SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 31, 2000
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WORLDWIDEWEB INSTITUTE.COM, INC.
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(Exact name of registrant as specified in its charter)
Florida 33-40808-A 65-0260247
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(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
6245 N.W. 9th Avenue, Suite 201, Fort Lauderdale, Florida 33309
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (954) 776-8444
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER ITEMS
On March 31, 2000, we issued 11,200 shares of our newly-created Series
A Convertible Preferred Stock for a total purchase price of $11,200,000 to a
small group of accredited investors. The stated value of each share of the
preferred stock is $1,000 per share. Each share of Series A Convertible
Preferred Stock is convertible into common stock of the Company at $4.50 per
share. Except upon approval of the holders of a majority in interest of the
Series A Preferred Stock, no purchaser may convert their shares preferred stock
if it results in the purchaser receiving more than 4.99% of the outstanding
shares of common stock of WorldWideWeb. The conversion price will be adjusted
for any stock splits, stock dividends, corporate reorganizations and certain
other corporate transactions and issuance of securities at below market price.
The preferred stock includes no dividend and carries no voting rights except as
required under the Florida Business Corporation Act and, in that event, the vote
of the holders of a majority of the series of preferred stock will be required
to approve any transaction affecting the Series A Convertible Preferred Stock.
WorldWideWeb is required to file a Registration Statement covering the
underlying shares of common stock by May 15, 2000 and complete the registration
process within 210 days of closing or become subject to certain charges and
remedies. WorldWideWeb may not undertake any additional financing for a period
of 240 days following the closing date without the approval of the placement
agent for the financing, and the purchasers have a right of first refusal for a
period of 120 days following the prior period. In addition, for a period of 18
months following the March 31, 2000 closing, the purchasers have a right to
purchase up to an additional 2,222,222 shares of WorldWideWeb common stock at a
purchase price of $7.50 per share.
The Zanett Securities Corporation acted as placement agent for this
financing and received a commission of $920,000 as well as reimbursement for
certain expenses. WorldWideWeb also issued to The Zanett Securities Corporation
a warrant to purchase 250,000 shares of our common stock at an exercise price of
$4.50 which represented the market price of our common stock at the closing
date. The warrant carries a three year term and is subject to certain
adjustments for various corporate transactions. The shares of our common stock
underlying the warrant will also be included in the Company's Registration
Statement covering the purchasers' shares.
WorldWideWeb will use the proceeds from this financing for marketing,
investment in new products and services, expansion and development of foreign
operations, solidifying its infrastructure, and for working capital purposes.
With these proceeds, WorldWideWeb expects to file an application for inclusion
of its common stock on The Nasdaq Stock Market in conjunction with its March 31,
fiscal year-end financial reports.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) None
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(b) Exhibits.
99.1 Securities Purchase Agreement dated February 28 ,
2000 and related exhibits.
99.2 Placement Agency Agreement dated February 28, 2000
99.3 Registration Rights Agreement dated February 28, 2000
99.4 Stock Purchase Warrant dated February 28, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
WorldWideWeb Institute.com, Inc. has signed this report.
WORLDWIDEWEB INSTITUTE.COM, INC.
By: /s/Ernest Chu
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Name: Ernest Chu
Title: Chief Financial Officer
Dated: April 12, 2000.
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of February
28, 2000, by and among WORLDWIDEWEB INSTITUTE.COM, INC., a corporation organized
under the laws of the State of Florida (the "Company"), with headquarters
located at 6245 N.W. 9th Avenue, Suite 201, Fort Lauderdale, Florida 33309, and
each of the purchasers (individually the "Purchaser" and collectively the
"Purchasers") set forth on the execution page hereof (the "Execution Page").
WHEREAS:
A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act");
B. The Company desires to sell, and the Purchasers desire to purchase,
upon the terms and conditions stated in this Agreement, 11,200 shares of Series
A Convertible Preferred Stock of the Company (the "Preferred Shares") for an
aggregate purchase price of Eleven Million Two Hundred Thousand Dollars
($11,200,000), Two Million Dollars ($2,000,000) of which has been received by
the Company on the date hereof, and which Preferred Shares are evidenced by a
Certificate of Designation in a form attached hereto as Exhibit A (the
"Certificate") and which Preferred Shares are convertible into shares of the
Company's Common Stock, $.001 par value per share (the "Common Stock") at a
conversion price of $4.50 per Share. The Preferred Shares and the Common Stock
issuable upon conversion of the Preferred Shares (the "Common Shares") are
collectively referred to herein as the "Securities;"
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws;
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES
a. Purchase of Preferred Shares. The issuance, sale and purchase of the
Preferred Shares shall occur as of March 31, 2000. On the date of the closing
(the "Closing"), subject to the satisfaction (or waiver) of the relevant
conditions set forth in Section 6 and Section 7 below, the Company shall issue
and sell to each Purchaser, and each Purchaser severally agrees to purchase from
the Company, the Preferred Shares for the relevant purchase price as is set
forth on such Purchaser's Execution Page attached hereto (the "Purchase Price").
Each Purchaser's obligation to purchase its Preferred Shares hereunder is
distinct and separate from each other Purchaser's
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obligation to purchase its Preferred Shares and no Purchaser shall be required
to purchase hereunder more than the number of its Preferred Shares set forth on
such Purchaser's Execution Page hereto notwithstanding any failure by any other
Purchaser to purchase its Preferred Shares hereunder nor shall any Purchaser
have any liability by reason of any such failure by any other Purchaser.
b. Form of Payment- Mechanism of Exchange. At the Closing, each
Purchaser shall pay such Purchaser's Purchase Price hereunder by wire transfer
to the Company, in accordance with the Company's written wiring instructions,
against delivery of the duly executed certificates evidencing the Preferred
Shares being purchased by such Purchaser and the Company shall deliver such
Preferred Shares against delivery of such Purchase Price; provided, however,
that Two Million Dollars ($2,000,000) of the Purchase Price has already been
received by the Company.
c. Closing Date. Subject to the satisfaction (or waiver) of the
relevant conditions thereto set forth in Section 6 and Section 7 below, the date
and time of the issuance and sale of the Shares pursuant to this Agreement shall
be 12:00 noon Eastern Time as of March 31, 2000 or other time as may be mutually
agreed upon by the Company and the Purchasers. The date of the Closing shall
hereinafter be referred to as the "Closing Date." The Closing shall occur at the
offices of Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, 260 South Broad
Street, Philadelphia, Pennsylvania 19102.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser severally, but not jointly, represents and warrants to
the Company as follows:
a. Purchase for Own Account, Etc. Purchaser is purchasing the
Securities for Purchaser's own account and not with a present view towards the
sale or distribution thereof, and Purchaser acknowledges that the Securities may
be sold only pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under the Securities
Act. Purchaser understands that Purchaser must bear the economic risk of this
investment indefinitely, unless the Securities are registered pursuant to the
Securities Act and any applicable state securities or blue sky laws or an
exemption from such registration is available, and that the Company has no
present intention of registering any such Securities other than as contemplated
by the Registration Rights Agreement. Notwithstanding anything in this Section
2(a) to the contrary, by making the representations herein, the Purchaser does
not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act.
b. Accredited Investor Status. Purchaser is an "Accredited Investor" as
that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Purchaser understands that the Securities
are being offered and sold to Purchaser in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and
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accuracy of, and Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
d. Information. Purchaser and its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
specifically requested by Purchaser or its counsel. Purchaser and its counsel
have been afforded the opportunity to ask questions of the Company and have
received what Purchaser believes to be satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence investigation
conducted by Purchaser or its counsel or any of its representatives shall
modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Section 3 below. Purchaser
understands that Purchaser's investment in the Securities involves a high degree
of risk.
e. Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or (b)
Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred under an exemption from such
registration, or (c) sold under Rule 144 promulgated under the Securities Act
(or a successor rule) ("Rule 144"), or (d) sold or transferred to an affiliate
of Purchaser and such sale or transfer is pursuant to an exemption from such
registration or pursuant to such registration; and (ii) neither the Company nor
any other person is under any obligation to register such Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to the
Registration Rights Agreement).
g. Legends. Purchaser understands that until such time as the Shares
have been registered under the Securities Act (including registration pursuant
to Rule 416 thereunder) as contemplated by the Registration Rights Agreement or
otherwise may be sold by Purchaser under Rule 144, the certificates for the
Shares may bear a restrictive legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state of the United States. The securities represented hereby may
not be offered or sold in the absence of an effective registration
statement for the securities under applicable securities laws unless
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offered, sold or transferred under an available exemption from the
registration requirements of those laws.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by state securities laws, (a) the sale of
such Security is registered under the Securities Act (including registration
pursuant to Rule 416 thereunder), or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the Securities Act or
(c) such holder provides the Company with reasonable assurances that such
Security has been sold under Rule 144 or can be sold under Rule 144(k).
Purchaser agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, pursuant to an effective
registration statement or under an exemption from the registration requirements
of the Securities Act. In the event the above legend is removed from any
Security and thereafter the effectiveness of a registration statement covering
such Security is suspended or the Company determines that a supplement or
amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to Purchaser the Company may require that the above
legend be placed on any such Security and Purchaser shall cooperate in the
prompt replacement of such legend. Such legend shall be removed when such
Security may be sold pursuant to an effective registration statement or sold
under Rule 144.
h. Authorization; Enforcement. This Agreement, the Certificate and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of Purchaser and are valid and binding agreements of
Purchaser enforceable in accordance with their terms.
i. Residency. Purchaser is a resident of the jurisdiction set forth
under the Purchaser's name on the Execution Page hereto executed by Purchaser.
j. Acknowledgments Regarding Placement Agent. Purchaser acknowledges
that The Zanett Securities Corporation is acting as placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. Purchaser further
acknowledges that the Placement Agent has acted solely as placement agent in
connection with the offering of the Securities by the Company, that the
information and data provided to Purchaser and referred to in subsection (d)
above or otherwise in connection with the transactions contemplated hereby have
not been subjected to independent verification by the Placement Agent, and that
the Placement Agent makes no representation or warranty with respect to the
accuracy or completeness of such information, data or other related disclosure
material. Purchaser further acknowledges that in making its decision to enter
into this Agreement and purchase the Securities it has relied on the Company's
representations and warranties contained in Section 3 below and on its own
examination of the Company and the terms of, and consequences of holding, the
Securities. Purchaser further acknowledges that the provisions of this Section
2(j) are for the benefit of, and may be enforced by, the Placement Agent.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on (i) the
Securities, (ii) the ability of the Company to perform its obligations hereunder
and under the Certificate or the Registration Rights Agreement or (iii) the
business, operations, properties, prospects or financial condition of the
Company and its subsidiaries, taken as a whole.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Certificate and the Registration Rights Agreement, to issue
and sell the Preferred Shares in accordance with the terms hereof and thereof,
to issue the Common Shares upon conversion of the Preferred Shares in accordance
with the terms thereof subject to (i) the execution, delivery and performance of
this Agreement, the Certificate and the Registration Rights Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Preferred Shares and
the issuance and reservation for issuance of the Common Shares) have been duly
authorized by the Company's Board of Directors, and no further consent or
authorization of the Company, its Board of Directors or its shareholders is
required and (ii) this Agreement constitutes, and, upon execution and delivery
by the Company of the Registration Rights Agreement, such agreements will
constitute, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms.
c. Stockholder Authorization. The Company believes that neither the
execution, delivery or performance of its obligations under this Agreement, the
Certificate or the Registration Rights Agreement by the Company nor the
consummation by it of the transactions contemplated hereby or thereby
(including, without limitation, the issuance of the Preferred Shares or the
issuance or reservation for issuance of the Common Shares) require any consent
or authorization of the Company's shareholders, including but not limited to
consent under Rule 4460(i) promulgated by the National Association of Securities
Dealers, Inc. (the "NASD") or any similar rule.
d. Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance pursuant to securities (other than the Preferred Shares) exercisable
for, or convertible into or exchangeable for any shares of capital stock and the
number
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of shares to be reserved for issuance upon conversion of the Preferred Shares is
set forth on Schedule 3(d). All of such outstanding shares of capital stock have
been, or upon issuance will be, validly issued, fully paid and nonassessable. No
shares of capital stock of the Company (including the Preferred Shares and the
Common Shares) are, and will not be, subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances.
