Exhibit 4.4
DEBENTURE PLACEMENT AGREEMENT
DEBENTURE PLACEMENT AGREEMENT ("Agreement") dated as of the __ day
of April 2000, by and between XXXXXXXX CONTROLS, INC., a Delaware corporation
(the "Company"), TAGLICH BROTHERS, INC., a New York corporation, ("Placement
Agent"), either on its own behalf or on behalf of other lenders, and the persons
and entities listed on EXHIBIT A to this Agreement (such persons and entities
being referred to individually as "Lender" and collectively, as "Lenders").
W I T N E S S E T H :
WHEREAS, in reliance upon the representations, warranties, terms and
conditions hereinafter set forth, Placement Agent will use its best efforts to
privately place a minimum of $2,000,000 (the "Minimum Amount') and a maximum of
$6,000,000 (the "Maximum Amount") in principal amount of 7.5% convertible
subordinated debentures of the Company due March 31, 2003 (the "Debentures"),
the Debentures being convertible into shares of common stock, $.01 par value per
share (the "Common Stock"), of the Company at $2.375 per share (the "Conversion
Price"); and
WHEREAS, the Company will issue to each Lender a three (3) year warrant
to purchase an amount of shares of Common Stock of the Company equal to twenty
(20%) percent of the shares of Common Stock into which such Lender's Debenture
is convertible (the "Common Stock Warrants"), at an exercise price of $2.375 per
share, subject to adjustment; and
WHEREAS, the Debentures and the Common Stock Warrants are being issued
pursuant to the Company's Confidential Private Placement Memorandum and Exhibits
thereto dated March 27, 2000, as amended April 18, 2000, and as same may be
further amended and/or supplemented from time to time (collectively, the
"Memorandum"); and
WHEREAS, the Debentures and the Common Stock Warrants are being issued
pursuant to an exemption from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act").
NOW, THEREFORE, in consideration of the premises and the respective
promises hereinafter set forth, the Company and the Placement Agent hereby agree
as follows:
1. SALE AND PURCHASE OF DEBENTURES.
(a) Subject to the terms and conditions of this Agreement, the
Company shall sell to the Lenders the Debentures and Common Stock Warrants. The
forms of the Debenture and the
Common Stock Warrant are included in the Memorandum. The Company will execute
each Debenture and Common Stock Warrant.
(b) The initial sale and purchase described in Paragraph 1(a)
of this Agreement shall take place at a closing (the "Closing") at the offices
of XXXXXXXX XXXXXXXXX XXXXXX XXXXXXXX & XXXXXX LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, XX 00000 or such other place as shall be acceptable to the Company and
Placement Agent on such date or dates as Placement Agent shall advise the
Company on two (2) business days notice or such shorter notice as shall be
reasonably acceptable to the Company. Subsequent sales and purchases of the
Debentures and Common Stock Warrants up to the Maximum Amount shall take place
at one or more Closings held on such dates as the Company and Placement Agent
shall mutually determine. All Closings pursuant to this Agreement shall occur
not later than April 15, 2000, unless such date is extended for up to thirty
(30) days by mutual agreement of the Company and the Placement Agent, in their
sole and absolute discretion. The initial Closing hereunder shall be referred
to as "Initial Closing", the final Closing hereunder shall be referred to as
"Final Closing" and the date of the Final Closing shall be referred to as the
"Final Closing Date".
(c) All defined terms used in this Agreement which are not
otherwise defined shall have the meanings ascribed to them in the Memorandum.
2. PAYMENT. At each Closing, the Company or its agent shall deliver
to Placement Agent, on behalf of the Lenders, the original executed and sealed
Debentures being purchased by the Lenders, against its receipt of payment
therefor by certified or bank check drawn on a bank located in the United
States, or by Federal wire transfer, in the amount of the aggregate purchase
price for such Debentures being sold, less the amount of cash fees payable to
Placement Agent pursuant to Paragraph 10(a) of this Agreement. All Debentures
being purchased by the Lenders shall be issued in the respective names of the
Lenders in accordance with instructions provided by Placement Agent not later
than the day of Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to and covenants and agrees with the Placement Agent, as
of the date hereof and as of the date of each Closing, as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified and in good standing as a foreign corporation in each jurisdiction in
which the nature of the business conducted by the Company or the property owned
or leased by the Company requires such qualification. Except as set forth in
this Agreement, the Memorandum and in the exhibits annexed to the Memorandum
(collectively, the "Exhibits"), the Company has no subsidiaries and does not own
any equity interest and has not made any loans or advances to or guarantees of
indebtedness to any person, corporation, partnership or other entity, except for
guarantees of subsidiary debt by Xxxxxxxx Controls, Inc. or Xxxxxxxx Controls
Industries, Inc. Each of Xxxxxxxx Technologies, Inc., Xxxxxxxx World Trade,
Inc., Aptek Xxxxxxxx, Inc. and GeoFocus, Inc., each a wholly-owned subsidiary of
the Company (each a
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"Subsidiary" and together, the "Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and each Subsidiary is qualified and in good standing as a foreign
corporation in each jurisdiction in which the nature of its business or the
property owned or leased by the Subsidiary requires such qualification. Except
as disclosed in the Memorandum, no Subsidiary has any subsidiary and no
Subsidiary owns any equity interest in any other entity and no Subsidiary has
made any loans or advances to or guarantees of indebtedness to any person,
corporation, partnership or other entity. The Company owns all of the issued
and outstanding shares of common stock of each of the Subsidiaries free and
clear of any lien, claim, encumbrance, pre-emptive rights or contractual rights
of first refusal.
