Exhibit 2
▇▇▇▇▇▇ Technologies, Inc.
Common Stock and Five-Year Warrant Purchase Agreement
This Agreement is made as of June 15, 1998 by and among ▇▇▇▇▇▇
Technologies, Inc., a Delaware corporation (the "Company"), with an office at ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, its principal
stockholders, ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (hereinafter referred to
individually as a "Principal Stockholder" and collectively as "Principal
Stockholders"), and the purchasers identified on Schedule 1 hereto (hereinafter
referred to individually as a "Purchaser" and collectively as "Purchasers").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties hereto do hereby agree as follows:
1. Purchase and Sale.
1.1 Authorization. The Company has authorized the sale and
issuance of up to 2,111,111 shares of its $0.20 par value Common Stock
("Shares") and five-year warrants ("Warrants") to purchase up to 5,277,778
additional Shares at an exercise price of $1.00 per Share.
1.2 Sale of Shares and Warrants. Subject to the provisions of this
Agreement, including the form of Share Purchase Warrant attached hereto as
Exhibit A, and on the closing dates set forth below, the Company will sell to
each of the Purchasers, severally and not jointly, and each of the Purchasers,
severally and not jointly, will purchase from the Company, investment units each
consisting of 1 Share and Warrants to purchase 2.5 Shares in the number of
Shares and Warrants set forth opposite each Purchaser's name in Schedule 1
attached hereto at the purchase price per investment unit indicated.
2. Closings of Purchases and Sales.
2.1 (a) First Closing - First Tranche. Upon execution and delivery
of this Agreement by all the parties, the Purchasers will purchase at a first
closing ("First Closing") 1,388,887 investment units consisting of 1 Share (a
total of 1,388,887 Shares) and Warrants to purchase 2.5 Shares (a total of
3,472,218 Shares) for a purchase price of $0.90 per investment unit or an
aggregate purchase price of $1,249,998.30. At the First Closing, the Company
will deliver to each Purchaser certificates representing the number of Shares
and Warrants set forth on Schedule 1 attached hereto, together with a copy of an
opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A., counsel to the Company, as to the matters set
forth in Sections 3.1 through 3.6 hereof in form and substance satisfactory to
the Purchasers and their counsel, and the Purchasers will pay the Company the
purchase price by wire transfer of immediately available funds to the following
bank account designated by the Company:
Valley National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA#0212-01383
▇▇▇▇▇▇ Technologies, Inc.
Acct.#▇▇▇-▇▇▇▇▇-▇
(b) First Closing - Possible Second Tranche. The Purchasers agree
to purchase and the Company agrees to sell to the Purchasers further investment
units in a second tranche for an aggregate purchase price of $150,000.30 at a
subsequent closing ("Tranche 2 Closing") at such time, if ever, prior to August
31, 1999 as the Company shall have entered into binding contracts with nuclear
power generating companies or their contractors providing for gross sales of
more than $100,000 of the Company's fire retardant products during the first
year of such contracts to upgrade fire protection of control wiring at nuclear
power generating facilities. In such event, the Company shall give at least 10
business days written notice to each Purchaser of such Tranche 2 Closing. At any
such Tranche 2 Closing, and as a condition thereto, the Company will deliver to
each Purchaser certificates representing the number of Shares and Warrants
subject to purchase as set forth in Schedule 1, together with a copy of an
opinion of counsel as provided in Section 2.1(a) and a bring-down certificate
executed by each Principal Stockholder and the Company stating (i) that the
representations and warranties set forth in Section 3 are true and correct in
all material respects on the date of such Tranche 2 Closing and (ii) that the
Company has met the requirement for new sales contracts set forth in this
Section 2.1(b) and has performed and complied in all material respects with all
covenants and agreements provided in Section 6 required of it on or prior to the
date of such Tranche 2 Closing. The Purchasers will pay the Company the purchase
price by wire transfer of immediately available funds to a bank account
designated by the Company and will deliver to the Company a certificate stating
that the representations and warranties set forth in Section 4 are true and
correct on the date of such Tranche 2 Closing.
2.2 Second Closing. The Purchasers agree to purchase and the
Company agrees to sell to the Purchasers further investment units for an
aggregate purchase price of $500,000 at a subsequent closing ("Second Closing")
subject to the following terms and conditions:
If for the fiscal year ending August 31, 1999, the Company has net sales of
$2,000,000 or more and pre-tax earnings of $400,000 or more, the Purchasers
will purchase 555,557 further investment units consisting of 1 Share (a
total of 555,557 Shares) and Warrants to purchase 2.5 Shares (a total of
1,388,892 Shares) at a Subsequent Closing on September 15, 1999 for a
purchase price of $0.90 per investment unit or an aggregate purchase price
of $500,001.30.
If the Company has net sales of less than $2,000,000 or pre-tax earnings
(determined in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis) of less than $400,000 for the
fiscal year ending August 31, 1999, the Purchasers may at their option
notify the Company of their decision not to purchase such further
investment units at a Second Closing, in which event they shall have no
obligation to purchase any additional Shares and Warrants under this
Agreement, or they may purchase up to 555,557 further investment units at a
Second Closing on September 15, 1999 in the number of such investment units
elected by them for a purchase price of $0.90 per investment unit.
At any Second Closing, and as a condition thereto, the Company will deliver to
each Purchaser certificates representing the number of Shares and Warrants
required to be purchased or elected for purchase, as the case may be, together
with a copy of an opinion of counsel as provided in Section 2.1 and a bring-down
certificate executed by each Principal Stockholder and the Company stating (i)
that the representations and warranties set forth in Section 3 are true and
correct in all material respects on the date of such Second Closing and (ii)
that the Company has performed and complied in all material respects with all
covenants and agreements provided in Section 6 required of it on or prior to the
date of such Second Closing. The Purchasers will pay the Company the purchase
price by wire transfer of immediately available funds to a bank account
designated by the Company and will deliver to the Company a certificate stating
that the representations and warranties set forth in Section 4 are true and
correct on the date of such Second Closing.
3. Representations and Warranties of the Company and its Principal
Stockholders. Each of the Company's Principal Stockholders and the Company
hereby represents and warrants to each of the Purchasers that the following
information is true and correct:
3.1 Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all requisite corporate power and authority to own
its property and assets and to carry on its business as it is presently being
conducted and as it is proposed to be conducted, as disclosed to the Purchasers.
The Company is in good standing in the state of New Jersey. The Company is not
presently qualified to do business as a foreign corporation in any jurisdiction
other than Delaware and New Jersey, and the failure to be so qualified will not
have a material adverse effect on the Company's business as now conducted or as
now proposed to be conducted.
3.2 Capitalization. Immediately prior to the Closing, the
authorized capital of the Company shall consist of 25,000,000 Shares, of which
approximately 10,701,549 Shares are issued and outstanding. The Company has
reserved approximately 5,524,249 Shares for issuance upon exercise of
outstanding warrants and convertible debentures. The Shares and warrants
outstanding immediately prior to the First Closing are duly and validly issued
(including, without limitation, issued in compliance with applicable federal and
state securities laws), fully-paid and non-assessable. Except for the
transactions contemplated by this Agreement or as described in the preceding
sentence, there are (i) no outstanding warrants, options or rights to subscribe
for or purchase any Shares or other securities from the Company, (ii) no voting
trusts or voting agreements among, or irrevocable proxies executed by,
stockholders of the Company (other than certain voting trust arrangements listed
on Exhibit B hereto) and (iii) no existing rights of stockholders to require the
Company to register any securities of the Company or to participate with the
Company in any registration by the Company of its securities (other than certain
registration rights provided in agreements with holders of the Company's
warrants and convertible debentures).
3.3 Validity of Shares and Warrants. The Shares and Warrants being
purchased by the Purchasers hereunder when issued, sold and delivered in
accordance with the terms of this Agreement, including the form of Share
Purchase Warrants attached, will be duly and validly issued, fully-paid and
non-assessable. The Shares issuable upon exercise of the Warrants when issued,
sold and delivered in accordance with the terms of this Agreement, will be duly
and validly issued, fully-paid and non-assessable.
3.4 No Subsidiaries. The Company does not own or control, directly
or indirectly, any other corporation, partnership, association or business
entity.
3.5 Authorization; Approvals. All corporate action on the part of
the Company necessary for the authorization, execution, delivery and performance
of all its obligations under this Agreement and for the authorization, issuance
and delivery of the Shares and the shares issuable upon exercise of the Warrants
has been taken. This Agreement, when executed and delivered by or on behalf of
the Company and by each Principal Stockholder, shall constitute a valid and
legally binding obligation of the Company and each Principal Stockholder,
enforceable against the Company and each Principal Stockholder in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The Company has obtained or
will obtain prior to each Closing Date all necessary consents, authorizations,
approvals and orders, and has made all registrations, qualifications
designations, declarations or filings with all federal, state or other relevant
governmental authorities required on the part of the Company in connection with
the consummation of the transactions contemplated by this Agreement (the
"Approval and Filings"), unless such are not required prior to the consummation
of such transaction, in which case the Company covenants to obtain the Approvals
and Filings immediately after such Closing Date.