Except for the Securities and as disclosed in Schedule 3(d), as of the date of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, and (ii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
its or their securities under the Securities Act (except the Registration Rights
Agreement); provided, however, that if any securities are disclosed on Schedule
3(d) which the Company is obligated to register for sale, the Securityholders
shall not conduct any sale (the "Sale") of those securities (the "Scheduled
Securities") beginning on the date hereof unless they shall have first delivered
to Zanett Capital Corp. at least ten (10) business days prior to the closing of
such Sale, written notice describing the proposed Sale, including the terms and
conditions thereof, and providing Zanett Capital Corp. and its affiliates, an
option during the ten (10) business day period following delivery of such notice
to purchase the entire amount of the Scheduled Securities being sold in the Sale
on the same terms as contemplated by such Sale. In addition, if Zanett Capital
Corp. waives its right of first refusal on any sale of the Scheduled Securities,
the holder of the Scheduled Securities cannot sell more than ten percent (10%)
of their monthly holdings of the Scheduled Securities per month, thereafter,
until all such Scheduled Securities are sold. Except as set forth on Schedule
3(d), there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the issuance of the Securities in
accordance with the terms of this Agreement or the Certificate. The Company has
furnished to each Purchaser true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws as in effect on the date hereof (the
"By-laws"), and all other instruments and agreements governing securities
convertible into or exercisable or exchangeable for capital stock of the
Company. On the Closing Date, respectively, except for the issuance of some or
all of the Securities as contemplated hereby, there are no changes to the
representations and warranties contained in this Section 3(d). The officer's
certificate referred to in Section 7(a)(iv) and Section 7(b)(iii) shall contain
a written update of Schedule 3(d) as of the Closing Date.
e. Issuance of Shares. The Preferred Shares are duly authorized and
reserved for issuance, and, upon conversion of the Preferred Shares in
accordance with, and subject to the limitations set forth in the terms thereof,
the Common Shares will be validly issued, fully paid and non-assessable, and
free from all taxes, liens, claims and encumbrances and will not be subject to
preemptive rights or other similar rights of shareholders of the Company and
will not impose personal liability upon the holder thereof.
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f. No Conflicts. The execution, delivery and performance of this
Agreement, the Certificate and the Registration Rights Agreement by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for
issuance, as applicable, of the Preferred Shares and the Common Shares) will not
(i) result in a violation of the Certificate of Incorporation or By-laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including U.S. federal and state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected (except,
with respect to clause (ii), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its subsidiaries is in default (and no event has occurred which, with
notice or lapse of time or both, would put the Company or any of its
subsidiaries in default), nor has there occurred any event giving others (with
notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted, and shall not be conducted so long as each
Purchaser owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity, except for actual or possible violations,
if any, the sanctions for which either singly or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws, the Company is not required to obtain any consent, approval, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, the Certificate
or the Registration Rights Agreement, in each case in accordance with the terms
hereof or thereof. The Common Stock is listed for trading on the Nasdaq
Electronic Bulletin Board ( the "Bulletin Board"), and the Company is not in
violation of the listing requirements of the Bulletin Board and does not
reasonably anticipate that the Common Stock will be delisted by the Bulletin
Board for the foreseeable future, nor is aware of any basis for such delisting.
g. SEC Documents, Financial Statements. Since March 31, 1998, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the United States Securities and
Exchange Commission ("SEC") pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (all of the
foregoing filed prior to the date hereof and after the First Filing Date, and
all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"). The Company has delivered to Zanett Capital
Corp. true and complete copies of the SEC Documents, except for the exhibits and
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schedules thereto and the documents incorporated therein. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents is, or has
been, required to be updated or amended under applicable law. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto. Such financial statements have been prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to immaterial year-end audit adjustments). Except as set
forth in the financial statements of the Company included in the SEC Documents
filed prior to the date hereof, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to the date of such financial statements and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which liabilities and obligations
referred to in clauses (i) and (ii), individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
h. Absence of Certain Changes. Since March 31, 1999, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of the Company, except as disclosed in Schedule 3(h) or the Company's quarterly
or periodic reports filed under the Securities Exchange Act of 1934, as amended.
i. Absence of Litigation. Except as disclosed in the SEC Documents
filed prior to the date hereof, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body including, without limitation, the
Securities and Exchange Commission or NASDAQ, pending or, to the knowledge of
the Company or any of its subsidiaries, threatened against or affecting the
Company, any of its subsidiaries, or any of their respective directors or
officers in their capacities as such which will have a Material Adverse Effect.
To the best of the knowledge of the Company, there are no facts which, if known
by a potential claimant or governmental authority, could give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable to the
Company or any of its subsidiaries, could have a Material Adverse Effect.
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j. Intellectual Property. Each of the Company and its subsidiaries owns
or is licensed to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as now being conducted. To the best
knowledge of the Company, neither the Company nor any subsidiary of the Company
infringes or is in conflict with any right of any other person with respect to
any Intangibles which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
Except as set forth on Schedule 3(j), neither the Company nor any of its
subsidiaries has received written notice of any pending conflict with or
infringement upon such third party Intangibles. Neither the Company nor any of
its subsidiaries has entered into any consent, indemnification, forbearance to
sue or settlement agreements with respect to the validity of the Company's or
its subsidiaries' ownership or right to use its Intangibles and, to the best
knowledge of the Company, there is no reasonable basis for any such claim to be
successful. The Intangibles are valid and enforceable and no registration
relating thereto has lapsed, expired or been abandoned or canceled or is the
subject of cancellation or other adversarial proceedings, and all applications
therefor are pending and in good standing. The Company and its subsidiaries have
complied, in all material respects, with their respective contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the best knowledge of the Company, no person is infringing on or
violating the Intangibles owned or used by the Company of its subsidiaries.
k. Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
l. Disclosure. All information relating to or concerning the Company
set forth in this Agreement or provided to each Purchaser pursuant to Section
2(d) hereof and otherwise in connection with the transactions contemplated
hereby is true and correct in all material respects and the Company has not
omitted to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or exists with
respect to the Company or its subsidiaries or their respective businesses,
properties, prospects, operations or financial conditions, which has not been
publicly disclosed but, under applicable law, rule or regulation, would be
required to be disclosed by the Company in a registration statement filed on the
date hereof by the Company under the Securities Act with respect to a primary
issuance of the Company's securities.
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<PAGE>
m. Acknowledgment Regarding the Purchasers' Purchase of the Securities.
The Company acknowledges and agrees that each of the Purchasers is not acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, and the
relationship between the Company and each Purchaser is "arms length" and that
any statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to such Purchaser's purchase
of Securities and has not been relied upon by the Company, its officers or
directors in any way, except as provided for or contemplated in Section 2
hereof. The Company further represents to each Purchaser that the Company's
decision to enter into this Agreement has been based solely on an independent
evaluation by the Company and its representatives.
n. No General Solicitation. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
o. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, Rule 4460(i) of the NASD or
any similar rule.
p. No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by any Purchaser relating to this Agreement or the transactions
contemplated hereby, except for dealings with Zanett Securities Corp., whose
commissions and fees will be paid by the Company.
q. Tax Status. Except as set forth in the SEC Documents filed prior to
the date hereof or on Schedule 3(q), the Company and each of its subsidiaries
has made or filed all federal, state and local income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to any statute of limitations relating to
the assessment or
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<PAGE>
collection of any federal, state or local tax. None of the Company's tax returns
has been or is being audited by any taxing authority.
r. Title. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(r) or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries. Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and Section 7 of this
Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to the Purchaser on or prior to the Closing
Date. Within two trading days after the Closing, the Company agrees to file a
Form 8-K concerning this Agreement and the transactions contemplated hereby,
which Form 8-K shall attach this Agreement and its Exhibits as exhibits to such
Form 8-K.
c. Reporting Status. So long as the Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
d. Use of Proceeds; Limitation on Acquisitions. The Company shall use
the proceeds from the sale of the Preferred Shares as set forth on Schedule
4(d); provided, further, that the Company shall not use such proceeds (i) to
repurchase any shares of Common Stock of the Company, (ii) to engage in any type
of investment activity similar to that conducted on the date hereof, (iii) to
make loans or engage in transactions with its directors, officers, employees,
shareholders or their family members and affiliates (as such term is defined in
Rule 12b-2 of the Exchange Act) of such persons or the Company or (iv) to
acquire any stock of or ownership interest of any kind in, or, except in the
ordinary course of business, acquire any assets or property of any
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<PAGE>
other business entity whatsoever. The Company shall not use any working capital
to acquire any stock of or ownership interest of any kind in, or, except in the
ordinary course of business, acquire any assets or property of any other
business entity whatsoever without the written consent of Zanett Capital Corp.,
except for any acquisitions of stocks or assets which do not exceed, in the
aggregate, Two Hundred Fifty Thousand Dollars ($250,000).
e. Additional Equity Capital; Right of First Offer; Call Option.
(i) The Company agrees that during the period beginning on the
date hereof and ending on the date which is 240 days following the Closing Date
(the "Lock-Up Period"), the Company will not, without the prior written consent
of Zanett Capital Corp., contract with any party to obtain additional financing
in which any equity or equity-linked securities are issued (including any debt
financing with an equity component) ("Future Offerings"). In addition, the
Company will not conduct any Future Offering during the period beginning on the
date hereof and ending 120 days following the expiration of the Lock-Up Period,
unless it shall have first delivered to Zanett Capital Corp., at least ten (10)
business days prior to the closing of such Future Offering, written notice
describing the proposed Future Offering, including the terms and conditions
thereof, and provided Zanett Capital Corp. and its affiliates an option during
the ten (10) business day period following delivery of such notice to purchase
all of the securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this and
the immediately preceding sentence are collectively referred to as the "Capital
Raising Limitations"); provided, however, that in the event more than one
Purchaser desires to purchase such securities, (a) the interested Purchasers may
allocate such Future Offering among themselves by agreement among such
Purchasers or, in the event such Purchasers cannot reach an agreement in such
period, such Future Offering shall be allocated among them on a pro rata basis
equal to the percentage each such Purchaser's Purchase Price bears to the sum of
the Purchase Prices of such interested Purchasers. The Capital Raising
Limitations shall not apply to any transaction involving issuances of securities
as consideration in a merger, consolidation or acquisition of assets, or in
connection with any strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company. The Capital
Raising Limitations also shall not apply to (i) the issuance of securities
pursuant to an underwritten public offering, (ii) the issuance of securities
upon exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof or (iii) the grant of
additional options or warrants, or the issuance of additional securities, under
any duly authorized Company stock option or restricted stock plan for the
benefit of the Company's employees or directors.
(ii) At any time from the Closing Date until eighteen (18)
months after the Closing Date (the "Call Option Period"), the Purchasers have
the right to purchase from the Company up to an additional 2,222,222 shares of
Common Stock at a purchase price of $7.50 per share (the "Call Option"). The
Call Option may be exercised by the holders of a majority in face amount of the
Preferred Shares at any time during the Call Option Period, and to the extent
that all Purchasers choose not to participate in the Call Option, the remaining
Purchasers so choosing to
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<PAGE>
participate in the Call Option shall be entitled to participate on a pro rata
basis based upon the amount of Preferred Shares purchased hereunder relative to
all holders of Preferred Shares participating in the Call Option. The purchase
of Common Stock pursuant to the Call Option shall be evidenced by documents and
instruments containing customary terms and conditions.
f. Expenses. The Company shall pay to each Purchaser, at the Closing,
reimbursement for the expenses reasonably incurred by such Purchaser and its
affiliates and advisors in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, such Purchaser's and its
affiliates' and advisors' reasonable due diligence and attorneys' fees and
expenses (the "Expenses"). In addition, from time to time thereafter, upon each
Purchaser's written request, the Company shall pay to such Purchaser such
additional Expenses, if any, not covered by such payment, in each case to the
extent reasonably incurred by such Purchaser in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other agreements
to be executed in connection herewith. Notwithstanding the foregoing, the
Company shall not be obligated to reimburse the Purchasers for more than $50,000
pursuant to this Section 4(f).
g. Financial Information. The Company agrees to send the following
reports to each Purchaser until such Purchaser transfers, assigns or sells all
of its Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB,
its proxy statements and any Current Reports on Form 8-K; and (ii) within one
(1) day after release, copies of all press releases issued by the Company or any
of its subsidiaries.
h. Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
Common Shares to provide for the full conversion of the Preferred Shares as
otherwise required by the Certificate.
i. Listing. The Company shall promptly secure the listing of the Common
Shares issuable upon the conversion of the Preferred Shares, subject to the
limitations contained therein upon the Bulletin Board, or each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Common Shares from time to time issuable upon conversion of the
Preferred Shares. The Company will take all action necessary to continue the
listing and trading of all of its Common Stock on the Bulletin Board and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and such exchanges, as
applicable.
