sent by mail, postage Prepaid, addressed (until another address is sent
by the holder to the Company) to the address of such holder on the records of
the Company.
IN WITNESS WHEREOF, Chadmoore Wireless Group, Inc., has caused
this Certificate to be signed by its President, and attested to by its
Secretary, this 9th day of December, 1997.
CHADMOORE WIRELESS GROUP, INC.
By: /s/ Robert W. Moore
-------------------------------
Robert W. Moore, President
Attest:
/s/ Jan S. Zwaik
- -------------------------------
Jan S. Zwaik, Treasurer
9
<PAGE> 1
EXHIBIT 4.6
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER (THE "SECURITIES
ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE UNITED STATES (AS THAT TERM IS DEFINED IN REGULATION S
PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS
DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
SECURITIES ACT, OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase ______ Shares of Common Stock of
CHADMOORE WIRELESS GROUP, INC.
THIS CERTIFIES that, for value received, ___________________
(the Investor), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after one day after the date hereof
and on or prior to December __, 2002 (the Termination Date) but not thereafter,
to subscribe for and purchase from CHADMOORE WIRELESS GROUP, INC., a Colorado
corporation (the "Company"), ___________________ (______) shares of Common
Stock (the "Warrant Shares"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant shall be equal to the closing bid
price of the shares of Common Stock on the NASDAQ OTC Bulletin Board as quoted
by Bloomberg, LP on the Closing Date (defined below). The closing bid price
shall be deemed to be the reported last bid price regular way on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, the closing bid price as reported by NASDAQ or
such other system then in use, or, if the Common Stock is not quoted by any
such organization, the closing bid price in the over-the-counter market as
furnished by the principal national securities exchange on which the Common
Stock is traded. The Exercise Price and the number of shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein. This
Warrant is being issued in connection with the Series B 8% Convertible
Preferred Stock Offshore Agreement dated on or about December ___, 1997 (the
"Agreement") between the Company and Investor and is subject to its terms. In
the event of any conflict between the terms of this Warrant and the Agreement,
the Agreement shall control.
1
<PAGE> 2
1. Title of Warrant. Prior to the expiration hereof and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.
2. Authorization of Shares. The Company covenants that
all shares of Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented by
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
3. Exercise of Warrant. Exercise of the purchase rights
represented by this Warrant may be made at any time or times after forty-five
(45) days of the date hereof, in whole or in part, before the close of business
on the Termination Date, or such earlier date on which this Warrant may
terminate as provided in paragraph 12 below, by the surrender of this Warrant
and the Notice of Exercise annexed hereto duly executed, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered holder hereof at the address of such holder
appearing on the books of the Company) and upon payment of the Exercise Price
of the shares thereby purchased; whereupon the holder of this Warrant shall be
entitled to receive a certificate for the number of shares of Common Stock so
purchased. Certificates for shares purchased hereunder shall be delivered to
the holder hereof within five business days after the date on which this
Warrant shall have been exercised as aforesaid. Payment of the Exercise Price
of the shares may be by certified check or cashier's check or by wire transfer
to an account designated by the Company in an amount equal to the Exercise
Price multiplied by the number of shares being purchased.
4. No Fractional Shares or Scrip. No fractional shares
or scrip representing fractional shares shall be issued upon the exercise of
this Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates
for shares of Common Stock upon the exercise of this Warrant shall be made
without charge to the holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the holder of this Warrant or in such name or names as
may be directed by the holder of this Warrant; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a name other
than the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that upon any transfer
involved in the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. Restrictions on Transfer. On exercise of the Warrant,
the Company shall require the person exercising to certify that the holder of
this Warrant is not a United States
2
<PAGE> 3
Person as defined in the Offshore Subscription Agreement executed concurrently
herewith, and is not exercising the Warrant on behalf of a United States
Person. If the Company does not receive such certification, such person shall
be required to provide a written opinion of their United States counsel,
acceptable to the Company stating that the Warrant and the securities delivered
upon exercise have been registered under the Securities Act or are exempt from
registration under the Securities Act. The holder of the Warrant agrees to
comply with the procedures the Company intends to adopt to ensure that the
Warrants offered pursuant to Regulation S will not be exercised within the
United States and that the securities may not be delivered within the United
States upon exercise, other than in offering deemed to meet the definition of
an offshore transaction under Regulation S, unless they are registered under
the Securities Act or are exempt from registration. Without limitation to the
foregoing, the Holder acknowledges and agrees that Holder is familiar with the
terms of Regulation S, and, in particular, with the provisions of Item 902 of
such Regulation S which pertain to the duration of the Restricted Period
applicable to the shares of Common Stock purchased hereunder.
The Holder of the Warrant agrees and acknowledges that the
Warrant is being purchased for the holder's own account, for investment
purposes only, and not for the account of any other person, and not with a view
to distribution, assignment, pledge or resale to others or to fractionalization
in whole or in part. The holder further represents, warrants and agrees as
follows: no other person has or will have a direct or indirect beneficial
interest in this Warrant and the holder will not sell, hypothecate or otherwise
transfer the Warrant except in accordance with the Securities Act and
Regulation S thereunder and applicable state securities laws or unless, in the
opinion of counsel for the holder acceptable to the Company, an exemption from
the registration requirements of the Securities Act and such laws is available.
