SECURITIES PURCHASE AND SUPPLEMENTAL
EXCHANGE RIGHTS AGREEMENT
SECURITIES PURCHASE AND SUPPLEMENTAL EXCHANGE RIGHTS AGREEMENT (the
"Agreement"), dated as of July 30, 2001 by and among Pro Tech Communications,
Inc., a Florida Corporation, with headquarters located at 0000 Xxxxxxxxxx 00xx
Xxxxxx, Xxxx Xxxxxx, Xxxxxxx 00000 ("Pro Tech"), NCT Group, Inc., a Delaware
corporation, with headquarters located at 00 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 ("NCT"), and Alpha Capital Aktiengesellschaft, a Xxxxxxxxxxxx
corporation ("Buyer").
WHEREAS, Pro Tech, NCT and Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("Regulation D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
WHEREAS, Pro Tech has authorized a new series of Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), designated the Series B Convertible
Preferred Stock (the "Series B Preferred Shares") with a stated value of $1,000
per share ("Stated Value") and an accretion rate of 4% per annum on the Stated
Value ("4% Accretion"), which shall be convertible into shares of Pro Tech's
common stock, $0.001 par value per share (the "Common Stock") (as converted, the
"Conversion Shares"), in accordance with the terms of Pro Tech's Articles of
Amendment to Articles of Incorporation dated as of July 30, 2001 (the "Articles
of Amendment"), to be filed by Pro Tech with the Secretary of State of the State
of Florida on or prior to the Closing (as defined herein) substantially in the
form attached hereto as Exhibit "A";
WHEREAS, Pro Tech shall issue a Warrant (as defined below) to Buyer on the
Closing Date to purchase shares of Common Stock as additional consideration to
induce Buyer to enter into this Agreement;
WHEREAS, Buyer desires to purchase from Pro Tech, and Pro Tech desires to
issue and sell to Buyer, upon the terms and conditions stated in this Agreement,
500 shares of Series B Preferred Stock;
WHEREAS, NCT is granting Buyer supplemental exchange rights whereby Buyer
may, in accordance with and subject to the terms of this Securities Purchase
Agreement, exchange Series B Preferred Shares for shares of NCT's common stock,
$0.01 par value per share (the "NCT Common Stock") (as exchanged, the "Exchange
Shares"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, (1) Pro Tech and Buyer are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit "B" (the
"Pro Tech Registration Rights Agreement") pursuant to which Pro Tech has agreed
to provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws, and
(2) NCT and Buyer are executing and delivering a Registrations Rights Agreement
substantially in the form hereto as Exhibit "C" (the "NCT Registration Rights
Agreement") pursuant to which NCT has agreed, as the case may arise, to provide
certain registration rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, in consideration of the premises hereof and the mutual
covenants, representations and warranties contained herein, Pro Tech, NCT and
Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SERIES B PREFERRED SHARES.
a. Purchase of Series B Preferred Shares. Subject to the satisfaction
(or waiver) of the conditions precedent to Closing (as defined below) as
set forth in Sections 9, 10 and 11 below, on the Closing Date (as defined
below), Pro Tech shall issue and sell to the Buyer, and the Buyer shall
purchase from Pro Tech, five hundred (500) shares of Series B Preferred
Shares, in consideration for Five Hundred Thousand Dollars ($500,000) cash
(the "Purchase Price").
b. Closing Date. The date and time of the closing (the "Closing Date")
shall be 10:00 a.m. Eastern Daylight Savings Time, within five (5) business
days following the date hereof, subject to notification of satisfaction (or
waiver) of the conditions precedent to Closing set forth herein (or such
later date as is mutually agreed to in writing by Pro Tech, NCT and the
Buyer). The closing (the "Closing") shall occur on the Closing Date at the
offices of NCT Group, Inc., located at 00 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000.
c. Form of Payment. On the Closing Date, (i) Buyer shall pay the
Purchase Price for the five hundred (500) Series B Preferred Shares to be
issued and sold to Buyer at the Closing, in United States dollars by wire
transfer of immediately available funds to an account designated in writing
by Pro Tech for such purpose. Pro Tech shall deliver a share certificate
representing such Series B Preferred Shares to Buyer, duly executed on
behalf of Pro Tech and registered in the name of Buyer or its designee (the
"Series B Certificate").
2. WARRANT. Pro Tech will issue to Buyer a warrant (the "Warrant") to purchase
one million (1,000,000) shares of Common Stock (the "Warrant Shares") at an
exercise price of $0.13 per share, substantially in the form attached
hereto as Exhibit "D" (the "Warrant Agreement").
3. BUYER'S SUPPLEMENTAL RIGHTS TO EXCHANGE SERIES B PREFERRED SHARES FOR NCT
COMMON STOCK
The Buyer of Series B Preferred Shares shall be entitled, at its sole
election and in lieu of Buyer's conversion rights provided for in the Articles
of Amendment, to exchange shares of Series B Preferred Stock for shares of NCT
Common Stock on the following terms and conditions:
a. Exchange Rights. At any time on or after six (6) months after the
Issuance Date (as defined below), Buyer shall have the right, at Buyer's
option, to exchange up to and including fifty percent (50%) of the Series B
Preferred Shares for fully paid and nonassessable shares of NCT Common
Stock at the Exchange Rate (as defined below). Furthermore, at any time on
or after twelve (12) months after the Issuance Date (as defined below),
Buyer shall also have the right, at Buyer's option, to exchange up to and
including one hundred percent (100%) of the Series B Preferred Shares for
fully paid and nonassessable shares of NCT Common Stock at the Exchange
Rate (as defined below).
b. Exchange Rate. The number of shares of NCT Common Stock issuable
upon exchange of each of the Series B Preferred Shares pursuant to this
Section 3 shall be determined according to the following formula (the
"Exchange Rate"):
Face Value = Number of Shares of
Exchange Price NCT Common Stock
provided that NCT shall have the option to pay the 4% Accretion accrued on
each Series B Preferred Share in either cash or cash equivalents. If NCT
elects to pay the 4% Accretion accrued in cash or cash equivalents, the
Exchange Rate shall be:
Stated Value = Number of Shares of
Exchange Price NCT Common Stock
For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Face Value" equals the Stated Value plus the 4%
Accretion accrued on each share of Series B Preferred Stock;
(ii) "Exchange Price" means the amount obtained by
multiplying 0.8 by the lowest average of the average Closing Bid
Price (as defined below) for the NCT Common Stock for any
consecutive five (5) day trading period out of the fifteen (15)
trading days preceding such relevant date;
(iii) "Closing Bid Price" means, for any security as of any
date, the last closing bid price on the Nasdaq National Market
System (the "Nasdaq-NM") as reported by Bloomberg Financial
Markets ("Bloomberg"), or, if the Nasdaq-NM is not the principal
trading market for such security, the last closing bid price of
such security on the principal securities exchange or trading
market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid
price of such security in the over-the-counter market on the pink
sheets or bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for such
security by Bloomberg, the last closing trade price of such
security as reported by Bloomberg. If the Closing Bid Price
cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such
date shall be the fair market value as reasonably determined in
good faith by the Board of Directors of the issuer of the
security (all as appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period); and
(iv) "Issuance Date" means the Closing Date.
c. Buyer's Delivery Requirements. To exchange Series B Preferred
Shares into full shares of NCT Common Stock on any date (such date, an
"Exchange Date") in accordance with and subject to the terms and conditions
set forth in Section 3(a) hereof, the Buyer shall (A) deliver or transmit
by facsimile, for receipt on or prior to 11:59 p.m., Eastern Time, on such
date, a copy of a fully executed notice of exchange in the form attached
hereto as Exhibit "E" (the "Notice of Exchange") to NCT (Attn: Chief
Financial Officer, NCT Group, Inc., 00 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000, facsimile number (000) 000-0000, with a copy to Pro Tech
at the address given in Section 14(g) herein, and (B) surrender to a common
carrier for delivery to NCT as soon as practicable following such notice,
the original certificates representing the Series B Preferred Shares, duly
endorsed for transfer or accompanied by a duly executed assignment, being
exchanged (or an indemnification undertaking with respect to such
certificates in the case of their loss, theft or destruction) (the
"Preferred Stock Certificates") and the originally executed Notice of
Exchange.
d. NCT Response. Upon receipt by NCT of a facsimile copy of a Notice
of Exchange, NCT shall immediately send, via facsimile, a confirmation of
receipt of such Notice of Exchange to Buyer ("Confirmation of Receipt").
Upon receipt by NCT of the Preferred Stock Certificates to be exchanged
pursuant to a Notice of Exchange, together with the originally executed
Notice of Exchange (such date, "NCT's Receipt"), NCT or NCT's Transfer
Agent (as applicable) shall, within five (5) business days following NCT's
Receipt, issue and surrender to a common carrier for overnight delivery to
the address as specified in the Notice of Exchange, a certificate, duly
executed on behalf of NCT and registered in the name of the Buyer or its
designee, for the number of shares of NCT Common Stock (the "Exchange
Shares") to which the Buyer shall be entitled.
e. Record Holder. The person or persons entitled to receive the
Exchange Shares shall be treated for all purposes as the record holder or
holders of such shares of NCT Common Stock on the Exchange Date. NCT shall
be treated by Pro Tech for all purposes as the record holder of such shares
of Series B Preferred Shares on the Exchange Date, and Pro Tech shall amend
its records to so reflect.
f. NCT's Failure to Timely Exchange. If NCT shall fail to issue to
Buyer within seven (7) business days following NCT's Receipt, a certificate
for the Exchange Shares, in addition to all other available remedies which
Buyer may pursue hereunder, (i) NCT shall pay additional damages to Buyer
on each day after the seventh (7th) business day following NCT's Receipt
until the day delivery is effected or a Redemption (as defined below) has
occurred, an amount equal to 1.0% of the product of (A) the number of
shares of NCT Common Stock not issued to the Buyer and to which Buyer is
entitled and (B) the Closing Bid Price (the "Redemption Price") of the NCT
Common Stock on the business day following NCT's Receipt, and (ii) with
respect to the unexchanged shares of Series B Preferred Stock, Buyer shall
have the right, in its sole discretion, to require NCT to redeem for cash
from Buyer those Series B Preferred Shares for which NCT has failed to
issue Exchange Shares in accordance with Buyer's Notice of Exchange (a
"Redemption"), at the Redemption Price. The parties agree (i) that the
timely exchange of Series B Preferred Shares for Exchange Shares is a
material element of this Agreement, (ii) that the Buyer will suffer damages
which may be difficult to quantify if NCT fails, for any reason, to timely
deliver the Exchange Shares, and (iii) that any amount paid under this
subsection shall be paid as liquidated damages and not as a penalty.
4. BUYER'S REPRESENTATIONS AND WARRANTEES.
Buyer represents and warrants to Pro Tech and NCT that:
a. Investment Purpose. Buyer is acquiring (A) the Series B Preferred
Shares, and (i) upon conversion of the Series B Preferred Shares, will
acquire the Conversion Shares then issuable or (ii) upon any exchange of
the Series B Preferred Shares, will acquire the Exchange Shares then
issuable and (B) the Warrant, pursuant to the terms and conditions of the
Warrant Agreement, and upon exercise of the Warrant, will acquire Warrant
Shares, for its own account for investment purposes only and not with a
view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, that by making the representations herein,
Buyer does not agree to hold any Series B Preferred Shares, Conversion
Shares, Exchange Shares, Warrant or Warrant Shares for any minimum or other
specific term and reserves the right to dispose of Series B Preferred
Shares, Conversion Shares, Exchange Shares, Warrant or Warrant Shares at
any time in accordance with or pursuant to an effective registration
statement under the 1933 Act and in compliance with applicable state
securities laws or an exemption from such registration.
b. Accredited Investor Status. Buyer is an "accredited investor" as
that term is defined in Rule 501(a)(3) of Regulation D. As such, the Buyer
is able to bear the economic risk of an investment in the Series B
Preferred Shares and, as of the date hereof, is able to afford a total and
complete loss of its investment.
c. Sophisticated Investor. Buyer has such knowledge, skill and
experience in business, financial and investment matters so that it is
capable of evaluating the merits and risk of an investment in the Series B
Preferred Shares, the Conversion Shares, the Exchange Shares and the
Warrant Shares and, to the extent necessary, has retained, at its own
expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of Buyer's investments in
the Series B Preferred Shares, the Conversion Shares, the Exchange Shares
and the Warrant Shares.
