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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
JULY 24, 1998
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Date of Report (Date of earliest event reported)
DATAMETRICS CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-8567 95-3545701
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(Commission File Number) (I.R.S. Employer
Identification No.)
25B HANOVER ROAD, FLORHAM PARK, NJ 07932
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(Address of principal executive offices) (Zip Code)
(973) 377-3900
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Registrant's telephone number, including area code
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(Former name or former address, if changed since last report)
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ITEM 5
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On July 24, 1998 (the "Closing Date"), several investors (the
"Investors") purchased $1,000,000 in aggregate principal amount of 7%
Convertible Debentures due July 24, 2001 (the "Debentures") of Datametrics
Corporation (the "Registrant") pursuant to a certain 7% Convertible Debenture
Subscription Agreement dated as of July 24, 1998 (the "Agreement").
The aggregate cash consideration paid was $1,000,000.
Fifty percent of the original aggregate principal amount of the
Debentures are convertible at the Investors' election into shares of common
stock, $.01 par value per share ("Common Stock") of the Registrant at any time
after January 23, 1999, and the remainder at any time after March 14, 1999, at
the lesser of (i) $2.125 per share of Common Stock or (ii) 80% of the average
closing bid prices of the Common Stock for the preceding 10 trading days,
provided that in the case of a conversion referred to in (ii), the Registrant
has the option at its election to redeem the Debentures for 120% of the
principal amount of Debentures thereof. The Registrant may also redeem the
Debentures if the closing bid price of the Common Stock is greater than $4.25
for 20 consecutive trading days.
The principal amount of the Debentures bears interest at the rate of 7%
per annum and matures on July 24, 2001, at which time the Debentures convert
automatically into Common Stock. The Debentures are subordinate and junior to
the prior payment in full of all indebtedness for borrowed money of the
Registrant. Imperial Bank, the Registrant's senior lender, has consented to the
sale of Debentures.
The Agreement contains certain covenants and restrictions and a related
Registration Rights Agreement grants the Investors certain registration rights
with respect to the shares of Common Stock which may be acquired upon conversion
of the Debentures.
The above discussion is qualified in its entirety by reference to the
Agreement, the Debentures and the Registration Rights Agreement, copies of each
of which are attached hereto as Exhibits and incorporated herein by this
reference.
ITEM 7
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(c) EXHIBITS
Exhibits which, in their entirety, are incorporated by reference to any
report, exhibit or other filing previously made with the Securities and Exchange
Commission are designated by an asterisk (*) and the location of such material
is included in its description.
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EXHIBIT NO. DESCRIPTION PAGE NO.
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3.1 Restated Certificate of Incorporation of Registrant, as
currently in effect. *
3.2 Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Series *
B Preferred Stock and Qualifications, Limitations and
Restrictions thereof dated August 10, 1993 (incorporated
by reference to Exhibit 4.1 to Registrant's Form 8-K dated
August 10, 1993).
3.3 Bylaws of Registrant, as currently in effect (incorporated
by reference to Exhibit 3.2 to Registrant's Form 10-K for *
the year ended October 28, 1990).
3.4 First Amendment to the Restated By-Laws of the Registrant,
dated August 6, 1996 (incorporated by reference to Exhibit *
3.0 to the Registrant's Form 8-K dated August 6, 1996).
4.1 7% Convertible Debenture Subscription Agreement dated
Filed Herewith as of July 24, 1998 between the Registrant
and the Investors named therein. Filed Herewith
4.2 Form of 7% Convertible Debenture.
4.3 Registration Rights Agreement dated as of July 24, 1998 Filed Herewith
Filed Herewith between the Registrant and the Investors
named therein. Filed Herewith
10.1 Line of Credit Agreement, Security Agreement, Addendum to *
Line of Credit Agreement, and Loan Disbursement
Instructions dated September 8, 1993 (incorporated by
reference to Exhibit 10.1 to Registrant's Form 10-K for
the year ended October 31, 1993).
10.3 Lease for Woodland Hills facility between the Company and *
Manufacturers Life Insurance Company dated as of December
19, 1993, as amended on August 31, 1994 (incorporated by
reference to Exhibit 10.2 to Registrant's Form 10-K for
the year ended October 30, 1994).
10.4 Agreement between the Company and Sidney E. Wing dated *
March 17, 1989 (incorporated by reference to Exhibit 10.4
to Registrant's Form 10-K for the year ended October 29,
1989).
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EXHIBIT NO. DESCRIPTION PAGE NO.
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10.5 Deferred Compensation Agreement between the Company and *
Garland S. White dated October 18, 1989 (incorporated by
reference to Exhibit 10.5 to Registrant's Form 10-K for
the year ended October 29, 1989).
10.6 Amended and Restated Agreement and Plan of Merger dated as *
of May 12, 1993 between Registrant and Rugged Digital
Systems, Inc. ("Rugged Digital") (incorporated by
reference to Exhibit 2 to Registrant's Form 8-K dated May
12, 1993).
10.7 Escrow Agreement dated August 10, 1993 among the *
Registrant and others relating to the acquisition of
Rugged Digital (incorporated by reference to Exhibit 4.3
to Registrant's Form 8-K dated August 10, 1993).
10.8 Debt Exchange Agreement dated August 10, 1993 among *
Registrant and debt holders of Rugged Digital
(incorporated by reference to Exhibit 4.2 to Registrant's
Form 8-K dated August 10, 1993).
10.9 Security and Loan Agreement between Registrant and *
Imperial Bank executed March 21, 1995, as amended May 15,
1995 (incorporated by reference to Exhibit 10.1 to
Registrant's Form 10-Q for the period ended April 30,
1995), and as amended March 4, 1996 (incorporated by
reference to period ended April 30, 1995) and as amended
March 4, 1966 (incorporated by reference to Exhibit 10.1
to Registrant's Form 10-Q for the period ended April 28,
1996).
10.10 Agreement between the Company and the Angeloff Company *
dated February 15, 1995 (incorporated by reference to
Exhibit 10.2 to Registrant's Form 10-Q for the period
ended April 30, 1995).
21 List of Subsidiaries *
24.1 Consent of Ernst & Young LLP, Independent Auditors. *
24.2 Consent of Deloitte and Touche LLP, Independent Auditors. *
27 Financial Data Schedule. *
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EXHIBIT NO. DESCRIPTION PAGE NO.
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99.1 The Datametrics Employee Savings Plan And The Trust *
Agreement Pursuant To The Datametrics Employee Savings
Plan (incorporated by reference to Exhibit 28 to
Registrant's Statement on Form S-8 filed on November 12,
1985 SEC File No. 33-01469.
99.2 The Amended and Restated 1993 Stock Option Plan of *
Datametrics Corporation (incorporated by reference to
Exhibit 28.2 to Registrant's Form 10-K for the year ended
October 31, 1993).
99.3 The 1986 Stock Option Plan of Datametrics Corporation, as *
amended (incorporated by reference to Exhibit 28.1 to
Registrant's Registration Statement on Form S-8 filed on
June 10, 1987, SEC File No. 33-14969 and Exhibit 28.5 to
Registrant's Form 10-K for the year ended October 29,
1988).
99.4 The 1982 Stock Option Plan of Datametrics Corporation, as *
amended (incorporated by reference to Exhibit 28.2 to
Registrant's Registration Statement on Form S-8 filed on
June 10, 1987, SEC File No. 33-14969).
99.5 The 1993 Directors' Option Plan of Datametrics Corporation *
(incorporated by reference to Exhibit 28.5 to Registrant's
Form 10-K for the year ended October 31, 1993).
99.6 Datametrics Corporation Supplemental Executive Retirement *
Plan and Master Trust Agreement (incorporated by reference
to Exhibit 28.6 to Registrant's From 10-K for the year
ended October 30, 1994).
99.7 The 1995 Stock Option Plan of Datametrics Corporation *
(incorporated by reference to Exhibit 28.7 to Registrant's
Form S-8 Filed May 30, 1996, SEC File No. 333-04815).
99.8 The Datametrics Corporation Employee Qualified Stock *
Purchase Plan (incorporated by reference to Exhibit 28.8
to Registrant's Form S-8 filed on May 30, 1996, SEC File
No. 333-04815).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATAMETRICS CORPORATION
By: /s/ Ronald Lefkon
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Ronald Lefkon, Vice President and
Chief Financial Officer
Dated July 24, 1998
EXHIBIT 4.1
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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND APPLICABLE STATE SECURITIES LAWS. THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND
UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
7% CONVERTIBLE DEBENTURE
SUBSCRIPTION AGREEMENT
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DATAMETRICS CORPORATION
THIS 7% CONVERTIBLE DEBENTURE SUBSCRIPTION AGREEMENT (this"Agreement")
is executed in reliance upon an exemption under the Securities and Exchange
Commission ("SEC"), under the Securities Act of 1933, as amended (the "Act").
This Agreement has been executed by the undersigned in connection with
the private placement of the 7% Convertible Debentures (hereinafter referred to
as the "Debentures") of DATAMETRICS CORPORATION (American Stock Exchange symbol
"DC"), with an address at 25B Hanover Road, No. 3305, Florham Park, NJ 07932, a
corporation organized under the laws of the State of Delaware, USA (hereinafter
referred to as the "Company"). The terms on which the Debentures may be
converted into common stock of the Company, $0.01 par value per share, (the
"Common Stock") and the other terms of the Debentures are set forth in the form
of the 7% Convertible Debenture due July 24, 2001 annexed hereto as Exhibit A
(the "Form of Debenture"). The offer and sale of the Debentures, and the Common
Stock underlying the Debentures (collectively the "Securities"), are being made
in reliance upon an exemption under the Act. The Closing Date shall be
determined in accordance with Sections 13, 14 and 15 herein.
Each of the entities listed on Schedule A annexed hereto (the
"Subscribers") hereby represents and warrants to, and agrees with the Company as
follows:
SECTION 1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
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1.1 CLOSING. The Company will sell and the Subscribers will buy, in
reliance upon the representations and warranties of the Company and Subscribers
contained in this Agreement and the Form of Debenture, upon the terms and
conditions set forth herein and therein, that principal amount of Debentures set
forth next to their names on Schedule A for an aggregate purchase price of One
Million ($1,000,000) U.S. Dollars (the "Purchase Price"). The proceeds of the
sale of the Debentures will be used only for working capital purposes and not
for the payment of any senior or secured debt.