7. Closing of Books. The Company will at no time close
its shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
8. No Rights as Shareholder until Exercise. This Warrant
does not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise thereof. If, however, at the
time of the surrender of this Warrant and purchase the holder hereof shall be
entitled to exercise this Warrant, the shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been exercised.
9. Assignment and Transfer of Warrant. This Warrant may
be assigned by the surrender of this Warrant and the Assignment Form annexed
hereto duly executed at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books
of the Company); provided, however, that this Warrant may not be resold or
otherwise transferred except with the prior consent of the Company and (i) in a
transaction registered under the Securities Act, or (ii) in a transaction
pursuant to an exemption, if available, from such registration and whereby, if
requested by the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that the
transaction is so exempt.
3
<PAGE> 4
10. Loss, Theft, Destruction or Mutilation of Warrant.
The Company represents and warrants that upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Warrant or stock certificate, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of this Warrant or
stock certificate.
11. Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday.
12. Effect of Certain Events.
(a) If at any time the Company proposes (i) to sell or
otherwise convey all or substantially all of its assets, or (ii) to effect a
transaction (by merger or otherwise) in which more than 50% of the voting power
of the Company is disposed of (collectively, a Sale or Merger Transaction), in
which the consideration to be received by the Company or its shareholders
consists solely of cash, the Company shall give the holder of this Warrant
thirty (30) days' notice of the proposed effective date of the transaction
specifying that the Warrant shall terminate if the Warrant has not been
exercised by the effective date of the transaction.
(b) In case the Company shall at any time effect a Sale
or Merger Transaction in which the consideration to be received by the Company
or its shareholders consists in part of consideration other than cash, the
holder of this Warrant shall have the right thereafter to purchase, by exercise
of this Warrant and payment of the aggregate Exercise Price in effect
immediately prior to such action, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such transaction had this Warrant been exercised
immediately prior thereto.
(c) "Piggy-Back" Registration. The Holder of this Warrant
shall have the right to include all of the shares of Common Stock underlying
this Warrant (the "Registrable Securities") as part of any registration of
securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to
Form S-8) and must be notified in writing of such filing; provided, however,
that the holder of this Warrant agrees it shall not have any piggy-back
registration rights pursuant to this Section 12(c) if the shares of Common
Stock underlying this Warrant are freely tradable in the United States pursuant
to the provisions of Regulation S. Holder shall have five (5) business days to
notify the Company in writing as to whether the Company is to include Holder or
not include Holder as part of the registration; provided, however, that if any
registration pursuant to this Section shall be underwritten, in whole or in
part, the Company may require that the Registrable Securities requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the underwriter evidenced in
writing of such
4
<PAGE> 5
offering only a limited number of Registrable Securities should be included in
such offering, or no such shares should be included, the Holder, and all other
selling stockholders, shall be limited to registering such proportion of their
respective shares as shall equal the proportion that the number of shares of
selling stockholders permitted to be registered by the underwriter in such
offering bears to the total number of all shares then held by all selling
stockholders desiring to participate in such offering. Those Registrable
Securities which are excluded from an underwritten offering pursuant to the
foregoing provisions of this Section (and all other Registrable Securities held
by he selling stockholders) shall be withheld from the market by the Holders
thereof for a period, not to exceed one hundred eighty (180) days, which the
underwriter may reasonably determine is necessary in order to effect such
underwritten offering. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 12(c) prior to the
effectiveness of such registration whether or not any Warrant holder elected to
include securities in such registration. All registration expenses incurred by
the Company in complying with this Section 12(c) shall be paid by the Company,
exclusive of underwriting discounts, commissions and legal fees and expenses
for counsel to the holders of the Warrants.
13. Adjustments of Exercise Price and Number of Warrant
Shares. The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following.
In case the Company shall (i) declare or pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, the number of Warrant
Shares purchasable upon exercise of this Warrant immediately prior thereto
shall be adjusted so that the holder of this Warrant shall be entitled to
receive the kind and number of Warrant Shares or other securities of the
Company which he would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
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<PAGE> 6
14. Voluntary Adjustment by the Company. The Company may
at its discretion, at any time during the term of this Warrant, reduce the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant
shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this Warrant notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities or
property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth computation by which
such adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
16. Authorized Shares. The Company covenants that during
the period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for shares of the Company's Common Stock upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as
may be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of
any requirements of the OTC Bulletin Board or any domestic securities exchange
upon which the Common Stock may be listed.
17. Miscellaneous.
(a) Issue Date; Jurisdiction. The provisions of this
Warrant shall be construed and shall be given effect in all respects as if it
had been issued and delivered by the Company on the date hereof. This Warrant
shall be binding upon any successors or assigns of the Company. This Warrant
shall constitute a contract under the laws and jurisdictions of New York and
for all purposes shall be construed in accordance with and governed by the laws
of said state without regard to its conflict of law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant, if not registered, may
have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any
provisions hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the same
is sought.
(d) Notices. Any notice, request or other document
required or permitted to be given or delivered to the holders hereof of the
Company shall be delivered or shall be sent by
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<PAGE> 7
certified or registered mail, postage prepaid, to each such holder at its
address as shown on the books of the Company or to the Company at the address
set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: December 10, 1997
CHADMOORE WIRELESS GROUP,
INC.