(b) The authorized capital of the Company consists of
50,000,000 shares of Common Stock and 50,000 shares of Series A Preferred Stock
(the "Preferred Stock"), of which, as of the date of this Agreement, (i)
19,787,278 shares of Common Stock are issued and outstanding, (ii) 130,200
shares of Common Stock are held in treasury, (iii) 78,500 shares of Preferred
Stock are issued and outstanding, and (iv) 6,499,643 shares of Common Stock have
been reserved for issuance upon conversion or exercise of the outstanding
Preferred Stock, debentures, options, warrants and other rights to acquire
Common Stock and upon the exercise of options granted pursuant to the Company's
stock option plans and pursuant to other agreements, excluding the shares of
Common Stock issuable upon conversion of the Debentures (the "Conversion
Shares") , the shares of Common Stock issuable upon exercise of the Placement
Agent Warrants (as defined below) (the "PAW Exercise Shares") and the shares of
Common Stock issuable upon exercise of the Common Stock Warrants (the "CSW
Exercise Shares"). Except as set forth in the Memorandum, the Company is not a
party to any agreement to issue, nor has it issued, any warrants, options or
rights or preferred stock, notes or other evidence of indebtedness or other
securities, instruments or agreements upon the exercise or conversion of which
or pursuant to the terms of which additional shares of capital stock of the
Company may become issuable. No holder of any of the Company's securities has
preemptive rights or contractual rights of first refusal.
(c) The Company has the full right, power and authority to
execute, deliver and perform under this Agreement, the Debentures, the Placement
Agent Warrants and the Common Stock Warrants. This Agreement has been duly
executed by the Company and, at each Closing, the Debentures, the Common Stock
Warrants and the Placement Agent Warrants being issued will have been duly
executed by the Company, and this Agreement, the Debentures, the Common Stock
Warrants and the Placement Agent Warrants and the transactions contemplated by
this Agreement, the Common Stock Warrants and the Placement Agent Warrants have
been duly authorized by all necessary corporate action and each constitute, the
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms.
(d) All of the issued and outstanding shares of Common Stock
and Preferred Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable, with no personal liability
attaching to the holders thereof, and such shares of Common Stock and Preferred
Stock have not been issued in violation of the preemptive rights or rights of
first refusal of any holder of securities of the Company. All of the issued and
outstanding
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shares of Common Stock and Preferred Stock of the Company have been issued
pursuant to either a current effective registration statement under the 1933 Act
or an exemption from the registration requirements of the 1933 Act and were
issued in accordance with all applicable Federal and state securities laws. All
of the issued and outstanding shares of common stock of each Subsidiary have
been duly and validly authorized and issued and are fully paid and
nonassessable.
(e) The Debentures and Common Stock Warrants to be issued at
each Closing and the shares of Common Stock included in the Conversion Shares,
in the PAW Exercise Shares and the CSW Exercise Shares have been validly
authorized for issuance and, when issued pursuant to this Agreement and the
terms of the Debenture, the Placement Agent Warrants and the CSW Exercise
Shares, as the case may be, will be duly and validly authorized and issued,
fully paid and nonassessable and free from preemptive rights or rights of first
refusal held by any person.
(f) The following financial statements of the Company
(hereinafter collectively, the "Financial Statements") are included in the
Memorandum: (i) consolidated balance sheets as of September 30, 1999 and
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal year ended September 30, 1999 and the related notes thereto, which
have been audited by Xxxxxx Xxxxxxxx LLP, independent certified public
accountants, (ii) consolidated balance sheets as of September 30, 1998 and
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal year ended September 30, 1998, and the related notes thereto, which
have been audited by Xxxxxx Xxxxxxxx LLP, independent certified public
accountants, and (iii) unaudited balance sheet as of December 31, 1999, and
unaudited statement of operations and cash flows for the fiscal quarter ended
December 31, 1999, and the related notes thereto, which have been prepared by
the Company. The Financial Statements, which are included in the Company's
Annual Report on Form 10-K and Form 10-K/A for the year ended September 30,
1999 and the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1999 (the "Form 10-Q"), were prepared in accordance with
generally accepted accounting principles consistently applied and present and
reflect fairly the financial position of the Company at the respective balance
sheet dates and the results of its operations, changes in stockholders' equity
and cash flows for the periods then ended, PROVIDED, HOWEVER, that the financial
statements included in the Form 10-Q are subject to normal year-end adjustments
and footnotes and other presentation items have been condensed or omitted.
During the period of Xxxxxx Xxxxxxxx LLP's engagement as the Company's
independent certified public accountants, there has been no disagreements
between the accounting firm and the Company on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure and no events required to be reported on a current report on Form 8-K
relating to the relationship between the Company and the accounting firm. The
Company has made and kept books and records and accounts which are in reasonable
detail and which fairly and accurately reflect the activities of the Company,
subject only to year-end adjustments.
(g) The Company has good and marketable title to all of its
material property and assets and, except as set forth in the Memorandum or the
Financial Statements, none of such property or assets of the Company is subject
to any lien, mortgage, pledge, encumbrance or other security interest.
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(h) Except as may be disclosed in the Memorandum, since
December 31, 1999, there has not been any material adverse change in the
financial condition or in the operations, business or prospects of the Company
or any of the Subsidiaries from that shown in the Financial Statements or any
damage or destruction, not covered by insurance, which affects the business,
property or assets of the Company or any of the Subsidiaries.
(i) Except as set forth in the Memorandum, the Company has not
filed any Current Reports on Form 8-K or other reports filed with the Securities
and Exchange Commission (the "SEC") subsequent to December 31, 1999.
(j) Except for any consents obtained at or prior to closing,
neither the execution or delivery of this Agreement, the Debentures, the Common
Stock Warrants or the Placement Agent Warrants by the Company nor the
performance by the Company of the transactions contemplated by this Agreement,
the Debentures, the Common Stock Warrants or the Placement Agent Warrants: (i)
requires the consent, waiver, approval, license or authorization of or filing
with or notice to any person, entity or public authority (except any filings
required by Federal or state securities laws, which filings have been or will be
made by the Company on a timely basis); (ii) violates or constitutes a default
under or breach of any law, rule or regulation applicable to the Company; or
(iii) conflicts with or results in a breach or termination of any provision of,
or constitutes a default under, or will result in the creation of any lien,
charge or encumbrance upon any of the property or assets of the Company with or
without the giving of notice, the passage of time or both, pursuant to (A) the
Company's certificate of incorporation or by-laws, (B) any mortgage, deed of
trust, indenture, note, loan agreement, security agreement, contract, lease,
license, alliance agreement, joint venture agreement, or other agreement or
instrument, or (C) any order, judgment, decree, statute, regulation or any other
restriction of any kind or character to which the Company is a party or by which
any of the assets of the Company may be bound.
