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EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
CRESCENT INTERNATIONAL LTD.
AND
GLOBALNET, INC.
DATED AS OF APRIL 9, 2001
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TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS....................................................................... 1
Section 1.1. "Affiliate".......................................................................... 1
Section 1.2. "Bid Price".......................................................................... 2
Section 1.3. "Capital Shares"..................................................................... 2
Section 1.4. "Closing"............................................................................ 2
Section 1.5. "Closing Date"....................................................................... 2
Section 1.6. "Closing Statement".................................................................. 2
Section 1.7. "Commitment Period".................................................................. 2
Section 1.8. "Commitment Shares".................................................................. 2
Section 1.9. "Common Stock"....................................................................... 2
Section 1.10. "Condition Satisfaction Date"........................................................ 2
Section 1.11. "Convertible Note"................................................................... 2
Section 1.12. "Daily Trading Value"................................................................ 2
Section 1.13. "Damages"............................................................................ 2
Section 1.14. "Effective Date"..................................................................... 3
Section 1.15. "Exchange Act"....................................................................... 3
Section 1.16. "First Sale"......................................................................... 3
Section 1.17. "First Sale Shares".................................................................. 3
Section 1.18. "Incentive Warrant".................................................................. 3
Section 1.19. "Incentive Warrant Shares"........................................................... 3
Section 1.20. "Investment Amount".................................................................. 3
Section 1.21. "Legend"............................................................................. 3
Section 1.22. "Material Adverse Effect"............................................................ 3
Section 1.23. "Maximum Commitment Amount".......................................................... 3
Section 1.24. "Maximum Sale Amount"................................................................ 3
Section 1.25. "Minimum Sale Amount"................................................................ 4
Section 1.26. "Minimum Time Interval".............................................................. 4
Section 1.27. "NASD"............................................................................... 4
Section 1.28. "Note Conversion Shares"............................................................. 4
Section 1.29. "Outstanding"........................................................................ 4
Section 1.30. "Person"............................................................................. 4
Section 1.31. "Principal Market"................................................................... 4
Section 1.32. "Protective Warrant"................................................................. 4
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Section 1.33. "Protective Warrant Shares".......................................................... 4
Section 1.34. "Purchase Price"..................................................................... 4
Section 1.35. "Registrable Securities"............................................................. 4
Section 1.36. "Registration Rights Agreement"...................................................... 5
Section 1.37. "Registration Statement"............................................................. 5
Section 1.38. "Regulation D"....................................................................... 5
Section 1.39. "Representative"..................................................................... 5
Section 1.40. "Sale"............................................................................... 5
Section 1.41. "Sale Date".......................................................................... 5
Section 1.42. "Sale Fees".......................................................................... 5
Section 1.43. "Sale Notice"........................................................................ 5
Section 1.44. "Sale Notice Date"................................................................... 5
Section 1.45. "Sale Notice Period"................................................................. 5
Section 1.46. "SEC"................................................................................ 6
Section 1.47. "SEC Documents"...................................................................... 6
Section 1.48. "Section 4(2)"....................................................................... 6
Section 1.49. "Securities Act"..................................................................... 6
Section 1.50. "Short Sale"......................................................................... 6
Section 1.51. "Subscription Date".................................................................. 6
Section 1.52. "Subscription Fee"................................................................... 6
Section 1.53. "Subsequent Sale".................................................................... 6
Section 1.54. "Subsequent Sale Shares"............................................................. 6
Section 1.55. "Subsidiary"......................................................................... 6
Section 1.56. "Trading Day"........................................................................ 6
Section 1.57. "Transfer Agent Instructions"........................................................ 6
Section 1.58. "Underwriter"........................................................................ 6
Section 1.59. "Warrants"........................................................................... 6
Section 1.60. "Warrant Shares"..................................................................... 6
ARTICLE II SALE AND PURCHASE OF SECURITIES; TERMINATION OF OBLIGATIONS............................... 7
Section 2.1. Sales................................................................................ 7
Section 2.2. Twenty Percent Limitation............................................................ 8
Section 2.3. Sale Notice.......................................................................... 8
Section 2.4. Closings............................................................................. 8
Section 2.5. Termination of Agreement and Investment Obligation................................... 9
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR................................................ 9
Section 3.1. Intent............................................................................... 9
Section 3.2. Sophisticated Investor............................................................... 9
Section 3.3. Authority............................................................................ 9
Section 3.4. Not an Affiliate..................................................................... 10
Section 3.5. Organization and Standing............................................................ 10
Section 3.6. Absence of Conflicts................................................................. 10
Section 3.7. Disclosure; Access to Information.................................................... 10
Section 3.8. Manner of Sale....................................................................... 10
Section 3.9. Resale Restrictions.................................................................. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 11
Section 4.1. Organization of the Company.......................................................... 11
Section 4.2. Authority............................................................................ 11
Section 4.3. Corporate Documents.................................................................. 11
Section 4.4. Books and Records.................................................................... 12
Section 4.5. Capitalization....................................................................... 12
Section 4.6. Registration and Listing of Common Stock............................................. 12
Section 4.7. Financial Statements................................................................. 12
Section 4.8. SEC Documents........................................................................ 13
Section 4.9. Exemption from Registration; Valid Issuances; New Issuances.......................... 13
Section 4.10. No General Solicitation or Advertising............................................... 14
Section 4.11. No Conflicts......................................................................... 14
Section 4.12. No Material Adverse Change........................................................... 15
Section 4.13. No Undisclosed Liabilities........................................................... 15
Section 4.14. No Undisclosed Events or Circumstances............................................... 15
Section 4.15. No Integrated Offering............................................................... 15
Section 4.16. Litigation and Other Proceedings..................................................... 15
Section 4.17. No Misleading or Untrue Communication................................................ 15
Section 4.18. Material Non-Public Information...................................................... 16
ARTICLE V COVENANTS OF THE INVESTOR................................................................. 16
Section 5.1. Compliance........................................................................... 16
Section 5.2. Short Sale........................................................................... 16
ARTICLE VI COVENANTS OF THE COMPANY.................................................................. 16
Section 6.1. Registration Rights.................................................................. 16
Section 6.2. Reservation of Common Stock.......................................................... 16
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Section 6.3. Listing of Common Stock.............................................................. 16
Section 6.4. Exchange Act Registration............................................................ 17
Section 6.5. Legends.............................................................................. 17
Section 6.6. Corporate Existence.................................................................. 17
Section 6.7. Additional SEC Documents............................................................. 17
Section 6.8. Notice of Certain Events Affecting Registration; Suspension of Right to
Make a Subsequent Sale............................................................... 17
Section 6.9. Consolidation; Merger................................................................ 18
Section 6.10. Issuance of Commitment Shares, Warrant Shares and Additional Shares.................. 18
Section 6.11. Legal Opinion on Subscription Date................................................... 18
Section 6.12. No Similar Arrangement; Right of First Refusal....................................... 18
Section 6.13. Public Announcements................................................................. 19
ARTICLE VII CONDITIONS TO DELIVERY OF SALE NOTICES AND CONDITIONS TO CLOSING.......................... 19
Section 7.1. Conditions Precedent to the Obligation of the Company to Issue and Sell
Common Stock......................................................................... 19
Section 7.2. Conditions Precedent to the Right of the Company to Deliver a Sale Notice
and the Obligation of the Investor to Purchase Commitment Shares..................... 19
Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public Information....................... 22
ARTICLE VIII LEGENDS................................................................................... 23
Section 8.1. Legends.............................................................................. 23
Section 8.2. No Other Legend or Stock Transfer Restrictions....................................... 24
Section 8.3. Investor's Compliance................................................................ 25
ARTICLE IX INDEMNIFICATION; ARBITRATION.............................................................. 25
Section 9.1. Indemnification...................................................................... 25
Section 9.2. Method of Asserting Indemnification Claims........................................... 26
Section 9.3. Arbitration.......................................................................... 28
ARTICLE X MISCELLANEOUS............................................................................. 29
Section 10.1. Fees and Transaction Costs........................................................... 29
Section 10.2. Reporting Entity for the Common Stock................................................ 30
Section 10.3. Brokerage............................................................................ 30
Section 10.4. Notices.............................................................................. 30
Section 10.5. Assignment........................................................................... 31
Section 10.6. Amendment; No Waiver................................................................. 32
Section 10.7. Annexes and Exhibits; Entire Agreement............................................... 32
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Section 10.8. Survival............................................................................. 32
Section 10.9. Severability......................................................................... 32
Section 10.10. Title and Subtitles.................................................................. 32
Section 10.11. Counterparts......................................................................... 32
Section 10.12. Choice of Law........................................................................ 32
Section 10.13. Other Expenses....................................................................... 32
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
CRESCENT INTERNATIONAL LTD.
AND
GLOBALNET, INC.
DATED AS OF APRIL 9, 2001
This SECURITIES PURCHASE AGREEMENT is entered into as of the 9th day of
April, 2001 (this "Agreement"), by and between Crescent International Ltd. (the
"Investor"), an entity organized and existing under the laws of Bermuda, and
GlobalNet, Inc., a corporation organized and existing under the laws of the
State of Nevada (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase, up to
$6,000,000 worth of securities of the Company, which shall include (i) shares of
Common Stock (as defined below) and (ii) a Convertible Note (as defined below)
in the principal amount of $2,000,000; and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the U.S.
Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder (the "Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in Common Stock to be made hereunder.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Affiliate" shall mean any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by, or
is under direct or indirect common control with any other Person. For the
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the term "controls" and "controlled" have meanings correlative
to the foregoing.
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Section 1.2. "Bid Price" shall mean, with respect to the Common Stock,
the per share closing bid price for such Common Stock as reported by Bloomberg
L.P. in accordance with Section 10.2 of this Agreement.
Section 1.3. "Capital Shares" shall mean the Common Stock, the Note
Conversion Shares and any shares of any other class of common stock whether now
or hereafter authorized, having the right to participate in the distribution of
dividends (as and when declared) or assets (upon liquidation of the Company).
Section 1.4. "Closing" shall mean one of the closings of a purchase and
sale of the Common Stock and the issuance of the Warrants and the Convertible
Note pursuant to Section 2.1 of this Agreement.
Section 1.5. "Closing Date" shall mean, with respect to a Closing, the
second Trading Day following the Sale Date related to such Closing, provided all
conditions to such Closing have been satisfied on or before such Trading Day.
Section 1.6. "Closing Statement" shall mean the closing statement
executed by the Company and the Investor on the Subscription Date and on each
Closing Date, setting forth the actions taken by the Company and the Investor on
the Subscription Date and on such Closing Date, as applicable, and the amounts
due to the payee entities set forth on Schedule 10.1 hereto, on the Subscription
Date and such Closing Date, as applicable, in the form of Exhibit A attached
hereto.
Section 1.7. "Commitment Period" shall mean the period commencing on
the Subscription Date and expiring on the earlier to occur of (i) the date on
which the Investor shall have purchased Commitment Shares pursuant to this
Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, (ii)
the date this Agreement is terminated pursuant to Section 2.5 hereof, or (iii)
the date occurring 12 months from the Subscription Date.
Section 1.8. "Commitment Shares" shall mean the First Sale Shares and
the Subsequent Sale Shares, collectively.
Section 1.9. "Common Stock" shall mean the Company's common stock,
$0.001 par value per share.
Section 1.10. "Condition Satisfaction Date" shall have the meaning set
forth in Section 7.2 of this Agreement.
Section 1.11. "Convertible Note" shall mean the convertible note to be
issued by the Company to the Investor in the principal amount of $2,000,000, in
the form attached hereto as Exhibit B.
Section 1.12. "Daily Trading Value" shall mean, on any Trading Day, the
Bid Price multiplied by the trading volume of the Common Stock.
Section 1.13. "Damages" shall mean any and all losses, claims, damages,
liabilities, costs and expenses (including, without limitation, any and all
investigative, legal and other
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expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of, any action, suit or proceeding between any indemnified
party and any indemnifying party or between any indemnified party and any third
party, or otherwise, or any claim asserted).