By:
---------------------------
Title:
------------------------
7
<PAGE> 8
NOTICE OF EXERCISE
To: CHADMOORE WIRELESS GROUP, INC.
(1) The undersigned hereby elects to purchase ________
shares of Common Stock of CHADMOORE WIRELESS GROUP, INC. pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
(2) By signing below, the undersigned hereby certifies
that it is not a U.S. person as defined in the Offshore Subscription Agreement,
and that this Warrant is not being exercised on behalf of a U.S. person. In
lieu of this certification, the undersigned has attached hereto an opinion of
its United States counsel, acceptable to the Company, stating that the shares
of Common Stock to be issued upon exercise of this Warrant have been registered
under the Securities Act of 1933 (the "Act"), or that an exemption from
registration under the Securities Act is available for such shares of Common
Stock.
(3) Please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned or in
such other name as is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
-------------------------------
Signature
NOTE: Signature must conform in all respects to holder's name as specified on
the face of the attached warrant.
8
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, 1997
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
9
<PAGE> 1
EXHIBIT 10.15
THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, TOGETHER WITH THE REGULATIONS PROMULGATED
THEREUNDER (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE UNITED STATES (AS THAT TERM IS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S.
PERSON (AS THAT TERM IS DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
SUBSCRIPTION AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE
RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
OFFSHORE SUBSCRIPTION AGREEMENT
SERIES B 8% CONVERTIBLE PREFERRED STOCK
CHADMOORE WIRELESS GROUP, INC.
THIS OFFSHORE SUBSCRIPTION AGREEMENT (this "Agreement"), dated
as of the 10th day of December, 1997, is executed in reliance upon the
transaction exemption afforded by Regulation S, as amended ("Regulation S")
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (together with the regulations promulgated
thereunder, (the "Securities Act").
This Agreement has been executed by the undersigned in
connection with the private placement of the Series B Convertible Preferred
Stock (hereinafter referred to as the "Preferred Stock") of CHADMOORE WIRELESS
GROUP, INC. (NASDAQ OTC Bulletin Board symbol "MOOR"), located at 4720 Polaris
Street, Las Vegas, NV 89103, a corporation organized under the laws of
Colorado, USA (hereinafter referred to as the "Company"). The terms on which
the Preferred Stock may be converted into common stock of the Company (the
"Common Stock") and the other terms of the Preferred Stock are set forth in a
Certificate of Designation of the Series B Convertible Preferred Stock in the
form of Exhibit A annexed hereto (the "Certificate of Designation"). In
addition, subject to the terms and conditions set forth below, the Company will
sell to Subscriber ______________________ (_______) warrants (the "Warrants")
to purchase Common Stock, as per the terms of the Stock Purchase Warrant in the
form of Exhibit B annexed hereto (as amended, supplemented or otherwise
modified from time to time, the "Stock Purchase Warrant"). This Agreement, the
offer and sale of the Preferred Stock and Warrants, and of the Common Stock
underlying of the Preferred Stock and Warrants (the "Underlying Shares", and,
together with the Preferred Stock and Warrants, collectively, the
"Securities"), are being made in reliance upon the provisions of Regulation S.
<PAGE> 2
The undersigned, ______________________, located at
___________________, _________________, a corporation organized under the laws
of ________, a non-USA jurisdiction (hereinafter referred to as "Subscriber"),
hereby represents and warrants to, and agrees with the Company as follows:
1. Agreement to Subscribe; Purchase Price.
(a) Purchase and Sale of Preferred Stock. Upon the terms
and subject to the conditions set forth herein, the Company shall issue and
sell to Subscriber, and Subscriber will buy from the Company,
_______________________________ (_______) shares of Series B Preferred Stock,
for an aggregate purchase price of _________________________________
(US$_________) United States Dollars (as such amounts shall be reduced from
time to time by conversion or redemption of such shares as provided herein and
in the Certificate of Designation, (the "Purchase Price"). Each share of
Preferred Stock so purchased shall have a liquidation preference of Ten (US$10)
United States Dollars.
(b) Form of Payment. Subscriber shall pay the Purchase
Price by delivering good funds in United States Dollars by wire transfer to
Goldstein, Goldstein & Reis, LLP, Escrow Agent, against delivery of the
original Preferred Stock. The parties have entered into an Escrow Agreement
annexed hereto as Exhibit C (as amended, supplemented or otherwise modified
from time to time, the "Escrow Agreement"). The Purchase Price shall be paid to
the Company as provided in such Escrow Agreement
(c) Wire Instructions. Wire instructions for Goldstein,
Goldstein & Reis, LLC are as follows:
Chase Manhattan Bank, N.A.
ABA No. 021000021
For the Account of:
United States Trust Company of New York
Account No. 920-1-073195
In favor of:
Goldstein, Goldstein & Reis, LLP Attorney Escrow Account
Account No. 59-01383
2. Representation and Warranties of Subscriber.
Subscriber acknowledges, represents, warrants and agrees as follows:
(a) Organizations and Authorization. Subscriber is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all
2
<PAGE> 3
requisite power and authority to purchase and hold the Securities. This
Agreement has been duly authorized, executed and delivered by Subscriber. The
decision to invest and the execution and delivery of this Agreement by
Subscriber, the performance by Subscriber of its obligations hereunder and the
consummation by Subscriber of the transactions contemplated hereby have been
duly authorized and requires no other proceedings, consent or authorization of
Subscriber or its Board of Directors, stockholders, partners, managers or
others, as the case may be. Subscriber's signatory has all right, power and
authority to execute and deliver this Agreement on behalf of Subscriber. This
Agreement has been duly executed and delivered by Subscriber and, assuming the
execution and delivery hereof and acceptance thereof by the Company, will
constitute the legal, valid and binding obligations of Subscriber, enforceable
against Subscriber in accordance with its terms.