1.2 FORM OF PAYMENT. The Subscribers shall pay the Purchase Price by
delivering good funds in United States Dollars by wire transfer in escrow to
Goldstein, Goldstein & Reis, LLP, the Escrow Agent, against delivery of the
original Debentures to the Escrow Agent, as per a separate Escrow Agreement,
annexed hereto as Exhibit B) as payment in full for their portion of the
Securities.
1.3 WIRE INSTRUCTIONS. Wire instructions for Goldstein, Goldstein &
Reis, LLP are as follows:
Chase Manhattan Bank, N.A.
ABA No. 021000021
For the Account of:
United States Trust Company of New York
Account No. 920-1-073195
In favor of:
Goldstein, Goldstein & Reis, LLP Attorney Escrow Account
Account No. 59-01383
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.
Subscribers each acknowledge, represent, warrant and agree as follows:
2.1 ORGANIZATION AND AUTHORIZATION. Each of the Subscribers is duly
incorporated or organized and validly existing in the state or country of its
incorporation or organization and has all requisite power and authority to
subscribe for and purchase and hold the Securities and to enter into this
Agreement. The decision to subscribe for Debentures and the execution and
delivery of this Agreement by the Subscribers, the performance by the
Subscribers of their obligations hereunder and the consummation by the
Subscribers of the transactions contemplated hereby have been duly authorized
and requires no other proceedings on the part of the Subscribers. The
undersigned signatories have all right, power and authority to execute and
deliver this Agreement on behalf of the Subscribers. This Agreement has been
duly executed and delivered by the Subscribers and, assuming the execution and
delivery hereof and acceptance hereof by the Company, constitutes the legal,
valid and binding obligations of the Subscribers, enforceable against the
Subscribers in accordance with its terms.
2.2 EVALUATION OF RISKS. Each of the Subscribers has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of, and bearing the
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economic risks entailed by, an investment in the Company and of protecting its
interests in connection with this transaction. They each recognize that their
investment in the Company involves a high degree of risk and could result in the
complete loss of their investment.
2.3 INDEPENDENT COUNSEL. Each of the Subscribers acknowledge that they
have been advised to consult with their own attorney regarding legal matters
concerning the Company and their investment in the Securities and to consult
with their tax advisor regarding the tax consequences of acquiring the
Securities.
2.4 DISCLOSURE DOCUMENTATION. Each of the Subscribers has each
received and reviewed copies of the Company's reports and registration
statements filed under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the Act, including the Company's 10-Ks, 10-Qs, 8-K's, and
registration statements filed by the Company since June 1, 1997 (collectively,
the "Reports"). Except for the Reports, the Subscribers are not relying on any
other information relating to the offer and sale of the Securities. Subscribers
acknowledge that the Company has offered to make available any additional public
information that the Subscribers may reasonably request, including technical
information, and other material public information about the Company and
Subscribers have been offered the Company's full and unconditional cooperation
in making such information available to Subscribers and acknowledge that the
Company has recommended that the Subscribers request and review such information
prior to making an investment decision. Except as set forth in herein, no oral
or written representations have been made, or oral or written information
furnished to the undersigned, the Subscribers or their advisors, if any, in
connection with the offering of the Securities which were or are in any way
inconsistent with the Reports.
2.5 OPPORTUNITY TO ASK QUESTIONS. Each of the Subscribers has had a
reasonable opportunity to ask questions of and receive answers from the Company
concerning the Company and the offering of the Securities, and all such
questions, if any, have been answered to the full satisfaction of each of the
Subscribers.
2.6 REPORTS CONSTITUTE SOLE REPRESENTATIONS. Except as set forth in
the Reports and elsewhere herein, no representations or warranties have been
made to Subscribers by (a) the Company or any agent, employee or affiliate of
the Company or (b) any other person, and in entering into this transaction
Subscribers are not relying upon any information, other than that contained in
the Reports and the results of independent investigation by Subscribers.
2.7 EACH OF THE SUBSCRIBERS IS AN ACCREDITED INVESTOR. All of the
Subscribers are "Accredited Investors", as defined under Regulation D, and
represent and warrant that they are included within one or more of the following
categories of "Accredited Investors."
(i) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan associated or other institution as defined in
Section 3(a)(5)A of the Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the 1934 Act; any insurance company
as defined in Section 2(13) of the Act;
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any investment company registered under the Investment Company
Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; any Small Business Investment
Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Act of 1958;
any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political subdivision, for the benefits of its employees
if such plan has total assets in excess of $5,000,000; and
employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in
excess of $5,000,000;
(ii) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of the
Company, or any director, executive officer, or general
partner of a general partner of that issuer;
(v) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(vi) Any natural person who had an individual income in excess of
$200,000 in each of the two (2) most recent years or joint
income with that person's spouse in excess of $300,000 in each
of those years and has a reasonable expectation of reaching
that same income level in the current year;
(vii) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
as described in Section 230.506(b)(2)(ii) of Regulation D
under the Act;
(viii) Any entity in which all of the equity owners are accredited
investors; and
(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors
within the meaning of Rule 501 of Regulation D promulgated
under the Act.
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2.8 NO REGISTRATION, REVIEW OR APPROVAL. Each of the Subscribers
acknowledges and understands that the limited private offering and sale of
Securities pursuant to this Agreement has not been reviewed or approved by the
SEC or by any state securities commission, authority or agency, and is not
registered under the Act or under the securities or "blue sky" laws, rules or
regulations of any state. Each of the Subscribers acknowledges, understands and
agrees that the Securities are being offered and sold hereunder pursuant to (i)
a private placement exemption to the registration provisions of the Act pursuant
to Section 3(b) or Section 4(2) of such Act, and (ii) a similar exemption to the
registration provisions of applicable state securities laws. Each of the
Subscribers understands that the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and
understandings of the Subscribers set forth herein in order to determine the
applicability of such exemptions and the suitability of the Subscribers to
acquire the Securities.
2.9 INVESTMENT INTENT. Without limiting their ability to resell the
Securities pursuant to an effective registration statement under the Act, each
of the Subscribers is acquiring the Securities solely for its own account and
not with a view to the distribution, assignment or resale to others. Each of the
Subscribers understands and agrees that it may have to bear the economic risk of
its investment in the Securities for an indefinite period of time.
2.10 NO ADVERTISEMENTS. The Subscribers are not subscribing for the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
2.11 REGISTRATION RIGHTS. The parties have entered into a Registration
Rights Agreement (Exhibit C).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
acknowledges, represents, warrants and agrees as follows:
3.1 ORGANIZATION/QUALIFICATION. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware and is in
good standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of its business requires such qualification, except where
its failure to be so qualified would not have a material adverse effect on the
Company.
3.2 ACCURACY OF REPORTS AND INFORMATION. Except as otherwise disclosed
herein or in any schedule hereto, the Company is in compliance, to the extent
applicable, with all reporting obligations under either Section 12(b), 12(g) or
15(d) of the 1934 Act, and shall maintain such status on a timely basis. The
Company has registered its Common Stock pursuant to Section 12 of the 1934 Act
and the Common Stock is listed and trades on the American Stock Exchange. [The
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Company has filed all material required to be filed pursuant to all reporting
obligations, under either Section 13(a) or 15(d) of the 1934 Act during the
twelve (12) months immediately preceding the offer and sale of the Securities
(or for such shorter period that the Company has been required to file such
material).]
3.3 SEC FILINGS/FULL DISCLOSURE. None of the Company's filings with
the Securities and Exchange Commission contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made, not misleading. The Company has timely filed all requisite
forms, reports and exhibits thereto with the Securities and Exchange Commission.
There is no fact known to the Company (other than general economic conditions
known to the public generally) that has not been publicly disclosed by the
Company or disclosed in writing to each of the Subscribers which (i) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or on the earnings, business affairs, properties, or
assets of the Company (a "Material Adverse Effect"), or (ii) could reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement.
3.4 AUTHORIZATION. The Company has all requisite corporate right,
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Securities and the performance
of the Company's obligations hereunder has been taken. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy as they may apply to the indemnification provisions set forth in this
Agreement. Upon their issuance and delivery in accordance with this Agreement,
the Securities will be validly issued, fully paid and nonassessable and will be
free of any liens or encumbrances; provided, however, that the Securities are
subject to restrictions on transfer under state and/or federal securities laws.
The issuance and sale of the Securities will not give rise to any preemptive
right or right of first refusal or right of participation on behalf of any
person.
3.5 NO CONFLICT. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not result in
any violation of, or default, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to a loss of a
material benefit, under, any provision of the Certificate of Incorporation, and
any amendments thereto, Bylaws, and any amendments thereto of the Company or any
material mortgage, indenture, lease or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, its properties or
assets and which (i) would reasonably be expected to have a Material Adverse
Effect, or (ii) could reasonably be expected to materially and adversely affect
the ability of the Company to perform its obligations pursuant to this
Agreement.
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3.6 NO UNDISCLOSED LIABILITIES OR EVENTS. The Company has no
liabilities or obligations, other than those disclosed in the Reports, this
Agreement or those incurred in the ordinary course of the Company's business
since June 15, 1998, which individually or in the aggregate, would (i)
reasonably be expected to have a Material Adverse Effect, or (ii) reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement. Except as set for in Section
3.24, to the knowledge of the Company, no event or circumstance has occurred or
exists with respect to the Company which (i) could reasonably be expected to
have a Material Adverse Effect, or (ii) could reasonably be expected to
materially and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement.
3.7 NO DEFAULT. Except as set forth in Section 3.24, the Company is
not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound, and neither the execution, nor the
delivery by the Company, nor the performance by the Company of its obligations
under this Agreement or the Exhibits annexed hereto, including the conversion
provision of the Debentures will result in the breach or violation of any of the
terms or provisions of, or constitute a default or result in the creation or
imposition of any lien or charge on any assets or properties of the Company
under, any material indenture, mortgage, deed of trust or other agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound or any statute or the Certificate of Incorporation or by-laws
of the Company, or any decree, judgment, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or its
properties, or the Company's listing agreement for its Common Stock (it being
understood that it will be necessary for the Company to file an additional
listing application with the American Stock Exchange to list the Common Stock
issuable pursuant to the Debenture), which individually or in the aggregate (i)
could reasonably be expected to have a Material Adverse Effect, or (ii) could
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement.
3.8 ABSENCE OF EVENTS OF DEFAULT. Except as set forth in the Reports
and this Agreement (including all Exhibits annexed hereto), no default, as
defined in the respective agreement to which the Company is a party, and no
event which, with the giving of notice or the passage of time or both, would
become a default, has occurred and is continuing, which would (i) reasonably be
expected to have a Material Adverse Effect, or (ii) could reasonable be expected
to materially and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement.