j. Corporate Existence. So long as a Purchaser beneficially owns any
Securities, the Company shall maintain its corporate existence, and in the event
of a merger, consolidation or sale of all or substantially all of the Company's
assets, the Company shall ensure that the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
Certificate (except as otherwise provided therein) and the agreements and
instruments entered into in connection herewith regardless of whether or not the
Company would have had a sufficient
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<PAGE>
number of Common Shares authorized and available for issuance in order to effect
the conversion of the Preferred Shares outstanding as of the date of such
transaction and (ii) is a publicly traded corporation whose common stock is
listed for trading on the NASDAQ, NYSE or AMEX. Notwithstanding the foregoing,
the Company covenants and agrees that it will not engage in any merger,
consolidation or sale of all or substantially all of its assets at any time
prior to the effectiveness of the registration statement required to be filed
pursuant to the Registration Rights Agreement without (A) providing Zanett
Capital Corp. with written notice of such transaction at least sixty (60) days
prior to the consummation of the transaction and (B) obtaining the written
consent of the Purchasers holding a majority, in face amount, of the Preferred
Shares on or before the 10th day after the delivery of such notice by the
Company.
k. No Integrated Offerings. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause this offering of Securities to be integrated with any
other offering of securities by the Company for purposes of any stockholder
approval provision applicable to the Company or its securities.
l. Shareholders' Meeting. If required, the Company shall call a meeting
of its shareholders to be held as promptly as practicable and in any event
within one hundred twenty (120) days of the Closing Date for the purpose of
voting upon and approving this Agreement, the Certificate and Registration
Rights Agreement and the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Securities. The Company
shall, through its Board of Directors, recommend to its shareholders approval of
such matters. The Company shall use its best efforts to solicit from its
shareholders proxies in favor of such matters sufficient to comply with all
relevant legal requirements, including, without limitation, Rule 4460(i)
promulgated by the NASD.
m. Certain Trading Restrictions. So long as the Company is in
compliance in all material respects with its obligations to the Purchasers under
this Agreement, the Certificate and the Registration Rights Agreement, each
Purchaser agrees that from the date of this Agreement until the date the
Registration Statement is declared effective by the SEC, it will not engage in
any short sales or other hedging transactions relating to the Common Shares.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company shall instruct its transfer agent to issue certificates,
registered in the name of each Purchaser or its nominee, for the Common Shares
in such amounts as specified from time to time by such Purchaser to the Company
upon conversion of the Preferred Shares. To the extent and during the periods
provided in Section 2(f) and Section 2(g) of this Agreement, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement.
b. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the transfer of the Common
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<PAGE>
Shares prior to registration of the Common Shares under the Securities Act or
without an exemption therefrom, will be given by the Company to its transfer
agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this Section shall affect in
any way each Purchaser's obligations and agreement set forth in Section 2(g)
hereof to resell the Securities pursuant to an effective registration statement
or under an exemption from the registration requirements of applicable
securities law.
c. If any Purchaser provides the Company with an opinion of counsel,
which opinion of counsel shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration, or any Purchaser provides the Company with
reasonable assurances that such Securities may be sold under Rule 144 or such
Securities may be sold pursuant to an effective registration statement, the
Company shall permit the transfer, and, in the case of the Shares, promptly
instruct its transfer agent to issue one or more certificates in such name and
in such denominations as specified by such Purchaser.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Preferred
Shares to each Purchaser hereunder is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions thereto, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion.
a. Each Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
b. Each Purchaser shall have delivered such Purchaser's Purchase Price
in accordance with Section 1(b) above.
c. The representations and warranties of each Purchaser shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date), and each Purchaser shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by such Purchaser
at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
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<PAGE>
e. This Agreement, the Certificate and Registration Rights
Agreement and the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Securities, shall have been approved and
adopted by the shareholders of the Company in compliance with all relevant legal
requirements.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of each Purchaser hereunder to purchase such Purchaser's
Preferred Shares hereunder, at the Closing, is subject to the satisfaction, at
or before the Closing Date, of the following condition, provided that this
condition is for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
This Agreement, the Certificate and Registration Rights Agreement and
the transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Securities, shall have been approved and adopted by the
shareholders of the Company, if necessary, in compliance with all relevant legal
requirements.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts and
the state courts located in New York, New York in any suit or proceeding based
on or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company further agrees that service of process upon
the Company mailed by first class mail shall be deemed in every respect
effective service of process upon the Company in any such suit or proceeding.
Nothing herein shall affect the right of any Purchaser to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof.
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<PAGE>
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Purchaser make any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement and no provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and Zanett Capital Corp.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
WorldWideWeb Institute.com
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, Florida 33309
Telecopy: 954-776-3322
Attention: Smiley Sansoni
with a copy to:
Atlas Pearlman Trop & Borkson, P.A.
New River Center, Suite 1900
200 East Las Olas Boulevard
Fort Lauderdale, FL 33301
Attention: James M. Schneider, Esquire
Telecopy: 954-766-7800
If to any Purchaser, to the address set forth under such Purchaser's
name on the signature page hereto executed by such Purchaser.
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<PAGE>
Each party shall provide notice to the other parties of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
provided herein, neither the Company nor any Purchaser shall assign this
Agreement or any rights or obligations hereunder. Notwithstanding the foregoing,
each Purchaser may assign its rights hereunder to any of its "affiliates," as
that term is defined under the Exchange Act, without the consent of the Company
or to any other person or entity with the consent of the Company. This provision
shall not limit any Purchaser's right to transfer the Securities pursuant to the
terms of this Agreement, the Certificate or the Registration Rights Agreement or
to assign such Purchaser's rights hereunder and/or thereunder to any such
transferee. In addition, and notwithstanding anything to the contrary contained
in this Agreement, the Certificate or the Registration Rights Agreement, the
Securities may be pledged and all rights of Purchaser under this Agreement or
any other agreement or document related to the transaction contemplated hereby
may be assigned, without further consent of the Company, to a bona fide pledgee
in connection with a Purchaser's margin or brokerage accounts.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the Company and the
agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive the
Closing hereunder notwithstanding any due diligence investigation conducted by
or on behalf of any Purchaser. Moreover, none of the representations and
warranties made by the Company herein shall act as a waiver of any rights or
remedies any Purchaser may have under applicable federal or state securities
laws. The Company agrees to indemnify and hold harmless each Purchaser and each
other holder of the Securities and all of their shareholders, officers,
directors, employees, partners, members, agents and direct or indirect investors
and affiliates and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Certificate, the Registration Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in this Agreement, the Certificate, the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, (c)
any cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement, the Certificate, the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (d) any transaction financed or to be financed in whole or in part,
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directly or indirectly, with the proceeds of the issuance of the Securities or
(e) the status of such Purchaser or holder of the Securities as an investor in
the Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
j. Publicity. The Company and Zanett Capital Corp. shall have the right
to approve before issuance any press releases, SEC or the Bulletin Board
filings, or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or SEC or
the Bulletin Board filings with respect to such transactions as is required by
applicable law and regulations (although Zanett Capital Corp. shall be consulted
by the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing Date shall not have
occurred on or before March 31, 2000, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.
m. Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Certificate
and the Registration Rights Agreement. As such, the language used herein and
therein shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any party to this Agreement.
n. Equitable Relief. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to each Purchaser by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder (including, but not limited to, its obligations pursuant
to Section 5 hereof) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited to, its obligations pursuant to Section 5 hereof), that each
Purchaser shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have caused this
Agreement to be duly executed as of the date first above written.
WORLDWIDEWEB INSTITUTE.COM
By:
Name:
Title:
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PURCHASER: PURCHASE PRICE
ZANETT LOMBARDIER MASTER FUND L.P.
By:_____________________________
Name:
Title:
RESIDENCE: Cayman Islands
ADDRESS: c/o Olympia Capital (Cayman) Ltd.
Caledonian House, P.O. Box 1100
Georgetown, Grand Cayman
Cayman Islands
with copies of all notices to:
The Zanett Securities Corporation
Tower 49, 31st Floor
12 East 49th Street
New York, New York 10017
Telecopy: (212) 343-2121
Attention: Claudio Guazonni
Telecopy: (212) 759-3301
SUBSCRIPTION AMOUNT
Closing
Number of Shares: 11,200
Purchase Price ($1,000 per Share): $11,200,000
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Placement Agency Agreement
February 28, 2000
The Zanett Securities Corporation
Tower 49, 25th Floor
12 East 49th Street
New York, New York 10017
Gentlemen:
This agreement ("Agreement") will confirm that WORLDWIDEWEB
INSTITUTE.COM, INC., a Florida corporation (the "Company"), has retained The
Zanett Securities Corporation ("Zanett" or the "Placement Agent") as its
exclusive placement agent to assist the Company, in connection with the purchase
(the "Purchase") of 11,200 shares of Series A Convertible Preferred Stock of the
Company (the "Preferred Shares") which are convertible into shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), by
certain Initial Investors as defined in the Registration Rights Agreement (the
"Registration Rights Agreement"), pursuant to a Securities Purchase Agreement
(the "Securities Purchase Agreement") of even date herewith, in the aggregate
principal amount of Eleven Million Two Hundred Thousand Dollars ($11,200,000)
(the "Purchase Price").
1. Appointment of Placement Agent. Zanett is hereby appointed Placement
Agent of the Company for the purposes of assisting the Company in connection
with the Purchase. On the basis of the representations and warranties and
subject to the terms and conditions contained herein, Zanett hereby accepts such
agency and agrees to assist the Company in connection with the Purchase.
Zanett's agency hereunder is not terminable by the Company.
2. Closing; Placement Fee and Warrant; Expenses.
a. Closing. Upon satisfaction of the conditions to the closing
contained in the Securities Purchase Agreement, the closing (the "Closing") of
the purchase and sale of the Preferred Shares shall take place at the offices of
Klehr, Harrison, Harvey, Branzburg & Ellers LLP or such other mutually agreed
place, at such times and dates (each, a "Closing Date") as may be agreed upon
between the Placement Agent, the Initial Investors and the Company.
b. Procedures at Closing. Counsel for the Placement Agent shall act as
escrow agent for the Closing (the "Escrow Agent"). At the Closing:
(i) The Company shall deliver to the Escrow Agent, on behalf of the
Placement Agent and the Initial Investors, an opinion of the Company's outside
legal counsel, dated as of the Closing Date, in such form as required by the
Securities Purchase Agreement.
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(ii) The Company shall deliver to the Escrow Agent certificates from
the Company, signed by the President or a Vice President thereof, certifying
that attached thereto is a true and correct copy of resolutions adopted by the
Company's Board of Directors authorizing (A) the execution, delivery and
performance of this Agreement, the Securities Purchase Agreement, the
Registration Rights Agreement and other documentation related to the Purchase
(collectively the "Purchase Documents"), (B) the issuance of the Preferred
Shares and (C) the reservation for issuance and issuance of the Common Shares,
and certifying that such resolutions have not been modified, rescinded or
amended and are in full force and effect.
(iii) The Company shall deliver to the Escrow Agent a certificate of
good standing of the Company, dated as of a recent date, from the Secretary of
State of the State of Florida.
(iv) Each Investor shall deliver to the Escrow Agent two executed
copies of the Securities Purchase Agreement and Registration Rights Agreement
signed by such Investor, and the Company shall deliver to the Escrow Agent with
respect to each Investor two executed copies of its acceptance of the Securities
Purchase Agreement and Registration Rights Agreement executed by such Investor.
(v) Each Investor shall have delivered to the Company such Initial
Investor's pro rata portion of Two Million Dollars ($2,000,000) of the Purchase
Price on the date hereof and shall have delivered by wire transfer to an escrow
account designated by the Escrow Agent an amount equal to such Initial
Investor's pro rata portion of the remaining Nine Million Two Hundred Thousand
Dollars ($9,200,000) of the Purchase Price for the Preferred Shares being
purchased by such Investor at the Closing.
(vi) The Company shall have delivered to the Escrow Agent the duly
executed Preferred Shares being purchased by the Initial Investors in such
denominations as the Initial Investors shall request.