(k) Neither the Company nor any of the Subsidiaries has any
indebtedness to any officer, director, 5% stockholder or other Affiliate (as
defined in the Rules and Regulations of the SEC under the 0000 Xxx) of the
Company.
(l) The Company and each of the Subsidiaries are in compliance
with all laws, rules and regulations of all Federal, state and local government
agencies having jurisdiction over the Company and each of the Subsidiaries or
affecting the business, assets or properties of the Company or any of the
Subsidiaries, except where the failure to comply has not and will not have a
material adverse effect on the business, financial condition or results of
operations of the Company or its Subsidiaries, taken as a whole (a "Material
Adverse Effect"). The Company and each of the Subsidiaries possess all
licenses, permits, consents, approvals and agreements which are required to be
issued by any and all applicable Federal, state or local authorities necessary
for the operation of their respective business and/or in connection with their
respective assets or properties, except where the failure to possess such
licenses, permits, consents, approvals or agreements has not and will not have a
Material Adverse Effect.
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(m) Except as disclosed in the Memorandum, neither the Company
nor any of the Subsidiaries is in default under any note, loan agreement,
security agreement, mortgage, contract, franchise agreement, distribution
agreement, lease, alliance agreement, joint venture agreement, agreement,
license, permit, consent, approval or instrument to which it is a party, and no
event has occurred which, with or without the lapse of time or giving of notice,
or both, would constitute such default thereof by the Company or any of the
Subsidiaries or would cause acceleration of any obligation of the Company or any
of the Subsidiaries or would adversely affect the business, operations,
financial condition or prospects of the Company or any of the Subsidiaries,
except where such default or event, whether with or without the lapse of time or
giving of notice, or both, has not and will not have a Material Adverse Effect.
To the best of the knowledge of the Company, except as disclosed in the
Memorandum, no party to any note, loan agreement, security agreement, mortgage,
contract, franchise agreement, distribution agreement, lease, alliance
agreement, joint venture agreement, agreement, license, permit, consent,
approval or instrument with or given to the Company or any of the Subsidiaries
is in default thereunder and no event has occurred with respect to such party,
which, with or without the lapse of time or giving of notice, or both, would
constitute a default by such party or would cause acceleration of any
obligations of such party.
(n) To the best of the Company's knowledge, except as set
forth in the Memorandum, no officer, director or 5% stockholder of the Company
and no Affiliate of any such person either (i) holds any interest in any
corporation, partnership, business, trust, sole proprietorship or any other
entity which is engaged in a business similar to that conducted by the Company
or any of the Subsidiaries (other than a passive immaterial interest in a public
company engaged in any such business) or (ii) engages in business with the
Company or any of the Subsidiaries.
(o) Except as set forth in the Memorandum, there are no
material (i.e., involving an asserted liability in excess of one hundred
thousand dollars ($100,000)) claims, actions, suits, proceedings or labor
disputes, inquiries or investigations (whether or not purportedly on behalf of
the Company or any of the Subsidiaries), pending or, to the best of the
Company's knowledge, threatened, against the Company or any of the Subsidiaries,
at law or in equity or by or before any Federal, state, county, municipal or
other governmental department, SEC, National Association of Securities Dealers,
Inc., board, bureau, agency or instrumentality, domestic or foreign, whether
legal or administrative or in arbitration or mediation, nor is there any basis
for any such action or proceeding except for litigation brought against Kenco
Xxxxxxxx, Inc. by Precision Plastics, Inc., which was in excess of $100,000.
Neither the Company, any of the Subsidiaries nor any of their respective assets
are subject to, nor is the Company or any of the Subsidiaries in default with
respect to, any order, writ, injunction, judgment or decree that could adversely
affect the financial condition, business, assets or prospects of the Company or
any of the Subsidiaries.
(p) The accounts receivable of the Company and the Subsidiaries
represent receivables generated from the sale of goods and services in the
ordinary course of business. The Company knows of no material disputes
concerning accounts receivable of the Company and the Subsidiaries not disclosed
in the Memorandum.
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(q) Except as set forth in the Memorandum, neither the Company
nor any of the Subsidiaries has (i) any written employment contracts and no oral
employment contracts not terminable at will by the Company or any Subsidiary, as
applicable, with any 5% percent shareholder, officer or director of the Company
or any Subsidiary, as applicable, (ii) any consulting agreement or other
compensation agreement with any 5% percent shareholder, officer or director of
the Company or any Subsidiary, as applicable, or (iii) any agreement or contract
with any 5% percent shareholder, officer or director of the Company or any
Subsidiary, as applicable, that will result in the payment by the Company or
any Subsidiary, as applicable, or the creation of any commitment or obligation
(absolute or contingent), of the Company or any Subsidiary, as applicable, to
pay any severance, termination, "golden parachute", or similar payment to any
present or former personnel of the Company or any Subsidiary, as applicable,
following termination of employment. No director, executive officer or other
key employee of the Company or any Subsidiary, as applicable, has advised the
Company that he or she intends to resign as director and/or executive officer of
the Company or any Subsidiary, as applicable, or to terminate his or her
employment with the Company or the Subsidiary, as applicable.
(r) The accounts payable of the Company and the Subsidiaries
represent bona fide payables to third parties incurred in the ordinary course of
business and represent bona fide debts for services and/or goods provided to the
Company and the Subsidiaries.
(s) Except as set forth in the Memorandum, neither the Company
nor any of the Subsidiaries is a party to a labor agreement with respect to any
of their respective employees with any labor organization, union, group or
association and there are no employee unions (nor any similar labor or employee
organizations). There is no labor strike or labor stoppage or slowdown pending,
or, to the knowledge of the Company, threatened against the Company or any of
the Subsidiaries nor has the Company or any of the Subsidiaries experienced in
the last five (5) years any work stoppage or other labor difficulty. The
Company is in compliance with all applicable laws, rules and regulations
regarding employment practices, employee documentation, terms or conditions of
employment and wage and hours and the Company is not engaged in any unfair labor
practices, except where the failure to comply has not and will not have a
Material Adverse Effect. There are no unfair labor practices charges or
complaints against the Company or any of the Subsidiaries pending before the
National Labor Relations Board or any other governmental agency.