3.9 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement (including all Exhibits annexed hereto), or the
offer, sale or issuance of the Securities, or the consummation of any other
transaction contemplated hereby, except as may be required by applicable
securities laws.
3.10 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the Reports,
the Company has
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sufficient trademarks, trade names, patent rights, copyrights and licenses to
conduct its business as presently conducted in the Reports. Except as disclosed
in the Reports, to the knowledge of the Company, neither the Company nor its
services is infringing or will infringe any trademark, trade name, patent right,
copyright, license, trade secret or other similar right of others currently in
existence; and there is no claim being made against the Company regarding any
trademark, trade name, patent, copyright, license, trade secret or other
intellectual property right which could (i) reasonably be expected to have a
Material Adverse Effect, or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations pursuant
to this Agreement.
3.11 MATERIAL CONTRACTS. Except as set forth in the Reports and in
Section 3.24, the agreements to which the Company is a party described in the
Reports are valid agreements, in full force and effect, and the Company is not
in breach or default under any of such agreements which could (i) reasonably be
expected to have a Material Adverse Effect, or assets of the Company, or (ii)
could reasonably be expected to materially and adversely affect the ability of
the Company to perform its obligations pursuant to this Agreement.
3.12 LITIGATION. Except as disclosed in the Reports, there is no
action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any Material Adverse Effect. The Company is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality which could (i) reasonably be
expected to have a Material Adverse Effect, or (ii) could reasonably be expected
to materially and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement.
3.13 TITLE TO ASSETS. Except as set forth in Reports, the Company has
good and marketable title to all properties and material assets described in the
Reports as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company.
3.14 SUBSIDIARIES. Except as disclosed in the Reports, the Company
does not presently own or control, directly or indirectly, any interest in any
other corporation, partnership, association or other business entity.
3.15 REQUIRED GOVERNMENTAL PERMITS. The Company is in possession of
and operating in material compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities which are material to the conduct of its business, all of
which are valid and in full force and effect.
3.16 LISTING. The Company will maintain the listing of its Common
Stock on the American Stock Exchange, the successors thereto, or other organized
United States market or quotation system. The Company has not received any
notice, oral or written, affecting its continued listing on such Exchange and
the Company will take no action which would impact its continued
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listing or eligibility of the Company for such listing. The Company is in full
compliance with the requirements for listing on the American Stock Exchange.
3.17 OTHER OUTSTANDING SECURITIES/FINANCING RESTRICTIONS. Except as
disclosed in the Reports, the Company has no outstanding restricted shares, or
shares of Common Stock sold under Regulation S, Regulation D or outstanding
under any other exemption from registration, which are available for sale as
unrestricted ("free trading") stock.
3.18 REGISTRATION ALTERNATIVE. The Company covenants and agrees that
for so long as any of the Common Stock issuable upon conversion of the
Debentures remains outstanding and continues to be "restricted securities"
within the meaning of Rule 144 under the Act, the Company shall cooperate in all
reasonable respects in order to permit resales of the underlying Common Stock
pursuant to Rule 144 under the Act. The Company and the Subscribers shall upon
conversion of the Debentures, provide the Transfer Agent any and all papers
necessary to complete the transfer under Rule 144, including, but not limited
to, opinions of counsel to the Transfer Agent, and the Company shall continue to
file all material required to be filed pursuant to Sections 13(a) or 15(d) of
the 1934 Act.
3.19 CAPITALIZATION. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, $0.01 par value per share, of
which 15,564,580 are outstanding. There are 5,000,000 shares of Preferred Stock
authorized and none outstanding. All issued and outstanding shares of Common
Stock have been duly authorized, validly issued and fully paid and
nonassessable.
3.20 DILUTION. The Company is aware and acknowledges that conversion
of the Debentures would cause dilution to existing stockholders and could
significantly increase the outstanding number of shares of Common Stock.
3.21 EMPLOYEE RELATIONS. The Company is not involved in any labor
dispute, nor, to the knowledge of the Company, is any such dispute threatened.
None of the Company's employees is a member of a union and the Company believes
that its relations with its employees are good.
3.22 ENVIRONMENTAL LAWS. To its knowledge, the Company is (i) in
compliance with any and all 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 and which the Company knows are applicable to it ("Environmental
Laws"), (ii) has received all permits, licenses or other approvals required
under applicable Environmental Laws to conduct its business, and (iii) is in
compliance with all terms and conditions of any such permit, license or
approval, except in each case where one failure to do so could reasonably be
expected to have a Material Adverse Effect.
3.23 INSURANCE. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company is engaged. The Company has no
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reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires, or obtain similar coverage from
similar 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 operation of the Company.
3.24 REPRESENTATIONS. Notwithstanding any other provision hereof, the
Subscribers understand and acknowledge that the Company is in material default
under its senior bank facility with Imperial Bank and under its $1,850,000
Senior Subordinated Secured Debentures due May 25, 1998.
SECTION 4. FURTHER REPRESENTATIONS AND WARRANTIES OF THE COMPANY. For
so long as any Securities held by any of the Subscribers remain outstanding, the
Company acknowledges, represents, warrants and agrees as follows:
(i) It will reserve from its authorized but unissued shares of
Common Stock a sufficient number of shares of Common Stock to
permit the conversion in full of all of the outstanding
Securities.
(ii) It will permit the Subscribers to exercise their right to
convert the Debentures pursuant to the terms contained in the
Debentures.
SECTION 5. OPINION OF COUNSEL. Each of the Subscribers shall, upon the
Closing, receive an opinion from counsel to the Company as to the matters set
forth in Exhibit D.
SECTION 6. OPINION OF COUNSEL UPON CONVERSION/TRANSFER. The Company
will obtain for each Subscriber, at the Company's expense, any and all opinions
of counsel which may reasonably be required in order to permit the issuance (and
transfer) of the shares of Common Stock upon conversion of the Debentures,
subject only to receipt of a Notice of Conversion in the form of Exhibit E and
receipt by counsel of such representations, warranties, and documents as are
determined by such counsel to be necessary to comply with applicable securities
laws, duly executed by the Subscriber which shall be satisfactory to the
Transfer Agent, directing the Transfer Agent to remove the legend from the
Common Stock certificate in connection with a sale of such Common Stock, if the
Registration Statement has been declared effective by the SEC or another
exemption is available for resale.
SECTION 7. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Securities to the public without registration, the
Company agrees, for so long as the Securities are held by the Subscribers, to
take such action as is necessary to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times
after the effective date on which the Company becomes subject
to the reporting requirements of the Act or the 1934 Act;
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<PAGE>
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934
Act;
(iii) furnish to each Subscriber forthwith, upon request, a written
statement by the Company as to its compliance with the
reporting requirements of said Rule 144, and of the Act and
the 1934 Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of
the Company and other information in the possession of or
reasonably obtainable by the Company as each Subscriber may
reasonably request in availing itself of any rule or
regulation of the SEC allowing any Subscriber to sell any such
Securities without registration.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SUBSCRIBERS. Each of the Subscribers, and the Company represent, warrant,
covenant, and agree to the other the following with respect to itself:
8.1 SUBSCRIPTION AGREEMENT. This Agreement has been duly authorized,
validly executed and delivered on behalf of the Company and each of the
Subscribers, and is a valid and binding agreement, enforceable in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally.
8.2 NO-CONFLICT. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, under any
provision of the Certificate of Incorporation, and any amendments thereto,
bylaws and any amendments thereto of any Subscriber or any material mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree statute, law, ordinance, rule or
regulation applicable to any Subscriber, or its respective properties or assets.
8.3 APPROVALS. Neither the Company, nor any Subscriber, is aware of
any authorization, approval or consent of any governmental body which is legally
required for the Company's issuance and sale of the Securities to the
Subscribers.
8.4 INDEMNIFICATION. The Company and each of the Subscribers agrees to
indemnify the other, and to hold the other harmless, from and against any and
all losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach by the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
8.5 TRANSFER RESTRICTIONS/CONVERSION HOLDING PERIOD. Refer to the
Debenture annexed hereto as Exhibit A.
8.6 SHORT SELLING RESTRICTIONS. The Subscribers shall be entitled to
accumulate and
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maintain a short position in the Common Stock subject to the following terms and
conditions:
(i) during the five trading days immediately preceding each
Conversion Date as is set forth in the following sentence. The
short position which the Subscribers may accumulate on a daily
basis during this period shall be limited to ten (10%) percent
per day of the principal amount of the Debenture being
converted with the short positions being cumulative during
this five trading day period. Irrespective of whether there
are concurrent or contemporaneous Conversion Dates within the
same five trading day period, the Subscribers may accumulate
and maintain short positions on all such conversions
independently of each other in accordance with the terms of
this section; and/or
(ii) in the event the closing price of the Common Stock is US$4.75
(or higher) the Subscribers, on a pro rata basis, may
initiate, or add to, a short position on the next trading day
in an amount equal to the average daily total composite volume
of the previous twenty (20) trading days on all exchanges
and/or markets as reported by Bloomberg, L.P.
(iii) In no event shall this Section require the Subscribers to
cover any short sales that they may have made for short
selling pursuant to this Section.
8.7 RIGHT OF FIRST REFUSAL. The Company agrees that should it elect to
enter into a transaction for additional debt or equity financing (other than
debt financing from a bank or financial institution) within the later of two
hundred and forty (240) days after the Closing Date or (ii) the Effective Date,
the Company will give each Subscriber written notice of the terms and conditions
of such offer (the "ROFR Notice"). Each Subscriber shall have a right of first
refusal to commit to provide the funds pursuant to the terms as outlined in the
ROFR Notice pro rata on the basis of the Debentures purchased by such
Subscriber. Each Subscriber shall have five (5) business days to reply in
writing after receipt of the ROFR Notice from the Company. Such reply may be
sent via facsimile, receipt confirmed. In the event such written reply is not
received by the Company within such five (5) business day period and provided
that the Subscribers provide the full amount of such financing by the date
specified in the ROFR Notice, the Company shall have the right to conclude a
transaction with another investor or investors provided the transaction is not
materially different from that outlined to the Subscriber as provided herein
above.
SECTION 9. RESTRICTIONS ON SHARE ISSUANCES.
9.1 RESTRICTIONS ON CONVERSION OF DEBENTURE. Each Subscriber or any
subsequent holder of the Debenture (the "Holder") shall be prohibited from
converting any portion of the Debenture which would result in any Subscriber or
Holder being deemed the beneficial owner, in accordance with the provisions of
Rule 13d-3 of the 1934 Act, as amended, of 4.99% or more of the then issued and
outstanding Common Stock of the Company.