d. Reliance on Exemptions. Buyer understands and acknowledges that the
Series B Preferred Shares, the Conversion Shares, the Exchange Shares, the
Warrant and the Warrant Shares are being offered and sold to it in a
private placement in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that
Pro Tech and NCT are relying in part upon the truth and accuracy of, and
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of Buyer
to acquire such securities.
e. Information. Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of Pro
Tech and NCT and materials relating to the offer and sale of the Series B
Preferred Shares, the Conversion Shares, the Exchange Shares, the Warrant
and the Warrant Shares which have been requested by Buyer. Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of
Pro Tech and NCT. Neither such inquiries nor any other due diligence
investigations conducted by the Buyer or its advisors, if any, or their
representatives shall modify, amend or affect the Buyer's right to rely on
Pro Tech's representations and warranties contained in Section 5 below or
NCT's representations and warranties contained in Section 6 below. Buyer
understands that its investment in the Series B Preferred Shares, the
Conversion Shares, the Exchange Shares, the Warrant and the Warrant Shares
involves a high degree of risk. Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Series B Preferred Shares,
the Conversion Shares, the Exchange Shares, the Warrant and the Warrant
Shares.
f. No Governmental Review. Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Series B
Preferred Shares, the Conversion Shares, the Exchange Shares, the Warrant
or the Warrant Shares, or the fairness or suitability of the investment in
the Series B Preferred Shares, the Conversion Shares, the Exchange Shares,
the Warrant or the Warrant Shares, nor have such authorities passed upon or
endorsed the merits of the offering of the Series B Preferred Shares, the
Conversion Shares, the Exchange Shares, the Warrant or the Warrant Shares.
g. Legal Fees and Finder Fees. To the best of its knowledge, other
than as provided for in Section 7(i) herein, Buyer has taken no action
which would give rise to any claim by any person for brokerage commissions,
finders' fees or the like relating to this Agreement or the transactions
contemplated hereby.
h. Buyer Liquidity. Buyer has adequate means of providing for its
current needs and foreseeable financial contingencies.
i. Transfer or Resale of Series B Preferred Shares, Conversion Shares,
Warrant and Warrant Shares. Buyer understands that except as provided in
the Pro Tech Registration Rights Agreement: (i) the Series B Preferred
Shares, the Conversion Shares, the Warrant and the Warrant Shares have not
been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned,
transferred or otherwise disposed of by Buyer unless (a) subsequently
registered under the 1933 Act and state securities laws, if applicable, (b)
Buyer shall have delivered to Pro Tech an opinion of counsel, in form and
substance reasonably satisfactory to Pro Tech, to the effect that such
securities to be sold, assigned, transferred or otherwise disposed of may
be sold, assigned, transferred or otherwise disposed of pursuant to an
exemption from such registration, (c) Buyer provides Pro Tech with written
customary assurance that such securities can be sold, assigned, transferred
or otherwise disposed of pursuant to Rule 144 promulgated under the 1933
Act (or a successor rule thereto) ("Rule 144"), or (d) Buyer exchanges the
Series B Preferred Shares for Exchange Shares pursuant to Section 3 above;
(ii) any sale of such securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither Pro Tech nor any other
person is under any obligation to register such securities under the 1933
Act or any state securities laws, if applicable, or to comply with the
terms and conditions of any exemption thereunder. Notwithstanding the
registration or qualification of the Series B Preferred Stock, the
Conversion Shares, the Warrant and the Warrant Shares of Buyer in
accordance with Section 4(i)(i)(a) through Section 4(i)(i)(d), Buyer agrees
not to knowingly sell, transfer, assign, pledge, exchange, hypothecate or
otherwise dispose of such Series B Preferred Stock, the Conversion Shares,
the Warrant and the Warrant Shares and any registration rights thereto to a
Competitor (as defined in Section 12(b) hereof ) of Pro Tech or its
affiliates (as defined in Rule 501 of Regulation D of the 0000 Xxx)
("Affiliates").
j. Transfer or Resale of Exchange Shares. Buyer understands that
except as provided in the NCT Registration Rights Agreement: (i) the
Exchange Shares have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned, transferred or otherwise disposed of by Buyer unless (a)
subsequently registered under the 1933 Act and state securities laws, if
applicable, (b) Buyer shall have delivered to NCT an opinion of counsel, in
form and substance reasonably satisfactory to NCT, to the effect that such
securities to be sold, assigned, transferred or otherwise disposed of may
be sold, assigned, transferred or otherwise disposed of pursuant to an
exemption from such registration, or (c) Buyer provides NCT written
customary assurance that such securities can be sold, assigned, transferred
or otherwise disposed of pursuant to Rule 144; (ii) any sale of such
securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any
resale of such securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 0000 Xxx) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (iii) neither NCT nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws, if applicable, or to comply with the terms and conditions
of any exemption thereunder.
k. Legends on Series B Preferred Shares, Conversion Shares, Warrant
and Warrant Shares. Buyer understands that the certificates or other
instruments representing (A) the Series B Preferred Shares and, until such
time as the sale of the Conversion Shares have been registered under the
1933 Act as contemplated by the Pro Tech Registration Rights Agreement, the
stock certificates representing the Conversion Shares and (B) the Warrant
and, until such time as the sale of the Warrant Shares have been registered
under the 1933 Act as contemplated by the ProTech Registration Rights
Agreement, the stock certificates representing the Warrant Shares, shall
bear a restrictive legend in substantially the following form (and a stop
transfer order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN CUSTOMARY
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and Pro Tech shall issue a
certificate or other instrument without such legend to the holder of the
Series B Preferred Shares, the Conversion Shares, and the Warrant Shares,
upon which it is stamped, if, unless otherwise required by state securities
laws, (i) with respect to the Conversion Shares and the Warrant Shares
only, the sale of the Conversion Shares or the Warrant Shares is registered
under the 1933 Act, respectively, (ii) in connection with a sale
transaction, such holder provides Pro Tech with an opinion of counsel, in
form and substance reasonably acceptable to Pro Tech, to the effect that a
public sale, assignment, transfer or other disposition of the Series B
Preferred Shares, the Conversion Shares, the Warrant and the Warrant Shares
may be made without registration under the 1933 Act, or (iii) such holder
provides Pro Tech with written customary assurance that the Series B
Preferred Shares, the Conversion Shares, the Warrant and the Warrant Shares
can be sold pursuant to Rule 144.
l. Legends on Exchange Shares. Buyer understands that the certificates
or other instruments representing the Exchange Shares and, until such time
as the sale of the Exchange Shares have been registered under the 1933 Act
as contemplated by the NCT Registration Rights Agreement, the stock
certificates representing the Exchange Shares shall bear a restrictive
legend in substantially the following form (and a stop transfer order may
be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN CUSTOMARY
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and NCT shall issue a
certificate without such legend to the holder of the Exchange Shares, upon
which it is stamped, if, unless otherwise required by state securities
laws, (i) with respect to the Exchange Shares, the sale of the Exchange
Shares is registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides NCT with an opinion of counsel, in form
and substance reasonably acceptable to NCT, to the effect that a public
sale, assignment, transfer or other disposition of the Exchange Shares may
be made without registration under the 1933 Act, or (iii) such holder
provides NCT with written customary assurance that the Exchange Shares can
be sold pursuant to Rule 144.
x. Xxxxxx; Authorization; Enforceability. Buyer has all corporate or
company power and authority to enter into and perform this Agreement. This
Agreement has been duly and validly authorized, executed and delivered on
behalf of Buyer and is a valid and binding agreement of Buyer enforceable
in accordance with its terms, except as such enforceability may be limited
by general principles of equity and bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally the enforcement of, applicable creditors' rights and remedies.
n. Conflicts. Except as disclosed in Schedule 4(n), the execution,
delivery and performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby will not (i) conflict with or
violate its organizational charters or by-laws, (ii) conflict with or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which Buyer is a party, or (iii) to Buyer's
knowledge, result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable
to Buyer or any of its subsidiaries, or by which any property or asset of
Buyer or any of its subsidiaries is bound or affected.
5. REPRESENTATIONS AND WARRANTIES OF PRO TECH.
Pro Tech represents and warrants to each of the Buyer and NCT that:
a. Organization and Qualification. Pro Tech is a corporation duly
organized and validly existing in good standing under the laws of the state
of Florida, and has the requisite corporate power and authority to own and
lease its properties (if any) and assets and to carry on its business as
now being conducted. Pro Tech is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the business, operations, properties, financial condition or results of
operations of Pro Tech. As of the date hereof, Pro Tech has no
Subsidiaries. For purposes of this Agreement, "Subsidiaries" or
"Subsidiary" of a person or entity shall mean any corporation, partnership,
limited liability company, association or other business entity at least
fifty percent (50%) of the outstanding voting power of which is at the time
owned or controlled directly or indirectly by such person or entity or by
one or more of such subsidiary entities, or both.
b. Authorization, Enforcement, Compliance with Other Instruments. Pro
Tech has the requisite corporate power and authority to enter into and
perform this Agreement, the Pro Tech Registration Rights Agreement and any
related agreements (collectively, the "Transaction Documents"), and to
issue the Series B Preferred Shares, the Conversion Shares, the Warrant and
the Warrant Shares in accordance with and subject to the terms and
conditions hereof and thereof. The Articles of Amendment have been duly
authorized by the Board of Directors of Pro Tech and shall be filed with
the Secretary of State of the State of Florida on or prior to the Closing.
The execution and delivery of the Transaction Documents by Pro Tech and the
consummation by it of the transactions contemplated thereby, including,
without limitation, the issuance of the Series B Preferred Shares and the
Warrant and the reservation for issuance and subsequent issuance of the
Conversion Shares and the Warrant Shares issuable upon conversion or
exercise thereof, have been duly authorized by Pro Tech's Board of
Directors and no further consent or authorization is required by Pro Tech,
its Board of Directors or its shareholders. The Transaction Documents have
been duly executed and delivered by Pro Tech and, when delivered,
constitute the valid and binding obligations of Pro Tech enforceable
against Pro Tech in accordance with their terms, except as such
enforceability may be limited by general principles of equity and
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies, and subject to the limitation that the
indemnification and contribution provisions of the Pro Tech Registration
Rights Agreement may be unenforceable as a matter of public policy. On or
prior to the Closing Date, the Articles of Amendment will be filed with the
Secretary of State of the State of Florida and will be in full force and
effect, enforceable against Pro Tech in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized capital stock
of Pro Tech consists of 40,000,000 shares of Common Stock and 1,000,000
shares of Preferred Stock, of which approximately 33,000,0000 shares of
Common Stock were issued and outstanding as of July 12, 2001, and, except
for 100 shares of Series A Preferred Stock, no shares of preferred stock
were issued and outstanding. All of such outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as disclosed in Schedule 5(c), no shares of Common Stock or Preferred Stock
are subject to preemptive or similar rights or any liens or encumbrances
suffered or permitted by Pro Tech. Except as disclosed in Schedule 5(c), as
of the effective date of this Agreement:
(i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of Pro Tech, or contracts,
commitments, understandings or arrangements by which Pro Tech is
or may become bound to issue additional shares of capital stock
of Pro Tech;
(ii) there are no outstanding debt securities; and
(iii) there are no unperformed agreements or arrangements
under which Pro Tech is obligated to register the sale of any of
their securities under the 1933 Act (except the Pro Tech
Registration Rights Agreement).