(t) Except as set forth in the Memorandum, there are no
employee pension, retirement or other benefit plans, maintained, contributed to
or required to be contributed to by the Company or any of the Subsidiaries
covering any employee or former employee of the Company or any of the
Subsidiaries. Neither the Company nor any of the Subsidiaries has any liability
or obligation of any kind or nature, whether accrued or contingent, matured or
unmatured, known or unknown, under any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or any provision of the
Internal Revenue Code of 1986, as amended, specifically relating to persons
subject to ERISA.
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(u) The Company and each of the Subsidiaries have timely filed
with the appropriate taxing authorities all returns in respect of taxes required
to be filed through the date hereof, except for the 1999 North Carolina state
tax return for Agrotec Xxxxxxxx whose extension request was denied for untimely
filing, and each has timely paid all taxes that each is required to pay or has
established an adequate reserve therefor, except where the Company or the
Subsidiary, as applicable, has timely filed for extensions. There are no
pending or, to the knowledge of the Company, threatened audits, investigations
or claims for or relating to any liability of the Company or any of the
Subsidiaries in respect of taxes except the audit of the 1996 federal tax return
which contains no proposed material tax adjustments.
(v) Neither the Company nor any of the Subsidiaries has any
liabilities of any kind or nature whether accrued or contingent, matured or
unmatured, known or unknown, except as set forth in the Financial Statements,
the Memorandum and those liabilities incurred by the Company and each of the
Subsidiaries in the ordinary course of business since December 31, 1999.
(w) Except as set forth in the Memorandum, no customer of the
Company or any of the Subsidiaries during fiscal year 1999 accounted for more
than 5% of the revenues of the Company (on a consolidated basis) and to the best
of the Company's knowledge, no customer, other than the customers identified in
the Memorandum, will account for more than 5% of the Company's revenues (on a
consolidated basis) during fiscal year 2000 or fiscal year 2001.
(x) There are no finder's fees or brokerage commissions payable
with respect to the transactions contemplated by this Agreement, except as
provided in Paragraph 10 of this Agreement, and the Company agrees to indemnify
and hold harmless the Placement Agent from and against any and all cost, damage,
liability, judgment and expense (including reasonable fees and expenses of
counsel) arising out of or relating to claims for such fees or commissions and
to pay the Placement Agent pursuant to a separate agreement between the Company
and the Placement Agent.
(y) Except as set forth in the Memorandum, the Company is not
currently and has not during the past six (6) months been engaged in
negotiations with respect to: (i) any merger or consolidation of the Company
where the Company would not be the surviving entity; or (ii) the sale of the
Company, any of its Subsidiaries or any of their respective assets other than
sales in the ordinary course of business, except (1) the Company has accepted an
offer for Xxxxxx Xxxxxxxx, Inc. which was publicly announced April 4, 2000 and,
(2) the Company has been in discussions with prospective buyers and intends to
solicit additional offers for the purchase of PPT.
(z) The Company and each of the Subsidiaries has the right to
conduct their respective business in the manner in which their respective
business has been heretofore conducted. To the knowledge of the Company, the
conduct of such businesses by the Company and each of the Subsidiaries do not
violate or infringe upon the patent, copyright, trade secret or other
proprietary rights of any third party, and neither the Company nor any of the
Subsidiaries has received any notice of any claim of any such violation or
infringement.
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(aa) The Company and each of the Subsidiaries are currently in
compliance in all respects with all applicable Environmental Laws (as defined
below), including, without limitation, obtaining and maintaining in effect all
permits, licenses, consents and other authorizations required by applicable
Environmental Laws and the Company and each Subsidiary are each currently in
compliance with all such permits, licenses, consents and other authorizations,
except where the failure to comply has not and will not have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received notice
from any property owner, landlord, tenant or Governmental Authority (as defined
below) that Hazardous Wastes (as defined below) are being improperly used,
stored or disposed of at any property currently or formerly owned or leased by
the Company or any of its Subsidiaries or that any soil or ground water
contamination has emanated from any such property. For purposes hereof, the
term "Environmental Laws" means, collectively, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Toxic Substances Act, as amended, the Clean Air Act, as
amended, the Clean Water Act, as amended, any other "Superfund" or "Superlien"
law or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect. For purposes
hereof, the term "Governmental Authority" shall mean the Federal Government of
the United States of America, any state or any political subdivision of the
Federal Government or any state, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities. For purposes hereof, the term "Hazardous Waste" shall mean
any regulated quantity of hazardous substances as listed by the United States
Environmental Protection Agency ("EPA") and the list of toxic pollutants
designated by the United States Congress and/or the EPA or defined by any other
Federal, state or local statute, law, ordinance, code, rule, regulation, order,
or decree regulating, relating to or imposing liability for standards of conduct
concerning any hazardous, toxic substance or material. The disclosure in the
Memorandum regarding the status of the Company's property in Portland, Oregon,
is a full and accurate disclosure and does not omit to disclose any material
information known to the Company.
(bb) The information contained in the Financial Statements and
the Memorandum, taken together, describe in all material respects the business
and financial condition of the Company and its Subsidiaries, and such material,
taken together, does not contain any misstatement of a material fact or omit to
state a material fact necessary to make the information not misleading. The
Lenders and Placement Agent shall be entitled to rely on such material
notwithstanding any investigation they or any of them may have made.
4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
The representations and warranties of the Company set forth in Section 3 of this
Agreement shall survive the execution and delivery of the Debentures. The
indemnification obligations of the Company as set forth in the indemnification
rider identified as EXHIBIT B (the "Indemnification Rider") to the January 25,
2000 engagement letter between the Company and the Placement Agent, as same
shall be supplemented and/or amended, is hereby incorporated herein by reference
in its entirety as if more
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fully set forth herein and the provisions of the Indemnification Rider shall
apply and be applicable to, among other things, all representations and
warranties of the Company.