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<PAGE>
9.2 LIMITATION ON SHARE ISSUANCE. Notwithstanding anything to the
contrary contained herein or in the Debentures, the number of shares of Common
Stock of the Company issuable pursuant to the Debentures shall not exceed
3,097,351 shares (being 19.9% of the 15,564,580 shares of Common Stock issued
and outstanding on the date hereof). In the event the number of shares of Common
Stock of the Company issuable pursuant to the Debentures exceeds 2,334,687
shares (being 15% of the 15,564,580 shares of Common Stock issued and
outstanding on the date hereof), the Company agrees that it shall, as promptly
as the circumstances permit, call a stockholders meeting for the purpose of
approving below market price issuances of Common Stock to the Subscribers in
excess of 2,334,687. In the event that the aforementioned proposal is not
ratified by the stockholders and the number of shares issuable under the
Debentures exceeds 3,097,351, the Company will seek a waiver from the American
Stock Exchange to permit such issuances. If the Company is unable to obtain the
waiver within twenty (20) days of applying therefor, the Company will, at its
option, either (i) delist the Common Stock from the American Stock Exchange and
include the Common Stock for quotation on the OTC Bulletin Board or (ii) pay to
the Subscribers the "Economic Benefit" of that number of shares of Common Stock
that would have been issuable to the Subscribers above 3,097,351 shares. The
"Economic Benefit" is defined as the number of shares of Common Stock issuable
to the Subscribers pursuant to the Debentures in excess of 3,097,351, multiplied
by the average closing Bid Price for the five trading days preceding the tenth
(10th) trading day after the aforementioned stockholder meeting. The "Economic
Benefit" will be paid within thirty (30) days after such tenth (10th) trading
day.
SECTION 10. REGISTRATION OR EXEMPTION REQUIREMENTS. Each of the
Subscribers acknowledges and understands that the Securities may not be resold
or otherwise transferred except in a transaction registered under the Act and
any applicable state securities laws or unless an exemption from such
registration is available. Each of the Subscribers understands that the
Securities will be imprinted with a legend that prohibits the transfer of the
Securities unless (i) they are registered under applicable securities laws or
such registration is not required, or (ii) if the transfer is pursuant to an
exemption from registration, an opinion of counsel reasonably satisfactory to
the Company is obtained to the effect that the transaction is so exempt.
SECTION 11. LEGEND. The certificates representing the Securities shall
be subject to a legend restricting transfer under the Act, such legend to be
substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE OFFERED OR SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT."
The certificates representing these Securities, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state securities law.
SECTION 12. STOCK DELIVERY INSTRUCTIONS. The Debenture Certificates
shall be delivered to each of the Subscribers on a delivery versus payment basis
as set forth in the Escrow Agreement.
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<PAGE>
SECTION 13. CLOSING DATE. The date the Escrow Agent (i) receives the
Securities and the Purchase Price, and (ii) the conditions set forth in Sections
14 and 15, and the terms and conditions of the Escrow Agreement (Exhibit B)
herein are satisfied or waived, shall be the Closing (the "Closing Date").
SECTION 14. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. Each of the
Subscribers understands that the Company's obligation to sell the Debentures is
conditioned upon:
(i) The receipt and acceptance by the Company of this Subscription
Agreement and all Exhibits duly executed by all other parties
thereto;
(ii) Delivery into escrow by each of the Subscribers of good
cleared funds as payment in full for the purchase of the
Securities;
(iii) All representations and warranties of each of the Subscribers
contained herein shall remain true and correct as of the
Closing Date; and
(iv) The Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the
Debentures, or shall have the availability of exemptions
therefrom. At the Closing Date, the sale and issuance of the
Debentures and the proposed issuance of the Common Stock
underlying the Debentures shall be legally permitted by all
laws and regulations to which each of the Subscribers and the
Company are subject.
SECTION 15. CONDITIONS TO SUBSCRIBER'S OBLIGATION TO PURCHASE. The
Company understands that each of the Subscriber's obligation to purchase the
Debentures is conditioned upon:
(i) Acceptance by the Company of each of the Subscriber's
Subscription Agreement in the form hereof and due execution by
all parties of the Exhibits hereto;
(ii) Delivery into escrow of the original Securities as described
herein;
(iii) All representations and warranties of the Company contained
herein shall remain true and correct in all material respects
as of the Closing Date;
(iv) Receipt of opinion of counsel substantially in the form of
Exhibit D annexed hereto;
(v) The Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Debentures
or shall have the availability of exemptions therefrom. At the
Closing Date, the sale and issuance of the Debentures shall be
legally permitted by all laws and regulations to which the
Company and each of the Subscribers are subject.
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<PAGE>
SECTION 16. MISCELLANEOUS.
16.1 GOVERNING LAW/JURISDICTION. This Agreement will be construed and
enforced in accordance with and governed by the laws of the State of New York,
except for matters arising under the Act, without reference to principles of
conflicts of law. Each of the parties consents to the jurisdiction of the US
District Court for the Southern District of the State of New York in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any state or country
having jurisdiction over the party against whom such judgment was obtained, and
each party hereby waives any defenses available to it under local law and agrees
to the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
16.2 CONFIDENTIALITY. The Company and each of the Subscribers agrees
to keep confidential and not to disclose to or use for the benefit of any third
party the terms of this Agreement (including the names of the Subscribers) or
any other information which at any time is communicated by the other party as
being confidential without the prior written approval of the other party;
provided, however, that this provision shall not apply to information which, at
the time of disclosure, is already part of the public domain (except by breach
of this Agreement) and information which is required to be disclosed by law. If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any such
information obtained from any other party, including the names of the
Subscribers (except information publicly available or in such party's domain
prior to the date hereof, and except as required by court order) and shall
promptly return to the other parties all schedules, documents, instruments, work
papers or other written information, without retaining copies thereof,
previously furnished by it as a result of this Agreement or in connection
herewith.
16.3 FACSIMILE/COUNTERPARTS/ENTIRE AGREEMENT. Except as otherwise
stated herein, in lieu of the original, a facsimile transmission or copy of the
original shall be as effective and enforceable as the original. This Agreement
may be executed in counterparts which shall be considered an original document
and which together shall be considered a complete document. This Agreement and
Exhibits hereto constitute the entire agreement between the Subscribers and the
Company with respect to the subject matter hereof. This Agreement may be amended
only by a writing executed by all parties.
16.4 SEVERABILITY. In the event that any provision of this Agreement
becomes or is
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<PAGE>
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; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
16.5 RELIANCE BY COMPANY. Each of the Subscribers represents to the
Company that the representations and warranties of each Subscriber contained
herein are complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under federal and
state securities laws in connection with a private offering of securities.
16.6 LEGAL FEES AND EXPENSES. Each of the parties shall pay its own
fees and expenses (including the fees of any accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby, except that the Company agrees to pay on the Closing Date,
out of the Purchase Price, fees, in cash, to Goldstein, Goldstein, & Reis, LLP
the sum equal of $17,500.
16.7 AUTHORIZATION. Each of the parties hereto represents that the
individual executing this Agreement on its behalf has been duly and
appropriately authorized to execute the Agreement.
16.8 NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received), (b) on the second business day following the date of mailing by
reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur or (c) on the fifth
business day following date of mailing by registered or certified mail, return
receipt requested, postage prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
(i) If to the Company:
Datametrics Corporation
25B Hanover Road No. 3305
Florham Park, NJ 07932
Attn: Daniel P. Ginns, CEO
Telephone: (973) 377-3900
Facsimile: (973) 377-5736
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<PAGE>
With a copy to:
Lane Altman & Owens LLP
101 Federal Street
Boston, MA 02110
Attn: Joseph Mazzella
Telephone: (617) 345-9800
Facsimile: (617) 345-0400
(ii) If to the Subscribers, at the addresses and numbers listed on
Schedule A annexed hereto.
Any party hereto may from time to time change its address or
facsimile number for notices under this Section by giving at
least ten (10) days' prior written notice of such changed
address or facsimile number to the other party hereto.
16.9 ADJUSTMENTS. Any references to the price of the Common Stock
shall be adjusted proportionately to reflect any adjustments due to the payment
of a stock dividend, stock split, combination of shares or any other similar
event prior to the closing.
[Remainder of Page Intentionally Left Blank]
[Signature Page Follows]
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<PAGE>
IN WITNESS WHEREOF, this 7% Convertible Debenture Subscription
Agreement was duly executed on the date first written below.
Agreed to and Accepted on
this 24th day of July 1998
DATAMETRICS CORPORATION
By: /s/ Ronald Lefkon
-------------------------------
Name: Ronald Lefkon
Title: Vice President and
Chief Financial Officer
LITTLE WING, L.P.
By: /s/ Bic Nguyen
----------------------------------
Name: Bic Nguyen
Title: Authorized Signatory
TRADEWINDS FUND LTD.
By: /s/ Bic Nguyen
----------------------------------
Name: Bic Nguyen
Title: Authorized Signatory
LITTLE WING TOO, L.P.
By: /s/ Bic Nguyen
----------------------------------
Name: Bic Nguyen
Title: Authorized Signatory
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<PAGE>
SCHEDULE A
LIST OF PURCHASERS
------------------
LITTLE WING, L.P.
- -----------------
Little Wing, L.P.
c/o Quilcap Corp.
375 Park Avenue, Suite 1404
New York, New York 10152
$540,000
TRADEWINDS FUND LTD.
- --------------------
Tradewinds Fund Ltd.
c/o Quilcap Corp.
375 Park Avenue, Suite 1404
New York, New York 10152
$400,000
LITTLE WING TOO, L.P.
- ---------------------
Little Wing Too, L.P.
c/o Quilcap Corp.
375 Park Avenue, Suite 1404
New York, New York 10152
$60,000
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<PAGE>
EXHIBITS
(OMITTED)
-20-
EXHIBIT 4.2
-----------
No. $ USD
---- -----
DATAMETRICS CORPORATION
Convertible Debenture due July 24, 2001
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND
HAS BEEN ISSUED IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE SECURITIES
ACT AND AN EXEMPTION UNDER APPLICABLE STATE SECURITIES LAWS. THIS DEBENTURE
SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE
DEBENTURE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.
THIS DEBENTURE MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS.
