Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of July 18, 1997, between
COMPOSITECH LTD., a Delaware corporation with principal executive offices
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), and
the undersigned ("Buyer").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from the Company, and the Company
desires to issue and sell to the Buyer, upon the terms and subject to the
conditions of this Agreement, the Company's 5% Convertible Debentures due May
31, 2000 (the "Debentures") which, upon the terms and subject to the conditions
of the Debentures, will be convertible into shares of the Company's common
stock, $.01 par value (the "Common Stock", and together with the Debentures, the
"Securities");
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. PURCHASE AND SALE OF DEBENTURES
a. Transaction. Buyer hereby agrees to purchase from the Company, and the
Company has offered and hereby agrees to issue and sell to the Buyer in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "Securities Act"), $960,000
aggregate principal amount of the Debentures having the terms and conditions and
being in the form attached hereto as Annex I.
b. Purchase Price; Form of Payment. The purchase price for the Debentures
to be purchased by Buyer hereunder shall be U.S. $960,000 (the "Purchase
Price"). Buyer shall pay the Purchase Price by wire transfer of immediately
available funds to the escrow agent (the "Escrow Agent") identified in those
certain Joint Escrow Instructions of even date herewith, a copy of which is
attached hereto as Annex II (the "Joint Escrow Instructions"). Simultaneously
against receipt by the Escrow Agent of the Purchase Price, the Company shall
deliver one or more duly authorized, issued and executed certificates (I/N/O
Buyer or, if the Company otherwise has been notified, I/N/O Buyer's nominee)
evidencing the Debentures, to the Escrow Agent or its designated depository. By
executing and delivering this Agreement, Buyer and the Company each hereby
agrees to observe the terms and conditions of the Joint Escrow Instructions, all
of which are incorporated herein by reference as if fully set forth herein.
c. Method of Payment. Payment into escrow of the Purchase Price shall be
made by wire transfer of immediately available funds to:
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______________________
______________________
______________________
______________________
______________________
For the Account of:
______________________
______________________
Simultaneously with the execution of this Agreement, the Buyer shall deposit
with the Escrow Agent the Purchase Price and the Company shall deposit with the
Escrow Agent the Debentures.
2. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
Buyer represents and warrants to and covenants and agrees with the Company
as follows:
a. Buyer is purchasing the Debentures (and the shares of Common Stock
issuable upon conversion thereof) for its own account, for investment
purposes only and not with a view towards or in connection with the public
sale or distribution thereof in violation of the Securities Act.
b. Buyer is (i) an "accredited investor" within the meaning of Rule
501 of Regulation D under the Securities Act, (ii) experienced in making
investments of the kind contemplated by this Agreement, (iii) capable, by
reason of its business and financial experience, of evaluating the relative
merits and risks of an investment in the Securities, and (iv) able to
afford the loss of its investment in the Securities.
c. Buyer understands that the Debentures (and the Common Stock
issuable upon conversion thereof) are being offered and sold by the Company
in reliance on an exemption from the registration requirements of the
Securities Act and equivalent state securities and "blue sky" laws, and
that the Company is relying upon the accuracy of, and Buyer's compliance
with, Buyer's representations, warranties and covenants set forth in this
Agreement to determine the availability of such exemption and the
eligibility of Buyer to purchase the Debentures;
d. Buyer has been furnished with or provided access to all materials
relating to the business, financial position and results of operations of
the Company, and all other materials requested by Buyer to enable it to
make an informed investment decision with respect to the Debentures.
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e. Buyer acknowledges that it has been furnished with copies of the
Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996 and all other reports and documents heretofore filed by the
Company with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") since December 31, 1996 (collectively the
"Commission Filings").
f. Buyer acknowledges that in making its decision to purchase the
Debentures it has (i) relied upon independent investigations made by it and
its professional advisors, (ii) visited the Company's principal executive
offices and been given access and the opportunity to examine all material
agreements, books and records of the Company and all documents relating to
the Company's private placement of the Debentures, and (iii) been given an
opportunity to ask questions of and to receive answers from the Company's
executive officers, directors and management personnel concerning the terms
and conditions of the private placement of the Debentures by the Company.
g. Buyer understands that the Securities have not been approved or
disapproved by the Commission or any state securities commission and that
the foregoing authorities have not reviewed any documents or instruments in
connection with the offer and sale to it of the Securities and have not
confirmed or determined the adequacy or accuracy of any such documents or
instruments.
h. This Agreement has been duly and validly authorized, executed and
delivered by Buyer and is a valid and binding agreement of Buyer
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally.
i. Neither Buyer nor its affiliates nor any person acting on its or
their behalf has the intention of entering, or will enter into, prior to
the closing, any put option, short position or other similar instrument or
position with respect to the Common Stock and neither Buyer nor any of its
affiliates nor any person acting on its or their behalf will use at any
time shares of Common Stock acquired pursuant to this Agreement or the
Debentures to settle any put option, short position or other similar
instrument or position that may have been entered into prior to the
execution of this Agreement.