5. USE OF PROCEEDS. The net proceeds from the sale of the Debentures
will be used by the Company as disclosed in the Memorandum.
6. UNREGISTERED SECURITIES. None of the Debentures, the Conversion
Shares, the Placement Agent Warrants, the PAW Exercise Shares or the CSW
Exercise Shares have been registered under the 1933 Act, in reliance upon the
applicability of Section 4(2), 4(6) and/or Rule 506 of Regulation D of the 1933
Act to the transactions contemplated hereby. The certificates representing the
Debentures, the Placement Agent Warrants and the Common Stock Warrants will bear
an investment legend and the certificate representing the Conversion Shares, the
PAW Exercise Shares and the CSW Exercise Shares issued prior to their respective
registration under Section 3 of the Debenture Purchase Agreement (a copy of
which is annexed as an exhibit to the Memorandum), Section 7 below and Section 4
of the Common Stock Warrants will also bear investment legends.
7. REGISTRATION RIGHTS AND "PIGGY-BACK" REGISTRATION RIGHTS.
(a) The Company shall prepare and file with the SEC, within
ninety (90) days following the Final Closing Date, a registration statement
("Registration Statement") on the appropriate form under the 1933 Act, with
respect to the Conversion Shares, the PAW Exercise Shares and the CSW Exercise
Shares (collectively, the "Registrable Securities"), time being of the essence.
The Company will use its best efforts to have such Registration Statement
declared effective as soon as possible thereafter, but in no event later than
one hundred eighty (180) days following the Final Closing Date and shall keep
such Registration Statement current and effective for at least three (3) years
from the effective date thereof or until such earlier date as all of the
Registrable Securities have been sold or otherwise transferred. If the
Registration Statement is not filed within ninety (90) days following the Final
Closing Date, the Conversion Price shall be reduced (and concomitantly, the
number of Conversion Shares, the PAW Exercise Shares and the CSW Exercise Shares
shall increase) by three (3%) percent for each thirty (30) day period, or any
part thereof, beyond said ninety (90) day period until the Registration
Statement covering the Registrable Securities is filed with the SEC.
Notwithstanding anything to the contrary contained herein, and in addition to
the adjustments set forth in the preceding sentence, if the Registration
Statement has been filed but is not declared effective within one hundred eighty
(180) days after the Final Closing Date, then the Conversion Price shall be
reduced (and concomitantly the number of Conversion Shares, the PAW Exercise
Shares and the CSW Exercise Shares shall increase) by three (3%) percent for
each thirty (30) day period, or any part thereof, beyond said one hundred eighty
(180) day period until the Registration Statement described herein covering the
Registrable Securities is declared effective. Notwithstanding the foregoing,
the Conversion Price shall not be reduced pursuant to this Section 7 by more
than 36% in the aggregate.
(b) If the Company effects any registration under the 1933 Act
of any Registrable Securities pursuant to Paragraphs 7(a) above or 7(g) below,
the Company shall indemnify, to the
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extent permitted by law, and hold harmless each holder of the Registrable
Securities (each a "Registered Holders") whose Registrable Securities are
included in such Registration Statement (each, a "Seller"), any underwriter, any
officer, director, employee or agent of any Seller or underwriter, and each
other person, if any, who controls any Seller or underwriter within the meaning
of Section 15 of the 1933 Act, against any losses, claims, damages or
liabilities, judgment, fines, penalties, costs and expenses, joint or several,
or actions in respect thereof (collectively, the "Claims"), to which each such
indemnified party becomes subject, under the 1933 Act or otherwise, insofar as
such Claims arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement or
prospectus or any amendment or supplement thereto or any document filed under a
state securities or blue sky law (collectively, the "Registration Documents") or
insofar as such Claims arise out of or are based upon the omission or alleged
omission to state in any Registration Document a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
and will reimburse any such indemnified party for any legal or other expenses
reasonably incurred by such indemnified party in investigating or defending any
such Claim; provided that the Company shall not be liable in any such case to a
particular indemnified party to the extent such Claim is based upon an untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission of a material fact made in any Registration Document in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such indemnified party specifically for use in the preparation of such
Registration Document.
(c) In connection with any registration statement in which any
Seller is participating, each Seller, severally and not jointly, shall
indemnify, to the extent permitted by law, and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each other person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act, each other Seller and each underwriter,
any officer, director, employee or agent of any such other Seller or underwriter
and each other person, if any, who controls such other Seller or underwriter
within the meaning of Section 15 of the 1933 Act against any Claims to which
each such indemnified party may become subject under the 1933 Act or otherwise,
insofar as such Claims (or actions in respect thereof) are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Document, or insofar as any Claims are based upon the omission or
alleged omission to state in any Registration Document a material fact required
to be stated therein or necessary to make the statements made therein not
misleading, and will reimburse any such indemnified party for any legal or other
expenses reasonably incurred by such indemnified party in investigating or
defending any such claim; provided, however, that such indemnification or
reimbursement shall be payable only if, and to the extent that, any such Claim
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Registration Document in reliance
upon and in conformity with written information furnished to the Company by the
Seller specifically for use in the preparation thereof.