THIS DEBENTURE is one of a duly authorized issue of debentures of
Datametrics Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (the "ISSUER"), issued on July 24, 1998 (the
"Issuance Date"), and designated as its 7% Convertible Debenture due July 24,
2001, in an aggregate face amount not exceeding One Million (USD $1,000,000)
Dollars.
This Debenture has been issued under the terms and provisions of the 7%
Convertible Debenture Subscription Agreement dated as of July 24, 1998 between
the ISSUER and HOLDER (the "Agreement") and shall be subject to all of the terms
and conditions and entitled to all of the benefits thereof.
FOR VALUE RECEIVED, the ISSUER promises to pay to
---------------------
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<PAGE>
the registered holder hereof or its registered assigns, if any (the "HOLDER"),
the principal sum of:
_________________ ($_________)
United States Dollars,
on July 24, 2001 (the "Maturity Date"), and to pay interest, as outlined below,
at the rate of seven (7%) percent per annum on the principal dollar amount
outstanding for the term of this Debenture. Accrual of interest shall commence
on the date hereof. Interest shall be payable by the ISSUER in cash, quarterly,
commencing on the first business day of the Company's next fiscal quarter
immediately following the Issuance Date, on that portion of the principal amount
of this Debenture which is then outstanding. The interest so payable will be
paid to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the ISSUER regarding registration
and transfers of the Debenture (the "Debenture Register"), provided, however,
that the ISSUER'S obligation to a transferee of this Debenture arises only if
such transfer, sale or other disposition is made in accordance with the terms
and conditions contained in the Agreement. The principal of this Debenture is
payable as provided below in shares of Common Stock at any time prior to the
Maturity Date upon the HOLDER exercising its conversion rights set forth below.
In the event this Debenture is outstanding on the Maturity Date it shall
automatically be converted into freely tradable shares of Common Stock (as set
forth above) as if the HOLDER voluntarily elected such conversion in accordance
with the procedures, terms and conditions set forth in this Debenture, provided,
that (i) the Common Stock is listed on the American Stock Exchange or other
exchange or market in compliance with Section 3.16 of the Agreement, (ii) the
Bid Price is greater than One ($1.00) Dollar for the ten (10) Trading Days
immediately preceding the Maturity Date, (iii) there has not been any suspension
in the trading of the Common Stock on the American Stock Exchange during the
thirty (30) Trading Days immediately preceding the Maturity Date, and (iv) the
ISSUER has been in compliance in all material respects with the terms and
conditions of this Debenture and the Agreement. In the event all of the
aforementioned conditions are not satisfied, or the ISSUER is not able to issue
freely tradable shares of Common Stock as set forth above, the ISSUER agrees to
pay to the HOLDER, in cash, within five (5) Trading Days of the Maturity Date,
the dollar value of the number of shares of Common Stock issuable to the HOLDER
as if the HOLDER had exercised its conversion rights on the Maturity Date,
multiplied by the closing bid price of the Common Stock on the Maturity Date.
Principal and interest are payable at the address last appearing on the
Debenture Register as designated in writing by the HOLDER hereof from time to
time.
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as
requested by the HOLDER surrendering the same. No service
charge will be made for such registration or transfer or
exchange, although the HOLDER shall be responsible for their
own expenses associated with complying with the restrictions
on transfer of the Debenture in the Agreement.
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<PAGE>
2. The ISSUER shall be entitled to withhold from all payments
under this Debenture any amounts required to be withheld under
the applicable provisions of the U.S. Internal Revenue Code of
1986, as amended, or other applicable laws at the time of such
payments.
3. This Debenture has been issued subject to investment
representations of the original HOLDER hereof and may be
transferred or exchanged only in compliance with the
Securities Act and applicable state securities laws and in
compliance with the restrictions on transfer provided in the
Agreement. Prior to the due presentment for such transfer of
this Debenture, the ISSUER and any agent of the ISSUER may
treat the person in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for
the purpose of receiving payment as herein provided and all
other purposes, whether or not this Debenture is overdue, and
neither the ISSUER nor any such agent shall be affected by
notice to the contrary. The transferee shall be bound, as the
original HOLDER by the same representations and terms
described herein and under the Agreement.
4. The HOLDER is entitled, at its option, to convert this
Debenture in accordance with the following terms and
conditions:
(a) At any time after one hundred eighty-first (181st)
day from the Issuance Date, the HOLDER may convert up
to fifty (50%) percent of the original aggregate
principal amount of this Debenture on the Issuance
Date, at the Conversion Rate set forth below.
(b) At any time after the two hundred forty first (241st)
day after the Issuance Date, the HOLDER may convert
any remaining part of this Debenture then outstanding
at the Conversion Rate set forth below.
(c) The HOLDER may exercise its right to convert the
Debenture by telecopying an executed and completed
notice of conversion (the "Notice of Conversion") to
the ISSUER and delivering the original Notice of
Conversion and the original Debenture to the ISSUER
by express courier. Each business date on which a
Notice of Conversion is telecopied to and received by
the ISSUER in accordance with the provisions hereof
shall be deemed a "Conversion Date". The ISSUER will
transmit the certificates representing shares of
Common Stock issuable upon conversion of the
Debenture (together with the certificates
representing the Debenture not so converted) to the
HOLDER via express courier, by electronic transfer or
otherwise within five (5) business days after the
Conversion Date if the ISSUER has received the
original Notice of Conversion and Debenture being so
converted by such date. In addition to any other
remedies which may be available to the HOLDER, in the
event that the ISSUER fails to effect delivery of
such shares of Common Stock within five (5) such
business day period, the HOLDER will be entitled
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to revoke the Notice of Conversion by delivering a
notice to such effect to the ISSUER whereupon the
ISSUER and the HOLDER shall each be restored to their
respective positions immediately prior to delivery of
the Notice of Conversion. The Notice of Conversion
and Debenture representing the portion of the
Debenture converted shall be delivered as follows:
To the ISSUER:
Datametrics Corporation
25B Hanover Road #3305
Florham Park, NJ 07932
Attn: Daniel P. Ginns, CEO
Facsimile: (973) 377-5736
Telephone: (973) 377-3900
With a copy to:
Lane Altman & Owens LLP
101 Federal Street
Boston, MA 02110
Attn: Joseph Mazzella
Facsimile: (617) 345-9800
Telephone: (617) 345-0400
(d) In the event that the Common Stock issuable upon
conversion of the Debenture is not delivered within
five (5) business days of receipt by the ISSUER of a
valid Notice of Conversion and the Debenture to be
converted, and the ISSUER has not exercised its
Redemption rights set forth in Section 14 below, the
ISSUER shall pay to the HOLDER, in immediately
available funds, upon demand, as liquidated damages
for such failure and not as a penalty, for each
$100,000 principal amount of Debenture sought to be
converted, $500 for the first five days and $1,000
per day thereafter that the shares of Common Stock
are not delivered, which liquidated damages shall run
from the sixth business day after the Conversion Date
up until the time that either the Conversion Notice
is revoked or the Common Stock is delivered, at which
time such liquidated damages shall cease. Any and all
payments required pursuant to this paragraph shall be
payable only in cash.
(e) Subject to subsections (a) through (d) herein, and
subject to the ISSUER'S right to force conversion
pursuant to its right to call this Debenture as
provided in Section 15 below, and the automatic
conversion on the Maturity Date as provided herein,
each Debenture shall be convertible, at the sole
option of the HOLDER into that number of shares of
fully paid
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<PAGE>
and nonassessable shares of Common Stock which is to
be derived from dividing the Conversion Amount by the
Conversion Price (the "Conversion Rate. For purposes
of this Debenture, the Conversion Amount shall mean
the principal dollar amount of the Debenture being
converted. The Conversion Price shall be equal to the
lesser of: (i) $2.125 (2 1/8) per share of Common
Stock, or (ii) eighty (80%) percent of the average
closing bid prices of the Common Stock for the ten
day trading period immediately preceding the
Conversion Date. The closing bid price shall be
deemed to be the reported last bid price regular way
as reported by Bloomberg LP or if unavailable, on the
principal national securities exchange on which the
Common Stock is listed or admitted to trading, or if
the Common Stock is not listed or admitted to trading
on any national securities exchange, the closing bid
price as reported by Nasdaq or such other system then
in use, or, if the Common Stock is not quoted by any
such organization, the closing bid price in the
over-the-counter market as furnished by the principal
national securities exchange on which the Common
Stock is traded.
(f) The number of shares of Common Stock issuable upon
the conversion of the Debenture and the Conversion
Price shall be subject to adjustment as follows:
(i) In case the ISSUER shall (A) pay a dividend
on Common Stock in Common Stock or
securities convertible into, exchangeable
for or otherwise entitling a holder thereof
to receive Common Stock, (B) declare a
dividend payable in cash on its Common Stock
and at substantially the same time offer its
shareholder a right to purchase new Common
Stock (or securities convertible into,
exchangeable for or otherwise entitling a
holder thereof to receive Common Stock) from
proceeds of such dividend (all Common Stock
so issued shall be deemed to have been
issued as a stock dividend), (C) subdivide
its outstanding shares of Common Stock into
a greater number of shares of Common Stock,
(D) combine its outstanding shares of Common
Stock into a smaller number of shares of
Common Stock, or (E) issue by
reclassification of its Common Stock any
shares of Common Stock of the ISSUER, the
number of shares of Common Stock issuable
upon conversion of the Debenture immediately
prior thereto shall be adjusted so that the
holders of the Debenture shall be entitled
to receive after the happening of any of the
events described above that number and kind
of shares as the holders would have received
had such Debenture been converted
immediately prior to the happening of such
event or any record date with respect
thereto. Any adjustment made pursuant to
this subdivision shall become effective
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<PAGE>
immediately after the close of business on
the record date in the case of a stock
dividend and shall become effective
immediately after the close of business on
the record date in the case of a stock
split, subdivision, combination or
reclassification.
(ii) Any adjustment in the numbers of shares of
Common Stock issuable hereunder otherwise
required to be made by this paragraph 4(c)
will not have to be made if such adjustment
would not require an increase or decrease in
one (1%) percent or more in the number of
shares of Common Stock issuable upon
conversion of the Debenture.
(iii) Whenever the number of shares of Common
Stock issuable upon the conversion of the
Debenture is adjusted, as herein provided,
the Conversion Price shall be adjusted (to
the nearest cent) by multiplying such
Conversion Price immediately prior to such
adjustment by a fraction of which the
numerator shall be the number of shares of
Common Stock issuable upon the conversion of
this Debenture immediately prior to such
adjustment, and of which the denominator
shall be the number of shares of Common
Stock issuable immediately thereafter.