Section 1.14. "Effective Date" with respect to each Sale of Registrable
Securities shall mean the earlier to occur of: (i) the applicable date on which
the SEC has declared effective a Registration Statement registering resale of
Registrable Securities as set forth in the Registration Rights Agreement and
(ii) the date on which such Registrable Securities first become eligible for
resale pursuant to Rule 144 of the Securities Act.
Section 1.15. "Exchange Act" shall mean the U.S. Securities Exchange
Act of 1934, as amended and the rules and regulations promulgated thereunder.
Section 1.16. "First Sale" shall have the meaning set forth in Section
2.1(a) of this Agreement.
Section 1.17. "First Sale Shares" shall have the meaning set forth in
Section 2.1(a) of this Agreement.
Section 1.18. "Incentive Warrant" shall mean the Incentive Warrant in
the form of Exhibit C hereto issued pursuant to Section 2.1(d) of this
Agreement, together with any new or replacement warrant issued in accordance
with the terms of the Incentive Warrant.
Section 1.19. "Incentive Warrant Shares" shall mean all shares of Common Stock
issued or issuable pursuant to exercise of the Incentive Warrant.
Section 1.20. "Investment Amount" shall mean (i) with respect to a
Sale, the dollar amount to be invested by the Investor to purchase Commitment
Shares with respect to any Sale Date as notified by the Company to the Investor
in accordance with Section 2.3 hereof, and (ii) with respect to the Convertible
Note, $2,000,000.
Section 1.21. "Legend" shall have the meaning specified in Section 8.1
of this Agreement.
Section 1.22. "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company or to the Company and such
other entities controlling or controlled by the Company, taken as a whole,
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
its obligations under any of (i) this Agreement, (ii) the Registration Rights
Agreement and (iii) the Warrants.
Section 1.23. "Maximum Commitment Amount" shall mean $4,000,000.
Section 1.24. "Maximum Sale Amount" shall mean $2,000,000, unless a
higher amount is agreed to by the Investor; provided, that if the Bid Price on
each Trading Day during any Sale Notice Period is less than $0.50, the Maximum
Sale Amount shall be $25,000.
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Section 1.25. "Minimum Sale Amount" shall mean $25,000 (A) if the Bid
Price on any Trading Day during any Sale Notice Period is less than $0.50, or
(B) with respect to the First Sale, 2.75 times the average of the Daily Trading
Values during the 22 Trading Day period immediately preceding the Subscription
Date is less than $200,000, or (C) with respect to a Subsequent Sale, 2.00 times
the average of the Daily Trading Values during the 22 Trading Day period
immediately preceding the Sale Notice Date is less than $200,000. In all other
cases the Minimum Sale Amount shall be $200,000.
Section 1.26. "Minimum Time Interval" shall mean (i) if the previous
Sale related to the sale of unregistered Common Stock, 22 Trading Days from the
Effective Date relating to such Sale or (ii) if the previous Sale related to the
sale of registered Common Stock, 22 Trading Days from the previous Sale Date.
Section 1.27. "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.28. "Note Conversion Shares" shall mean shares of Common
Stock into which the Convertible Note is or may be converted.
Section 1.29. "Outstanding" when used with reference to Common Stock or
Capital Shares (collectively the "Shares"), shall mean, at any date as of which
the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not refer to any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.30. "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.31. "Principal Market" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange, the Electronic Bulletin
Board or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.32. "Protective Warrant" or "Protective Warrants" shall mean
any and all Protective Warrant(s) in the form of Exhibit D hereto issued
pursuant to Section 2.1(c) of this Agreement.
Section 1.33. "Protective Warrant Shares" shall mean all shares of
Common Stock issued or issuable pursuant to exercise of the Protective Warrants.
Section 1.34. "Purchase Price" shall mean, 92.5% of the lowest three
consecutive Bid Prices during (i) with respect to the First Sale, the 22 Trading
Day period immediately preceding the Subscription Date, (ii) with respect to a
Subsequent Sale, the 22 Trading Day period immediately preceding the Sale Date
relating to such Subsequent Sale and (ii) with respect to an Effective Date, the
22 Trading Day period immediately preceding such Effective Date.
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Section 1.35. "Registrable Securities" shall mean (i) the Commitment
Shares, (ii) the Note Conversion Shares, (iii) the Warrant Shares and (iv) any
securities issued or issuable with respect to any of the foregoing by way of
exchange, stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (w) the applicable
Registration Statement has been declared effective by the SEC and all such
Registrable Securities have been disposed of pursuant to the applicable
Registration Statement, (x) all such Registrable Securities have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") are met,
(y) such time as all such Registrable Securities have been otherwise transferred
to holders who may trade such shares without restriction under the Securities
Act, and the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend or (z) in the
opinion of counsel to the Company, which counsel shall be reasonably acceptable
to the Investor, all such Registrable Securities may be sold by the Investor
without registration and without any time, volume or manner limitations pursuant
to Rule 144(k) (or any similar provision then in effect) under the Securities
Act.
Section 1.36. "Registration Rights Agreement" shall mean the
registration rights agreement by and between the Company and the Investor, in
the form of Exhibit E hereto.
Section 1.37. "Registration Statement" or "Registration Statements"
shall have the meaning set forth in the Registration Rights Agreement.
Section 1.38. "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.39. "Representative" of a party shall mean any officer,
director, employee, agent, counsel, accountant, financial advisor, consultant or
other representative of such party.
Section 1.40. "Sale" shall mean the First Sale, together with any and
all Subsequent Sales.
Section 1.41. "Sale Date" shall mean the Trading Day on which a Sale
Notice Period expires.
Section 1.42. "Sale Fees" shall have the meaning specified in Section
10.1(b) hereof.
Section 1.43. "Sale Notice" shall mean a written notice to the Investor
in the form of Exhibit F hereto, setting forth, inter alia, the intended Closing
Date, the Investment Amount and the number of shares of Common Stock that the
Company intends to require the Investor to purchase pursuant to the terms of
this Agreement.
Section 1.44. "Sale Notice Date" shall mean (i) with respect to the
First Sale, the Subscription Date, and (ii) with respect to a Subsequent Sale,
the Trading Day during the Commitment Period, upon which a Sale Notice to sell
Common Stock to the Investor is deemed delivered pursuant to Section 2.3(b)
hereof.
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Section 1.45. "Sale Notice Period" shall mean (i) with respect to the
First Sale, the period beginning 7 Trading Days before the Subscription Date and
ending on the Subscription Date, and (ii) with respect to a Subsequent Sale, a
period beginning on a Sale Notice Date and ending 7 Trading Days after a Sale
Notice Date.
Section 1.46. "SEC" shall mean the U.S. Securities and Exchange
Commission.
Section 1.47. "SEC Documents" shall mean the Company's registration
statement on Form S-3 filed with the SEC on April 2, 2001, latest Form 10-K as
of the time in question, all Forms 10-Q and 8-K filed thereafter, and the Proxy
Statement for its latest fiscal year as of the time in question until such time
the Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.
Section 1.48. "Section 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.49. "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.50. "Short Sale" shall have the meaning specified in Rule
3b-3 of the Exchange Act.
Section 1.51. "Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the parties hereto.
Section 1.52. "Subscription Fee" shall have the meaning set forth in
Section 10.1(a) hereof.
Section 1.53. "Subsequent Sale" shall have the meaning set forth in
Section 2.1(b) of this Agreement.
Section 1.54. "Subsequent Sale Shares" shall have the meaning set forth
in Section 2.1(b) of this Agreement.
Section 1.55. "Subsidiary" shall mean any Person in which the Company,
directly or indirectly through Subsidiaries or otherwise, beneficially owns more
than 50% of either the equity interests in, or the voting control of, such
Person.
Section 1.56. "Trading Day" shall mean any day during which the
Principal Market shall be open for business.
Section 1.57. "Transfer Agent Instructions" shall have the meaning set
forth in Section 2.4(a) of this Agreement.
Section 1.58. "Underwriter" shall mean any underwriter participating in
any disposition of the Registrable Securities on behalf of the Investor pursuant
to a Registration Statement.
Section 1.59. "Warrants" shall mean the Protective Warrants and
Incentive Warrant.
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Section 1.60. "Warrant Shares" shall mean the Protective Warrant Shares
and the Incentive Warrant Shares.
ARTICLE II
SALE AND PURCHASE OF SECURITIES;
TERMINATION OF OBLIGATIONS
Section 2.1. Sales.
(a) First Sale. In accordance with the terms and conditions
set forth herein (including without limitation the provisions
of Article VII hereof), the Sale Date of the First Sale shall
occur on the Subscription Date. On the Closing Date relating
to the First Sale, the Company shall issue and sell and the
Investor shall purchase, such number of shares of Common Stock
for an Investment Amount not to exceed 2.75 times the average
of the Daily Trading Values during the 22 Trading Day period
immediately preceding the Subscription Date, less $500,000
(such transaction is referred to herein as the "First Sale,"
and all such shares are referred to herein as the "First Sale
Shares"). The First Sale Amount shall be not less than
$250,000.
(b) Subsequent Sales. In accordance with the terms and
conditions set forth herein (including, without limitation,
the provisions of Article VII hereof), on any Sale Notice Date
the Company shall exercise a Subsequent Sale by the delivery
of a Sale Notice. On the Closing Date relating to each
Subsequent Sale, the Company shall issue and sell and the
Investor shall purchase such number of shares of Common Stock
for an Investment Amount, stated in the applicable Sale
Notice, not to exceed 2.00 times the average of the Daily
Trading Values during the 22 Trading Day period immediately
preceding the Sale Notice Date (each such transaction is
referred to herein as a "Subsequent Sale," and all such shares
are referred to herein as the "Subsequent Sale Shares"). Such
Investment Amount shall not be less than the Minimum Sale
Amount.
(c) Protective Warrants. In partial consideration for the
Investor entering into this Agreement if the Company elects to
exercise its right with respect to any Sale to require the
Investor to purchase shares of Common Stock that have not been
previously registered and are not covered by an effective
Registration Statement filed with the SEC, on each Closing
Date relating to each such Sale, the Company shall issue and
deliver to the Investor a Protective Warrant with an exercise
price of $0.01 for each share of Common Stock, for the
purchase of such number of shares of Common Stock as described
in such Protective Warrant.
(d) Incentive Warrant. In partial consideration for the
Investor entering into this Agreement, on the applicable
Closing Date of the First Sale, the Company shall issue and
deliver to the Investor the Incentive Warrant, with an
exercise price equal to 150% of the Purchase Price of the
First Sale, for the purchase of
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such number of shares of Common Stock as is equal to $600,000
divided by the Purchase Price of the First Sale.
(e) Convertible Note. On the Subscription Date the Company
shall issue to the Investor and the Investor shall purchase
the Convertible Note.
Section 2.2. Twenty Percent Limitation. Unless the Company obtains the
requisite approval of its shareholders in accordance with the corporate laws of
Nevada and the applicable rules of the Principal Market, no more than 19.9% of
the Outstanding shares of Common Stock may be issued and sold pursuant to Sales,
the Warrants and the Convertible Note; provided, that with respect to the
issuance of more than 19.9% of the Outstanding shares of Common Stock pursuant
to the Warrants, the Investor has the right to require the Company to seek such
shareholder approval and upon the written request of the Investor the Company
shall as soon as practicable after such request prepare and file with the SEC a
proxy statement to be distributed to shareholders of the Company for the purpose
of soliciting proxies for use at an annual or special meeting of shareholders of
the Company at which such shareholder approval is sought, and in which proxy
statement the Company will recommend to its shareholders the foregoing approval.
Section 2.3. Sale Notice.
(a) Timing. At any time during the Commitment Period, the
Company may deliver a Sale Notice to the Investor, subject to the conditions set
forth in Section 7.2.
(b) Date of Delivery of Sale Notice. A Sale Notice shall be
deemed delivered on (i) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received prior to 12:00 noon New York time, or
(ii) the immediately succeeding Trading Day if it is received by facsimile or
otherwise after 12:00 noon New York time on a Trading Day or at any time on a
day which is not a Trading Day. No Sale Notice will be deemed delivered, on a
day that is not a Trading Day.
Section 2.4. Closings.