3. COMPANY'S REPRESENTATIONS
The Company represents and warrants to Buyer that:
a. Capitalization. (i) The authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock, of which 6,138,939 shares
are outstanding on the date hereof; 4,000,000 shares of undesignated
preferred stock, of which none are outstanding on the date hereof; 714,161
shares of Series A Convertible Preferred Stock, par value $3.00 per share,
of which 644,161 shares are outstanding on the date hereof; all of the
issued and outstanding shares of Common Stock and preferred stock have been
duly authorized and validly issued and are fully paid and non-assessable.
The Common Stock
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issuable upon conversion of the Debentures has been duly and validly
authorized and reserved for issuance by the Company, and when issued by the
Company upon conversion of, or in lieu of accrued interest on, the
Debentures, will be duly and validly issued, fully paid and non-assessable
and will not subject the holder thereof to personal liability by reason of
being such holder. There are no preemptive, subscription, "call" or other
similar rights to acquire the Common Stock (including Common Stock issuable
upon conversion of the Debentures) that have been issued or granted to any
person, except as disclosed in the Commission Filings or otherwise
previously disclosed in writing to Buyer.
(ii) Except as disclosed in the Commission Filings, the Company does
not own or control, directly or indirectly, any interest in any other
corporation, partnership, limited liability company, unincorporated
business organization, association, trust or other business entity. The
Company has no subsidiaries.
b. Organization; Reporting Company Status.
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is duly
qualified as a foreign corporation in all jurisdictions in which the
failure to so qualify would have a material adverse effect on the business,
properties, prospects, condition (financial or otherwise) or results of
operations of the Company or on the consummation of any of the transactions
contemplated by this Agreement (a "Material Adverse Effect").
(ii) The Company has registered the Common Stock pursuant to Section
12 of the Exchange Act and has timely filed with the Commission all reports
and information required to be filed by it pursuant to all reporting
obligations under Section 13(a) or 15(d), as applicable, of the Exchange
Act for the 9-month period immediately preceding the date hereof. The
Common Stock is listed and traded on the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") Small Capitalization Market
System and the Company has not received any notice regarding, and to its
knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing.
c. Authorized Shares. The Company has duly and validly authorized and
reserved for issuance shares of Common Stock sufficient in number for the
conversion, in full, of the Debentures (assuming for purposes of this
Section 3.c. a conversion price of $1.50).
d. Terms of Debentures. The Debentures when issued to Buyer pursuant
to this Agreement shall be in the form of Annex I attached hereto.
e. Authority; Validity and Enforceability. The Company has the
requisite corporate power and authority to enter into this Agreement, the
Registration Rights Agreement of even date herewith between the Company and
Buyer, a copy of which is annexed hereto as Annex III (the "Registration
Rights Agreement") and the Joint Escrow Instructions and to perform all of
its obligations hereunder and thereunder (including the issuance, sale and
delivery to Buyer of the Debentures and the Common Stock issuable upon
conversion thereof). The execution, delivery and performance by the Company
of this
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Agreement and the Registration Rights Agreement, and the consummation by
the Company of the transactions contemplated hereby and thereby, has been
duly authorized by all necessary corporate action on the part of the
Company. Each of this Agreement and the Registration Rights Agreement has
been duly and validly executed and delivered by the Company and constitutes
a valid and binding agreement of the Company enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally. The Debentures have
been duly and validly authorized for issuance by the Company and, when
executed and delivered by the Company, will be valid and binding
obligations of the Company enforceable against it in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally.
f. Non-contravention. The execution and delivery by the Company of
this Agreement and the Registration Rights Agreement, the issuance of the
Debentures (and the Common Stock issuable upon conversion thereof), and the
consummation by the Company of the other transactions contemplated hereby
and thereby, do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default (or
an event which, with notice, lapse of time or both, would constitute a
default) under, the articles of incorporation or by-laws of the Company, or
any indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which its properties or
assets are bound, or any law, rule, regulation, decree, judgment or order
of any court or public or governmental authority having jurisdiction over
the Company or any of its properties or assets, except such conflict,
breach or default which would not have a Material Adverse Effect.
g. Approvals. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the Company
for the issuance and sale of the Debentures (and the Common Stock issuable
upon conversion thereof) to Buyer as contemplated by this Agreement, except
such authorizations, approvals and consents that have been obtained by the
Company prior to the date hereof.
h. Commission Filings. None of the Commission Filings contained at the
time they were filed any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
were made, not misleading.
i. Absence of Certain Changes. Since the Balance Sheet Date (as
defined in Section 3.m.), there has not occurred any change, event or
development in the business, financial condition, prospects or results of
operations of the Company, and there has not existed any condition having
or reasonably likely to have, a Material Adverse Effect.