(vii) The Company and the Placement Agent shall instruct the Escrow
Agent to pay to the Company the remaining Nine Million Two Hundred Thousand
Dollars ($9,200,000) of the Purchase Price for the Preferred Shares subscribed
for at the Closing, less the Placement Agent Fee (as defined below), out of the
funds on deposit in the escrow account received from the Initial Investors whose
Securities Purchase Agreements have been accepted.
c. Placement Fee; Expenses. The Company covenants and agrees to pay to
the Placement Agent at the Closing a fee (the "Placement Agent Fee") equal to
10.0% of the aggregate gross proceeds payable to the Company for the sale of the
Preferred Shares at the Closing. The Placement Agent Fee shall be delivered by
the Escrow Agent to Zanett by wire transfer, in accordance with Zanett's written
wiring instructions, from the funds on deposit in the escrow account
simultaneously with payment for and delivery of the Preferred Shares at the
Closing under the Securities Purchase Agreement as provided in paragraph 2(a)
above. In addition, the Placement
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Agent shall be entitled to receive from the Company a non-accountable expense
allowance (the "Expense Allowance") not to exceed Fifty Thousand Dollars
($50,000.00). Lastly, the Company shall pay to the Placement Agent, on the first
day of each calendar month during which any Preferred Shares or Warrants are
outstanding, a monitoring and financial advisory fee of Four Thousand Nine
Hundred Fifty Dollars ($4,950.00).
d. Warrants. In addition to the Placement Agent Fee, at the Closing
under the Securities Purchase Agreement, the Company shall issue, to the
Placement Agent, warrants, in substantially the form attached hereto as Exhibit
A, to purchase 250,000 shares of the Company's Common Stock (the Placement
Warrants"). The Placement Warrants shall be exercisable for a period of three
(3) years beginning the date of issuance at a price per share equal to the
market price of the Company's common stock (the "Common Stock") at the end of
business on the Closing Date. Common Stock issuable upon exercise of the
Placement Warrants shall hereinafter be referred to as the "Placement Warrant
Shares." The Company shall grant the Placement Agent certain registration rights
under the Securities Act with respect to the Placement Warrant Shares pursuant
to the Registration Rights Agreement.
e. Expenses of Purchase. The Company shall be responsible for and shall
bear all expenses directly and necessarily incurred by it in connection with the
Purchase, including, but not limited to, the following: filing fees, registrar
and transfer agent fees, investigatory fees (including, but not limited to
travel, lodging and entertainment expenses), issuer's counsel and accounting
fees, blue sky fees and counsel, if any, and issue and transfer taxes, if any.
f. Non-Circumvention Period; Lock-Up Period; Option on Future
Financing. The Company agrees that, during the period beginning on the date
hereof and ending three (3) years following the later of the date hereof and the
date of the Closing (the "Non-Circumvention Period"), it will not, without the
prior written consent of the Placement Agent, negotiate or contract or have
discussions concerning any such matters with any Investor or any other party
introduced to the Company by Placement Agent to obtain additional financing in
any form. In addition, during the Non-circumvention, as investment bankers to
the Company, Zanett shall approve all mergers, sales, consolidations or
financings involving the Company and which are, in the aggregate, in excess of
Two Hundred Fifty Thousand Dollars ($250,000).
3. Representations and Warranties and Covenants.
a. The Company represents and warrants to Zanett that this Agreement
has been duly authorized, executed and delivered by the Company and, assuming
the due execution by Zanett, constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms.
b. The Company has delivered to Zanett true and complete copies of the
SEC Documents (as defined in the Securities Purchase Agreement) filed by the
Company on or after
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March 31, 1999 with the Securities and Exchange Commission (the "SEC") pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
c. The Company recognizes and confirms that Zanett (i) will use and
rely primarily on the SEC Documents and on information provided by the Company
in connection with the transactions contemplated by this Agreement in performing
the services contemplated by this Agreement without having independently
verified the same; (ii) is authorized to assist the Company in the structuring
of the Purchase with any prospective purchaser who is an "accredited investor"
as defined in Regulation D under the Securities Act and to provide copies of the
SEC Documents and forms of the Securities Purchase Agreement and other Purchase
Documents to prospective purchasers of the Company's securities in connection
with the performance of Zanett's services hereunder; and (iii) does not assume
responsibility for the accuracy or completeness of the SEC Documents.
d. In addition to the foregoing, the Company hereby incorporates by
reference all of the representations and warranties and covenants to be set
forth in the Securities Purchase Agreement and the other Purchase Documents with
the same force and effect as if specifically set forth herein.
e. So long as Zanett and/or affiliates own any securities of the
Company issued pursuant to the Purchase Documents or this Agreement, (i) the
Company shall provide Zanett, within three (3) business days of the filing or
preparation thereof, with such financial and other statements including, without
limitation, management letters and consolidated financial statements as are
provided to any other lenders to or security holders of the Company; (ii) in the
event any current officer, director, employee, consultant or other agent ceases,
subsequent to the date hereof, to have such relationship with the Company and
such cessation has, or is likely to have, a material adverse effect on the
Company, taken as a whole, the Company shall promptly notify Zanett of such
event, which notification shall comprehensively describe such circumstances;
(iii) the Company shall, on a regular basis, provide to Zanett updates of any
material litigation and/or governmental proceedings which could reasonably be
expected to have a material adverse effect on the business of the Company; and
(iv) the Company shall promptly provide to Zanett notice of any event of default
under any agreement or other document with any lender or holder of any security
of the Company. Zanett shall hold in confidence and shall not make any
disclosure (except to an Initial Investor) or use of any such information
disclosed to it pursuant to clauses (i) through (iv) above which the Company
determines in good faith to be confidential, and of which determination Zanett
is so notified, unless (a) the release of such information is ordered pursuant
to a subpoena or other order from a court or government body of competent
jurisdiction or (b) the information has been made generally available to the
public other than by disclosure in violation of this or any other agreement.
Anything contained herein to the contrary notwithstanding, Placement Agent's
obligations to proceed with the Purchase is conditioned upon Placement Agent's
due diligence investigation of the Company. Zanett shall be fully informed by
the Company of any events which might have a material affect on the financial
condition of the Company. If, in Zanett's opinion, the condition of the Company,
financial or otherwise, and its prospects are affected in a material and/or
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adverse manner and do not fulfill Zanett's expectations, Zanett shall have the
sole discretion to review and determine its continued interest in the Purchase.
f. So long as Zanett and/or affiliates own any securities of the
Company, the Company shall make available, during regular business hours, all
records and books of account of the Company for inspection by Zanett, subject to
the execution of an acceptable confidentiality agreement. The Company shall
permit Zanett, at its expense and during regular business hours, to inspect its
properties with three days notice and in a manner that does not disrupt
operations.
g. The Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement and the Placement Warrants
in accordance with the terms hereof. The execution, delivery and performance of
this Agreement and the Placement Warrants by the Company and the consummation by
it of the transactions contemplated hereby (including, without limitation, the
reservation for issuance and issuance of the Placement Warrant Shares issuable
upon exercise thereof) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its shareholders is required. This Agreement constitutes, and upon
execution and delivery by the Company of the Placement Warrants, such Placement
Warrants will constitute, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms.
h. The Placement Warrants and the Placement Warrant Shares issuable
upon the exercise thereof are duly authorized and, upon issuance of the
Placement Warrant Shares upon exercise of the Placement Warrants in accordance
with the terms thereof, the Placement Warrant Shares will be validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of the shareholders of the Company.
i. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby will not (A) result in a violation of the Company's Articles of
Incorporation or By-laws or (B) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected (except, with respect to clause (B), for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a material adverse effect
on the operation, properties, prospects or financial condition of the Company
("Material Adverse Effect")). The Company is not in violation of its Articles of
Incorporation or By-laws and is not in default (and no event has occurred which
with notice or lapse of time or both would put the Company in default) under,
nor has there occurred any event giving others (with notice or lapse of time or
both) any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, except for
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possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. The business of the Company is not being conducted, and
shall not be conducted, in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which either singly or in
the aggregate do not have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self regulatory agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement in accordance with the terms hereof.
j. The Company shall at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of Placement Warrant Shares to provide
for the full exercise of the outstanding Placement Warrants.
k. The Company shall promptly secure the listing of the Placement
Warrant Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Placement Warrant Shares
from time to time issuable upon exercise of the Placement Warrants.
l. The Company agrees to provide two (2) fully developed web sites for
the Placement Agent, the purpose of each will be determined by the Placement
Agent at a future date and shall be in form and operation reasonably
satisfactory to the Placement Agent.
m. The Company shall perform all corporate obligations which are
necessary to insure that the Placement Agent has the right to appoint one (1)
member of the Board of Directors of the Company at any time if such Board has
five (5) or fewer members and two (2) members to such Board if such Board has
six (6) or more members.
n. The Placement Agent represents and warrants to the Company that:
(i) The Placement Agent is acquiring the Placement Warrants and the
Placement Warrant Shares for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act.
(ii) The Placement Agent is an "Accredited Investor" as that term is
defined in Rule 501(a) of Regulation D.
(iii) The Placement Agent understands that the Placement Warrants and
the Placement Warrant Shares are being issued to the Placement Agent in reliance
upon specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the truth
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and accuracy of, and Placement Agent's compliance with, the representations,
warranties, agreements, acknowledgments and understandings set forth herein in
order to determine the availability of such exemptions and the eligibility of
Placement Agent to acquire the Placement Warrants and the Placement Warrant
Shares.
(iv) The Placement Agent understands that (i) except as provided in the
Registration Rights Agreement, the sale or resale of the Placement Warrants and
the Placement Warrant Shares issuable upon exercise thereof have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) the resale of the Securities has been
registered thereunder; or (b) Placement Agent shall have delivered to the
Company an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that the securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; or (c) the Securities are sold
under Rule 144 promulgated under the Securities Act (or a successor rule) ("Rule
144"); or (d) the Securities are sold or transferred to an affiliate of
Placement Agent who agrees to sell or otherwise transfer such securities only in
accordance with the provisions of the terms hereof and who is an Accredited
Investor; and (ii) neither the Company nor any other person is under any
obligation to register such Securities under the Securities Act or any state
securities laws (other than pursuant to the Registration Rights Agreement).
Notwithstanding the foregoing or anything else contained herein to the contrary,
such securities may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement.
(v) This Agreement has been duly and validly authorized, executed and
delivered on behalf of Placement Agent and is the valid and binding agreement of
Placement Agent enforceable against Placement Agent in accordance with its
terms.
(vi) The Placement Agent is a registered broker dealer (as such term is
defined under the Securities Act of 1933, as amended) and has not made any
general solicitations (as such term is defined under the Securities Act of 1933,
as amended) with respect to the sale of the Securities.
4. Publicity. The Company shall not make any reference to Zanett or to
any of its affiliates in any release or other communication without Zanett's
prior written consent. Without Zanett's prior written consent, no advice
rendered by Zanett in connection with the services performed by Zanett pursuant
to this Agreement will be quoted by the Company, its affiliates or
representatives nor will any such advice be referred to in any report, document,
release or other communication, whether oral or written, prepared or issued or
transmitted by such person, except to the extent required by law (in which case
the appropriate party shall so advise Zanett in writing prior to such use and
shall consult with Zanett with respect to the form and timing of the
disclosure).
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5. Indemnification and Contribution.
a. To the extent permitted by law, each party hereto (such party being
the "Indemnifying Party") will indemnify, hold harmless and defend the other
party hereto and each of its directors, officers, partners, members, employees,
agents and each person who controls such other party within the meaning of the
Securities Act or the Exchange Act, if any, (each, an "Indemnified Person"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (a) where the Company is the Indemnifying
Party, (i) any transaction contemplated by this Agreement, the retention of
Zanett as Placement Agent under this Agreement, the performance of services by
Zanett hereunder or any involvement or alleged involvement of Zanett in the
Purchase or (ii) any breach of any of the Company's representations, warranties
or covenants contained herein or (b) where Zanett is the Indemnifying Party, any
breach of any of Zanett's representations or warranties contained herein. The
Indemnifying Party shall reimburse each of the Indemnified Persons, promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable out of pocket expenses incurred by them in connection
with investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 5(a) shall not (i) apply in instances where the Claims were the result
of Zanett's or the Company's, in each case as the Indemnified Person, gross
negligence or based on Zanett's or the Company's, in each case as the
Indemnified Person, wilful misconduct, and (ii) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
b. Promptly after receipt by an Indemnified Person under this Section 5
of notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Claim in respect thereof is made against the
Indemnifying Party under this Section 5, deliver to the Indemnifying Party a
written notice of the commencement thereof, and the Indemnifying Party shall
have the right to participate in, and, to the extent the Indemnifying Party so
desires, to assume control of the defense thereof with counsel mutually
satisfactory to the Indemnifying Party and the Indemnified Person; provided,
however, that an Indemnified Person shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnifying Party, if, in
the reasonable opinion of counsel retained by the Indemnified Person, the
representation by such counsel of the Indemnified Person and the Indemnifying
Party would be inappropriate due to actual or potential differing interests
between such Indemnified Person and any other party represented by the
Indemnifying Party's counsel in such proceeding. The Indemnifying Party shall
pay for only one separate legal counsel for the Indemnified Persons, and such
legal counsel shall be selected by Placement Agent, where the Company is the
Indemnifying Party, or the Company, where the Placement Agent is the
Indemnifying Party. The failure to deliver written notice to the Indemnifying
Party within a reasonable time of the commencement of any such action shall not
relieve the Indemnifying Party of any liability to the Indemnified Person under
this Section 5, except to the extent that the Indemnifying Party is actually
prejudiced in its ability to defend such action.