(b) Evaluation of Risks. Subscriber has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting its interests in connection with
this Agreement and the transactions contemplated hereby. It recognizes that its
investment in the Company involves a high degree of risk. Subscriber can afford
the complete loss of Subscriber's investment, and Subscriber will have
sufficient capital to enter into and perform this Agreement and to purchase the
Preferred Stock to be sold hereunder.
(c) Foreign Laws. This Agreement and the consummation of
the transactions contemplated hereby comply with all applicable laws of
Subscriber's jurisdiction, including (i) the legal requirements within such
jurisdiction for the purchase of the Securities and other applicable securities
laws (if any), (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consent that may need to be obtained,
and (iv) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, sale or transfer of any Securities.
(d) Independent Counsel. Subscriber acknowledges that it
has been advised to consult with its own attorney regarding legal matters
concerning the Company and to consult with its tax advisor regarding the tax
consequences of acquiring the Securities.
(e) Disclosure Documentation. Subscriber has received and
reviewed copies of the Company's reports filed under the Securities Exchange
Act of 1934, as amended (together with the regulations promulgated thereunder,
the "1934 Act"), including Form 10-KSBs, Form 10-QSBs and Form 8-Ks filed by
the Company for at least twelve (12) months immediately preceding the Closing
Date (collectively, the "SEC Filings"). Except for the SEC Filings, Subscriber
is not relying on any other information relating to the offer and sale of the
Securities. Subscriber acknowledges that the Company has offered to make
available any additional public information that Subscriber may reasonably
request, including technical information, and other material information about
the Company and Subscriber has been offered Company's full and unconditional
cooperation in making such information available to Subscriber and acknowledges
that the Company has recommended that Subscriber request and review such
information prior to
3
<PAGE> 4
making an investment decision. No oral or written representations have been
made, or oral or written information furnished to Subscriber or its advisors,
if any, in connection with the offering of the Securities which were or are in
any way inconsistent with the SEC Filings.
(f) Opportunity to Ask Questions. Subscriber has had a
reasonable opportunity to review the SEC Filings, obtain such additional
information concerning the Company and its business, and to ask questions of
and receive answers from the Company concerning the Company, the offering
hereunder and the Securities, as Subscriber deems necessary to make an informed
investment decision and to evaluate the merits and risks of the investments
contemplated by this Agreement, and, without limitation to Section 2(e) above,
all such questions, if any, have been answered to the full satisfaction of
Subscriber.
(g) SEC Filings Constitute Sole Representations. Without
limitation to Sections 2(e) and (f) above, except as set forth in the SEC
Filings, no representations or warranties have been made to Subscriber by (a)
the Company or any agent, employee or affiliate of the Company or (b) any other
person, and in entering into this transaction Subscriber is not relying upon
any information, other than that contained in the SEC Filings and the results
of independent investigation by Subscriber.
(h) Subscriber is Accredited Investor. Subscriber is an
"Accredited Investor" (as defined in Regulation D of the Securities Act).
Subscriber is purchasing the Securities for its own account. Subscriber has no
present intention to sell any Securities, and Subscriber has no present
arrangement (whether or not legally binding) at any time to sell any Securities
to or through any person or entity.
(i) Registration. Subscriber understands that the
Securities have not been registered under the Securities Act or any other
securities laws but are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of Federal and State securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Subscriber set forth herein in order to determine the applicability of such
exemptions and the suitability of Subscriber to acquire the Securities.
(j) Offering Outside the United States. Subscriber is not
a "U.S. Person" as defined in Regulation S.(1) At the time the buy order for
this transaction was originated,
- --------------------
(1) Pursuant to Regulation S, a "U.S. Person" means: (i) any natural
person resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States, (iii) any estate
of which any executor or administrator is a U.S. Person, (iv) any trust of
which any trustee is a U.S. Person, (v) any agency or branch of a foreign
entity located in the United States, (vi) any non-discretionary account or
similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if any individual resident in the United
States), (vii) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized, incorporated or
(if an individual resident in the United States), or (viii) any partnership or
corporation if organized under the laws of any foreign jurisdiction and formed
by any U.S. Person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or incorporated and
owned by accredited investors (as defined in Rule 501(a) under the Securities
Act) who are not natural persons, estates or trusts.