j. Full Disclosure. There is no fact known to the Company (other than
general economic or industry conditions known to the public generally) that
has not been fully disclosed in writing to the Buyer that (i) reasonably
could be expected to have a Material Adverse Effect or (ii) reasonably
could be expected to materially and adversely affect the
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ability of the Company to perform its obligations pursuant to this
Agreement or the Registration Rights Agreement.
k. Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the Company's knowledge,
threatened, by or before any court or public or governmental authority
which, if determined adversely to the Company or any of its subsidiaries,
would have a Material Adverse Effect.
l. Absence of Events of Default. No "Event of Default" (as defined in
any agreement or instrument to which the Company or any of its subsidiaries
is a party) and no event which, with notice, lapse of time or both, would
constitute an Event of Default (as so defined), has occurred and is
continuing, which could have a Material Adverse Effect.
m. Financial Statements; No Undisclosed Liabilities. Seller has
delivered to Buyer true and complete copies of its audited balance sheet as
at December 31, 1996 and the related audited statements of operations and
cash flows for the fiscal years ended December 31, 1996 and December 31,
1995 including the related notes and schedules thereto (collectively, the
"Financial Statements"), and all management letters, if any, from the
Company's independent auditors relating to the dates and periods covered by
the Financial Statements. Each of the Financial Statements is complete and
correct in all material respects, has been prepared in accordance with
United States General Accepted Accounting Principles ("GAAP") (subject, in
the case of the interim Financial Statements, to normal year end
adjustments and the absence of footnotes) and in conformity with the
practices consistently applied by the Company without modification of the
accounting principles used in the preparation thereof, and fairly presents
the financial position, results of operations and cash flows of the Company
as at the dates and for the periods indicated. For purposes hereof, the
audited balance sheet of the Company as at December 31, 1996 is hereinafter
referred to as the "Balance Sheet" and December 31, 1996 is hereinafter
referred to as the "Balance Sheet Date". The Company does not have any
indebtedness, obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise, and whether due or to become due) that
would have been required to be reflected in, reserved against or otherwise
described in the Balance Sheet or in the notes thereto in accordance with
GAAP, which was not fully reflected in, reserved against or otherwise
described in the Balance Sheet or the notes thereto or was not incurred in
the ordinary course of business consistent with the Company's past
practices since the Balance Sheet Date.
n. Compliance with Laws; Permits. The Company is in compliance with
all laws, rules, regulations, codes, ordinances and statutes (collectively
"Laws") applicable to it or to the conduct of its business, except for such
non-compliance which would not have a Material Adverse Effect. The Company
possesses all permits, approvals, authorizations, licenses, certificates
and consents from all public and governmental authorities which are
necessary to conduct its business, except for those the absence of which
would not have a Material Adverse Effect.
o. Related Party Transactions. Except as set forth in the Commission
Filings, neither the Company nor any of its officers, directors or
"Affiliates" (as such term is
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defined in Rule 12b-2 under the Exchange Act) has borrowed any moneys from
or has outstanding any indebtedness or other similar obligations to the
Company. Except as set forth in the Commission Filings, neither the Company
nor any of its officers, directors or Affiliates (i) owns any direct or
indirect interest constituting more than a one percent equity (or similar
profit participation) interest in, or controls or is a director, officer,
partner, member or employee of, or consultant to or lender to or borrower
from, or has the right to participate in the profits of, any person or
entity which is (x) a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Company or any of its subsidiaries, (y) engaged
in a business related to the business of the Company or any of its
subsidiaries, or (z) a participant in any transaction to which the Company
is a party or (ii) is a party to any contract, agreement, commitment or
other arrangement with the Company.
p. Insurance. The Company maintains property and casualty, general
liability, workers' compensation, environmental hazard, personal injury and
other similar types of insurance with financially sound and reputable
insurers that is adequate, consistent with industry standards and the
Company's historical claims experience. The Company has not received notice
from, and has no knowledge of any threat by, any insurer (that has issued
any insurance policy to the Company) that such insurer intends to deny
coverage under or cancel, discontinue or not renew any insurance policy
presently in force.