(g) In the case of any (i) consolidation or merger of the
ISSUER into any entity (other than a consolidation or
merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding
shares of Common Stock of the ISSUER), (ii) sale,
transfer, lease or conveyance of all or substantially
all of the assets of the ISSUER as an entirety or
substantially as an entirety, or (iii)
reclassification, capital reorganization or change of
the Common Stock (other than solely a change in par
value, or from par value to no par value), in each
case as a result of which shares of Common Stock
shall be converted into the right to receive stock,
securities or other property (including cash or any
combination thereof), each holder of a Debenture then
outstanding shall have the right thereafter to
convert such share only into the kind and amount of
securities, cash and other property receivable upon
such consolidation, merger, sale, transfer, capital
reorganization or reclassification by a holder of the
number of shares of Common Stock of the ISSUER into
which such Debenture would have been converted
immediately prior to such consolidation, merger,
sale, transfer, capital reorganization or
reclassification, assuming such holder of Common
Stock of the ISSUER (A) is not an entity with which
the ISSUER consolidated or into which such sale or
transfer was made, as the case may be ("constituent
entity"), or an affiliate of the constituent entity,
and (B) failed to exercise his or her rights of
election, if any, as to the kind or amount of
securities, cash and
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<PAGE>
other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind
or amount of securities, cash or other property
receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common
Stock of the ISSUER held immediately prior to such
consolidation, merger, sale or transfer by other than
a constituent entity or an affiliate thereof and in
respect of which the ISSUER merged into the ISSUE or
to which such rights or election shall not have been
exercised ("non-electing share"), then for the
purpose of this Section (4)(d) the kind and amount of
securities, cash or other property receivable upon
such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and
amount so receivable per share by a majority of the
non-electing shares). If necessary, appropriate
adjustment shall be made in the application of the
provision set forth herein with respect to the rights
and interest thereafter of the HOLDERS, to the end
that the provisions set forth herein shall thereafter
correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or
other securities or property thereafter deliverable
on the conversion of the Debenture. The above
provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, capital
reorganizations and reclassifications. The ISSUER
shall not effect any such consolidation, merger, sale
or transfer unless prior to or simultaneously with
the consummation thereof the successor ISSUER or
entity (if other than the ISSUER) resulting from such
consolidation, merger, sale or transfer shall assume,
by written instrument, the obligation to deliver to
the HOLDER such shares of Common Stock, securities or
assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive
under this paragraph.
(h) The ISSUER will not, by amendment of its Certificate
of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to
be observed or performed hereunder by the ISSUER, but
will at all times in good faith assist in the
carrying out of all the provisions of this paragraph
and in taking of all such action as may be necessary
or appropriate in order to protect the conversion
rights of the HOLDERS against impairment.
5. The HOLDER acknowledges and agrees that the obligations of the
ISSUER hereunder and under the Agreement are subordinate and
junior to the prior payment in full in cash of all Senior Debt
and that no payment may be made by the Company with respect
hereto at any time when a default exists under any Senior Debt
or upon the maturity of any Junior Debt, whether by
acceleration or otherwise. The HOLDER agrees to execute upon
request any Subordination
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<PAGE>
Agreement with the holders of Senior Debt to effectuate the
foregoing provisions. For purposes hereof, Senior Debt shall
include all indebtedness for borrowed money of the Company and
any refinancing, refunding and replacement thereof. No
provision of this Debenture shall alter or impair the
obligation of the ISSUER, which is absolute and unconditional,
upon an Event of Default (as defined below), to pay the
principal of, and interest on this Debenture at the place,
time, and rate, and in the coin or currency herein prescribed.
6. The ISSUER hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to
accelerate, and diligence in taking any action to collect
amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be
owing hereon, regardless of and without any notice, diligence,
act or omission as or with respect to the collection of any
amount called for hereunder.
7. If one or more of the following described "Events of Default"
shall occur,
a. A trustee, liquidator or receiver shall be appointed
for the ISSUER or for a substantial part of its
property or business without its consent and not
discharged within 10 days; or
b. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental
agency shall assume custody or control of the whole
or any substantial portion of the properties or
assets of the ISSUER and remains in such control for
longer than 10 days;
c. Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the ISSUER and, if
instituted against the ISSUER, ISSUER shall by any
action or answer approve of, consent to or acquiesce
in any such proceedings or admit the material
allegations of, or default in answering a petition
filed in any such proceeding or such proceedings
shall not be dismissed within sixty (60) days
thereafter; or
d. The Common Stock is delisted from trading on the
American Stock Exchange or the Company has received
notice of final action concerning delisting from the
American Stock Exchange and the Common Stock has not
been listed on any other national securities exchange
within 60 days thereafter; or
e. The ISSUER shall fail to pay the amount of the
"Economic Benefit" (as defined in Section 9.2 of the
Agreement) within 5 business days after the
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<PAGE>
date when due thereunder; or
f. The ISSUER shall have failed to pay interest within 5
business days after the date when due hereunder; or
g. The effectiveness of the Registration Statement
including the shares of Common Stock underlying this
Debenture has been suspended for a period of five (5)
trading days.
h. The ISSUER shall breach any material term of this
Debenture, or the Agreement (including all exhibits
annexed hereto), and such breach is not cured within
10 days after notice in writing from the HOLDER to
the ISSUER specifying such default.
Then, or at any time thereafter, and in each and
every such case, unless such Event of Default shall
have been waived in writing by the HOLDER (which
waiver shall not be deemed to be a waiver of any
subsequent default) at the option of the HOLDER and
in the HOLDER'S sole discretion, the HOLDER may
consider this Debenture immediately due and payable,
without presentment, demand protest or notice of any
kind, all of which are hereby expressly waived, and
HOLDER may immediately, and without expiration of any
period of grace, enforce any and all of the HOLDER'S
rights and remedies provided herein or any other
rights or remedies afforded by law. It is agreed that
in the event of such action, such HOLDER shall be
entitled to receive all reasonable fees, costs and
expenses incurred in connection with enforcing the
rights granted hereunder, including without
limitation such reasonable fees and expenses of
attorneys.
8. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable or if, any payment hereunder shall be
deemed to constitute usury, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to
the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture
will not in any way be affected or impaired thereby.
9. In addition to the terms of the Registration Rights Agreement
of even date herewith, the HOLDER shall have the right to
include all of the shares of Common Stock underlying this
Debenture (the "Registrable Securities") as part of any
registration of securities filed by the ISSUER on behalf of a
party other than the ISSUER (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the
Act or pursuant to Form S-8) and must be notified in writing
of such filing; provided, however, that the HOLDER agrees it
shall not have any piggy-back registration rights pursuant to
this Debenture if the shares of
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<PAGE>
Common Stock underlying this Debenture may be sold in the
United States pursuant to the provisions of Rule 144. HOLDER
shall have five (5) business days to notify the ISSUER in
writing as to whether the ISSUER is to include HOLDER or not
include HOLDER as part of the registration; provided, however,
that if any registration pursuant to this Section shall be
underwritten, in whole or in part, the Company may require
that the Registrable Securities requested for inclusion
pursuant to this Section be included in the underwriting on
the same terms and conditions as the securities otherwise
being sold through the underwriters. If in the good faith
judgment of the underwriter evidenced in writing of such
offering only a limited number of Registrable Securities
should be included in such offering, or no such shares should
be included, the HOLDER, and all other selling stockholders,
shall be limited to registering such proportion of their
respective shares as shall equal the proportion that the
number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the
total number of all shares then held by all selling
stockholders desiring to participate in such offering. Those
Registrable Securities which are excluded from an underwritten
offering pursuant to the foregoing provisions of this Section
(and all other Registrable Securities held by the selling
stockholders) shall be withheld from the market by the HOLDERS
thereof for a period, not to exceed ninety (90) days, which
the underwriter may reasonably determine is necessary in order
to effect such underwritten offering. The ISSUER shall have
the right to terminate or withdraw any registration initiated
by it under this Agreement prior to the effectiveness of such
registration whether or not any Debenture holder elected to
include securities in such registration. All registration
expenses incurred by the ISSUER in complying with this
Agreement shall be paid by the ISSUER, exclusive of
underwriting discounts, commissions and legal fees and
expenses for counsel to the HOLDERS of this Debenture.
10. This Debenture and the Agreement (along with all exhibits
attached thereto) constitute the full and entire understanding
and agreement between the ISSUER and HOLDER with respect
hereto. Neither this Debenture nor any terms hereof may be
amended, waived, discharged or terminated other than by a
written instrument signed by the ISSUER and the HOLDER. Any
capitalized terms shall have the same meaning as given in the
Agreement. In the event of any inconsistencies between this
Debenture and the Agreement, the Agreement shall control.
11. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York.
12. The convertibility of the Debenture shall be restricted such
that the portion of the Debenture which, if otherwise
converted, would result in HOLDER being deemed the beneficial
owner, in accordance with the provisions of Rule 13d-3 of the
1934 Act, of 4.99% or more of the then issued and outstanding
Common Stock, shall
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<PAGE>
not be convertible. If, in accordance with the foregoing
sentence, any portion of the Debenture remains unconvertible
on the Maturity Date, the ISSUER shall have no further
obligation therefor.
13. This Debenture, together with all documents referenced herein,
embodies the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement of
any kind not expressly set forth in this Debenture or the
Agreement shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Debenture.