(d) Any person entitled to indemnification under Paragraphs
7(b) or 7(c) above shall notify promptly the indemnifying party in writing of
the commencement of any Claim if a claim for indemnification in respect thereof
is to be made against an indemnifying party under this
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Paragraph 7(d), but the omission of such notice shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under Paragraph 7(b) or 7(c) above, except to the extent that
such failure shall materially adversely affect any indemnifying party or its
rights hereunder. In case any action is brought against the indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it chooses, to assume the defense thereof with counsel reasonably satisfactory
to the indemnified party; and, after notice from the indemnifying party to the
indemnified party that it so chooses, the indemnifying party shall not be liable
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the Claim within twenty
(20) days after receiving notice from the indemnified party that the indemnified
party believes it has failed to do so; (ii) if the indemnified party who is a
defendant in any action or proceeding which is also brought against the
indemnifying party reasonably shall have concluded that there are legal defenses
available to the indemnified party which are not available to the indemnifying
party; or (iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct, the
indemnified party shall have the right to assume or continue its own defense as
set forth above (but with no more than one firm of counsel for all indemnified
parties in each jurisdiction, except to the extent any indemnified party or
parties reasonably shall have concluded that there are legal defenses available
to such party or parties which are not available to the other indemnified
parties or to the extent representation of all indemnified parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct) and the indemnifying party shall be liable for any reasonable expenses
therefor; provided, that no indemnifying party shall be subject to any liability
for any settlement of a Claim made without its consent (which may not be
unreasonably withheld, delayed or conditioned). If the indemnifying party
assumes the defense of any Claim hereunder, such indemnifying party shall not
enter into any settlement without the consent of the indemnified party if such
settlement attributes liability to the indemnified party.
(e) If for any reason the indemnity provided in Paragraphs 7(b)
or 7(c) above is unavailable, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of any Claim in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other from
the transactions contemplated by this Agreement. If, however, the allocation
provided in the immediately preceding sentence is not permitted by applicable
law, or if the indemnified party failed to give the notice required by Paragraph
7(d) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
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opportunity to correct or prevent such statement or omission. The amount paid
or payable in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. Notwithstanding the foregoing, no
underwriter or controlling person thereof, if any, shall be required to
contribute, in respect of such underwriter's participation as an underwriter in
the offering, any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligation of any underwriters to
contribute pursuant to this paragraph (e) shall be several in proportion to
their respective underwriting commitments and not joint.
(f) The provisions of Paragraphs 7(b) through 7(e) of this
Agreement shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of the Registrable Securities by any such party.
(g) If the registration statement as filed pursuant to Section
7(a) above is not then effective, the Registered Holders shall have certain
"piggy-back" registration rights with respect to the Registrable Securities as
hereinafter provided:
A. If at any time after the Initial Closing Date (as
defined in the Memorandum), the Company shall file with the SEC a registration
statement under the 1933 Act registering any shares of Common Stock, except for
any registration on Forms X-0, X-0 or other similar or successor Forms, the
Company shall give written notice to each Registered Holder thereof prior to
such filing.
B. Within fifteen (15) days after such notice from the
Company, each Registered Holder shall give written notice to the Company whether
or not the Registered Holder desires to have all of the Registered Holder's
Registrable Securities included in the registration statement. If a Registered
Holder fails to give such notice within such period, such Registered Holder
shall not have the right to have Registered Holder's Registrable Securities
registered pursuant to such registration statement. If a Registered Holder
gives such notice, then the Company shall include such Registered Holder's
Registrable Securities in the registration statement, at the Company's sole cost
and expense, subject to the remaining terms of this Paragraph 7(g).
C. If the registration statement relates to an
underwritten offering, and the underwriter shall determine in writing that the
total number of shares of Common Stock to be included in the offering, including
the Registrable Securities, shall exceed the amount which the underwriter deems
to be appropriate for the offering, the number of shares of the Registrable
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Securities shall be reduced in the same proportion as the remainder of the
shares in the offering and each Registered Holder's Registrable Securities
included in such registration statement will be reduced proportionately. For
this purpose, if other securities in the registration statement are derivative
securities, their underlying shares shall be included in the computation. The
Registered Holders shall enter into such agreements as may be reasonably
required by the underwriters and the Registered Holders shall pay to the
underwriters commissions relating to the sale of their respective Registrable
Securities.
D. Each Registered Holder shall have two (2)
opportunities to have the Registrable Securities registered under this Paragraph
7(g).
E. A Registered Holder shall furnish in writing to the
Company such information as the Company shall reasonably require in connection
with a registration statement.
(h) If and whenever the Company is required by the provisions
of this Paragraph 7 to use its best efforts to register any Registrable
Securities under the 1933 Act, the Company shall, as expeditiously as possible
under the circumstances:
A. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective as soon as possible
after filing and remain effective.
B. Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement current and
effective and to comply with the provisions of the 1933 Act, and any regulations
promulgated thereunder, with respect to the sale or disposition of all
Registrable Securities covered by the registration statement required to effect
the distribution of the securities, but in no event shall the Company be
required to do so for a period of more than three (3) years following the
effective date of the registration statement.
C. Furnish to the Registered Holders participating in
the offering, copies (in reasonable quantities) of summary, preliminary, final,
amended or supplemented prospectuses, in conformity with the requirements of the
1933 Act and any regulations promulgated thereunder, and other documents as
reasonably may be required in order to facilitate the disposition of the
securities, but only while the Company is required under the provisions hereof
to keep the registration statement current.
D. Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions of the United States as the
Registered Holders participating in the offering shall reasonably request, and
do any and all other acts and things which may be reasonably necessary to enable
each participating Registered Holder to consummate the disposition of the
Registrable Securities in such jurisdictions, provided that the Company will not
be required to (i) qualify
-14-
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (D), (ii) subject itself to taxation
in any such jurisdiction by reason of such registration or qualification of any
Registrable Securities, or (iii) consent to general service of process in any
such jurisdiction.
E. Notify each Registered Holder selling Registrable
Securities, at any time when a prospectus relating to any such Registrable
Securities covered by such registration statement is required to be delivered
under the 1933 Act, of the Company's becoming aware that the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and promptly prepare and furnish to each
such Registered Holder selling Registrable Securities a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
F. As soon as practicable after the effective date of
the registration statement, and in any event within eighteen (18) months
thereafter, make generally available to Registered Holders participating in the
offering an earnings statement (which need not be audited) covering a period of
at least twelve (12) consecutive months beginning after the effective date of
the registration statement which earnings statement shall satisfy the provisions
of Section 11(a) of the 1933 Act, including, at the Company's option, Rule 158
thereunder. To the extent that the Company files such information with the SEC
in satisfaction of the foregoing, the Company need not deliver the above
referenced earnings statement to Registered Holders.