(a) Subscription Date. On the Subscription Date (i) the
Company and the Investor shall execute the Registration Rights Agreement, (ii)
the Company shall issue and deliver to the Investor a Protective Warrant, (iii)
the Company shall issue and deliver to the Investor the Incentive Warrant, (iv)
the Company shall issue and deliver to the Investor the Convertible Note, (v)
the Company shall execute and deliver irrevocable instructions to the transfer
agent, in the form of Exhibit G attached hereto (the "Transfer Agent
Instructions"), to prepare and deliver to the Investor, following each Sale, a
share certificate in the name of the Investor and in the amount of the
applicable Commitment Shares, the transfer agent shall confirm and accept such
instructions, and a copy of such instructions shall be delivered to the
Investor's legal counsel, (vi) the Investor shall deliver to the Company and the
Company shall execute a Closing Statement, and (vii) the Investor shall deliver
to the Company the Investment Amount specified in the Closing Statement, less
applicable fees and costs determined in accordance with Section 10.1, by wire
transfer of immediately available funds to the account designated in writing by
the Company. In addition, on or prior to the Subscription Date, each of the
Company and the Investor shall deliver to the other all documents, instruments
and writings
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required to be delivered or reasonably requested by either of them pursuant to
this Agreement in order to implement and effect the transactions contemplated
herein.
(b) Closing Date. On each Closing Date (i) the Company shall
issue and deliver to the Investor a Protective Warrant, if required by Section
2.1(c) hereof, (ii) the Company shall instruct the transfer agent to prepare and
deliver to the Investor a share certificate in the name of the Investor and in
the amount of the applicable Commitment Shares, in accordance with the Transfer
Agent Instructions, and the Company shall take all other actions necessary to
ensure the prompt delivery of such share certificate to the Investor, (iii) the
Investor shall deliver to the Company and the Company shall execute a Closing
Statement, and (iv) the Investor shall deliver to the Company the Investment
Amount specified in the Closing Statement, less applicable fees and costs
determined in accordance with Section 10.1, by wire transfer of immediately
available funds to the account designated in writing in the Sale Notice. In
addition, on or prior to each Closing Date, each of the Company and the Investor
shall deliver to the other all documents, instruments and writings required to
be delivered or reasonably requested by either of them pursuant to this
Agreement in order to implement and effect the transactions contemplated herein.
Section 2.5. Termination of Agreement and Investment Obligation. The
Company shall have the right to terminate this Agreement at any time upon 30
days' written notice to the Investor. The Investor shall have the right to
immediately terminate this Agreement (including with respect to any Sale, notice
of which has been given but the applicable Closing Date has not yet occurred) in
accordance with Section 6.12 or in the event that: (i) any Registration
Statement has not been declared effective by the SEC within the applicable time
periods set forth in Section 1.1 of the Registration Rights Agreement, (ii)
there shall occur any stop order or suspension of the effectiveness of the
Registration Statement for an aggregate of 30 Trading Days during the Commitment
Period, or (iii) the Company shall at any time fail to comply with the
requirements of Section 6.2, 6.3, 6.4, 6.5, 6.6, 6.8 or 6.9.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1. Intent. The Investor is entering into this Agreement for
its own account, and the Investor has no view to the distribution of the
Registrable Securities, the Convertible Note or Warrants and has no present
arrangement (whether or not legally binding) at any time to sell, assign,
transfer, pledge, encumber, hypothecate or otherwise dispose of the Registrable
Securities, the Convertible Note or Warrants to or through any person or entity;
provided, however, that although having a present investment intent, by making
the representations herein, the Investor does not agree to hold the Registrable
Securities, the Convertible Note or Warrants for any minimum or other specific
term and reserves the right to dispose of the Registrable Securities, the
Convertible Note or Warrants at any time pursuant to the Registration Statement
and in accordance with federal and state securities laws applicable to such
disposition.
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Section 3.2. Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and the Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Common Stock and the Convertible
Note. The Investor acknowledges that an investment in the Common Stock is
speculative and involves a high degree of risk.
Section 3.3. Authority. Each of this Agreement and the Registration
Rights Agreement has been duly authorized by all necessary corporate action and
no further consent or authorization of the Investor, or its Board of Directors
or stockholders is required. Each of this Agreement and the Registration Rights
Agreement was validly executed and delivered by the Investor and each is a valid
and binding agreement of the Investor enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
Section 3.4. Not an Affiliate. The Investor is not an officer, director
or "affiliate" (as that term is defined in Rule 405 of the Securities Act) of
the Company.
Section 3.5. Organization and Standing. The Investor is duly organized,
validly existing, and in good standing under the laws of Bermuda.
Section 3.6. Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated thereby, and compliance with the
requirements thereof, will not to the Investor's knowledge (a) violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
the Investor, (b) violate any provision of any indenture, instrument or
agreement to which the Investor is a party or is subject, or by which the
Investor or any of its assets is bound, (c) conflict with or constitute a
material default thereunder, (d) result in the creation or imposition of any
lien pursuant to the terms of any such indenture, instrument or agreement, or
constitute a breach of any fiduciary duty owed by the Investor to any third
party, or (e) require the approval of any third-party (that has not been
obtained) pursuant to any material contract to which the Investor is subject or
to which any of its assets, operations or management may be subject.
Section 3.7. Disclosure; Access to Information. The Investor has
received or had access to all documents, records, books and other information
pertaining to Investor's investment in the Company that have been requested by
Investor. The Investor has received and reviewed copies of the SEC Documents.
Neither the receipt by the Investor of such information, nor the access of the
Investor to such information shall modify, amend or affect the Investor's right
to rely upon the representations and warranties made by the Company pursuant to
Article IV of this Agreement.
Section 3.8. Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
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Section 3.9. Resale Restrictions. Investor acknowledges that any
Registrable Securities, the Convertible Note and Warrants to be acquired by
Investor have not been registered under the federal securities laws or any
applicable state securities laws in reliance upon exemptions available for
non-public or limited offerings. Investor understands that it must bear the
economic risk of the investment in the Registrable Securities, the Convertible
Note and Warrants because the Registrable Securities, the Convertible Note and
Warrants have not been so registered and therefore are subject to restrictions
upon transfer such that they may not be sold or otherwise transferred unless
registered under the applicable securities laws or an exemption from such
registration is available. The Investor will not reoffer, sell, assign,
transfer, pledge, encumber, hypothecate or otherwise dispose of any Registrable
Securities, the Convertible Note or the Warrants in the absence of an effective
registration statement, qualification or authorization relating thereto under
federal and applicable state securities laws or an opinion of qualified counsel
satisfactory to the Company to the effect that the proposed transaction in the
Registrable Securities, the Convertible Note or the Warrants will neither
constitute or result in any violation of the federal or state securities laws.
Subject to Section 8.1 of this Agreement, any certificate or other document that
may be issued representing any shares of Registrable Securities, the Convertible
Note or the Warrants may be endorsed with a legend to this effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that on the Subscription
Date, each Effective Date and each Closing Date:
Section 4.1. Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Except for GlobalNet International, Inc., a Delaware corporation, and except as
set forth in the SEC Documents, the Company does not own more than 50% of the
outstanding capital stock of or control any other Person. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, other than those in which the
failure so to qualify would not have a Material Adverse Effect.
Section 4.2. Authority. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement, the Convertible Note and the
Warrants and to issue the Commitment Shares, the Convertible Note, the Warrants
and the Warrant Shares; (ii) the execution and delivery of this Agreement and
the Registration Rights Agreement, and the execution, issuance and delivery of
the Convertible Note and the Warrants, by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required; and (iii) each of
this Agreement and the Registration Rights Agreement has been duly executed and
delivered, and the Convertible Note and the Warrants have been duly executed,
issued and delivered, by the Company and constitute valid
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and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 4.3. Corporate Documents. The Company has furnished or made
available to the Investor true and correct copies of the Company's Certificate
of Incorporation, as amended and in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as amended and in effect on the date
hereof (the "By-Laws").
Section 4.4. Books and Records. The minute books and other similar
records of the Company and its subsidiaries as made available to Investor prior
to the execution of this Agreement contain a true and complete record, in all
material respects, of all action taken at all meetings and by all written
consents in lieu of meetings of the stockholders, the boards of directors and
committees of the boards of directors of the Company and the subsidiaries. The
stock transfer ledgers and other similar records of the Company and the
subsidiaries as made available to Investor prior to the execution of this
Agreement accurately reflect all record transfers prior to the execution of this
Agreement in the capital stock of the Company and the subsidiaries. Neither the
Company nor any subsidiary has any of its books or records recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Company or a
subsidiary.
Section 4.5. Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock, of which 31,865,450
shares are issued and outstanding. Except as set forth on Schedule 4.5 hereto,
there are no options, warrants, preemptive rights for, or rights to subscribe
to, securities, rights or obligations convertible into or exchangeable for or
giving any right to subscribe for any shares of capital stock of the Company.
There are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of Common Stock pursuant to this
Agreement. All of the outstanding shares of Common Stock of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable.
Section 4.6. Registration and Listing of Common Stock. The Company has
registered its Common Stock pursuant to Section 12(b) or 12(g) of the Exchange
Act and is in full compliance with all reporting requirements of the Exchange
Act, and the Company has used its best efforts to maintain all requirements for
the continued listing or quotation of its Common Stock, and such Common Stock is
currently listed or quoted on the Principal Market. As of the date hereof, the
Principal Market is the Nasdaq SmallCap Market.
Section 4.7. Financial Statements. Prior to the execution of this
Agreement, the Company has delivered to the Investor true and complete copies of
the following financial statements:
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(a) the audited balance sheets of DTA Communications Networks,
LLC, the predecessor company to GlobalNet International, Inc., a wholly-owned
subsidiary of the Company, and its consolidated subsidiaries as of December 31,
1999, and the related audited consolidated statements of operations,
stockholders' equity and cash flows for each of the fiscal years then ended,
together with a true and correct copy of the report on such audited information
by KPMG, and all letters from such accountants with respect to the results of
such audits; and
(b) the unaudited balance sheets of the Company and its
consolidated subsidiaries as of December 31, 2000, and the related unaudited
consolidated statements of operations and stockholders' equity for the portion
of the fiscal year then ended.
The financial statements of the Company delivered to the Investor have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 4.8. SEC Documents. The Company has timely filed all SEC
Documents and has delivered or made available to the Investor true and complete
copies of the SEC Documents (including, without limitation, audited financial
statements, proxy information and solicitation materials). The Company has not
provided to the Investor any information that, according to applicable law, rule
or regulation, should have been disclosed publicly prior to the date hereof by
the Company, but which has not been so disclosed. As of their respective dates,
the SEC Documents complied as to form and substance in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and other federal, state and local laws, rules and regulations applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC Documents is, or has been, required to be amended or
updated under applicable law (except for such statements as have been amended or
updated in subsequent filings prior to the date hereof). The financial
statements of the Company included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may include summary notes
and may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
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Section 4.9. Exemption from Registration; Valid Issuances; New
Issuances. The sale and issuance of the Warrants, the Warrant Shares, the
Convertible Note, the Note Conversion Shares and the Commitment Shares in
accordance with the terms and on the basis of the representations and warranties
set forth in this Agreement, may and will be properly issued pursuant to Section
4(2), Regulation D and/or any applicable state law. When issued and paid for as
provided herein and in the Warrants, the Commitment Shares, the Warrant Shares
and the Note Conversion Shares will be duly and validly issued, fully paid, and
nonassessable. When issued as herein provided the Convertible Note shall be duly
and validly executed, issued and delivered by the Company and constitute a valid
and binding obligation of the Company. Neither the sales of the Commitment
Shares, the Warrants, the Warrant Shares, the Convertible Note or the Note
Conversion Shares pursuant to, nor the Company's performance of its obligations
under, this Agreement, the Registration Rights Agreement, the Convertible Note
or the Warrants will (i) result in the creation or imposition of any liens,
charges, claims or other encumbrances upon the Commitment Shares, the Warrant
Shares, the Note Conversion Shares or any of the assets of the Company, or (ii)
entitle the holders of Outstanding Capital Shares to preemptive or other rights
to subscribe to or acquire the Capital Shares or other securities of the
Company. The Commitment Shares, the Note Conversion Shares and the Warrant
Shares will not subject the Investor to personal liability by reason of the
ownership thereof. The Commitment Shares, the Note Conversion Shares and Warrant
Shares have been duly authorized by the Company, but have not been issued
(whether or not subsequently repurchased by the Company) to any Person, and when
issued to the Investor in accordance with this Agreement, the Convertible Note
and the Warrants will not have been issued (whether or not subsequently
repurchased by the Company) to any Person other than the Investor.