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Subscriber was outside the United States and no offer to purchase the
Securities was made in the United States. Subscriber agrees not to reoffer or
sell the Securities, or to cause any transferee permitted hereunder to reoffer
or sell the Securities, within the United States, or for the account or benefit
of a U.S. Person, (i) as part of the distribution of the Securities at any
time, or (ii) otherwise, until at least forty (40) days after the Securities
are issued, and, in either case, only in a transaction meeting the requirements
of Regulation S under the Securities Act, including without limitation, where
the offer (i) is not made to a person in the United States and either (A) at
the time the buy order is originated, the Subscriber is outside the United
States or the Company and any person acting on its behalf reasonably believes
that the Subscriber is outside the United States, or (B) the transaction is
executed in, on or through the facilities of a designated offshore securities
market and neither the seller nor any person acting on its behalf knows that
the transaction has been pre-arranged with a buyer in the United States; and
(ii) no directed selling efforts shall be made in the United States by the
Subscriber, an affiliate or any person acting on their behalf, or in a
transaction registered under the Securities Act or pursuant to an exemption
from such registration. The address set forth by Subscriber's name in Section
12(i) hereof is Subscriber's true and correct domicile, which address is not
within the United States. Subscriber has no present intention of becoming a
resident of any other jurisdiction. This Agreement has been executed and sent
to the Company by Subscriber from a location outside the United States, and at
such time and throughout the term of this Agreement Subscriber was and will be
outside the United States. If Subscriber is a corporation, partnership, trust
or other entity, (i) it has its principal place of business at the address set
forth in Section 12(i) hereof, (ii) is not organized under the laws of any
jurisdiction within the United States, and (iii) was not formed by a U.S.
Person for the purpose of investing in Regulation S securities. Subscriber is
not an affiliate of the Company. Subscriber expressly acknowledges that no
offer to sell any of the Securities was made to Subscriber in the United States
and that any purchase by, or delivery to, Subscriber of any Common Stock and
Warrants will be made outside the United States. Subscriber has no reason to
believe that Subscriber's acquisition of Securities as contemplated hereby will
not constitute an "offshore transaction" (as such term is used in Regulation
S).
(k) Investment Intent. Without limiting its ability to
resell the Securities pursuant to an effective registration statement,
Subscriber is acquiring the Securities solely for its own account and not with
a view to the distribution, assignment or resale to others to or for the
benefit or account of any U.S. Person, in whole or in part. Subscriber
understands and agrees that it may bear the economic risk of its investment in
the Securities for an indefinite period of time. Subscriber does not now have
any short position or hedge position in the Company's Common Stock, nor will
Subscriber make any promissory notes and/or pledges using the Securities as
collateral. Subscriber understands that the securities are being issued in
reliance upon the exemption afforded by Regulation S. As a result, the
securities may not be transferred
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except as permitted under various exemptions contained in the Securities Act or
upon satisfaction of the registration and prospectus delivery requirements of
the Securities Act. Subscriber acknowledges that it must bear the economic risk
of its investment in the securities for an indefinite period of time,
particularly since the Company has no obligation to register the securities
under the Securities Act except in the limited circumstances contemplated by
the Registration Rights Agreement between Subscriber and Company in the form of
Exhibit E hereto. Subscriber is experienced in evaluating companies such as the
Company, is able to protect its own interests in the transactions contemplated
by this Agreement and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Company.
(l) Transfer Restrictions/Holding Period/Redemption.
(i) The transaction restriction in connection
with this offshore offer and sale restricts Subscriber from
offering and selling to U.S. Persons, or for the account or
benefit of a U.S. Person, for a period of time. Rule 903(c)(2)
governs a forty (40) day transaction restriction and is
defined herein as the "Restricted Period." In addition, no
conversion of Preferred Stock shall be made from the date
hereof to the later to occur of (A) January 2, 1998 and (B)
the date occurring forty-five (45) days after the Closing Date
(the "Holding Period"). After the expiration of the Holding
Period up to one hundred (100%) percent of the Preferred Stock
shall be convertible into Underlying Shares at the option of
Subscriber in accordance with the terms hereof and of the
Certificate of Designation.
(ii) Stop transfer instructions have been or will
be placed on any certificates or other documents evidencing
any Securities so as to restrict the resale, pledge,
hypothecation or other transfer thereof in accordance with the
provisions hereof and the provisions of Regulation S.
(iii) The Company may at its sole discretion, and
in accordance with the Certificate of Designation, redeem the
Preferred Stock, in whole or in part, at any time by payment
to the Subscriber of all or a portion of the then-current
Liquidation Preference thereof, together with all, or a
corresponding ratable portion of, then-accrued dividends
thereunder. Upon any such partial redemption of Preferred
Stock, the Liquidation Preference thereof shall be reduced by
the amount of Liquidation Preference paid to Subscriber in
connection therewith.
(m) Transfer Restrictions Regarding Securities. Upon
conversion of any part or all of the Preferred Stock at any time after the
Holding Period, if the holder of the Preferred Stock being converted makes the
certification, pursuant to a Notice of Conversion in the form attached hereto
as Exhibit D (a "Notice of Conversion"), that such holder has complied with all
of the requirements of Regulation S and such other requirements as set forth
herein, then the Company shall cause the Transfer Agent to deliver Underlying
Shares upon such conversion without a restrictive legend or stop transfer
instructions, otherwise the Underlying Shares shall be
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considered restricted securities and certificates representing such Underlying
Shares shall contain restrictive legends and stop transfer instructions will be
placed with the Transfer Agent regarding such Underlying Shares, including
without limitation the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH
THE REGULATIONS PROMULGATED THEREUNDER, THE "SECURITIES ACT"), AND MAY
NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHIN THE UNITED STATES (AS THAT TERM IS DEFINED IN REGULATION S
PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT
TERM IS DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
The certificates representing Securities, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state securities law.