q. Securities Law Matters. Based, in part, upon the representations
and warranties of Buyer set forth in Section 2 hereof, the offer and sale
by the Company of the Debentures (and the Common Stock issuable upon
conversion thereof) is exempt from (i) the registration and prospectus
delivery requirements of the Securities Act and the rules and regulations
of the Commission thereunder and (ii) the registration and/or qualification
provisions of all applicable state securities and "blue sky" laws. Other
than pursuant to an effective registration statement under the Securities
Act, the Company has not issued, offered or sold the Debentures or any
shares of Common Stock (including for this purpose any securities of the
same or a similar class as the Debentures or Common Stock, or any
securities convertible into or exchangeable or exercisable for the
Debentures or Common Stock or any such other securities) within the
six-month period next preceding the date hereof, except as disclosed in the
Commission Filings or otherwise previously disclosed in writing to Buyer,
and the Company shall not directly or indirectly take, and shall not permit
any of its directors, officers or Affiliates directly or indirectly to
take, any action (including, without limitation, any offering or sale to
any person or entity of the Debentures or shares of Common Stock), so as to
make unavailable the exemption from Securities Act registration being
relied upon by the Company for the offer and sale to Buyer of the
Debentures (and the Common Stock issuable upon conversion thereof) as
contemplated by this Agreement. No form of general solicitation or
advertising has been used or authorized by the Company or any of its
officers, directors or Affiliates in connection with the offer or sale of
the Debentures (and the Common Stock issuable upon conversion thereof) as
contemplated by this Agreement or any other agreement to which the Company
is a party.
r. Environmental Matters. (i) The operations of the Company are in
material compliance with all applicable Environmental Laws and all permits
issued pursuant to Environmental Laws or otherwise;
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(ii) to its knowledge, the Company has obtained or applied for
all material permits required under all applicable Environmental Laws
necessary to operate its business;
(iii) the Company is not the subject of any outstanding written
order of or agreement with any governmental authority or person
respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any
Release or threatened Release of Hazardous Materials;
(iv) the Company has not received, since December 31, 1996, any
written communication alleging that it may be in violation of any
Environmental Law or any permit issued pursuant to any Environmental
Law, or may have any liability under any Environmental Law;
(v) the Company does not have any current contingent liability in
connection with any Release of any Hazardous Materials into the indoor
or outdoor environment (whether on-site or off-site);
(vi) except as set forth in the Commission Filings, to the
Company's knowledge, there are no investigations of the business,
operations, or currently or previously owned, operated or leased
property of the Company pending or threatened which could lead to the
imposition of any liability pursuant to any Environmental Law;
(vii) to the Company's knowledge, there is not located at any of
the properties of the Company any (A) underground storage tanks, (B)
asbestos-containing material or (C) equipment containing
polychlorinated biphenyls; and,
(viii) the Company has provided to Buyer all environmentally
related audits, studies, reports, analyses, and results of
investigations that have been performed with respect to the currently
or previously owned, leased or operated properties of the Company.
For purposes of this Section 3.r.:
"Environmental Law" means any foreign, federal, state or local
statute, regulation, ordinance, or rule of common law as now or hereafter
in effect in any way relating to the protection of human health and safety
or the environment including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss. 9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. ss.
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss.
6901 et seq.), the Clean Water Act (33 U.S.C. ss. 1251 et seq.), the Clean
Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the Occupational Safety and
Health Act (29 U.S.C. ss. 651 et seq.), and the regulations promulgated
pursuant thereto.
"Hazardous Material" means any substance, material or waste which is
regulated by the United States, Canada or any of its provinces, or any
state or local governmental authority including, without limitation,
petroleum and its by-products, asbestos, and any material or substance
which is defined as a "hazardous waste," "hazardous substance," "hazardous
material," "restricted hazardous waste," "industrial waste," "solid waste,"
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"contaminant," "pollutant," "toxic waste" or toxic substance" under any
provision of any Environmental Law;
"Release" means any release, spill, filtration, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching
into the indoor or outdoor environment, or into or out of any property;
"Remedial Action" means all actions to (x) clean up, remove, treat or
in any other way address any Hazardous Material; (y) prevent the Release of
any Hazardous Material so it does not endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; or (z)
perform pre-remedial studies and investigations or post-remedial monitoring
and care.
s. Labor Matters. The Company is not party to any labor or collective
bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the Company. No employees of the
Company are represented by any labor organization and none of such
employees has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the Company's knowledge, threatened to be brought
or filed, with the National Labor Relations Board or other labor relations
tribunal. There is no organizing activity involving the Company pending or
to the Company's knowledge, threatened by any labor organization or group
of employees of the Company. There are no (i) strikes, work stoppages,
slowdowns, lockouts or arbitrations or (ii) material grievances or other
labor disputes pending or, to the knowledge of the Company, threatened
against or involving the Company. There are no unfair labor practice
charges, grievances or complaints pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees
of the Company.
t. ERISA Matters. The Company and its ERISA Affiliates are in
compliance in all material respects with all provisions of ERISA applicable
to it. No Reportable Event has occurred, been waived or exists as to which
the Company or any ERISA Affiliate was required to file a report with the
Pension Benefits Guaranty Corporation, and the present value of all
liabilities under all Plans (based on those assumptions used to fund such
Plans) did not, as of the most recent annual valuation date applicable
thereto, exceed the value of the assets of all such Plans in the aggregate.