Section 4.10. No General Solicitation or Advertising. In regard to the
transactions contemplated hereby, neither the Company nor any of its Affiliates
nor any distributor or any person acting on its or their behalf (i) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of Regulation D) or general advertising with respect to any of the
Commitment Shares, the Warrants, the Warrant Shares, the Convertible Note or the
Note Conversion Shares, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Common Stock under the Securities Act.
Section 4.11. No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Commitment Shares, the Warrants, the Warrant Shares, the Convertible Note
and the Note Conversion Shares do not and will not (i) result in a violation of
the Certificate or By-Laws or (ii) conflict with, or constitute a material
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture, instrument
or any "lock-up" or similar provision of any underwriting or similar agreement
to which the Company is a party, or (iii) result in a violation of any federal,
state, local or foreign law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations, or any rule,
regulation, order, judgment or decree of any self-regulatory organization having
authority over the matters contemplated hereby, applicable to the Company or by
which any property or asset of the Company is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as
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would not, individually or in the aggregate, have a Material Adverse Effect) nor
is the Company otherwise in violation of, conflict with or in default under any
of the foregoing; provided, however, that for purposes of the Company's
representations and warranties as to violations of foreign law, rule or
regulation referenced in clause (iii), such representations and warranties are
made only to the best of the Company's knowledge insofar as the execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby are or may be affected by
the status of the Investor under or pursuant to any such foreign law, rule or
regulation. The business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental or self-regulatory entity,
except for possible violations that either singly or in the aggregate do not and
will not have a Material Adverse Effect. The Company is not required under any
federal, state or local law, rule or regulation, order, judgment or decree
(including federal and state securities laws and regulations), or any rule,
regulation, order, judgment or decree of any self-regulatory organization having
authority over the matters contemplated hereby, to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Common Stock, the
Commitment Shares, the Warrants, the Warrant Shares, the Convertible Note or the
Note Conversion Shares in accordance with the terms hereof (other than any SEC,
NASD or state securities filings that may be required to be made by the Company
subsequent to any Closing, any registration statement that may be filed pursuant
hereto, and any shareholder approval required by the rules applicable to
companies whose common stock trades on the Nasdaq SmallCap Market); provided
that, for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Investor herein.
Section 4.12. No Material Adverse Change. Except as set forth in the
SEC Documents, since December 31, 1999, no event has occurred that would have a
Material Adverse Effect on the Company.
Section 4.13. No Undisclosed Liabilities. Except as set forth in the
SEC Documents, the Company has no liabilities or obligations that are material,
individually or in the aggregate, other than those incurred in the ordinary
course of the Company's businesses since December 31, 1999 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company.
Section 4.14. No Undisclosed Events or Circumstances. Except as set
forth in the SEC Documents, since December 31, 1999, no event or circumstance
has occurred or exists with respect to the Company or its businesses,
properties, prospects, operations or financial condition, that, under applicable
law, rule or regulation, requires public disclosure or announcement prior to the
date hereof by the Company but which has not been so publicly disclosed or
announced.
Section 4.15. No Integrated Offering. Neither the Company, nor any of
its Affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Common Stock, the Commitment Shares, the Warrants, the Warrant Shares, the
Convertible Note or the Note Conversion Shares under the Securities Act.
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Section 4.16. Litigation and Other Proceedings. Except as set forth in
the SEC Documents, there are no lawsuits or proceedings pending or to the best
knowledge of the Company threatened, against the Company, nor has the Company
received any written or oral notice of any such action, suit, proceeding or
investigation, which have had or might have a Material Adverse Effect. Except as
set forth in the SEC Documents, no judgment, order, writ, injunction or decree
or award has been issued by or, so far as is known by the Company, requested of
any court, arbitrator or governmental agency which has resulted in or might
result in a Material Adverse Effect.
Section 4.17. No Misleading or Untrue Communication. The Company, any
Person representing the Company, and, to the knowledge of the Company, any other
Person selling or offering to sell the Commitment Shares, the Warrants, the
Warrant Shares, the Convertible Note or the Note Conversion Shares in connection
with the transactions contemplated by this Agreement, have not made, at any
time, any oral communication in connection with the offer or sale of the same
which contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 4.18. Material Non-Public Information. The Company is not in
possession of, nor has the Company or its agents disclosed to the Investor, any
material non-public information that (i) if disclosed, would, or could
reasonably be expected to have, an effect on the price of the Common Stock or
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1. Compliance. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and the
rules and regulations of the Principal Market on which the Company's Common
Stock is listed.
Section 5.2. Short Sale. Neither the Investor nor any of its Affiliates
will directly or indirectly engage in any Short Sale of the Commitment Shares,
the Warrant Shares, the Warrants, the Convertible Note or the Note Conversion
Shares during the Commitment Period.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect, and the
Company shall comply in all respects with the terms thereof.
Section 6.2. Reservation of Common Stock. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any
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obligation to issue (i) the Commitment Shares and the Warrant Shares, such
amount of shares of Common Stock to be reserved shall be calculated based upon
the Minimum Bid Price and the Exercise Price of the Incentive Warrant and the
maximum number of Protective Warrant Shares issuable pursuant to the Protective
Warrants and (ii) the Note Conversion Shares, such amount of Note Conversion
Shares to be resold shall be calculated based upon the conversion price set
forth in Section 3.1(a) of the Convertible Note. The number of shares so
reserved from time to time, as theretofore increased or reduced as hereinafter
provided, may be reduced by the number of shares actually delivered.
Section 6.3. Listing of Common Stock. The Company shall exercise best
efforts to maintain the listing or quotation of the Common Stock on a Principal
Market, and as soon as practicable (but in any event prior to the Closing Date
for any Sale) will cause the Commitment Shares, the Note Conversion Shares and
the Warrant Shares with respect to each Sale to be listed on the Principal
Market. The Company further shall, if the Company applies to have the Common
Stock traded on any other Principal Market, include in such application the
Commitment Shares, the Note Conversion Shares and the Warrant Shares, and shall
take such other action as is necessary or desirable in the opinion of the
Investor to cause the Common Stock to be listed on such other Principal Market
as promptly as possible. The Company shall use commercially reasonable efforts
to continue the listing and trading of its Common Stock on the Principal Market
(including, without limitation, maintaining sufficient net tangible assets) and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and the Principal Market.
Section 6.4. Exchange Act Registration. The Company shall comply with
all applicable requirements set forth in the Registration Rights Agreement,
including without limitation its obligation to file each Registration Statement
with the SEC within the applicable time periods set forth in the Registration
Rights Agreement. After each Registration Statement becomes effective, the
Company shall cause the Common Stock covered by such Registration Statement to
continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will
comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act.
Section 6.5. Legends. The certificates evidencing the Warrants, the
Convertible Note, the Note Conversion Shares, the Commitment Shares and the
Warrant Shares shall be free of legends, except as provided for in Article VIII.
Section 6.6. Corporate Existence. The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.7. Additional SEC Documents. Until all Registrable Securities
issued or issuable to the Investor pursuant to this Agreement may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act, the Company shall deliver to the Investor, as and when the
originals thereof are submitted to the SEC for filing, copies of all SEC
Documents so furnished or submitted to the SEC.
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Section 6.8. Notice of Certain Events Affecting Registration;
Suspension of Right to Make a Subsequent Sale. The Company shall immediately
notify the Investor upon the occurrence of any of the following events in
respect of a Registration Statement or related prospectus in respect of an
offering of Registrable Securities: (i) receipt of any request for additional
information by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in such
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (v) the declaration by the SEC of the effectiveness of a
Registration Statement; and (vi) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate, and
the Company shall promptly make available to the Investor any such supplement or
amendment to the related prospectus. The Company shall not deliver to the
Investor any Sale Notice during the continuation of any of the foregoing events.
Section 6.9. Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity (if not the
Company) executes a written instrument acknowledging and assuming the obligation
to issue to the Investor, upon any Sale or the exercise of any Warrant, in lieu
of each share of Common Stock theretofore issuable upon such Sale or exercise of
any such Warrant, other securities, money or property receivable upon such
merger, consolidation or transfer had the Sale or exercise of such Warrant
occurred immediately prior to such merger, consolidation or transfer.
Section 6.10. Issuance of Commitment Shares, Warrant Shares and
Additional Shares. The sale of the Commitment Shares, the issuance of the
Convertible Note, the issuance of the Note Conversion Shares upon conversion of
the Convertible Note, the issuance of the Warrants and the issuance of the
Warrant Shares pursuant to exercise of the Warrants shall be made in accordance
with the provisions and requirements of Regulation D and any applicable state
law. Issuance of the Warrant Shares pursuant to exercise of the Warrants through
a cashless exercise shall be made in accordance with the provisions and
requirements of Section 3(a)(9) under the Securities Act and any applicable
state law.
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Section 6.11. Legal Opinion on Subscription Date. The Company's
independent counsel shall deliver to the Investor on the Subscription Date an
opinion in the form of Exhibit H, except for paragraph 7 thereof.
Section 6.12. No Similar Arrangement; Right of First Refusal. The
Company shall refrain from entering into any other agreements, arrangements or
understandings granting to the Company the right to sell shares of its
securities to one or more investors in placements exempt from registration under
the Securities Act until 60 calendar days after this Agreement is terminated
pursuant to Section 2.5 hereof (the "Exclusivity Period"). If the Company, for
the purpose of obtaining any additional financing, wishes to sell shares of its
securities in placements exempt from registration under the Securities Act
during the Exclusivity Period (a "Third Party Sale") to a party other than the
Investor (the "Third Party"), the Company shall first offer (the "Offer") to the
Investor, in writing, the right to purchase such shares (the "Offered Shares")
at the bona fide price offered by the Third Party (the "Offer Price"). The Offer
shall grant the Investor the right during the 5 Trading Days immediately
following the date of the Offer to elect to purchase any or all of the Offered
Shares. The Company, in connection with such a Third Party Sale, shall refrain
from circumventing or attempting to circumvent the Investor's right of first
refusal by way of making such a Third Party Sale to any of its Affiliates
without first making an Offer to the Investor. If the Investor so exercises its
right to purchase any or all of the Offered Shares, the purchase will be treated
as a Subsequent Sale except that the purchase price for the Offered Shares shall
be the Offer Price. The closing and method of payment shall be as provided for
in Sections 2.3 and 2.4 hereof and the Closing Date shall be 7 Trading Days
after the Investor exercises such right. If the Investor fails to exercise its
right to purchase any or all of the Offered Shares, then during the 60 calendar
days immediately following the expiration of such right, the Company shall be
free to sell any or all of the Offered Shares to a purchaser for a purchase
price not lower than the Offer Price payable on terms and conditions that are
not more favorable to such purchaser than those contained in the Offer. In the
event that the Company effects a Third Party Sale, the Investor may immediately
terminate this Agreement.
Section 6.13. Public Announcements. The Company, its Representatives
and legal advisors, and the Investor will not issue or make any reports,
statements or releases to the public or to any third party with respect to this
Agreement or the transactions contemplated hereby without the consent of both
the Company and the Investor, which consent shall not be unreasonably withheld.
The Company, its Representatives and legal advisers, and the Investor also will
obtain the other party's prior approval of any press release to be issued
announcing the consummation of the transactions contemplated by this Agreement
or in any way referring to the other party or affiliates of the other party. If
either party is unable to obtain the approval of its public report, statement,
or press or other release from the other party and such report, statement, or
press or other release is, in the opinion of legal counsel to such party,
required by applicable law or by any rule or regulation of the Principal Market
in order to discharge such party's disclosure obligations, then such party may
make or issue the legally required report, statement, or press or other release
and promptly furnish the other party with a copy thereof.