The ISSUER shall have the right to Redeem this Debenture, in
whole or in part, in cash, at the Redemption Price (as defined
below), provided the HOLDER has forwarded a Conversion Notice
to the ISSUER as set forth above utilizing the fixed
Conversion Price as stated in Section 4(g)(ii) above. However,
in no event shall the ISSUER be permitted to redeem less than
fifty (50%) percent of the principal value of the Debenture
being converted as set forth in the previous sentence. The
ISSUER shall be entitled to exercise the Redemption rights as
follows:
a. The ISSUER shall exercise this Redemption right by
telecopying written notice (the "Redemption Notice")
to the HOLDER within one (1) business day after the
Conversion Date.
b. The ISSUER shall wire transfer the appropriate amount
of funds into an escrow account to complete the
Redemption which shall be on the fifth (5th) business
day after the Redemption Notice was served upon the
party being noticed (the "Redemption Date").
c. In the event the ISSUER does not wire transfer the
appropriate amount of funds into the escrow account
on or before the Redemption Date, or shall otherwise
fail to comply with the Redemption provisions set
forth herein; (i) the ISSUER will be required to
forward the shares of Common Stock issuable pursuant
to the notice of conversion within three (3) business
days after the Redemption Date by transmitting the
certificates representing shares of Common Stock
issuable upon the conversion of the Debenture
(together with the certificates representing the
Debenture not so converted) to the HOLDER via express
courier or by electronic transfer, (ii) the
Redemption Notice shall be deemed null and void, and
the ISSUER shall have waived its right to Redeem this
Debenture at any time, and (iii) in the event the
ISSUER fails to deliver the certificates representing
the shares of Common Stock within three (3) business
days after the Redemption Date the ISSUER shall be
subject to the full liquidated damages as set forth
in
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Section 4(f) above commencing on the fourth (4th)
business day after the Redemption Date.
d. The Redemption Notice shall set forth (i) the
Redemption Date, (ii) the redemption price, which
shall be equal to one hundred and twenty (120%)
percent of the principal amount of the Debenture
being redeemed, plus all accrued and unpaid interest
(the "Redemption Price"), (iii) a statement that
interest on the Debenture being Redeemed will cease
to accrue on such Redemption Date, and (iv) a
statement of or reference to the conversion right set
forth in this Debenture (including that the right to
give a notice of conversion in respect of any shares
to be Redeemed shall terminate on the Redemption
Date. If fewer than all of the principal amount of
the Debentures owned by the HOLDER are then to be
Redeemed, the notice shall specify the amount thereof
that is to be called and, if practicable, the numbers
of the certificates representing such Debenture.
e. Unless so converted, at the close of business on the
Redemption Date, subject to the conditions described
herein, the portion of this Debenture being Redeemed
shall be automatically canceled and converted into a
right to receive the Redemption Price, and all rights
of this Debenture, including the right to conversion
shall cease without further action. Immediately
following the Redemption Date, provided the ISSUER
has complied with the terms set forth herein, the
HOLDER shall surrender their original Debenture at
the office of the ISSUER, and the ISSUER shall issue
to the HOLDER a new Debenture Certificate for the
principal amount that remains outstanding, if any.
f. The Redemption Price shall be adjusted proportionally
upon any adjustment of the Conversion Price under the
terms hereof in the event of any stock dividend,
stock split, combination of shares or similar event.
g. The ISSUER shall not be entitled to send any
Redemption Notice and begin the Redemption procedure
hereunder unless it has:
(i) the full amount of the Redemption Price in
cash, available in a demand or other
immediately available account in a bank or
similar financial institution;
(ii) immediately available credit facilities, in
the full amount of the Redemption Price with
a bank or similar financial institution; or
(iii) a combination of the items set forth in (a)
and (b) above, aggregating the full amount
of the Redemption Price.
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<PAGE>
h. Upon delivery of the Redemption Notice, the ISSUER
and the HOLDER shall agree on reasonable arrangements
for a closing of the Redemption of this Debenture.
15. In the event the closing bid price of the Common Stock is
greater than US$4.25 (the "Strike Price") per share for twenty
(20) consecutive trading days (the "Call Period"), the ISSUER
shall have the right to "Call" this Debenture, in whole or in
part, thereby forcing conversion by the HOLDER. The Strike
Price shall be adjusted proportionately to reflect any
adjustments due to the payment of a stock dividend, stock
split, combination of shares or any other similar event.
The ISSUER may exercise its right to Call by telecopying written notice
(the "Call Notice") to the HOLDER within five (5) trading days after the
aforementioned twenty consecutive trading day period.
Once the ISSUER has exercised its right to Call by giving written
notice to the Holder it shall be deemed irrevocable. Each trading day on which
the Call Notice is telecopied to and received by the HOLDER shall be deemed a
Conversion Date for the purposes of completing this Call and calculating the
number of shares of Common Stock to be issued upon conversion. The ISSUER will
transmit the certificates representing shares of Common Stock issuable pursuant
to the Call (together with the certificates representing the principal amount of
the Debenture not Called, if any) to the HOLDER via express courier, by
electronic transfer or otherwise within five (5) trading days after the Call
Notice was served upon the HOLDER (the "Call Date").
The Call Notice shall set forth (i) a calculation referencing the
conversion formula contained herein showing the number of shares of Common Stock
being issued pursuant to this Call, (ii) a calculation referencing all accrued
and unpaid interest which shall be payable by the ISSUER on or before the Call
Date, and (iii) a statement that interest on the Debenture being Called will
cease to accrue on such Call Date. The Call Notice shall be irrevocable by the
ISSUER, and it shall be sent at least five (5) trading days prior to the
expiration of the Call Period to the HOLDER. If fewer than all of the principal
amount of the Debentures owned by the HOLDER are then to be Called, the Call
Notice shall specify the amount thereof that is to be Called and, if
practicable, the numbers of the certificates representing such Debenture.
The portion of this Debenture being Called shall be automatically
canceled and converted into a right to receive the shares of Common Stock, and
all rights of this Debenture, including the right to conversion shall cease
without further action. Immediately following the Call Date, the HOLDER shall
surrender their original Debenture being called at the office of the ISSUER, and
the ISSUER shall issue to the HOLDER a new Debenture Certificate for the
principal amount that remains outstanding, if any.
The number of shares of Common Stock issuable upon the Call of the
Debenture shall be adjusted in accordance with the provisions set forth in
Section 4(h).
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Notwithstanding the provisions of this Section 15, upon receiving the
Call Notice, the HOLDER shall have the option to force the ISSUER to Redeem that
portion of the Debenture which has been Called by the ISSUER for a forced
conversion. The HOLDER'S right to force the ISSUER to Redeem as set forth in
this paragraph must be done by telecopying written notice (the "Redemption
Notice") to the ISSUER within three (3) trading days after receipt of the Call
Notice. The ISSUER shall have five (5) trading days after receipt of HOLDER'S
notice of forced Redemption as set forth herein to complete this Redemption
which shall be completed in accordance with Sections 14(b), (d), (e), (f) and
(h) where the principal amount of the Debenture being Redeemed shall equal the
principal amount of the Debenture being Called.
Any Call or Redemption pursuant to Sections 14 and 15 of this Debenture
shall not be deemed to affect or otherwise reduce the Subscriber's Conversion
rights set forth in this Agreement.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the ISSUER has caused this Debenture to be duly
executed by an officer thereunto duly authorized.
DATAMETRICS CORPORATION
By:
---------------------------------
Name:
Title:
Date: July 24, 1998
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EXHIBIT 4.3
-----------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 24th day of July,
1998, among the entities listed on Schedule A (collectively referred to as the
"Holders"), and DATAMETRICS CORPORATION, a corporation incorporated under the
laws of the state of Delaware, and having its principal place of business at 25B
Hanover Road, No. 3305, Florham Park NJ 07932 (the "Company").
WHEREAS, the Holders are purchasing from the Company, pursuant to a 7%
Convertible Debenture Subscription Agreement dated the date hereof (the
"Subscription Agreement"), an aggregate of One Million ($1,000,000) Dollars
principal amount of the Company's 7% Convertible Debentures; and
WHEREAS, as a condition to such purchase, the Holders have required
that the Company grant to the Holders the registration rights set forth herein
with respect to the shares of Common Stock of the Company ("Common Stock")
(collectively hereinafter referred to as the "Stock" or "Securities" of the
Company) into which the 7% Convertible Debentures may be converted.
NOW, THEREFORE, the parties hereto mutually agree as follows:
SECTION 1. REGISTRABLE SECURITIES. As used herein the term "Registrable
Security" means the Securities; provided, however, that with respect to any
particular Registrable Security, such security shall cease to be a Registrable
Security when, as of the date of determination, (i) it has been registered under
the Securities Act of 1933, as amended (the "1933 Act"), (ii) registration under
the 1933 Act is no longer required for the immediate public distribution of such
security as a result of the provisions of Rule 144 promulgated under the 1933
Act, or (iii) it has ceased to be outstanding. The term "Registrable Securities"
means any and/or all of the Securities falling within the foregoing definition
of a "Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Section 1.
SECTION 2. RESTRICTIONS ON TRANSFER. The Holders acknowledge and
understand that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Act. The Holders understand that no disposition or transfer of the
Securities may be made by the Holders in the absence of (i) an opinion of
counsel to the Company that such transfer may be made without registration under
the 1933 Act or (ii) such registration.
<PAGE>
SECTION 3. REGISTRATION RIGHTS.
--------------------
(a) The Company agrees that it will use its best efforts to
prepare and file with the Securities and Exchange Commission
("Commission"), within ninety (90) days after the date hereof
(the "Subscription Date"), a registration statement under the
1933 Act (the "Registration Statement"), at the sole expense
of the Company (except as provided in Section 3(c) hereof), in
respect of all holders of Registrable Securities, so as to
permit a registered issuance of the Registrable Securities
under the Act. The Company shall cause the Registration
Statement to become effective within one hundred eighty (180)
days from Subscription Date. The number of shares designated
in the Registration Statement to be registered shall be two
hundred (200%) percent (or such higher number as the Company
determines) of the number of Securities that would be required
if all the Registrable Securities were issued on the day
before the filing of the Registration Statement. The Company
agrees that it will only include the Registrable Securities in
the Registration Statement to be filed pursuant to the terms
of this Agreement.
(b) The Company will maintain the effectiveness of the
Registration Statement or post-effective amendment filed under
this Section 3 hereof current under the 1933 Act until the
earlier of (i) the date that all of the Registrable Securities
have been sold pursuant to the Registration Statement, (ii)
the date the holders thereof receive an opinion of counsel
that all of the Registrable Securities may be sold under the
provisions of Rule 144 (without volume limitation) or (iii)
three years after the Closing Date.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and
filing of the Registration Statement under subparagraph 3(a)
and in complying with applicable securities and Blue Sky laws
(including, without limitation, all attorneys' fees) shall be
borne by the Company. The Holders shall bear the cost of
underwriting discounts and commissions, if any, applicable to
the Registrable Securities being registered and the fees and
expenses of its counsel. The Company shall qualify any of the
Registrable Securities for sale in such states as each Holder
reasonably designates and shall furnish indemnification in the
manner provided in Section 6 hereof. However, the Company
shall not be required to qualify any of the Registrable
Securities for sale in any state which will require an escrow
or other restriction relating to the Company and/or the
sellers. The Company at its expense will supply the Holder
with copies of the Registration Statement and the prospectus
or offering circular included therein and other related
documents in such quantities as may be reasonably requested by
the Holders.
(d) The Company shall not be required by this Section 3 to include
a Holder's
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<PAGE>
Registrable Securities in any Registration Statement which is
to be filed if, in the opinion of counsel for both the Holders
and the Company (or, should they not agree, in the opinion of
another counsel experienced in securities law matters
acceptable to counsel for the Holders and the Company) the
proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal
and state securities laws and would result in all transferees
obtaining securities which are not "restricted securities," as
defined in Rule 144 under the 1933 Act.
(e) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed with the
Commission within ninety (90) days from the Subscription Date
and/or the Registration Statement is not declared effective by
the Commission within one hundred eighty (180) days from the
Subscription Date, then the Company will pay Holder (pro rated
on a daily basis), as liquidated damages for such failure and
not as a penalty, three (3%) percent of the Purchase Price of
the then outstanding Securities each month until such time as
the Registration Statement has been filed and/or declared
effective. Such payment of the liquidated damages shall be
made to the Holders in cash, immediately upon demand,
provided, however, that the payment of such liquidated damages
shall not relieve the Company from its obligations to register
the Securities pursuant to this Section and shall not relieve
the Company from any obligation to pay liquidated damages.
If the Company does not remit the damages to the Holders as set forth
above, the Company will pay the Holders' reasonable costs of collection,
including reasonable attorneys fees, in addition to the liquidated damages. The
registration of the Securities pursuant to this provision shall not affect or
limit Holders' other rights or remedies as set forth in this Agreement.
(f) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in
which it is required to include Registrable Securities
pursuant to this Section 3.
(g) If at any time or from time to time after the effective date
of the Registration Statement, the Company notifies the
Holders in writing of the existence of a Potential Material
Event (as defined in Section 3(h) below), the Holders shall
not offer or sell any Registrable Securities or engage in any
other transaction involving or relating to Registrable
Securities, from the time of the giving of notice with respect
to a Potential Material Event until such Holder receives
written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer
constitutes a Potential Material Event; provided, however,
that the Company may not so suspend the right to such holders
of Securities for more than one (1) twenty (20) day period
during any twelve month period, during the periods the
Registration Statement is required to be in effect. If a
Potential Material Event shall occur prior to the date the
Registration Statement is filed, then the Company's obligation
to file
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<PAGE>
the Registration Statement shall be delayed without penalty
for not more than twenty (20) days. The Company must give each
Holder notice in writing at least two (2) business days prior
to the first day of the blackout period relating to any
potential material event.
(h) "Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for
disclosure in a registration statement; (b) any material
engagement or activity by the Company which would be adversely
affected by disclosure in a registration statement at such
time; or (c) the Registration Statement would be materially
misleading absent the inclusion of such information.
SECTION 4. COOPERATION WITH COMPANY. Holders will cooperate with the
Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
SECTION 5. REGISTRATION PROCEDURES. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration
statement whenever the Holder of such securities shall desire
to sell or otherwise dispose of the same (including prospectus
supplements with respect to the sales of securities from time
to time in connection with a registration statement pursuant
to Rule 415 promulgated under the Act);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary
prospectus or any amendment or supplement to any prospectus,
in conformity with the requirements of the Act, and such other
documents, as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the
securities owned by such Holder;
(c) register and qualify the securities covered by the
Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Holders shall reasonably
request (subject to the limitations set forth in Section 3(d)
above), and do any and all other acts and things which may be
necessary or advisable to enable each Holder to consummate the
public sale or other disposition in such jurisdiction of the
securities owned by such Holder, except that the Company shall
not for any such purpose be
-4-
<PAGE>
required to qualify to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(d) list such securities on the American Stock Exchange or other
national securities exchange on which any securities of the
Company are then listed, if the listing of such securities is
then permitted under the rules of such exchange;
(e) notify each Holder of Registrable Securities covered by the
Registration Statement, at any time when a prospectus relating
thereto covered by the Registration Statement is required to
be delivered under the Act, of the happening of any event of
which it has knowledge as a result of which the prospectus
included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
SECTION 6. INDEMNIFICATION.
----------------
(a) The Company agrees to indemnify and hold harmless the Holders,
and each officer, director or person, if any, who controls
each Holder within the meaning of the 1933 Act ("Distributing
Holder") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees), to which
the Distributing Holder may become subject, under the 1933 Act
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, or any related preliminary prospectus, final
prospectus, offering circular, notification or amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the
Company (i) will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the
Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or
supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by the
Distributing Holder, specifically for use in the preparation
thereof, or (ii) will not pay any amounts paid in settlement
of any loss, claim, damage or liability if such settlement is
effected without the consent of the Company, which consent
shall not be unreasonably withheld. This Section 6(a) shall
not inure to the benefit of any Distributing Holder with
respect to any person asserting such loss, claim, damage or
liability who purchased the Registrable Securities which are
the subject thereof if the Distributing older failed to send
or give (in violation of the 1933 Act or the rules and
-5-
<PAGE>
regulations promulgated thereunder) a copy of the prospectus
contained in such Registration Statement to such person at or
prior to the written confirmation of such person of the sale
of such Registrable Securities, where the Distributing Holder
was obligated to do so under the 1933 Act or the rules and
regulations promulgated thereunder. This indemnity provision
will be in addition to any liability which the Company may
otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each officer, director, or
person, if any, who controls the Company within the meaning of
the 1933 Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or
any such officer, director or controlling person may become
subject under the 1933 Act or otherwise, insofar as such
losses claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
the Registration Statement, or any related preliminary
prospectus, final prospectus, offering circular, notification
or amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but
in each case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was
made in the Registration Statement, preliminary prospectus,
final prospectus, offering circular, notification or amendment
or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by such
Distributing Holder, specifically for use in the preparation
thereof. This indemnity provision will be in addition to any
liability which the Distributing Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 6,
notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability which it may
have to any indemnified party otherwise than as to the
particular item as to which indemnification is then being
sought solely pursuant to this Section 6. In case any such
action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after
notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal
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<PAGE>
or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying
party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not
be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with
counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is the Distributing
Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of
such counsel has been specifically authorized in writing by
the indemnifying party, or (ii) the named parties to any such
action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the
Distributing Holder shall have been advised by such counsel
that there may be one or more legal defenses available to the
indemnifying party different from or in conflict with any
legal defenses which may be available to the Distributing
Holder (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of
the Distributing Holder, it being understood, however, that
the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable only for the
reasonable fees and expenses of one separate firm of attorneys
for the Distributing Holder, which firm shall be designated in
writing by the Distributing Holder). No settlement of any
action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent
shall not be unreasonably withheld.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution under the 1933 Act in any case in which (i) the indemnified party
makes a claim for indemnification pursuant to Section 6 hereof but is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the 1933 Act may be
required on the part of any indemnified party, then the Company and the
applicable Distributing Holder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault 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 Company on the one hand or the applicable
Distributing Holder on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and
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<PAGE>
the Distributing Holder agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
SECTION 8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received), (b) on the second business day following the date of mailing by
reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur, or (c) on the fifth
business day following the date of mailing by certified or registered mail,
return receipt requested, postage prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
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<PAGE>
If to Datametrics Corporation:
Datametrics Corporation
25B Hanover Road
#3305
Florham Park, NJ 07932
Attn: Daniel P. Ginns, CEO
Facsimile: (973) 377-5736
Telephone: (973) 377-3900
With a copy to:
Lane Altman & Owens LLP
101 Federal Street
Boston, MA 02110
Attn: Joseph Mazzella, Jr.
Facsimile: (617) 345-0400
Telephone: (617) 345-9800
If to the Holders at the addresses set forth on Schedule A attached
hereto.
Any party hereto may from time to time change its address or facsimile
number for notices under this Section by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.
SECTION 9. ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The rights granted the Holders under this Agreement shall not
be assigned without the written consent of the Company, which consent shall not
be unnecessarily withheld. In the event of a transfer of the rights granted
under this Agreement, the Holder agrees that the Company may require that the
transferee comply with reasonable conditions as determined in the discretion of
the Company.
SECTION 10. COUNTERPARTS; FACSIMILE; AMENDMENTS. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.
SECTION 11. TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to this Agreement shall terminate as to each Holder (and permitted
transferees or assignees) upon the
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<PAGE>
occurrence of any of the following:
(a) all Holder's Securities subject to this Agreement have been
registered;
(b) all of such Holder's Securities subject to this Agreement may
be sold without such registration pursuant to Rule 144
promulgated by the SEC pursuant to the Securities Act;
(c) all of such Holder's Securities subject to this Agreement can
be sold pursuant to Rule 144(k).
SECTION 12. HEADINGS. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 13. GOVERNING LAW: VENUE; JURISDICTION. This Agreement will be
construed and enforced in accordance with and governed by the laws of the State
of New York, except for matters arising under the Act, without reference to
principles of conflicts of law. Each of the parties consents to the jurisdiction
of the U.S. District Court sitting in the Southern District of the State of New
York in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdiction. Each party hereby agrees that if another party to this
Agreement obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the courts of any
country having jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to it under local
law and agrees to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any such proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
SECTION 14. SEVERABILITY. If any provision of this Agreement shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
SECTION 15. CAPITALIZED TERMS. All capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Subscription
Agreement.
SECTION 16. ENTIRE AGREEMENT. This Agreement, together with all
documents referenced herein, embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement
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<PAGE>
of any kind not expressly set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on the day and year first above written.
DATAMETRICS CORPORATION
By: /s/ Ronald Lefkon
-----------------------------------------
Ronald Lefkon, Chief Financial Officer
and Vice President
LITTLE WING, L.P.
By: /s/ Bic Nguyen
-----------------------------------------
Name: Bic Nguyen
Title: Authorized Signatory
TRADEWINDS FUND LTD.
By: /s/ Bic Nguyen
-----------------------------------------
Name: Bic Nguyen
Title: Authorized Signatory
LITTLE WING TOO, L.P.
By: /s/ Bic Nguyen
-----------------------------------------
Name: Bic Nguyen
Title: Authorized Signatory
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<PAGE>
SCHEDULE A
LITTLE WING, L.P.
- -----------------
Little Wing, L.P.
c/o Quilcap Corp.
375 Park Avenue, Suite 1404
New York, New York 10152
$540,000
TRADEWINDS FUND LTD.
- --------------------
Tradewinds Fund Ltd.
c/o Quilcap Corp.
375 Park Avenue, Suite 1404
New York, New York 10152
$400,000
LITTLE WING TOO, L.P.
- ---------------------
Little Wing Too, L.P.
c/o Quilcap Corp.
375 Park Avenue, Suite 1404
New York, New York 10152
$60,000
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