Subscriber understands that the Company is the issuer of the
securities which are the subject of this Agreement, and that, for purposes of
Regulation S, a "distributor" is any underwriter, dealer or other person who
participates, pursuant to a contractual arrangement, in the distribution of
securities offered or sold in reliance on Regulation S and that an "affiliate"
is any partner, officer, director or any person directly or indirectly
controlling, controlled by or under common control with the person in question.
In this regard, Subscriber shall not, during the Restricted Period, act as a
distributor, either directly or through any affiliate, nor shall Subscriber
sell, transfer, hypothecate or otherwise convey any of the Securities or
interest therein, other than in accordance with this Agreement. Subscriber
shall not at any time sell, transfer, hypothecate or otherwise convey any of
the Securities or interest therein to a distributor, unless Subscriber shall
have first notified such distributor that such Securities are governed by
Regulation S, and such distributor has agreed to comply with any applicable
terms of Regulation S with respect to such Securities.
Anything to the contrary appearing in this Agreement or any
document contemplated hereby notwithstanding, the maximum number of Underlying
Shares sold on any day by or on behalf of Subscriber, directly or indirectly,
shall not exceed ______ (__%) percent of the total number of shares of Common
Stock traded on the NASDAQ OTC Bulletin Board on the day prior to each
Conversion Date.
(n) Registration Rights. The parties have entered into a
Registration Rights Agreement (Exhibit E).
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(o) No Advertisements. Subscriber is not subscribing for
Securities as a result of or subsequent to any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media
or broadcast over television or radio, or presented at any seminar or meeting.
Neither Subscriber, nor any affiliate or any person acting on Subscriber's
behalf, (i) has made any "directed selling efforts," as such term is defined
under Regulation S in the United States and its territories and possessions
(the "United States") with respect to the Securities or any other shares of the
Company, and (ii) during the Restricted Period following the issuance of any
Securities will make any such directed selling effort. The transactions
contemplated hereby (x) have not been and will not be pre-arranged by
Subscriber with any buyer located in the United States or which is a U.S.
Person and (y) are not and will not be part of a plan or a scheme by Subscriber
to evade the registration provisions of the Securities Act.
(p) Backup Withholding. Subscriber certifies, under
penalty of perjury, that it is NOT subject to the backup withholding provisions
of Section 3406(a)(1)(c) of the Internal Revenue Code of 1986, as amended.
3. Representations and Warranties of the Company. The
Company represents, warrants and agrees as follows:
(a) Organization and Authorization. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as currently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
Company. The Company is not in default or violation of any material term or
provision of its Certificate of Incorporation, as amended, or By-laws nor will
the consummation of the transactions contemplated by this Agreement cause any
such default or violation. The Company has all requisite corporate right, power
and authority to enter into this Agreement, to sell the Securities hereunder
and to carry out and perform its obligations under the terms of this Agreement.
This Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
effecting the rights of creditors generally and available equitable remedies.
Upon their issuance and delivery pursuant to this Agreement, the Underlying
Shares will be validly issued, fully paid and nonassessable and will be free of
any liens or encumbrances; provided, however, that the Underlying Shares are
subject to restrictions on transfer under state and/or federal laws.
(b) Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock $0.001 par value, of
which 21,118,274 are outstanding as of October 31, 1997, and 40,000,000 shares
of Preferred Stock, $0.001 par value, none of which are outstanding.
(c) Reporting Issuer Company Status. The Company is a
"Reporting Issuer" as defined in Rule 902 of Regulation S. To the best of its
knowledge, the Company is in full compliance, to the extent applicable, with
all reporting obligations under either Section 12(b),
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12(g) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and shall use its best efforts to maintain such status on a
timely basis. The Company has registered its Common Stock pursuant to Section
12 of the Exchange Act, and Common Stock trades on the NASDAQ OTC Bulletin
Board on the date hereof.
(d) Company to Reserve Shares. The Company will reserve
from its authorized but unissued shares of Common Stock a sufficient number of
shares of Common Stock to permit the conversion in full of the outstanding
Preferred Stock and Warrants.
(e) Bulletin Board. The Company will use all commercially
reasonable efforts to maintain the listing of its Common Stock on the NASDAQ
OTC Bulletin Board or a recognized National Securities Exchange.
(f) Company to Honor Telecopied Notices. The Company will
permit Subscriber to exercise its right to convert the Preferred Stock and
exercise the Warrants by telecopying an executed and completed Notice of
Conversion to the Company and delivering the original Notice of Conversion and
the certificate representing the Preferred Stock to the Company by express
courier. The Company will use all commercially reasonable efforts to transmit
the certificates representing Underlying Shares issuable upon conversion of any
Preferred Stock or exercise of Warrants (together with the certificates
representing any then-remaining unconverted Preferred Stock or Warrants) to
Subscriber via express courier, at the address set forth herein , by electronic
transfer or otherwise within three business days after the applicable
Conversion Date (defined below) if the Company has received the original Notice
of Conversion and Preferred Stock certificate being so converted by such date.