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The indemnification required by this Section 5 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
c. To the extent any indemnification by the Indemnifying Party of an
Indemnified Person is prohibited or limited by law or otherwise unavailable in
respect of any Claim, the Indemnifying Party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under this Section 5 to the fullest extent permitted by law. In this regard, the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Person as a result of any such Claim (i) in such portion as is
appropriate to reflect the relative benefits received by the Indemnifying Party,
on the one hand, and the Indemnified Person, on the other, from the structuring
and issuance of the securities in the Purchase or any other transaction in which
Zanett rendered services hereunder or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Party, on the one hand,
and of the Indemnified Person, on the other, in connection with untrue
statements or omissions or other actions (or alleged untrue statements,
omissions or other actions) which resulted in such Claim as well as any other
relevant equitable considerations. The relative benefits received by the
Indemnifying Party, on the one hand, and the Indemnified Person, on the other,
shall be deemed to be in the same proportion as the total gross proceeds
received by the Indemnifying Party in the Purchase or any other financing bears
to such Indemnified Person's compensation. The relative fault of the
Indemnifying Party on the one hand and of the Indemnified Person on the other
shall be determined by reference to, among other things, whether such untrue
statements or omissions or other actions (or alleged untrue statements,
omissions or other actions) relate to information supplied or action taken by
the Indemnifying Party, on the one hand, or by the Indemnified Person, on the
other, and the relevant persons' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statements,
omission or actions. The amount paid or payable by a party as a result of the
Claim shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim. The Company and Zanett agree that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above.
d. The aforesaid indemnity and contribution agreements shall apply to
any related activities engaged in by any Indemnified Person prior to this date
and to any modification of Zanett's engagement hereunder, and shall remain in
full force and effect regardless of any investigation made by or on behalf of
Indemnified Person or any of its agents, employees, officers, directors or
controlling persons and shall survive the issuance of any securities in any
transaction referred to hereunder (including the Purchase) and any termination
of this Agreement or Placement Agent's engagement hereunder. Each party hereto
agrees to promptly notify the other party hereto of the commencement of any
litigation or proceeding against it or any of its directors, officers, agents or
employees in connection with the transactions contemplated hereby.
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e. The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company, its owners, creditors or security holders for or in connection with
advice or services rendered or to be rendered by Zanett pursuant to this
Agreement, the transactions contemplated hereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions except for liabilities (and related expenses) of the Company that
are determined by a final judgment of a court of competent jurisdiction to have
resulted primarily from such Indemnified Party's gross negligence or wilful
misconduct in connection with any such advice, actions, inactions or services.
6. Survival of Certain Provisions. The representations, warranties,
covenants and provisions contained in Section 2(f), Section 3, Section 4 and
Section 5 hereof shall survive in full force and effect until Zanett no longer
owns any Placement Warrants or Placement Warrant Shares, regardless of (a) any
completion or termination of any financing contemplated by this Agreement
(including the Purchase), (b) any termination of this Agreement, or (c) any
investigation made by or on behalf of Placement Agent or any affiliate of
Placement Agent, and shall be binding upon, and shall inure to the benefit of,
any successors, assigns, heirs and personal representatives of the Company,
Zanett, the Indemnified Parties and any holder of Placement Warrants or
Placement Warrant Shares.
7. Miscellaneous.
a. All notices, requests, demands and other communications which are
required or may be given hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally, receipt acknowledged or five (5)
days after being sent by registered or certified mail, return receipt requested,
postage prepaid or by confirmed telecopy. All notices shall be made to the
parties at the addresses designated above or at such other or different
addresses which party may subsequently provide with notice thereof, and, to
their respective legal counsel, as follows:
(i) If to Placement Agent, to
The Zanett Securities Corporation
Tower 49, 31st Floor
12 East 49th Street
New York, NY 10017
Attention: Claudio Guazzoni
- with a copy simultaneously transmitted by like means to -
Klehr, Harrison, Harvey, Branzburg & Ellers
260 South Broad Street
Philadelphia, PA 19102
Attention: Stephen T. Burdumy, Esquire
Telecopy: 215-568-6603
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(ii) If to the Company, to
WORLDWIDEWEB INSTITUTE.COM, INC.
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, FL 33309
Attn: Smiley Sansoni
Telecopy: 954-776-3322
- with a copy simultaneously transmitted by like means to -
Atlas Pearlman Trop & Borkson, P.A.
New River Center, Suite 1900
200 East Las Olas Boulevard
Fort Lauderdale, FL 33301
Attention: James M. Schneider, Esquire
Telecopy: 954-766-7800
b. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
c. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York (without regard to its conflict of laws
provisions). The Company hereby agrees to submit to the exclusive jurisdiction
of an arbitration panel of the National Association of Securities Dealers, Inc.
located in the City of New York in the State of New York in connection with any
suit, action or proceeding related to this Agreement or any of the matters
contemplated hereby, irrevocably waives any defense of lack of personal
jurisdiction and irrevocably agrees that all claims in respect of any suit,
action or proceeding may be heard and determined in by such panel. The Company
irrevocably waives, to the fullest extent it may effectively do so under
applicable law any objection which it may now or hereafter have to the laying of
venue of any such suit, action or proceeding brought before any such court and
any claims that any such suit, action or proceeding brought in any such
arbitration panel has been brought in an inconvenient forum. The Company further
agrees to pay or reimburse Zanett for all reasonable costs and expenses incurred
by Placement Agent in connection with the enforcement of any of its rights under
this Agreement, including without limitation, all attorneys' fees and expenses
of its counsel.
d. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
e. This Agreement may not be modified or amended except in writing duly
sworn by the parties hereto.
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f. If any term, provision, covenant or restriction contained in this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
g. Each party to this Agreement has participated in the negotiation and
drafting of this Agreement. As such, the language used herein shall be deemed to
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction will be applied against any party to this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Please sign and return the original and one copy of this letter to
indicate your acceptance of the terms set forth herein whereupon this letter and
your acceptance shall constitute a binding agreement between you and the
Company.
Very truly yours,
WORLDWIDEWEB INSTITUTE.COM, INC.
By:
Name:
Title:
Accepted and Agreed to this 28th day of February, 2000.
THE ZANETT SECURITIES CORPORATION
By:_____________________________________
Name:
Title:
13
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of February
28, 2000, by and among WORLDWIDEWEB INSTITUTE.COM, INC., a corporation organized
under the laws of the State of Florida, with headquarters located at 6245 N.W.
9th Avenue, Suite 201, Fort Lauderdale, Florida 33309 (the "Company"), and the
undersigned (together with affiliates, the "Initial Investors").
WHEREAS:
A. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Initial Investors (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, (i) to issue and sell to the Initial Investors
Series A Convertible Preferred Stock (the "Preferred Shares") in the aggregate
principal amount of Eleven Million Two Hundred Thousand Dollars ($11,200,000),
which are convertible into shares of the Company's common stock (the "Common
Shares"), $.001 par value per share, (the "Common Stock") and (ii) to issue to
Zanett Securities Corp., as placement agent, warrants (the "Warrants") to
acquire 250,000 shares of common stock of the Company. The Common Shares
issuable upon conversion of or otherwise issuable pursuant to the Preferred
Shares and the Certificate of Designation (the "Certificate") governing the
terms of the Preferred Shares are referred to herein as the "Conversion Shares"
and the shares of Common Stock issuable upon exercise of or otherwise pursuant
to the Warrants are referred to herein as the "Warrant Shares."
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following
meanings:
(i) "Investors" means the Initial Investors and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for
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offering securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means (i) the Conversion Shares, (ii)
the Warrant Shares, and (iii) any shares of capital stock issued or issuable,
from time to time (with any adjustments), as a distribution on or in exchange
for or otherwise with respect to any of the foregoing, whether as default
payments or otherwise.
(iv) "Registration Statement" means a registration statement of the
Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare and file with the
United States Securities and Exchange Commission ("SEC"), on or prior to the
date (the "Filing Date") which is forty-five (45) days after the Closing Date
(as defined in the Securities Purchase Agreement, the "Closing Date") a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of
Zannett Capital Corp. covering the resale of at least 3,500,000 Registrable
Securities, which Registration Statement, to the extent allowable under the
Securities Act and the Rules promulgated thereunder (including Rule 416), shall
state that such Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion of the
Preferred Shares and exercise of the Warrants (i) to prevent dilution resulting
from stock splits, stock dividends or similar transactions. The Registrable
Securities included in the Registration Statement shall be allocated to the
Investors as set forth in Section 11(k) hereof. The Registration Statement (and
each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of) the
Initial Investors and their counsel prior to its filing or other submission.
b. Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors who hold a majority in interest of the Registrable Securities subject
to such underwritten offering, with the consent of the Initial Investors, shall
have the right to select one legal counsel to represent the Investors and an
investment banker or bankers and manager or managers to administer the offering,
which investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company. In the event that any Investors elect not to
participate in such underwritten offering, the Registration Statement covering
all of the Registrable Securities shall contain appropriate plans of
distribution reasonably satisfactory to the Investors participating in such
underwritten offering and the Investors electing not to participate in such
underwritten offering (including, without limitation, the ability of
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nonparticipating Investors to sell from time to time and at any time during the
effectiveness of such Registration Statement).
c. Payments by the Company. The Company shall use its best efforts to
cause the Registration Statement required to be filed pursuant to Section 2(a)
hereof to become effective as soon as practicable, but in no event later than
the two hundred and tenth (210th) day after the Closing Date (the "Registration
Deadline"). If (i) the Registration Statement(s) covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not filed with the SEC by the Filing Date or declared effective by the SEC on
or before the Registration Deadline or if, after the Registration Statement has
been declared effective by the SEC, sales of all the Registrable Securities
(including any Registrable Securities required to be registered pursuant to
Section 3(b) hereof) cannot be made pursuant to the Registration Statement (by
reason of a stop order or the Company's failure to update the Registration
Statement or any other reason outside the control of the Investors) except as
provided below or (ii) the Common Stock is not listed or included for quotation
on the Nasdaq National Market (the "NNM"), the Nasdaq Small Cap Market ("Small
Cap Market"), the Nasdaq Electronic Bulletin Board (the "Bulletin Board"), the
New York Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX")
at any time after the Registration Deadline, then the Company will make payments
to the Investors in such amounts and at such times as shall be determined
pursuant to this Section 2(c) as partial relief for the damages to the Investors
by reason of any such delay in or reduction of their ability to sell the
Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity). The Company shall pay to each Investor
an amount equal to the product of (i) the aggregate principal amount of the
Preferred Shares held by such Investor (including, without limitation, Preferred
Shares that have been converted into Conversion Shares then held by such
Investor) (the "Aggregate Principal Amount"), multiplied by (ii) one and
one-half percent (1.5%), multiplied by (iii) the sum of (x) the number of months
(pro rated for partial months) after the Filing Date and prior to the date the
Registration Statement required to be filed pursuant to Section 2(a) is filed
with the SEC, plus (y) the number of months (pro rated for partial months) after
the Registration Deadline and prior to the date the Registration Statement filed
pursuant to Section 2(a) is declared effective by the SEC, plus (z) the number
of additional months (prorated for partial months) that sales of any Registrable
Securities cannot be made pursuant to the Registration Statement after the
Registration Statement has been declared effective or the Common Stock is not
listed or included for quotation on the NNM, the NYSE, AMEX or the Bulletin
Board. [For example, if the Registration Statement is not effective by the
Registration Deadline, the Company would pay $15,000 per month for each
$1,000,000 of Aggregate Principal Amount until the Registration Statement
becomes effective.] Such amounts shall be paid in cash or, at each Investor's
option, may be convertible into Common Stock at the "Conversion Price" (as
defined in the Certificate). Any shares of Common Stock issued upon conversion
of such amounts shall be Registrable Securities. If the Investor desires to
convert the amounts due hereunder into Registrable Securities, it shall so
notify the Company in writing within two (2) business days of the date on which
such amounts are first payable in cash and such amounts shall be so convertible
(pursuant to the mechanics set forth under Article III of the Certificate),
beginning on the last day upon which the cash amount would otherwise be due in
accordance with the following sentence. Payments of cash pursuant hereto shall
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be made within five (5) days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than thirty
(30) days, interim payments shall be made for each such thirty (30) day period.
d. Piggy-Back Registrations. If at any time prior to the expiration of
the Registration Period (as hereinafter defined) the Company shall file with the
SEC a Registration Statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans) and the Company is not prohibited from including
such Registrable Securities on such Registration Statement, the Company shall
send to each Investor who is entitled to registration rights under this Section
2(d) written notice of such determination and, if within fifteen (15) days after
the date of such notice, such Investor shall so request in writing, the Company
shall include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if, in
connection with any underwritten public offering for the account of the Company
the managing underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock which may be included in the Registration Statement
because, in such underwriter(s)' judgment, marketing or other factors dictate
such limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Investor has
requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to
include Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights (except to the extent any existing agreements otherwise provide). No
right to registration of Registrable Securities under this Section 2(d) shall be
construed to limit any registration required under Section 2(a) hereof. If an
offering in connection with which an Investor is entitled to registration under
this Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in
an underwritten offering using the same underwriter or underwriters and, subject
to the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
e. Eligibility for Form SB-2. The Company represents and warrants that
it meets the requirements for the use of Form SB-2 for registration of the sale
by the Initial Investors and any other Investor of the Registrable Securities
and the Company shall file all reports required to be filed
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by the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form SB-2.
f. Rule 416. The Company and the Investors each acknowledge
that an indeterminate number of Registrable Securities shall be registered
pursuant to Rule 416 under the Securities Act so as to include in such
Registration Statement any and all Registrable Securities which may become
issuable to prevent dilution resulting from stock splits, stock dividends or
similar transactions.