G. Upon request, deliver promptly to counsel for each
Registered Holder participating in the offering copies of all correspondence
between the SEC and the Company, its counsel or auditors and all memoranda
relating to discussions with the SEC or its staff with respect to the
registration statement and permit each such Registered Holder to do such
investigation at such Registered Holder's sole cost and expense, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary. Each Registered Holder
agrees that it will use its best efforts not to interfere unreasonably with the
Company's business when conducting any such investigation and each Registered
Holder shall keep any such information received pursuant to this Paragraph 7G
confidential.
H. Provide a transfer agent and registrar located in
the United States for all such Registrable Securities covered by such
registration statement not later than the effective date of such registration
statement.
I. List the Registrable Securities covered by such
registration statement on such exchanges and/or on the National Association of
Securities Dealers Automated Quotation National Market System ("NASDAQ") as the
Common Stock is then currently listed upon.
-15-
J. Pay all Registration Expenses (as defined below)
incurred in connection with a registration of Registrable Securities, whether or
not such registration statement shall become effective; provided that each
Registered Holder shall pay all underwriting discounts, commissions and transfer
taxes, and their own counsel and accounting fees, if any, relating to the sale
or disposition of such Registered Holder's Registrable Securities pursuant to a
registration statement. As used herein, "Registration Expenses" means any and
all reasonable and customary expenses incident to performance of or compliance
with the registration rights set forth herein, including, without limitation,
(i) all SEC and stock exchange or NASDAQ registration and filing fees, (ii) all
fees and expenses of complying with state securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities but no other expenses
of the underwriters or their counsel), (iii) all printing, messenger and
delivery expenses, and (iv) the reasonable fees and disbursements of counsel for
the Company and the Company's independent public accountants.
(i) The Company acknowledges that there is no adequate remedy
at law for failure by it to comply with the provisions of this Paragraph 7 and
that such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Paragraph 7 may be specifically
enforced. In the event that the Company shall fail to file such registration
statement when required pursuant to Paragraph 7(a) above or to keep any
registration statement effective as provided in this Paragraph or otherwise
fails to comply with its obligations and agreements in this Paragraph 7, then,
in addition to any other rights or remedies Sellers may have at law or in
equity, including without limitation, the right of rescission, the Company shall
indemnify and hold harmless each holder of Placement Agent Warrants from and
against any and all manner or loss which they may incur as a result of such
failure. In addition, the Company shall also reimburse such holders for any and
all reasonable legal fees and expenses incurred by them in enforcing their
rights pursuant to this Paragraph 7, regardless of whether any litigation was
commenced; provided, however, that the Company shall not be liable for the fees
and expenses of more than one law firm, which firm shall be designated by the
Placement Agent.
8. CONDITIONS. The following obligations of the Company shall be
satisfied or fulfilled on or prior to the date of each Closing, unless otherwise
agreed to in writing by the Placement Agent:
(a) The Company shall have delivered to the Placement Agent, at
the Initial Closing, (i) a currently-dated long-form good standing certificate
or telegram from the Secretary of State where the Company and each Subsidiary is
incorporated and each other jurisdiction in which the Company and any of the
Subsidiaries is qualified to do business as a foreign corporation; (ii) the
certificate of incorporation of the Company and each Subsidiary, as currently in
effect, certified by the Secretary of State of the state where the Company and
each Subsidiary is incorporated; (iii) by-laws of the Company certified by the
secretary of the Company; and (iv) certified resolutions of the Board of
Directors of the Company approving this Agreement, the sale of the Debentures,
the
-16-
Common Stock Warrants and the Placement Agent Warrants, and the registration of
the Registrable Securities.
(b) There shall have occurred no event which had a Material
Adverse Effect on the Company or the Subsidiaries or any of their respective
businesses, assets, prospects or the Company's securities since the date of this
Agreement.
(c) No litigation or administrative proceeding shall have been
threatened or commenced against the Company or any of the Subsidiaries which (i)
seeks to enjoin or otherwise prohibit or restrict the consummation of the
transactions contemplated by this Agreement or (ii) if adversely determined,
would have a Material Adverse Effect on the Company or the Company's securities.
(d) The Company shall have delivered to the Placement Agent a
certificate of its principal executive and financial officers as to the matters
set forth in Paragraphs 8(a), (b) and (c) of this Agreement and to the further
effect that (i) neither the Company nor any Subsidiary is in default, in any
respect, under any note, loan agreement, security agreement, mortgage, deed of
trust, indenture, contract, alliance agreement, lease, license, joint venture
agreement, agreement or other instrument to which it is a party, except as
disclosed in the Financial Statements or the Memorandum and except where such
default has not and will not have a Material Adverse Effect; however, Xxxxxx X.
Xxxxxx has given notice of an event of default related to the note payable to
him in the amount of $750,000 as a result of an alleged late payment of
interest. The Company attempted to deliver the interest and Xxxxxx Xxxxxx
refused the check and therefore the Company contends that the note is not in
default; (ii) the Company's representations and warranties contained in this
Agreement are true and correct in all respects on such date with the same force
and effect as if made on such date; (iii) there has been no amendment or changes
to the Company's or Subsidiaries' certificates of incorporation or by-laws or
authorizing resolutions from those delivered pursuant to Paragraph 8(a) of this
Agreement; and (iv) no event has occurred which, with or without the lapse of
time or giving of notice, or both, would constitute a breach or default thereof
by the Company or any Subsidiary or would cause acceleration of any obligation
of the Company or any Subsidiary, or could adversely affect the business,
operations, financial condition or prospects of the Company.
(e) The Placement Agent shall have received the opinion of
Friedlob Xxxxxxxxx Xxxxxxx & Tourtillot, LLC, counsel for the Company, dated as
of the Closing date in form and substance reasonably satisfactory to the
Placement Agent and its counsel.
(f) The Company shall have prepared and filed or delivered to
counsel for filing with the SEC and any states in which such filing is required,
a Form D relating to the sale of the Debentures and such other documents and
certificates as are required.
(g) Subscriptions for at least the Minimum Amount of Debentures
shall have been accepted by the Company.
-17-
(h) In addition to the right of the Placement Agent to
terminate this Agreement and not consummate the transactions contemplated by
this Agreement as a result of the failure of the Company to comply with any of
its obligations set forth in this Agreement, this Agreement may be terminated by
the Placement Agent by written notice to the Company at any time prior to the
Initial Closing if, in the Placement Agent's sole judgment, (i) the Company
and/or Subsidiaries shall have sustained a loss that is material to the Company
or its Subsidiaries, taken as a whole, whether or not insured, by reason of
fire, earthquake, flood, accident or other calamity, or from any labor dispute
or court or government action, order or decree; (ii) trading in securities on
any exchange or system shall have been suspended or limited, either generally or
specifically, with respect to the Company's Common Stock; (iii) material
governmental restrictions have been imposed on trading in securities, generally
or specifically, with respect to the Company's Common Stock (not in force and
effect on the date of this Agreement); (iv) a banking moratorium shall have been
declared by Federal or New York State authorities; (v) an outbreak of major
international hostilities or other national or international calamity shall have
occurred; (vi) the Congress of the United States or any state legislative body
shall have passed or taken any action or measure, or such bodies or any
governmental body or any authoritative accounting institute, or board, or any
governmental executive shall have adopted any orders, rules or regulations,
which the Placement Agent reasonably believes is likely to have a Material
Adverse Effect on the business, financial condition or financial statements of
the Company or the market for the Common Stock; (vii) the Common Stock shall
have been delisted from NASDAQ or the Company shall have received notice from
NASDAQ advising the Company of its intention to have the Common Stock delisted
from NASDAQ, whether conditional or otherwise, or the Company shall fail to meet
the requirements for continued listing on NASDAQ; or (viii) there shall have
been, in the Placement Agent's judgment, a material decline in the Dow Xxxxx
Industrial Index or the market price of the Common Stock at any time subsequent
to the date of this Agreement.
9. COVENANTS OF THE COMPANY. The Company agrees at all times as long
as the Debentures or Placement Agent Warrants may be converted or exercised, to
keep reserved from the authorized and unissued Common Stock, such number of
shares of Common Stock as may be, from time to time, issuable upon conversion of
the Debentures and exercise of the Placement Agent Warrants.
10. FEES.
(a) Upon the receipt by the Company of the payment from the
Lenders, the Company will pay the Placement Agent a fee, in cash, (the "Cash
Fee") equal to seven (7.0%) percent of the gross proceeds from the sale of the
Debentures sold in the transaction contemplated by this Agreement. Such amount
of the Cash Fee may be deducted by the Placement Agent from the payment being
made to the Company pursuant to Section 2 of this Agreement. In addition, the
Company shall issue to the Placement Agent at the Final Closing, five (5) year
Warrants to purchase an amount of shares of the Company's Common Stock equal to
seven (7.0%) percent of the total number of shares of Common Stock issuable upon
conversion of the Debentures sold in the
-18-
transaction contemplated by this Agreement, at an exercise price of 120% of the
Conversion Price (the "Placement Agent Warrants").
(b) The Company shall reimburse the Placement Agent for up to
$35,000 of its reasonable expenses (including reasonable fees and expenses of
its counsel) incurred in connection with the transaction contemplated by this
Agreement.
(c) The Company shall pay any fees required in connection of
the qualification of the sale of the Debentures under the state securities or
"blue sky" laws of any state which the Placement Agent reasonably deems
necessary and any other out-of-pocket expenses incurred by the Placement Agent
in connection with the transaction contemplated by this Agreement.
(d) All payments in connection with the sale of the Debentures
shall be made pursuant to the terms and conditions of the escrow agreement dated
as of March 24, 2000 between Placement Agent and American Stock Transfer & Trust
Company, an executed copy of which has been delivered to and acknowledged by the
Company.
11. NOTICES. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally or sent
by overnight courier or messenger against receipt thereof or sent by registered
or certified mail, return receipt requested, or by facsimile transmission, if
confirmed by mail as provided in this Paragraph 11. Notices shall be deemed to
have been received on the date of personal delivery or facsimile or, if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the third business day after the date of mailing. Notices shall be
sent to the following addresses:
TO THE COMPANY:
XXXXXXXX CONTROLS, INC.
00000 XX 00xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
FACSIMILE: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Chief Financial Officer
WITH A COPY TO:
FRIEDLOB XXXXXXXXX XXXXXXX
& XXXXXXXXXXX, LLC
0000 Xxxxxxx Xxxxx, Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
FACSIMILE: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
TO PLACEMENT AGENT:
-19-
TAGLICH BROTHERS, INC.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
FACSIMILE: (000) 000-0000
Attention: Xx. Xxxxxxx X. Oh
WITH A COPY TO:
XXXXXXXX XXXXXXXXX XXXXXX AROHNSON
& XXXXXX LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FACSIMILE: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or to such other address as any party shall designate in the manner provided in
this Paragraph 11.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof, superseding any and all prior or
contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver. No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such state. Each party hereby consents to
the exclusive jurisdiction of the Federal and state courts situated in New York
County, New York in connection with any action arising out of or based upon this
Agreement and the transactions contemplated by this Agreement.
(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective personal representatives,
successors and permitted assigns.
(d) In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision.
(e) Each party shall, without payment of any additional
consideration by any other party, at any time on or after the date of any
Closings take such
-20-
further action and execute such other and further documents and instruments as
the other party may request in order to provide the other party with the
benefits of this Agreement.
(f) The captions and headings contained herein are solely for
convenience and reference and do not constitute a part of this Agreement.
(g) All references to any gender shall be deemed to include the
masculine, feminine or neuter gender, the singular shall include the plural and
the plural shall include the singular.
(h) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same document.
-21-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first aforesaid.
XXXXXXXX CONTROLS, INC. TAGLICH BROTHERS, INC.
By: By:
--------------------------- ----------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxxx X. Oh
Title: Chief Financial Officer Title: Vice President