None of the Company or ERISA Affiliates has incurred any Withdrawal
Liability that could result in a Material Adverse Effect. None of the
Company or ERISA Affiliates has received any notification that any
Multiemployer Plan is in reorganization or has been terminated within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably
expected to be in reorganization or termination where such reorganization
or termination has resulted or could reasonably be expected to result in
increases to the contributions required to be made to such Plan or
otherwise.
For purposes of this Section 3.t.:
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"ERISA" means the Employee Retirement Income Security Act of 1974, or
any successor statute, together with the regulations thereunder, as the
same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that was, is or hereafter may become, a member of a group of
which the Company is a member and which is treated as a single employer
under ss. 414 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code").
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other than
one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
ss. 414 of the Internal Revenue Code) is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years
made or accrued an obligation to make contributions.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Plan" means any pension plan (other than a Multiemployer Plan)
subject to the provision of Title IV of ERISA or ss. 412 of the Internal
Revenue Code that is maintained for employees of the Company or any ERISA
Affiliate.
"Reportable Event" means any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered
an ERISA Affiliate only pursuant to subsection (m) or (o) of ss. 414 of the
Internal Revenue Code.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
u. Tax Matters. (i) The Company has filed all Tax Returns which it is
required to file under applicable Laws, except for such Tax Returns in
respect of which the failure to so file does not and could not have a
Material Adverse Effect; all such Tax Returns are true and accurate and
have been prepared in compliance with all applicable Laws; the Company has
paid all Taxes due and owing by it (whether or not such Taxes are required
to be shown on a Tax Return) and have withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to withhold
from amounts paid or owing to any employee, stockholder, creditor or other
third parties; and since the Balance Sheet Date, the charges, accruals and
reserves for Taxes with respect to the Company (including any provisions
for deferred income taxes) reflected on the books of the Company are
adequate to cover any Tax liabilities of the Company if its current tax
year were treated as ending on the date hereof.
(ii) No claim has been made by a taxing authority in a jurisdiction
where the Company does not file tax returns that such corporation is or may
be subject to taxation by that jurisdiction. There are no foreign, federal,
state or local tax audits or administrative or
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judicial proceedings pending or being conducted with respect to the Company
other than a New York State tax audit presently being conducted, the result
of which will not have a Material Adverse Effect; no information related to
Tax matters has been requested by any foreign, federal, state or local
taxing authority; and, except as disclosed above, no written notice
indicating an intent to open an audit or other review has been received by
the Company from any foreign, federal, state or local taxing authority.
There are no material unresolved questions or claims concerning the
Company's Tax liability. The Company (A) has not executed or entered into a
closing agreement pursuant to ss. 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law; or (B) has not agreed to or is required to make any
adjustments pursuant to ss. 481 (a) of the Internal Revenue Code or any
similar provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or any of its subsidiaries or
has any knowledge that the IRS has proposed any such adjustment or change
in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company. The Company has not
been a United States real property holding corporation within the meaning
of ss. 897(c)(2) of the Internal Revenue Code during the applicable period
specified in ss. 897(c)(1)(A)(ii) of the Internal Revenue Code.
(iii) The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another
person that is not a subsidiary of the Company under (A) Treas. Reg. ss.
1.1502-6 (or comparable provisions of state, local or foreign law), (B) as
a transferee or successor, (C) by contract or indemnity or (D) otherwise.
The Company is not a party to any tax sharing agreement. The Company has
not made any payments, is obligated to make payments or is a party to an
agreement that could obligate it to make any payments that would not be
deductible under ss. 280G of the Internal Revenue Code.
For purposes of this Section 3.u.:
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign, or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind
whatsoever (including, without limitation, deficiencies, penalties,
additions to tax, and interest attributable thereto) whether disputed or
not.
"Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including
any amendment thereof.
v. Property. The Company does not own any real property. The Company
has good and marketable title to all personal property owned by it, free
and clear of all liens, encumbrances and defects except such as are
described in the Commission Filings or
-11-
such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company; and any real property and buildings held under
lease by the Company are held by it under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company.
w. Intellectual Property. The Company owns or possesses adequate and
enforceable rights to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its business as
now being conducted and as described in the Commission Filings. To the best
of the Company's knowledge, the Company is not infringing upon or in
conflict with any right of any other person with respect to any
Intangibles. Except as disclosed in the Commission Filings, no claims have
been asserted by any person to the ownership or use of any Intangibles and
the Company has no knowledge of any basis for such claim.
x. [Reserved]
y. Internal Controls and Procedures. The Company maintains accurate
books and records and internal accounting controls which provide reasonable
assurance that (i) all transactions to which the Company is a party or by
which its properties are bound are executed with management's
authorization; (ii) the reported accountability of the Company's assets is
compared with existing assets at regular intervals; (iii) access to the
Company's assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company is a party or
by which its properties are bound are recorded as necessary to permit
preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
z. Payments and Contributions. Neither the Company nor any of its
directors, officers or, to its knowledge, other employees has (i) used any
Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment of Company funds to any
foreign or domestic government official or employee; (iii) violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977,
as amended; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other similar payment to any person with respect to Company
matters.
aa. Customers. To the Company's knowledge, except as otherwise
provided to Buyer in writing by the Company, neither _________________ nor
________________ plan or intend to discontinue or decrease their purchases
of the Company's products and the Company's relationship with such
customers is strong and all accounts receivable of such customers are
current.