ARTICLE VII
CONDITIONS TO DELIVERY OF
SALE NOTICES AND CONDITIONS TO CLOSING
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Section 7.1. Conditions Precedent to the Obligation of the Company to
Issue and Sell Common Stock. The obligation hereunder of the Company to issue
and sell the Commitment Shares to the Investor incident to each Closing is
subject to the satisfaction, at or before each such Closing, of each of the
conditions set forth below.
(a) Accuracy of the Investor's Representation and Warranties.
The representations and warranties of the Investor shall be
true and correct in all material respects as of the date of
this Agreement and as of the date of each such Closing as
though made at each such time.
(b) Performance by the Investor. The Investor shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
Section 7.2. Conditions Precedent to the Right of the Company to
Deliver a Sale Notice and the Obligation of the Investor to Purchase Commitment
Shares. The right of the Company to deliver a Sale Notice and the obligation of
the Investor hereunder to acquire and pay for the Commitment Shares incident to
a Closing is subject to the satisfaction, on (i) the Subscription Date, (ii) the
applicable Sale Notice Date and (iii) the applicable Closing Date (each a
"Condition Satisfaction Date"), of each of the following conditions; provided,
however, that with respect to the Subscription Date and the Closing relating to
the First Sale only, the Investor waives the conditions set forth in paragraphs
(a), (b) and (k) of this Section 7.2:
(a) Filing of Registration Statements with the SEC. In
accordance with the provisions set forth in the Registration
Rights Agreement, the Company shall have filed with the SEC
Registration Statements covering the Note Conversion Shares
and the resale of Registrable Securities relating to all prior
Sales.
(b) Effective Registration Statements. (1) The Company shall
have notified the Investor in accordance with Section 6.8
hereof that all prior Registration Statements covering
Registrable Securities relating to the First Sale, the Note
Conversion Shares and any Subsequent Sales have been declared
effective by the SEC. (2) In accordance with the Registration
Rights Agreement, all such Registration Statements shall
remain effective on each Condition Satisfaction Date. (3)
Neither the Company nor the Investor shall have received
notice that the SEC has issued or intends to issue a stop
order with respect to a Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of a
Registration Statement, either temporarily or permanently, or
intends or has threatened to do so (unless the SEC's concerns
have been addressed and the Investor is reasonably satisfied
that the SEC no longer is considering or intends to take such
action). (4) No other suspension of the use or withdrawal of
the effectiveness of such Registration Statement or related
prospectus shall exist.
(c) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be
true and correct as of each
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Condition Satisfaction Date as though made at each such time
(except for representations and warranties specifically made
as of a particular date).
(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement, the Registration Rights Agreement, the Convertible
Note and the Warrants to be performed, satisfied or complied
with by the Company at or prior to each Condition Satisfaction
Date.
(e) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or adopted by any court or governmental
authority of competent jurisdiction that prohibits the
transactions contemplated by this Agreement or otherwise has a
Material Adverse Effect, and no actions, suits or proceedings
shall be in progress, pending or threatened by any Person,
that seek to enjoin or prohibit the transactions contemplated
by this Agreement or otherwise could reasonably be expected to
have a Material Adverse Effect. For purposes of this paragraph
(e), no proceeding shall be deemed pending or threatened
unless one of the parties has received written or oral
notification thereof prior to the applicable Closing Date.
(f) No Suspension of Trading in or Delisting of Common Stock.
The trading of the Common Stock shall not have been suspended
by the SEC, the Principal Market or the NASD, and the Common
Stock shall have been approved for listing or quotation on and
shall not have been delisted from the Principal Market. The
issuance of shares of Common Stock with respect to the
applicable Closing shall not violate the shareholder approval
requirements of the Principal Market.
(g) Legal Opinion. The Company shall have caused to be
delivered to the Investor, within 5 Trading Days of the
effective date of a Registration Statement, an opinion of the
Company's independent counsel in the form of Exhibit H hereto,
addressed to the Investor.
(h) Due Diligence. No dispute between the Company and the
Investor shall exist pursuant to Section 7.3 as to the
adequacy of the disclosure contained in the Registration
Statement.
(i) Ten Percent Limitation. On each Closing Date, the number
of Commitment Shares then to be purchased by the Investor
shall not exceed the number of such shares that, when
aggregated with all other shares of Common Stock and
Registrable Securities then owned by the Investor beneficially
or deemed beneficially owned by the Investor, as determined in
accordance with the definition of beneficial ownership in Rule
13d-3 promulgated under the Exchange Act, would result in the
Investor owning no more than 9.9% of all of such Common Stock
as would be outstanding on such Closing Date, as determined in
accordance with Section 13(d) of the Exchange Act and the
regulations promulgated thereunder. For purposes of this
Section, in the event that the amount of Common Stock
outstanding as determined in accordance with Section
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13(d) of the Exchange Act and the regulations promulgated
thereunder is greater on a Closing Date than on the Sale
Notice Date associated with such Closing Date, the amount of
Common Stock outstanding on such Closing Date shall govern for
purposes of determining whether the Investor, when aggregating
all purchases of Common Stock made pursuant to this Agreement
and, if any, Warrant Shares would own more than 9.9% of the
Common Stock following such Closing Date.
(j) No Knowledge. The Company shall have no knowledge of any
event more likely than not to have the effect of causing any
Registration Statement to be suspended or otherwise
ineffective (which event is more likely than not to occur
within the fifteen Trading Days following the Trading Day on
which such notice is deemed delivered).
(k) Minimum Time Interval. The Minimum Time Interval shall
have elapsed.
(l) Shareholder Vote. The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not
violate the shareholder approval requirements of the Principal
Market. Each Sale Notice shall provide the Investor with the
following information as of the applicable Sale Notice Date:
(i) the total number of shares of Outstanding Common Stock,
(ii) the number of Subsequent Sale Shares issuable with
respect to the applicable Closing, (iii) the number of
Protective Warrant Shares issuable, if any, with respect to
the applicable Closing, (iv) the number of shares of
Commitment Shares issued pursuant to previous Sales, (v) the
number of Incentive Warrant Shares issued, (vi) the number of
Note Conversion Shares issued, if any, and (vii) the number of
Protective Warrant Shares issued pursuant to previous Sales.
If the issuance by the Company of a number of shares of Common
Stock equal to the sum of the amounts stated in clauses (ii)
through (vii), inclusive, hereof would result in a violation
by the Company of the shareholder approval requirements of the
Principal Market, the applicable Sale Notice shall be deemed
null and void.
(m) Other. On each Condition Satisfaction Date, the Investor
shall have received and been reasonably satisfied with such
other certificates and documents as shall have been reasonably
requested by the Investor in order for the Investor to confirm
the Company's satisfaction of the conditions set forth in this
Section 7.2., including, without limitation, a certificate in
substantially the form and substance of Exhibit I hereto,
executed in either case by an executive officer of the Company
and to the effect that all the conditions to such Closing
shall have been satisfied as at the date of each such
certificate.
Section 7.3. Due Diligence Review; Non-Disclosure of Non-Public
Information.
(a) The Company shall make available for inspection and review
by the Investor, advisors to and representatives of the
Investor (who may or may not be affiliated with the Investor
and who are reasonably acceptable to the Company), and any
Underwriter, any Registration Statement or amendment or
supplement thereto or
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any blue sky, NASD or other filing, all financial and other
records, all SEC Documents and other filings with the SEC, and
all other corporate documents and properties of the Company as
may be reasonably necessary for the purpose of such review,
and cause the Company's officers, directors and employees to
supply all such information reasonably requested by the
Investor or any such representative, advisor or Underwriter in
connection with such Registration Statement (including,
without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior
to and from time to time after the filing and effectiveness of
such Registration Statement for the sole purpose of enabling
the Investor and such representatives, advisors and
Underwriters and their respective accountants and attorneys to
conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
(b) None of the Company, its officers, directors, employees
and agents shall in any event disclose non-public information
to the Investor, advisors to or representatives of the
Investor unless prior to disclosure of such information the
Company identifies such information as being non-public
information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to
accept such non-public information for review. As a condition
to disclosing any non-public information hereunder, the
Company may require the Investor's advisors and
representatives to enter into a confidentiality agreement in
form reasonably satisfactory to the Company and the Investor.
(c) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any investors who
purchase stock in the Company in a public offering, to money
managers or to securities analysts; provided, however, that
notwithstanding anything herein to the contrary, the Company
shall, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and any
Underwriters of any event or the existence of any circumstance
(without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the
Company specifically or generally during the course of due
diligence by such persons or entities), which, if not
disclosed in the prospectus included in the applicable
Registration Statement would cause such prospectus to include
a material misstatement or to omit a material fact required to
be stated therein in order to make the statements, therein, in
light of the circumstances in which they were made, not
misleading. Nothing contained in this Section 7.3 shall be
construed to mean that such persons or entities other than the
Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in
accordance with the terms and conditions of this Agreement and
nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due
diligence by such persons or entities, that such Registration
Statement contains an untrue statement of a material fact or
omits a material fact required to be stated in such
Registration
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Statement or necessary to make the statements contained
therein, in light of the circumstances in which they were
made, not misleading.
ARTICLE VIII
LEGENDS
Section 8.1. Legends. Each of the Warrants, the Convertible Note and,
unless otherwise provided below, each certificate representing Registrable
Securities will bear the following legend (the "Legend"):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY
SET FORTH IN A SECURITIES PURCHASE AGREEMENT, DATED AS OF APRIL 9,
2001, BETWEEN GLOBALNET, INC. AND CRESCENT INTERNATIONAL LTD. A COPY OF
THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY
BE OBTAINED FROM GLOBALNET, INC.'S EXECUTIVE OFFICES."
On the Subscription Date the Company shall issue to the transfer agent
for its Common Stock (and to any substitute or replacement transfer agent for
its Common Stock upon the Company's appointment of any such substitute or
replacement transfer agent) Transfer Agent Instructions, with a copy to the
Investor. Other than as required as a result of change in law, such instructions
shall be irrevocable by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be, except as otherwise expressly provided in the Registration
Rights Agreement. It is the intent and purpose of such instructions, as provided
therein, to require the transfer agent for the Common Stock from time to time
upon transfer of Registrable Securities by the Investor to issue certificates
evidencing such Registrable Securities free of the Legend during the following
periods and under the following circumstances and without consultation by the
transfer agent with the Company or its counsel and without the need for any
further advice or instruction or documentation to the transfer agent by or from
the Company or its counsel or the Investor, and the Company agrees that it will,
and will cause its counsel to, provide the transfer agent with any and all
documentation requested or required by the transfer agent, the Investor or their
respective
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counsel, including without limitation the documentation and confirmations
referenced in the Transfer Agent Instructions:
(a) At any time after the applicable Effective Date, upon
surrender of one or more certificates evidencing Registrable
Securities that bear the Legend, to the extent accompanied by
a notice requesting the issuance of new certificates free of
the Legend to replace those surrendered; provided that (i) the
applicable Registration Statement shall then be effective and
(ii) if reasonably requested by the transfer agent the
Investor confirms to the transfer agent that the Investor has
transferred the Registrable Securities pursuant to such
Registration Statement and has complied with the prospectus
delivery requirement; or
(b) At any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the
extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered
and containing representations that the Investor is permitted
to dispose of such Registrable Securities without limitation
as to amount or manner of sale pursuant to Rule 144(k) under
the Securities Act.
Section 8.2. No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Registrable Securities, and no instructions
or "stop transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII and as
required by applicable law.
Section 8.3. Investor's Compliance. Nothing in this Article VIII shall
affect in any way the Investor's obligations to comply with all applicable
securities laws.
ARTICLE IX
INDEMNIFICATION; ARBITRATION
Section 9.1. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Investor, its partners, Affiliates, officers, directors,
employees, and duly authorized agents, and each Person or
entity, if any, who controls the Investor within the meaning
of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with its controlling persons from and
against any Damages, joint or several, and any action in
respect thereof to which the Investor, its partners,
Affiliates, officers, directors, employees, and duly
authorized agents, and any such controlling person becomes
subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of
Company contained in this Agreement, as such Damages are
incurred, unless such Damages result primarily from the
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Investor's gross negligence, recklessness or bad faith in
performing its obligations under this Agreement; provided,
however, that the maximum aggregate liability of the Company
shall be limited to the amount actually invested by the
Investor under this Agreement, and provided, further, that in
no event shall this provision be deemed to limit any rights to
indemnification arising under the Registration Rights
Agreement.