Pro Tech has furnished to Buyer true and correct copies of Pro
Tech's Amended and Restated Articles of Incorporation, as amended
and as in effect on the date hereof (the "Articles of
Incorporation"), and Pro Tech's Bylaws, as in effect on the date
hereof (the "Bylaws").
d. Issuance of Securities. The Series B Preferred Shares are duly
authorized and, when issued and paid for in accordance with the terms
hereof, shall be (i) validly issued, fully paid and nonassessable, (ii)
free from all taxes, liens, encumbrances, security interests and charges
with respect to the issue thereof, and (iii) entitled to the rights and
preferences set forth in the Articles of Amendment. The Conversion Shares
issuable upon conversion of the Series B Preferred Shares have been duly
authorized. Upon conversion or exercise in accordance with the Articles of
Amendment, the Conversion Shares will be validly issued, fully paid and
nonassessable, free from all taxes, liens, encumbrances, security interests
and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. The Warrant
and the Warrant Shares issuable upon exercise of the Warrant have been duly
authorized. Upon exercise of the Warrant in accordance with the Warrant
Agreement, the Warrant Shares will be validly issued, fully paid and
nonassessable, free from all taxes, liens, encumbrances, security interests
and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.
e. No Conflicts. Except as disclosed in Schedule 5(e), the execution,
delivery and performance of this Agreement by Pro Tech and the consummation
by Pro Tech of the transactions contemplated hereby will not (i) conflict
with or violate the Articles of Incorporation or By-laws, or (ii) conflict
with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which Pro Tech is a party, which conflict or
default would have a material adverse effect on the business, operations,
properties, financial condition or results of operations of Pro Tech, or
(iii) to Pro Tech's knowledge, result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the
principal market or exchange on which the Common Stock is traded or listed)
applicable to Pro Tech, or by which any property or asset of Pro Tech is
bound or affected.
f. No Default or Violation. Except as disclosed in Schedule 5(f), Pro
Tech is not in violation of any term of or in default under its Articles of
Incorporation or By-laws, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to Pro Tech. To Pro Tech's
knowledge, the business of Pro Tech is not being conducted, and shall not
be conducted in violation of any law, ordinance or regulation of any
governmental entity.
g. Consents. Except as specifically contemplated by this Agreement and
as required under the 1933 Act and applicable state securities laws, Pro
Tech is not required to obtain any consent, waiver, authorization or order
of, or make any filing or registration with, any court or governmental
agency in connection with the execution, delivery or performance of any of
its obligations under or contemplated by this Agreement or the Pro Tech
Registration Rights Agreement in accordance with the terms hereof or
thereof. Except as disclosed in Section 7(f) and Schedule 5(g), all
consents, authorizations, orders, filings and registrations which Pro Tech
is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof.
h. SEC Documents: Financial Statements. Since January 1, 1999, Pro
Tech has timely filed all reports, schedules, forms, statements and other
documents, except for Pro Tech's Quarterly Report on Form 10-QSB for the
period ended July 31, 2000, required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing materials filed
prior to the date hereof and all exhibits included therein and financial
statements, schedules and documents incorporated by reference therein,
being hereinafter collectively referred to as the "SEC Documents"). Pro
Tech has delivered or made available to Buyer or its representative true
and complete copies of the SEC Documents. As of their respective dates, the
financial statements of Pro Tech contained in the SEC Documents (the
"Financial Statements") complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such
Financial Statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material
respects the financial position of Pro Tech as of the dates thereof and the
results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of Pro Tech to
Buyer which is not included in the SEC Documents, including, without
limitation, information referred to in Section 4(d) of this Agreement,
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made, not
misleading.
i. Absence of Certain Changes. Except as disclosed in Schedule 5(i),
since the date of the financial statements included in Pro Tech's last
filed Quarterly Report on Form 10-Q for the period ended March 31, 2001,
there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of Pro Tech. Pro Tech has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law, nor does Pro Tech have any knowledge or
reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
j. Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to Pro Tech's
knowledge, threatened against or affecting Pro Tech or the Common Stock
wherein an unfavorable decision, ruling or finding would (i) have a
material adverse effect on the transactions contemplated hereby; (ii)
adversely affect the validity or enforceability of, or the authority or
ability of Pro Tech to perform its obligations under, the Transaction
Documents; or (iii) except as expressly set forth in Schedule 5(j),
reasonably be expected to have a material adverse effect on the business,
operations, properties, financial condition or results of operation of Pro
Tech.
k. Acknowledgment Regarding Buyer's Purchase of Series B Preferred
Shares. Pro Tech acknowledges and agrees, based upon Buyer's
representations, that Buyer is acting solely in the capacity of an
arms-length purchaser with respect to this Agreement and the transactions
contemplated hereby. Pro Tech further acknowledges that Buyer is not acting
as a financial advisor or fiduciary of Pro Tech (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by Buyer or any of its respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to Buyer's purchase
of the Series B Preferred Shares, the Conversion Shares or the Warrant
Shares. Pro Tech further represents to Buyer that Pro Tech's decision to
enter into this Agreement has been based solely on the independent
evaluation by Pro Tech and its representatives.
l. No Undisclosed Events, Liabilities, Developments or Circumstances.
To Pro Tech's knowledge, no event, liability, development or circumstance
has occurred or exists, or is contemplated to occur, with respect to Pro
Tech or its business, properties, prospects, operations or financial
condition, which could be material but which has not been publicly
announced or disclosed in writing to the Buyer.
m. No General Solicitation. Neither Pro Tech, nor any of its
Affiliates, nor any person acting on its or their behalf, has distributed
any offering materials or engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 0000 Xxx)
in connection with the offer or sale of the Series B Preferred Shares, the
Conversion Shares, the Warrant or the Warrant Shares.
n. Employee Relations. Pro Tech is not involved in any labor dispute
nor, to Pro Tech's knowledge is any such dispute threatened. None of Pro
Tech's employees is a member of a union and Pro Tech believes that its
relations with its employees are satisfactory.
o. Environmental Laws. Pro Tech, to Pro Tech's knowledge, (i) is in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"); (ii) has received all permits,
licenses or other approvals required of it under applicable Environmental
Laws to conduct its business; and (iii) is in compliance with all material
terms and conditions of any such permit, license or approval.
p. Title. Pro Tech has good and marketable title to, or the right to
use, all personal property owned or leased by it which is material to the
business of Pro Tech, in each case free and clear of all liens,
encumbrances and defects, except as described in Schedule 5(p) and except
for those which do not materially affect the value of such property or
interfere with the use made and proposed to be made of such property by Pro
Tech. Pro Tech does not own any real property. Any real property and
facilities held under lease by Pro Tech 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 Pro Tech .
q. Insurance. Pro Tech is insured by insurers which Pro Tech believes
are of recognized financial responsibility against such losses and risks
and in such amounts as management of Pro Tech believes to be prudent and
customary in the businesses in which Pro Tech is engaged. Pro Tech has no
knowledge that it will not be able to renew its existing insurance coverage
as and when such coverage expires or obtain similar coverage from like
insurers as may be necessary to continue its business at a cost that would
not materially and adversely affect the condition, financial or otherwise,
or the earnings, business or operations of Pro Tech.
r. Regulatory Permits. Pro Tech, to Pro Tech's knowledge, possesses
all certificates, authorizations, licenses and permits required by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct its business, except where failure to have such certificates,
authorizations, licenses or permits would not have a material adverse
effect on the condition, financial or otherwise, or the earnings, business
or operations of Pro Tech. Pro Tech has no knowledge of, or has not
received notice of, proceedings relating to the revocation or modification
of any such certificate, authorization, license or permit.
s. Internal Accounting Controls. Pro Tech maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
t. No Materially Adverse Contracts, etc. Pro Tech is not subject to
any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which, in the judgment of Pro Tech's officers,
has or is reasonably expected in the future to have a material adverse
effect on the businesses, properties, operations, financial condition,
results of operations or prospects of Pro Tech. Pro Tech is not a party to
any contract or agreement which, in the judgment of Pro Tech's officers,
has or is reasonably expected to have a material adverse effect on the
businesses, properties, operations, financial condition, results of
operations or prospects of Pro Tech.
u. Tax Status. Except as set forth on Schedule 5(u), Pro Tech has made
or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that Pro Tech has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations (except those being contested in good
faith) and has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of Pro Tech have no knowledge of, and know
of no basis for, any such claim.
v. Certain Transactions. Except as set forth on Schedule 5(v), in the
SEC Documents and arms-length transactions pursuant to which Pro Tech makes
payments in the ordinary course of business upon terms no less favorable
than Pro Tech could obtain from third parties and other than the grant of
stock options disclosed on Schedule 5(c), none of the officers, directors,
or employees of Pro Tech is presently a party to any transaction with Pro
Tech (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to Pro Tech's knowledge, any
corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
w. Dilutive Effect. Pro Tech understands and acknowledges that the
number of Conversion Shares and Warrant Shares issuable upon conversion of
the Series B Preferred Shares and exercise of the Warrant will increase in
certain circumstances. Pro Tech further acknowledges that its obligation to
issue Conversion Shares upon the conversion of the Series B Preferred
Shares in accordance with this Agreement and the Articles of Amendment is
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other shareholders of Pro
Tech. Pro Tech further acknowledges that its obligation to issue Warrant
Shares upon the exercise of the Warrant in accordance with this Agreement
and the Warrant is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
stockholders of Pro Tech.
x. Fees and Rights of First Refusal. Pro Tech is not obligated to
offer the securities offered hereunder on a right of first refusal basis or
similar right to any third parties including, but not limited to, current
or former shareholders of Pro Tech, underwriters, brokers, agents or other
third parties.
y. Investment Company. Pro Tech is not, and is not controlled by or
under common control with an Affiliate of, an "investment company" within
the meaning of the Investment Company of Act of 1940, as amended.
z. No Broker Commissions or Finder Fees. Pro Tech has taken no action
which would give rise to any claim by any person for brokerage commissions,
finders' fees or the like relating to this Agreement or the transactions
contemplated hereby.
aa. Pro Tech's Representations and Warranties Generally. To Pro Tech's
knowledge, neither this Agreement nor the Schedules attached hereto
furnished by or on behalf of Pro Tech contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein not misleading.
bb. Pro Tech's Knowledge Generally. Where any representation, warranty
or statement contained herein regarding a specific matter relating to Pro
Tech or its business or affairs is qualified by the phrase "to Pro Tech's
knowledge" or any similar phrase relating to the knowledge of Pro Tech, it
is intended to mean the actual knowledge of any executive, manager or
director of Pro Tech, and an individual shall be deemed to have "knowledge"
of a particular fact, circumstance or other matter if: (a) such person is
actually aware of such fact or matter or (b) a prudent individual would be
expected to discover or otherwise become aware of such fact, circumstance
or other matter in the course of conducting a reasonable inquiry concerning
the truth or existence of such fact, circumstance, or other matter.
6. REPRESENTATIONS AND WARRANTIES OF NCT
NCT represents and warrants to Buyer that:
a. Organization and Qualification. NCT is a corporation duly organized
and validly existing in good standing under the laws of the state of
Delaware, and has the requisite corporate power and authority to own and
use its properties (if any) and assets and to carry on its business as now
being conducted. NCT has no material subsidiaries other than as set forth
on NCT's most recently filed Annual Report on Form 10-K, as amended. Each
of such subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the full corporate power and authority
to carry on its business as currently conducted. Each of NCT and its
subsidiaries is duly qualified as a foreign corporation to do business and
is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on NCT and its
subsidiaries taken as a whole.
b. Authorization, Enforcement, Compliance with Other Instruments. NCT
has the requisite corporate power and authority to enter into and perform
this Agreement, the NCT Registration Rights Agreement and any related
agreements (collectively, the "NCT Transaction Documents"), and to issue
the Exchange Shares in accordance with the terms hereof and thereof. The
execution and delivery of the NCT Transaction Documents by NCT and the
consummation by it of the transaction contemplated thereby, including,
without limitation, the reservation for issuance of the Exchange Shares
issuable upon exchange thereof, have been duly authorized by NCT's Board of
Directors and no further consent or authorization is required by NCT, its
Board of Directors or its stockholders. The NCT Transaction Documents have
been duly executed and delivered by NCT and, when delivered, constitute the
valid and binding obligations of NCT enforceable against NCT in accordance
with their terms, except as such enforceability may be limited by general
principles of equity and applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally
the enforcement of, creditors' rights and remedies, and subject to the
limitation that the indemnification and contribution provisions of the NCT
Registration Rights Agreement may be unenforceable as a matter of public
policy.
c. Capitalization. As of the date hereof, the authorized capital stock
of NCT consists of 645,000,000 shares of NCT Common Stock and 10,000,000
shares of NCT Preferred Stock, of which approximately 393,000,000 shares of
NCT Common Stock were issued and outstanding as of July 12, 2001, and no
shares of preferred stock are issued and outstanding as of the date hereof.
All of such outstanding shares of NCT Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as disclosed in Schedule 6(c), no shares of NCT Common Stock or NCT
Preferred Stock are subject to preemptive or similar rights or any liens or
encumbrances suffered or permitted by NCT. Except as disclosed in Schedule
6(c), as of the effective date of this Agreement:
(i) there are no outstanding options, warrants, scrip,
notes or debentures, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital
stock of NCT or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which NCT or
any of its subsidiaries is or may become bound to issue
additional shares of capital stock of NCT or any of its
subsidiaries;
(ii) there are no outstanding debt securities; and
(iii) there are no unperformed agreements or
arrangements under which NCT or any of its subsidiaries is
obligated to register the sale of any of their securities
under the 1933 Act (except the NCT Registration Rights
Agreement).