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bb. No Misrepresentation. No representation or warranty of the Company
contained in this Agreement, any schedule, annex or exhibit hereto or any
agreement, instrument or certificate furnished by the Company to Buyer
pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Restrictive Legend. Buyer acknowledges and agrees that, upon issuance
pursuant to this Agreement, the Debentures (and any shares of Common Stock
issued in conversion thereof) shall have endorsed thereon a legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the Debentures and the shares of Common Stock issuable upon
conversion thereon):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR SUCH
OTHER LAWS."
b. Filings. The Company shall make all necessary filings in connection with
the sale of the Debentures to the Buyer as required by all applicable Laws, and
shall provide a copy thereof to the Buyer promptly after such filing.
c. Reporting Status. So long as the Buyer beneficially owns any of the
Securities, the Company shall file all reports required to be filed by it with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
d. Use of Proceeds. The Company shall use the proceeds from the sale of the
Debentures (excluding amounts paid by the Company for legal fees and finder's
fees in connection with such sale) solely for working capital and to fund the
purchase of property, plant and equipment at its principal executive offices in
Hauppauge, New York.
e. Equipment. Within six months after the Closing Date, the Company shall
have purchased the equipment set forth on Schedule I and such equipment shall be
operational and fully functional as provided on Schedule I. It is understood
that the maximum conversion price of $6.00 provided in Section 3.1 of the
Debenture has been agreed to in reliance of the accuracy of the information set
forth on Schedule I as of the date of this Agreement. It is further understood
that any projection provided to the Buyer by the Company
-13-
were prepared in good faith based upon the Company's most current internal
information and that, as projections, they will be subject to changes based on
actual results.
f. Listing. Except to the extent the Company becomes eligible to list its
Common Stock on The New York Stock Exchange or obtained authorization to include
the Common Stock for quotation on the NASDAQ National Market System, the Company
shall use its best efforts to maintain its listing of the Common Stock on the
NASDAQ Small Capitalization Market System.
g. Reserved Conversion Shares. The Company at all times from and after the
date hereof shall have a sufficient number of shares of Common Stock duly and
validly authorized and reserved for issuance to satisfy the conversion, in full,
of the Debentures (assuming for purposes of this Section 3.g., a conversion
price of $1.50).
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company undertakes and agrees that no instruction other than the
instructions referred to in this Section 5 and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Common Stock issuable upon conversion of
the Debentures otherwise shall be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement, the Registration
Rights Agreement and applicable law. Nothing contained in this Section 5.a.
shall affect in any way Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of such Common Stock. If, at any time,
Buyer provides the Company with an opinion of counsel reasonably satisfactory to
the Company that registration of the resale by Buyer of such Common Stock is not
required under the Securities Act and that the removal of restrictive legends is
permitted under applicable law, the Company shall permit the transfer of such
Common Stock and, promptly instruct the Company's transfer agent to issue one or
more certificates for Common Stock without any restrictive legends endorsed
thereon.
b. The Company shall permit Buyer to exercise its right to convert the
Debentures by telecopying an executed and completed Notice of Conversion to the
Company and delivering to the Company by express courier within five business
days thereafter, the original Notice of Conversion and the Debentures being
converted. Each date on which a Notice of Conversion is telecopied to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion Date. The Company shall transmit the certificates evidencing the
shares of Common Stock issuable upon conversion of any Debentures (together with
certificates evidencing any principal amount of the Debentures not being so
converted) to Buyer via express courier, by electronic transfer or otherwise,
within five business days after receipt by the Company of the original Notice of
Conversion and the Debentures to be converted (the "Delivery Date").
c. The Company understands that a delay in the issuance of the shares of
Common Stock upon such conversion beyond the Delivery Date could result in
economic loss to Buyer. As compensation to Buyer for such loss (and not as a
penalty), the Company agrees
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to pay to Buyer for late issuance of Common Stock upon conversion in accordance
with the following schedule (where "No. Business Days" is defined as the number
of business days beyond five (5) days from Delivery Date):
Compensation For Each
$10,000 Principal
Amount of Debentures
No. Business Days Not Converted Timely
----------------- --------------------
1 $25
2 $50
3 $75
4 $100
5 $125
6 $150
7 $175
8 $200
9 $225
10 $250
more than 10 $250 + $100 for each
Business Day Late beyond
10 days
The Company shall pay to Buyer the compensation described above by the
transfer of immediately available funds upon Buyer's demand. Nothing herein
shall limit Buyer's right to pursue actual damages for the Company's failure to
issue and deliver Common Stock to Buyer, and in addition to any other remedies
which may be available to Buyer, in the event the Company fails for any reason
to effect delivery of such shares of Common Stock within five business days
after the relevant Delivery Date, Buyer shall be entitled to rescind the
relevant Notice of Conversion by delivering a notice to such effect to the
Company whereupon the Company and Buyer shall each be restored to their
respective original positions immediately prior to delivery of such Notice of
Conversion.