(b) The Investor agrees to indemnify and hold harmless the
Company, its Affiliates, officers, directors, employees, and
duly authorized agents, and each Person or entity, if any, who
controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together
with its controlling persons from and against any Damages,
joint or several, and any action in respect thereof to which
the Company, its Affiliates, officers, directors, employees,
and duly authorized agents, and any such controlling person
becomes subject to, resulting from, arising out of or relating
to any misrepresentation, breach of warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part
of the Investor contained in this Agreement, as such Damages
are incurred, unless such Damages result primarily from the
Company's gross negligence, recklessness or bad faith in
performing its obligations under this Agreement; provided,
however, that the maximum aggregate liability of the Investor
shall be limited to the amount by which the total price at
which the Registrable Securities held by the Investor were
sold to the public exceeds the amount actually paid by the
Investor under this Agreement for such Registrable Securities
sold to the public, and provided, further, that in no event
shall this provision be deemed to limit any rights to
indemnification arising under the Registration Rights
Agreement.
Section 9.2. Method of Asserting Indemnification Claims. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section
9.1 (an "Indemnified Party") might seek indemnity under
Section 9.1 is asserted against or sought to be collected from
such Indemnified Party by a person other than the Company, the
Investor or any Affiliate of the Company (a "Third Party
Claim"), the Indemnified Party shall deliver a written
notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for
indemnification that is being asserted under any provision of
Section 9.1 against any person (the "Indemnifying Party"),
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness
after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to such Third
Party Claim to the extent that the Indemnifying Party's
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ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party shall
notify the Indemnified Party as soon as practicable within the
period ending 30 calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity
Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party under Section 9.1 and
whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third
Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant
to this Section 9.2(a), then the Indemnifying Party
shall have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party,
such Third Party Claim by all appropriate
proceedings, which proceedings shall be vigorously
and diligently prosecuted by the Indemnifying Party
to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party in the case of
any settlement that provides for any relief other
than the payment of monetary damages or that provides
for the payment of monetary damages as to which the
Indemnified Party shall not be indemnified in full
pursuant to Section 9.1). The Indemnifying Party
shall have full control of such defense and
proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified
Party may, at the sole cost and expense of the
Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred
to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes
to be necessary or appropriate to protect its
interests; and provided further, that if requested by
the Indemnifying Party, the Indemnified Party will,
at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant
to this clause (i), and except as provided in the
preceding sentence, the Indemnified Party shall bear
its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the
defense or settlement of a Third Party Claim at any
time if it irrevocably waives its right to indemnity
under Section 9.1 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 9.2(a), or if the
Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or
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settle the Third Party Claim, or if the Indemnifying
Party fails to give any notice whatsoever within the
Dispute Period, then the Indemnified Party shall have
the right to defend, at the sole cost and expense of
the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings shall be
prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the consent
of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified
Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this
clause (ii), if the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that
the Indemnifying Party disputes its liability or the
amount of its liability hereunder to the Indemnified
Party with respect to such Third Party Claim, and if
such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below,
the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Party in full
for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this
clause (ii), and the Indemnifying Party shall bear
its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its
liability or the amount of its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party with
respect to such Third Party Claim, the Damages in the
amount specified in the Claim Notice shall be
conclusively deemed a liability of the Indemnifying
Party under Section 9.1 and the Indemnifying Party
shall pay the amount of such Damages to the
Indemnified Party on demand. If the Indemnifying
Party has timely disputed its liability or the amount
of its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through
negotiations within the period of 30 calendar days
immediately following the Dispute Period, such
dispute shall be resolved by arbitration in
accordance with Section 9.3.
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(b) In the event any Indemnified Party should have a claim under
Section 9.1 against the Indemnifying Party that does not involve a
Third Party Claim, the Indemnified Party shall deliver a written
notification of a claim for indemnity under Section 9.1 specifying the
nature of and basis for such claim, together with the amount or, if
not then reasonably ascertainable, the estimated amount, determined in
good faith, of such claim (an "Indemnity Notice") with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that the Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not
dispute the claim or the amount of the claim described in such
Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the
Damages in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under
Section 9.1 and the Indemnifying Party shall pay the amount of such
Damages to the Indemnified Party on demand. If the Indemnifying Party
has timely disputed its liability or the amount of its liability with
respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the period of
30 calendar days immediately following the Dispute Period, such
dispute shall be resolved by arbitration in accordance with Section
9.3.
Section 9.3. Arbitration. Any controversy, claim or dispute arising out of
or in connection with this Agreement, the Registration Rights Agreement or the
Warrants, including any question regarding its existence, validity,
interpretation, breach, or termination, shall be referred to and finally
resolved in accordance with the International Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitral
tribunal may be entered by any court having jurisdiction thereof or having
jurisdiction over any party or any party's assets.
(a) The tribunal shall consist of three arbitrators, two of whom shall
be appointed by the respective parties and the third, who shall be the
chairperson of the tribunal, by the two party-appointed arbitrators
within 30 days of the last of their appointments. Save that, if either
party should fail to appoint an arbitrator within 30 days of receiving
written notice of the appointment of an arbitrator by the other party,
the second arbitrator shall, at the written request of the party which
has already made an appointment, be appointed forthwith by the
American Arbitration Association. Likewise, if the party-appointed
arbitrators fail to make an agreed appointment for the chairperson
within 30 days of the last of their appointments, the chairperson
shall, at the written request of either party, be appointed forthwith
by the American Arbitration Association.
(b) The place of arbitration shall be New York, New York.
-29-
36
(c) This arbitration clause and the conduct of the arbitral
proceedings shall be governed by the Federal Arbitration Act, 9
U.S.C.A. sec. 1 et seq.
(d) The language of the arbitration shall be English.
(e) Nothing in these dispute resolution provisions shall be construed
as preventing either party from seeking conservatory or similar
interim relief in any court of competent jurisdiction.
(f) To the extent practicable, the arbitral tribunal shall render its
award no more than 60 calendar days from the date that the three
member tribunal is constituted. The arbitral tribunal shall not lose
jurisdiction over the matter based on a failure to render an award
within this time period.
ARTICLE X
MISCELLANEOUS
Section 10.1. Fees and Transaction Costs. In connection with the execution
of this agreement the following Sale Fees and Transaction Costs (as defined
below) are payable by the Company. The Investor is authorized by the Company to
retain and to pay, on behalf of the Company, the Subscription Fee, Sale Fees,
Investor Legal Fees and Due Diligence Costs to the payee entities in accordance
with Schedule 10.1, and may deduct such amounts from any sums due to the Company
on the Closing Date.
(a) Subscription Fee. On the Subscription Date, the Company shall pay
to the Investor the subscription fee amount set forth on Schedule 10.1
(the "Subscription Fee").
(b) Sale Fees. On each Closing Date, the Company shall pay certain
fees (the "Sale Fees") to the payee entities in accordance with
Schedule 10.1.
(c) Transaction Costs. The fees, expenses and disbursements of the
Investor's counsel (the "Investor Legal Fees") shall be paid as
follows: (i) the Investor shall pay the initial $10,000 of Investor
Legal Fees and (ii) the Company shall pay all Investor Legal Fees in
excess of $10,000. The Company shall pay the Investor due diligence
costs in connection with the consummation of this Agreement and the
transactions contemplated hereby (the "Due Diligence Costs") up to a
maximum amount of $10,000. The Company shall pay to the Investor the
Company's share of the Investor Legal Fees and Due Diligence Costs on
the Subscription Date, to the extent such share of the Investor Legal
Fees and Due Diligence Costs can be determined on the Subscription
Date. The Company shall pay its share of the remaining Investor Legal
Fees and Due Diligence Costs to the Investor not later than 10 days
after receipt of notice from the Investor that such amount is due. The
Company agrees to pay its own expenses incident to the performance of
its obligations hereunder.
-30-
37
Section 10.2. Reporting Entity for the Common Stock. The reporting entity
relied upon for the determination of the Bid Price or trading volume of the
Common Stock on the Principal Market on any given Trading Day for the purposes
of this Agreement shall be the Bloomberg L.P. The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.
Section 10.3. Brokerage. Except with respect to amounts payable to ▇.▇.
▇▇▇▇▇ by the Company and except as disclosed in Section 10.1, each of the
parties hereto represents that it has had no dealings in connection with this
transaction with any finder or broker which would impose a legal obligation to
pay any fee or commission. The Company on the one hand, and the Investor, on the
other hand, agree to indemnify the other against and hold the other harmless
from any and all liabilities to any persons claiming brokerage commissions or
finder's fees on account of services purported to have been rendered on behalf
of the indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 10.4. Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the third business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company:
GlobalNet, Inc.
Suite 125-D
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇ Traurig LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-31-
38
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇/Maxi Brezzi
Telephone: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
Facsimile: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq./▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party hereto from time to time may change its address or facsimile number
for notices under this Section by giving at least ten (10) days' prior written
notice of such changed address or facsimile number to the other party hereto.
Section 10.5. Assignment. Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
Person. Notwithstanding the foregoing, the Investor's interest in this Agreement
may be assigned at any time, in whole or in part, to any Affiliate of the
Investor upon the prior written consent of the Company, which consent shall not
to be unreasonably withheld provided, however, that any such assignment or
transfer shall relieve the Investor of its duties under this Agreement only upon
performance thereof by any such assignee or transferee.
Section 10.6. Amendment; No Waiver. No party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement. Except as expressly provided
in this Agreement, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
both parties hereto. The failure of the either party to insist on strict
compliance with this Agreement, or to exercise any right or remedy under this
Agreement, shall not constitute a waiver of any rights provided under this
Agreement, nor estop the parties from thereafter demanding full and complete
compliance nor prevent the parties from exercising such a right or remedy in the
future.
Section 10.7. Annexes and Exhibits; Entire Agreement. All annexes and
exhibits to this Agreement are incorporated herein by reference and shall
constitute part of this Agreement. This Agreement, the Convertible Note, the
Warrants and the Registration Rights Agreement set forth the entire agreement
and understanding of the parties relating to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written, relating to the
subject matter hereof.
-32-
39
Section 10.8. Survival. The provisions of Articles VI, VIII, IX and X, and
of Section 7.3, shall survive the termination of this Agreement.
Section 10.9. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10. Title and Subtitles. The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.
Section 10.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 10.12. Choice of Law. This Agreement shall be construed under the
laws of the State of New York.
Section 10.13. Other Expenses. In the event that a dispute between the
parties is not determined by a Board of Arbitration, the non-prevailing party in
any action, suit or proceeding shall bear all investigative, legal and other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
CRESCENT INTERNATIONAL LTD.
By:
-----------------------------------------
Name:
Title:
GLOBALNET, INC.
By:
-----------------------------------------
Name:
Title:
-33-
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SCHEDULE 10.1
FEES AND TRANSACTION COSTS
The Company shall pay to the Investor the following fees and costs, which the
Investor shall pay on behalf of the Company to the following payee entities:
EVENTS TRIGGERING THE FEES / TRANSACTION AMOUNT ON WHICH THE FEE IS PAYEE ENTITY AMOUNT
PAYMENT COSTS CALCULATED
----------------------------------------------------------------------------------------------------------------------------------
Maximum GreenLight (Switzerland)
Subscription Date Subscription Commitment Amount S.A. $60,000
Fee
----------------------------------------------------------------------------------------------------------------------------------
Subscription Date Sale Fee $2,000,000 GreenLight (Switzerland) $40,000
(Note) S.A.
----------------------------------------------------------------------------------------------------------------------------------
The Investment
Subscription Date Sale Fee Amount of the First GreenLight (Switzerland) S.A. 2%
(First Sale) Sale
----------------------------------------------------------------------------------------------------------------------------------
Investor Legal Fees Crescent International Ltd. Investor
Subscription Date Legal Fees Legal Fees
less $10,000
----------------------------------------------------------------------------------------------------------------------------------
Due Diligence Costs
Subscription Date Due Diligence with a maximum GreenLight (Switzerland) S.A. 100%
Costs amount of $ 10,000
----------------------------------------------------------------------------------------------------------------------------------
The Investment
Closing Date for a Sale Sale Fee Amount of the Sale GreenLight (Switzerland) S.A. 2%
----------------------------------------------------------------------------------------------------------------------------------
41
EXHIBIT A
FORM OF CLOSING STATEMENT
CLOSING STATEMENT
===============================================================================================================
Closing Date........................................ [DATE], 2001 ("Closing Date")
---------------------------------------------------------------------------------------------------------------
Investor............................................ Crescent International Ltd. ("Investor")
---------------------------------------------------------------------------------------------------------------
Company............................................. GlobalNet, Inc. ("Company")
---------------------------------------------------------------------------------------------------------------
Transaction......................................... This closing represented the
closing of the purchased sale by
the Company to Investor of
shares of the Company's Common
Stock pursuant to Securities
Purchase Agreement dated April
9, 2001 (the "Securities
Purchase Agreement").
Capitalized terms not otherwise
defined herein shall have the
meaning assigned by the
Securities Purchase Agreement.
---------------------------------------------------------------------------------------------------------------
Maximum Commitment Amount........................... $4,000,000
---------------------------------------------------------------------------------------------------------------
Purchase Price...................................... $[determined at applicable Closing]
---------------------------------------------------------------------------------------------------------------
Shares of Common Stock Sold......................... __________
---------------------------------------------------------------------------------------------------------------
Closing Disbursements:
1. Investment Amount............................... $__________
2. Less: Subscription Fee (Schedule 10.1).......... $__________
3. Less: Sale Fee (___%) (Schedule 10.1)........... $__________
4. Less: Escrow Amount $__________
4. Less: Legal Fees............................... $__________
5. Less: Due Diligence Costs...................... $__________
6. Net Amount...................................... $
==========
---------------------------------------------------------------------------------------------------------------
Actions at Closing:
---------------------------------------------------------------------------------------------------------------
1. Securities Purchase Agreement................... The Investor and the Company executed the
Securities Purchase Agreement.
---------------------------------------------------------------------------------------------------------------
2. Registration Rights Agreement................... The Investor and the Company executed the
Registration Rights Agreement.
---------------------------------------------------------------------------------------------------------------
3. Convertible Note................................ The Company executed and delivered the
Convertible Note to the Investor.
---------------------------------------------------------------------------------------------------------------
4. Incentive Warrant............................... The Company executed and delivered the
Incentive Warrant to the Investor.
---------------------------------------------------------------------------------------------------------------
5. Protective Warrant.............................. The Company executed and delivered a
Protective Warrant to the Investor.
===============================================================================================================
42
---------------------------------------------------------------------------------------------------------------
6. Instructions to Transfer Agent.................. The Company executed and delivered
irrevocable Issuance Instructions to the
Transfer Agent and the Transfer Agent
confirmed and accepted such instructions. A
copy of such instructions and acceptance has
been received by the Investor's legal
counsel.
---------------------------------------------------------------------------------------------------------------
7. Legal Opinion.................................... ▇▇▇▇▇▇▇▇▇ Traurig LLP delivered its legal opinion.
===============================================================================================================
8. Wire Transfer.................................... Upon confirmation of above actions by
Investor's legal counsel, Investor will wire
to the Company the Net Amount indicated on
the front page hereof, and thereafter
deliver to the Transfer Agent a Wire
Transfer Notice indicating completion of
delivery by wire transfer to the Company the
Net Amount.
---------------------------------------------------------------------------------------------------------------
ACKNOWLEDGED AND AGREED:
Crescent International Ltd. GlobalNet, Inc.
By: By:
--------------------------------------
===============================================================================================================
===============================================================================================================
TOTAL PURSUANT TO THE SECURITIES PURCHASE
AGREEMENT $6,000,000.00
---------------------------------------------------------------------------------------------------------------
Sale ($.00)
===============================================================================================================
REMAINING BALANCE $.00
===============================================================================================================
-2-
43
EXHIBIT B
FORM OF CONVERTIBLE NOTE
SEE EXHIBIT 99.3
44
EXHIBIT C
FORM OF INCENTIVE WARRANT
SEE EXHIBIT 99.4
45
EXHIBIT D
FORM OF PROTECTIVE WARRANT
SEE EXHIBIT 99.5
46
EXHIBIT E
FORM OF REGISTRATION RIGHTS AGREEMENT
SEE EXHIBIT 99.2
47
EXHIBIT F
FORM OF SALE NOTICE
Company GlobalNet, Inc.
Sale Notice Date
Proposed Closing Date
Investment Amount $___________
Purchase Price per Share $______
Number of Shares to be Issued on Closing Date ___________
The following information as of the Sale Notice Date is provided in accordance
with Section 7.2(l) of the Securities Purchase Agreement, dated April 9, 2001
between GlobalNet, Inc. and Crescent International Ltd. (the "Agreement")
(Capitalized terms used shall have the respective meanings ascribed to such
terms in the Agreement):
1. Shares of Outstanding Common Stock ______________
2. Shares to be issued on proposed Closing Date ______________
3. Protective Warrant Shares to be registered with respect ______________
to the proposed Closing
4. Shares issued pursuant to previous Sales ______________
5. Incentive Warrant Shares issued ______________
6. Note Conversion Shares issued
7. Protective Warrant Shares issued pursuant to previous ______________
Sales
8. Total (2) through (7) above
==============
9. Total as a percentage of Outstanding Common Stock (1) ___%
GLOBALNET, INC.
By: __________________
Name:
Title:
48
EXHIBIT G
TRANSFER AGENT INSTRUCTIONS
GLOBALNET, INC.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[DATE]
[TRANSFER AGENT]
[ADDRESS]
Attention: ______________
Dear ________:
Reference is made to the Securities Purchase Agreement (the
"Agreement"), dated as of April 9, 2001 between Crescent International Limited
(the "Investor") and GlobalNet, Inc. (the "Company"). Pursuant to the Agreement,
the Investor has agreed to purchase from the Company and the Company has agreed
to sell to the Investor from time to time shares of Common Stock of the Company
(the "Common Stock"). As a condition to the effectiveness of the Agreement, the
Company has agreed to issue to you, as the transfer agent for the Common Stock
(the "Transfer Agent"), these instructions (the "Irrevocable Instructions")
relating to the Common Stock to be issued to the Investor (or a permitted
assignee) pursuant to the Agreement. Any term used herein and not otherwise
defined shall have the meaning set forth in the Agreement.
1. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK
a. First Sale. Upon receipt of the Closing Statement duly signed by
both the Company and the Investor agreeing to the transfer of the funds due to
the Company pursuant to the First Sale and specifying the number of shares of
Common Stock to be issued to the Investor in respect of such funds, the Transfer
Agent shall deliver to the Investor by overnight courier certificates
representing Common Stock, bearing the Legend set forth on Exhibit A hereto, as
promptly as practicable, but in no event later than three business days after
the Closing Date relating to the First Sale.
b. Subsequent Sales. Upon receipt of the Closing Statement duly signed
by both the Company and the Investor agreeing to the transfer of the funds due
to the Company pursuant to a Subsequent Sale and specifying the number of shares
of Common Stock to be issued to the Investor in respect of such funds, the
Transfer Agent shall deliver to the Investor by overnight courier certificates
representing Common Stock, bearing the Legend set forth on Exhibit A hereto if
so required pursuant to the Securities Purchase Agreement, as promptly as
practicable, but in no event later than three business days after the Closing
Date relating to such Subsequent Sale.
49
c. Conversion. Upon confirmation by the Company of the conversion of
all or part of the outstanding principal balance of the Convertible Note and the
number of shares of Common Stock issuable upon conversion, the Transfer Agent
shall deliver to the Investor by overnight courier certificates representing
Common Stock, bearing the Legend set forth on Exhibit A hereto, as promptly as
practicable, but in no event later than three business days after the Conversion
Date.
d. Address. Unless otherwise notified in writing by the Investor, the
certificates delivered to the Investor pursuant to the Agreement and the
preceding two paragraphs shall be delivered at the following address:
NFSC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
DTC 0226
Agent ID 00226
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Ref: Crescent International Ltd. A/C OMD 002666
With notice to:
Prentice Securities Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
2. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
a. Pursuant to the Agreement, the Company is required to prepare and
file with the Commission, and maintain the effectiveness of, a registration
statement or registration statements registering the resale of the Common Stock
acquired or to be acquired by the Investor. The Company will advise the Transfer
Agent in writing of the effectiveness of any such registration statement
promptly upon its being declared effective. The Transfer Agent shall be entitled
to rely on such advice and shall assume that such registration statement remains
effective unless the Transfer Agent is otherwise advised in writing by the
Company and shall not be required to independently confirm the continued
effectiveness of such registration statement. In the circumstances set forth in
paragraph (b) below, the Transfer Agent shall deliver to the Investor
certificates representing Common Stock not bearing the Legend without requiring
further advice or instruction or additional documentation from the Company or
its counsel or the Investor or its counsel or any other party (other than as
described in such paragraphs).
b. At any time after the effective date of the applicable registration
statement (provided that the Company has not informed the Transfer Agent in
writing that such registration statement is not effective) upon any surrender of
one or more certificates evidencing Common Stock which bear the Legend,
accompanied by a notice from the Investor, its broker, custodian or permitted
assignee requesting the issuance of new certificates free of the Legend to
replace those
-2-
50
surrendered and setting forth whether a transfer is pursuant to a registration
statement, Rule 144 or Rule 144(k), the Transfer Agent shall promptly deliver to
the Investor certificates representing the Common Stock not bearing the Legend,
in such names and denominations as requested, provided that:
i. if pursuant to a registration statement, the Investor (or its
broker, custodian or permitted assignee) shall confirm in writing to the
Transfer Agent that the Investor has complied with the prospectus delivery
requirements under the Securities Act;
ii. if pursuant to Rule 144(k) the Investor (or its broker, custodian
or permitted assignee) shall deliver to the Transfer Agent an opinion of
counsel satisfactory to the Company, to the effect that the Investor is
permitted to dispose of such Common Stock without limitation as to amount
or manner of sale pursuant to Rule 144(k) under the Securities Act as
amended, and the Company shall provide the Transfer Agent with written
confirmation that such opinion is satisfactory, except that Transfer Agent
is under no duty or obligation to seek said written confirmation from
Company or to issue said Common Stock unless and until the Company has
provided the Transfer Agent with written confirmation that such opinion is
satisfactory; or
iii. if pursuant to Rule 144, the Investor (or its broker, custodian or
permitted assignee) shall deliver to the Transfer Agent an opinion of
counsel satisfactory to the Company, to the effect that the Investor has
complied with the manner of sale and notice requirements of Rule 144 under
the Securities Act, as amended, and the Company shall provide the Transfer
Agent with written confirmation that such opinion is satisfactory, except
that Transfer Agent is under no duty or obligation to seek said written
confirmation from Company or to issue said Common Stock unless and until
the Company has provided the Transfer Agent with written confirmation that
such opinion is satisfactory.
Any advice, notice or instructions to the Transfer Agent required or
permitted to be given hereunder may be transmitted via facsimile to the Transfer
Agent's facsimile number of (___) ___-____.
The certificates bearing the Legend shall be surrendered and delivered
to the Transfer Agent at the following address:
[TRANSFER AGENT]
[ADDRESS]
Attention:____________
Tel: (___) ___ - ____
3. FEES OF TRANSFER AGENT; INDEMNIFICATION
-3-
51
The Company agrees to pay the Transfer Agent for all fees and expenses
incurred in connection with these Irrevocable Instructions. The Company agrees
to indemnify the Transfer Agent and its officers, employees and agents, against
any losses, claims, damages or liabilities, joint or several, including
reasonable fees and cost of counsel, to which it or they become subject based
upon the performance by the Transfer Agent of its duties in accordance with the
Irrevocable Instructions.
4. THIRD PARTY BENEFICIARY
The Company acknowledges and agree that the Investor is an express
third party beneficiary of these Irrevocable Instructions and shall be entitled
to rely upon, and enforce, the provisions hereof, except that the Transfer Agent
is acting in a ministerial capacity only and has no duty or obligation hereunder
to any party other than the Company as said duties or obligations may accrue
under Transfer Agent's agreement with Company.
GLOBALNET, INC.
By:____________________________________
Name:
Title:
AGREED:
[TRANSFER AGENT]
By: __________________________
Name:
Title:
-4-
52
EXHIBIT A TO TRANSFER AGENT INSTRUCTIONS
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A SECURITIES
PURCHASE AGREEMENT, DATED AS OF APRIL 9, 2001, BETWEEN GLOBALNET, INC. AND
CRESCENT INTERNATIONAL LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT
EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM GLOBALNET, INC.'S EXECUTIVE
OFFICES.
-5-
53
EXHIBIT H
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
[DATE]
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai, ▇.▇. ▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Re: Securities Purchase Agreement
Between Crescent International Ltd. and GlobalNet, Inc.
Ladies and Gentlemen:
We have acted as counsel to GlobalNet, Inc., a Nevada corporation (the
"Company") in connection with the Securities Purchase Agreement by and between
Crescent International Ltd., a Bermuda entity (the "Investor") and the Company
dated April 9, 2001 (the "Securities Purchase Agreement), which provides for the
issuance and sale by the Company of up to $6,000,000 worth of securities of the
Company, inclusive of (i) Common Stock of the Company (the "Commitment Shares"),
(ii) a convertible note in the principal amount of $2,000,000 (the "Convertible
Note") (the shares of Common Stock issued or issuable pursuant to conversion of
the Convertible Note are referred to herein as the "Note Conversion Shares"),
(iii) a warrant to purchase up to 877,026 shares of Common Stock of the Company
(the "Incentive Warrant") and (iv) warrants to purchase a number of shares to be
determined in accordance with the terms of such warrants (the "Protective
Warrants", and together with the Incentive Warrant, the "Warrants") (the shares
of Common Stock issued or issuable pursuant to exercise of the Warrants are
referred to herein as the "Warrant Shares"). All terms used herein have the
meanings defined for them in the Securities Purchase Agreement unless otherwise
defined herein.")
This opinion is furnished to you pursuant to Paragraph 6.11 of the
Securities Purchase Agreement solely for your benefit, and the reliance and use
thereof is limited as set forth in the final paragraph of this letter.
54
In so acting, we have examined the Securities Purchase Agreement, the
Convertible Note, the Incentive Warrant, the Protective Warrant and the
Registration Rights Agreement (collectively, the "Agreements").
We have made such legal and factual examinations and inquiry as we have
deemed relevant or necessary for the purpose of rendering this opinion. In
addition, we have examined, among other things, originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
agreements, documents and instruments and such certificates, orders or corporate
documents of public officials and governmental authorities and of officers and
representatives of the Company and have made such inquiries of such officers and
representatives, as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures
(other than those by or on behalf of the Company) on original documents, the
authenticity and completeness of all documents submitted to us as originals, the
conformity to original documents of all copies submitted to us as copies, the
legal capacity of natural persons and the due execution and delivery of all
documents (except as to the due execution and delivery by the Company) where due
execution and delivery are a prerequisite to the effectiveness thereof. In the
case of any entity other than a natural person and other than the Company, we
have assumed the satisfaction by such entity of all conditions necessary to be
fulfilled for the due and proper execution of such document by such entity. As
to all questions of fact material to this opinion and that have not been
established by us independently, we have relied upon certificates or comparable
documents of officers and representatives of the Company and upon the
representations and warranties of the parties contained in the Agreements. For
the purpose of this opinion, we have assumed that the Investor has all requisite
power and authority and has taken any and all necessary corporate action to
execute and deliver the Agreements, and we are assuming that the representations
and warranties made by the Investor in the Agreements are true and correct. If
any of the matters as to which we have made assumptions are other than as
assumed by us, then the opinions expressed herein may be other than as stated.
As used in this opinion, the expression "to our knowledge", "of which
we are aware", and any correlative and analogous phrases and expressions mean
the conscious awareness of facts or other information by those attorneys in our
firm actively involved in the transactions contemplated by the Agreements and do
not include (i) constructive notice of any matters or information, or (ii) other
than conversations with executive officers of the Company and our review of the
Agreements to the extent stated above, imply that we have undertaken any
independent inquiries or investigations (x) with any persons outside of our
firm, (y) as to the accuracy or completeness of any factual representations,
information or any other matters made or furnished in connection with the
transactions contemplated by the Agreements, or (z) as to any instruments or
agreements other than the Agreements. Moreover, such references mean only that
nothing has come to our attention that leads us to believe that there exists any
facts or circumstances contradicting the statement that follows and do not imply
that we know any facts or circumstances contradicting the statement that follows
and do not imply that we know the statement to be correct or to have any basis
(other than the Agreements and said conversations).
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55
In rendering the opinions set forth in Paragraphs 1, 2 and 3 below, we
have assumed, with your permission, that the substantive laws of the State of
Nevada are identical in all respects to the substantive laws of the State of New
York, and such opinions are based on that assumption.
Our opinions in Paragraph 1 below as to the good standing and
qualification of the Company are based solely upon certificates of public
officials.
Based on the foregoing, and subject to the qualifications, limitations
and assumptions hereafter stated, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has all requisite power
and authority (corporate and other) to carry on its business and to own, lease
and operate its properties and assets as described in the Company's SEC
Documents. Except as indicated herein, the Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the Company owns or leases property, other than those in which the
failure so to qualify would not have a Material Adverse Effect. The Company,
while maintaining its principal place of business in the State of Illinois, is
not presently registered as a foreign corporation in the State of Illinois.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements, the Convertible Note and
the Warrants and to issue the Commitment Shares, the Convertible Note, the Note
Conversion Shares, the Warrants and the Warrant Shares. The execution and
delivery of the Agreements, and the execution, issuance and delivery of the
Convertible Note and the Warrants, by the Company and the consummation by it of
the transactions contemplated thereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors or stockholders is required. Each of the Agreements has been
duly executed and delivered, and the Convertible Note and the Warrants have
been, and upon issuance will be, duly executed, issued and delivered, by the
Company and each of the Agreements and the Warrants constitutes, and upon
issuance will constitute, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
3. The execution, delivery and performance of the Agreements, the
Convertible Note and the Warrants by the Company and the consummation by the
Company of the transactions contemplated thereby, including without limitation
the issuance of the Commitment Shares, the Convertible Note, the Note Conversion
Shares, the Warrant and the Warrant Shares, do not and will not (i) result in a
violation of the Company's Certificate or By-Laws; (ii) to our knowledge,
conflict with, or constitute a material default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment,
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56
acceleration or cancellation of, any material agreement, indenture, instrument
or any "lock-up" or similar provision of any underwriting or similar agreement
to which the Company is a party, except for such conflicts, defaults,
terminations, amendments, accelerations and cancellations as would not,
individually or in the aggregate, have a Material Adverse Effect; or (iii)
result in a violation of any federal or state law, rule or regulation applicable
to the Company or by which any property or asset of the Company is bound or
affected, except for such violations as would not, individually or in the
aggregate, have a Material Adverse Effect. To our knowledge, the Company is not
in violation of any terms of its Certificate or Bylaws. In connection with the
Company's listing on the SmallCap Market of The Nasdaq Stock Market, the Company
became a party to a Listing Agreement with NASDAQ and became subject to the
rules and regulations of The Nasdaq Stock Market with respect to the listing of
additional shares which it may issue in the future. We are advised that the
Company has filed an Additional Listing Application with The Nasdaq Stock Market
relating to the listing of the Commitment Shares, Conversion Shares and the
Warrant Shares. We express no opinion as to whether the issuance by the Company
of the Commitment Shares, Conversion Shares, Warrants and Warrant Shares in
advance of receiving NASDAQ approval may be deemed by NASDAQ to be a breach or
violation by the Company of its Listing Agreement. We have examined the
Additional Listing Application submitted by the Company, and such Application
appears on its face to be complete as to form, subject to the necessity of the
Company to file executed copies of the Agreements with The Nasdaq Stock Market.
4. The issuance of the Commitment Shares, the Convertible Note and the
Warrants in accordance with the Stock Purchase Agreement, the issuance of the
Note Conversion Shares in accordance with the Convertible Note, and the issuance
of the Warrant Shares in accordance with the Warrants, will be exempt from
registration under the Securities Act of 1933. When so issued, the Commitment
Shares, the Note Conversion Shares and the Warrant Shares will be duly and
validly issued, fully paid and nonassessable, and free of any liens,
encumbrances and preemptive or similar rights contained in the Certificate or
Bylaws or, to our knowledge, in any agreement to which the Company is party.
5. To our knowledge, except as disclosed in the SEC Documents or in any
schedule to the Agreements or the Notes to the Financial Statements of the
Company, there are no claims, actions, suits, proceedings or investigations that
are pending against the Company or its properties, or against any officer or
director of the Company in his or her capacity as such, nor has the Company
received any written threat of any such claims, actions, suits, proceedings, or
investigations which are required to be and have not been disclosed in the SEC
Documents.
6. To our knowledge, and solely based upon certificates from officers
of the Company, there are no outstanding options, warrants, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any right to subscribe for or
acquire any shares of Common Stock or contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock, except as described in the SEC Documents.
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57
The opinions expressed herein (other than the opinion set forth in
Paragraph 1 above) are limited to the laws of the State of new York and the
Federal Laws of the United States, and we express no opinion as to the effect on
the matters covered by this letter of the laws of any other jurisdiction.
In connection with the opinions expressed as to the enforceability of
the Agreements, such enforceability may be limited by bankruptcy and insolvency,
reorganization, moratorium or similar laws of judicial decisions now or
hereafter in effect, affecting the rights and remedies of creditors generally;
laws relating to conservatorship (in the case of an individual), and may be
limited to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (whether considered in a proceeding
of equity or at law). We express no opinion as to the availability of specific
performance, injunctive relief, reformation or other equitable remedies with
respect to the enforceability of any of the provisions contained in the
Agreements. Our opinions are further subject , as to enforceability, to the
qualification that rights of indemnification referred to or provided for in the
Agreements may be limited by federal of state securities laws or pubic policy
underlying such law.
The opinions expressed herein are written as of and relate solely to
the date hereof and are rendered exclusively for your benefit in connection with
the transactions described herein. The opinions expressed herein may not be used
or relied upon by any other person or entity, nor may this opinion letter or any
copies or excerpts thereof be furnished to a third party, filed with a public or
governmental authority, quoted, cited or otherwise referred to without our prior
written consent.
In the event that we are requested to deliver a further legal opinion
pursuant to Section 7.2(g) of the Securities Purchase Agreement, the following
language is acceptable to us, provided, however, that our indication of the
acceptability of the sum of such opinion language is not to be deemed or
construed as our agreement or obligation to deliver such opinion in the future;
our ability to do so being independent of the prevailing facts and circumstances
existing at the time such opinion is delivered.
[Nothing has come to our attention that has caused us to believe that
the Registration Statement and the Prospectus at the time the Registration
Statement became effective and as of the date of the filing with the Commission
of the Company's most recent Annual Report on Form 10-K or Quarterly Report on
Form 10-Q incorporated by reference into such Registration Statement contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; however,
we express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data derived
therefrom included in the Registration Statement or the Prospectus.] [For
Opinion Pursuant To Section 7.2(g).]
Very truly yours,
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
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EXHIBIT I
COMPLIANCE CERTIFICATE
The undersigned, __________, hereby certifies, with respect to shares
of common stock of GlobalNet, Inc. (the "Company") issuable in connection with
the Sale Notice, dated _____________ (the "Notice"), delivered pursuant to
Article II of the Securities Purchase Agreement, dated April 9, 2001, by and
between the Company and Crescent International Ltd. (the "Agreement"), as
follows:
1. The undersigned is the duly elected [Office] of the Company.
2. The representations and warranties of the Company set forth in
Article IV of the Agreement are true and correct as though made on and as of the
date hereof.
3. The Company has performed all covenants and agreements to be
performed by the Company on or prior to the Closing Date related to the Notice
and has complied in all material respects with all obligations and conditions
contained in Article VII of the Agreement.
The undersigned has executed this Certificate this ____ day of
__________, ____.
By:
__________________________________
Name:
Title: