Exhibit 10.1
BESTNET COMMUNICATIONS CORPORATION
UNIT PURCHASE AGREEMENT
This UNIT PURCHASE AGREEMENT ("AGREEMENT") is dated as of the date set
forth on the signature page hereto, by and among BestNet Communications Corp., a
Nevada corporation (the "COMPANY"), and each person or entity who executes a
counterpart signature page to this Agreement and is listed as an investor on
SCHEDULE I attached to this Agreement.
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue up to an aggregate of
4,500,000 units (collectively, the "UNITS" and individually a "UNIT"), each unit
consisting of the following securities: (a) three shares of Common Stock, par
value $.001 per share, of the Company (the "COMMON STOCK"); (b) one share of
Series A Preferred Stock, par value $.001 per share, of the Company (the
"PREFERRED STOCK"); and (c) three-year warrants (the "WARRANTS") to purchase one
share of Common Stock at a per share exercise price of $0.30 (the "WARRANT
SHARES");.
WHEREAS, the rights, preferences, privileges and restrictions of the
Series A Preferred Stock shall be set forth in a Certificate of Designations, in
the form and substance of EXHIBIT A attached hereto (the "CERTIFICATE OF
DESIGNATIONS");
WHEREAS, the Warrants shall be in the form and substance of EXHIBIT B
attached hereto;
WHEREAS, the Company intends to offer the Units during the period
commencing immediately and ending on March 30, 2003, subject to the Company's
right to unilaterally extend such period one time for up to an additional 30
days (the "OFFERING PERIOD");
WHEREAS, the purchase price of each Unit shall be $0.30.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in Section 1.3 herein.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall have the meaning set forth in the preamble of
this Agreement.
"Holder" and "Holders" shall include an Investor or Investors,
respectively, and any transferee of the Common Stock, the Series A Preferred
Stock, the Warrants or the Underlying Shares, which have been transferred in
compliance thereof.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities" shall mean the Units, the Common Stock, the Preferred
Stock and the Common Stock issuable upon conversion of the Preferred Stock, the
Warrants and the Warrant Shares.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Underlying Shares" shall mean the shares of Common Stock issuable
upon conversion of the Preferred Shares and upon exercise of the Warrants.
ARTICLE I
PURCHASE AND SALE OF THE STOCK AND WARRANTS
Section 1.1 PURCHASE AND SALE.
(a) Upon the following terms and conditions, the Company shall issue
and sell to each Investor listed on SCHEDULE I severally, and each Investor
listed on SCHEDULE I severally and not jointly agrees to purchase from the
Company, that number of Units indicated next to such Investor's name on SCHEDULE
I attached hereto.
(b) The purchase price for each Unit shall be $0.30 per Unit (the
"UNIT PURCHASE PRICE"). The Company shall have the right to determine in its
sole and absolute whether to require a minimum investment amount from an
Investor.
(c) The Company shall adopt and file with the Secretary of State for
the Sate of Nevada on or before the Closing (defined below) the Certificate of
Designation.
Section 1.2 THE CLOSING.
(a) The date of this Agreement shall be the date this Agreement is
signed by the first Investor(s) to acquire the Units hereunder. It is expected
that there will be one or more closings of the sale of the Units hereunder until
such time as all of the Units have been acquired or the Offering Period has
expired. Each closing of the purchase and sale of the Units (the "CLOSING")
shall take place by facsimile transmission of signature pages to each of the
documents contemplated by this Agreement, following acceptance by the Company of
subscriptions for Units being offered hereby, which acceptance shall not occur
until the conditions set forth in Article IV hereof with respect to each sale
shall be fulfilled or waived in accordance herewith. The date on which the
Closing occurs is referred to herein as the "CLOSING DATE."