For purposes of this Section 5.c., an act of God shall excuse the delay in
issuance of shares of Common Stock upon conversion beyond the Delivery Date in
the event that acts of war or terrorism, or some other catastrophic event not
encountered in business renders the Company's or its transfer agent's
performance impossible. Such delay in issuance of shares shall be excused only
for so long as the act of God in fact renders performance impossible but in no
event longer than seven (7) business days.
6. DELIVERY INSTRUCTIONS.
The Debentures shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof on a "delivery-against-payment basis" at the
Closing.
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7. CLOSING DATE.
The date and time of the issuance and sale of the Debentures (the "Closing
Date") shall be the date hereof or such other as shall be mutually agreed upon
in writing. The issuance and sale of the Debentures shall occur on the Closing
Date at the offices of the Escrow Agent. Notwithstanding anything to the
contrary contained herein, the Escrow Agent shall not be authorized to release
to the Company the Purchase Price and to Buyer the certificate(s) (I/N/O Buyer)
evidencing the Debentures being purchased by Buyer unless the conditions set
forth in Section 8(c) and 9(g) hereof have been satisfied.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Buyer understands that the Company's obligation to sell the Debentures
on the Closing Date to Buyer pursuant to this Agreement is conditioned upon:
a. Delivery by Buyer to the Escrow Agent of the Purchase Price;
b. The accuracy on the Closing Date of the representations and
warranties of Buyer contained in this Agreement as if made on the Closing
Date (except for representations and warranties which, by their express
terms, speak as of and relate to a specified date, in which case such
accuracy shall be measured as of such specified date) and the performance
by Buyer in all material respects on or before the Closing Date of all
covenants and agreements of Buyer required to be performed by it pursuant
to this Agreement on or before the Closing Date;
c. There shall not be in effect any Law or order, ruling, judgment or
writ of any court or public or governmental authority restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by
this Agreement.
9. CONDITIONS TO BUYER'S OBLIGATIONS.
The Company understands that Buyer's obligation to purchase the Debentures
on the Closing Date pursuant to this Agreement is conditioned upon:
a. Delivery by the Company to the Escrow Agent of one or more
certificates (I/N/O Buyer) evidencing the Debentures to be purchased by
Buyer pursuant to this Agreement;
b. The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the
Closing Date (except for representations and warranties which, by their
express terms, speak as of and relate to a specified date, in which case
such accuracy shall be measured as of such specified date) and the
performance by the Company in all material respects on or before the
Closing Date of all covenants and agreements of the Company required to be
performed by it pursuant to this Agreement on or before the Closing Date;
-16-
c. Buyer having received an opinion of counsel for the Company, dated
the Closing Date, in form, scope and substance reasonably satisfactory to
the Buyer, to the effect set forth in Annex IV attached hereto.
d. There not having occurred (i) any general suspension of trading in,
or limitation on prices listed for, the Common Stock on the NASDAQ Small
Capitalization Market System, (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States,
(iii) the commencement of a war, armed hostilities or other international
or national calamity directly or indirectly involving the United States or
any of its territories, protectorates or possessions, or (iv) in the case
of the foregoing existing at the date of this Agreement, a material
acceleration or worsening thereof.
e. There not having occurred any event or development, and there being
in existence no condition, having or which reasonably and forseeably could
have a Material Adverse Effect.
f. The Company shall have delivered to Buyer (as provided in the Joint
Escrow Instructions) reimbursement of Buyer's out-of-pocket costs and
expenses incurred in connection with the transactions contemplated by this
Agreement (including the fees and disbursements of Buyer's legal counsel
not to exceed $42,500), upon submission by Buyer to the Company of
appropriate documentary evidence of such out-of-pocket costs and expenses.
g. There shall not be in effect any Law or order, ruling, judgment or
writ of any court or public or governmental authority restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by
this Agreement.