3.6 No Conflict with Other Instruments. The execution, delivery
and performance of this Agreement and the conduct of the Company's business will
not result in any violation of, be in conflict with, or constitute a default
under any terms or provision of (i) the Company's Certificate of Incorporation
or By-laws; (ii) any judgment, decree or order or any agreement, contract,
understanding, indenture or other instrument to which the Company or any
Principal Stockholder is a party; or (iii) any statute, rule or governmental
regulation applicable to the Company.
3.7 Financial Statements. The company has furnished to the
Purchasers financial statements consisting of Balance Sheets as of February 28,
1998 (unaudited) and August 31, 1997 (audited), statements of operations for the
three and six month periods ended February 28, 1997 and February 28, 1998,
respectively, and July 13, 1987 (Date of Inception) through February 28, 1998,
statements of cash flows for the six months ended February 28, 1997 and February
28, 1998, respectively, and July 13, 1987 through February 28, 1998, and audited
financial statements for the fiscal year ended August 31, 1997, together with
the report of Wiss & Company, LLP, the Company's independent auditors, which
were included in the Company's Form 10-KSB annual report for such 1997 fiscal
year as filed with the Securities and Exchange Commission. All such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis and fairly present the financial position of the Company as of the dates
thereof and the results of operations and the cash flows for the fiscal periods
covered thereby, except, in the case of unaudited financial statements, for the
omission of certain footnotes and immaterial normal year end adjustments.
3.8 Liabilities. The Company does not have any obligation or
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company, whether due or to become due and regardless
of when asserted) other than (i) liabilities set forth on the Balance Sheet of
February 28, 1998 (including the notes thereto) and (ii) liabilities and
obligations which have arisen after the date of the Balance Sheet in the
ordinary course of business (none of which is a liability resulting from breach
of contract, breach of warranty, tort, infringement, claim or lawsuit).
3.9 Material Adverse Change. Since February 28, 1998, the Company
has operated only in the usual and ordinary course in accordance with past
practice, and there has been no (i) material adverse change in the financial
condition, assets, results of operations or business of the Company, (ii) no
sale, transfer or other disposition of any assets of the Company, except in the
usual and ordinary course of business, (iii) no material liens, security
interests or encumbrances placed upon any of its assets, (iv) no increase in the
compensation to any officer, director, employee or agent, (v) no dividend,
distribution, redemption, recapitalization or other transaction involving the
capital stock of the Company (other than certain issuances of Shares and
Warrants included in the number of Shares issued or reserved for issuance
reflected in Section 3.2 hereof), and (vi) no other event or condition which
could have a material adverse effect ("Material Adverse Effect") on the
financial condition, assets, results of operations or business of the Company.
3.10 Intellectual Property. The Company owns all right, title and
interest in and to all of the intellectual property described in or referred to
in the above-referenced Form 10-KSB annual report and Exhibit B, including, but
not limited to, Patent Nos. 4,879,320, 4,965,296 and 5,723,515 and the "▇▇▇▇▇▇"
trademark No. 1,567,780 and all U.S. and foreign applications and issued patents
and all U.S. and foreign trademark registrations and applications listed in
Exhibit B, and all knowhow and trade secrets related to any of the foregoing or
used in the Company's business ("Intellectual Property Rights") free and clear
of all liens or encumbrances, and rights and interests whatsoever of third
parties (except for the licensing agreements referred to in Section 3.15) and
there have been no claims made against the Company asserting the invalidity,
misuse or unenforceability of any of such Intellectual Property Rights and, to
the best of each of the Principal Stockholder's and the Company's knowledge,
there are no valid grounds for the same and that the Company has not received
any notices of, and is not aware of any facts which indicate a likelihood of,
any infringement or misappropriation by, or conflict with, any third party with
respect to such Intellectual Property Rights (including, without limitation, any
demand or request the Company license any rights from a third party), and the
conduct of the Company's business has not infringed, misappropriated or
conflicted with and does not infringe, misappropriate or conflict with any
intellectual property rights of other persons, and to the best of each of the
Principal Stockholder's and the Company's knowledge, the Intellectual Property
Rights owned by or licensed to the Company have not been infringed,
misappropriated or conflicted by any other persons. The transactions
contemplated by this Agreement shall have no material adverse effect on the
Company's right, title and interest in and to the Intellectual Property Rights.
3.11 Litigation. Other than those listed in the notes to the
above-referenced financial statements or as listed on Exhibit B hereto, there
are no actions, suits, proceedings, orders, investigations or claims pending or
threatened against or affecting the Company or any of the Principal
Stockholders, officers, directors or employees of the Company with respect to
the business or proposed business activities of the Company, or pending or
threatened by the Company against any third party, at law or in equity or before
or by any governmental department, commission board, bureau, agency or
instrumentality (including, without limitation, any actions, suit proceedings or
investigations with respect to the transactions contemplated by this Agreement);
the Company is not subject to any arbitration proceedings under collective
bargaining agreements or otherwise or, to the best knowledge of the Company or
its Principal Stockholders, any governmental investigations or inquiries; and,
to the best knowledge of the Company or its Principal Stockholders, there is no
valid basis for any of the foregoing.
3.12 Compliance With Law; Taxes; SEC. The Company has all
governmental licenses, permits, approvals and other authorizations as are
reasonably necessary for it to conduct its business as presently conducted. The
Company is in compliance with all federal, state and local laws, rules and
regulations to which it is subject (including without limitation, those related
to environmental, ERISA and labor matters). All applicable tax returns have been
timely filed accurately and are current in status and all required payments of
taxes, including employment taxes, have been made. All SEC reports have been
timely and accurately filed.
3.13 Environmental Compliance. The Company has compiled and is in
compliance with all Environmental and Safety Requirements (including all permits
and licenses required thereunder). The Company has not received any oral and
written notice of any violation of, or any liability under, any Environmental
and Safety Requirements. No acts or circumstances with respect to the past or
current operations or facilities of the Company or any predecessor (including
any onsite or offsite disposal or release of, or contamination by, hazardous
materials, substances or wastes) will hinder or prevent continued compliance
with or give rise to any liability (including corrective or remedial obligation)
under any Environmental and Safety Requirement. "Environmental and Safety
Requirements" shall mean all federal, state, local and foreign statutes,
regulations, ordinances and other provisions having the force or effect by law,
all judicial and administrative orders and determinations, all contractual
obligations and all common law, in each case concerning public health and
safety, worker health and safety and pollution or protection of the environment
(including without limitation all those relating to the presence, use,
production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous or otherwise regulated materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminates, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation).
3.14 Disclosure. Neither this Agreement nor any of the exhibits,
schedules, attachments, written statements, documents, certificates or other
items supplied to any Purchasers by or on behalf of the Company with respect to
the transactions contemplated hereby contains any untrue statement of a material
fact or omits a material fact necessary to make each statement contained herein
or therein not misleading; provided that with respect to any financial
projections furnished to the Purchasers by the Company, the Company and each
Principal Stockholder represents and warrants only that such projections were
based upon assumptions reasonably believed by the Company and each Principal
Stockholder to be reasonable and fair as of the date the projections were
prepared in the context of the Company's history and current and reasonably
foreseeable business conditions. There is no fact which the Company has not
disclosed to the Purchasers in writing and which has had or could reasonably be
expected to have a Material Adverse Effect.
3.15 Contracts. The Company has no contracts (exclusive or
non-exclusive) other than contracts with Engineering Ceramics Products, Inc.,
Transco Products, Inc., Rimex, PPG Fiat and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ which have been
furnished by the Company to the Purchasers and those listed on Exhibit C which
contains a brief summary of primary business terms. The Company has no
arrangements or understandings requiring it to pay commissions or fees to any
parties not included on Exhibit C or in excess of amounts there stated.
3.16 Finder's Fees; Brokers. There are no claims (or any basis for
any claims) for brokerage commissions, finder's fees or like payments in
connection with this Agreement or the transactions contemplated hereby resulting
from any action taken by the Company or either Principal Stockholder or on their
behalf.
4. Representations and Warranties of Each Purchaser. Each Purchaser severally
represents and warrants that:
4.1 Authorization. The execution and delivery of this Agreement
have been duly authorized by the Purchaser and this Agreement is a valid and
legally binding obligation of such Purchaser. Schedule 2 lists Purchaser's
social security or tax identification number and the address of Purchaser's
principal residence or place of business.
4.2 Investment Representations. Purchaser is acquiring the Shares
and the Warrants purchased by such Purchaser, and the Shares into which such
Warrants may be converted (collectively, the "Purchased Securities"), for
Purchaser's own account, for investment and not with a view to, or for sale in
connection with, any distribution of such stock or any part thereof.
4.3 Investment Experience; Access to Information. Purchaser (a) is
an "accredited investor" as such term is defined in Regulation D of the
Securities Act of 1933, as amended, and has such knowledge, sophistication, and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of the purchase of the Shares and Warrants and the
consummation of the other transactions contemplated hereby, (b) has the ability
to bear the economic risks of this investment, (c) has been furnished with or
has had access to the Company's Annual Report on Form 10-KSB for the fiscal year
ended August 31, 1997 and subsequent reports on form 10-QSB for the fiscal
quarters ended November 30, 1997 and February 28, 1998, and (d) has been
afforded prior to the First Closing the opportunity to ask questions of, and to
receive answers from, the Company and to obtain additional information requested
to make an informed investment decision with respect to the purchase of the
Shares and Warrants.
4.4 Absence of Registration. Each Purchaser understands that none
of the Purchased Securities has been registered under the Securities Act on the
ground that no distribution or public offering of any of the Purchased
Securities is to be effected, and that in connection therewith the Company is
relying in part on the representations of the Purchasers set forth in this
Section 4. Further, the Purchased Securities may be required to be held
indefinitely unless they are subsequently registered under the Securities Act,
or an exemption from such registration is available.
4.5 Restrictions on Transfer. Each Purchaser agrees that it will
not offer, sell, pledge, hypothecate, or otherwise dispose of any of the
Purchased Securities unless such offer, sale, pledge, hypothecation or other
disposition is (a) registered under the Securities Act or (b) in compliance with
an opinion of counsel selected by such Purchaser and reasonably satisfactory to
the Company, in form and substance reasonably satisfactory to it, to the effect
that such offer, sale, pledge, hypothecation or other disposition is exempt from
registration under the Securities Act.
4.6 Restrictive Legends. Each Purchaser agrees that each
certificate representing (a) the Shares, (b) the Warrants, (c) shares of Common
Stock issued upon conversion of the Warrants, and (d) any other securities
issued in respect of the Shares or the Warrants upon any stock split, stock
dividend, recapitalization, merger, or similar event (unless no longer required
in the opinion of counsel for the Company) shall be stamped or otherwise
imprinted with legends substantially in the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
ARE TRANSFERRABLE ONLY IN COMPLIANCE WITH SUCH LAWS OR IN ACCORDANCE
WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER OF
THESE SECURITIES IN FORM AND SUBSTANCE SATISFACTORY TO SUCH ISSUER."
Upon request of a holder of Purchased Securities, the Company shall remove the
legend set forth above from the certificates evidencing such Purchased
Securities or issue to such holder new certificates therefor free of such
legend, if with such request the Company shall have received an opinion of
counsel selected by the holder and reasonably satisfactory to the Company, in
form and substance reasonably satisfactory to the Company, to the effect that a
transfer by said holder of such Purchased Securities will not violate the
Securities Act or applicable state securities laws.
4.7 Finder's Fees; Brokers. There are no claims (or any basis for
any claims) for brokerage commissions, finder's fees or like payments in
connection with this Agreement or the transactions contemplated hereby resulting
from any action taken by such Purchaser or on behalf of such Purchaser.
5. Survival of Representations and Warranties and Indemnification.
5.1 Survival of Representations and Warranties. The
representations and warranties of each Principal Stockholder and the Company and
each Purchaser which are set forth in Sections 3 and 4, respectively, shall
survive each Closing and remain in full force and effect until the expiration of
any applicable limitations period.
5.2 Indemnification by Each Principal Stockholder and the Company.
Each of ▇▇▇ ▇▇▇▇▇ and the Company will indemnify, defend, save and hold harmless
each Purchaser from and against any and all damage, liability, loss, penalty,
expense, assessment, judgment or deficiency of any nature whatsoever (including,
without limitation, reasonable attorney's fees and expenses incident to any
suit, action or proceeding) whether upon the occurrence thereof or thereafter
(collectively, "Losses") incurred or sustained by such Purchaser which shall
arise out of or result from any breach of any representation, warranty or
agreement given or made by such Indemnitor.
5.3 Indemnification by Each Purchaser. Each Purchaser, severally
and not jointly, will indemnify, defend, save and hold harmless the Company from
and against any and all Losses incurred or sustained by the Company which shall
arise out of or result from any breach of any representation or warranty given
or made by such Purchaser herein.
6. Further Agreements, Assurances, and Covenants. Subject to the termination
provision set forth in Section 6.12 and the approval provision set forth in
6.13, as to certain of the following, the Company hereby gives the following
further agreements, assurances and covenants to the Purchasers:
6.1 Expenditures. The Company may not commit to expenditures
greater than $50,000 for any single transaction or purchase, including any
purchase requiring installments or future payments which in aggregate would
exceed $50,000. Any such expenditures require the prior approval of any two of
the following Purchasers (hereinafter referred to as a "Purchasers'
Representative"): JMC Investments LLC ("JMC"), NF Partners, LLC ("NFP,"
including its designated representative, initially ▇▇▇▇▇▇ ▇▇▇▇▇) or ▇▇▇▇▇▇
▇▇▇▇▇▇ ("▇▇▇▇▇▇," including his designated representative); and all parties will
be given notice of such approval.
6.2 Sales and Marketing Contracts. JMC must approve any material
sales or marketing contracts that the Company wishes to enter. The purpose of
this is to ensure an experienced marketing professional has the opportunity to
review any significant arrangements in advance of the Company's commitment.
6.3 Consulting Fee. The Company will pay JMC a monthly consulting
fee of $7,000 per month. JMC will serve as the marketing liaison between the
Company and Marketing Corporation of America ("MCA"). In addition JMC will
receive a 5% royalty on revenues produced by JMC sales actions, which will be
approved and registered with the Company in writing prior to developing these
contacts. Also, JMC will forward to NFP and ▇▇▇▇▇▇ a monthly
progress/marketing/cash flow/significant events summary. The Company will
provide all materials or information as requested by JMC to facilitate the
preparation of this summary.
6.4 Consulting Arrangements. ▇▇▇▇ ▇▇▇▇▇▇▇ will accept a position
as consultant to the Company's Board of Directors commencing at the First
Closing. It is agreed that the Company will fully indemnify him against any and
all lawsuits by past, present or future shareholders, customers, or others for
any reason whatsoever, including full reimbursement for all reasonable legal or
related expenses. Since the Company has no Director and Officer Liability
Insurance, ▇▇▇▇▇▇▇ will obtain Errors and Omissions Insurance at an annual
premium of no more than $5,000 which the Company will reimburse. The Company
will provide him as compensation for such services with five-year Warrants to
purchase 75,000 Shares at an exercise price of $2.00 per Share. Such 75,000
Warrants will vest at the rate of 1,250 Warrants monthly for so long as ▇▇▇▇▇▇▇
continues to perform such consulting services over a five year period commencing
on the date of the First Closing. NFP or ▇▇▇▇▇▇ may at any time, but not earlier
than 4 months from the date of this Agreement, with 20 days notice, terminate
the consulting arrangement with JMC for "cause," which for purposes of this
Agreement shall mean that (i) JMC or ▇▇▇▇ ▇▇▇▇▇▇▇ has failed to provide
consulting services agreed hereunder or in any consulting agreement with the
Company, (ii) JMC or ▇▇▇▇ ▇▇▇▇▇▇▇ has engaged in gross or persistent misconduct
relative to the affairs of the Company, (iii) JMC or ▇▇▇▇ ▇▇▇▇▇▇▇ has engaged in
acts materially injurious to the Company or its reputation or in acts of
dishonesty affecting the Company, (iv) JMC or ▇▇▇▇ ▇▇▇▇▇▇▇ has been convicted
of, or pleaded guilty or no-contest to a felony, (v) ▇▇▇▇ ▇▇▇▇▇▇▇ has reached
his 65th birthday or (vi) the Company has failed to achieve sales targets set
forth on Schedule 4 hereto. In the event of any termination for cause, any
voluntary termination by JMC, or the death, incapacity, or resignation or
withdrawal from JMC of ▇▇▇▇ ▇▇▇▇▇▇▇, only those warrants vested on the date of
termination will remain with JMC. In any such event, JMC's monthly consulting
fee shall accrue through the date of termination and thereupon terminate, and
JMC's entitlement to royalties pursuant to Section 6.3 shall be subject to a
sales agreement entered into between JMC and the Company after the First
Closing, said agreement being subject to prior approval by NFP and ▇▇▇▇▇▇.
6.5 Restriction on Use of Funds. Funds provided hereunder will
only be used for payment of legal fees and expenses of the Company's and the
Purchasers' counsel incurred in connection with entering into and accomplishing
the transactions contemplated under this Agreement and operating expenses
incurred by the Company as per the cash flow projection attached as Schedule 3.