3. DELAY PERIODS; SUSPENSION OF SALES.
a. If, at any time prior to the expiration of the Registration Period
(as defined below), in the good faith reasonable judgment of the Company's Board
of Directors, the disposition of Registrable Securities would require the
premature disclosure of material non-public information which may reasonably be
expected to have an adverse effect on the Company, then the Company shall not be
required to maintain the effectiveness of or amend or supplement the
Registration Statement for a period (a "Disclosure Delay Period") expiring upon
the earlier to occur of (i) the date on which such material information is
disclosed to the public or ceases to be material or (ii) subject to Section 3(b)
hereof, up to thirty (30) calendar days, but excluding the period of up to sixty
(60) calendar days for the processing of any post-effective amendment to the
Registration Statement, after the date on which the Company provides a notice to
the Investors under Section 4(f) hereof stating that the failure to disclose
such non-public information causes the prospectus included in the Registration
Statement, as then in effect, to include an untrue statement of a material fact
or to omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. For the avoidance of doubt, in no
event shall a Disclosure Delay Period exceed thirty (30) calendar days.
b. The Company will give prompt written notice, in the manner
prescribed by Section 12 hereof, to the Investors of each Disclosure Delay
Period. Advance notice of the Disclosure Delay Period shall be given to the
extent practicable. If practicable, such notice shall estimate the duration of
such Disclosure Delay Period. Each Investor, by accepting Registrable Securities
upon conversion of shares of Preferred Stock or exercise of Warrants, agrees
that, upon receipt of such notice prior to Investor's disposition of all such
Registrable Securities, Investor will forthwith discontinue disposition of such
Registrable Securities pursuant to the Registration Statement, and will not
deliver any prospectus forming a part thereof in connection with any sale of
such Registrable Securities until the expiration of such Disclosure Delay
Period. In addition, the provisions of Section 2(c) hereof shall not apply to
the Disclosure Delay Periods. Notwithstanding anything in this Section 3 to the
contrary, there shall not be more than an aggregate of sixty (60) calendar days
in any twelve (12) month period during which the Company is in a Disclosure
Delay Period nor more than an aggregate of thirty (30) calendar days in any
ninety (90) calendar day period during which the Company is in a Disclosure
Delay Period.
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4. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare promptly and use its best efforts to file
with the SEC the Registration Statement required by Section 2(a) as soon as
practicable after the Closing Date (but in no event later than the Filing Date),
and cause such Registration Statement relating to Registrable Securities to
become effective as soon as practicable after such filing (but in no event later
than the Registration Deadline), and keep the Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which all of the Registrable Securities (in the reasonable opinion of counsel
to the Initial Investors) may be immediately sold to the public without
registration or restriction pursuant to Rule 144(k) under the Securities Act
(the "Registration Period"), which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement. In the event the number of
shares available under a Registration Statement filed pursuant to this Agreement
is, for any three (3) consecutive trading days (the last of such three (3)
trading days being the "Registration Trigger Date"), insufficient to cover one
hundred thirty-five percent (135%) of the Registrable Securities issued or
issuable upon conversion of the Preferred Shares and exercise of the Warrants
(without giving effect to any limitations on conversion or exercise contained in
Article III.C of the Certificate or Section 7(g) of the Warrants), the Company
shall amend the Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as to cover two
hundred percent (200%) of the Registrable Securities so issued or issuable
(without giving effect to any limitations on conversion or exercise contained in
Article III.C of the Certificate or Section 7(g) of the Warrants) as of the
Registration Trigger Date, in each case, as soon as practicable, but in any
event within fifteen (15) days after the Registration Trigger Date (based on the
market price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. In the event the Company fails to obtain the effectiveness of
any such Registration Statement within sixty (60) days after a Registration
Trigger Date, each Investor shall thereafter have the option, exercisable in
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whole or in part at any time and from time to time by delivery of a written
notice to the Company (a "Repurchase Notice"), to require the Company to
purchase for cash, at an amount per share equal to the Default Amount (as
defined in Article VII of the Certificate), a portion of the Investor's
Preferred Shares such that the total number of Registrable Securities included
on the Registration Statement for resale by such Investor exceeds 135% of the
Registrable Securities issued or issuable upon conversion of such Investor's
Preferred Shares and exercise of such Investor's Warrants (without giving effect
to any limitations on conversion or exercise contained in Article III of the
Certificate or Section 7(g) of the Warrants). If the Company fails to purchase
any of such Preferred Shares within five (5) business days after its receipt of
a Repurchase Notice, then such Investor shall be entitled to the remedies
provided in Article VII.C of the Certificate.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2(a), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of any Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than any portion, if
any, thereof which contains information for which the Company has sought
confidential treatment), (ii) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the Registration
Statement or amendment has been declared effective, and (iii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor.
d. The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as each Investor who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its charter or bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of the
Company and its stockholders.
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e. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor by telephone and facsimile of the happening
of any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to
each Investor as such Investor may reasonably request.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable moment (including in each case by amending or supplementing
such Registration Statement) and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
h. The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
i. The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
j. At the request of any Investor, the Company shall furnish, on the
date of effectiveness of the Registration Statement (i) an opinion, dated as of
such date, from counsel representing the Company addressed to the Investors and
in form, scope and substances as is customarily given in an underwritten public
offering and (ii) in the case of an underwriting, a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and the Investors.
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k. The Company shall make available for inspection by (i) any Investor,
(ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) of
any Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(k). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein shall be deemed to
limit the Investors' ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
l. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (iv) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement, or (v) such Investor consents to the form and
content of any such disclosure. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
m. The Company shall use its best efforts to promptly either (i) cause
all the Registrable Securities covered by the Registration Statement to be
listed on the NYSE or the AMEX or another national securities exchange and on
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each additional national securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure the designation and quotation, of all the Conversion Shares and
the Warrant Shares covered by the Registration Statement on the Bulletin Board
and, without limiting the generality of the foregoing, to arrange for or
maintain at least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities.
n. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
o. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the managing underwriter
or underwriters, if any, or the Investors may reasonably request and registered
in such names as the managing underwriter or underwriters, if any, or the
Investors may request, and, within three (3) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) an opinion of such counsel in the form attached hereto as Exhibit 1.
p. At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.
q. The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the Securities Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated by the SEC).
r. The Company shall take all such other actions as any Investor or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities.
s. Except as provided in the Securities Purchase Agreement, from and
after the date of this Agreement, the Company shall not, and shall not agree to,
allow the holders of any securities of the Company to include any of their
securities in any Registration Statement under Section 2(a) hereof or any
amendment or supplement thereto under Section 3(b) hereof without the consent of
the holders of a majority in interest of the Registrable Securities.
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<PAGE>
5. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) business
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of the information the Company requires
from each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter(s) of such offering and the Company and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of such Investor's election not to participate in such
underwritten distribution.
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
Notwithstanding anything to the contrary, the Company shall cause the Transfer
Agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Certificate in connection with any
sale of Registrable Securities with respect to which such Investor has entered
into a contract for sale prior to receipt of such notice and for which such
Investor has not yet settled.
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<PAGE>
e. No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below. Notwithstanding anything in this Section
4(e) to the contrary, this Section 4(e) is not intended to limit an Investor's
rights under Section 2(a) or 3(b) hereof.
6. EXPENSES OF REGISTRATION.
All reasonable expenses incurred by the Company or the Investors in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 above, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, the fees and disbursements of one counsel selected by
the Investors, and underwriting discounts and commissions shall be borne by the
Company. In addition, the Company shall pay all of the Investors' costs and
expenses (including legal fees) incurred in connection with the enforcement of
the rights of the Investors hereunder.
7. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities, and
(ii) the directors, officers, partners, members, employees and agents of such
Investor and each person who controls any Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), if any, (each, an "Indemnified Person"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
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<PAGE>
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Investors and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented,
if such corrected prospectus was timely made available by the Company pursuant
to Section 3(c) hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or underwriter
within the meaning of the Securities Act or the Exchange Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) such Investor will
reimburse any legal or other expenses (promptly as such expenses are incurred
and are due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that amount as
does not exceed the net proceeds actually received by such Investor as a result
of the sale of Registrable Securities
-13-
<PAGE>
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented, and the Indemnified Party failed to utilize
such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if it holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
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<PAGE>
8. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
9. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
a. file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's obligations under
Section 4(c) of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns Preferred
Shares, Warrants or Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
10. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the Preferred Shares, Warrants or the Registrable Securities if: (i)
the Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company after such
assignment, (ii) the Company is furnished with written notice of (a) the name
and address of such transferee or assignee and (b) the securities with respect
to which such registration rights are being transferred or assigned, (iii)
following such
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<PAGE>
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (iv) the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement. In addition, and notwithstanding anything to
the contrary contained in this Agreement, the Securities Purchase Agreement, the
Certificate, the Warrants or the Securities (as defined in the Securities
Purchase Agreement) may be pledged, and all rights of the Investors under this
Agreement or any other agreement or document related to the transaction
contemplated hereby may be assigned, without further consent of the Company, to
a bona fide pledgee in connection with an Investor's margin or brokerage
accounts.
11. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company , the
Initial Investors (to the extent the Initial Investors still own Preferred
Shares or Registrable Securities) and Investors who hold a majority in interest
of the Registrable Securities or, in the case of a waiver, with the written
consent of the party charged with the enforcement of any such provision. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.
12. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
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<PAGE>
If to the Company:
WorldWideWeb Institute.com, Inc.
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, Florida 33309
Telecopy: 954-766-3322
Attention: Smiley Sansoni
with a copy to:
Atlas Pearlman Trop & Borkson, P.A.
New River Center, Suite 1900
200 East Las Olas Boulevard
Fort Lauderdale, FL 33301
Attention: James M. Schneider, Esquire
Telecopy: 954-766-7800
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts and
state courts located in New York, New York in any suit or proceeding based on or
arising under this Agreement and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company further agrees that service of process upon
the Company mailed by first class mail shall be deemed in every respect
effective service of process upon the Company in any such suit or proceeding.
Nothing herein shall affect an Investor's right to serve process in any other
manner permitted by law. The Company agrees that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
e. This Agreement, the Securities Purchase Agreement, and the
Certificate of Designation (including all schedules and exhibits thereto)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Securities Purchase Agreement and the Certificate
supersede all prior
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<PAGE>
agreements and understandings among the parties hereto and thereto with respect
to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
j. All consents, approvals and other determinations to be made by the
Investors or the Initial Investors pursuant to this Agreement shall be made by
the Investors holding a majority in interest of the Registrable Securities
(determined as if all Preferred Shares and Warrants then outstanding had been
converted into or exercised for Registrable Securities) then held by all
Investors or by the Initial Investors, as the case may be.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time of such
establishment or increase, as the case may be. In the event an Investor shall
sell or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included on a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated
to any person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Investors, pro rata based on the number of shares of
Registrable Securities then held by such Investors. For the avoidance of doubt,
the number of Registrable Securities held by an Investor shall be determined as
if all Preferred Shares and Warrants then outstanding and held by an Investor
were converted into or exercised for Registrable Securities.
l. For purposes of this Agreement, the term "business day" means any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law, regulation or
executive order to close.
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<PAGE>
[Remainder of Page Intentionally Left Blank]
-19-
<PAGE>
IN WITNESS WHEREOF, the undersigned Initial Investors and the Company
have caused this Agreement to be duly executed as of the date first above
written.