In addition to any other remedies which may be available to Subscriber, in the
event that the Company fails for any reason to transmit such shares of Common
Stock within such three business day period, Subscriber will be entitled to
revoke the relevant Notice of Conversion by delivering a notice to such effect
to the Company whereupon the Company and Subscriber shall each be restored to
their respective positions immediately prior to delivery of such Notice of
Conversion.
In the event that the Common Stock issuable upon conversion of
the Preferred Stock is not delivered within five (5) business days of receipt
by the Company of a valid Notice of Conversion (such date of receipt referred
to as the "Conversion Date"), and the Preferred Stock to be converted is
received within three (3) business days from the Conversion Date, the Company
shall pay to the Purchaser, in immediately available funds, upon demand, as
liquidated damages for such failure and not as a penalty, for each $100,000 of
Preferred Stock sought to be converted, $500 for each of the first ten (10)
days and $1,000 per day thereafter that the Underlying Shares required to be
issued pursuant to such attempted conversion (the "Conversion Shares") are not
delivered, which liquidated damages shall run from the sixth business day after
the Conversion Date. Any and all payments required pursuant to this paragraph
shall be payable only in shares of Common Stock and not in cash. The number of
such shares shall be determined by dividing the total sum payable by the
Conversion Price (as defined in the Certificate of Designation).
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(g) SEC Filings. None of the Company's filings with the
Securities and Exchange Commission since December 31, 1995 contained as of the
respective dates thereof any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statement therein in light of the circumstances under which they were made, not
misleading. To the best of its knowledge, the Company has since December 31,
1995 timely filed all requisite forms, reports and exhibits thereto with the
Securities and Exchange Commission.
(h) Opinions of Company Counsel. The Company shall use
its best efforts to have counsel provide, at the Company's expense, (i) a
Regulation S opinion of counsel as to matters pertaining to the Company
acceptable to the Transfer Agent upon conversion of the Preferred Stock, upon
receipt of Notice of Conversion from Subscriber, and upon exercise of the
Warrants, and (ii) any opinions of counsel pertaining to the Company which may
be reasonably required in order to convert the Preferred Stock.
(i) Other Convertible Interests. Except as described in
the SEC Filings, (i) there are no other outstanding debt or equity securities
presently convertible into shares of Common Stock or that could be convertible
into shares of Common Stock, (ii) the Company has no outstanding restricted
shares of Common Stock, or shares of Common Stock sold under Regulation S or
Regulation D under the Securities Act or outstanding under any other exemption
from registration, which are available for sale as unrestricted free trading
stock, (iii) the Company has no other liabilities or obligations, (iv) the
Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or agreement to which it
is a party or by which its property is bound, (v) the Company has sufficient
trademarks, trade names, patent rights, copyrights and licenses to conduct its
business as presently conducted, (vi) the Company has good and marketable title
to all properties and material assets described in the aforementioned reports
as owned by it, or (vii) the Company does not presently own control, directly
or indirectly, any interest in any other corporation, partnership, association
or other business entity.
(j) Restrictions on Future Regulation S Financings. The
Company agrees that it will not enter into any debt or equity financing in
reliance on Regulation S until the earlier of: (i) the then-remaining
Liquidation Preference of the Preferred Stock is no greater than Two Hundred
Eighty Five Thousand (US$285,000) United States Dollars, (ii) one hundred
twenty (120) days from the Closing Date, or (iii) Subscriber gives written
approval for such additional financing; provided, however, anything to the
contrary appearing herein notwithstanding, neither this Section 3(j) nor any
other provision hereof shall be construed to restrict or prohibit the Company's
right to restructure, amend or modify any facility existing on the date hereof.
(k) Mandatory Conversion. In the event the Preferred
Stock has not all been converted two (2) years from the Closing Date, all
Preferred Stock shall automatically be
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converted as if Subscriber voluntarily elected such conversion in accordance
with the procedure, terms and conditions set forth in this Agreement.
(l) Dilution. The Company is aware and acknowledges that
conversion and exercise of the Securities would cause dilution to existing
shareholders and could significantly increase the outstanding number of shares
of Common Stock.
4. Representations and Warranties of the Company and
Subscriber. Each of Subscriber and the Company represent, warrant to, and agree
with, the other as follows, in each case with respect to itself alone:
(a) Agreement. This Agreement has been duly authorized,
validly executed and delivered on behalf of such party and is a valid and
binding agreement in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally.
(b) Non-contravention. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities and the
transaction contemplated by this Agreement do not and will not conflict with or
result in a breach by such party of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws of such
party, or any indenture, mortgage, deed of trust of other material agreement or
instrument to which such party is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation or any applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over such party or any of its properties or assets. The execution,
delivery and performance of this Agreement and the consummation by such party
of the transactions contemplated hereby or relating hereto do not and will not
(i) result in a violation of such party's charter documents, by-laws,
partnership agreement, certificate of limited partnership or other governing
documents, as the case may be, or (ii) conflict with, or constitute a default
(or an event which with notice of lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such party is
a party, or result in a violation of any law, rule, or regulation, or any
order, judgment or decree of any court or governmental agency applicable to
such party or any of its properties. Such party is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or the transactions contemplated
hereby; provided that for purposes of the representation made in this sentence,
each party is assuming and relying upon the accuracy of the relevant
representations and agreements of the other party herein.
(c) Approvals. Neither the Company nor Subscriber is
aware of any authorization, approval or consent of any governmental body which
is legally required for the issuance and sale of the Securities.
