WAIVER, CONSENT, SURRENDER AND MODIFICATION AGREEMENT
This WAIVER, CONSENT, SURRENDER AND MODIFICATION AGREEMENT (this
"Agreement") is dated as of January 21, 2005, by and among Usurf America, Inc.,
a Nevada corporation (the "Company"), and the purchasers identified on Schedule
A hereto (each, including its successors and assigns, a "Purchaser" and
collectively the "Purchasers").
WITNESSETH:
WHEREAS, the Purchasers and the Company entered into one or more
Purchase Agreements (as defined herein) pursuant to which the Company issued the
Debentures to the Purchasers in the amounts and designations, and on the dates
set forth on Schedule B hereto;
WHEREAS, pursuant to the Purchase Agreements the Company issued the
Warrants to the Purchasers in the amounts and designations, and on the dates set
forth on Schedule C hereto;
WHEREAS, the Company has executed and delivered that certain Securities
Purchase Agreement with Sovereign LLC ("Sovereign") dated as of January 26, 2005
(the "Sovereign Agreement"), pursuant to which, among other things, the Company
will issue shares of its Common Stock and preferred stock ("Preferred Stock") to
the members of Sovereign in exchange for all the membership interests of
Sovereign;
WHEREAS, the Company desires to reduce the number of shares of Common
Stock it now has reserved for issuance in order to perform the Sovereign
Agreement;
WHEREAS, the Company must obtain the consent of the Purchasers in order
to execute and perform the Sovereign Agreement;
WHEREAS, the Company wishes Purchasers to waive certain provisions of
the Purchase Agreements and the Debentures in connection with the Sovereign
Agreement; and
WHEREAS, the Purchasers wish to amend the terms of the Debentures,
consent to the Sovereign Agreement and the transactions contemplated thereby and
waive certain provisions of the Purchase Agreements and the Debentures in order
to facilitate the Company's performance under the Sovereign Agreement and the
benefits thereto to the Company and its shareholders.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein
have the meanings given to such terms in the Debentures (as defined
herein) or the Purchase Agreements (as defined herein), and (b) the
following terms have the meanings indicated in this Section 1.1:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par
value $0.0001 per share, and any securities into which such common
stock shall hereinafter have been reclassified into.
"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
"Principal Market" means initially the OTC Bulletin Board and
shall also include the American Stock Exchange, New York Stock
Exchange, the NASDAQ Small-Cap Market or the NASDAQ National Market,
whichever is at the time the principal trading exchange or market for
the Common Stock, based upon share volume.
"Purchase Agreements" means collectively the Securities
Purchase Agreement dated March 8, 2004, the Securities Purchase
Agreement dated April 22, 2004, the Securities Purchase Agreement dated
July 1, 2004, and the Securities Purchase Agreement dated July 15,
2004, each by and among the Company and the Purchaser parties thereto.
"Registration Statement" means a registration statement
meeting the requirements set forth in the Registration Rights Agreement
and covering the resale of the shares underlying the Debentures and/or
the Warrants by each Purchaser as provided for in the Registration
Rights Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Condition" shall mean, (i) the Common Stock is
trading uninterrupted on the Principal Market and (ii) the price at
which the Common Stock is trading on the Principal Market during any
consecutive (uninterrupted) thirty calendar day period is not below
$0.25 per share.
"Transaction Documents" means the Debentures, the Registration
Rights Agreement and any other documents or agreements executed in
connection with the Purchase Agreements (other than the Warrants).
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ARTICLE II
SURRENDER OF WARRANTS
2.1 Surrender of Warrants. Each Purchaser hereby surrenders to Company
all of the Warrants owned by it as set forth in Schedule C, representing in the
aggregate, assuming all outstanding Warrants are surrendered hereby, the right
to purchase up to 31,626,374 shares of Common Stock (the "Surrendered
Warrants"). Company accepts such Surrendered Warrants and such Surrendered
Warrants shall be immediately deemed canceled. Each Purchaser shall return the
original Warrant certificates to the Company within ten days of the date hereof.
2.2 Release of Obligations under Surrendered Warrants; Termination of
Registration. Each Purchaser hereby terminates, waives and abandons and any all
rights or privileges arising under and inuring to Purchaser under (i) the
Surrendered Warrants and (ii) the Purchase Agreements as the same relates to the
Surrendered Warrants, and releases and discharges Company from its obligations
and duties under such agreements with respect to the Surrendered Warrants (the
"Terminated Agreements"). Each Purchaser acknowledges and agrees that Company
shall have no obligations whatsoever with respect to the registration of such
Surrendered Warrants, or the shares of Common Stock underlying such instruments,
under the Registration Rights Agreement between Company and Purchasers. Each
Purchaser further acknowledges and agrees that Company shall take all steps
necessary or desirable to amend the Registration Statement currently filed by
the Company with the Commission on Form SB-2, File No. 333-121657 (the "SB-2
Registration Statement") to reflect the surrender of the Surrendered Warrants
and/or the elimination of the shares of Common Stock underlying such
instruments, and the removal of such instruments and related shares of Common
Stock from the registration table and selling shareholder table, as well as
other provisions, of the SB-2 Registration Statement.
ARTICLE III
MODIFICATION OF DEBENTURES
3.1 Conversion Limitations. Each Purchaser hereby agrees that,
notwithstanding the conversion provisions of the Debentures, the aggregate
number of shares of Common Stock into which the Debentures collectively shall be
convertible is hereby limited to 40,000,000 shares. Schedule D hereto sets forth
the agreed limitation on conversion with respect to each Debenture,
notwithstanding the terms of such Debenture (the "Maximum Conversion Shares").
Accordingly, each Purchaser and the Company agree that each Debenture owned by
such Purchaser is hereby modified to provide that the maximum number of shares
of Common Stock into which each such Debenture may be converted shall be as set
forth on Schedule D hereto. Each Purchaser and Company agree that Section 4(a)
iii of each Debenture owned by such Purchaser shall have the following clause
added to the end of such Section: "...up to a maximum of ___ shares" and that
the corresponding Maximum Conversion Shares amount shall be deemed inserted as
part of such new clause. Each Purchaser acknowledges and agrees that Company
shall take all steps necessary or desirable to amend the SB-2 Registration
Statement to reflect the revised number of shares of Common Stock into which the
Debentures are convertible and to reflect such revised numbers of shares of
Common Stock in the registration table and selling shareholder table, as well as
other provisions, of the SB-2 Registration Statement.
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3.2 New Repayment Terms. The second paragraph of each Debenture is
hereby deleted in its entirety and shall be replaced and restated as follows,
with the appropriate conforming Purchaser name and principal amount set forth
therein as the same are scheduled on Schedule B hereto:
"FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the
"Holder"), the principal sum of $_______________ on July 1,
2006, or such earlier date as the Debenture is required or
permitted to be repaid as provided hereunder (the "Maturity
Date"). The Company shall record and the registration and
transfers of the Debenture (the "Debenture Register") with
respect to the Holder and any subsequent Holders. The Company
may from time to time prepay any portion of the principal
amount of this Debenture without the prior written consent of
the Holder. In addition, and notwithstanding the foregoing,
this Debenture shall terminate and all obligations of the
Company to Holder herein, and all rights of Holder hereunder
shall terminate immediately upon the occurrence of the Trading
Condition, as defined in the Waiver, Consent, Surrender and
Modification Agreement dated January 21, 2005, between Holder
and the Company."
3.3 Ambiguities. Notwithstanding any provision of this Agreement or the
Debentures or the Purchase Agreements to the contrary, any ambiguity in the
drafting or interpretation of the Debentures or the Purchase Agreements that may
arise as a result of the modifications set forth in this Article III shall be
interpreted to fulfill the intents and purposes of the modifications set forth
in Article III and IV of this Agreement.
ARTICLE IV
MODIFICATION OF PURCHASE AGREEMENTS
4.1 Suspension of Certain Investment Rights and Restrictions. Each
Purchaser and Company hereby agree that until the Maturity Date (Defined in the
Debentures) each of the following Sections of each of the Purchase Agreements to
which such Purchaser is a party shall be suspended in its entirety and of no
force or effect during the period of such suspension: Section 4.13
(Participation in Future Financings), Section 4.14 (Prohibition on Subsequent
Financings), and Section 4.16 (Additional Investment Option of Purchasers).
4.2 Ambiguities. Notwithstanding any provision of this Agreement or the
Debentures or the Purchase Agreements to the contrary, any ambiguity in the
drafting or interpretation of the Debentures or the Purchase Agreements that may
arise as a result of the modifications set forth in this Article IV shall be
interpreted to fulfill the intents and purposes of modifications set forth in
Article III and IV of this Agreement.
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ARTICLE V
WAIVERS AND CONSENTS; EFFECTIVENESS
5.1 Consent to Sovereign Agreement. Each Purchaser hereby grants and
affirms its consent to the execution, delivery and performance by the Company of
the Sovereign Agreement and each document, instrument and agreement contemplated
thereby or necessary thereto on the part of the Company to perform the
transactions contemplated under the Sovereign Agreement. Such consent shall be
deemed effective and granted as of the original date of the execution of the
Sovereign Agreement by the Company, notwithstanding the grant of any prior
consent, and notwithstanding the modifications of the Debentures and the
Purchase Agreements set forth herein.
5.2 Waivers. Each Purchaser hereby waives its rights arising under (i)
Sections 4.13, 4.14, 4.16, and 4.17 of the Purchase Agreements to which each
Purchaser is a party, and (ii) Sections 3(a) viii, 4(c) iii, iv, v and viii of
each of the Debentures owned by such Purchaser, with respect to the execution,
delivery and performance by the Company of the Sovereign Agreement and each
document, instrument and agreement contemplated thereby or necessary thereto on
the part of the Company to perform the transactions contemplated under the
Sovereign Agreement. Such waivers shall be deemed effective and granted as of
the original date of the execution of the Sovereign Agreement by the Company,
notwithstanding the grant of any prior waivers, and notwithstanding the
modifications of the Debentures and the Purchase Agreements set forth herein.
Each Purchaser agrees that the transactions contemplated by the Sovereign
Agreement shall not be deemed a Change of Control Transaction under the
Debentures or the Purchase Agreements and all rights arising upon a Change of
Control Transaction are waived as a part of this Section 5.2.
5.3 Effectiveness of Waivers, Consent and Modifications.
Notwithstanding any provision of this Agreement to the contrary, the consents
and waivers set forth in Article V, the modifications of the Debentures and the
Purchase Agreements set forth in Article III and the surrender of the Warrants
provided in Article II shall be deemed effective as of the signing date of the
Sovereign Agreement as if this Agreement had been executed at and as of such
date.
ARTICLE VI
MISCALLANEOUS PROVISIONS
6.1 Entire Agreement; No further Modification. This Agreement together
with the exhibits and schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof. Except as set forth herein,
each of the Transaction Documents shall remain in full force and effect and no
other consent or waiver shall be deemed given or implied.
6.2 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
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6.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
6.4 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person
6.5 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) such document with the same force and effect as if such facsimile
signature page were an original thereof.
6.6 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
REMAINDER OF PAGE INTENTIONALLY BLANK
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
USURF AMERICA, INC.
By:/s/ Douglas O. McKinnon
---------------------------------
Name: Douglas O. McKinnon
Title: President and CEO
Address for Notice:
------------------
390 Interlocken Crescent, Suite 900
Broomfield, Colorado 80021
Attn: Chief Executive Officer
Tel: (719) 260-7455
Fax: (719) 260-7456
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With a copy to:
Steven W. Ritcheson
White Field, Inc.
9800 D Topanga Canyon Blvd., #326
Chatsworth, California 91311
Tel: (818) 744-8714
Fax: (818) 337-0383
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER'S SIGNATURE PAGE - USURF]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
Name of Purchaser: __________________________
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
Email Address of Authorized Signatory:________________________________
Address for Notice of Purchaser:
[SIGNATURE PAGES CONTINUE]
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SCHEDULE A
PURCHASERS
Crestview Capital Master LLC
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SCHEDULE B
DEBENTURES
HOLDER NAME SERIES DATE AMOUNT
Crestview Capital Master LLC, I March 8, 2004 $ 2,000,000
Crestview Capital Master LLC II April 22, 2004 $ 1,500,000
Crestview Capital Master LLC III July 1, 2004 $ 500,000
Crestview Capital Master LLC IV July 16, 2004 $ 250,000
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SCHEDULE C
WARRANTS
HOLDER NAME SERIES DATE WARRANTS
Crestview Capital Master LLC, I March 8, 2004 13,157,895
Crestview Capital Master LLC II April 22, 2004 7,218,479
Crestview Capital Master LLC III July 1, 2004 7,500,000
Crestview Capital Master LLC IV July 16, 2004 3,750,000
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SCHEDULE D
CONVERSION AMOUNTS
MAXIMUM NUMBER OF CONVERSION SHARES PER NOTE WHICH YEILDS A TOTAL
CONVERSION NUMBER OF 40,000,000
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