10. TERMINATION.
a. Termination by Mutual Written Consent. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned, for any reason and at
any time prior to the Closing Date, by the mutual written consent of the Company
and Buyer.
b. Termination by the Company or Buyer. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned by action of the
Company or Buyer if (i) the Closing shall not have occurred at or prior to 5:00
p.m., New York City time, on July 25, 1997; provided, however, that the right to
terminate this Agreement pursuant to this Section 10.a.(i) shall not be
available to any party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur at or before such time and date or (ii) any court or public or
governmental authority shall have issued an order, ruling, judgment or writ, or
there shall be in effect any Law, restraining, enjoining or otherwise
prohibiting the consummation of any of the transactions contemplated by this
Agreement.
c. Termination by Buyer. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned by Buyer at any time prior to
the Closing Date, if (i) the Company shall have failed to comply in any material
respect with any of its
-17-
covenants or agreements contained in this Agreement, (ii) there shall have been
a breach by the Company with respect to any representation or warranty made by
it in this Agreement, or (iii) there shall have occurred any event or
development, or there shall be in existence any condition, having or reasonably
and forseeably likely to have a Material Adverse Effect.
d. Termination by the Company. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned by the Company at any time
prior to the Closing Date, if (i) Buyer shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement or (ii) there shall have been a breach by Buyer with respect to any
representation or warranty made by it in this Agreement.
11. SURVIVAL; INDEMNIFICATION.
a. The representations, warranties and covenants made by each of the
Company and Buyer in this Agreement, the annexes, schedules and exhibits hereto
and in each instrument, agreement and certificate entered into and delivered by
them pursuant to this Agreement, shall survive the Closing and the consummation
of the transactions contemplated hereby. In the event of a breach or violation
of any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation made by or on behalf of such party on or prior to the Closing
Date.
b. Indemnification of Buyer by the Company.
The Company hereby agrees to indemnify and hold harmless the Buyer, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Buyer Indemnitees"), from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "Losses"), and agrees to reimburse the Buyer Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel), in
each case promptly as incurred by the Buyer Indemnitees and to the extent
arising out of or in connection with:
(i) any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this
Agreement; or
(ii) any failure by the Company to perform in any material respect any
of its covenants, agreements, undertakings or obligations set forth in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Company pursuant
to this Agreement.
c. Indemnification of the Company by Buyer.
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Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Company Indemnitees"), from and against any and all Losses,
and agrees to reimburse the Company Indemnitees for all out-of-pocket expenses
(including the fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with:
(i) any misrepresentation, omission of fact, or breach of any of
Buyer's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by Buyer pursuant to this Agreement;
or
(ii) any failure by Buyer to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in this
Agreement or any instrument, certificate or agreement entered into or
delivered by Buyer pursuant to this Agreement.
d. Third Party Claims. Promptly after receipt by either party hereto
seeking indemnification pursuant to this Section 11 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 11 is being sought (the "Indemnifying Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying
Party reasonably shall have concluded that representation of the Indemnified
Party by the Indemnifying Party by the same legal counsel would not be
appropriate due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such parties in the
conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying
-19-
Party shall not, without the prior written consent of the Indemnified Party
(which consent shall not unreasonably be withheld), settle or compromise any
Claim or consent to the entry of any judgment that does not include an
unconditional release of the Indemnified Party from all liabilities with respect
to such Claim or judgment.
e. Other Claims.
In the event one party hereunder should have a claim for indemnification
that does not involve a claim or demand being asserted by a third party, the
Indemnified Party promptly shall deliver notice of such claim to the
Indemnifying Party. If the Indemnified Party disputes the claim, such dispute
shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
12. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of New York, without regard to the conflicts of law principles
of such state. Each of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the City of New York or the state
courts of the State of New York sitting in the City of New York in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
13. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven business days after deposit in the United
States Postal Service, by (a) advance copy by fax, and (b) mailing by express
courier or registered or certified mail with postage and fees prepaid, addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by ten days advance written
notice to each of the other parties hereto.
COMPANY: COMPOSITECH LTD.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Leisure ▇▇▇▇▇▇ & Irvine
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BUYER: ____________________________
____________________________
____________________________
Telephone:__________________
Fax:________________________
ESCROW
AGENT: ____________________________
____________________________
____________________________
Telephone:__________________
Fax:________________________
14. CONFIDENTIALITY. Each of the Company and Buyer agrees to keep
confidential and not to disclose to or use for the benefit of any third party
the terms of this Agreement or any other information which at any time is
communicated by the other party as being confidential without the prior written
approval of the other party; provided, however, that this provision shall not
apply to information which, at the time of disclosure, is already part of the
public domain (except by breach of this Agreement) and information which is
required to be disclosed by law (including, without limitation, pursuant to Item
10 of Rule 601 of Regulation S-K under the Securities Act and the Exchange Act).
15. ASSIGNMENT. This Agreement shall not be assignable by either of the
parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Buyer may assign its rights and
obligations hereunder, in whole or in part, to any affiliate of Buyer who
furnishes to the Company the representations and warranties set forth in Section
2 hereof and otherwise agrees to be bound by the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.
-21-
COMPOSITECH LTD.
By:
----------------------------
Name:
Title:
--------------------------------
By:
----------------------------
Name:
Title:
-22-