No payments required by the bankruptcy agreement will be made out of such funds
except as specifically agreed by the Purchasers. Any payments for prior debts or
liabilities incurred by the Company or deferred compensation or the like should
be deferred if possible to a time when Company cash flow allows such to be paid
and in no instance shall they be made from funds provided hereunder except as
specifically agreed by the Purchasers. It is expressly understood that funds
from the Purchasers are to be used only to accomplish the financing provided by
this Agreement and for operating and marketing purposes intended to bolster the
Company's business and to create a positive cash flow.
6.6 Legal Fees and Expenses. The Company agrees that all legal
fees and expenses incurred by the Purchasers or JMC in connection with entering
into and accomplishing the transactions under this Agreement and any incurred in
connection with disputes regarding this Agreement brought about by inaccuracies,
misrepresentations or breach of any of the above will be paid for by the
Company.
6.7 New Contracts/Agreements. The Company will not enter into any
new agreements or relationships, or contract renewals, including but not limited
to, any sales or marketing contracts, any employment or consulting arrangements,
or any agreements that require issuance of additional Shares, warrants, or any
other securities by the Company without the written approval of either of the
Purchasers' Representatives.
6.8 Negative Covenant Re. Patents and Trademark. The Company will
not transfer, assign, sell, pledge, hypothecate, or otherwise dispose or
encumber any Intellectual Property, including but not limited to the patents and
trademarks referred to in Section 3.10.
6.9 Additional Warrant Issuance. ▇▇. ▇▇ ▇▇▇▇▇▇ will be issued
50,000 Five-year Warrants and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000 Five-year Warrants, in
each case with an exercise price of $1.00 per Share in consideration for Shares
that each recently purchased.
6.10 Sacks Option. The parties acknowledge that after the First
Closing and on or prior to July 15, 1998, Mr. ▇▇▇▇▇ ▇▇▇▇▇ shall have the right
to invest up to $50,000 at his option in addition to the $1,750,000 financing
contemplated under this Agreement under the same terms and conditions of this
Agreement, (i.e., up to 39,683 investment units initially and up to 15,873
investment units at the Second Closing), and in such event, ▇▇. ▇▇▇▇▇ shall (i)
become a signatory to this Agreement, (ii) make a simultaneous payment of the
purchase price for the number of investment units purchased by him, and (iii)
have the rights and obligations hereunder to purchase additional investment
units at the Second Closing with the number in Section 2.2 to be increased
proportionately.
6.11 Public Announcements. The Company will not make reference to
any Purchaser by name in any press release or public announcement with respect
to any of the transactions contemplated hereunder without obtaining the prior
approval of such Purchaser.
6.12 Termination of Certain Covenants. The Company's further
agreements and covenants provided under Sections 6.1, 6.2, 6.3 and 6.7 will
terminate after the second anniversary of the First Closing on the earlier of
(i) such time after such date as the closing price of the Company's Shares on
NASDAQ shall have equaled or exceeded $4.00 per Share for 60 consecutive trading
days or (ii) the fifth anniversary of the First Closing. In the case of Section
6.8, the Company's further agreement and covenant will terminate at such time as
the Company shall have discharged all of its liabilities to unsecured creditors
under the Company's Plan of Reorganization as confirmed on April 7, 1995 (the
"Plan").
6.13 Approval Requirement. In the event that prior approval for
any action by the Company is required from a Purchasers' Representative
hereunder, the Company shall request such approval in writing and the
Purchasers' Representative shall have 10 days to grant or deny such approval in
writing. In the event the Purchasers' Representative fails to either grant or
deny such approval within such period, the approval shall be deemed to have been
granted. In no event shall the Purchasers' Representative unreasonably withhold
an approval.
6.14 Registration Rights. The purchasers shall have the
registration rights with respect to the Shares and Warrants set forth in the
Registration Rights Agreement attached hereto as Exhibit D.
7. Principal Stockholder and Certain Other Chapter XI Claims. The Principal
Stockholders hereby agree that they will not assert any of their Chapter XI
claims against the Company, unless and until all other claims of other unsecured
creditors pursuant to the Plan have been satisfied, and they further agree that
any of such claims shall be subordinate and junior to rights and claims of the
Purchasers relating to their investment in the Company hereunder. In addition,
the Principal Stockholders agree that their claims can be satisfied no earlier
than January 1, 2000 and subsequently can be paid only when the Company has an
amount on hand equal to current assets less current liabilities (current is
defined as 12 months) in excess of 15% of the prior year's gross sales after
giving effect to the payment of any of their deferred Chapter XI claims. The
Principal Stockholders further agree and confirm their understanding that their
salary deferral claims shall continue to be subject to applicable deferment
arrangements and that in no event will any of the proceeds of the financing
furnished to the Company by the Purchasers hereunder be used to pay any of such
salary deferral claims. As a condition to the First Closing, the Company shall
also have obtained satisfactory deferment agreements from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ as to their Chapter XI claims, and the
Company agrees to use its best efforts to obtain a deferment agreement from
▇▇▇▇▇▇▇ ▇▇▇▇▇ as to his Chapter XI claims upon his return from a current trip.
As a further condition to the First Closing, the Company shall have entered into
an Agreement with ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Fire Stop Group, Inc. in the form
attached as Exhibit E hereto.
8. Miscellaneous.
8.1 Notices. All notices, requests, consents and other
communications herein shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or personally delivered, as follows:
(a) If to the Company or any Principal Stockholder, addressed
to such party at:
▇▇▇▇▇▇ Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to the Purchasers:
at their respective addresses set forth on Schedule 2 hereto
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties.
8.2 Modifications; Waiver. Neither this Agreement not any
provision hereof may be changed, waived, discharged or terminated orally or in
writing.
8.3 Entire Agreement. This Agreement, including the Schedules and
Exhibits, contains the entire agreement between the parties with respect to the
transactions contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties, commitments, whether in writing or oral, prior to
the date hereof.
8.4 Effectiveness. This Agreement shall become effective only when
executed by the Purchasers, the Principal Stockholders and the Company.
8.5 Successors and Assigns. All of the terms of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
8.6 No Third-Party Beneficiaries. Nothing in this Agreement will
be construed as giving any person, firm, corporation or other entity, other than
the parties hereto and their successors and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provision hereof.
8.7 Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and by the Company.
8.8 Governing Law and Severability. This Agreement shall be
governed by and construed and interpreted in accordance with the laws of the
State of New Jersey without reference to principles of conflict of laws or
choice of laws. In the event any provision of this Agreement or the application
of any such provision to any party shall be held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this Agreement
shall remain in full force and effect.
8.9 Headings. The descriptive headings of the Sections hereof and
of the Schedules and Exhibits hereto are inserted for convenience only any do
not constitute a part of this Agreement.
COUNTERPART SIGNATURE PAGE
COMMON STOCK AND FIVE-YEAR PURCHASE
AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
The Company Purchasers
▇▇▇▇▇▇ Technologies, Inc. NF Partners, LLC
By:__________________________ By:__________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Manager
JMC Investments LLC
Principal Stockholders By:__________________________
▇▇▇▇ ▇▇▇▇▇▇▇,____________
______________________________
▇▇▇ ▇▇▇▇▇ Ravitch Rice & Company LLC
By:_________________________
______________________________ ▇▇▇▇▇▇ ▇. ▇▇▇▇, Managing Dir.
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Schedule 1
First Closing-First Tranche
Purchaser # Shares # Warrants Purchase Price
--------- -------- ---------- --------------
---------------------------------------------------------------------------------------------------
NF Partners, LLC 853,174 2,132,935 $767,856.60
JMC Investments LLC 39,683 99,208 $35,714.70
▇▇▇▇▇▇ ▇▇▇▇▇▇ 277,777 694,442 $249,999.30
▇▇▇▇ ▇▇▇▇▇▇ 39,683 99,208 $35,714.70
▇▇▇▇▇▇ ▇▇▇▇▇▇ 79,365 198,412 $71,428.50
▇▇▇▇▇ ▇▇▇▇▇ 35,714 89,285 $32,142.60
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 35,714 89,285 $32,142.60
▇▇▇▇▇ ▇▇▇▇▇▇▇ 7,936 19,840 $7,142.40
Ravitch Rice & Co. LLC 19,841 49,603 $17,856.90
-------------------------------------------------------
Totals 1,388,887 3,472,218 $1,249,998.30
=======================================================
First Closing-Possible Second Tranche
Purchaser # Shares # Warrants Purchase Price
---------------------------------------------------------------------------------------------------
NF Partners, LLC 102,381 255,952 $92,142.90
JMC Investments LLC 4,762 11,905 $4,285.80
▇▇▇▇▇▇ ▇▇▇▇▇▇ 33,333 83,333 $29,999.70
▇▇▇▇ ▇▇▇▇▇▇ 4,762 11,905 $4,285.80
▇▇▇▇▇▇ ▇▇▇▇▇▇ 9,524 23,810 $8,571.60
▇▇▇▇▇ ▇▇▇▇▇ 4,286 10,715 $3,857.40
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 4,286 10,715 $3,857.40
▇▇▇▇▇ ▇▇▇▇▇▇▇ 952 2,380 $856.80
Ravitch Rice & Co. LLC 2,381 5,953 $2,142.90
-------------------------------------------------------
Totals 166,667 416,668 $150,000.30
=======================================================
Second Closing
Purchaser # Shares # Warrants Purchase Price
---------------------------------------------------------------------------------------------------
NF Partners, LLC 341,270 853,175 $307,143.00
JMC Investments LLC 15,873 39,682 $14,285.70
▇▇▇▇▇▇ ▇▇▇▇▇▇ 111,111 277,778 $99,999.90
▇▇▇▇ ▇▇▇▇▇▇ 15,873 39,682 $14,285.70
▇▇▇▇▇▇ ▇▇▇▇▇▇ 31,746 79,365 $28,571.40
▇▇▇▇▇ ▇▇▇▇▇ 14,286 35,715 $12,857.40
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 14,286 35,715 $12,857.40
▇▇▇▇▇ ▇▇▇▇▇▇▇ 3,175 7,938 $2,857.50
Ravitch Rice & Co. LLC 7,937 19,842 $7,143.30
-------------------------------------------------------
TOTAL 555,557 1,388,892 $500,001.30
First (First Tranche) &
Second Closings 1,944,444 4,861,110 $1,749,999.60
First Closing - Possible
Second Tranche 166,667 416,668 $150,000.30
=======================================================
TOTAL ALL CLOSINGS 2,111,111 5,277,778 $1,899,999.30
=======================================================
Schedule 2
Purchaser's Addresses
---------------------
NF Partners, LLC ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, #▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ S.S.# ###-##-####
EIN# ▇▇-▇▇▇▇▇▇▇
JMC Investments LLC ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ S.S.# ###-##-####
EIN#▇▇-▇▇▇▇▇▇▇
Ravitch Rice & Company LLC ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇ S.S.#556-155293
EIN# ▇▇-▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
S.S. ####-##-####
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
S.S.####-##-####
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
S.S.####-##-####
Schedule 3
[omitted]
Schedule 4
Minimum Sales Targets Pertaining to Section 6.4
9/1/98 to 8/31/99 $ 4 million
9/1/99 to 8/31/00 $ 8 million
9/1/00 to 8/31/01 $12 million
9/1/02 to 8/03/03 $25 million
Every year thereafter $30 million
EXHIBIT A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND ARE
TRANSFERRABLE ONLY IN COMPLIANCE WITH SUCH LAWS OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER OF THESE
SECURITIES IN FORM AND SUBSTANCE SATISFACTORY TO SUCH ISSUER.
▇▇▇▇▇▇ TECHNOLOGIES, INC.
FIVE YEAR SHARE PURCHASE WARRANT
CERTIFICATE
Initial Exercise/Purchase Price -- $1.00 per share
Expiration Date - Five Years from Date of Issue
Issue Date -- ________, 1998
___________ Warrants to Purchase Common Stock of ▇▇▇▇▇▇ Technologies, Inc.
This is to certify that, for value received, and subject to the
terms and conditions hereof, ________________ (the "Holder"), is the owner of
Warrants, each of which entitles the registered Holder to purchase from ▇▇▇▇▇▇
TECHNOLOGIES, INC., a Delaware corporation (the "Corporation"), at any time
before 5:00 P.M. (New York time) on _________, 200_ (the "Warrant Term Date"),
one (1) share of fully paid and non-assessable common stock, 20(cent) par value
(the "Common Stock"), of the Corporation, at a purchase price per share of $1.00
Dollar (such purchase price per share as adjusted from time to time as herein
provided is referred to herein as the "Warrant Exercise Price"), subject to
adjustment as set forth herein. The shares of Common Stock issuable upon the
exercise of the Warrants are sometimes called the "Warrant Shares".
Subject to the provisions hereof, at any time before the Warrant
Term Date, the Warrants represented by this Warrant Certificate may be exercised
by the Holder in whole or in part by surrender of this Warrant Certificate at
the principal executive offices of the Corporation with the form of election to
exercise attached hereto duly executed and with payment in full to the
corporation of the Warrant Exercise Price for each of the Warrant Shares so
purchased. Payment of such Warrant Exercise Price shall be made in cash, by bank
check, certified check, wire transfer, attorney's trust account check or other
means acceptable to the Corporation. Thereupon, the Warrants shall be deemed to
have been exercised and the person exercising the Warrants to have become a
holder of record of the Warrant Shares so purchased (or of the other securities
or property to which such person is entitled upon such exercise) for all
purposes, and certificates for Warrant Shares so purchased shall be delivered to
the purchaser within a reasonable time (not exceeding ten [10] days) after the
Warrants shall have been exercised as set forth above.
This Warrant Certificate and all rights hereunder are assignable
and transferable on the books of the Corporation, upon surrender of this Warrant
Certificate, with the form of assignment attached hereto duly executed by the
registered Holder thereof or by his or her attorney duly authorized in writing,
to the Corporation at its principal executive offices, and thereupon there shall
be issued in the name of the transferee or transferees, in exchange for this
Warrant Certificate, a new warrant certificate or warrant certificates of like
tenor and date, representing in the aggregate the right to subscribe for and
purchase the number of shares which may be subscribed for and purchased
hereunder.
Upon any partial exercise hereof, this Warrant Certificate is
exchangeable upon surrender by its registered Holder at the principal executive
offices of the Corporation for new Warrant Certificates of like tenor and date
representing in the aggregate the right to purchase the remaining number of
Warrant Shares which may be purchased hereunder.
The Corporation covenants and agrees that all shares of Common
Stock which may be issued upon the exercise of the rights represented by this
Warrant Certificate shall, upon issuance, be duly and validly issued, fully-paid
and non-assessable, and free from all taxes, liens, and charges with respect to
the issue thereof. The Corporation further covenants and agrees that, during the
period within which the rights represented by this Warrant Certificate may be
exercised, the Corporation will at all times have authorized and reserved a
sufficient number of shares of Common Stock to provide for the exercise in full
of the rights represented by this Warrant Certificate.
ARTICLE I
Section 1.1. Adjustment of Warrant Exercise Price and Number of
Warrant Shares.
(A) The Warrant Exercise Price and the number of Warrant Shares
purchasable upon the exercise of the Warrants shall be subject to equitable
adjustment and anti-dilution protection from time to time as follows:
(i) If the number of shares of Common Stock outstanding at any
time after the date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
following the record date fixed for the determination of holders of Common Stock
entitled to receive such stock dividend, subdivision or split-up, the number of
Warrant Shares issuable upon exercise of each Warrant and the Warrant Exercise
Price shall be appropriately adjusted so that the number of shares of Common
Stock issuable on exercise of each Warrant shall be increased, and the Warrant
Exercise price decreased in proportion to such increase of outstanding shares.
(ii) If the number of shares of Common Stock outstanding at any
time after the date hereof is decreased by a combination or reverse split of the
outstanding shares of Common Stock, then, following the record date for such
combination or reverse split, the number of Warrant Shares issuable upon
exercise of Warrants shall be decreased and the Warrant Exercise Price shall be
appropriately increased so that the number of shares of Common Stock issuable on
exercise of each Warrant shall be decreased, and the Warrant Exercise Price
shall be increased in proportion to such decrease in outstanding shares.
(iii) If any consolidation or merger of the Corporation with or
into another entity, or the sale of all or substantially all of its assets to
another entity shall be effected, or in case of any capital reorganization or
reclassification of the capital stock of the Corporation, then, as a condition
of such consolidation, merger or sale, reorganization, or reclassification,
lawful, equitable and adequate provision shall be made whereby each Holder of
Warrants shall thereafter have the right to receive upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
of the Corporation immediately theretofore receivable upon the conversion of
such Warrants, such shares of stock, securities, interests, or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of Common Stock equal to the number of shares of Common Stock immediately
theretofore so receivable by such Holder had such consolidation, merger, sale,
reorganization, or reclassification not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
such Holder to the end that the provisions hereof (including without limitation
provisions for adjustment of the Warrant Exercise Price) shall thereafter be
applicable, as nearly as may be in relation to any shares of stock, securities,
or assets thereafter deliverable upon the exercise of such conversion rights. In
the event any of the foregoing transactions shall result in holders of Common
Stock being entitled to cash with respect to or in exchange for their Common
Stock by reason of an extraordinary dividend, stock redemption or buyback,
liquidation, sale of stock, cash merger, or otherwise, each Holder of Warrants
shall be entitled to receive cash in exchange for Warrants in the net amount to
which such Holder of Warrants would be entitled if the Warrants had been
exercised immediately before such transaction and the Shares received upon
exercise exchanged for cash in such transaction, it being intended that the
Holder will be deemed for tax purposes to have sold such Warrants in exchange
for cash in a long-term capital gain transaction.
(B) In any case in which the provisions of this Article I shall
require that an adjustment shall become effective immediately after a record
date for an event, the Corporation may defer until the occurrence of such event
(i) issuing to the Holder of any Warrant exercised after such record date and
before the occurrence of such event, the additional shares of Common Stock
issuable upon such exercise by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such exercise before
giving effect to such adjustment and (ii) paying to such Holder any amount in
cash in lieu of a fractional share of Common Stock pursuant to Section 1.2;
provided, however, that the Corporation shall deliver to such Holder a due ▇▇▇▇
or other appropriate instrument evidencing such Holder's right to receive such
additional shares and such cash, upon the occurrence of the event requiring such
adjustment.
(C) In the event the Corporation shall propose to take any action
of the types described in this Section 1.1, the Corporation shall give notice to
the Holder, at the address of the Holder shown on the books of the Corporation,
which notice shall specify the record date, if any, with respect to any such
action and the date on which such action is to take place. Such notice also
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Warrant Exercise Price and the number of shares,
securities, interests, or assets which shall be deliverable or purchasable upon
the occurrence of such action or deliverable upon the occurrence of such action
or deliverable upon exercise of the Warrants. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
ten (10) business days prior to the date so fixed, and in case of all other
action, such notice shall be given at least thirty (30) days prior to the taking
of such proposed action..
(D) In the event that at any time as a result of an adjustment
made pursuant to this Section 1.1, the Holder of any Warrants thereafter
surrendered for exercise shall become entitled to receive any shares of the
Corporation or another corporation other than shares of Common Stock, the
provisions of this Article I with respect to the Common Stock shall apply on
like terms to any such other shares.
Section 1.2. Fractional Shares. No certificates for fractional
shares of Common Stock shall be issued upon the exercise of Warrants, but in
lieu thereof the Corporation shall pay, upon exercise in full of the Warrants
represented by this Warrant Certificate, out of funds legally available
therefor, a cash adjustment in respect of such fractional share based upon the
then effective Warrant Exercise Price.
ARTICLE II
Section 2.1. Investment Representations and Registration Rights.
The Holder is acquiring this Warrant pursuant to the Common Stock and Five-Year
Warrant Purchase Agreement (the "Purchase Agreement"), dated as of June 15, 1998
among the Corporation and the Principal Stockholders and Purchasers named
therein. Purchaser has made representations and warranties to the Company in
Section 4 of the Purchase Agreement in connection with the purchase of the
Warrants and the acquisition of Common Stock upon exercise of the Warrants, and
this Warrant Certificate is issued subject to such representations and
warranties which are incorporated herein by reference. In connection with the
Purchase Agreement, Holder and the Company also entered into a related
Registration Rights Agreement dated as of June 15, 1998, and the Warrants and
Warrant Shares are subject to the terms and conditions of that agreement which
is also incorporated herein by reference.
ARTICLE III
Section 3.1. Vesting. The rights of the Holder in this Warrant
Certificate shall vest upon issuance of this Warrant Certificate.
ARTICLE IV
Section 4.1. Tax Payment. The issue of any stock or other
certificate upon the exercise of the Warrants shall be made without charge to
the registered Holder hereof for any transfer or issuance tax in respect of the
issue thereof. The Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of any certificate in a name other than that of the registered Holder
of this Warrant Certificate, and the Corporation shall not be required to issue
or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Corporation the amount of
such tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
Section 4.2. Lost Certificates. If this Warrant Certificate shall
be lost, stolen, mutilated, or destroyed, the Corporation shall on such terms as
to indemnity or otherwise protect the Corporation as the Corporation may in its
discretion reasonably impose issue a new warrant certificate of like
denomination, tenor, and date as the Warrant Certificate so lost, stolen,
mutilated or destroyed.
Section 4.3. Ownership. The Corporation may deem and treat the
registered Holder of this Warrant Certificate as the absolute owner of this
Warrant Certificate for all purposes and shall not be affected by any notice to
the contrary.
Section 4.4. No Stockholder Rights. This Warrant Certificate shall
not entitle the Holder to any rights of a stockholder of the Corporation either
at law or in equity, including, without limitation, the right to vote, to
receive dividends and other distributions, to exercise any preemptive rights, or
to receive any notice of meetings of stockholders or of any other proceedings of
the Corporation.
Section 4.5. Termination. This Warrant Certificate, in all events,
shall be wholly void and have no effect after 5 P.M. (New York time) on the
Warrant Term Date.
Section 4.6. Unenforceable Provisions. In the event that one or
more of the provisions of this Warrant Certificate shall for any reason be held
to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Warrant Certificate, but this Warrant Certificate shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
Section 4.7. Choice of Law; Jurisdiction and Venue. This Warrant
Certificate shall be governed by and construed in accordance with the laws of
the State of New Jersey without reference to principles of conflict of laws or
choice of laws. In the event an action is required to be commenced with respect
to this Warrant Certificate, the Holder hereby consents to the jurisdiction of
the Federal and State Courts of the State of New Jersey and in the event of any
State Court action to the venue of the Courts in Bergen County.
ISSUED this ____ day of ________, 1998
▇▇▇▇▇▇ TECHNOLOGIES, INC.
By: _______________________________
▇▇▇ ▇▇▇▇▇,
Chief Executive Officer
FORM OF EXERCISE
(to be executed by the registered Holder hereof)
The undersigned hereby exercises the right to purchase
___________________ shares of common stock, 20(cent) par value ("Common Stock"),
of ▇▇▇▇▇▇ TECHNOLOGIES, INC., a Delaware corporation, evidenced by the attached
Warrant Certificate and herewith makes payment of the purchase price in full.
Kindly issue certificates for shares of Common Stock (and for the unexercised
balance of the Warrants evidenced by the attached Warrant Certificate, if any)
in accordance with the instructions given below.
Dated: ______________________
____________________________________
(INVESTOR NAME)
Instructions for registration of stock
_______________________________________________
Name (Please Print)
Social Security or other identifying
Number: _________________________________
Address:
__________________________________________
__________________________________________
City/State and Zip Code
INSTRUCTIONS FOR REGISTRATION OF CERTIFICATE REPRESENTING
THE UNEXERCISED BALANCE OF WARRANTS (IF ANY)
__________________________________________
Name (Please Print)
Social Security or other identifying
Number: _________________________________
Address:
__________________________________________
__________________________________________
City/State and Zip Code
EXHIBIT C
[OMITTED]
EXHIBIT ▇
▇▇▇▇▇▇ TECHNOLOGIES, INC.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of June 15, 1998 by and among ▇▇▇▇▇▇ Technologies, Inc., a
Delaware corporation (the "Company"), and the parties listed on the Schedule of
Investors separately delivered to the Investors (the "Schedule of Investors")
(each hereinafter individually referred to as an "Investor" and collectively
referred to as the "Investors").
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter contained, the parties hereto do hereby agree as follows:
1. DEFINITIONS.
For purposes of this Agreement:
(a) Act. The term "Act" means the Securities Act of 1933, as
heretofore or hereafter amended.
(b) Commission. The term "Commission" means the Securities and
Exchange Commission.
(c) Common Stock. The term "Common Stock" means shares of the
Common Stock, par value $0.20 per share, of the Company.
(d) Exchange Act. The term "Exchange Act" means the Securities
Exchange Act of 1934, as heretofore or hereafter amended.
(e) Form S-3. The term "Form S-3" means such form under the Act as
is in effect on the date hereof or any successor registration form under the Act
subsequently adopted by the Commission which permits inclusion or incorporation
of substantial information by reference to other documents filed by the Company
with the Commission.
(f) Holder. The term "Holders" means holders of Registrable
Securities that have registration rights pursuant to this Agreement.
(g) Prospectus: The term "Prospectus" shall mean the prospectus
included in any Shelf Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Act), as amended or supplemented by any prospectus
supplement (including, without limitation, any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Shelf Registration Statement), and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(h) Purchase Agreement. The term "Purchase Agreement" means the
Common Stock and Five-Year Warrant Purchase Agreement dated as of June 15, 1998
by and among the Company, the Investors and ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(i) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement.
(j) Registrable Securities. The term "Registrable Securities"
means: (1) all of the shares of Common Stock purchased by the Investors from the
Company pursuant to the Purchase Agreement, (2) all of the Warrant Shares and
(3) any other shares of Common Stock owned, at the time of filing of the Form S3
by the Company, by an Investor that reasonably may be deemed to be an
"affiliate" (as defined in Rule 144) of the Company, and (4) any shares of
Common Stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, any of the shares of Common
Stock that are included in clauses (1), (2) and (3) above; provided, however,
that the term "Registrable Securities" shall exclude in all events (and such
securities shall not constitute "Registrable Securities") (i) any Registrable
Securities sold or transferred by a person in a transaction in which the
registration rights granted under this Agreement are not assigned in accordance
with the provisions of this Agreement, (ii) any Registrable Securities sold in a
public offering pursuant to a registration statement filed with the Commission
or sold pursuant to Rule 144 promulgated under the Act ("Rule 144") or (iii) as
to any Holder, the Registrable Securities held by such Holder if all of such
Registrable Securities can be publicly sold without volume restriction within a
three-month period pursuant to Rule 144.
(k) Rules and Regulations. The term "Rules and Regulations" means
the rules and regulations of the Commission under the Act.
(l) Shelf Registration Statement. See Section 2(a).
(m) Warrants. The term "Warrants" means the Five-Year Warrants
issued to the Investors pursuant to the Purchase Agreement and any securities
issued with respect to, in exchange for or upon transfer or replacement of such
Five-Year Warrants.
(n) Warrant Shares. The term "Warrant Shares" means any shares of
Common Stock issued upon exercise of the Warrants.
2. FORM S-3 SHELF REGISTRATION.
(a) Registration. The Company shall prepare and file with the
Commission and use all reasonable efforts to have declared effective no later
than the earlier of (i) the date the Company is required to file its Form 10K
Annual Report with the Commission pursuant to the Exchange Act for the fiscal
year ended August 31, 1999 and (ii) 60 days following delivery to the Company of
written request for registration of the Registrable Securities by Holders owning
at least 25% of the shares of Common Stock outstanding (assuming, for such
purposes that all Warrants have been exercised (whether or not the Warrants are
then exercisable) and the Holders of the Warrants are the owners of the Warrant
Shares issuable upon exercise of their Warrants), a registration statement on
Form S-3 (or, if the Company is not then eligible to use Form S-3, then another
appropriate form) providing for the resale by the Holders of all of the
Registrable Securities on a delayed or continuous basis (the "Shelf Registration
Statement"). The Shelf Registration Statement shall permit disposition of the
Registrable Securities in any lawful manner requested by any Holder and may
include securities other than those held by Holders. The Company shall use its
best efforts to keep the Shelf Registration Statement continuously effective,
pursuant to the Act and the Rules and Regulations promulgated thereunder, until
(i) the date when such Registrable Securities cease to meet the definition of
Registrable Securities pursuant to Section 1, or (ii) the Company's obligations
hereunder terminate; provided, however:
(i) that the Holders will sell the Registrable Securities
pursuant to such registration only during a "Permitted Window" (as defined
below);
(ii) if the Company furnishes to the Holders a certificate
signed by the President or Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for sales to be made
from such Shelf Registration Statement at such time (or, in the case a "Notice
of Resale" (as defined below) has been given, that would be seriously
detrimental to the Company and its shareholders for the Permitted Window to
commence at such time) due to (A) the existence of a material development or
potential material development involving the Company which the Company would be
obligated to disclose in the Prospectus contained in the Shelf Registration
Statement, which disclosure would in the good faith judgment of the Board of
Directors of the Company be premature or otherwise inadvisable at such time or
(B) concurrent public filings with the Commission of other registration
statements, then the Company will have the right to defer the filing (the
"Deferral Right") of the Shelf Registration Statement (or the commencement of
the Permitted Window, as the case may be) for a period of not more than 60 days
after the date it would otherwise be required to file the Shelf Registration
Statement pursuant to this Section 2(a) (or after receipt of the Notice of
Resale, as the case may be); provided, however, that the Company will not
utilize the Deferral Right more than once in any twelve month period; and
provided further, however, that the Company may defer the filing of the Shelf
Registration Statement (or the commencement of the Permitted Window as the case
may be) for up to 180 days if so requested by an underwriter in connection with
an underwritten offering of the Company's securities so long as any selling
stockholders in such underwritten offering are subject to a lock-up agreement of
the same duration (other than with respect to the Company's securities to be
sold by such selling stockholders in such underwritten offering); and
(iii) that the Company will not be required to effect any
such registration, qualification or compliance under applicable state blue sky
laws in any particular jurisdiction in which the Company would thereby be
required to qualify to do business or to execute a general consent to service of
process.
In the event that the Shelf Registration Statement shall cease to
be effective, the Company shall promptly prepare and file a new registration
statement covering the Registrable Securities and shall use its best efforts to
have such registration statement declared effective as soon as possible. Any
such registration statement shall be considered a "Shelf Registration Statement"
hereunder.
(b) Permitted Window.For the purposes of this Agreement, a
"Permitted Window" with respect to a Holder is a period of 30 consecutive
calendar days commencing upon delivery to the Holder of the Company's written
notification to the Holder in response to a Notice of Resale that the Prospectus
contained in the Shelf Registration Statement is available for resale. In order
to cause a Permitted Window to commence, a Holder must first give written notice
to the Company of its present intention to sell part or all of the Registrable
Securities pursuant to such registration (a "Notice of Resale"). Upon receipt of
such Notice of Resale, the Company will give written notice to the Holders as
soon as practicable, but in any event not more than three business days after
such receipt, that (A) the Permitted Window will commence on the date such
notice is received by the Holder, (B) it is necessary for the Company to
supplement the Prospectus or make an appropriate filing under the Exchange Act
so as to cause the Prospectus to become current (unless a certificate of the
President or Chief Executive Officer is delivered as provided in 2(a)(ii)
above), or (C) the Company is required under the Act and the Rules and
Regulations thereunder to amend the Shelf Registration Statement in order to
cause the Prospectus to be current (unless a certificate of the President or
Chief Executive Officer is delivered as provided in 2(a)(ii) above). If the
Company determines that a supplement to the Prospectus, the filing of a report
pursuant to the Exchange Act or an amendment to the Shelf Registration Statement
required under the Act, as provided above, is necessary, it will take such
actions as soon as reasonably practicable (subject to paragraph (c) below), and
the Company will notify the Holder of the filing of such supplement, report or
amendment, and, in the case of an amendment, the effectiveness thereof, and the
Permitted Window will then commence.
(c) Closing of Permitted Window. During a Permitted Window and in
the event (i) of the happening of any event of the kind described in Section
3(c) hereof or (ii) that, in the judgment of the Company's Board of Directors,
it is advisable to suspend use of the Prospectus for a discrete period of time
due to undisclosed pending corporate developments or pending public filings with
the Commission (which need not be described in detail), the Company shall
deliver a certificate in writing to the Holder to the effect of the foregoing
and, upon receipt of such certificate, the Permitted Window shall terminate. The
Permitted Window shall resume upon the Holder's receipt of copies of the
supplemented or amended Prospectus, or at such time as the Holder is advised in
writing by the Company that the Prospectus may be used, and at such time as the
Holder has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus and which
are required to be delivered as part of the Prospectus. In any event, the
Permitted Window shall resume no later than 60 days after it has been terminated
pursuant to this subsection. If the Company has previously terminated a
Permitted Window pursuant to this subsection within 90 days of the date that it
delivers another notice pursuant this subsection terminating another Permitted
Window, then the time period set forth in the preceding sentence shall be
shortened so that the Permitted Window shall resume no later than 10 days after
it has been terminated pursuant to such second notice.
(d) Expenses. The registration fees and expenses incurred by the
Company in connection with the Shelf Registration Statement and actions taken by
the Company in connection with each Permitted Window shall be borne by the
Company. The Holders shall be responsible for any fees and expenses of its
counsel or other advisers.
3. OBLIGATIONS OF THE COMPANY.
Whenever required to effect the registration of any Registrable
Securities under this Agreement, the Company shall, as expeditiously as
reasonably possible:
(a) Furnish to each Holder such number of copies of a Prospectus,
including a preliminary Prospectus, in conformity with the requirements of the
Act, and such other documents as it may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by it that are
included in such registration.
(b) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by any
Holder, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(c) Notify each Holder promptly (i) of any request by the
Commission or any other federal or state governmental authority during the
period of effectiveness of a registration statement for amendments or
supplements to such registration statement or related prospectus or for
additional information, (ii) of the issuance by the Commission 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 and (iii) of the receipt by the Company 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.
(d) Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at the
earliest possible time.
4. FURNISH INFORMATION.
It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2 that the Holder shall furnish
to the Company such information regarding it, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to timely effect the registration of its Registrable Securities.
5. INDEMNIFICATION.
In the event any Registrable Securities are included in a
registration statement under this Agreement:
(a) By the Company. To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, the officers, directors, partners,
members and managers of each Holder, each entity that may be deemed to be an
"underwriter" within the meaning of the Act in connection with the sale of any
Registrable Securities pursuant to the Shelf Registration Statement and each
person, if any, who controls any Holder or any such underwriter within the
meaning of the Act or the Exchange Act (such persons and entities referred to as
"Holder Indemnified Parties"), against any losses, expenses, damages or
liabilities to which they may become subject under the Act, the Exchange Act or
other federal or state law (a "Loss"), insofar as such Losses (or actions in
respect thereof) arise out of any claim, action or proceeding brought by a third
party arising out of or based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement filed pursuant to this
Agreement;
(ii) the omission or alleged omission to state in a
registration statement filed pursuant to this Agreement of a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) any violation or alleged violation by the Company of
the Act, the Exchange Act, any federal or state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement;
and the Company will reimburse each Holder Indemnified Party for any legal or
other expenses reasonably incurred by it, as incurred, in connection with
investigating or defending any such Violation; provided, however, that the
indemnity agreement contained in this subsection shall not apply to amounts paid
in settlement of any such Loss, if such settlement is effected without the
consent of the Company, nor shall the Company be liable in any such case for any
such Loss to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by the Holder Indemnified
Party; and provided further, that the Company will not be liable for the legal
fees and expenses of more than one counsel to the Holder Indemnified Parties.
(b) By the Holders. To the extent permitted by law, each Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, and each person, if any,
who controls the Company within the meaning of the Act (such persons and
entities referred to as "Company Indemnified Parties") against any Losses to
which such Company Indemnified Parties may become subject under the Act, the
Exchange Act or other federal or state law, insofar as such Losses (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by the Holder
expressly for use in connection with such registration; and the Holder will
reimburse any legal or other expenses reasonably incurred by such Company
Indemnified Parties in connection with investigating or defending any such
Violation; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts paid in settlement of any such Loss if
such settlement is effected without the consent of the Holder; provided further,
that the Holder shall not be liable for the legal fees and expenses of more than
one counsel to the Company Indemnified Parties; and provided further, that the
total amounts payable in indemnity by the Holder under this subsection in
respect of any Violation shall not exceed the net proceeds received by the
Holder in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section, deliver to the indemnifying party a written notice of the
commencement of such an action and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel elected by the indemnifying party and reasonably acceptable
for the indemnified party; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if the indemnified party has been advised in writing
by counsel that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of liability to the indemnified
party under this Section to the extent such delay caused actual prejudice to the
indemnified party, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and the Holder are subject to the condition that,
insofar as they relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the Commission at
the time the registration statement in question becomes effective or in the
amended prospectus filed with the Commission pursuant to Rule 424(b) of the
Commission (the "Final Prospectus"), such indemnity agreements shall not inure
to the benefit of any person if a copy of the Final Prospectus was furnished in
a timely manner to the indemnified party and was not furnished by or on behalf
of the indemnified party to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Act.
(e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Act in any case in which either (i) a
Holder Indemnified Party makes a claim for indemnification pursuant to this
Section but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section provides for
indemnification in such case, or (ii) contribution under the Act may be required
on the part of the Holder Indemnified Party in circumstances for which
indemnification is provided under this Section then, and in each such case, the
Company and the Holder Indemnified Parties will contribute to the aggregate
Losses to which they may be subject (after contribution from others) in
proportion to their relative fault as determined by a court of competent
jurisdiction; provided however, that in no event, except in instances of fraud
by a Holder in which there is no limitation, (i) shall a Holder be responsible
for more than the portion represented by the percentage that the public offering
price of its Registrable Securities offered by and sold under the registration
statement bears to the public offering price of all securities offered by and
sold under such registration statement and (ii) shall a Holder be required to
contribute any amount in excess of the public offering price of all such
Registrable Securities offered and sold by the Holder pursuant to such
registration statement; and in any event, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and the Holders under
this Section shall survive the completion of any offering of Registrable
Securities in a registration statement or otherwise.
6. RULE 144 REPORTING.
With a view to making available the benefits of certain Rules and
Regulations of the Commission which may at any time permit the sale of the
Registrable Securities to the public without registration, for so long as any
Holder owns any Registrable Securities, the Company agrees to:
(a) Make and keep adequate, current public information available,
as those terms are understood and defined in Rule 144 under the Act, at all
times;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Exchange Act; and
(c) So long as the Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144, a copy of
the most recent annual or quarterly report of the Company, and such other
information, reports and documents of the Company as the Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such securities without registration.
7. TERMINATION OF THE COMPANY'S OBLIGATIONS.
The Company shall have no obligations to register, or maintain, a
registration statement governing Registrable Securities, (i) if all Registrable
Securities have been registered and sold pursuant to registration statements
effected pursuant to this Agreement, or (ii) with respect to any particular
Holder, at such time as all Registrable Securities held by such Holder may be
sold within a three month period under Rule 144, as it may be amended from time
to time, including but not limited to amendments that reduce that period of time
that securities must be held before such securities may be sold pursuant to such
Rule.
8. PIGGYBACK REGISTRATIONS.
(a) The Company shall use its best efforts to notify all Holders
of Registrable Securities in writing at least twenty (20) days before filing any
registration statement under the Act for purposes of effecting a public offering
by the Company of securities of the Company (excluding registration statements
relating to any employee benefit plan or a corporate reorganization) and will
afford each such Holder an opportunity to include in such registration statement
all or any part of the Registrable Securities then held by such Holder. Each
Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by such Holder shall, within ten (10) days after
receipt of the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any such registration statement filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein. The Holders' rights to include any Registrable
Securities in any offering under this Section are subject in all events to the
ability of the managing underwriter for such offering (or, if there is no
underwriter and the offering includes securities to be sold for the account of
the Company, then the Company) to exclude some or all of the Registrable
Securities requested to be registered on the basis of a good faith determination
that inclusion of such securities might adversely affect the success of the
offering or otherwise adversely affect the Company. Any such exclusion shall be
pro rata among all Holders who have requested to sell Registrable Securities in
such registration.
(b) Underwriting. If a registration statement under which the
Company gives notice under this Section is for an underwritten offering, then
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriters selected for such underwriting and
shall furnish such information and documents as the Company or the managing
underwriter or underwriters may reasonably request. Notwithstanding any other
provision of this Agreement, if the managing underwriter determine(s) in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude Registrable
Securities from the registration and the underwriting, pro rata among all
Holders who have requested to sell Registrable Securities in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.
(c) Expenses. The Holders shall be responsible for their pro rata
share of registration fees and underwriters' and brokers' discounts and
commissions relating to any Registrable Securities included in such
registration. Other registration expenses (such as legal and accounting fees of
counsel to the Company, printing fees, road show expenses, and the like) shall
be shall be borne by the Company.
(d) Number of Piggyback Registrations. The piggyback registration
rights granted to the Holders under this Section shall apply to the first three
registrations filed by the Company after the date of this Agreement.
9. ASSIGNMENT.
Notwithstanding anything herein to the contrary, the registration
rights of the Holders under Section 7 hereof may be assigned only to a party who
acquires from a Holder at least 33% of the shares of Registrable Securities that
constituted the original number of Registrable Securities acquired by the
original Holder of the Registrable Securities or, if less, at least 25,000
shares of Registrable Securities (as such number may be adjusted to reflect
subdivisions, combinations and stock dividends of the Company's Common Stock),
(such party is referred to as a "Assignee"); provided, however, that (w) no
party may be assigned any of the foregoing rights until the Company is given
written notice by the assigning party at the time of such assignment stating the
name and address of the Assignee and identifying the securities of the Company
as to which the rights in question are being assigned; (x) that any such
Assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement; and (y) no such assignment or assignments shall
increase the obligations of the Company hereunder. As long as an assigning
Holder continues to hold Registrable Securities, no such assignment shall
terminate the registration rights hereunder of the Assigning Holder.
10. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties to this Agreement and the respective
successors and assigns of the parties.
(b) Governing Law. This Agreement shall be governed by and
construed under the internal laws of the State of New Jersey without reference
to principles of conflict of laws or choice of laws.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
(e) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, by
telecopier or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified in the
case of the Company, at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A., ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or in the case of Investor, at the record address for such
Investor as reflected on the books of the Company, or at such other address as
any party may designate by giving ten (10) days advance written notice to the
other party. Notices shall be deemed delivered upon delivery if personally
delivered, one business day after transmission with confirmation of receipt if
sent by telecopier, or three days after deposit in the mails if mailed.
(f) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders a
majority of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section shall be binding upon each Holder of any
Registrable Securities (even if such Holder did not vote or consent with respect
to, or voted against or withheld its consent with respect to, such amendment or
waiver), each future Holder of such securities, and the Company. The Investors
acknowledge that by virtue of this provision, Holders of a majority of the
Registrable Securities may bind other Holders to amendment or waivers that such
other Holders may have voted to oppose or with respect to which they withheld
their consent.
(g) Severability. If one or more provisions of this Agreement are
held to be invalid, illegal or unenforceable under applicable law, such
provision(s) shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.
(h) Entire Agreement. This Agreement, together with any exhibits
or schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter hereof.
(i) Further Assurances. From and after the date of this Agreement,
upon the request of a Holder or the Company, the Company and the Holders shall
execute and deliver such instruments, documents or other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
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COUNTERPART SIGNATURE PAGE
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
THE COMPANY: INVESTOR:
▇▇▇▇▇▇ Technologies, Inc.,
a Delaware corporation
By: By:
Title: Title: