EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (as it may be amended from time to time, the
"Agreement") made and entered on February 3, 1999, by and between ProFutures
Special Equities Fund, L.P. ("ProFutures") and Coventry Industries Corp. (the
"Company").
WHEREAS, the Company and ProFutures entered into a Subscription
Agreement dated January 16, 1998 and amended as of March 31, 1998 (the
"Subscription Agreement") pursuant to which ProFutures purchased 1,250 shares of
the Company's 5% Convertible Preferred Stock (the "Preferred Stock"); and
WHEREAS, the Company desires to redeem the Preferred Stock on the terms
set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, promises, and undertakings set forth herein, the parties agree as
follows:
1. Upon the closing of the private placement on the terms set forth on Exhibit A
hereto, the Company will deliver to ProFutures the following (the "Coventry
Deliveries"):
(a) A bank check or wire transfer in the amount of $600,000.
(b) Three 8% Convertible Promissory Notes in the aggregate principal
amount of $819,000 in the form of Exhibit B hereto, all of which are the same
except for the conversion prices of $.91, $1.36 and $1.36, respectively.
(c) An 8% Promissory Note in the amount of $81,000 in the form of
Exhibit C hereto.
(d) A certificate representing 250,000 shares of Company Common Stock
(or if after the planned 1-for-8 reverse split 31,250 shares).
(e) A Pledge and Security Agreement, in the form of Exhibit D hereto,
relating to the pledge by Xxxxxxx Rosedale and Xxxxxx Xxxxxxx of up to 2,000,000
shares (presplit) of the Company to secure the Notes (the "Pledged Shares").
(f) An Escrow and Control Agreement, in the form of Exhibit E hereto,
with respect to the Pledged Shares.
2. Simultaneously with the Coventry Deliveries, ProFutures will deliver to the
Company the following:
(a) Stock certificate representing the Preferred Stock, which shall be
retired by the Company.
(b) Option Agreement, in the form of Exhibit F hereto.
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(c) Executed copy of an amendment or joinder to the Company's existing
Voting Agreement.
(d) The Warrants to purchase 250,000 shares of the Company's Common
Stock held by ProFutures to be cancelled.
3. Effective upon the Coventry Delivery, the Subscription Agreement will be
terminated and, therefore, ProFutures will then waive only such claims that it
has to dividends and penalties payable under such Agreement and shares that may
be required to be issued under the Subscription Agreement.
4. Effective upon the receipt by ProFutures of $900,000 in cash representing the
repayment of the aggregate principal amount of the outstanding Notes described
in Section 1(b) and (c) above, and accrued interest on the Notes, ProFutures
will waive and hereby release and discharge the Company, and the Company will
waive and hereby release and discharge ProFutures, from any and all liability of
whatever kind or nature arising from any acts or omissions of either party,
known or unknown, asserted or unasserted, which occurred up to the date of this
Agreement, including but not limited to all liability for any acts that may have
violated their rights under any contract, tort, or other common law, or any
other duty or obligation of any kind; all liability, asserted or unasserted,
known or unknown, suspected or unsuspected, which was or may have been alleged
against or imputed to either party by the other party or anyone acting on its
behalf up to the date of this Agreement.
5. The Company hereby represents and warrants to ProFutures that, as of the date
hereof, each of the representations and warranties set forth in Section 2.2(a),
(b), (e) through (i) of the Subscription Agreement, incorporated herein as if
fully set forth, is true and correct, except that the Company has been notified
by the NASDAQ SmallCap Market that its common stock will be delisted on February
19, 1999 if the Company does not meet such Market's listing requirements by that
date.
6. If the Coventry Deliveries are not made by the earlier of: (a) 5:00 p.m.,
Austin, Texas time, February 28, 1999; or (b) suspension of trading or delisting
of the Company's Common Stock on the NASDAQ SmallCap Market, this Agreement
shall be null and void. In such event, ProFutures shall be free to pursue all
rights and remedies at law or in equity under the Subscription Agreement or
otherwise.
7. This Agreement constitutes the entire agreement between the parties in
relation to its subject matter, supersedes all prior agreements between the
parties, if any, concerning its subject matter, and may not be altered, amended,
modified, superseded, canceled, or terminated except by a writing duly executed
by the parties or their attorneys on their behalf.
8. If any of the provisions, terms, clauses, waivers, or releases of claims or
rights contained in this Agreement are declared illegal, unenforceable, or
ineffective in a legal forum of competent jurisdiction, then such provisions,
terms, clauses, waivers, or releases of claims or rights shall be deemed
severable, such that all other provisions, terms, clauses, waivers, and releases
of claims and rights contained in this Agreement shall remain valid and binding
upon the parties.
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9. This Agreement shall be governed by the laws of the State of Florida, without
reference to its principles governing conflicts of law.
The Company and ProFutures each hereby (i) irrevocably submits to the
jurisdiction of the United States District Court and other courts of the United
States sitting in the State of Texas for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company and ProFutures each
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to its principal business address and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this paragraph shall affect or limit any right to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF, Coventry Industries Corp. and ProFutures Special
Equities Fund, L.P. have acknowledged and executed this Agreement as of the date
hereof.
COVENTRY INDUSTRIES CORP.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Xxxxxx Xxxxxxx, President
PROFUTURES SPECIAL EQUITIES FUND, L.P.
By: ProFutures Fund Management, Inc., a General Partner
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx, President
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