Exhibit
4.4
CONSENT, WAIVER AND AMENDMENT
AGREEMENT
This Consent, Waiver and Amendment
Agreement (this “ Agreement ”) is entered into
as of ________________, 2006, by and between each of the
undersigned purchasers, acting individually (individually a “
Purchaser ” and collectively the “
Purchasers ”), and Unity Wireless Corporation, a
Delaware corporation (the “ Company
”).
WHEREAS, pursuant to a securities
purchase agreement dated February 27, 2006 among the Company and
the Purchasers (the “ Purchase Agreement ”), the
Purchasers were issued debentures (the “ Existing
Debentures ”) and warrants (the “ Existing
Warrants ”) to purchase shares of Common Stock, par value
$.001 per share (the “ Common Stock ”) and in
the individual amounts set forth below such Purchaser’s name
on the signature pages to the Purchase Agreement;
WHEREAS, pursuant to note and
warrant purchase agreement dated August 31, 2004, the Company
issued convertible debentures in the principal amount of
$1,250,000, and 3,125,000 warrants (the “ August 2004
Debentures ” and “ August 2004 Warrants
”);
WHEREAS, pursuant to a note and warrant
purchase agreement dated February 10, 2005, the Company issued
convertible debentures in the principal amount of $2,000,000, and
5,000,000 warrants (the “ February 2005 Debentures
” and “ February 2005 Warrants
”);
WHEREAS, the Company desires to issue and
sell an additional $1,350,000 of debentures (the “ New
Debentures ”) and warrants (the “ New
Warrants ”) on the same terms and conditions set forth in
the Purchase Agreement pursuant to (i) an additional issuance
agreement dated as of the date hereof by and between the Company
and the purchasers signatory thereto and (ii) other agreements
between the Company and “accredited investors” that are
either existing security holders of the Company or are introduced
to the Company by Oceana Partners, LLC, provided such transactions
are consummated on or before ______________, 2006 (such agreements
described in (i) and (ii), collectively, the “ Additional
Issuance Agreement(s) ”);
WHEREAS, the Company desires to borrow an
aggregate of up to $1,500,000 principal amount of bridge notes (the
“ Bridge Notes ”) and issue the lenders thereof
warrants to purchase shares of Common Stock (the “ Bridge
Warrants ”) in connection therewith pursuant to the terms
of a Loan and Security Agreement dated as of the date hereof by and
among the Company and the lenders signatory thereto (the “
Bridge Loan Agreement ”);
WHEREAS, the Company desires to obtain up
to $3,000,000 from a commercial lender (the “ AR
Lender ”) pursuant to an accounts receivable financing on
or before the maturity date of the Bridge Notes (such transaction,
the “ AR Financing ”);
WHEREAS, so long as the terms and
conditions of the AR Financing are acceptable to the Purchasers in
their sole discretion, the Purchasers intend to consent to the AR
Financing and the granting of a lien by the Company in its accounts
receivables to the AR Lender, pursuant to a written consent by the
Purchasers to be executed and effective contemporaneous with the
closing of the AR Financing, it being understood that neither this
recital nor anything else contained herein shall constitute a
consent by the Purchasers to the AR Financing; and
WHEREAS, in consideration for the
Purchasers consenting to the transactions contemplated by the
Additional Issuance Agreement and Bridge Loan Agreement, the
Company agrees to amend certain terms of the Transaction
Documents.
NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained in this Agreement, and for good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Purchasers and the Company agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.
Definitions . Capitalized terms not defined in this
Agreement shall have the meanings ascribed to such terms in the
Purchase Agreement.
ARTICLE II
AMENDMENTS AND OTHER
AGREEMENTS
Section 2.1
Reduction in Exercise Price of the
Existing Warrants, August 2004 Warrants, February 2005 Warrants and
Existing Debentures, August 2004 Debentures and February 2005
Debentures . Immediately
prior to the consummation of the transactions contemplated
hereunder, the conversion price of the Existing Debentures, August
2004 Debentures and February 2005 Debentures shall be reduced to
$0.09 and the exercise price of the Existing Warrants, August 2004
Warrants and February 2005 Warrants shall be reduced to $0.10, each
subject to adjustment pursuant to the applicable
instrument.
Section 2.2
Extension of Final Payment
Dates. The dates by
which the Existing Debentures, the August 2004 Debentures and the
February 2005 Debentures are finally due and payable or the
“Maturity Date”, unless required earlier pursuant to
the terms therein, are hereby extended to _________________,
2009.
Section 2.2
Consent and Waivers.
a)
Subject to the terms and conditions
hereunder, each Purchaser, severally and not jointly, hereby
consents to the terms and conditions of the Additional Issuance
Agreement(s) and Bridge Loan Agreement.
b)
Each Purchaser hereby waives the
provisions of Sections 4.13 and 4.14 with respect to the issuance
of the New Debentures, New Warrants, the Bridge Notes and the
Bridge Warrants.
c)
Each Purchaser hereby waives the
provisions of Section 6(b) of the Registration Rights Agreement
with respect to the inclusion of the shares of Common Stock
underlying the New Debentures, New Warrants and Bridge Warrants on
the Registration Statement.
d)
Each Purchaser hereby waives the
provisions of Section 7(a) of its Debenture in respect of the
granting of a Lien to the holders of the Bridge Notes and New
Debentures.
e)
The Company and each Purchaser hereby
acknowledge that certain Events of Default (as defined in the
Existing Debentures) are existing, which are continuing to the date
of this Agreement (the “ Existing Defaults ”).
Company further acknowledges and agrees that no Purchaser is
in any way agreeing to waive such Existing Defaults as a result of
this Agreement or the performance by the parties of their
respective obligations hereunder or thereunder except as expressly
set forth herein. Subject to the conditions contained herein
and performance by the Company of all of the terms of this
Agreement, each Purchaser shall waive the Existing Defaults and to
forbear from enforcing the remedies set forth in the Transaction
Documents with respect thereto so long as the transactions
contemplated by the Additional Issuance Agreement and Bridge Loan
Agreement close by November ___, 2006, provided ,
however , that in the event that the Company does not close
such transactions on or before such date, this forbearance and
waiver shall be of no effect. Additionally, this forbearance
shall not be construed as an agreement by any Purchaser to forbear
from exercising any of its rights or remedies under the Transaction
Documents with respect to any further Event of Default that may
occur after date of this Agreement.
Section 2.3
Amendments .
a)
(i)
The definition of “Filing
Date” in Section 1 of the Registration Rights Agreement is
hereby deleted and restated in its entirety as follows:
“ Filing Date ” means,
with respect to the initial Registration Statement required
hereunder, _______________, 2006 and, with respect to any
additional Registration Statements which may be required pursuant
to Section 3(c), the 30 th day following the date on
which the Company first knows, or reasonably should have known that
such additional Registration Statement is required
hereunder.
(ii)
Notwithstanding the foregoing amendment,
if the initial Registration Statement is not filed by the Company
with the Commission on or before ________________, 2006, the
foregoing amendment shall be void ab initio , and the
Company shall be obligated to pay liquidated damages pursuant to
the terms of the Registration Rights Agreement for failure of the
Registration Statement to be filed by the Filing Date as defined
immediately prior to the date hereof, which damages shall be paid
in the manner set forth in the Registration Rights
Agreement.
b)
(i)
The definition of “
Effectiveness Date ” in Section 1 of the Registration
Rights Agreement is hereby deleted and restated in its entirety as
follows:
“ Effectiveness Date ”
means, with respect to the initial Registration Statement required
to be filed hereunder, January 29, 2007 and, with respect to any
additional Registration Statements which may be required pursuant
to Section 3(c), the 60 th calendar day following the
date on which the Company first knows, or reasonably should have
known, that such additional Registration Statement is required
hereunder; provided , however , in the event the
Company is notified by the Commission that one of the above
Registration Statements will not be reviewed or is no longer
subject to further review and comments, the Effectiveness Date as
to such Registration Statement shall be the fifth Trading Day
following the date on which the Company is so notified if such date
precedes the dates required above.
(ii) Notwithstanding the foregoing
amendment, if the initial Registration Statement is not declared
effective by the Commission on or before January 29, 2007, the
foregoing amendment shall be void ab initio , and the
Company shall be obligated to pay liquidated damages pursuant to
the terms of the Registration Rights Agreement for failure of the
Registration Statement to be declared effective by the
Effectiveness Date as defined immediately prior to the date hereof,
which damages shall be paid in the manner set forth in the
Registration Rights Agreement.
c)
Amendment to Existing Debentures,
August 2004 Debentures, February 2005 Debentures and New
Debentures .
(i)
The following additional definitions are
hereby added to Section 1 of the Existing Debentures and New
Debentures:
“ Cash Sale Redemption
Amount ” shall equal the sum of (i) 200% of the principal
amount of this Debenture to be prepaid, plus all accrued and unpaid
interest thereon, (ii) the product of (A) the quotient obtained by
dividing (1) the principal amount of this Debenture to be prepaid,
plus all other accrued and unpaid interest hereon by (2) the
Conversion Price on the closing date of the applicable event and
(B) the “Effective Price” (defined below), and (iii)
all other amounts, costs, expenses and liquidated damages due in
respect of this Debenture. The “ Effective Price
” shall be the fair market value of the consideration paid by
the acquirer in such event (less the amount set forth in clause (i)
above) divided by the sum of; (x) the issued and outstanding shares
of Common Stock of the Company then outstanding and (y) the shares
of Common Stock into which the outstanding Debentures may be
converted on the day immediately preceding the record date fixed
for determining the holders of shares of Common Stock eligible to
receive a distribution (or if no such date has been fixed, the date
of the day immediately preceding the closing of the transaction)
and (z) the number of shares deemed issuable to the Warrant holders
pursuant to the mandatory redemption provisions in the Warrants
which take effect upon sale of assets for cash consideration
whether or not any Warrant holder shall have elected to have their
Warrants Redeemed; provided , however , that
the number of shares of Common Stock issuable on conversion of the
Debentures and issuable upon exercise of the Warrants for this
purpose shall be determined on a fully converted or exercised basis
and ignoring any conversion or exercise limitations
therein).
“ Warrants ” shall
have the meaning set forth in the Purchase Agreement.
(ii)
New Section 6(d) is hereby added to the
Existing Debentures and New Debentures as follows:
“ Redemption at Election of
Holder . If the Company shall agree to sell substantially
all of its assets in one or more transactions in which the
consideration consists solely of cash, cash equivalents, assumption
of indebtedness, or any combination thereof, the Holder shall have
the right to require the Company, by written notice to the Company,
to redeem this Debentures, in full and in cash, at the closing of
such Change of Control Transaction, Fundamental Transaction or sale
of assets. The aggregate amount payable upon such
Change of Control Transaction, Fundamental Transaction or sale of
assets shall be equal to the Cash Sale Redemption Amount. In
the event that the Company fails to pay the Cash Sale Redemption
Amount on or prior to the applicable closing date, the interest
rate on this Debenture shall accrue at the rate of 18% per annum,
or such lower maximum amount of interest permitted to be charged
under applicable law, until the Cash Sale Redemption Amount is paid
in full. Concurrently with the payment in full of the Cash
Sale Redemption Amount, the Holder shall surrender this Debenture
to or as directed by the Company (or the successor company).
The Holder may elect to convert the outstanding
principal amount of the Debenture pursuant to Section 4 prior to
actual payment in cash for the redemption under this Section 6 by
fax delivery of a Notice of Conversion to the Company.
For purposes of this Section 6(d) only,
“ Change of Control Transaction ” means the
occurrence after the date hereof of any of (i) an acquisition after
the date hereof by an individual or legal entity or
“group” (as described in Rule 13d-5(b)(1) promulgated
under the Exchange Act) of effective control (whether through legal
or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 45% of the voting securities
of the Company (other than by means of conversion or exercise of
the Debentures and the Securities issued together with the
Debentures), or (ii) the Company merges into or consolidates with
any other Person, or any Person merges into or consolidates with
the Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction
own less than 55% of the aggregate voting power of the Company or
the successor entity of such transaction, or (iii) the Company
sells or transfers all or substantially all of its assets to
another Person and the stockholders of the Company immediately
prior to such transaction own less than 55% of the aggregate voting
power of the acquiring entity immediately after the transaction, or
(iv) a replacement at one time or within a three year period of
more than one-half of the members of the Company’s board of
directors which is not approved by a majority of those individuals
who are members of the board of directors on the date hereof (or by
those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors
who are members on the date hereof), or (v) the execution by the
Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth in
clauses (i) through (iv) above.”
(iii)
The following is added as new Section
5(h) of the Existing Debentures and New Debentures:
“ Adjustment upon a Reverse
Stock Split . In the event the Company effects a reverse
stock split of the Common Stock at any time while this Debenture is
outstanding, in addition to any other adjustment provided herein,
the Conversion Price shall be reduced effective as of the 23
rd Trading Day following such stock split (the “
Reset Date ”) to a price equal to the lesser of (i)
the average of the VWAPs for the 22 Trading Days immediately
following such reverse stock split or (ii) the average of the VWAPs
for the 5 Trading Days immediately prior to the Reset Date, subject
to further adjustment as provided herein. If such an
adjustment does not result in a reduction of the Conversion Price
then in effect, no adjustment will be made.”
(iv)
The following is added as New Section
1(f) of the August 2004 Debentures and February 2005
Debentures:
“(I)
As used in this Section 1(f), the
following terms shall have mean:
“ Cash Sale Redemption
Amount ” shall equal the sum of (i) 200% of the principal
amount of this Note to be prepaid, plus all accrued and unpaid
interest thereon, (ii) the product of (A) the quotient obtained by
dividing (1) the principal amount of this Note to be prepaid, plus
all other accrued and unpaid interest hereon by (2) the Conversion
Price on the closing date of the applicable event and (B) the
“Effective Price” (defined below), and (iii) all other
amounts, costs, expenses and liquidated damages due in respect of
this Note. The “ Effective Price ” shall
be the fair market value of the consideration paid by the acquirer
in such event (less the amount set forth in clause (i) above)
divided by the sum of; (x) the issued and outstanding shares of
Common Stock of the Maker then outstanding and (y) the shares of
Common Stock into which the outstanding Note may be converted on
the day immediately preceding the record date fixed for determining
the holders of shares of Common Stock eligible to receive a
distribution (or if no such date has been fixed, the date of the
day immediately preceding the closing of the transaction) and (z)
the number of shares deemed issuable to the Warrant holders
pursuant to the mandatory redemption provisions in the Warrants
which take effect upon sale of assets for cash consideration
whether or not any Warrant holder shall have elected to have their
Warrants Redeemed; provided , however , that
the number of shares of Common Stock issuable on conversion of the
Notes and issuable upon exercise of the Warrants for this purpose
shall be determined on a fully converted or exercised basis and
ignoring any conversion or exercise limitations
therein).
“ Change of Control
Transaction ” means the occurrence after the date hereof
of any of (i) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective
control (whether through legal or beneficial ownership of capital
stock of the Maker, by contract or otherwise) of in excess of 45%
of the voting securities of the Maker (other than by means of
conversion or exercise of the Notes and the securities issued
together with the Notes), or (ii) the Maker merges into or
consolidates with any other Person, or any Person merges into or
consolidates with the Maker and, after giving effect to such
transaction, the stockholders of the Maker immediately prior to
such transaction own less than 55% of the aggregate voting power of
the Maker or the s