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(b) On the Closing Date, the Company, upon receipt and clearing of
funds by check or wire transfer shall deliver to the applicable Investor
appropriate documents and certificates representing the shares of Common Stock,
Preferred Stock and Warrants comprising the Units purchased hereunder by such
Investor registered in the name of such Investor. Each party shall deliver all
documents, instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to each of the
Investors from and as of the date hereof through the Closing Date:
(a) ORGANIZATION AND QUALIFICATION; MATERIAL ADVERSE EFFECT. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. Except for the Company's subsidiaries
disclosed in its Form 10-KSB for the fiscal year ended August 31, 2002 or its
subsequently filed Form 10-QSBs (the "COMPANY SEC FILINGS"), there are no other
corporations or other entities (including partnerships, limited liability
companies and joint ventures) in which the Company directly or indirectly owns
at least a majority of the voting power represented by the outstanding capital
stock or other voting securities or interests having voting power under ordinary
circumstances to elect a majority of the directors or similar members of the
governing body, or otherwise to direct the management and policies, of such
corporation or entity. The Company has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in which the
failure so to qualify would not, individually or in the aggregate, have a
Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any adverse effect on
the business, operations, properties, prospects, or financial condition of the
entity with respect to which such term is used and which is material to such
entity and other entities controlling or controlled by such entity, taken as a
whole, and any material adverse effect on the transactions contemplated under
the Agreement or any other agreement or document contemplated hereby.
(b) AUTHORIZATION; ENFORCEMENT. All corporate action on the part of
the Company and its respective officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement, the Certificate
of Designations, the Registration Rights Agreement, which is substantially in
the form and substance attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS
AGREEMENT"); the performance of all obligations of the Company hereunder and
thereunder; and the authorization, issuance (or reservation for issuance), sale
and delivery of the Securities being sold hereunder and the Common Stock
issuable upon conversion of the Preferred Stock and upon exercise of the
Warrants has been taken or will be taken prior to the Closing, and this
Agreement, the Certificate of Designations and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors, rights and remedies generally, and subject, as to
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enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and (ii) as limited
by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies. The Common Stock, Preferred Stock and Warrants
being purchased by Investors hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, and the Common Stock issuable upon conversion of the Preferred Stock and
upon exercise of the Warrants (when issued in accordance with the Certificate of
Designation and the Warrants, as the case may be) (the "Conversion Shares"),
will be, subject to the truth and accuracy of each Investor's representations
set forth in Section 2 of this Agreement, and the offer, sale and issuance of
the Common Stock, Preferred Stock and Warrants as contemplated by this Agreement
are, exempt from the registration requirements of any applicable state and
federal securities laws. To the Company's knowledge, no person acting on its
behalf has taken any action (including, without limitation, any offering of any
securities of the Company under circumstances which require the integration of
such offering with the offering of the Units under the Securities Act and the
rules and regulations of the SEC thereunder) that might subject the offering,
issuance or sale of the Units to the registration requirements of Section 5 of
the Securities Act.
(c) CAPITALIZATION. Schedule 2.1(c) sets forth the outstanding
capital stock of the Company. The issued and outstanding shares of capital stock
of the Company have been validly issued and are fully paid and non-assessable.
Except as set forth on Schedule 2.1(c), there are no outstanding options,
warrants, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights exchangeable or convertible
into, any ownership interest in the Company.
(d) ISSUANCE OF SECURITIES. The Common Stock, Preferred Stock and
Warrants have been duly authorized and, subject to the increase in the
authorized shares of Common Stock contemplated in Section 3.6, the Underlying
Shares will be, as of the Closing Date, reserved for issuance and, upon
conversion of the Preferred Stock in accordance with the terms thereof and upon
exercise of the Warrants in accordance with terms thereof, will be validly
issued, fully paid and non-assessable, free and clear of any and all liens,
claims and encumbrances, except for liens, claims and encumbrances placed upon
such Securities by an Investor.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) result in a violation of the organizational documents,
as amended, of the Company 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, patent, patent license or instrument
to which the Company is a party, or result in a violation of any Federal, state,
local or foreign law, rule, regulation, order, judgment or decree (including
Federal and state securities laws and regulations) applicable to the Company or
by which any property or asset of the Company is bound (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect); provided, that, for purposes of such representation as to
Federal, state, local or foreign law, rule or regulation, no representation is
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made herein with respect to any of the same applicable solely to the Investors
and not to the Company. The business of the Company has not been, is not now
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required under Federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or to make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, the Units, the
Investor Warrants or issue and sell the Units or such Warrants in accordance
with the terms hereof, the Underlying Shares issuable upon conversion of the
Units and upon exercise of the Warrants, provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investors
herein.
(f) NO MATERIAL ADVERSE CHANGE. Since November 30, 2002, the date
through which the most recent unaudited financial statements (the "FINANCIAL
STATEMENTS") of the Company have been prepared, no event which, individually or
in the aggregate, when considered with any other event, had or is likely to have
a Material Adverse Effect has occurred or exists with respect to the Company,
except as otherwise disclosed or reflected in Financial Statements, and as
otherwise provided to the Investors prior to the date hereof.
(g) NO UNDISCLOSED LIABILITIES. Except as set forth in the SEC
Filings, the Company does not have any liabilities or obligations not disclosed
in the Financial Statements, other than those liabilities incurred in the
ordinary course of its business since November 30, 2002, or liabilities or
obligations, individually or in the aggregate, which do not or would not have a
Material Adverse Effect on the Company.
(h) NO GENERAL SOLICITATION. Neither the Company nor, to the
Company's knowledge, any of its affiliates or any person acting on its or their
behalf has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities.
(i) INTELLECTUAL PROPERTY. Except as set forth in the SEC Filings,
the Company owns, or has legal and valid rights by license, lease, or other
agreement to use, all trademarks, trade names, service marks, Internet domain
names, logos, assumed names, copyrights, patents, trade secrets, software,
databases and names, likenesses and other information concerning real persons,
and all registrations and applications therefore (collectively, the
"INTELLECTUAL PROPERTY RIGHTS") which are used or are needed to conduct its
business as it is now being conducted or as proposed to be conducted. Except as
set forth in the SEC Filings, the Company has no reason to believe that the
Intellectual Property Rights owned or used by the Company are invalid or
unenforceable or that the use of such Intellectual Property Rights by the
Company infringes upon or conflicts with any right of any third party, and the
Company has no knowledge of a basis for such claim or has received notice of any
such infringement or conflict. All registrations and applications for material
Intellectual Property Rights owned by the Company are valid and subsisting, and
standing in the record ownership of the Company. There are no settlements,
consents, agreements to forebear or other similar agreements or arrangements to
which the Company is bound which materially affects its rights to own, use or
enforce any Intellectual Property Rights.
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(j) NO LITIGATION. Except as set forth in the SEC Filings, no
litigation or claim (including those for unpaid taxes) against the Company is
pending or, to the Company's knowledge, threatened, and no other event has
occurred, which if determined adversely would have a Material Adverse Effect on
the Company, or would materially adversely effect the transactions contemplated
hereby.
(k) BROKERS. During the Offering Period, the Company may elect to pay
brokerage commissions to registered broker-dealers who, at the Company's
request, assist in the sale of the Units. The commissions will be up to a
maximum of five percent (5%) of any proceeds received from the Units offered and
sold by an authorized broker-dealer.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each of
the Investors, severally and not jointly, hereby makes the following
representations and warranties to the Company as of the date hereof and on the
Closing Date:
(a) AUTHORIZATION; ENFORCEMENT. (i) Such Investor has the requisite
power and authority, or the legal capacity, as the case may be, to enter into
and perform this Agreement and to purchase the Securities being sold to such
Investor hereunder, (ii) the execution and delivery of this Agreement by such
Investor and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate or partnership action, as
required, and (iii) this Agreement constitutes the valid and binding obligation
of such Investor enforceable against such Investor in accordance its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(b) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation by such Investor of the transactions contemplated
hereby do not and will not (i) result in a violation of such Investor's
organizational documents, or (ii) conflict with any agreement, indenture, or
instrument to which such Investor is a party, or (iii) result in a violation of
any law, rule, or regulation or any order, judgment or decree of any court or
governmental agency applicable to such Investor. Such Investor is not required
to obtain any consent or authorization of any governmental agency in order for
it to perform its obligations under this Agreement.
(c) INVESTMENT REPRESENTATION. Such Investor is purchasing the
Securities purchased hereunder for its own account and not with a view to
distribution in violation of any securities laws. With respect to the purchase
of the Securities pursuant to this Agreement, Investor is not acting as an
"underwriter" within the meaning of Section 2(a)(11) of the Securities Act. Such
Investor has no present intention to sell the Securities purchased hereunder and
such Investor has no present arrangement (whether or not legally binding) to
sell the Securities purchased hereunder to or through any person or entity.
(d) ACCREDITED INVESTOR. Such Investor is an "ACCREDITED INVESTOR" as
defined in Rule 501 promulgated under the Securities Act. The Investor has such
knowledge and experience in financial and business matters in general and
investments in particular, so that such Investor is able to evaluate the merits
and risks of an investment in the Securities purchased hereunder and to protect
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its own interests in connection with such investment. In addition (but without
limiting the effect of the Company's representations and warranties contained
herein), such Investor has reviewed the Company's SEC Filings and received such
information as it considers necessary or appropriate for deciding whether to
purchase the Securities purchased hereunder. Notwithstanding the foregoing, the
Investor has not been provided and is not otherwise in possession of material
nonpublic information pertaining to the Company.
(e) RULE 144. Such Investor understands that there is no public
trading market for the Units as a whole, the shares of Preferred Stock or the
Warrants, that none is expected to develop, and that the Units and each of the
Securities that comprise the Units must be held indefinitely unless such
Securities are registered under the Securities Act or an exemption from
registration is available. Such Investor understands that any Underlying Shares
issued upon conversion of the Preferred Stock and upon exercise of the Warrants
must be held indefinitely unless such Securities are registered under the Act or
an exemption from registration is available. Such Investor has been advised or
is aware of the provisions of Rule 144 promulgated under the Act.
(f) BROKERS. Investor has taken no action that would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
by the Company relating to this Agreement or the transactions contemplated
hereby.
(g) RELIANCE BY THE COMPANY. Such Investor understands that the Units
and the Securities that comprise the Units are being offered and sold in
reliance on a transactional exemption from the registration requirements of
Federal and state securities laws and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Investor set forth herein in order to determine the
applicability of such exemptions and the suitability of such Investor to acquire
the Securities.
ARTICLE III
COVENANTS
Section 3.1 CERTIFICATES ON CONVERSION OR EXERCISE. Upon (i) the
conversion of any shares of Preferred Stock in accordance with the Certificate
of Designations or exercise of any Warrants in accordance with the terms of the
Warrants, the Company shall issue and deliver to such Investor (or the then
holder) within five (5) business days of the exercise date, (x) a Certificate or
Certificates representing the Underlying Shares issuable upon exercise, and (y)
in the case of the Warrants, a new certificate or certificates for the Warrants
of such Investor (or holder) which have not yet been exercised but which are
evidenced in part by the certificate(s) submitted to the Company in connection
with such exercise (with the number of and denomination of such new
certificate(s) designated by such Investor or holder).
Section 3.2 REPLACEMENT CERTIFICATES. The certificate(s) representing
any of the Securities comprising the Units held by any Investor (or then holder)
may be exchanged by such Investor (or such holder) at any time and from time to
time for certificates with different denominations representing an equal amount
of such Securities, as reasonably requested by such Investor (or such holder)
upon surrendering the same. No service charge will be made for such
registration, transfer or exchange.
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Section 3.3 NOTICES. The Company agrees to provide all holders of
Securities with copies of all notices and information, including, without
limitation, notices and proxy statements in connection with any meetings that
are provided to the holders of Common Stock of the Company, contemporaneously
with the delivery of such notices or information to such existing members.
Section 3.4 RESERVATION OF UNDERLYING SHARES ISSUABLE UPON EXERCISE.
Subject to the increase in the authorized shares of Common Stock contemplated in
Section 3.6, the Company shall at all times reserve and keep available, solely
for the purpose of effecting the conversion of the Preferred Stock and exercise
of the Warrants, such number of Underlying Shares as shall from time to time be
sufficient to effect the conversion or exercise of such Securities.
Section 3.5 NO IMPAIRMENT. The Company will not, by amendment of its
organizational documents 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 under this Agreement, the
Certificate of Designations and the Warrants, but will at all times in good
faith assist in the carrying out of all the provisions of such agreements and
instruments.