WORLDWIDEWEB INSTITUTE.COM, INC.
By:
Name:
Title:
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<PAGE>
INITIAL INVESTOR:
ZANETT LOMBARDIER MASTER FUND L.P.
By:_____________________________
Name:
Title:
RESIDENCE: Cayman Islands
ADDRESS: c/o Olympia Capital (Cayman) Ltd.
Caledonian House, P.O. Box 1100
Georgetown, Grand Cayman
Cayman Islands
with copies of all notices to:
The Zanett Securities Corporation
Tower 49, 31st Floor
12 East 49th Street
New York, New York 10017
Telecopy: (212) 343-2121
Attention: Claudio Guazonni
Telecopy: (212) 759-3301
-21-
<PAGE>
INITIAL INVESTOR:
[ ]
---------------
By:
Name:
Title:
RESIDENCE:
ADDRESS:
Telecopy:
-22-
<PAGE>
INITIAL INVESTOR:
ZANETT LOMBARDIER MASTER FUND, LTD.
By:
Name:
Title:
ADDRESS:
Telecopy:
Attention:
with copies of all notices to:
Klehr, Harrison, Harvey, Branzburg & Ellers, LLP
260 S. Broad Street
Philadelphia, PA 19102
Telecopy: (215) 568-6603
Attention: Stephen T. Burdumy, Esquire
-23-
<PAGE>
EXHIBIT 1
to
Registration
Rights
Agreement
[Date]
[Name and address
of transfer agent]
RE: WORLDWIDEWEB INSTITUTE.COM, INC.
Ladies and Gentlemen:
We are counsel to WORLDWIDEWEB INSTITUTE.COM, INC., a corporation
organized under the laws of the State of Florida (the "Company"), and we
understand that [Name of Investor] (the "Holder") has purchased from the Company
(i) Series A Convertible Preferred Shares (the "Preferred Shares") which are
convertible into shares (the "Conversion Shares") of the Company's common stock,
$.001 par value per share, (the "Common Stock") and (ii) warrants (the
"Warrants") to acquire shares of the Common Stock (the "Warrant Shares"). The
Conversion Shares and the Warrants were issued by the Company pursuant to a
Securities Purchase Agreement, dated as of February 28, 2000, by and among the
Company and the signatories thereto (the "Agreement"). Pursuant to a
Registration Rights Agreement, dated as of February 28, 2000, by and among the
Company and the signatories thereto (the "Registration Rights Agreement"), the
Company agreed, among other things, to register the Registrable Securities (as
that term is defined in the Registration Rights Agreement) under the Securities
Act of 1933, as amended (the "Securities Act"), upon the terms provided in the
Registration Rights Agreement. In connection with the Company's obligations
under the Registration Rights Agreement, on _____ __, 2000, the Company filed a
Registration Statement on Form S-3 (File No. 333- _____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities, which names the Holder as a
selling stockholder thereunder.
[Other customary introductory and scope of examination language to be
inserted]
Based on the foregoing, we are of the opinion that the Registrable
Securities have been registered under the Securities Act.
[Other customary language to be included.]
Very truly yours,
cc: [Name of Investor]
-24-
VOID AFTER 5:00 P.M., NEW YORK CITY
TIME, ON FEBRUARY 28, 2005
(UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase 250,000 Shares of
Common Stock, $.001 par value per share
Date: February 28, 2000
WORLDWIDEWEB INSTITUTE.COM, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, The Zanett Securities
Corporation, or its registered assigns, is entitled to purchase from
WORLDWIDEWEB INSTITUTE.COM, INC., a corporation organized under the laws of the
State of Florida (the "Company"), at any time or from time to time during the
period specified in Section 2 hereof, two hundred fifty thousand (250,000) fully
paid and nonassessable shares (the "Warrant Shares") of the Company's common
stock, $.001 par value per share (the "Common Stock"), at an exercise price per
share (the "Exercise Price") equal to the [market price of the Common Stock at
the end of business on the Closing Date] (as defined in the Placement Agency
Agreement of even date herewith). The number of shares of Common Stock
purchasable hereunder and the Exercise Price are subject to adjustment as
provided in Section 4 hereof. In addition, the Exercise Price is subject to
reset as provided in Section 2(b) hereof. The term "Warrants" means this Warrant
and the other warrants of the Company issued pursuant to that certain Securities
Purchase Agreement, dated as of February 28, 2000, by and among the Company and
the other signatories thereto (the "Securities Purchase Agreement") and the
Placement Agency Agreement.
1
<PAGE>
This Warrant is subject to the following terms, provisions and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 7 hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company by 11:59 p.m. New York time on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof) and upon (i) payment
to the Company in cash, by certified or official bank check or by wire transfer
for the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) if the holder is effectuating a
Cashless Exercise (as defined below) delivery to the Company of a written notice
of an election to effect a Cashless Exercise for the Warrant Shares specified in
the Exercise Agreement. This Warrant may be exercised at any time after the date
hereof until the end of the Exercise Period, by presentation and surrender of
this Warrant to the Company at its principal executive offices with a written
notice of the holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a "Cashless Exercise"). In the
event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price (as defined in Section 4(l)
below) of a share of the Common Stock on the date of exercise and the Exercise
Price, and the denominator of which shall be the then current Market Price per
share of Common Stock. The Warrant Shares so purchased shall be deemed to be
issued to the holder hereof or such holder's designee, as the record owner of
such shares, as of the close of business on the date on which this Warrant shall
have been surrendered and the completed Exercise Agreement shall have been deliv
ered or, if such date is not a business date, on the next succeeding business
date. The Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the holder
hereof within a reasonable time, not exceeding three business days, after this
Warrant shall have been so exercised (the "Delivery Period"). If the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, and so long as the certificates therefor
do not bear a legend and the holder is not obligated to return such certificate
for the placement of a legend thereon, the Company shall cause its transfer
agent to electronically transmit the Warrant Shares so purchased to the holder
by crediting the account of the holder or its nominee with DTC through its
Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Company shall
deliver to the holder physical certificates representing the Warrant Shares so
purchased. Further, the holder may instruct the Company to deliver to the holder
physical certificates representing the Warrant Shares so purchased in lieu of
delivering such shares by way of DTC Transfer. Any certificates so delivered
shall be in such denominations as may be reasonably requested by the holder
hereof, shall be registered in the name of such holder or such other name as
shall be designated by such holder and, following the date on which the Warrant
Shares have been registered under the Securities Act pursuant to that certain
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<PAGE>
Registration Rights Agreement, dated as of February 28, 2000, by and between the
Company and the other signatories thereto (the "Registration Rights Agreement")
or otherwise may be sold by the holder pursuant to Rule 144 promulgated under
the Securities Act (or a successor rule), shall not bear any restrictive legend.
If this Warrant shall have been exercised only in part, then, unless this
Warrant has expired, the Company shall, at its expense, at the time of delivery
of such certificates, deliver to the holder a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised.
If, at any time, a holder of this Warrant submits this Warrant and an
Exercise Agreement, and the Company fails for any reason to deliver, on or prior
to the fifth business day following the expiration of the Delivery Period for
such exercise, the number of shares of Common Stock to which the holder is
entitled upon such exercise (an "Exercise Default"), then the Company shall pay
to the holder payments ("Exercise Default Payments") for an Exercise Default in
the amount of (a) (N/365), multiplied by (b) the Market Price (as defined in
Section 4(l) hereof) on the date the Exercise Agreement giving rise to the
Exercise Default is transmitted in accordance with this Section 1 (the "Exercise
Default Date"), multiplied by (c) the number of shares of Common Stock the
Company failed to so deliver in such Exercise Default, multiplied by (d) .24,
where N = the number of days from the Exercise Default Date to the date that the
Company effects the full exercise of this Warrant which gave rise to the
Exercise Default. The accrued Exercise Default Payment for each calendar month
shall be paid in cash or shall be convertible into Common Stock, at the holder's
option, as follows:
(a) In the event holder elects to take such payment in cash, cash
payment shall be made to holder by the fifth day of the month following the
month in which it has accrued; and
(b) In the event holder elects to take such payment in Common Stock,
the holder may convert such payment amount into Common Stock (in accordance with
the terms contained in Article IV of the Statement of Designation of Rights and
Preferences (the "Statement of Designation") governing the Company's Series A
Convertible Preferred Stock (the "Series A Preferred Stock")) at the lower of
the Exercise Price or the Market Price (as defined in Section 4(l)) (as in
effect at the time of conversion) at any time after the fifth day of the month
following the month in which it has accrued.
Nothing herein shall limit the holder's right to pursue actual damages
for the Company's failure to maintain a sufficient number of authorized shares
of Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).
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<PAGE>
2. Period of Exercise; Reset of Exercise Price.
(a) This Warrant is immediately exercisable, at any time or from time
to time on or after the date of initial issuance of this Warrant (the "Issue
Date") and before 5:00 p.m., New York City time, on that date which is three (3)
years after the Issue Date (the "Exercise Period"). The Exercise Period shall
automatically be extended (i) by one (1) day for each day on which the Company
does not have a number of shares of Common Stock reserved for issuance upon
exercise hereof at least equal to the number of shares of Common Stock issuable
upon exercise hereof and (ii) for so long as (A) a Redemption Event (as defined
in the Statement of Designation) shall have occurred and be continuing or (B)
any event shall have occurred and be continuing which, with the passage of time
or the giving of notice and the failure to cure, would result in a Redemption
Event.
(b) Notwithstanding anything to the contrary contained herein, the
holder may once, beginning on the date hereof and ending on the last day of the
Exercise Period, elect by providing written notice to the Company, to have the
Exercise Price reset to equal the Market Price (as defined in Section 4(l)
below) at the time of such election. The provisions of Section 4 shall be
applicable to any reset Exercise Price.
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a suf ficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 7(g) hereof).
(c) Listing. If required, the Company shall promptly secure the listing
of the shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of this Warrant;
and the Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the exercise of this
Warrant if and so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system; provided, however,
that the holder of this Warrant acknowledges and agrees that the Company will be
required to obtain shareholder approval for the issuance of the shares of Common
Stock issuable upon exercise of this Warrant in excess of the Cap Amount (as
defined in the Statement of Designation).
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<PAGE>
(d) Certain Actions Prohibited. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the economic benefit inuring to the holder hereof
and the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of issuance
of any Warrant Shares, take such actions as the Company shall reasonably
determine are necessary to qualify the Warrant Shares for, or obtain exemption
for the Warrant Shares for, sale to the holder of this Warrant upon the exercise
hereof under applicable securities or "blue sky" laws of the states of the
United States, and shall provide evidence of any such action so taken to the
holder of this Warrant prior to such date; provided, however, that the Company
shall not be required to qualify as a foreign corporation or file a general
consent to service of process in any such jurisdiction.
4. Antidilution Provisions. During the Exercise Period, the Exercise
Price and the number of Warrant Shares issuable hereunder and for which this
Warrant is then exercisable pursuant to Section 2 hereof shall be subject to
adjustment from time to time as provided in this Section 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
or down to the nearest cent.
(a) Adjustment of Exercise Price. Except as otherwise provided in
Sections 4(c) and 4(e) hereof, if and whenever during the Exercise Period the
Company issues or sells, or in accordance with Section 4(b) hereof is deemed to
have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less than the Dilutive Price (as defined in this
subparagraph) on the date of issuance (a "Dilutive Issuance"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted in
accordance with one of the two formulas below. For purposes of this
subparagraph, "Dilutive Price" means the Market Price (as hereinafter defined).
The Exercise Price will be adjusted in accordance with the following formula:
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<PAGE>
<TABLE>
E' = E x O + P/M ;
---------------------
CSD
<S> <C>
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the then current Market Price (as defined in Section 4(1)(ii));
F = the Floor Price (as defined in the Statement of Designation)
O = the number of shares of Common Stock outstanding immediately
prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in Section 4(b)
hereof, received by the Company upon such Dilutive Issuance; and
CSDO = the total number of shares of Common Stock
deemed outstanding immediately after the
Dilutive Issuance.