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(d) Indemnification. Each of the Company and Subscriber
agrees to indemnify the other and to hold the other harmless from and against
any and all losses, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) which the other may sustain or incur in connection
with the breach by the indemnifying party of any representation, warranty or
covenant made by it in this Agreement.
(e) Time of Representations and Warranties. Each
representation and warranty made by each party hereunder shall be deemed made
as of the date hereof and as of the Closing Date, unless the context shall
clearly require otherwise.
5. Permissive Redemption. Please refer to Certificate of
Designation.
6. Restrictions on Conversion of Preferred Stock. The
convertibility of the Preferred Stock shall be restricted such that the portion
of the Preferred Stock which, if otherwise converted, would result in
Subscriber or the Holder being deemed the beneficial owner, in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, as amended, of 4.99% or more
of the then issued and outstanding Common Stock, shall not be convertible.
7. Exemption; Reliance on Representations. Subscriber
understands that the offer and sale of the Securities are not being registered
under the Securities Act. The Company is relying on the rules governing offers
and sales made outside the United States pursuant to Regulation S. Each of the
Company and Subscriber agree to comply in all material respects with the
provisions of Regulation S in connection with the transactions contemplated
hereby, and to ensure that all applicable Offering Restrictions (as defined in
Regulation S) are thoroughly complied with and satisfied and to refrain from
engaging, and to ensure that none of its affiliates will engage, in any
directed selling efforts (as defined in Regulation S).
8. Stock Delivery Instructions. The Preferred Stock
Certificate shall be delivered to Subscriber on a delivery versus payment basis
as set forth in the Escrow Agreement.
9. Closing Date. The Closing Date (the "Closing Date")
shall be mutually agreed upon as to time and place when the Escrow Agent
receives the Securities and Purchase Price, the conditions set forth in
Sections 10 and 11 and the terms and conditions of the Escrow Agreement herein
are satisfied or waived.
10. Conditions to the Company's Obligation to Sell.
Company's obligation to sell the Securities are conditioned upon:
(a) The execution and delivery of this Agreement by the
Company; and
(b) Delivery into escrow by Subscriber of good cleared
funds as payment in full for the purchase of the Preferred Stock, and written
notification to the Company by the Escrow Agent of receipt of payment in full
for the Convertible Preferred Stock; and
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(c) All representations and warranties of Subscriber
shall remain true and correct as of the Closing Date.
11. Conditions to Subscriber's Obligation to Purchase.
Subscriber's obligation to purchase the Preferred Stock is conditioned upon:
(a) The execution and delivery of this Agreement by
Subscriber;
(b) Delivery of the Preferred Stock, Warrant and
Registration Rights Agreement;
(c) All representations and warranties of the Company
shall remain true and correct as of the Closing Date;
(d) Receipt of opinion of counsel in substantially the
form of Exhibit F hereto and a copy of a filed Certificate of Designation.
12. Miscellaneous.
(a) This Agreement will be construed and enforced in
accordance with and governed by the laws of the State of New York, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of New York or
the state courts of the State of New York in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens,
to the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the
party against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such
a judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to such party at its address set forth
herein. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by law.
(b) If for any reason the transactions contemplated by
this Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party's domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information, without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herewith.
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(c) In lieu of the original, a facsimile transmission or
copy of the original shall be as effective and enforceable as the original.
This Agreement may be executed in counterparts which shall be considered an
original document and which together shall be considered a complete document.
(d) This Agreement and Exhibits hereto constitute the
entire agreement between Subscriber and the Company with respect to the subject
matter hereof. This Agreement may be amended only by a writing executed by both
of them.
(e) Subscriber represents to the Company that the
representations and warranties of Subscriber contained herein are complete and
accurate and may be relied upon by the Company in determining the availability
of an exemption from registration under federal and state securities laws in
connection with a private offering of securities.
(f) 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 no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
(g) Each of the Company and Subscriber agrees to keep
confidential and not to disclose to or use for the benefit of any third party
the terms of this Agreement or any other information which at any time is
communicated by the other party as being confidential without the prior written
approval of the other party; provided, however, that this provision shall not
apply to information which, at the time of disclosure, is already part of the
public domain (except by breach of this Agreement) and information which is
required to be disclosed by the Exchange Act or other applicable law.
(h) Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby.
(i) Each Notice of Conversion, and all other notices and
communications delivered hereunder from time to time, and any Preferred Stock
representing the portion of the Preferred Stock remaining unconverted, if
applicable, shall be delivered as follows:
If to the Company:
Chadmoore Wireless Group, Inc.
4720 Polaris Street
Las Vegas, Nevada 89103
Attn: Robert Moore
Fax: (702) 740-4233
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If to Subscriber:
[Insert address and fax number]
Provided, that each party may specify an address for notices
and communications to such party different from the one then specified under
this Section 12(i) by so notifying the other party at the address then
operative under this Section 12(i).
IN WITNESS WHEREOF, this Offshore Subscription Agreement was
duly executed on the date first written below.
PURCHASER:
By
-------------------------------
Title:
Executed at
this 10th day of December, 1997
Agreed to and Accepted on
this 10th day of December, 1997
CHADMOORE WIRELESS GROUP, INC.
By
-------------------------------
Title:
15