NCT has furnished to the Buyer true and correct copies of
NCT's Restated Certificate of Incorporation, as amended and
as in effect on the date hereof (the "Certificate of
Incorporation"), and NCT's By-laws, as in effect on the date
hereof (the "NCT By-laws").
d. Issuance of Securities. The Exchange Shares issuable upon exchange
of the Series B Preferred Shares have been duly authorized. Upon the
exchange and against delivery of the Series B Preferred Shares as provided
herein, the Exchange Shares will be validly issued, fully paid and
nonassessable, free from all liens, encumbrances, security interests and
charges with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of NCT Common Stock. NCT shall pay any
stamp transfer tax that may be due in connection with any such exchange.
e. No Conflicts. Except as disclosed in Schedule 6(e), the execution,
delivery and performance of this Agreement by NCT and the consummation by
NCT of the transactions contemplated hereby will not (i) conflict with or
violate the Certificate of Incorporation or NCT By-laws, or (ii) conflict
with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which NCT or any of its subsidiaries is a party,
or (iii) to NCT's knowledge, result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the
principal market or exchange on which the NCT Common Stock is traded or
listed) applicable to NCT or any of its subsidiaries, or by which any
property or asset of NCT or any of its subsidiaries is bound or affected.
f. No Default or Violation. Except as disclosed in Schedule 6(f),
neither NCT nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
or order or any statute, rule or regulation applicable to NCT or its
subsidiaries. To NCT's knowledge, the business of NCT and its subsidiaries
is not being conducted, and shall not be conducted in violation of any law,
ordinance or regulation of any governmental entity.
g. Consents. Except as specifically contemplated by this Agreement and
as required under the 1933 Act and applicable state securities laws, NCT is
not required to obtain any consent, waiver, authorization or order of, or
make any filing or registration with, any court or governmental agency in
connection with the execution, delivery or performance of any of its
obligations under or contemplated by this Agreement or the NCT Registration
Rights Agreement in accordance with the terms hereof or thereof. Except as
disclosed in Section 7(f) and Schedule 6(g), all consents, authorizations,
orders, filings and registrations which Pro Tech is required to obtain
pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof. NCT and its subsidiaries have no knowledge of any
facts or circumstances which might give rise to any of the foregoing.
h. SEC Documents: Financial Statements. Since January 1, 1999, NCT has
timely filed all reports, schedules, forms, statements and other documents,
except for NCT's latest Quarterly Report on Form 10-Q for the period ended
March 31, 2001, required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing materials
filed prior to the date hereof and all exhibits included therein and
financial statements, schedules and documents incorporated by reference
therein, being hereinafter collectively referred to as "NCT's SEC
Documents"). NCT has delivered or made available to the Buyer or its
representative true and complete copies of NCT's SEC Documents. As of their
respective dates, the financial statements of NCT contained in NCT's SEC
Documents (the "NCT Financial Statements") complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as in effect at the
time of filing. Such NCT Financial Statements have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such NCT Financial Statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of Pro Tech as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf
of NCT to the Buyer which is not included in NCT's SEC Documents,
including, without limitation, information referred to in Section 4(d) of
this Agreement, contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were
made, not misleading.
i. Absence of Certain Changes. Except as disclosed in Schedule 6(i),
since the date of the financial statements included in NCT's last filed
Quarterly Report, as amended, on Form 10-Q for the period ended March 31,
2001, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of NCT or its subsidiaries. NCT has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law, nor does NCT or its subsidiaries
have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
j. Absence of Litigation. Except as disclosed in NCT's SEC's
Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of NCT or any of its
subsidiaries, threatened against or affecting NCT, the NCT Common Stock or
any of NCT's subsidiaries, wherein an unfavorable decision, ruling or
finding would (i) have a material adverse effect on the transactions
contemplated hereby; (ii) adversely affect the validity or enforceability
of, or the authority or ability of NCT to perform its obligations under,
the Transaction Documents; or (iii) except as expressly set forth in
Schedule 6(j), would reasonably be expected to have a material adverse
effect on the business, operations, properties, financial condition or
results of operation of NCT and its subsidiaries taken as a whole.
k. Acknowledgment Regarding Buyer's Purchase of Series B Preferred
Shares. NCT acknowledges and agrees, based upon Buyer's representations,
that the Buyer is acting solely in the capacity of an arms-length purchaser
with respect to this Agreement and the transactions contemplated hereby.
NCT further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of NCT (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice
given by the Buyer or any of its respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to Buyer's purchase of the Series B Preferred Shares or
exchange of the Series B Preferred Shares for the Exchange Shares. NCT
further represents to the Buyer that NCT's decision to enter into this
Agreement has been based solely on the independent evaluation by NCT and
its representatives.
l. No Undisclosed Events, Liabilities, Developments or Circumstances.
To NCT's knowledge, no event, liability, development or circumstance has
occurred or exists, or is contemplated to occur, with respect to NCT or its
subsidiaries or their respective businesses, properties, prospects,
operations or financial condition, which could be material but which has
not been publicly announced or disclosed in writing to the Buyer.
m. No General Solicitation. Neither NCT, nor any of its Affiliates,
nor any person acting on its or their behalf, has distributed any offering
materials or engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 0000 Xxx) in
connection with the offer or sale of the Exchange Shares.
n. Employee Relations. Neither NCT nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of NCT or any of its
subsidiaries, is any such dispute threatened. None of NCT's or its
subsidiaries' employees is a member of a union and NCT and its subsidiaries
believe that their relations with their employees are satisfactory.
o. Environmental Laws. NCT and its subsidiaries, to NCT's knowledge,
(i) are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"); (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval.
p. Title. NCT and its subsidiaries have good and marketable title to,
or the right to use, all personal property owned or leased by them which is
material to the business of NCT and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects, except as described in
Schedule 6(p) and except for those which do not materially affect the value
of such property or interfere with the use made and proposed to be made of
such property by NCT and its subsidiaries. Neither NCT nor its subsidiaries
own any real property. Any real property and facilities held under lease by
NCT and its subsidiaries are held by them 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 NCT and its subsidiaries.
q. Insurance. NCT and each of its subsidiaries are insured by insurers
which NCT believes are of recognized financial responsibility against such
losses and risks and in such amounts as management of NCT believes to be
prudent and customary in the businesses in which NCT and its subsidiaries
are engaged. Neither NCT nor any such subsidiary has been refused any
insurance coverage sought or applied for, and neither NCT nor any such
subsidiary has any knowledge that it will not be able to renew its existing
insurance coverage as and when such coverage expires or obtain similar
coverage from like insurers as may be necessary to continue its business at
a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of NCT and
its subsidiaries, taken as a whole.
r. Regulatory Permits. NCT and its subsidiaries possess all
certificates, authorizations, licenses and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, except where failure to have such
certificates, authorizations, licenses or permits would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business or operations of NCT and its subsidiaries, taken as a whole.
Neither NCT nor any such subsidiary has no knowledge of, and has received
no notice of, proceedings relating to the revocation or modification of any
such certificate, authorization, license or permit.
s. Internal Accounting Controls. NCT and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
t. No Materially Adverse Contracts, etc. Neither NCT nor any of its
subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which, in
the judgment of NCT's officers, has or is expected in the future to have a
material adverse effect on the businesses, properties, operations,
financial condition, results of operations or prospects of NCT or its
subsidiaries. Neither NCT nor any of its subsidiaries is a party to any
contract or agreement which, in the judgment of NCT's officers, has or is
expected to have a material adverse effect on the businesses, properties,
operations, financial condition, results of operations or prospects of NCT
or its subsidiaries.
u. Tax Status. Except as set forth on Schedule 6(u), NCT and each of
its subsidiaries has made or filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that NCT and each of its
subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and
other governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations
(except those being contested in good faith) and has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of NCT have
no knowledge of, and know of no basis for, any such claim.
v. Certain Transactions. Except as set forth on Schedule 6(v), in the
NCT's SEC Documents and arms-length transactions pursuant to which NCT
makes payments in the ordinary course of business upon terms no less
favorable than NCT could obtain from third parties and other than the grant
of stock options disclosed on Schedule 6(c), none of the officers,
directors, or employees of NCT is presently a party to any transaction with
NCT (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of NCT, any
corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
w. Dilutive Effect. NCT understands and acknowledges that the number
of Exchange Shares issuable upon exchange of the Series B Preferred Shares
will increase in certain circumstances. NCT further acknowledges that its
obligation, if any, to issue NCT Common Stock upon the exchange of the
Series B Preferred Stock in accordance with this Agreement is absolute and
unconditional regardless of the dilutive effect that such issuance may have
on the ownership interests of other stockholders of NCT.
x. Fees and Rights of First Refusal. NCT is not obligated to offer the
securities offered hereunder on a right of first refusal basis or similar
right to any third parties including, but not limited to, current or former
shareholders of NCT, underwriters, brokers, agents or other third parties.
y. Investment Company. NCT is not, and is not controlled by or under
common control with an Affiliate of, an "investment company" within the
meaning of the Investment Company of Act of 1940, as amended.
7. COVENANTS.
a. Commercially Reasonable Efforts. Each party shall use its
commercially reasonable efforts to timely satisfy each of the conditions
precedent to Closing as provided in Sections 9, 10 and 11 of this
Agreement.
b. Form D. Pro Tech agrees to file a Form D with respect to the Series
B Preferred Shares, the Conversion Shares, the Warrant and the Warrant
Shares as required under Regulation D promulgated under the 1933 Act and to
provide a copy thereof to Buyer promptly after such filing. Pro Tech shall,
on or before the Closing Date, take such action as Pro Tech shall
reasonably determine is necessary to qualify the Series B Preferred Shares,
the Conversion Shares, the Warrant and the Warrant Shares for, or obtain
exemption for the Series B Preferred Shares, the Conversion Shares, the
Warrant and the Warrant Shares for, sale to the Buyer at the Closing
pursuant to this Agreement under applicable securities or "Blue Sky" laws
of the State of Florida and shall provide evidence of any such action so
taken to the Buyer as soon as practicable following the Closing Date.
NCT agrees to file a Form D with respect to the Exchange Shares as required
under Regulation D promulgated under the 1933 Act and to provide a copy
thereof to Buyer promptly after such filing. NCT shall, on or before the
Exchange Date (as defined in Section 3 above), take such action as NCT
shall reasonably determine is necessary to qualify the Exchange Shares for,
or obtain exemption for the Exchange Shares for, exchange to the Buyer at
the Closing pursuant to this Agreement under applicable securities or "Blue
Sky" laws of the state of Delaware and shall provide evidence of any such
action so taken to the Buyer as soon as practicable following the Exchange
Date (as defined in Section 3 above).
c. Reporting Status. Until the earlier of (i) one year after the date
as of which the Investors (as that term is defined in the Pro Tech
Registration Rights Agreement) may sell all of the Conversion Shares and
the Warrant Shares without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto), or (ii) the date on which (A)
the Investors shall have sold all the Conversion Shares and the Warrant
Shares and (B) none of the Series B Preferred Shares or the Warrant is
outstanding (the "Pro Tech Registration Period"), Pro Tech shall file all
reports required to be filed with the SEC pursuant to the 1934 Act, and Pro
Tech shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would otherwise permit such termination.
Until the earlier of (i) one year after the date as of which the Investors
(as that term is defined in the NCT Registration Rights Agreement) may sell
all of the Exchange Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on
which (A) the Investors shall have sold all the Exchange Shares and (B)
none of the Series B Preferred Shares is outstanding (the "NCT Registration
Period"), NCT shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and NCT shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would otherwise permit such
termination.
d. Use of Proceeds. Pro Tech shall use all of the proceeds from the
sale of the Series B Preferred Stock purchased hereunder for working
capital and general corporate purposes and not for the satisfaction of any
portion of Pro Tech borrowings outside the normal course of business.
Subject to Section 7(h) hereof, while any shares of Series B Preferred
Stock or any Conversion Shares remain outstanding, Pro Tech shall not
satisfy any obligation or liability of any kind, including, but not limited
to, those owed to a shareholder, officer or director of Pro Tech, or redeem
Pro Tech equity or equity-equivalent securities, except that Pro Tech may
use the proceeds from the sale of the Series B Preferred Stock purchased
hereunder to satisfy (i) the $150,000 loan from Westek Communications and
(ii) any amounts due to Xxxxxxx Factors, Inc. ("Xxxxxxx Factors") pursuant
to a Factoring Agreement, dated as of March 26, 2001, between Xxxxxxx
Factors and Pro Tech.
e. Financial Information. Pro Tech agrees to send the following to
Buyer upon Buyer's request during the Pro Tech Registration Period: (i)
within five (5) days after the later of (A) the filing thereof with the SEC
or (B) the date Buyer's request was received by Pro Tech, a copy of its
Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any registration statements or amendments
filed pursuant to the 1933 Act; (ii) within one (1) day after the later of
(A) release thereof or (B) the date Buyer's request was received by Pro
Tech, copies of all press releases issued by Pro Tech or any of its
subsidiaries; and (iii) copies of the same notices and other information
given to the shareholders of Pro Tech generally, contemporaneously with the
giving thereof to the shareholders.