</TABLE>
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 4(a) hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If the Company in any manner issues
or grants any warrants, rights or options, whether or not immediately
exercisable, to subscribe for or to purchase Common Stock or other securities
exercisable, convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "Options") and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Dilutive Price in effect on the date of issuance of such
Options ("Below Market Options"), then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Below Market Options
(assuming full exercise, conversion or exchange of Convertible Securities, if
applicable) will, as of the date of the issuance or grant of such Below Market
Options, be deemed to be outstanding and to have been issued and sold by the
Company for such price per share. For purposes of the preceding sentence, the
"price per share for which Common Stock is issuable upon the exercise of such
Below Market Options" is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the issuance or
granting of all such Below Market Options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
all such Below Market Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Below Market Options, the minimum aggregate
amount of additional consideration payable upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below Market
Options (assuming full conversion of Convertible Securities, if applicable). No
further adjustment to the Exercise Price will be made upon the actual issuance
of such Common Stock upon the exercise of such Below Market Options or upon the
exercise, conversion or exchange of Convertible Securities issuable upon
exercise of such Below Market Options.
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<PAGE>
(ii) Issuance of Convertible Securities.
(A) If the Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same
are issuable upon the exercise of Options) and the price per share for which
Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Dilutive Price in effect on the date of issuance of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of all such Convertible Securities will, as of
the date of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon such exercise, conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(B) If the Company in any manner issues or sells any Convertible
Securities with a fluctuating conversion or exercise price or exchange ratio (a
"Variable Rate Convertible Security"), then the "price per share for which
Common Stock is issuable upon such exercise, conversion or exchange" for
purposes of the calculation contemplated by Section 4(b)(ii)(A) shall be deemed
to be the lowest price per share which would be applicable (assuming all holding
period and other conditions to any discounts contained in such Convertible
Security have been satisfied) if the Dilutive Price on the date of issuance of
such Convertible Security was 75% of the Dilutive Price on such date (the
"Assumed Variable Market Price"). Further, if the Dilutive Price at any time or
times thereafter is less than or equal to the Assumed Variable Market Price last
used for making any adjustment under this Section 4 with respect to any Variable
Rate Convertible Security, the Exercise Price in effect at such time shall be
readjusted to equal the Exercise Price which would have resulted if the Assumed
Variable Market Price at the time of issuance of the Variable Rate Convertible
Security had been 75% of the Dilutive Price existing at the time of the
adjustment required by this sentence.
(iii) Change in Option Price or Conversion Rate. If there is a change
at any time in (i) the amount of additional consideration payable to the Company
upon the exercise of any Options; (ii) the amount of additional consideration,
if any, payable to the Company upon the exercise, conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock (in each such case, other
than under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been
7
<PAGE>
in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. If, in any case, the total number of shares of Common Stock issuable
upon exercise of any Option or upon exercise, conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise such
Option or to exercise, convert or exchange such Convertible Securities shall
have expired or terminated, the Exercise Price then in effect will be readjusted
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock, Options
or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair market
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the Market Price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued in connection with any
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair market value of any consideration other than cash or
securities will be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and reasonably
acceptable to the holder hereof, with the costs of such appraisal to be borne by
the Company. In case any Common Stock, Options or Convertible Securities are
issued in connection with the issuance of debt securities the amount of
consideration therefor shall be the cash received by the Company and the value
of the securities issued by the Company shall be the fair market value of all
securities and instruments issued in such transaction, with fair market value
being determined by agreement between the holder hereof and the Company or if no
such agreement is reached pursuant to the immediately preceding sentence. For
all Options and Warrants the fair market value thereof shall be determined in
accordance with the black shoals methodology.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price will be made (i) upon the exercise of any warrants, options or
convertible securities issued and outstanding on the Issue Date and set forth on
Schedule 3(d) of the Securities Purchase Agreement in accordance with the terms
8
<PAGE>
of such securities as of such date or (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be implemented in the future, so
long as the issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company, if any, or a
majority of the members of a committee of non-employee directors established for
such purpose; or (iii) upon the issuance of securities pursuant to an
underwriters public offering.
(c) Subdivision or Combination of Common Stock. If the Company, at any
time during the Exercise Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a greater number of shares, then, after the date of record for
effecting such subdivision, the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Company, at any time
during the Exercise Period, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such combination
will be proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant and for which this
Warrant is or may become exercisable shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable or for which this Warrant is or
may become exercisable (as applicable) upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(e) Consolidation, Merger or Sale. In case of any consolidation of the
Company with, or merger of the Company into, any other corporation, or in case
of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company at any time during the Exercise Period, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Warrant will have the right to acquire and receive
upon exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities, cash or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such consolidation,
merger or sale or conveyance not taken place. In any such case, the Company will
make appropriate provision to insure that the provisions of this Section 4
hereof will thereafter be applicable as nearly as may be in relation to any
shares of stock or securities thereafter deliverable upon the exercise of this
Warrant. The Company will not effect any consolidation, merger or sale or
conveyance unless prior to the consummation thereof, the successor corporation
(if other than the Company) assumes by written instrument the obligations under
this Warrant and the obligations to deliver to the holder of this Warrant such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire. Notwithstanding the
foregoing, in the event of any consolidation of the Company with, or
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<PAGE>
merger of the Company into, any other corporation, or the sale or conveyance of
all or substantially all of the assets of the Company, at any time during the
Exercise Period, the holder of the Warrant shall, at its option, have the right
to receive, in connection with such transaction, cash consideration equal to the
fair market value of this Warrant as determined in accordance with customary
valuation methodology used in the investment banking industry.
(f) Distribution of Assets. In case the Company shall declare or make
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, stock repurchase by way of
return of capital or otherwise (including any dividend or distribution to the
Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "Distribution"), at any time during the
Exercise Period, then the holder of this Warrant shall be entitled upon exercise
of this Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, to receive the amount of such assets (or rights) which would
have been payable to the holder had such holder been the holder of such shares
of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.
(g) Notice of Adjustment. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount of less than 1% of the Exercise Price in effect
at the time such adjustment is otherwise required to be made, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;
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<PAGE>
(ii) the Company shall offer for subscription pro rata to the holders
of the Common Stock any additional shares of stock of any class or other rights;
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable estimate thereof by the Company)
when the same shall take place. Such notice shall also specify the date on which
the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least twenty (20)
days prior to the record date or the date on which the Company's books are
closed in respect thereto. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to in clauses (i),
(ii), (iii) and (iv) above. Notwithstanding the foregoing, the Company shall
publicly disclose the substance of any notice delivered hereunder prior to
delivery of such notice to the holder of this Warrant.
(k) Certain Events. If, at any time during the Exercise Period, any
event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(g) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.
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<PAGE>
(l) Certain Definitions.
(i) "Market Price," as of any date, (i) means the average of the
closing bid prices for the shares of Common Stock as reported on The Nasdaq
Over-the Counter Bulletin Board (the "Bulletin Board") by Bloomberg Financial
Markets ("Bloomberg") for the ten consecutive trading days immediately preceding
such date, or (ii) if the Bulletin Board is not the principal trading market for
the shares of Common Stock, the average of the closing bid prices as reported by
Bloomberg on the principal trading market for the Common Stock during the same
period, or, if there is no sale price for such period, the last reported bid
price as reported by Bloomberg for such period, or (iii) if market value cannot
be calculated as of such date on any of the foregoing bases, the Market Price
shall be the average fair market value as reasonably determined by an investment
banking firm selected by the Company and reasonably acceptable to the holder,
with the costs of the appraisal to be borne by the Company. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(ii) "Common Stock," for purposes of this Section 4, includes the
Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer, Exchange, Redemption and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights granted to the
holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
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the conditions set forth in Sections 7(f) and (g) hereof and to the provisions
of Sections 2(f) and 2(g) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the holder hereof at the time of such
surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 7. The Company shall indemnify
and reimburse the holder of this Warrant for all losses and damages arising as a
result of or related to any breach of the terms of this Warrant, including costs
and expenses (including legal fees) incurred by such holder in connection with
the enforcement of its rights hereunder.
(e) Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder), shall not be registered under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such exercise, transfer, or exchange, (i) that the
holder or transferee of this
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Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such exercise, transfer,
or exchange may be made without registration under the Securities Act and under
applicable state securities or blue sky laws (the cost of which shall be borne
by the Company if the Company's counsel renders such an opinion and up to $250
of such cost shall be borne by the Company if the holder's counsel is requested
to render such opinion), (ii) that the holder or transferee execute and deliver
to the Company an investment letter in form and substance acceptable to the
Company and (iii) that the transferee be an "accredited investor" as defined in
Rule 501(a) promulgated under the Securities Act; provided that no such opinion,
letter, or status as an "accredited investor" shall be required in connection
with a transfer pursuant to Rule 144 under the Securities Act.
(g) Additional Restrictions on Exercise or Transfer. Notwithstanding
anything contained herein to the contrary, this Warrant shall not be exercisable
by a holder hereof to the extent (but only to the extent) that (a) the number of
shares of Common Stock beneficially owned by such holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unexercised portion of the Warrants or the
unexercised or unconverted portion of any other securities of the Company
(including the Series A Preferred Stock) subject to a limitation on conversion
or exercise analogous to the limitation contained herein) and (b) the number of
shares of Common Stock issuable upon exercise of the Warrant (or portion
thereof) with respect to which the determination described herein is being made,
would result in beneficial ownership by such holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock. To the extent the above
limitation applies, the determination of whether and to what extent this Warrant
shall be exercisable with respect to other securities owned by such holder shall
be in the sole discretion of the holder and submission of this Warrant for full
or partial exercise shall be deemed to be the holder's determination of whether
and the extent to which this Warrant is exercisable, in each case subject to
such aggregate percentage limitation. No prior inability to exercise the Warrant
pursuant to this Section shall have any effect on the applicability of the
provisions of this Section with respect to any subsequent determination of
exerciseability. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as
otherwise provided in clause (a) hereof. Except as provided in the immediately
succeeding sentence, the restrictions contained in this Section 7(g) may not be
amended without the consent of the holder of this Warrant and the holders of a
majority of the Company's then outstanding Common Stock. Notwithstanding the
foregoing, a holder of shares of Series A Preferred Stock may, by providing
written notice to the Corporation, (a) adjust the restriction set forth in this
subparagraph (g) so that the limitations on beneficial ownership of 4.99% of the
outstanding shares of Common Stock referred to above shall not be applicable to
such holder, which adjustment shall not take effect until the 61st day after the
date of such notice and (b) irrevocably waive the right to deliver a waiver in
accordance with clause (a) of this sentence.
8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth
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in the Registration Rights Agreement, including the right to assign such rights
to certain assignees, as set forth therein.
9. Notices. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective upon receipt or refusal of receipt, if
delivered personally or by courier, or by confirmed telecopy, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
WORLDWIDEWEB INSTITUTE.COM, INC.
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, FL 33309
Telecopy: (954) 776-3322
Attn: Smiley Sansoni
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
10. Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York, without regard to
principles of choice of law or conflicts of law that would defer to the
substantive law of another jurisdiction. The Company irrevocably consents to the
jurisdiction of the United States federal courts and state courts located in the
State of New York in any suit or proceeding based on or arising under this
Warrant and irrevocably agrees that all claims in respect of such suit or
proceeding shall be determined exclusively in such courts. The Company
irrevocably waives any objection to the laying of venue and the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company mailed by certified or
registered mail shall be deemed in every respect effective service of process
upon the Company in any such suit or proceeding. Nothing herein shall affect the
holder's right to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder hereof.
(b) Descriptive Headings. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
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(c) Business Day. For purposes of this Warrant, the term "business day"
means any day, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
WORLDWIDEWEB INSTITUTE.COM, INC.
By:
Name:
Title:
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FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
To: WORLDWIDEWEB INSTITUTE.COM, INC.
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, FL 33309
Telecopy: (954) 776-3322
Attn: Smiley Sansoni
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of WORLDWIDEWEB INSTITUTE.COM, INC., a
corporation organized under the laws of the State of Florida (the "Company"),
evidenced by the attached Warrant, in accordance with the conditions and
provisions of said Warrant. The undersigned shall submit as payment for such
purchase, at the option of the holder, either (i) an amount equal to the product
of the Exercise Price multiplied by the number of shares being purchased hereby,
or (ii) forfeiture of a number of shares of Common Stock which would have been
issuable under the Warrant equal to the aggregate Exercise Price payable for
such exercise divided by the Market Price. All capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the
Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
[ ] The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this
Exercise Agreement to the account of the undersigned or its nominee
(which is _________________) with DTC through its Deposit Withdrawal
Agent Commission System ("DTC Transfer").
[ ] In lieu of receiving the shares of Common Stock issuable pursuant to
this Exercise Agreement by way of DTC Transfer, the undersigned hereby
requests that the Company cause its transfer agent to issue and deliver
to the undersigned physical certificates representing such shares of
Common Stock.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated:
Signature of Holder
Name of Holder (Print)
Address:
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No of Shares
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints_____________________ as agent
and attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.
Dated: _____________________, ____
In the presence of
- ------------------
Name:
Signature:
Title of Signing Officer or Agent (if any):
Address:
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