Section 3.6 INCREASE IN AUTHORIZED CAPITAL. The Company hereby agrees
to take such action as is reasonably necessary to call a meeting of its
shareholders for the purpose of submitting a proposal to amend the Company's
certificate of incorporation to increase the number of authorized shares of
Common Stock to a number that will allow the holders of the Preferred Stock and
the Warrants to convert or exercise such Securities in accordance with their
terms.
Section 3.7 TRADING OF UNDERLYING SECURITIES. Each Investor, severally
and not jointly, hereby acknowledges and agrees that such Investor may only
trade the Common Stock, Preferred Stock and the Underlying Shares upon the prior
written consent of the Company, which consent may be withheld in the Company's
sole and absolute discretion. Until the Company gives such consent, only the
Units may be traded by an Investor.
ARTICLE IV
CONDITIONS
Section 4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
ISSUE AND SELL THE UNITS. The obligation hereunder of the Company to issue and
sell the Units to the Investors is subject to the satisfaction, at or before the
Closing Date, of each of the conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) ACCURACY OF THE INVESTORS' REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each Investor shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
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made at that time (except for representations and warranties that speak as of a
particular date, which shall be true and correct in all material respects as of
such other date).
(b) PERFORMANCE BY THE INVESTORS. Each Investor shall have performed
all agreements and satisfied all conditions required hereby to be performed or
satisfied by such Investor at or prior to the Closing Date.
(c) NO INJUNCTION. 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 which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) APPROVALS. The Company shall have obtained the requisite
consents/approvals with respect to the transactions contemplated by this
Agreement in accordance with the Company's organizational documents, including,
without limitation, receipt of approval of the Company's board of directors.
Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTORS TO
PURCHASE THE UNITS. The obligation hereunder of each Investor to acquire and pay
for the Units is subject to the satisfaction, at or before the Closing Date, of
each of the conditions set forth below. These conditions are for each Investor's
sole benefit and may be waived by each Investor at any time in its sole
discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representation and warranties of the Company shall be true and correct in all
material respects 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
particular date which shall be true and correct in all material respects as of
such other date), and except that all representations and warranties that by
their terms are qualified by reference to "materiality" or to a "Material
Adverse Effect" shall be, or have been, true and correct in all respects.
(b) PERFORMANCE BY THE COMPANY. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing Date.
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority or competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered to the
Investors a certificate in form and substance reasonably satisfactory to the
Investors, executed by the Secretary or an Assistant Secretary of the Company on
behalf of the Company, certifying as to the satisfaction of all closing
conditions, incumbency of signing officers, charter, Bylaws, good standing and
authorizing resolutions of the Company.
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ARTICLE V
LEGEND AND STOCK; REGISTRATION RIGHTS
Section 5.1 LEGEND AND STOCK. Each certificate representing the Common
Stock, Preferred Stock, Warrants and the Underlying Shares shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I) PURSUANT TO A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND
IS CURRENT WITH RESPECT TO THESE SECURITIES OR (II) PURSUANT TO A SPECIFIC
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER
HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE ISSUER THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY"
OR SIMILAR SECURITIES LAW.
The Company may also place such legends on the Securities as it shall
determine in its reasonable discretion are necessary to ensure compliance with
the trading limitations set forth in Section 3.7.
Section 5.2 REGISTRATION RIGHTS. The Units and the Securities that
comprise each Unit shall be entitled to the registration rights set forth in the
Registration Rights Agreement.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing Date by the mutual written consent
of the Company and the Investors.
Section 6.2 OTHER TERMINATION. This Agreement may be terminated by the
Company or by any of the Investors at any time if the Closing Date shall not
have occurred by the fifth business day following the date of this Agreement;
provided, however, that the right to terminate this Agreement under this Section
6.2 shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing Date to have occurred on or prior to such date.
ARTICLE VII
MISCELLANEOUS
Section 7.1 STAMP TAXES; AGENT FEES. The Company shall pay all stamp
and other taxes and duties levied in connection with the issuance of the
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Securities comprising the Units, and the Underlying Shares issued upon
conversion of the Preferred Stock and upon exercise of the Warrants.
Section 7.2 SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION.
(a) The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) The Company and each of the Investors (i) hereby irrevocably
submits to the exclusive jurisdiction of the United States District Court for
the District of Arizona, the Arizona State courts and other courts of the United
States sitting in Maricopa County, Arizona for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement and (ii) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. The Company and each of the
Investors consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
paragraph shall affect or limit any right to serve process in any other manner
permitted by law.
Section 7.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement together with
the agreements and documents executed in connection herewith, contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor any
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
Section 7.4 NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one business day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
to the Company: BestNet Communications Corp.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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with copies to: Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Two Renaissance Square
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Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
to the Investors: To each Investor at the addresses set forth on SCHEDULE I
of this Agreement.
Any party hereto may from time to time change its address for notices by giving
at least five (5) days written notice of such changed address to the other
parties hereto. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above.
Section 7.5 INDEMNITY. Each party shall indemnify, defend and hold
harmless each other party against any loss, cost or damages (including
reasonable attorney's fees) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.
Section 7.6 WAIVERS. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 7.7 HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.8 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may amend
this Agreement without notice to or the consent of any third party. No Investor
may assign this Agreement (in whole or in part) or any rights or obligations
hereunder without the Company's prior written consent, which consent may be
withheld for any reason in the Company's sole discretion.
Section 7.9 NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
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Section 7.10 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Nevada without regard to such State's principles of conflict of laws.
Section 7.11 SURVIVAL. The representations and warranties and the
agreements and covenants of the Company and each Investor contained herein shall
survive the Closing.
Section 7.12 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
Section 7.13 PUBLICITY. The Company agrees that it will not include in
any public announcement the name of any Investor without its consent, unless and
until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement.
Section 7.14 SEVERABILITY. The parties acknowledge and agree that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warrants, agreements, acts or omissions of
any other Investor, and that any rights granted to "Investors" hereunder shall
be enforceable by each Investor hereunder.
Section 7.15 LIKE TREATMENT OF HOLDERS. Neither the Company nor any of
its affiliates shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee, payment for the redemption or
exchange of Securities, or otherwise, to any holder of Securities, for or as an
inducement to, or in connection with the solicitation of, any consent, waiver or
amendment of any terms or provisions of the Securities or this Agreement, unless
such consideration is required to be paid to all holders of Securities bound by
such consent, waiver or amendment whether or not such holders so consent, waive
or agree to amend and whether or not such holders tender their Securities for
redemption or exchange. The Company shall not, directly or indirectly, redeem
any Securities unless such offer of redemption is made pro rata to all holders
of Securities on identical terms.
Section 7.16 EXPENSES. Each party shall pay its own expenses incident
to the preparation and performance of this Agreement and the documents provided
for herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
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BESTNET COMMUNICATIONS CORP., a Nevada corporation;
By: ______________________________
Name: ____________________________
Title: ___________________________
INVESTOR:
By: ______________________________
Name: ____________________________
Title: ___________________________
Amount Invested: $____________________USD Number of Units Purchased:________
Wiring instructions are as follows:
Account Name: BestNet Communications
Bank information: Bank One
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(▇▇▇)-▇▇▇-▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇▇
ABA/routing#: ▇▇▇▇▇▇▇▇▇
Checks should be made payable to:
BestNet Communications Corporation
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ALL INVESTORS MUST INITIAL THE FOLLOWING LINE:
______ I understand that the representations contained in Section 2.2 (a through
g) are made for the purpose of qualifying me as an accredited investor as that
term is defined by the Securities and Exchange Commission for the purpose of
inducing a sale of securities to me. I hereby represent that the statement or
statements are true and correct in all respects.
[Investor Signature Page]
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EXHIBITS AND SCHEDULES
Schedule I Investor Information
Schedule 2.1(C) Capitalization
Exhibit A Form of Certificate of Designations
Exhibit B Form of Warrant
Exhibit C Form of Registration Rights Agreement
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SCHEDULE I
INVESTOR INFORMATION SHEET
NAME: ________________________________ Number of Units Purchased: __________
TITLE: _______________________________
CORPORATION: _________________________
ADDRESS: _____________________________
______________________________________
______________________________________
TAXPAYER ID# or SSN: _________________
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SCHEDULE 2.1(C)
CAPITALIZATION
Outstanding Shares of Capital Stock 19,199,825
Warrants Outstanding 8,173,380
Options Outstanding 4,385,669
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