NCT agrees to send the following to Buyer upon Buyer's request during
the NCT Registration Period: (i) within five (5) days after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements or amendments filed pursuant to the 1933 Act; (ii)
within one (1) day after release thereof, copies of all press releases
issued by NCT or any of its subsidiaries; and (iii) copies of the same
notices and other information given to the stockholders of NCT generally,
contemporaneously with the giving thereof to the stockholders.
f. Reservation of Shares. Pro Tech shall take all action necessary to,
at all times, have authorized and reserved for the purpose of issuance, no
less than 140% of the number of shares of Common Stock needed to provide
for the issuance of (i) the Conversion Shares to effect the conversion of
the Series B Preferred Shares then issued and outstanding, and (ii) the
Warrant Shares for which the Warrant may be exercised.
NCT shall take all action necessary to, at all times, have authorized
and reserved for the purpose of issuance, no less than 120% of the number
of shares of NCT Common Stock needed to provide for the issuance of the
Exchange Shares to effect the exchange of the Series B Preferred Shares
then issued and outstanding.
g. Listings. Pro Tech shall take all steps reasonably necessary to
cause the Conversion Shares and the Warrant Shares to be approved for
quotation on the OTC Bulletin Board, subject to the terms and conditions of
the Pro Tech Registration Rights Agreement, and Pro Tech shall use its
commercially reasonable efforts to maintain the quotation of its Common
Stock on such market, as long as the rules governing such quotation do not
change. Pro Tech shall promptly provide to Buyer copies of any notices it
receives regarding the continued eligibility of the Common Stock for
trading on the facility on which it is listed.
NCT shall also take all steps reasonably necessary to cause the
Exchange Shares to be approved for quotation on the OTC Bulletin Board, and
NCT shall use its best efforts to maintain the quotation of its NCT Common
Stock on such market, as long as the rules governing such quotation do not
change. NCT shall promptly provide to Buyer copies of any notices it
receives regarding the continued eligibility of the NCT Common Stock for
trading on the facility on which it is listed.
h. Expenses. Each of Pro Tech, NCT and the Buyer shall pay all costs
and expenses incurred by such party in connection with the negotiation,
investigation, preparation, execution and delivery of the Transaction
Documents. Pro Tech and NCT shall pay all fees, costs and expenses of their
respective counsel in connection with the negotiation, investigation,
preparation, execution and delivery of the Transaction Documents at
Closing.
i. Fees. Pro Tech shall pay to counsel to the Buyer its fees of $7,500
for services rendered to the Buyer in connection with this Agreement, which
shall be payable to such counsel no later than the Closing Date. Pro Tech
will pay the finders identified on Exhibit "I" hereto (the "Finders") a
cash finder's fee in the amount of 7% of the Purchase Price (the "Finder's
Fee"). The Finder's Fee must be paid on or prior to the Closing Date.
j. Corporate Existence. So long as any Series B Preferred Shares
remain outstanding, Pro Tech shall not directly or indirectly consummate
any merger, reorganization, restructuring, consolidation, sale of all or
substantially all of Pro Tech's assets or any similar transaction or
related transactions (each such transaction, a "Sale of Pro Tech"), except
if the surviving or successor entity in such transaction (i) expressly
assumes, in writing, Pro Tech's obligations hereunder and under the Pro
Tech Registration Rights Agreement, the Series B Preferred Shares and any
other agreements and instruments entered into or delivered by Pro Tech in
connection herewith; and (ii) is a publicly traded corporation whose common
stock is listed for trading on the OTC Bulletin Board, New York Stock
Exchange, Inc., the American Stock Exchange or the NASDAQ Small Cap or
National Market.
k. Transactions With Affiliates. So long as (i) twenty-five percent
(25%) of the originally issued shares of the Series B Preferred Shares
issued pursuant to this Agreement are outstanding or (ii) the Buyer owns
Conversion Shares with a Market Value (as defined below) as of the date of
the Transaction (as defined below) equal to or greater than $125,000, Pro
Tech shall not enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement ("Transaction") with any of its
officers, directors, persons who were officers or directors at any time
during the previous two years, shareholders who beneficially own 5% or more
of the Common Stock, affiliates (as defined below), any individual related
by blood, marriage, or adoption to any such individual or with any entity
in which any such entity or individual owns a 5% or more beneficial
interest (each a "Related Party"), except for (a) customary employment
arrangements and benefit programs on reasonable terms, (b) any Transaction
on an arms-length basis on terms no less favorable than terms which would
have been obtainable from a person other than such Related Party, and (c)
any Transaction which is approved by a majority of the disinterested
directors of Pro Tech. For purposes hereof, "Market Value" per share of
Conversion Shares is equal to the lowest average of the average of the
Closing Bid Price (as defined in Section 3(b) hereof) for the Common Stock
for any consecutive five (5) day trading period out of the fifteen (15)
trading days preceding the date of such Transaction. "Disinterested
director" for purposes of approving a Transaction pursuant to this Section
7(k) means a director of Pro Tech who is not a party to such Transaction.
"Affiliate" for purposes of this Section 7(k) means, with respect to any
person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has 5%
or more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) share common control with that person or entity.
"Control" or "controls" for purposes hereof means that a person or entity
has the power, direct or indirect, to conduct or govern the policies of
another person or entity.
So long as (i) any Series B Preferred Shares are outstanding or (ii)
the Buyer collectively own Exchange Shares with a market value equal to or
greater than $125,000, NCT shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit any
subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement with any of its or any subsidiary's
officers, directors, person who were officers or directors at any time
during the previous two years, stockholders who beneficially own 5% or more
of the NCT Common Stock, affiliates, any individual related by blood,
marriage, or adoption to any such individual or with any entity in which
any such entity or individual owns a 5% or more beneficial interest (each a
"Related Party"), except for (a) customary employment arrangements and
benefit programs on reasonable terms, (b) any agreement, transaction,
commitment, or arrangement on an arms-length basis on terms no less
favorable than terms which would have been obtainable from a person other
than such Related Party, (c) any agreement, transaction, commitment, or
arrangement which is approved by a majority of the disinterested directors
of NCT. For purposes hereof, any director who is also an officer of NCT or
any subsidiary of NCT shall not be a disinterested director with respect to
any such agreement, transaction, commitment, or arrangement.
l. No Short Sales of the Common Stock or NCT Common Stock. So long as
Buyer beneficially owns (Buyer shall be deemed to own any shares to be
issued by NCT pursuant to a Notice of Exchange as of the date such notice
was telecopied or otherwise delivered to NCT by Buyer and Buyer shall be
deemed to own any shares to be issued by Pro Tech pursuant to a Conversion
Notice (as defined in the Articles of Amendment) as of the date such notice
was telecopied or otherwise delivered to Pro Tech by Buyer) Conversion
Shares, Exchange Shares or Warrant Shares registered under a registration
statement which have not been sold, Buyer or its Affiliates shall not
engage in any short sales or third party short sales of the Common Stock or
NCT Common Stock in violation of Regulation M promulgated under the 1934
Act, or hold a similar "put equivalent position" with respect to the Common
Stock or NCT Common Stock (as defined in Rule 16a-1 under the 1934 Act);
provided however, (i) that Buyer's sale of Common Stock or NCT Common Stock
which the Buyer owned prior to such registration and which were acquired
outside of this Agreement shall not be deemed a short sale under this
Agreement and (ii) that Buyer's sale of Common Stock or NCT Common Stock
during (A) any such period after the Buyer's delivery to Pro Tech of any
Conversion Notice (as defined in the Articles of Amendment) but prior to
Buyer's receipt of the Common Stock to be issued pursuant to such notice,
or (B) any such period after the Buyer's delivery to NCT of any Notice of
Exchange but prior to Buyer's receipt of NCT Common Stock to be issued
pursuant to such notice, as the case may be, shall not be deemed a short
sale under this Agreement.
m. Without the prior express written consent of the holders of not
less than ninety percent (90%) of the then outstanding Series B Preferred
Shares, Pro Tech shall not issue, nor authorize the issuance of, any
additional shares of Pro Tech's Series A Convertible Preferred Stock (the
"Series A Preferred Shares"). Schedule 7(m) attached hereto sets for the
names and addresses of the holders of Pro Tech's Series A Preferred Shares
as of July 30, 2001.
8. TRANSFER AGENT INSTRUCTIONS.
a. Pro Tech shall issue irrevocable instructions to its transfer agent
to issue a certificate, registered in the name of Buyer or its respective
nominee(s), for the Conversion Shares and Warrant Shares in such amounts as
specified from time to time by Buyer to Pro Tech upon conversion of the
Series B Preferred Shares ("Pro Tech's Irrevocable Transfer Agent
Instructions"). All such certificates shall bear the restrictive legend
specified in Section 4(k) of this Agreement. Pro Tech warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 8, and stop transfer instructions to give effect to
Section 4(i) hereof (in the case of the Conversion Shares and Warrant
Shares prior to registration of such shares under the 0000 Xxx) will be
given by Pro Tech to its transfer agent and that the Series B Preferred
Shares , the Conversion Shares, the Warrant and the Warrant Shares shall
otherwise be freely transferable on the books and records of Pro Tech as
and to the extent provided in the Transaction Documents. Nothing in this
Section 8 shall affect in any way Buyer's obligations and agreement to
comply with all applicable federal and state securities laws upon resale of
the Series B Preferred Shares, Conversion Shares, the Warrant or the
Warrant Shares. If Buyer provides Pro Tech with an opinion of counsel,
reasonably satisfactory in form and substance to Pro Tech, that
registration for resale by Buyer of any of the Series B Preferred Shares,
Conversion Shares, the Warrant or the Warrant Shares is not required under
the 1933 Act, Pro Tech shall permit the transfer, subject to the
limitations and restrictions set forth in this Agreement and the other
Transaction Documents, and, in the case of the Conversion Shares and the
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by Buyer.
Pro Tech acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, Pro Tech acknowledges that
the remedy at law for a breach of its obligations under this Section 8 will
be inadequate and agrees, in the event of a breach or threatened breach by
Pro Tech of the provisions of this Section 8, that Buyer shall be entitled,
in addition to all other available remedies, to an injunction restraining
any breach and requiring immediate issuance and transfer, without the
necessity of showing economic loss and without any bond or other security
being required.
b. NCT shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Exchange Shares in such amounts as specified from time
to time by the Buyer to NCT upon exchange of the Series B Preferred Shares
for NCT Common Stock (the "NCT's Irrevocable Transfer Agent Instructions").
Prior to registration of the Exchange Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 4(l) of
this Agreement. NCT warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 8, and stop
transfer instructions to give effect to Section 4(j) hereof (prior to
registration of such shares under the 0000 Xxx) will be given by NCT to its
transfer agent and that the Exchange Shares shall otherwise be freely
transferable on the books and records of NCT as and to the extent provided
in this Agreement and the NCT Registration Rights Agreement. Nothing in
this Section 8 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable federal and state securities laws
upon resale of the Exchange Shares. If the Buyer provides NCT with an
opinion of counsel, reasonably satisfactory in form and substance to NCT,
that registration for resale by the Buyer of any of the Exchange Shares is
not required under the 1933 Act, NCT shall permit the transfer and promptly
instruct its transfer agent to issue one or more certificates in such name
and in such denominations as specified by the Buyer. NCT acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, NCT acknowledges that the remedy at law
for a breach of its obligations under this Section 8 will be inadequate and
agrees, in the event of a breach or threatened breach by NCT of the
provisions of this Section 8, that the Buyer shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required.
9. CONDITIONS PRECEDENT TO PRO TECH'S OBLIGATION TO SELL.
The obligation of Pro Tech hereunder to issue and sell the Series B
Preferred Shares to the Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions may be waived by Pro Tech at any time in its sole discretion:
a. The Buyer shall have executed this Agreement, the Pro Tech
Registration Rights Agreement, the NCT Registration Rights Agreement and
delivered same to Pro Tech.
b. NCT shall have executed this Agreement and the NCT Registration
Rights Agreement and delivered same to Pro Tech.
c. The Buyer shall have delivered to Pro Tech, and Pro Tech shall have
received, the Purchase Price for the Series B Preferred Shares being
purchased by the Buyer at the Closing in United States dollars by wire
transfer of immediately available funds pursuant to the wire instructions
provided by Pro Tech or as otherwise provided in paragraph 1(c) above.
d. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the
Closing Date. Pro Tech shall have received a certificate, executed by the
Chief Financial Officer, or other executive officer acting in such
capacity, of the Buyer, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by Pro
Tech.
e. The representations and warranties of NCT shall be true and correct
in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties
that speak as of a specific date), and NCT shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by NCT at or prior to the Closing Date. Pro Tech shall have
received a certificate, executed by the Chief Financial Officer, or other
executive officer acting in such capacity, of NCT, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be
reasonably requested by Pro Tech including, without limitation, an update
as of the Closing Date regarding the representation contained in Section
6(c) above.
10. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer to purchase the Series B Preferred Shares at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions may be waived
by the Buyer at any time in its sole discretion:
a. Pro Tech and NCT shall have executed this Agreement and delivered
same to the Buyer.
b. NCT shall have executed the NCT Registration Rights Agreement and
delivered same to the Buyer.
c. Pro Tech shall have executed the Pro Tech Registration Rights
Agreement and delivered same to the Buyer.
d. The Articles of Amendment shall have been duly authorized by the
Board of Directors of Pro Tech and filed with the Secretary of State of the
State of Florida.
e. Both the Common Stock and the NCT Common Stock shall be authorized
for quotation on the OTC Bulletin Board, over-the-counter market, AMEX, the
NASDAQ Small Cap or National Market or The New York Stock Exchange, Inc.,
and trading in the Common Stock and NCT Common Stock shall not have been
suspended for any reason.
f. The representations and warranties of Pro Tech shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 5 above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and Pro
Tech shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to
be performed, satisfied or complied with by Pro Tech at or prior to the
Closing Date. The Buyer shall have received a certificate, executed by the
Chief Financial Officer, or other executive officer acting in such
capacity, of Pro Tech, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by the
Buyer including, without limitation, an update as of the Closing Date
regarding the representation contained in Section 5(c) above.
g. The representations and warranties of NCT shall be true and correct
in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 6 above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and NCT
shall have performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by Pro Tech at or prior to the
Closing Date. The Buyer shall have received a certificate, executed by the
Chief Financial Officer, or other executive officer acting in such
capacity, of NCT, dated as of the Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by the Buyer
including, without limitation, an update as of the Closing Date regarding
the representation contained in Section 6(c) above.
h. The Buyer shall have received the opinion of Pro Tech's Florida
counsel, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Buyer and in substantially the form of Exhibit "G"
attached hereto.
i. The Buyer shall have received the opinion of NCT's and Pro Tech's
counsel, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Buyer and in substantially the form of Exhibit "F"
attached hereto.
j. Pro Tech shall have executed and delivered to the Buyer (or the
Buyer's designee) the Series B Certificate (in such denominations as the
Buyer shall request) for the Series B Preferred Shares being purchased by
Buyer at the Closing.
k. The Board of Directors of Pro Tech shall have adopted the
resolutions in substantially the form of Exhibit "H" attached hereto.
l. Pro Tech's Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by Pro Tech's transfer agent.
m. NCT's Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by NCT's transfer agent.
11. CONDITIONS PRECEDENT TO NCT'S OBLIGATION TO EXCHANGE
The obligation of NCT hereunder to issue the Exchange Shares to Buyer at an
Exchange Date is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions may be waived
by NCT at any time in its sole discretion:
a. Buyer shall have executed this Agreement, the Pro Tech Registration
Rights Agreement and the NCT Registration Rights Agreement and delivered
same to NCT.
b. Pro Tech shall have executed this Agreement and the Pro Tech
Registration Rights Agreement and delivered same to NCT.
c. The Articles of Amendment shall have been duly authorized by the
Board of Directors of Pro Tech and filed with the Secretary of State of the
State of Florida.
d. Buyer shall have delivered to Pro Tech the Purchase Price for the
Series B Preferred Shares being purchased by Buyer at the Closing in United
States dollars by wire transfer of immediately available funds pursuant to
the wire instructions provided by Pro Tech or as otherwise provided in
paragraph 1(c) above.
e. NCT shall have received the opinion of Pro Tech's Florida counsel,
dated as of the Closing Date, in form and substance reasonably satisfactory
to NCT and in substantially the form of Exhibit "G" attached hereto.
12. INDEMNIFICATION.
a. By Pro Tech.
(i) In consideration of the Buyer's execution and
delivery of this Agreement and acquisition of the Series B
Preferred Shares, the Conversion Shares, the Warrant and the
Warrant Shares hereunder, and in addition to all of Pro
Tech's other obligations under this Agreement, but subject
to the limitations set forth in Section 6 of the Pro Tech
Registration Rights Agreement, Pro Tech shall defend,
protect, indemnify and hold harmless Buyer ("Buyer
Indemnitee") from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection
therewith (irrespective of whether Buyer Indemnitee is a
party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and
disbursements (the "Buyer Indemnified Liabilities") incurred
by Buyer Indemnitee in connection with or as a result of any
breach by Pro Tech of any representation, warranty or
covenant in the Transaction Documents, including, but not
limited to: (a) any misrepresentation or breach of any
representation or warranty made by Pro Tech in the
Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby; or (b) any
breach of any covenant, agreement or obligation of Pro Tech
contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or
thereby; provided, however, that this Section 12(a)(i) shall
not apply to the extent that it is finally judicially
determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith resulted
solely from the gross negligence or bad faith of Buyer
Indemnitee. To the extent that the foregoing undertaking by
Pro Tech may be unenforceable for any reason, Pro Tech shall
make the maximum contribution to the payment and
satisfaction of each of the Buyer Indemnified Liabilities
which is permissible under applicable law.
(ii) In consideration of NCT's execution and delivery
of this Agreement, and in addition to all of Pro Tech's
other obligations under this Agreement, Pro Tech shall
defend, protect, indemnify and hold harmless NCT and its
respective officers, directors, agents, and controlling
persons thereof and permitted assigns (each a "NCT
Indemnitee"), from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection
therewith (irrespective of whether any such NCT Indemnitee
is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys' fees and
disbursements (the "NCT Indemnified Liabilities") incurred
by the NCT Indemnitees or any of them in connection with or
as a result of any breach by Pro Tech of any representation,
warranty or covenant in the Transaction Documents,
including, but not limited to: (a) any misrepresentation or
breach of any representation or warranty made by Pro Tech in
the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; or
(b) any breach of any covenant, agreement or obligation of
Pro Tech contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or
thereby; provided, however, that this Section 12(a)(ii)
shall not apply to the extent that it is finally judicially
determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith resulted
solely from the gross negligence or bad faith of such NCT
Indemnitee. To the extent that the foregoing undertaking by
Pro Tech may be unenforceable for any reason, Pro Tech shall
make the maximum contribution to the payment and
satisfaction of each of the NCT Indemnified Liabilities
which is permissible under applicable law.
b. By NCT.
(i) In consideration of the Buyer's execution and
delivery of this Agreement and acquisition of Exchange
Shares hereunder, and in addition to all of NCT's other
obligations under this Agreement, but subject to the
limitations set forth in Section 6 of the NCT Registration
Rights Agreement, NCT shall defend, protect, indemnify and
hold harmless Buyer Indemnitee from and against the Buyer
Indemnified Liabilities incurred by Buyer Indemnitee in
connection with or as a result of any matter referred to in
the Transaction Documents, including, but not limited to:
(a) any misrepresentation or breach of any representation or
warranty made by NCT in the Transaction Documents or any
other certificate, instrument or document contemplated
hereby or thereby; or (b) any breach of any covenant,
agreement or obligation of NCT contained in the Transaction
Documents or any other certificate, instrument or document
contemplated hereby or thereby; provided, however, that this
Section 12(b)(i) shall not apply to the extent that it is
finally judicially determined that such actions, causes of
action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection
therewith resulted solely from the gross negligence or bad
faith of Buyer Indemnitee. To the extent that the foregoing
undertaking by NCT may be unenforceable for any reason, NCT
shall make the maximum contribution to the payment and
satisfaction of each of the Buyer Indemnified Liabilities
which is permissible under applicable law.
(ii) In consideration of Pro Tech's execution and
delivery of this Agreement and issuance of the Series B
Preferred Shares which may be exchanged for Exchange Share
as described herein, and in addition to all of NCT's other
obligations under this Agreement, NCT shall defend, protect,
indemnify and hold harmless Pro Tech and its directors,
officers, agents and controlling persons thereof (each a
"Pro Tech Indemnitee"), from and against any and all
actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Pro
Tech Indemnitee is a party to the action for which
indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Pro Tech
Indemnified Liabilities"), incurred by the ProTech
Indemnitees or any of them in connection with or as a result
of any matter referred to in the Transaction Documents,
including, but not limited to: (a) any misrepresentation or
breach of any representation or warranty made by NCT in the
Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby; or (b) any
breach of any covenant, agreement or obligation of NCT
contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or
thereby; provided, however, that this Section 12(b)(ii)
shall not apply to the extent that it is finally judicially
determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith resulted
solely from the gross negligence or bad faith of such Pro
Tech Indemnitee, as the case may be, respectively. To the
extent that the foregoing undertaking by NCT may be
unenforceable for any reason, NCT shall make the maximum
contribution to the payment and satisfaction of each of the
Pro Tech Indemnified Liabilities, as the case may be, which
is permissible under applicable law.
c. By the Buyer.
(i) In consideration of Pro Tech's execution and
delivery of this Agreement and issuance of the Series B
Preferred Shares, the Conversion Shares, Warrant and Warrant
Shares hereunder, and in addition to all of the Buyer's
other obligations under this Agreement, but subject to the
limitations set forth in Section 6 of the Pro Tech
Registration Rights Agreement, Buyer shall defend, protect,
indemnify and hold harmless the Pro Tech Indemnitees from
and against the Pro Tech Indemnified Liabilities incurred by
the Pro Tech Indemnitees or any of them in connection with
or as a result of any breach by Buyer of any representation,
warranty or covenant in the Transaction Documents,
including, but not limited to: (a) any misrepresentation or
breach of any representation or warranty made by Buyer in
the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; or
(b) any breach of any covenant, agreement or obligation of
Buyer contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or
thereby; provided, however, that this Section 12(c)(i) shall
not apply to the extent that it is finally judicially
determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith resulted
solely from the gross negligence or bad faith of such Pro
Tech Indemnitee. To the extent that the foregoing
undertaking by Buyer may be unenforceable for any reason,
Buyer shall make the maximum contribution to the payment and
satisfaction of each of the Pro Tech Indemnified Liabilities
which is permissible under applicable law.
(ii) In consideration of NCT's execution and delivery
of this Agreement and issuance of the Exchange Shares
hereunder, and in addition to all of the Buyer' other
obligations under this Agreement, but subject to the
limitations set forth in Section 6 of the NCT Registration
Rights Agreement, as the case may be, Buyer shall defend,
protect, indemnify and hold harmless the NCT Indemnitees
from and against the NCT Indemnified Liabilities incurred by
the NCT Indemnitees or any of them in connection with or as
a result of any breach by Buyer of any representation,
warranty or covenant in the Transaction Documents,
including, but not limited to: (a) any misrepresentation or
breach of any representation or warranty made by Buyer in
the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; or
(b) any breach of any covenant, agreement or obligation of
Buyer contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or
thereby; provided, however, that this Section 12(c) shall
not apply to the extent that it is finally judicially
determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith resulted
solely from the gross negligence or bad faith of such NCT
Indemnitee. To the extent that the foregoing undertaking by
Buyer may be unenforceable for any reason, Buyer shall make
the maximum contribution to the payment and satisfaction of
each of the NCT Indemnified Liabilities which is permissible
under applicable law.
d. Promptly after receipt by Buyer Indemnitee, a NCT Indemnitee or a
Pro Tech Indemnitee (Buyer Indemnitee, NCT Indemnitee and Pro Tech
Indemnitee are sometimes referred to herein as "Indemnified Party") under
this Section of notice of the commencement of any action or proceeding
involving any breach of any representation, warranty or covenant in the
Transaction Documents ("Claim"), such Indemnified Party shall, if a Claim
in respect thereof is to be made against any indemnifying party (the
"Indemnifying Party") under this Section, deliver to the Indemnifying Party
a written notice of the commencement thereof. 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 control of the defense thereof with counsel mutually satisfactory to
the Indemnifying Party and the Indemnified Party, as the case may be;
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, in the reasonable opinion of counsel retained by the
Indemnifying Party, the representation by such counsel of the Indemnified
Party and the Indemnifying Party would be inappropriate due to actual or
potential conflicts of interests between such Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party shall cooperate fully with the Indemnifying Party in connection with
any negotiation or defense of any such action or claim by the Indemnifying
Party and shall furnish to the Indemnifying Party all information
reasonably available to the Indemnified Party which relates to such action
or claim. The Indemnifying Party shall keep the Indemnified Party fully
apprised as to the status of the defense or any settlement negotiations
with respect thereto. No Indemnifying Party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the consent of the Indemnified Party, consent to entry
of any judgment or enter into any settlement or other compromise which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation. Following indemnification as provided
for hereunder, the Indemnifying Party shall be subrogated to all rights of
the Indemnified Party with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the Indemnifying Party
within a reasonable time of the commencement of any such action shall not
relieve such Indemnifying Party of any liability to the Indemnified Party
under this Section, except to the extent that the Indemnifying Party is
prejudiced in its ability to defend such action. The indemnification
required by this Section shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or Buyer Indemnified Liabilities, NCT Indemnified
Liabilities or Pro Tech Indemnified Liabilities are incurred.
e. Limitation of Liability. Buyer shall not be liable to Pro Tech or
NCT pursuant to this Section 12 in an aggregate amount greater than the
Purchase Price relating to the Series B Preferred Shares, the Warrant and
the Warrant Shares purchased by the Buyer. Pro Tech and NCT shall not be
liable to the Buyer pursuant to this Section 12 for any amount in excess of
the Purchase Price. No party may seek to limit their liability pursuant to
this subsection 12(e) in the event the liability such party seeks to limit
arises from (i) such party's knowing or willful misconduct or gross
negligence or (ii) in the case of indemnification by Pro Tech or NCT, a
third party claim or governmental claim arising from Pro Tech's or NCT's
violation or alleged violation of federal or state securities laws.
13. GOVERNING LAW, MISCELLANEOUS.
a. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
b. Consent to Jurisdiction. The parties expressly consent to the
exclusive jurisdiction and venue of the federal courts whose districts
encompass any part of the City of New York, New York or the state courts of
the State of New York sitting in the City of New York, New York, for the
adjudication of any civil action related to or arising out of, in whole or
in part, this Agreement and the Transaction Documents.
c. Counterparts. This Agreement may be executed in three or more
identical counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
parties. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional originally executed signature pages to be physically delivered
to the other parties within five (5) days of the execution and delivery
hereof.
d. Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of,
this Agreement.
e. Severability. If any term, provision, covenant or restriction of
this Agreement is held to be illegal, void, invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
f. Entire Agreement, Amendments. This Agreement supersedes all other
prior oral or written agreements among the Buyer, Pro Tech, NCT, their
Affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and, except as specifically set forth herein, neither Pro
Tech, NCT nor Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by
each of the parties hereto.
g. Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a
copy is mailed by U.S. certified mail, return receipt requested; (iii)
three (3) days after being sent by U.S. certified mail, return receipt
requested; or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to NCT: 00 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to (which shall not constitute notice):
Xxxxxx & Xxxxxxx
000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Pro Tech: Pro Tech Communications, Inc.
0000 Xxxxxxxxxx 00xx Xxxxxx
Xx. Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to (which shall not constitute notice):
Xxxxxx & Xxxxxxx
000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer: Alpha Capital Aktiengesellschaft
Xxxxxxxxx 0, 0000 Xxxxxxxxxxx
Vaduz, Lichtenstein
Facsimile: (000-00) 0000-0000
With a copy to (which shall not constitute notice):
Grushko & Xxxxxxx, P.C.
000 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
h. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective permitted
successors and assigns. None of the parties shall assign this Agreement or
any rights or obligations hereunder without the prior written consent of
the other parties.
i. No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
j. Survival. Unless this Agreement is terminated under Section 13(m),
the representations and warranties of Pro Tech, NCT and the Buyer contained
in Sections 4, 5 and 6, the agreements and covenants set forth in Sections
7, 8, and 13 and the indemnification provisions set forth in Section 12
shall survive for a period of one (1) year from the Closing.
k. Publicity. Pro Tech, NCT and the Buyer shall have the right to
approve before issuance any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however,
that Pro Tech or NCT shall each be entitled, without the prior approval of
the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and
regulations (although the Buyer shall be consulted by Pro Tech and NCT in
connection with any such press release or other public disclosure prior to
its release and shall be provided with a copy thereof).
l. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
m. Termination. In the event that the Closing shall not have occurred
with respect to the Buyer on or before five (5) business days from the date
hereof due to Pro Tech's, NCT's or the Buyer's failure to satisfy the
conditions precedent to Closing as set forth in Sections 9, 10 and 11 above
(and a nonbreaching party's failure to waive such unsatisfied
condition(s)), any nonbreaching party shall have the option to terminate
this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party.
n. Construction of Agreement. This Agreement has been fully negotiated
among the parties, and none of the parties shall have any greater burden
than the other parties in construing this Agreement, including one party
being charged with the drafting of the Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Buyer, Pro Tech and NCT have caused this Securities
Purchase and Supplemental Exchange Rights Agreement to be duly executed as of
the date first written above.
PRO TECH COMMUNICATIONS, INC.
By: /s/ XXXXXXX XXXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxxx
Its: President and Secretary
NCT GROUP, INC.
By: /s/ XX X. XXXXXXX
-------------------------------
Name: Xx X. Xxxxxxx
Its: Senior Vice President and
Chief Financial Officer
ALPHA CAPITAL AKTIENGESELLSCHAFT
By: ____________________________
Name:
Its:
EXHIBIT "A"
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF PRO TECH COMMUNICATIONS, INC.
EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT
OF PRO TECH COMMUNICATIONS, INC.
EXHIBIT "C"
REGISTRATION RIGHTS AGREEMENT
OF NCT GROUP, INC.
EXHIBIT "D"
WARRANT FOR ALPHA CAPITAL AKTIENGESELLSCHAFT
EXHIBIT "E"
NCT GROUP, INC.
NOTICE OF EXCHANGE
Reference is made to the Securities Purchase and Supplemental Exchange
Rights Agreement, dated as of July 30, 2001 (the "Securities Purchase
Agreement"). In accordance with and pursuant to the Securities Purchase
Agreement, the undersigned hereby elects to exchange the number of shares of
Series B Convertible Preferred Stock, $.01 par value per share (the "Series B
Preferred Shares"), of Pro Tech Communications, Inc., a Florida corporation,
indicated below for shares of Common Stock, $.01 par value per share, of NCT
Group, Inc. (the "NCT Common Stock"), by tendering the stock certificate(s)
representing the share(s) of Series B Preferred Shares specified below as of the
date specified below, based on the Exchange Rate set forth in Section 3(b) of
the Securities Purchase Agreement.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exchange of the Series B Preferred
Shares shall be made only pursuant to (i) a registration statement effective
under the Securities Act of 1933, as amended (the "Act"), or (ii) an opinion of
counsel in form and content reasonably satisfactory to the Corporation that such
sale is exempt from registration required by Section 5 of the Act.
Date of Exchange:
-----------------------------------------
Number of Series B Preferred Shares to be
exchanged:
-----------------------------------------
Stock certificate no(s). of Series B
Preferred Shares to be exchanged:
-----------------------------------------
Please confirm the following information:
Exchange Price:
-----------------------------------------
Number of shares of NCT Common Stock to be
issued:
-----------------------------------------
Please issue the NCT Common Stock for which the Series B Preferred Shares are
being exchanged in the following name and to the following address:
Issue to:1
=========================================
Facsimile Number:
-----------------------------------------
Authorization:
-----------------------------------------
By:______________________________________
Title:___________________________________
Dated:
-----------------------------------------
ACKNOWLEDGED AND AGREED:
NCT GROUP, INC.
By: _____________________________
Name:___________________________
Title:____________________________
Date:____________________________
EXHIBIT "F"
OPINION OF COUNSEL OF
PRO TECH COMMUNICATIONS, INC. AND NCT GROUP, INC.
EXHIBIT "G"
OPINION OF FLORIDA COUNSEL OF
PRO TECH COMMUNICATIONS, INC.
EXHIBIT "H"
BOARD RESOLUTIONS
EXHIBIT "I"
FINDER'S FEES
FINDER 7% OF PURCHASE PRICE - CASH FEE
Libra Finance, S.A. $35,000
SCHEDULE 4(n)
Buyer: Conflicts
None.
SCHEDULE 5(c)
Pro Tech: Capitalization
1. Options to purchase 300,000 shares of common stock of Pro Tech have been
granted by Pro Tech under the 1998 Stock Option Plan at an exercise price
of $0.375 per share of common stock.
2. Options to purchase 200,000 shares of common stock of Pro Tech have been
granted by Pro Tech under the 1998 Stock Option Plan at an exercise price
of $0.38 per share of common stock.
3. Options to purchase 500,000 shares of common stock of Pro Tech have been
granted by Pro Tech under the 1998 Stock Option Plan at an exercise price
of $0.4375 per share of common stock.
4. Options to purchase 940,000 shares of common stock of Pro Tech have been
granted by Pro Tech under the 1998 Stock Option Plan at an exercise price
of $0.17 per share of common stock.
5. Warrants were issued to acquire 4,500,000 shares of common stock of Pro
Tech at an exercise price of $0.50 per share of common stock, in connection
with the sale of Pro Tech's Series A Convertible Preferred Stock.
6. In connection with issuance of a convertible note by NCT Group, Inc., Pro
Tech issued a warrant to the note holder to acquire $500,000 worth of
shares of common stock of either NCT Group, Inc. or Pro Tech at the note
holders election an exercise price of $0.21 per share or $0.44 per share
per share of common stock, respectively.
7. Under the terms of sale of 1,500 shares of Series A Convertible Preferred
Stock of Pro Tech Communications, Inc., such shares may be converted into
Pro Tech common stock or exchanged for NCT common stock. 100 shares of such
Series A Preferred Stock remain outstanding and are convertible for Pro
Tech common stock at a predetermined exchange ratio. Assuming a $0.12
five-day average closing bid price, the company approximates 1,041,000
shares of Pro Tech's common stock could be issued for the remaining
outstanding shares of Pro Tech Series A Preferred Stock.
8. An accredited investor and spouse of a former director of NCT is a holder
of a secured convertible note of NCT in an aggregate principal amount of
$1.4 million. The holder has the right at any time on or prior to the day
the note is paid in full, to convert at any time, all or from time to time,
any part of the outstanding and unpaid amount of the note into fully paid
and non-assessable shares of common stock of NCT or Pro Tech at the
predetermined conversion prices. Using the predetermined conversion price
of $0.22 per share per share, Pro Tech approximates 6,363,636 shares of Pro
Tech common stock will be needed for the conversion of this convertible
note and interest accrued thereon.
SCHEDULE 5(e)
Pro Tech: Conflicts
None.
SCHEDULE 5(f)
Pro Tech: Defaults, Violations
None.
SCHEDULE 5(g)
Pro Tech: Consents
None.
SCHEDULE 5(i)
Pro Tech: Subsequent Events
None.
SCHEDULE 5(j)
Pro Tech: Litigation
None.
SCHEDULE 5(p)
Pro Tech: Title
None.
SCHEDULE 5(u)
Pro Tech: Tax Status
None.
SCHEDULE 5(v)
Pro Tech: Certain Transactions
None.
SCHEDULE 6(c)
NCT: Capitalization
1. Options to purchase 46,771,428 shares of common stock of NCT have been
granted by NCT under the 1992 Stock Option Plan at exercise prices ranging
from $0.16 per share to $1.00 per share of common stock.
2. Options to purchase 1,350,000 shares of common stock of NCT have been
granted by NCT under the 1987 Stock Option Plan at exercise prices ranging
from $0.16 per share to $1.00 per share of common stock.
3. Options to purchase 609,000 shares of common stock of NCT have been granted
by NCT under the Non-Statutory Stock Option Plan at exercise prices ranging
from $0.2656 per share to $0.50 per share of common stock.
4. Warrant was issued to acquire 6,666,667 shares of common stock of NCT at an
exercise price of $0.1875 per share of common stock, in connection with an
agreement with Product Resource Group, LLC.
5. Warrant was issued in connection with issuance of a convertible note by NCT
to the note holder to acquire $500,000 worth of shares of common stock of
either NCT Group, Inc. or Pro Tech Communications, Inc. at the note holders
election at an exercise price of $0.21 per share or $0.44 per share per
share of common stock, respectively.
6. Warrant was issued in conjunction with curing certain note defaults by NCT
to the note holder to purchase 500,000 shares of common stock of NCT at an
exercise price of $0.13 per share.
7. Warrant was issued to acquire up to 10,000,000 shares of common stock of
NCT at an exercise price of $0.317 per share of common stock, in
consideration for advisory services with respect to financings completed
during 2000.
8. Warrants were issued to consultants to acquire an aggregate of 2,625,000
shares of common stock of NCT at exercise prices ranging from $0.41 to
$0.59.
9. Warrants were issued to officers, vendors, consultants and investors to
acquire an aggregate of 4,631,664 shares of common stock of NCT at exercise
prices ranging from $0.14 to $0.59.
10. Under the terms of sale of 2,145 common shares of NCT Audio Products 160
such shares remain that are exchangeable into NCT common stock at a
predetermined exchange ratio. Assuming a $0.14 five-day average closing bid
price, the company approximates 2,862,595 shares of its common stock could
be exchanged for the remaining NCT Audio shares.
11. Under the terms of sale of 1,000 common shares of Xxxxxxxxxxxxxx.xxx, 323
such shares remain that are exchangeable into NCT common stock at a
predetermined exchange ratio. Assuming a $0.14 five-day average closing bid
price, the company approximates 3,316,518 shares of its common stock could
be exchanged for the remaining Xxxxxxxxxxxxxx.xxx shares.
12. Under the terms of sale of 1,500 Series A convertible preferred shares of
Pro Tech Communications, Inc. such shares may be exchangeable for NCT
common stock. 100 shares of Series A preferred stock remain outstanding and
are exchangeable for NCT common stock at a predetermined exchange ratio.
Assuming a $0.14 five-day average closing bid price, the company
approximates 893,000 shares of NCT's common stock could be issued for the
remaining outstanding shares of Pro Tech Series A Preferred Stock.
13. Under the terms of a new equity credit agreement between NCT and Xxxxxxx
Road LLC, NCT is obligated to put $17 million worth of its common stock to
Xxxxxxx. Assuming a $0.14 five-day average closing bid price, the company
approximates 200 million shares of its common stock could be issued and or
sold with respect to this agreement
14. In connection with the execution of the new private equity credit
agreement, for each $100,000 of our common stock sold under the new equity
credit agreement, Xxxxxxx is entitled to an additional warrant for 1,000
shares of our common stock at an exercise price per share equal to 100% of
the average of the closing prices for our common stock for twenty trading
days prior to issuance of the warrant. Assuming a $0.14 five-day average
closing bid price, the company approximates 170,000 shares of its common
stock could be issued related to this warrant arrangement
15. Pursuant to the exchange agreement between NCT and Xxxxxxx Road, LLC, the
holder of DMC-NY common stock,. NCT issued to Xxxxxxx 13,333,333 shares of
NCT common stock in exchange for 2,000 shares of common stock of DMC-NY.
According to the terms of the exchange agreement, we are also obligated to
issue the holder additional shares, known as the Reset Shares, of NCT
common stock if the closing bid price for the five business days prior to
effectiveness of the registration statement is less than $0.16 per share.
Assuming a $0.14 five-day average closing bid price, the company
approximates 1,904,667 shares of its common stock could be issued related
to Reset Shares.
16. We are required to issue additional shares of common stock to the former
shareholders of Theater Radio Network (known as DMC Cinema, Inc.) in the
future under certain earnout provisions. If such provisions are achieved
for each measurement period, at $0.14 per share as the trailing market
price, we would be obligated to issue up to 17,857,143 shares.
17. With respect to the acquisition of Midcore Software, additional purchase
consideration includes $1,725,000 to be paid by NCT in cash over 36 months
based upon earned royalties, as defined in the merger agreement. If after
36 months the total royalty has not been earned, the recipients have the
right to collect the remaining unpaid balance in cash or through the
issuance of our common stock, at their election. In addition, we are
obligated to issue additional shares of common stock, known as the Look
Back Shares, if the value of certain shares issued at the closing is less
than $1.5 million on the third anniversary of the closing. Conversely, if
the value of those shares is more than $1.5 million on the third
anniversary of the closing, shares of our common stock would be returned to
us. Assuming a $0.14 five-day average closing bid price, the company
approximates 6,382,281 shares of its common stock could be issued related
to the Look Back Shares.
18. NCT entered into a subscription agreement with an accredited investor
pursuant to a private placement of a $250,000 convertible note to the
investor and a $17,500 convertible note as a finder's fee. Such notes
mature March 14, 2002 and bear interest at 8% per annum, payable at
maturity. The notes are convertible into shares of NCT common stock from
and after July 15, 2001. Assuming a $0.14 five-day average closing bid
price, the company approximates 2,985,491 shares of its common stock could
be issued related to these notes and interest accrued thereon.
19. NCT entered into an exchange agreement with Xxxxxxx Road, LLC, the holder
of DMC-NY common stock, pursuant to which NCT issued to Xxxxxxx Road a
convertible note of $1,000,000. Such convertible note matures on December
31, 2001. The note is convertible into shares of NCT common stock from and
after July 15, 2001 at a conversion price per share equal to 93.75% of the
average closing bid price of NCT common stock for the five consecutive
trading days prior to conversion. The company approximates 9,523,810 shares
of common stock for the conversion of this convertible note and interest
accrued thereon.
20. NCT entered into a subscription agreement with an accredited investor
pursuant to a private placement of a $125,000 convertible note to the
investor and a $8,750 convertible note as a finder's fee. Such notes mature
on April 12, 2002 and bear interest at 8% per annum, payable at maturity.
The notes are convertible into shares of NCT common stock from and after
July 15, 2001 at a conversion price per share equal to 80% of the lowest
closing bid price of NCT common stock for the five trading days prior to
conversion. At $0.14 per share, the company approximates 1,492,746 shares
of common stock for the conversion of this convertible note and interest
accrued thereon.
21. Artera Group, Inc., entered into a private placement of $5,040,000 of its
convertible notes with six accredited investors. The Artera convertible
notes mature January 9, 2002 and bear interest at 6% per annum, payable at
maturity. Such convertible notes are immediately convertible into shares of
Artera common stock. Pursuant to an exchange rights agreement, as modified,
entered into by NCT and the holders of the Artera convertible notes, such
notes are exchangeable for shares of NCT common stock from and after April
5, 2001 at an exchange price per share of 100% of the average closing bid
price of NCT common stock for the five trading days prior to the exchange.
At $0.14 per share, the company approximates NCT may be obligated to issue
37,157,143 shares of common stock upon the exchange of the Artera
convertible notes.
22. Artera entered into a private placement with two accredited investors for
$875,000 of its convertible notes. These Artera convertible notes mature
April 4, 2002 and bear interest at 6% per annum, payable at maturity. Such
convertible notes are convertible into shares of Artera common stock.
Pursuant to an exchange rights agreement dated April 4, 2001, entered into
by NCT and the holders of these Artera convertible notes, such notes are
exchangeable for shares of NCT common stock from and after September 15,
2001 at an exchange price per share of 100% of the average closing bid
price of NCT common stock for the five trading days prior to the exchange.
At $0.14 per share, NCT would need a reserve of 7,812,500 shares of common
stock for the exchange of the April 4, 2001 Artera notes.
23. NCT Video Displays, Inc, entered into a subscription agreement with an
accredited investor pursuant to a private placement of a $500,000
convertible note. The NCT Video note matures on December 31, 2001 and bears
interest at 8% per annum, payable at maturity. Such convertible note is
convertible into shares of NCT Video common stock from and after July 31,
2001. Pursuant to an exchange rights agreement entered into by NCT and the
holder of the NCT Video convertible note, such note is exchangeable for
shares of NCT common stock from and after September 15, 2001 at an exchange
price per share of 93.75% of the average closing bid price of NCT common
stock for the five trading days prior to the exchange. At $0.14 per share,
NCT may be obligated to issue 4,761,905 shares of common stock for the
exchange of the NCT Video note and interest accrued thereon.
24. Xxxxxx Xxxxxxx, an accredited investor and spouse of a former director of
NCT, is a holder of secured convertible notes of the company in an
aggregate principal amount of $4.4 million. The holder has the right at any
time on or prior to the day the notes are paid in full, to convert at any
time, all or from time to time, any part of the outstanding and unpaid
amount of the notes into fully paid and non-assessable shares of common
stock of the company at the predetermined conversion prices. Using the
various predetermined conversion prices per share, the company approximates
41,433,710 shares of common stock for the conversion of these convertible
notes and interest accrued thereon.
25. Artera entered into a private placement with 2 accredited investors for
$375,000 of its convertible notes. These Artera convertible notes mature
May 25, 2002 and bear interest at 6% per annum, payable at maturity. Such
convertible notes are convertible into shares of Artera common stock.
Pursuant to an exchange rights agreement dated May 25, 2001, entered into
by NCT and the holders of these Artera convertible notes, such notes are
exchangeable for shares of NCT common stock from and after September 15,
2001 at an exchange price per share of 100% of the average closing bid
price of NCT common stock for the five trading days prior to the exchange.
At $0.14 per share, NCT approximates 2,678,571 shares of common stock for
the exchange of the May 25, 2001 Artera notes.
26. Artera entered into a private placement with 6 accredited investors for
$1,250,000 of its convertible notes. These Artera convertible notes mature
June 29, 2002 and bear interest at 6% per annum, payable at maturity. Such
convertible notes are convertible into shares of Artera common stock.
Pursuant to an exchange rights agreement dated June 29, 2001, entered into
by NCT and the holders of these Artera convertible notes, such notes are
exchangeable for shares of NCT common stock from and after November 30,
2001 at an exchange price per share of 100% of the average closing bid
price of NCT common stock for the five trading days prior to the exchange.
At $0.14 per share, NCT approximates 8,928,571 shares of common stock for
the exchange of the June 29, 2001 Artera notes.
27. Pursuant to an exchange rights agreement dated June 29, 2001, entered into
by NCT and the certain holders of Artera Convertible Series A Preferred
Stock, such preferred shares, aggregating $4,276,000 in stated value, are
exchangeable for shares of NCT common stock from and after November 30,
2001 at an exchange price per share of 100% of the average closing bid
price of NCT common stock for the five trading days prior to the exchange.
At $0.14 per share, NCT approximates 30,542,857 shares of common stock for
the exchange of the Artera Series A Convertible Preferred shares.
SCHEDULE 6(e)
NCT: Conflicts
None.
SCHEDULE 6(f)
NCT: Defaults, Violations
None.
SCHEDULE 6(g)
NCT: Consents
None.
SCHEDULE 6(i)
NCT: Subsequent Events
None.
SCHEDULE 6(j)
NCT: Litigation
On June 26, 2001, DMC and NCT were ordered to appear for a prejudgement
remedy hearing in Superior Court, District of Fairfield, CT (the "Court") on
June 26, 2001 with respect to a default in the terms of a Resolution Agreement ,
entered into on January 11, 2001 and a May 11, 2001 agreement between NCT, DMC
and Production Resource Group, L.L.C., known as PRG. The amount due PRG is in
dispute. The Company believes it has recorded all liability related to the PRG
transactions. The Court determination in this matter is pending.
SCHEDULE 6(p)
NCT: Title
Xxxxxxx Convertible Notes:
-------------------------
Security interest in NCT's now owned and hereinafter acquired inventory or
receivables in respect thereof and all products and proceeds thereof.
SCHEDULE 6(u)
NCT: Tax Status
None.
SCHEDULE 6(v)
NCT: Certain Transactions
None.
SCHEDULE 7(m)
Holders of Series A Convertible Preferred Stock of Pro Tech
(as of July 30, 2001)
Name of Holder Address Number of Series A Shares Owned
-------------- ---------------------- --------------------------------
Austost Anstalt Xxxxxx 7440 Xxxxxxxxxxx 00
Xxxxxxxxxxx 163
Vaduz, Xxxxxxxxxxxx
Xxxxxxx Funds S.A. Trident Xxxxxxxx 35
X.X. Xxx 000
Xxxx Xxxx
Xxxxxxx, XXX
Xxxxxx Limited 000 Xxxxxx Xxx., Xxxxx 000 00
Xxxxxxx, Xxxxxx
X0X0X
If other than to the record holder of the Series B Preferred Shares, any
applicable transfer tax must be paid by the undersigned.
