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UNITED STATES
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
Date of Report (Date of earliest event reported): September 30, 1999
SCHERER HEALTHCARE, INC.
(Exact name of Company specified in its charter)
DELAWARE 0-10552 59-0688813
(State or other jurisdiction of (Commission File Number) (IRS Employer ID No.)
incorporation or organization)
120 INTERSTATE NORTH PARKWAY, S.E.
SUITE 305
ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)
(770) 933-1800
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective September 30, 1999, Scherer Healthcare, Inc. ("SHI") made an
investment of $2,000,000 in Econometrics, Inc., a Colorado corporation
("Parent"), and Econometrics, Inc., an Illinois corporation and a wholly-owned
subsidiary of Parent ("Sub") ("Parent" and "Sub" collectively referred to as the
"Companies"). SHI's investment is in the form of a five-year Convertible
Debenture (the "Debenture") in the principal sum of $2,000,000, to be repaid by
the Companies to the last registered holder of the Debenture on September 1,
2004 (the "Maturity Date"). The Companies agreed to pay interest on the unpaid
principal amount of the Debenture at a rate of eight percent (8%) per annum.
Interest accrues from September 30, 1999. The Companies are not required to make
any payments of interest until September 1, 2000, at which time all accrued
interest from September 30, 1999, through September 1, 2000 shall be paid.
Commencing on December 1, 2000, interest shall be paid quarterly (on March 1,
June 1, September 1 and December 1 of each year) until the principal amount has
been paid in full or the Debenture has been converted in full into Common Stock
of the Parent. SHI used working capital as the source of funds for the
investment.
As a result of this transaction, SHI will have the right to nominate
two (2) of the seven (7) directors on the Board of Directors of each of the
Companies. In accordance with that agreement, the Companies have elected Robert
P. Scherer, Jr. and Kenneth H. Robertson to the Board of Directors of each
Company.
The Companies have the right to prepay, in whole or in part, the
outstanding principal balance of the Debenture as follows: (i) at any time after
September 1, 2001 but before September 1, 2002, by payment of accrued interest
plus 104% of the unpaid principal amount; (ii) at any time on or after September
1, 2002 and before September 1, 2003, by payment of accrued interest plus 102.5%
of the unpaid principal amount; or (iii) at any time on or after September 1,
2003, but before September 1, 2004, by payment of accrued interest plus 101% of
the unpaid principal amount. If the Companies elect to prepay any portion of the
outstanding principal balance of the Debenture, the Companies are required to
provide SHI with thirty (30) days prior written notice of their intent to prepay
the Debenture and, if SHI exercises its conversion option (discussed below)
within the thirty (30) day period after receiving notice of prepayment, SHI
shall receive such number of shares of Parent's Common Stock, no par value, as
are calculated pursuant to the Debenture.
Until the Debenture is paid in full, SHI has the right to demand
payment of the entire outstanding principal balance of the Debenture, plus
interest thereon accrued to date, in the event of (i) any voluntary or
involuntary liquidation, dissolution of winding-up of either of the Companies,
(ii) the consolidation of either of the Companies with, or merger of either of
the Companies into, any other corporation, or (iii) the acquisition of forty
percent (40%) or more of the then outstanding voting stock of either of the
Companies by any person or entity other than the applicable Company or an
affiliate, subsidiary or parent of such Company.
Until the Debenture is paid in full, SHI has the right to convert up to
the entire outstanding principal balance of the Debenture, plus interest thereon
accrued to date, into shares
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of Common Stock of the Parent at the conversion price of $.4315 per share of
Common Stock (subject to certain adjustments specified in the Debenture). As a
result, and subject to adjustment, the Debenture is convertible into 4,634,994
shares of Common Stock of Parent. The conversion price was determined to provide
SHI twenty percent (20%) of the Common Stock of the Parent outstanding as of
September 30, 1999, on a fully diluted basis.
For so long as the principal balance of the Debenture remains
outstanding, SHI has a right of first refusal to purchase any Common Stock of
either the Parent or the Sub which either the Parent or the Sub may from time to
time propose to sell.
The indebtedness evidenced by the Debenture, both principal and
interest, and the right to seek enforcement of any of the rights granted to SHI,
are unsecured and subordinate and junior in all respects to the Companies'
existing bank debt, but only as to the amount of such indebtedness which is owed
and outstanding on the date of issuance of the Debenture. The indebtedness
evidenced by the Debenture is senior to all other indebtedness of the Companies.
Pursuant to a Registration Rights Agreement entered into by and between
Parent and SHI, SHI is granted certain "piggy-back" registration rights. If at
any time Parent files with the Securities and Exchange Commission a Registration
Statement under the Securities Act of 1933, as amended, relating to an offering
of any of its Common Stock (other than on Form S-4 or Form S-8 or their then
equivalents relating to Common Stock to be issued solely in connection with any
acquisition of any entity or business or Common Stock issuable in connection
with stock options or other employee benefit plans), SHI has the right to
require Parent to include in such Registration Statement all or part of SHI's
shares of Parent's Common Stock. These piggy-back rights are subject to certain
restrictions outlined in the Registration Rights Agreement.
The Companies are based in Chicago, Illinois. Sub is a database
marketing company that manages its own national consumer database of 180 million
consumers. Sub links marketers to its national database through the Internet.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibits are filed herewith:
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Exhibit Page No.
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2.1 8% Convertible Debenture Purchase Agreement dated as of
September 30, 1999, by and among Econometrics, Inc. (Colorado),
Econometrics, Inc. (Illinois), and Scherer Healthcare, Inc.
10.1 8% Convertible Debenture due September 1, 2004, with
Econometrics, Inc. (Colorado) and Econometrics, Inc. (Illinois)
as makers
10.2 Stockholders Agreement dated as of September 30, 1999,
by and among Econometrics, Inc. (Colorado), Scherer Healthcare,
Inc., Robert R. McGuire, Walter G. Cornett III and WCI, Inc.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
10.3 Registration Rights Agreement dated as of September 30, 1999,
by and among Econometrics, Inc. (Colorado) and Scherer Healthcare,
Inc.
</TABLE>
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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.
SCHERER HEALTHCARE, INC.
/s/ Robert P. Scherer, Jr.
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Robert P. Scherer, Jr.
Chairman of the Board, President and
Chief Executive Officer
Date: October 15, 1999
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Exhibit 2.1
ECONOMETRICS, INC.
8% CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
THIS 8% CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this "Agreement") is
made as of September 30, 1999, by and among Econometrics, Inc., a Colorado
corporation ("Parent"), Econometrics, Inc., an Illinois corporation and a wholly
owned subsidiary of Parent ("Sub"; Sub and Parent hereinafter are collectively
referred to as the "Companies" and individually as a "Company"), and Scherer
Healthcare, Inc., a Delaware corporation (the "Investor").
R E C I T A L S:
A. The Companies have, jointly and severally, authorized the issuance
of $2,000,000 aggregate principal amount of 8% Convertible Debentures due 2004
(the "Debenture"), with the terms, rights and privileges set forth in EXHIBIT A
hereto (the "Debenture Certificate").
B. The Companies desire to sell the Debenture to the Investor, and the
Investor desires to purchase the Debenture from the Companies, on the terms and
subject to the conditions set forth in this Agreement.
C. Certain capitalized terms shall have the meanings sets forth in
APPENDIX A hereto.
THE PARTIES AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF DEBENTURE.
1.1 SALE AND ISSUANCE OF DEBENTURE. Subject to
the terms and conditions hereof, the Companies, jointly and severally, shall
issue and sell to the Investor and the Investor agrees to purchase from the
Companies the Debenture at an aggregate purchase price of $2,000,000 (the
"Purchase Price").
1.2 CLOSING. Subject to the satisfaction or
waiver of the conditions set forth herein, the closing of the purchase and sale
of the Debenture shall take place at the offices of the Companies, 111 East
Wacker Drive, Suite 1250, Chicago, Illinois 60601, on the date hereof and
simultaneously with the execution and delivery of this Agreement, or at such
other place and time as the Companies and the Investor mutually agree (which
date, time and place are designated the "Closing").
1.3 DELIVERY. At the Closing, the Companies
shall deliver to the Investor the Debenture Certificate, duly executed by each
Company, against delivery to the Companies by the Investor of (i) an executed
copy of this Agreement, and (ii) the Purchase Price payable by certified check
or wire transfer in immediately available funds.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES TO THE
INVESTOR. The Companies (references herein to the Company shall mean the Company
and each Subsidiary of the Company) hereby, jointly and severally, represent and
warrant to the Investor as follows:
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2.1 CORPORATE ORGANIZATION AND AUTHORITY.
(a) Each Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite corporate power and authority to own,
lease and operate the assets used in its business and to carry on its business
as presently conducted and as proposed to be conducted. SCHEDULE 2.1(A) hereto
contains a true, correct and complete copy of each Company's certificate or
articles of incorporation and bylaws. Each Company has made available to the
Investor and its counsel true, correct and complete copies of all minutes of
meetings and all written consents of its directors and stockholders.
(b) Each Company has all requisite
corporate power to execute, deliver and perform the transactions contemplated by
this Agreement, the Debenture Certificate, the Stockholders Agreement (as
defined below) and the Registration Rights Agreement (as defined below) (the
Stockholders Agreement and the Registration Rights Agreement are referred to as
the "Related Agreements"), in each case to the extent to which such Company is a
party thereto.
(c) Each Company is qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on the business,
finances, assets (including levels of working capital and components thereof),
condition (financial or otherwise), operating results, liabilities, operations,
customer, supplier or employee relations, business prospects or properties of
such Company (a "Material Adverse Effect").
2.2 CAPITALIZATION.
Immediately prior to the Closing, the authorized capital of the
Companies shall consist of:
(a) PREFERRED STOCK. (i) Ten million
(10,000,000) shares of Preferred Stock, $.10 par value per share, of Parent are
duly authorized, none of which shares are issued and outstanding. No shares of
Preferred Stock of Sub are authorized, issued or outstanding.
(b) COMMON STOCK. Seven hundred and fifty
million (750,000,000) shares of Common Stock, no par value per share, of Parent
(the "Common Stock") are duly authorized, of which 11,141,342 shares are issued
and outstanding. The issued and outstanding shares of Common Stock are held of
record as set forth on SCHEDULE 2.2(b). All of such issued and outstanding
shares of Common Stock are duly and validly issued and outstanding and are fully
paid and non-assessable with no personal liability attached to the ownership
thereof, and were issued in compliance with applicable state and federal
securities laws. Such shares were issued without violation of any preemptive
rights. Except as set forth in the articles or certificate of incorporation of
Parent, this Agreement, the Debenture Certificate or SCHEDULE 2.2(b), there are
no outstanding warrants, options, conversion privileges, preemptive rights, or
other rights or agreements to purchase or otherwise acquire or issue any equity
securities of the Company (which Schedule sets forth the name of the holder of
such warrants, options or other rights, the number of shares issuable thereunder
and the exercise price thereof). Immediately after the Closing, 4,635,299 shares
of Common Stock will be reserved for issuance upon conversion of the Debenture.
Except as set forth on SCHEDULE 2.2(b), (i) no Securities of
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Parent are issued and outstanding, (ii) there are no outstanding plans,
contracts, agreements or commitments relating to the issuance or purchase by
Parent, directly or indirectly, of any Securities and (iii) there are no
preemptive or similar rights to purchase or otherwise acquire any Securities of
Parent.
Five hundred thousand (500,000) shares of Common Stock, no par value
per share, of Sub (the "Sub Common Stock") are duly authorized, of which
205,013.24 shares are issued and outstanding. All of the issued and outstanding
shares of Sub Common Stock are owned by Parent. All of such issued and
outstanding shares of Sub Common Stock are duly and validly issued and
outstanding and are fully paid and non-assessable with no personal liability
attached to the ownership thereof, and were issued in compliance with applicable
state and federal securities laws. Such shares were issued without violation of
any preemptive rights. There are no outstanding warrants, options, conversion
privileges, preemptive rights, or other rights or agreements to purchase or
otherwise acquire or issue any equity securities of the Company. Except as set
forth herein, (i) no Securities of Sub are issued and outstanding, (ii) there
are no outstanding plans, contracts, agreements or commitments relating to the
issuance or purchase by Sub of any Securities and (iii) there are no preemptive
or similar rights to purchase or otherwise acquire any Securities of Sub.
2.3 SUBSIDIARIES. Except as set forth in
SCHEDULE 2.3, the Companies do not own, have any investment in, or control,
directly or indirectly, any capital or other equity interest or participation in
any Subsidiaries, associations or other business entities nor is any Company a
participant in any joint venture or partnership nor is any Company, directly or
indirectly, subject to any obligation or requirement to provide funds to, or
invest in, any Person.
2.4 AUTHORIZATION. All corporate actions on
the part of each Company and its respective officers, directors and stockholders
necessary for the authorization, execution, delivery and performance of all
obligations under this Agreement, the Debenture Certificate and the Related
Agreements, and for the sale, issuance, grant and delivery of the Debenture and
the Common Stock issuable upon conversion of the Debenture have been taken, and
this Agreement, the Debenture Certificate and the Related Agreements constitute
legally binding and valid obligations of each Company that is a party thereto
enforceable in accordance with their terms, except as limited by applicable
bankruptcy, insolvency, reorganization, and similar laws affecting enforcement
of creditors' rights generally and rules of law concerning equitable remedies.
The sale and issuance of the Debenture and the subsequent conversion of the
Debenture into Common Stock are not and will not be subject to any preemptive
rights or rights of first refusal.
2.5 VALIDITY OF DEBENTURE AND COMMON STOCK. The
Debenture, when sold, issued and delivered in accordance with the terms and for
the consideration expressed in this Agreement and the shares of Common Stock
issued upon conversion of the Debenture (the "Conversion Shares"), shall be duly
and validly issued, fully-paid and non-assessable, and will be free of any liens
or encumbrances; provided, however, that the Debenture and the Conversion Shares
may be subject to restrictions on transfer under applicable state and/or federal
securities laws as set forth herein or as may be required by such laws at the
time a transfer is proposed.
2.6 NO CONFLICT WITH OTHER INSTRUMENTS. The
execution, delivery and performance of this Agreement, the Debenture Certificate
and the Related Agreements will not result in any violation of, be in conflict
with, constitute a default or give rise to any right of
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termination, cancellation or acceleration under, with or without the passage of
time or the giving of notice or both: (i) any provision of either Company's
articles or certificate of incorporation or bylaws; (ii) any provision of any
judgment, decree, writ or order to which either Company is a party or by which
it or any of its property is bound; (iii) any contract, obligation or commitment
to which either Company is a party or by which it or any of its property is
bound; or (iv) any statute, governmental rule or regulation applicable to either
Company. The execution, delivery and performance of and compliance with this
Agreement, the Debenture Certificate and the Related Agreements, and the
issuance and sale of the Debenture pursuant hereto and of the Conversion Shares
pursuant to the Debenture Certificate will not, with or without the passage of
time or giving of notice or both, result in any such violation, or be in
conflict with or constitute a default under any such term, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of either Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to either Company, its business or operations or any of its
assets or properties.
2.7 FINANCIAL STATEMENTS. (a) The audited
consolidated balance sheets of Parent dated as of December 31, 1997 and 1998
(the "Audited Balance Sheets") together with the related audited consolidated
statements of operations and retained earnings (deficit), the consolidated
statements of stockholders' equity and the consolidated statements of cash flow,
each for the years ended December 31, 1997 and 1998 (collectively with the
Audited Balance Sheets, the "Audited Financial Statements"), the unaudited
consolidated balance sheets of Parent dated as of June 30, 1998 and 1999 (the
"Interim Balance Sheet"), together with the related unaudited consolidated
statements of operations and retained earnings (deficit) and the unaudited
consolidated statement of cash flows, each for the three and six months ended
June 30, 1998 and 1999 (collectively with the Interim Balance Sheets, the
"Interim Financial Statements" and together with the Audited Financial
Statements and the Interim Balance Sheets, the "Financial Statements") are
attached hereto as SCHEDULE 2.7(a). The Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP") for the periods covered (except as may be indicated in
the notes thereto). The Financial Statements fairly present the consolidated
financial position of the Companies as of the dates and for the periods
indicated thereon and the results of operations, retained earnings and changes
in cash flows of the Companies as of such dates and for the periods then ended
in accordance with GAAP.
(b) Except as set forth on SCHEDULE 2.7(b),
the Companies have no liabilities, absolute or contingent, which are,
individually or in the aggregate, material to the financial condition or
operating results of either Company that are not reflected on the Interim
Balance Sheet. There are no "loss contingencies" (as defined in Statement of
Financial Accounting Standards No. 5 issued March 1975), that are not adequately
provided for on the Interim Balance Sheet or set forth on SCHEDULE 2.7(b).
Except as set forth in SCHEDULE 2.7(b), neither Company has any indebtedness for
borrowed money that either Company has directly or indirectly created, incurred,
assumed, or guaranteed, or with respect to which either Company has otherwise
become directly or indirectly liable.
(c) SCHEDULE 2.7(c) sets forth an accurate and
complete list of indebtedness for borrowed money owed to persons or entities
brought to the Company by Jeffrey Goldberg, including the date the Company
received the loan proceeds, the identity of the lender, the amount borrowed, the
amount previously repaid by the Company, the principal balance outstanding as of
the date hereof, the interest rate applicable to such loans, the interest
accrued
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and unpaid through the date hereof, the maturity date of such loans, and the
number and terms of warrants to purchase Common Stock granted in connection
therewith. The persons and entities identified as lenders on such SCHEDULE
2.7(c) are referred to collectively as the "Goldberg Group" and the debt owed by
the Company to the members of the Goldberg Group is referred to as the "Goldberg
Group Loans." The Company has the right to prepay all or any portion of the
Goldberg Loans at any time or from time to time without penalty and without the
consent of any member of the Goldberg Group or any other third party.
2.8 CHANGES IN CONDITION. Except as
contemplated herein or as described on SCHEDULE 2.8, since the date of the
Interim Balance Sheet, there has not been:
(a) any material damage, destruction
or loss to either Company's business, finances, assets, liabilities, operations,
properties or prospects, whether or not covered by insurance;
(b) any waiver by either Company of a
material right or a debt owed to it;
(c) any satisfaction or discharge of
any liability, lien, claim or encumbrance or payment of any obligation by either
Company, except those which have occurred in the ordinary course of business and
which have not had a Material Adverse Effect;
(d) any material change in any
compensation arrangement or agreement with any employee, officer, director or
stockholder;
(e) any adverse change in the condition
(financial or otherwise) of the business, finances, assets, liabilities (fixed
or contingent), operations, properties or prospects of either Company from that
reflected in the Interim Balance Sheet;
(f) any declaration or payment of any
dividend or other distribution with respect to any share of Parent's capital
stock;
(g) any mortgage, pledge or other
encumbrance of any of either Company's assets or properties, tangible or
intangible, nor any commitment to do any of the foregoing, except for liens for
current taxes that are not yet due and payable;
(h) any commitment to borrow money or
provide financial support to any Person entered into by either Company;
(i) any disposal of, or agreement to
dispose of, any asset or property, tangible or intangible, except in the
ordinary course of business, and in each case for a consideration at least equal
to the fair market value of such asset or property, nor any lease or license to
others, or agreement so to lease or license, any asset or property, except in
the ordinary course of business;
(j) any write-down of the value of any
inventory of either Company, or any write-off as uncollectible of any accounts
or notes receivable of either Company;
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(k) any purchase or agreement to
purchase or otherwise acquire any debt or equity securities of any corporation,
partnership, joint venture, firm or other entity;
(l) any expenditure or commitment
for the purchase, acquisition, construction or improvement of a capital asset in
excess of $10,000;
(m) any material change or agreement
to change any employee profit sharing, stock option, stock purchase, pension,
bonus, incentive, retirement, medical reimbursement, life insurance, deferred
compensation or any other employee benefit plan or arrangement;
(n) any resignation or termination of
any key officers of either Company; and neither Company knows of the impending
resignation or termination of employment of any such officer;
(o) any liability or loss contingency
incurred by either Company that would have to be disclosed on financial
statements (including the notes thereto) in accordance with GAAP, or any change
in the contingent obligations of either Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(p) any direct or indirect loans
made by either Company to any stockholder, employee, officer or director of
either Company;
(q) any sale, assignment or transfer of
any patents, trademarks, copyrights, trade secrets or other intangible assets;
(r) any change in any material agreement
to which either Company is a party or by which it is bound including
compensation agreements with either Company's employees;
(s) any labor organization activity;
(t) any change in the accounting or tax
methods, practices or assumptions followed by either Company;
(u) any other event or condition of
any character that, either individually or cumulatively, has had or is
reasonably expected to have a Material Adverse Effect.
2.9 LITIGATION. Except as set forth on
SCHEDULE 2.9, there is no action, suit, proceeding or investigation pending or
to either Company's knowledge currently threatened against either Company that
questions the validity of this Agreement, the Debenture Certificate, or the
Related Agreements or the right of either Company to enter into this Agreement,
the Debenture Certificate or any of such Related Agreements, or to consummate
the transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the
business, finances, assets, liabilities, operations, properties or prospects of
either Company, or any change in the current equity ownership of either Company.
The foregoing includes, without limitation, actions pending or threatened
involving the prior employment of any of either Company's employees, their use
in connection
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with either Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers. Neither Company is a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. Except as set forth in SCHEDULE 2.9, there
is no action, suit, proceeding or investigation by either Company currently
pending or which either Company intends to initiate.
2.10 PROPERTIES; TITLE; LIENS AND ENCUMBRANCES.
Except as set forth in SCHEDULE 2.10, neither Company owns or leases any real
property. Except as set forth in SCHEDULE 2.10, the Interim Balance Sheet
reflects all of the personal property used by either Company in its business or
otherwise held by either Company, except for (i) property acquired or disposed
of in the ordinary course of the business of either Company since the date of
the Interim Balance Sheet, and (ii) property not required under generally
accepted accounting principles to be reflected thereon. Except as set forth in
SCHEDULE 2.10, each Company has good and marketable title to all of its
properties and assets. Each Company has good title to all its leasehold
interests, in each case subject to no material mortgage, pledge, lien, security
interest, conditional sale agreement, encumbrance or charge. All of the fixed
assets and properties included in the Interim Financial Statements or thereafter
acquired are in satisfactory condition and repair and are adequate and suitable
for the requirements of each Company's business as presently conducted. There
does not exist any condition which interferes with the economic value or use of
such assets.
2.11 PATENTS AND TRADEMARKS. (a) Each Company
owns or possesses sufficient legal rights to all domestic and foreign patents,
trademarks, service marks, trade names, copyrights, trade secrets, information
and other proprietary rights and processes, and applications and registrations
therefore, and designs, customer lists, inventions and know-how, other
confidential or proprietary information and other intellectual property rights
(collectively "Intellectual Property Rights") necessary to permit each Company
to carry on its business as now conducted or as proposed to be conducted without
any known infringement of the rights of others. SCHEDULE 2.11 sets forth a full
and complete list of all Intellectual Property Rights. Except as set forth on
SCHEDULE 2.11, there are no outstanding options, licenses or agreements of any
kind relating to the foregoing, nor is either Company bound by or a party to any
options, licenses or agreements of any kind with respect to the Intellectual
Property Rights of any other person or entity (other than such licenses or
agreements arising from the purchase of "off the shelf" or standard products).
Except as set forth on SCHEDULE 2.11, neither Company has received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the Intellectual Property Rights of
any other Person. Except as set forth in agreements with either Company, neither
Company is aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company's business as proposed to be conducted. Neither the
execution nor delivery of this Agreement, the consummation of the transactions
contemplated hereby, nor the carrying on of the Companies' business by the
employees of either Company, nor the conduct of either Company's business as
proposed, will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. Neither Company believes
it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its
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employees made prior to their employment by the Company, except for inventions,
trade secrets or proprietary information that have been assigned to either
Company.
(b) All registered patents, copyrights,
trademarks, and service marks of each Company are in full force and effect and
are not subject to any taxes or maintenance fees. To the knowledge of the
Companies, neither Company markets or sells, or proposes to market or sell, any
product or service that violates or would violate any Intellectual Property
Rights of a third party. There is no pending or, to the best knowledge of the
Companies, threatened claim or litigation against either Company contesting the
right to use its Intellectual Property Rights, asserting the invalidity,
unenforceability or misuse of any thereof, or asserting the infringement or
other violation of, or conflict with, any Intellectual Property Rights of a
third party. The Intellectual Property Rights of the Companies do not infringe,
violate or conflict with any Intellectual Property Rights of a third party and
no third party infringes, violates or is in conflict with the Intellectual
Property Rights of either Company. All prior art known to the Companies which
may be or may have been pertinent to the examination of any patent or patent
application listed on SCHEDULE 2.11 has been cited to the United States Patent
and Trademark Office. Each Company has taken all reasonable security measures to
protect the secrecy, confidentiality and value of its customer lists, trade
secrets, proprietary processes and formulae, inventions, know-how and other
confidential and proprietary information. All inventions and know-how conceived
by employees or consultants of either Company and related to the business of
either Company were "works for hire", and all right, title, and interest therein
were transferred and assigned to the Company.
(c) None of the Intellectual Property Rights
of either Company are subject to any outstanding judgment or contract
restricting the use thereof by either Company. Neither Company has entered into
any agreement to indemnify any other Person against any charge of infringement
of any Intellectual Property Rights.
(d) All licenses, sublicenses or other rights
of use of the Intellectual Property Rights licensed by either Company (the
"LICENSED RIGHTS") are valid and authorized by the terms under which the Company
licenses or otherwise uses such Licensed Rights. Neither Company is in default
in the payment of any royalties, license fees or other consideration to any
owner or licensor of any Licensed Rights used in or necessary for the conduct of
either Company's business as now conducted and as proposed to be conducted or to
any agent or representative of any such owner or licensor by reason of the use
thereof by either Company and neither Company is otherwise in default in the
performance of any of its obligations to any such owner or licensor, and no such
owner or licensor, nor any such agent or representative, has notified either
Company of any claim of any such default.
2.12 TAXES. All federal, state, local and
foreign tax returns and reports required to be filed by either Company have been
filed, and all taxes, interest, assessments or deficiencies, fees and other
governmental charges upon either Company, or upon any of its properties, income
or franchises, shown in such returns and on assessments received by either
Company to be due and payable or claimed to be due and payable by any
governmental authority, have been paid. Neither Company has executed or filed
with any taxing authority any agreement, waiver or consent for the extension of
the period for assessment or collection of any taxes or the audit of any tax
returns or reports. Neither Company is a party to any pending action or
proceeding, nor, to the knowledge of either Company, is any such action or
proceeding threatened by any governmental authority for the assessment or
collection of taxes, interest,
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penalties, assessments or deficiencies, and no claim for assessment or
collection of taxes, interest, penalties, assessments or deficiencies has been
asserted against either Company. No material issue has been raised by any
federal, state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, reports, business or properties of either
Company which has not been settled or resolved. Neither Company has agreed to
extend the statute of limitations with respect to any tax period or the review
or audit of any tax return. No material, special charges, penalties, fines,
liens or similar encumbrances have been asserted against either Company with
respect to the payment or failure to pay any taxes which have not been paid or
received without further liability to either Company.
2.13 MATERIAL AGREEMENTS. (a) SCHEDULE 2.13(a)
sets forth all written or oral agreements or understandings to which either
Company is a party and which:
(i) provide for the future purchase of
products or services in excess of $10,000 per year or
otherwise call for expenditures in excess of $10,000 per year;
(ii) provide for the employment of, or any
covenant not to compete by, any director, officer, key
employee or consultant;
(iii) provide for the borrowing of money or
a line of credit or a leasing transaction of a type required
to be capitalized in accordance with GAAP;
(iv) provide for the sale, assignment,
license, or other disposition of any asset outside the
ordinary course of business;
(v) provide for the lease of any real or
personal property with lease payments in excess of $5,000 per
year;
(vi) were entered into with any labor union;
(vii) provide for a tax sharing;
(viii) restrict either Company or any
officer or key employee of either Company from engaging in any
business activity anywhere in the world, restrict any such
officer or key employee in the performance of his or her
obligations and responsibilities to either Company, or create
any other obligation or liability of any such officer or key
employee arising from his or her prior employment;
(ix) grant to any Person other than either
Company any right, title, or interest in any Intellectual
Property Rights;
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(x) provide for the licensing or
distribution of products or services by, or establish an
agency relationship with, any other party;
(xi) provide for a loan, guaranty, surety,
indemnity or other financial support to any Person, including,
without limitation, any director, officer, employee, or
consultant;
(xii) grant to any Person a security
interest in any asset or right;
(xiii) any agreement not terminable by the
Company with less than 30 days' advance notice and without
penalty;
(xiv) provide for the purchase within the
last two years of any entity, all or substantially all assets
of any entity or any other business operation, in each case
with consideration in excess of $10,000; or
(xv) are otherwise material to either
Company.
(b) Each Company has delivered to the
Investor correct and complete copies of all agreements and understandings listed
on SCHEDULE 2.13(a) (the "MATERIAL DOCUMENTS"). Each Material Document is in
full force and effect and constitutes a valid and binding obligation of the
Company that is a party thereto, and, to the best knowledge of each Company, all
other parties thereto. Each Company has in all respects performed the
obligations required to be performed by it and is not in default or alleged to
be in default in any material respect under any Material Document. There exists
no event or condition which, after notice or lapse of time, or both, would
constitute such default. To the best knowledge of the Companies, there are no
material defaults by any other party to any Material Document.
(c) Except as set forth in SCHEDULE
2.13(c), neither Company has granted any rights to license, market, or sell its
products or services to any Person and is not bound by any agreement that
affects either Company's exclusive right to develop, manufacture, assemble,
distribute, market or sell its products or services.
2.14 NO DEFAULTS, VIOLATIONS OR CONFLICTS.
Neither Company is in violation of any term or provision of its articles or
certificate of incorporation or bylaws, or any judgment, decree, order, statute,
rule or regulation, which has had or could have a Material Adverse Effect.
2.15 SECURITIES ACT. Subject to the accuracy of
the Investor's representations in Section 4 hereof, the offer, sale, grant and
issuance of the Debenture and the Conversion Shares upon the conversion of the
Debenture, constitute transactions exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
securities acts and laws of any other applicable jurisdictions.
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2.16 PRIOR REGISTRATION RIGHTS. Except as
described in SCHEDULE 2.16, neither Company is under any contractual obligation
to register under the Securities Act (whether upon demand or upon filing any
other registration statement) any of its presently outstanding securities or any
of its securities that may subsequently be issued.
2.17 DISTRIBUTIONS. There has been no declaration
or payment by either Company of any dividend, nor any other distribution by
either Company of any assets of any kind, to any of its stockholders.
2.18 EMPLOYEE BENEFIT PLANS. Except for those
plans described on SCHEDULE 2.18 (the "Plans"), neither Company now has,
maintains or contributes to (and each Company has not previously had, maintained
or contributed to) any "employee benefit plans" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). With
respect to the Plans described on SCHEDULE 2.18, each Company warrants and
represents that such Plans have been maintained in material compliance with all
applicable laws and regulations. The consummation of the transactions
contemplated by this Agreement will not constitute a triggering event under any
Plan that will, or upon the occurrence of subsequent events would, accelerate
the time of payment or vesting, or increase the amount of compensation or
benefits, for any director, officer, employee, or former employee of either
Company.
2.19 BROKERS AND FINDERS. Neither Company has
incurred or will incur, directly or indirectly, any liability for any brokerage
or finders' fees or agents commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
2.20 COMPLIANCE WITH LAWS; PERMITS. To its
knowledge, neither Company is in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties which violation would materially and adversely
affect the business, finances, assets, liabilities, operations, properties or
prospects of either Company. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Debentures or the Conversion
Shares, except (i) filings that have been duly and validly obtained or filed,
(ii) with respect to any filings that must be made after the Closing, filings
that will be filed in a timely manner or (iii) such consents or filings which
the failure to obtain or file would not, individually or in the aggregate, have
a Material Adverse Effect. Each Company has all material franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which has had or could have a Material
Adverse Effect and believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
2.21 FULL DISCLOSURE. This Agreement
(including the Schedules and Exhibits attached hereto and instruments delivered
in connection herewith, including, without limitation the Debenture Certificate
and the Related Documents) does not contain any untrue statement of a material
fact or omit any material fact necessary to make the statements contained herein
or therein not misleading. There is no fact which either Company has not
disclosed to the Investor and its counsel in writing and of which either Company
is aware which may have a Material Adverse Effect. The financial projections and
other estimates prepared by the Companies and presented to the Investor were
prepared by the Companies in good faith based on
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the Companies' experience in the industry and on assumptions of fact and opinion
as to future events which the Companies, at the date hereof, believed to be
reasonable. As of the date hereof, no facts have come to the attention of either
Company which would, in its opinion, require either Company to revise the
assumptions underlying such projections and other estimates or the conclusions
derived therefrom.
2.22 PATENT, COPYRIGHT AND NONDISCLOSURE
AGREEMENTS. Except as set forth on SCHEDULE 2.22, each employee, officer and
consultant (other than outside legal counsel and independent accounting firms)
of each Company has entered into a Patent, Copyright and Nondisclosure Agreement
substantially in the form attached hereto as EXHIBIT E, with such changes as may
have been approved by the Board of Directors of the respective Company.
2.23 INSURANCE. The Companies maintain valid
and effective insurance policies, issued by financially sound and reputable
insurers, to insure them against all risks usually insured against by Persons
conducting businesses similar to that of the Companies in the locality in which
such businesses are conducted. The Companies have paid all due premiums with
respect to all policies of insurance currently maintained by it. The Companies
have not received any notice that any insurance policy held by it has been or
shall be canceled or terminated or will not be renewed on substantially the same
terms as are now in effect or that the premium on such policy shall be
materially increased on the renewal thereof.
2.24 OBLIGATIONS TO RELATED PARTIES. Except as
set forth on SCHEDULE 2.24, there are no obligations of either Company to
officers, directors, stockholders, or employees of either Company other than (i)
for payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company and (iii) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of either Company). Except as set forth on SCHEDULE 2.24, none of the
officers, directors or stockholders of the Company, or any members of their
immediate families, are indebted to either Company or have any direct or
indirect ownership interest in any firm or corporation with which either Company
is affiliated or with which either Company has a business relationship, or any
firm or corporation which competes with either Company, except that officers,
directors and/or stockholders of either Company may own stock in publicly traded
companies which may compete with either Company. Except as set forth on SCHEDULE
2.24, no officer, director or stockholder, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
either Company (other than such contracts as relate to any such person's
ownership of capital stock or other securities of Parent). Except as may be
disclosed in the Financial Statements or as set forth on SCHEDULE 2.24, neither
Company is a guarantor or indemnitor of any indebtedness of any other person,
firm or corporation.
2.25 FOREIGN CORRUPT PRACTICES ACT. Neither
Company has taken any action which would cause it to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any rules and regulations
thereunder. To the best of each Company's knowledge, there is not now, and there
has never been, any employment by either Company of, or beneficial ownership in
either Company by, any governmental or political official in any country in the
world.
2.26 USE OF PROCEEDS. The Companies shall use the
funds from the purchase of the Debentures by the Investor as follows:
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(a) $175,000 shall be used to repay a portion
of the Company's debt to American National Bank and Trust Company of Chicago
(the "Bank");
(b) $250,000 shall be used to repay a portion of the
Goldberg Group Loans;
(c) $225,789 to pay all amounts owed by the Company
to Trans Union Corp.; and
(d) the balance to fund working capital and for other
general corporate purposes.
In addition to the foregoing, the Company shall use
the proceeds from the Goldberg and Cornett Investments (as defined below), the
Trenkman Investment (as defined below) and the prior sale of shares of Common
Stock to Hathaway Partners Investment Limited Partnership to repay an additional
$275,000 of the principal and interest outstanding under the Goldberg Group
Loans. The Companies will use their best efforts to obtain financing or capital
from other sources to repay the balance of the Goldberg Group Loans within 30
days after the Closing Date. The Companies will not use the proceeds from any of
the foregoing transactions, including the sale of the Debenture hereunder, to
obtain the release of any personal guarantees provided by any Person with
respect to indebtedness of either Company.
2.27 YEAR 2000. All of the software code and
product developed by either Company, if any, and, to the best knowledge of each
Company after due inquiry, any other software code or product owned or used by
either Company, (i) will not abnormally end or provide invalid or incorrect
results as a result of date data, specifically including date data which
represents or references different centuries or more than one century, and (ii)
have been designed to ensure Year 2000 compatibility, including, but not limited
to, date data century recognition, calculations which accommodate same century
and multi-century formulas and date values and date data interface values that
reflect the century.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR TO THE
COMPANIES. The Investor hereby represents and warrants to the Companies as
follows:
3.1 AUTHORIZATION. When executed and delivered
by the Investor, and assuming due execution and delivery by the Companies, this
Agreement will constitute a valid obligation of the Investor, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and rules of law
concerning equitable remedies.
4. SECURITIES LAWS.
4.1 EXEMPTIONS FROM REGISTRATION REQUIREMENTS.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN
REGISTERED FOR SALE UNDER THE SECURITIES ACT, THE GEORGIA ACT, OR THE SECURITIES
ACTS AND LAWS OF ANY OTHER JURISDICTION, AND SUCH SECURITIES WILL BE OFFERED AND
ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF ALL
SUCH APPLICABLE ACTS AND
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LAWS, INCLUDING WITHOUT LIMITATION THE EXEMPTIONS CONTAINED IN SECTION 4(2) OF
THE SECURITIES ACT AND SECTION 10-5-9(13) OF O.C.G.A.
4.2 SECURITIES LAWS REPRESENTATIONS AND
COVENANTS OF THE INVESTOR.
(a) This Agreement is made with the
Investor in reliance upon the Investor's representation to the Companies', which
by the Investor's execution of this Agreement the Investor hereby confirms, that
the Debenture and the Conversion Shares to be received by the Investor will be
acquired for such Investor's own account, not as a nominee or agent, and not
with a view to the direct or indirect sale or distribution of any part thereof
in violation of applicable securities laws, and that the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
(b) The Investor understands and
acknowledges that the offering of the Debenture and the Conversion Shares
pursuant to this Agreement will not be registered under the Securities Act or
any other applicable securities act or law or any other jurisdiction on the
grounds that the offering and sale of securities contemplated by this Agreement
are exempt from registration pursuant to Section 4(2) of the Securities Act and
Section 10-5-9(13) of the O.C.G.A. and under such other applicable securities
acts or laws, and that the Company's reliance upon such exemptions is predicated
upon such Investor's representations set forth in this Agreement.
(c) The Investor acknowledges that
the Debenture and the Conversion Shares being acquired by Investor must be held
indefinitely unless such securities are subsequently registered under the
Securities Act or an exemption from such registration is available with respect
to such shares. The Investor is aware of the provisions of Rule 144 promulgated
under the Securities Act which permits limited resales of securities purchased
in a private placement subject to the satisfaction of certain conditions, and
the Investor is aware that the conditions for resale set forth in Rule 144 have
not been satisfied and that, except as set forth herein or in the Registration
Rights Agreement, Parent has no plan to satisfy these conditions in the
foreseeable future. In no event will the Investor dispose of any of the
Debenture or the Conversion Shares other than pursuant to a registration
statement under the Securities Act or an exemption from such registration.
(d) The Investor represents that:
(i) the Investor is an "Accredited Investor" as that term is defined in Rule 501
of Regulation D promulgated by the Securities Exchange Commission under the
Securities Act and has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the Investor's
prospective investment in the Debenture and Conversion Shares; (ii) the Investor
has received all the information requested by it from the Companies and
considered necessary or appropriate for deciding whether to purchase the
Debenture; and (iii) the Investor has the ability to bear the economic risks of
such Investor's prospective investment.
4.3 LEGENDS. All certificates for the Debenture
and Conversion Shares shall bear the following legends:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE
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UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 (THE
"1933 ACT"), AND APPROPRIATE EXEMPTIONS
FROM REGISTRATION UNDER THE SECURITIES
LAWS OF OTHER APPLICABLE JURISDICTIONS.
THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED OTHER THAN
PURSUANT TO AN EFFECTIVE REGISTRATION
OR AN EXEMPTION FROM REGISTRATION. THE
ISSUER SHALL BE ENTITLED TO REQUIRE AN
OPINION OF COUNSEL REASONABLY SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH
THE 1933 ACT."
4.4 BLUE SKY COMPLIANCE. Parent shall register
or qualify the Debenture for offer and sale to the Investor under, or ensure the
availability of exemptions from the registration or qualification requirements
of, all applicable state securities or Blue Sky laws.
5. CONDITIONS OF INVESTORS' OBLIGATIONS AT THE CLOSING.
The obligations of the Investor to purchase the Debenture at Closing are subject
to the fulfillment of each of the following conditions, any of which may be
waived in writing by the Investor;
5.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Companies contained herein shall be true
and correct on and as of the Closing with the same effect as if made on and as
of the Closing.
5.2 PERFORMANCE. Each Company, on or before
Closing, shall have performed or fulfilled all agreements, obligations and
conditions contained herein required to be performed or fulfilled by such
Company before the Closing.
5.3 LEGAL COMPLIANCE. As of the closing date,
the sale and issuance of the Debenture, and the proposed issuance of the
Conversion Shares shall be legally permitted by all laws and regulations to
which the Investor and the Companies are subject.
5.4 BOARD OF DIRECTORS. As of the Closing,
the bylaws of Parent and Sub shall provide for a Board of seven (7) members. The
Board of Directors of each Company shall elect Robert P. Scherer, Jr. and
Kenneth H. Robertson as directors of each Company immediately after the Closing
such that the Board shall consist of Robert R. McGuire, Walter G. Cornett III,
A. Ward McCally, Brian J. Dettmann, Jeffrey L. Goldberg, Robert P. Scherer, Jr.
and Kenneth H. Robertson.
5.5 PROCEEDINGS SATISFACTORY. At or before
Closing, all corporate and legal proceedings in connection with the transactions
contemplated at the Closing and all documents and papers relating to such
transactions shall be reasonably satisfactory in form and substance to the
Investor. The Investor shall have received certified copies of all requisite
corporate actions taken by the Companies to authorize the execution and delivery
of this Agreement, the Debenture Certificate and the Related Agreements, their
respective performance
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thereunder (including required amendments to the bylaws), and the consummation
of the transactions contemplated thereby.
5.6 STOCKHOLDERS AGREEMENT. At or prior to
the Closing, Parent, Robert R. McGuire, Walter G. Cornett III, WCI, Inc., and
the Investor shall have entered into the Stockholders Agreement in the form
attached hereto as EXHIBIT 5.6 (the "Stockholders Agreement").
5.7 REGISTRATION RIGHTS AGREEMENT. At or prior
to the Closing, Parent and the Investor shall have entered into the Registration
Rights Agreement in the form attached as EXHIBIT 5.7 hereto (the "Registration
Rights Agreement").
5.8 REQUIRED CONSENTS. All consents, approvals
and other actions of, and notices and filings with, all Persons as may be
necessary or required with respect to the execution and delivery by the
Companies of this Agreement, the Debenture Certificate, and the Related
Agreements and the transactions contemplated thereby, shall have been obtained
or made.
5.9 DUE DILIGENCE. The Investor shall be
reasonably satisfied in all respects with the results of its business, legal and
accounting due diligence review of the Companies.
5.10 RESERVATION OF CONVERSION SHARES. At or
before Closing, the Conversion Shares issuable upon conversion of the Debenture
shall have been duly authorized and reserved for issuance upon such conversion.
5.11 LEGAL OPINION. At or before Closing, the
Investor shall have received an opinion from Ross & Hardies substantially in the
form of EXHIBIT 5.11.
5.12 EXTENSION OF MATURITY OF BANK DEBT. The
Bank shall have extended, or shall have agreed in writing to extend, to no
earlier than December 15, 2000 the date on which the principal balance is due to
be paid by the Company pursuant to the Installment Note (Secured) dated June 30,
1999, between Sub, as borrower, and the Bank as lender. The only condition to
the Bank's agreement to extend the maturity date of the Installment Note shall
be the consummation of the purchase and sale of the Debenture hereunder and the
Company's use of $175,000 of the proceeds therefrom to repay $175,000 of the
principal balance outstanding under the Installment Note.
5.13 ADDITIONAL INVESTMENTS. Prior to or
simultaneous with the Closing, Parent shall sell to Richard Trenkmann, Jeffery
L. Goldberg and Walter G. Cornett III (or affiliates that they control) the
number of shares of Common Stock set forth opposite its or his respective name
below at a purchase price per share of $.4315 payable by wire transfer or
certified check in immediately available funds:
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<TABLE>
<CAPTION>
Name Shares Total Price
---- ------ -----------
<S> <C> <C>
Richard Trenkmann 231,765 shares $100,000
Jeffrey L. Goldberg 144,853 shares 62,500
Walter G. Cornett III 144,853 shares 62,500
------
Total 521,471 shares $225,000
</TABLE>
The Company shall have received payment in full for such shares prior to or
simultaneous with the Closing. The purchase of such shares by Mr. Goldberg and
Mr. Cornett is referred to as the "Goldberg and Cornett Investments" and the
purchase of shares by Richard Trenkmann is referred to as "Trenkmann
Investment."
6. CONDITIONS OF THE COMPANIES' OBLIGATIONS AT THE
CLOSING. The obligations of the Companies under this Agreement are subject to
the representations and warranties of the Investors contained in Sections 3 and
4 having been satisfied and being true and correct on and as of the Closing with
the same effect as though said representations and warranties had been made on
and as of such Closing. This condition may be waived in writing by the Companies
at any time.
7. COVENANTS OF THE COMPANIES. Each Company hereby
covenants and agrees as follows:
7.1 ELECTION OF DIRECTORS. Immediately
following the Closing, the Board of Directors of each Company shall take such
action as may be necessary to increase the number of directors to seven and to
elect Robert P. Scherer, Jr. and Kenneth H. Robertson as directors of each
Company. Each year thereafter during the Applicable Period in connection with
the Annual Meeting of Stockholders or any other meeting of stockholders of each
Company at which directors are nominated or elected, the Investor shall be
entitled to designate two individuals (the "Investor Nominees") for nomination
for election as directors. The Board of Directors of each Company and each
Company agrees to nominate the Investor Nominees for election as directors and
to recommend that the stockholders vote in favor of their election. During the
Applicable Period, the size of the Board of Directors of either Company shall
not be expanded without the approval of the Investor Nominees then serving on
the respective Board of Directors. Notwithstanding the foregoing, in the event
that during the Applicable Period the number of directors of either Company is
increased, the number of Investor Nominees that the Investor is entitled to
designate shall be increased such that the number of Investor Nominees shall not
be less than 20% of the total number of directors on such Board. The Bylaws of
each Company shall be amended as soon as practicable after the date hereof to
provide for the nominations as set forth in this Section 7.1, which bylaw
provision may not thereafter be amended or changed during the Applicable Period
without the consent of the Investor Nominees then serving as directors.
7.2 USE OF PROCEEDS. The Companies shall use
the proceeds received upon the sale of the Debenture to pay transaction fees and
expenses related to the transactions contemplated by this Agreement, and for the
purposes specified in Section 2.26.
7.3 ACCESS TO RECORDS. At all times during the
Applicable Period, the Companies shall afford to the Investor and its authorized
employees, counsel, accountants and other representatives, upon reasonable
notice and during ordinary business hours, (a) free and
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full access, at all reasonable times and for any reasonable purpose, to all
books, records and properties of the Companies, and (b) the opportunity to
interview any directors, officers, and employees of the Companies regarding the
affairs of either Company.
7.4 BUDGET. At least 30 days before the
beginning of each fiscal year of Parent that begins during the Applicable
Period, Parent shall deliver to the Investor a budget for such fiscal year,
including consolidated and consolidating projected balance sheets and statements
of income and cash flows of the Companies for each quarter of such fiscal year
(the "BUDGET") and a copy of each Company's annual business plan. Parent shall
deliver, in a timely fashion, to the Investor any updated or revised budget or
business plan presenting the information required hereunder.
7.5 FINANCIAL STATEMENTS. During the Applicable
Period, Parent shall deliver to the Investor the following:
(a) within 45 days after the end of each
of the first three quarters of each fiscal year (i) consolidated and
consolidating balance sheets of the Companies at the end of such quarter, (ii)
consolidated and consolidating statements of income and cash flows for such
quarter and for the period from the beginning of the current fiscal year to the
end of such quarter, together with comparisons to such statements for the
corresponding periods in the prior year and to the current Budget, and (iii) a
management discussion of the results for such quarter compared with the previous
quarter and the projections in the Budget for such quarter; and
(b) within 90 days after the end of each
fiscal year of Parent, (i) audited consolidated and consolidating balance sheets
of the Companies at the end of such fiscal year, together with comparisons to
such balance sheets of the Companies at the end of the prior fiscal year, (ii)
audited consolidated and consolidating statements of income and cash flows of
the Companies for such fiscal year, together with comparisons to such statements
for the prior fiscal year, and (iii) an audit report of Parent's independent
accounting firm on such consolidated balance sheets and statements.
All financial statements to be delivered under this Section
shall be in accordance with the books and records of the Companies and shall
have been prepared in accordance with GAAP applied on a consistent basis.
7.6 PROCEEDINGS. Promptly after obtaining
knowledge thereof, the Companies shall notify the Investor of (i) the
commencement or threat of any material action, suit, claim, investigation or
other proceeding by or before any governmental authority or arbitrator against
either Company, (ii) any survey that contains material adverse findings with
respect to any Company property or assets, (iii) any material judgment, decree,
injunction, or order of any governmental authority or arbitrator entered
against, or any settlement agreement entered into by, either Company, (iv) any
default by either Company under any material agreement and (v) any other event
that may result in a Material Adverse Effect.
7.7 CONDUCT OF BUSINESS. Each Company shall
take all actions required to assure that it (i) remains duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) maintains all requisite governmental
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authority, licenses, and permits to conduct its business, and (iii) complies in
all material respects with all of its contractual obligations and applicable
laws and regulations.
7.8 PROPRIETARY INFORMATION AND CONFIDENTIALITY
AGREEMENT. Each Company shall cause each employee or consultant of such Company
to enter into a Proprietary Information and Confidentiality Agreement as a
condition to employment by or engagement with such Company.
7.9 INSURANCE. Each Company shall maintain
insurance coverage of a type and amount customary for corporations of similar
size engaged in similar lines of business. The Board of Directors of Parent
shall use its reasonable best efforts to obtain directors' and officers'
insurance, in an amount reasonably acceptable to the Investor Nominees.
7.10 USE OF SCHERER HEALTHCARE, INC. NAME.
Each Company acknowledges that the Investor has no responsibility for managing
the Companies and agrees that any use or reference to the Investor in any
publicly available or otherwise widely disseminated document or communication
must be approved, in writing, in advance by the Investor.
7.11 SUBSIDIARIES. Each Subsidiary of either
Company, whether now existing or hereafter formed or acquired, is (and shall be)
wholly-owned by the Company. Each Subsidiary shall be bound by and comply with
all covenants contained herein and in the Related Agreements.
7.12 OPTIONS. Parent shall only grant options or
warrants to acquire capital stock of the Company based on the recommendations of
management of the Company and with the approval of the Board of Directors and
the compensation committee, including approval of the Investor Nominees then
serving as directors. All such options or warrants shall be granted pursuant
customary stock option or warrant agreements, including vesting and other
typical provisions.
7.13 INDEMNIFICATION OF DIRECTORS. Each Company
shall take all actions (including, without limitation, any amendment of the
articles or certificate of incorporation or the bylaws) required to assure that
the articles or certificate of incorporation and the bylaws of each Company
provide at all times for exculpation from liability and indemnification of the
directors of the Company to the full extent permitted by law.
7.14 SECURITIES ACT REGISTRATION. As soon as
practicable but in no event later than December 31, 1999, Parent shall file with
the Securities and Exchange Commission (the "SEC") a registration statement on
Form 10 or Form 10-SB (or other appropriate form) to register the Common Stock
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Thereafter, Parent shall timely file with the SEC all reports required to be
filed under the Exchange Act, including without limitations Forms 10-K and 10-Q
or Forms 10-KSB and 10-QSB, in order to maintain such registration under the
Exchange Act.
7.15 FUTURE OPTION GRANTS. Parent agrees that
it will not issue any options, warrants or other rights to acquire Common Stock
(including securities convertible into shares of Common Stock) after the Closing
Date unless such options, warrants or other rights have an exercise price per
share of Common Stock of no less than the market value per share of
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<PAGE>
the Common Stock at the time of grant or $1.00 per share, whichever is greater.
Notwithstanding the foregoing, Parent shall be entitled to grant to (a) Timothy
O'Neill options to purchase 100,000 shares of Common Stock at an exercise price
of $.75 per share, (b) Michael Allen options to purchase 100,000 shares of
Common Stock at an exercise price of $.65 per share, (c) Kilbourn Surety IBC
warrants to purchase Common Stock at an exercise price of $.75 per share in
accordance with the terms of the existing agreement between Parent and Kilbourn
Securities IBC and (d) Schneider Securities, Inc. warrants to purchase 18,750
shares of Common Stock at an exercise price of $.60 per share pursuant to the
existing agreement between Parent and Schneider Securities, Inc. Additionally,
nothing in this Agreement shall prohibit Parent from extending the exercise
period of the following options and warrants; provided that such extension is
for no more than three years and is approved by the Board of Directors of Parent
after the election of the Investor Nominees to such Board: (i) options to
purchase 321,931 shares of Common Stock at an exercise price of $.3728
previously granted to Robert McGuire; (ii) options to purchase 321,931 shares of
Common Stock at an exercise price of $.3728 previously granted to A. Ward
McCally; (iii) options to purchase 40,242 shares of Common Stock at an exercise
price of $.6212 previously granted to Brian R. McGuire; (iv) warrants to
purchase 1,207,240 shares of Common Stock at an exercise price of $.7455
previously granted to Robert McGuire; (v) warrants to purchase 1,207,240 shares
of Common Stock at an exercise price of $.7455 previously granted to WCI, Inc.;
and (vi) warrants to purchase 603,620 shares of Common Stock at an exercise
price of $.7455 previously granted to A. Ward McCally.
7.16 RELATED PARTY TRANSACTIONS. From and after
the date hereof, all compensation paid by the Company or its Subsidiaries to any
director of the Company (other than compensation paid to directors who are full
time employees of the Company) must be approved in advance by a majority of the
disinterested directors of Parent then serving as directors. 7.17 CONSULTANTS.
The Company agrees not to renew, amend or replace any of the existing contracts
with its consultants and financial advisors.
8. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES. The warranties and
representations of the parties contained in or made pursuant to this Agreement
shall survive any investigation made by any Investor and shall survive the
execution and delivery of this Agreement and the Closing until the expiration of
the applicable statute of limitations.
8.2 NOTICES. All notices, claims, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Companies:
Econometrics, Inc.
One Illinois Center
111 East Wacker Drive, Suite 1250
Chicago, Illinois 60601
Telecopy: (312) 616-8401
Attention: Chairman and Chief Executive Officer
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<PAGE>
With copy to:
Ross & Hardies
150 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601
Telecopy: (312) 750-8600
Telephone: (312) 750-8693
Attention: Lawrence R. Samuels
If to Investor:
Scherer Healthcare, Inc.
120 Interstate North Parkway
Suite 305
Atlanta, Georgia 30339
Telecopier: (770) 933-1880
Attention: Robert P. Scherer, Jr.,
Chairman of the Board, President and
Chief Executive Officer
With copy to:
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
Telecopy: (404) 365-9532
Telephone (404) 233-7000
Attention: David M. Calhoun
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the fifth business day following that on which the piece
of mail containing such communication is posted.
8.3 GOVERNING LAW. This Agreement is made
and entered into in the State of Illinois and the internal laws of the State of
Illinois (without giving effect to the principles of conflicts of laws or choice
of law) shall govern the validity and interpretation hereof and the performance
by the parties hereto of their respective duties and obligations hereunder.
8.4 COUNTERPARTS. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
8.5 CAPTIONS AND SECTION HEADINGS. Section
titles or captions contained in this Agreement are inserted as a matter of
convenience and for reference purposes
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<PAGE>
only, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
8.6 SINGULAR AND PLURAL, ETC. Whenever the
singular number is used herein and where required by the context, the same shall
include the plural, and the neuter gender shall include the masculine and
feminine genders.
8.7 AMENDMENTS AND WAIVERS. This Agreement
may be amended only by a written instrument signed by the Company and by the
Investor. No failure to exercise and no delay in exercising, on the part of any
party, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law. The failure of
any party to insist upon a strict performance of any of the terms or provisions
of this Agreement, or to exercise any option, right or remedy herein contained,
shall not be construed as a waiver or as a relinquishment for the future of such
term, provision, option, right or remedy, but the same shall continue and remain
in full force and effect. No waiver by any party of any term or provision of
this Agreement shall be deemed to have been made unless expressed in writing and
signed by such party.
8.8 SUCCESSORS AND ASSIGNS. All rights,
covenants and agreements of the parties contained in this Agreement shall,
except as otherwise provided herein, be binding upon and inure to the benefit of
their respective successors and assigns.
8.9 EXPENSES. The Companies and the Investor
will each bear their respective legal and other fees and expenses in connection
with the transactions contemplated in this Agreement.
8.10 FURTHER ASSURANCES. Each party hereto
agrees to do all acts and to make, execute and deliver such written instruments
as shall from time to time be reasonably required to carry out the terms and
provisions of this Agreement.
8.11 ENTIRE AGREEMENT. This Agreement, the
Exhibits and Schedules hereto, the Related Agreements and the other documents
delivered pursuant hereto and thereto constitute the full and entire
understanding and agreement between the parties with respect to the subjects
hereof, and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreement except as specifically set
forth herein or therein.
8.12 SEVERABILITY. In case any provision of
the Agreement shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
(signatures on next page)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this 8%
Convertible Debenture Purchase Agreement as of the day and year first above
written. PARENT:
ECONOMETRICS, INC.,
a Colorado corporation
By: /s/ Robert R. McGuire
Name: Robert R. McGuire
Title: Chairman/CEO
SUB:
ECONOMETRICS, INC.,
an Illinois corporation
By: /s/ Robert R. McGuire
Name: Robert R. McGuire
Title: Chairman/CEO
INVESTOR:
SCHERER HEALTHCARE, INC.
By: /s/ Robert P. Scherer, Jr.
Name: Robert P. Scherer, Jr.
Title: Chairman, President and Chief Executive Officer
23
<PAGE>
ECONOMETRICS, INC.
8% CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
DATED AS OF
SEPTEMBER 30, 1999
24
<PAGE>
APPENDIX A
DEFINED TERMS
"APPLICABLE PERIOD" shall mean the period beginning on the date hereof
and ending at such time as both (i) all principal and interest under the
Debenture has been repaid in full or converted into Conversion Shares and (ii)
the Investor, together with its "affiliates" (as defined in Section ___ of the
Securities Act) holds, directly or indirectly, fewer than 15% of the Conversion
Shares that the Investor acquired or could have acquired upon conversion in full
of the Debenture.
"EQUITY SECURITIES" shall mean (i) all shares of capital stock of the
Company, (ii) all options, warrants, or other rights to purchase or otherwise
acquire from the Company shares of its capital stock or securities convertible
or exchangeable into, or exerciseable for, capital stock, and (iii) all
securities of the Company convertible into or exchangeable or exercisable for
shares of capital stock of the Company.
"PERSON" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"SECURITIES" means "securities" as defined in Section 2(1) of the
Securities Act.
"SUBSIDIARIES" means, with respect to any Person, any other Person
whose shares of stock or other Securities having a majority of the general
voting power in electing the board of directors or equivalent governing body of
such other Person are, at the time as of which any determination is made, owned
by such Person either directly or indirectly through one or more other entities
constituting Subsidiaries.
The following terms shall have the meanings ascribed to such terms in
the Section of the Agreement reference below:
<TABLE>
<CAPTION>
TERM SECTION
<S> <C>
"Agreement" Preamble
"Audited Balance Sheets" 2.7
"Audited Financial Statements" 2.7(a)
"Bank" 2.26(a)
"Budget" 7.4
"Closing" 1.2
"Common Stock" 2.2(b)
"Company" Preamble
"Conversion Shares" 2.5
"Debenture" Recitals
"Debenture Certificate" Recitals
"ERISA" 2.18
</TABLE>
<PAGE>
<TABLE>
<S> <C>
"Exchange Act" 7.14
"Financial Statements" 2.7(a)
"GAAP" 2.7(a)
"Georgia Act" 2.15
"Goldberg Group" 2.7(c)
"Goldberg Group Loans" 2.7(c)
"Intellectual Property Rights" 2.11
"Interim Balance Sheet" 2.7(a)
"Interim Financial Statements" 2.7(a)
"Investor" Preamble
"Investor Nominees" 7.1
"Licensed Rights" 2.11(d)
"Material Adverse Effect" 2.1(c)
"Material Documents 2.13(b)
"Plans" 2.18
"Purchase Price" 1.1
"Registration Rights Agreement" 5.7
"Related Agreements" 2.1(b)
"SEC" 7.14
"Securities Act" 2.15
"Stockholders Agreement" 5.6
</TABLE>
<PAGE>
Exhibit 10.1
$2,000,000 Chicago, Illinois
September 30, 1999
ECONOMETRICS, INC.
CONVERTIBLE DEBENTURE
1. PRINCIPAL AND INTEREST.
(a) PAYMENT OF PRINCIPAL AND INTEREST. Econometrics, Inc., a
Colorado corporation ("Parent") and Econometrics, Inc., an Illinois corporation
("Sub"; Sub and Parent hereinafter collectively referred to as the "Borrowers"
and individually referred to as a "Borrower"), for value received, hereby
jointly and severally, promise to pay to the last registered holder of this
Debenture as set forth on EXHIBIT A attached hereto and made a part hereof (the
"Registered Holder") (unless this Debenture shall have been converted), the
principal sum of $2,000,000 on September 1, 2004 (the "Maturity Date"). The
Borrowers further agree, jointly and severally, to pay interest on the unpaid
principal amount of this Debenture at a rate of eight percent (8%) per annum,
from the date of issue to the earlier of the Maturity Date or the date on which
this Debenture is paid in full, which interest shall accrue until September 1,
2000, at which time all accrued interest from the date hereof until such date
shall be paid. Thereafter, commencing on December 1, 2000, interest shall be
paid quarterly (with quarterly payment dates of March 1, June 1, September 1 and
December 1) until the principal amount has been paid in full or this Debenture
has been converted in full into Common Stock (hereinafter defined) as provided
herein. Interest shall be computed on the basis of actual days elapsed based on
a 365-day year.
(b) PREPAYMENT. The Borrowers shall have the right to prepay,
in whole or in part, the outstanding principal balance of this Debenture, as
follows: (i) at any time after September 1, 2001 but before September 1, 2002,
by payment of accrued interest plus 104% of the unpaid principal amount; (ii) at
any time on or after September 1, 2002 and before September 1, 2003, by payment
of accrued interest plus 102.5% of the unpaid principal amount; or (iii) at any
time on or after September 1, 2003, but before September 1, 2004, by payment of
accrued interest plus 101% of the unpaid principal amount. If the Borrowers
elect to prepay any portion of the outstanding principal balance of this
Debenture, the Borrowers shall provide the Registered Holder hereof with thirty
(30) days prior written notice of their intent to prepay this Debenture and, if
the Registered Holder exercises its Conversion Option (hereinafter defined)
within the thirty (30) day period after receiving notice of prepayment, the
Registered Holder hereof shall receive such number of shares of Parent's common
stock, no par value (the "Common Stock"), as calculated in Section 2 hereunder.
(c) REDEMPTION BY REGISTERED HOLDER. Until the date on which
this Debenture is paid in full, the Registered Holder hereof shall have the
right to demand payment of the entire outstanding principal balance of this
Debenture, plus interest thereon accrued to date, in the event of (i) any
voluntary or involuntary liquidation, dissolution of winding-up of either
Borrower, (ii) the consolidation of either Borrower with, or merger of either
Borrower into, any
<PAGE>
other corporation, or (iii) the acquisition of forty percent (40%) or more of
the then outstanding voting stock of either Borrower by any person or entity
other than the applicable Borrower or an affiliate, subsidiary or parent of such
Borrower.
(d) PLACE OF PAYMENT. The principal of and interest on this
Debenture shall be payable at the Registered Holder's address as it appears in
EXHIBIT A to this Debenture.
2. CONVERSION.
(a) Conversion Option.
(1) Until the date on which this Debenture is paid in
full, the Registered Holder hereof shall have the right to convert up
to the entire outstanding principal balance of this Debenture, plus
interest thereon accrued to date, into shares of Common Stock at the
Conversion Price (as hereinafter defined) (the "Conversion Option").
The Common Stock issuable upon conversion of this Debenture is referred
to hereinafter as the "Conversion Securities." In order to exercise its
Conversion Option, which exercise shall be irrevocable, the Registered
Holder shall surrender this Debenture to Parent, accompanied by a
written statement indicating that the Registered Holder is exercising
its Conversion Option (and specifying whether the Registered Holder is
converting this Debenture as to all or a portion of the outstanding
principal balance hereof, plus interest thereon, and as to any portion,
stating the amount to be so converted). If the Registered Holder
exercises its Conversion Option, the Registered Holder shall receive
such number of shares of Common Stock as is equal to the number derived
by dividing (i) the portion of the outstanding principal balance
hereof, plus interest thereon, to be converted on the date of
conversion (which in the event the Borrowers have elected to prepay the
outstanding principal balance of this Debenture in accordance with the
requirements set forth in Section 1(b) above, such amount may, at the
option of the Registered Holder, include up to the entire amount
required for prepayment under said Section 1(b)) by (ii) the Conversion
Price. In the event the Registered Holder exercises the Conversion
Option as to less than the entire outstanding principal amount hereof,
then subsequent to such exercise by the Registered Holder and the
Registered Holder's surrender of this Debenture to Parent, the
Borrowers shall issue and deliver to the Registered Holder a debenture
in substitution for and replacement of this Debenture, which debenture
shall indicate the remaining outstanding principal balance subsequent
to such exercise, and shall in all other respects be identical to this
Debenture. Notwithstanding the foregoing, prior to that date which is
one day following the date which is one (1) year from the date of
issuance of this Debenture, the Registered Holder's right to exercise
the Conversion Option may only be exercised in full for the entire
outstanding principal balance, and may not be exercised for any portion
thereof.
(2) Any conversion hereunder shall be deemed to have
been made at the close of business on the date that this Debenture
shall have been surrendered for conversion, so that the rights of the
Registered Holder as a Debenture holder (but only as such rights relate
to the portion of the Debenture so converted) shall cease at such time
and the person or persons entitled to receive Conversion Securities
upon such conversion,
2
<PAGE>
shall for all purposes be treated as having become the record holder or
holders of such Conversion Securities at such time; PROVIDED, HOWEVER,
that no such surrender on any date when the stock transfer books of
Parent shall be closed shall be effective to constitute the person or
persons entitled to receive such Conversion Securities as the record
holder or holders of such Conversion Securities on such date, but such
surrender shall be effective to constitute the person or persons
entitled to receive such Conversion Securities as the record holder or
holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open. Promptly
after this Debenture shall have been surrendered for conversion, Parent
shall issue and shall deliver to the Registered Holder, a certificate
for the number of full shares issuable upon conversion of this
Debenture (or portion thereof) in accordance with the provisions of
this Section 2 and cash as provided in Section 2(d).
(b) CONVERSION PRICE. Subject to adjustment as provided in
Section 2(c) below, the "Conversion Price" shall be $.4315 per share of Common
Stock.
(c) ADJUSTMENTS OF CONVERSION PRICE. The Conversion Price
shall be subject to adjustment from time to time only as follows:
(3) In the event shares of Common Stock are issued
by Parent as a dividend or other distribution on any class of stock of
Parent, the Conversion Price which would otherwise be in effect at the
opening of business on the date fixed for determination of stockholders
entitled to receive such dividend or other distribution shall be
reduced to an amount equal to the product of (A) the Conversion Price
immediately prior to such event multiplied by (B) a fraction, the
numerator of which is the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and
the denominator of which is the sum of the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the total number of shares constituting such
dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination.
(4) In the event the number of shares of outstanding
Common Stock shall be subdivided into a greater or combined into a
lesser number of shares of Common Stock, the Conversion Price in effect
immediately prior thereto, or immediately prior to the record date for
such subdivision or combination if a record date is fixed, shall be
proportionately adjusted so that it will bear the same relationship to
the Conversion Price in effect immediately prior to such subdivision or
combination, or such record date, as the total number of shares of
Common Stock outstanding immediately prior to such subdivision or
combination, or such record date, shall bear to the total number of
shares of common Stock outstanding immediately after such subdivision
or combination or such record date.
(5) In the event of any capital reorganization of
Parent, or any reclassification of the Common Stock, or the
consolidation of Parent with, or the merger of the Parent into, any
other corporation or of the sale of all or substantially all of the
3
<PAGE>
Common Stock or assets of Parent to any other entity (each, a
"Significant Event"), this Debenture shall, after such Significant
Event, entitle the Registered Holder to receive upon conversion that
number of shares of stock or other securities or property of Parent, or
of the corporation resulting from such consolidation or surviving such
merger or to which such sale shall be made, as the case may be, to
which the Registered Holder would have been entitled had the Registered
Holder converted this Debenture immediately prior to such Significant
Event; and in any such event, the provisions of this subsection with
respect to the rights and interests thereafter of the Registered Holder
shall be appropriately adjusted so as to be applicable, as nearly as
may reasonably be, to any shares of stock or other securities or any
property thereafter deliverable on the conversion of this Debenture.
The subdivision or combination of shares of Common Stock deliverable
upon conversion of this Debenture into a greater or lesser number of
shares of Common Stock shall not be deemed to be a reclassification of
the Common Stock for the purposes of this paragraph.
(d) FRACTIONAL SHARES. Parent shall not be required to issue
any fraction of a share in connection with the conversion of this Debenture, but
in any case where the Registered Holder of this Debenture would, except for the
provisions of this paragraph, be entitled under the terms of this Debenture to
receive a fraction of a share upon the conversion of this Debenture, Parent
shall pay a sum in cash in respect of any fraction of a share which would
otherwise be issuable upon the surrender of this Debenture.
(e) DIVIDENDS. No payment to the Registered Holder or
adjustment of the Conversion Price shall be made upon any conversion on account
of any cash dividends on the Common Stock declared and paid prior to the date
the Registered Holder exercises its Conversion Option.
(f) SHARES ISSUABLE UPON CONVERSION. Parent covenants and
agrees that all shares of Common Stock which may be issued upon the conversion
of this Debenture will, upon issuance, be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens, and charges with respect to
the issue thereof. Parent further covenants and agrees that, if necessary, it
will cause the amendment of its Articles of Incorporation to assure that it will
have authorized a sufficient number of shares of its Common Stock as shall then
be issuable upon the conversion of this Debenture.
3. AFFIRMATIVE COVENANTS OF BORROWERS. The Borrowers covenant and
agree that, so long as this Debenture shall be outstanding:
(a) PROVIDE FINANCIAL AND OTHER MATERIAL INFORMATION
CONCERNING OPERATIONS OF BORROWERS. Parent shall furnish to the Registered
Holder at the same time as sent to stockholders of Parent, one copy of each
annual and interim financial and other reports or communications provided by
Parent to said stockholders. Additionally, the Borrowers shall afford to the
Registered Holder and its authorized employees, counsel, accountants and other
representatives, upon reasonable notice and during ordinary business hours, (i)
free and full access, at all reasonable times and for any reasonable purpose, to
all books, records and properties of the Borrowers, and (ii) the opportunity to
interview any directors, officers, and
4
<PAGE>
employees of the Borrowers regarding the affairs of the Borrowers.
(b) BOOKS AND RECORDS. Each Borrower will at all times keep,
in accordance with generally accepted accounting principles, true and complete
books and records in connection with its assets and operations.
(c) CONSENTS. All necessary consents to the issuance of this
Debenture have been obtained.
(d) Right of First Refusal.
(i) For so long as the principal balance hereunder
remains outstanding, Parent hereby grants to the Registered Holder the
right of first refusal to purchase the Parent's Common Stock which
Parent may from time to time propose to sell. In the event Parent
proposes to undertake a sale of Common Stock, it shall give to the
Registered Holder written notice (the "Parent Notice") of its
intentions, which notice shall describe the price and the principal
terms upon which Parent proposes to sell such Common Stock. The
Registered Holder shall have ten (10) days from the delivery of the
Parent Notice to exercise its right of first refusal to purchase all or
a portion of such Common Stock by giving written notice to Parent
stating the quantity of such Common Stock to be purchased accompanied
by payment of the purchase price therefor. Any shares of Common Stock
not accepted for purchase by the Registered Holder may be issued by
Parent, provided such issuance is in accordance with the terms of the
proposed offering as set forth in the Parent Notice;
(ii) For so long as the principal balance hereunder
remains outstanding, Sub hereby grants to the Registered Holder the
right of first refusal to purchase Sub's capital stock ("Sub Stock")
which Sub may from time to time propose to sell. In the event Sub
proposes to undertake a sale of Sub Stock, it shall give to the
Registered Holder written notice (the "Sub Notice") of its intentions,
which notice shall describe the price and the principal terms upon
which Sub proposes to sell such Sub Stock. The Registered Holder shall
have ten (10) days from the delivery of the Sub Notice to exercise its
right of first refusal to purchase all or a portion of such Sub Stock
by giving written notice to Sub stating the quantity of such Sub Stock
to be purchased accompanied by payment of the purchase price therefor.
Any shares of Sub Stock not accepted for purchase by the Registered
Holder may be issued by Sub, provided such issuance is in accordance
with the terms of the proposed offering as set forth in the Sub Notice.
4. EVENTS OF DEFAULT AND REMEDIES.
(a) EVENTS OF DEFAULT. If one or more of the events described
in subsections (a) through (d) of this Section 4 shall happen and be continuing,
each of such events shall be an "Event of Default":
5
<PAGE>
(i) Default shall be made by the Borrowers (A) in the
payment of principal of this Debenture when and as the same shall
become due and payable, whether at maturity thereof or otherwise, or
(B) in the payment of interest on this Debenture when and as the same
shall become due and payable in accordance with the provisions hereof
and such Default shall continue for a period of thirty (30) days; or
(ii) Default shall be made by either Borrower in the
performance or observance of any other of the covenants, conditions or
agreements on the part of the Borrowers, their successors or assigns,
set forth in this Debenture, and such default shall continue for a
period of sixty (60) days after either Borrower receives written notice
of such default from the Registered Holder; or
(iii) A decree or order by a court having
jurisdiction in the premises shall have been entered adjudging either
Borrower bankrupt or insolvent, or approving a petition seeking
reorganization, readjustment, arrangement, composition or similar
relief for either Borrower under the federal bankruptcy laws, or any
other similar applicable federal or state law, and such decree or order
shall have continued undischarged and unstayed for a period of sixty
(60) days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of either Borrower or a
substantial part of the property of either Borrower, or for the winding
up or liquidation of either of their affairs, shall have been entered,
and such decree or order shall have remained in force, undischarged and
unstayed for a period of sixty (60) days; or any property of either
Borrower shall be sequestered or attached and shall not be returned to
the possession of such Borrower or released from such attachment within
sixty (60) days thereafter; or
(iv) Either Borrower, shall institute proceedings to
be adjudicated a voluntary bankrupt, or shall consent to the filing of
a bankruptcy proceeding against it, or shall file a petition or answer
or consent seeking reorganization, readjustment, arrangement,
composition or similar relief under the federal bankruptcy laws, or any
other similar applicable federal or state law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of a substantial part of its property, or shall be
unable to pay its debts generally as they become due, or shall make an
assignment for the benefit of creditors, or corporate action shall be
taken by either Borrower in furtherance of any of the aforesaid
purposes.
(b) ACCELERATION. If an Event of Default occurs, the
Registered Holder may declare the entire unpaid principal balance of this
Debenture and all accrued but unpaid interest thereon to be due and payable
immediately, and upon any such declaration the unpaid principal balance of this
Debenture and said accrued unpaid interest thereon shall be immediately due and
payable, anything in this Debenture to the contrary notwithstanding, and the
Registered Holder may thereupon proceed to protect and enforce its rights either
by suit in equity, or by action at law, or by other appropriate proceedings
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Debenture or in aid of the
6
<PAGE>
exercise of any power granted in this Debenture, and proceed to enforce the
payment of any of this Debenture and to enforce any other legal or equitable
right of the Registered Holder.
(c) REMEDIES CUMULATIVE. No remedy herein conferred upon the
Registered Holder is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
(d) REMEDIES NOT WAIVED. No course of dealing between the
Borrowers and the Registered Holder or any delay in exercising any rights
hereunder shall operate as a novation of this Note or as a waiver by the
Registered Holder. Each Borrower hereby waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing.
5. TRANSFERABILITY OF DEBENTURE.
(a) RESTRICTIONS ON TRANSFER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (THE "SECURITIES") HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPROPRIATE EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES LAWS OF ALL
APPLICABLE JURISDICTIONS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
FROM REGISTRATION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE SECURITIES ACT
OF 1933, AS AMENDED.
(b) TRANSFERABILITY. This Debenture may not be transferred
unless the Debenture is subsequently registered under the Securities Act of
1933, as amended (the "Securities Act"), or an exemption from such registration
is available.
(c) The Borrowers represent, warrant and agree that for
purposes of Rule 144 promulgated under the Securities Act, that the initial
Registered Holder's holding period of Common Stock received, if any, pursuant to
a conversion described under Section 2 herein, shall have commenced on the date
of issuance of this Debenture, and that all Common Stock received by the initial
Registered Holder pursuant to any such conversion shall have been received
pursuant to a conversion described in paragraph (d)(3)(ii) of Rule 144.
6. JUNIOR UNSECURED LOAN. Anything in this Debenture to the
contrary notwithstanding, the indebtedness evidenced by this Debenture, both
principal and interest, and the right to seek enforcement of any of the rights
granted to the Registered Holder, shall be unsecured and subordinate and junior
in all respects to the existing debt of Sub to American National Bank and Trust
Company of Chicago, but only as to the amount of such indebtedness which is owed
and outstanding on the date of this Debenture. The indebtedness evidenced by
this Debenture shall be senior to all other indebtedness of Parent or Sub
currently outstanding or hereafter incurred.
7
<PAGE>
7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT: NO ORAL CHANGE. This Debenture embodies
the entire agreement and understanding between the Borrowers and the Registered
Holder relating to the subject matter hereof, and supersedes all prior
agreements and understandings relating to such subject matter. This Debenture
may not be changed orally, but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.
(b) NOTICES, ETC. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, mailed by certified mail, return receipt requested, sent by
overnight courier service or telecopied (transmission confirmed), or otherwise
actually delivered (i) if to the Registered Holder, to his address as it appears
on EXHIBIT A to this Debenture, or to such other address as may have been
furnished to the Borrowers by the Registered Holder in writing and (ii) if to
the Borrowers, to their respective addresses set forth below or to such other
address as may have been furnished to the Registered Holder by the Borrowers in
writing.
(c) GOVERNING LAW. This Debenture shall be construed in
accordance with and governed by the internal laws of the State of Illinois,
without regard to its conflicts of laws principles.
(d) BENEFIT. The provisions of this Debenture shall be binding
upon and inure to the benefit of the Borrowers and all subsequent Registered
Holders and their respective successors and assigns.
(e) PRESENTMENT. Presentment for payment, demand, protest and
notice of demand, protest and nonpayment and all other notices, except as
specifically required herein, are hereby waived by the Borrowers.
(f) MAXIMUM INTEREST. In no event shall the amount of interest
due or payable hereunder exceed the maximum rate of interest allowed by
applicable law, and in the event any such payment is inadvertently paid by the
Borrowers or inadvertently received by the Registered Holder, then such excess
sum shall be credited as a payment of principal, unless the Borrowers shall
notify the Registered Holder, in writing, that the Borrowers elect to have such
excess sum returned to them forthwith. It is the express intent hereof that the
Borrowers not pay and the Registered Holder not receive, directly or indirectly,
in any manner whatsoever, interest in excess of that which may be lawfully paid
by the Borrowers under applicable law.
(g) SEVERABILITY. If any one or more of the provisions of this
Debenture shall be determined to be invalid, illegal or unenforceable in any
respect for my reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions hereof shall not
in any way be impaired.
8
<PAGE>
(h) HEADINGS. The headings of the Sections of this Debenture
are inserted for convenience only and do not constitute a part of this
Debenture.
(i) LOSS, THEFT, DESTRUCTION OR MUTILATION OF DEBENTURE. Upon
receipt of evidence reasonably satisfactory to the Borrowers of the loss, theft,
destruction or mutilation of the Debenture and in the case of any such loss,
theft or destruction, upon receipt of any indemnity bond in such reasonable
amount as the Borrowers may determine or, in the case of any such mutilation,
upon surrender and cancellation of such Debenture, the Borrowers shall make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Debenture, a new
debenture of like tenor and unpaid principal amount and dated as of the date to
which interest has been paid on the Debenture so lost, stolen, destroyed or
mutilated.
(j) SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrowers contained in this Debenture
shall survive the execution and delivery of this Debenture and shall continue in
full force and effect thereafter until the earlier of the date on which all
principal and interest hereunder has been paid in full or until the date that is
two years after the date of exercise in full of the Conversion Option. All
covenants and agreements of the Borrowers contained in this Debenture shall
survive the execution and delivery of this Debenture and shall continue in full
force and effect thereafter in accordance with the terms hereof.
(Signatures on next page)
9
<PAGE>
IN WITNESS WHEREOF, the Borrowers have signed and sealed this Debenture
as of September 30, 1999.
ECONOMETRICS, INC.,
an Illinois corporation
Address of Sub:
One Illinois Center By: /s/ Robert R. McGuire
111 East Wacker Drive, Suite 1250 -----------------------------
Chicago, Illinois 60601 Name: Robert R. McGuire
Fax No. (312) 616-8401 Title: Chairman/CEO
ATTEST:
/s/ A. Ward McCally
- -----------------------------
Name: A. Ward McCally
Title: President/CFO
ECONOMETRICS, INC.,
a Colorado corporation
Address of Parent:
One Illinois Center By: /s/ Robert R. McGuire
111 East Wacker Drive, Suite 1250 ---------------------------
Chicago, Illinois 60601 Name: Robert R. McGuire
Fax No. (312) 616-8401 Title: Chairman/CEO
ATTEST:
/s/ A. Ward McCally
- -----------------------------
Name: A. Ward McCally
Title: President/CFO
10
<PAGE>
EXHIBIT A
REGISTRATION
(No Writing on this Debenture Except by an officer
or Agent of the Borrowers)
<TABLE>
<CAPTION>
Date of Registration In Whose Name Registered Address (Including Fax No.) Registry Officer
- -------------------- ------------------------ --------------------------- ----------------
<S> <C> <C> <C>
September 30, 1999 Scherer Healthcare, Inc. 120 Interstate Parkway, S.E.
Suite 305, Atlanta, GA 30339
</TABLE>
11
<PAGE>
ASSIGNMENT
For value received, I, __________________ hereby assign to
__________________ the attached Debenture dated September 1, 1999, and hereby
irrevocably appoint ___________________, attorney, to transfer the Debenture on
the books of Econometrics, Inc. with full power of substitution in the premises.
DATED this ______ day of _______________, _____
________________________________
In presence of:
____________________________
12
<PAGE>
Exhibit 10.2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this"Agreement") is made as of September 30, 1999,
by and among ECONOMETRICS, INC., a Colorado corporation (the "Company"), SCHERER
HEALTHCARE, INC., a Delaware corporation (the "Investor"), and ROBERT R. MCGUIRE
("McGuire"), WALTER G. CORNETT III ("Cornett") and WCI, INC. ("WCI" and together
with McGuire, the "Stockholders").
RECITALS
A. Each Stockholder owns the number of shares of Common Stock, no par
value per share, of the Company (the "Common Stock") set forth opposite the name
of such Stockholder on ANNEX I.
B. Pursuant to the 8% Convertible Debenture Purchase Agreement (the
"Purchase Agreement") dated of even date herewith by and among the Company and
the Investor, the Investor purchased from the Company $2,000,000 aggregate
principal amount of the Company's 8% Convertible Debentures due 2004 (the
"Debenture").
C. The Debenture is convertible, at the option of the Investor, into
shares of Common Stock (the "Conversion Shares").
D. The parties wish to provide for the terms with respect to certain
matters regarding the relationship between the Company and its stockholders and
among such stockholders. The parties agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings:
"BOARD" means the Board of Directors of the Company.
"CONVERSION SHARES" means the shares of Common Stock issuable upon
conversion of the Debenture, and any shares of capital stock issued on any of
the foregoing as a stock dividend or upon any stock split or other subdivision
of shares of capital stock.
"EQUITY SECURITIES" means all shares of capital stock of the Company,
all securities convertible into or exchangeable for shares of capital stock of
the Company, and all options, warrants, and other rights to purchase or
otherwise acquire from the Company shares of such capital stock, or securities
convertible into or exchangeable for shares of such capital stock.
<PAGE>
"GROUP" means:
(a) IN THE CASE OF ANY STOCKHOLDER WHO IS AN INDIVIDUAL,
(i) such Stockholder, (ii) the spouse and lineal
descendants of such Stockholder, and (iii) all trusts
for the benefit of any of the foregoing;
(b) IN THE CASE OF ANY STOCKHOLDER WHICH IS A
PARTNERSHIP, (i) such Stockholder and any affiliate
thereof, (ii) its partners, and (iii) any person or
entity to which such Stockholder shall Transfer all
or substantially all of its assets;
(c) IN THE CASE OF ANY STOCKHOLDER WHICH IS A LIMITED
LIABILITY COMPANY, (i) such Stockholder and any
affiliate thereof, (ii) its managing and non-managing
members, and (iii) any person or entity to which such
Stockholder shall Transfer all or substantially all
of its assets; and
(d) IN THE CASE OF ANY STOCKHOLDER WHICH IS A
CORPORATION, (i) such Stockholder and any affiliate
thereof, (ii) all stockholders thereof who hold more
than 50% of the shares of the capital stock entitled
to vote for the election of directors of such
Stockholder, and (iii) any person or entity to which
such Stockholder shall Transfer all or substantially
all of its assets.
"NEW SECURITIES" means all Equity Securities issued by the Company
after the date hereof.
"PERSON" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"PRO RATA AMOUNT" means, with respect to any Investor, the quotient obtained by
dividing (i) the number of shares of Common Stock held by such Investor by (ii)
the aggregate number of shares of Common Stock held by all Investors, assuming
in each case the conversion, exchange or exercise of all Equity Securities that
are not Common Stock.
"SHARES" means the Conversion Shares and the Stockholder Shares.
"STOCKHOLDER SHARES" means the shares of Common Stock held by the
Stockholders on the date hereof, any Equity Securities acquired by the
Stockholders hereafter, and any shares of capital stock issued thereon as a
stock dividend or upon any stock split or other subdivision of shares of capital
stock.
"THIRD PARTY" means, with respect to any Person, any person or entity
that is not a member of the Group of such Person.
"TRANSFER" means to issue, sell, transfer, assign, pledge or otherwise
dispose of, either voluntarily or involuntarily and with or without
consideration.
2
<PAGE>
"VOTING SHARES" means the shares of capital stock of the Company
entitled to vote for the election of directors.
ARTICLE II
MATTERS RELATING TO THE BOARD
2.1 BOARD REPRESENTATION.
(a) The Company and each Stockholder shall take such corporate actions
as may be reasonably required to ensure that the number of directors
constituting the Board is at all times seven.
(b) Subject to the terms of this Agreement and the Purchase Agreement,
the Investor shall be entitled (A) to nominate two individuals for election to
the Board to serve as directors until their successors are elected and qualified
(the "Investor Nominees"), (B) to nominate each such successor to the Investor
Nominees, and (C) to propose the removal from the Board of any director
nominated under the foregoing clause (A) or (B).
(c) Each nomination or any proposal to remove from the Board any
director pursuant to paragraph (b) above shall be made by delivering to the
Company a notice signed by the Investor. As promptly as practicable after
delivery of such notice, the Company shall take or cause to be taken such
corporate actions as may be reasonably required to cause the election or removal
proposed in such notice. Such corporate actions may include calling a meeting or
soliciting a written consent of the Board, or calling a meeting or soliciting a
written consent of the stockholders of the Company.
(d) Notwithstanding the foregoing, in the event the number of directors
is increased above seven, the number of Investor Nominees shall be increased
such that the number of Investor Nominees serving as director is not less than
20% of the total number of directors of the Company.
2.2 VOTING AGREEMENT.
Each Stockholder shall vote all Voting Shares held, directly or
indirectly, by such Stockholder (including Voting Shares with respect to which
such Stockholder has voting power or control and shares with respect to which
such Stockholder acquires voting control after the date hereof) for the election
to the Board of all Investor Nominees and for the removal from the Board of all
directors proposed to be removed in accordance with Section 2.1(b). Each
Stockholder shall use all reasonable efforts to cause each director to vote for
the election to the Board of all Investor Nominees.
2.3 BOARD MEETINGS, EXPENSES.
The Company shall convene meetings of its Board not less frequently
than quarterly. The Company shall reimburse the reasonable out-of-pocket
expenses of directors incurred in connection with attending Board meetings.
3
<PAGE>
2.4 BOARD COMMITTEES.
The Board shall form an executive committee, an audit committee and a
compensation committee of the Board. Each committee of the Board, including the
executive, audit and compensation committees, shall include at least one
director who is an Investor Nominee.
ARTICLE III
TRANSFER OF SHARES
3.1 LIMITATIONS ON TRANSFERS.
(a) Each Stockholder shall not Transfer any Shares except (i) in
accordance with Sections 3.1 or 3.2 hereof, (ii) with the prior written approval
of the Investor, or (iii) to any other member of the Group of such Stockholder,
but each such transferee may Transfer such Shares only to any other member of
the Group of the Stockholder initially relying on the foregoing exception. As a
condition to the effectiveness of any such Transfer, the transferee shall
execute a counterpart to this Agreement, whereupon such transferee shall be
bound by, and entitled to the benefits of, this Agreement with respect to the
transferred Shares in the same manner as the transferring Stockholder.
(b) Any Transfer of Shares by any Stockholder not in accordance with
paragraph (a) above shall be void.
3.2 TAG-ALONG RIGHTS.
(a) In the event any Stockholder proposes to Transfer, in a transaction
or a series of transactions, 25% or more of the Shares of such Stockholder to a
Third Party, such Stockholder shall first deliver to the Investor a written
notice (the "OFFER NOTICE") not less than 45 days prior to the date of Transfer.
Such Offer Notice shall include a description of the purchase price and the
other terms on which such Stockholder proposes to Transfer Shares to such Third
Party (such Offer Notice shall include the foregoing information and all other
relevant terms of the proposed Transfer). The Investor shall have the right and
option, for a period of 45 days after receipt of an Offer Notice (the
"ACCEPTANCE PERIOD"), to elect to participate in the proposed Transfer at the
same price and on the same terms specified in the Offer Notice by delivering to
the selling Stockholder a notice (the "CO-SALE NOTICE"), during the Acceptance
Period, specifying the number of Shares (not to exceed the Investor's Co,,Sale
Percentage of the Shares to be Transferred in the contemplated Transfer) with
respect to which the Investor exercises its right under this Section.
(b) Each selling Stockholder shall use his or its best efforts to
obtain the agreement of the prospective Transferee to the participation of the
Investor.
(c) The Investor shall effect its participation in the sale or transfer
by delivering to the selling Stockholder for Transfer to the prospective
Transferee one or more certificates, properly endorsed for Transfer,
representing (i) the type and number of shares of Common Stock the Investor
elects to sell or (ii) that portion of the principal amount of the Debenture
that is at such time convertible into the number of shares of Common Stock
Investor elects to sell; provided however , that if the prospective Transferee
objects to the delivery of a portion of the Debenture
4
<PAGE>
in lieu of Common Stock, the Investor shall convert such portion of the
Debenture into Common Stock and deliver Common Stock as provided above. The
Company agrees to make any such conversion concurrent with the actual transfer
of such shares to the purchaser.
(d) The stock certificate or certificates that the Investor delivers to
the selling Stockholder shall be transferred to the prospective Transferee in
consummation of the sale of Shares pursuant to the terms and conditions
specified in the Offer Notice, and the selling Stockholder shall concurrently
therewith remit to the Investor that portion of the sale proceeds to which the
Investor is entitled by reason of its participation in such sale. To the extent
that any prospective purchaser refuses to purchase securities from the Investor,
the selling Stockholder shall not sell to such prospective Transferee any Shares
unless and until, simultaneously with such sale, the selling Stockholder shall
purchase such Shares from the Investor for the same consideration and on the
same terms and conditions as described in the Offer Notice.
(e) As used herein, "Co-Sale Percentage" means the percentage
determined by dividing the number of Shares held by the Investor by the
aggregate Shares held by the selling Stockholder(s) delivering the Offer Notice
(in each case determined on a fully diluted basis).
(f) In the event any Shares subject to Section 3.2 are not Transferred
by the selling Stockholder during the 45-day period following the expiration of
the offer contained in the related Offer Notice, the restrictions set forth in
Section 3.2 shall again become applicable to any Transfer of such Shares by the
selling Stockholder.
ARTICLE IV
RIGHT OF FIRST REFUSAL
4.1 RIGHT OF FIRST REFUSAL.
(a) During the term of this Agreement, the Company hereby grants to the
Investor the right of first refusal to purchase New Securities which the Company
may from time to time propose to sell. In the event the Company proposes to
undertake a sale of New Securities, it shall give to the Investor written notice
(the "Notice") of its intention, which notice shall describe the price and the
principal terms upon which the Company proposes to sell such New Securities. The
Investor shall have ten (10) days from the delivery of the Notice to exercise
its right of first refusal to purchase such Common Stock by giving written
notice to the Company stating the quantity of such New Securities to be
purchased accompanied by payment of the purchase price therefor.
(b) If effective acceptance shall not be received pursuant to Section
4.1(a) with respect to all New Securities, the Company may issue such excess or
any portion thereof to any Person on terms and conditions that are no more
favorable to such Person than upon the terms stated in the Offer within 90 days
after expiration of the date of the Notice. If such issuance is not made within
such 90-day period, the restrictions provided for in this Section shall again
become effective.
5
<PAGE>
ARTICLE V
MISCELLANEOUS
5.1 MCGUIRE TRANSACTION.
McGuire and the Company agree that, at the request of the Investor, the
outstanding amounts owed by the Company to McGuire as well as outstanding
amounts owed by McGuire to the Company will be restructured as follows (or in a
manner reasonably acceptable to the Investor, McGuire and the Company):
Restructuring: (a) the Company would pay to McGuire a portion of the
deferred compensation owed by the Company to McGuire in an amount equal to the
amount McGuire owes to the Company plus an amount necessary to gross up the
payment to cover the estimated personal income tax McGuire will incur upon such
payment; (b) simultaneously, McGuire would repay all amounts he owes to the
Company; and (c) the Balance of the deferred compensation owed by the Company to
McGuire would be converted to Common Stock of the Company at a conversion price
of $.4315 per share. SCHEDULE 5.1 hereto sets forth a complete and accurate
description of all amounts owed by the Company to McGuire and all amounts owed
by McGuire to the Company.
5.2 LEGEND ON STOCK CERTIFICATES.
Each certificate representing Shares that are subject to this Agreement
shall bear a legend substantially in the following form:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER
OF SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT
TO A STOCKHOLDERS' AGREEMENT DATED AS OF ____________, 1999, AMONG
ECONOMETRICS, INC., SCHERER HEALTHCARE, INC. AND CERTAIN OF THE
STOCKHOLDERS OF ECONOMETRICS, INC. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF ECONOMETRICS, INC."
5.3 SEVERABILITY; GOVERNING LAW.
If any provision of this Agreement shall be determined to be illegal
and unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Illinois.
5.4 ASSIGNMENTS; SUCCESSORS AND ASSIGNS.
The rights of the Stockholders under this Agreement may not be
assigned, except in connection with any permitted Transfer of Shares by any
Stockholder on the terms expressly provided herein. The
6
<PAGE>
rights of the Investor may be assigned, in whole or in part, to any transferee
of all or part of the Debenture provided that the Investor gives prior written
notice of the assignment of all or part of its rights under this Agreement and
the transferee agrees to be bound by the terms hereof. This Agreement may not be
assigned by the Company. This Agreement shall bind and inure to the benefit of
the parties and their respective successors, permitted assigns, legal
representatives and heirs.
5.5 AMENDMENTS.
This Agreement may only be modified or amended by an instrument in
writing signed by the Company, the Stockholders and the Investor.
5.6 NOTICES.
All notices, claims, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if sent by nationally-recognized overnight courier, by
telecopy, or by registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:
if to the Company:
Econometrics, Inc.
One Illinois Center
111 East Wacker Drive,
Suite 1250
Chicago, Illinois 60601
Telecopy: (312) 616-8401
Attention: Chairman and Chief Executive Officer
With copy to:
Ross & Hardies
150 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601
Telecopy: (312) 750-8600
Telephone: (312) 750-8693
Attention: Lawrence R. Samuels
if to any Stockholder, to its or his address set forth on Annex I or II, as the
case may be;
If to Investor:
Scherer Healthcare, Inc.
120 Interstate North Parkway
Suite 305
Atlanta, Georgia 30339
Telecopier: (770) 933-1880
7
<PAGE>
Attention: Robert P. Scherer, Jr., Chairman of the Board, President and Chief
Executive Officer
With copy to:
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
Peachtree
Atlanta, Georgia 30326
Telecopy: (404) 365-9532
Telephone (404) 233-7000
Attention: David M. Calhoun
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally,,recognized overnight courier, on the next business day after the
date when sent, (c) in the case of telecopy transmission, when received, and (d)
in the case of mailing, on the fifth business day following that on which the
piece of mail containing such communication is posted.
5.7 HEADINGS.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.
5.8 NOUNS AND PRONOUNS.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of names and pronouns shall include the plural and vice versa.
5.9 ENTIRE AGREEMENT.
This Agreement contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings with respect to such subject matter.
5.10 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
5.11 TERMINATION.
This Agreement shall terminate at the end of the "Applicable Period" as
such term is defined in the Purchase Agreement.
(Signatures on next page)
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement on the date first above written.
ECONOMETRICS, INC.
By: /s/ Robert R. McGuire
------------------------------
Name: Robert R. McGuire
Title: Chairman/CEO
Attest:
By: /s/ A. Ward McCally
-----------------------------
Name: A. Ward McCally
Title: President/CFO
STOCKHOLDERS:
/s/ Robert R. McGuire
----------------------------------
Robert R. McGuire
WCI, Inc.
By: /s/ Walter G. Cornett III
------------------------------
Name: Walter G. Cornett III
Title: President
----------------------------------
Walter G. Cornett III
9
<PAGE>
INVESTOR:
SCHERER HEALTHCARE, INC.
By: /s/ Robert P. Scherer, Jr.
------------------------------
Robert P. Scherer, Jr.
Chairman of the Board, President and Chief
Executive Officer
10
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ECONOMETRICS, INC.
STOCKHOLDERS' AGREEMENT
DATED AS OF SEPTEMBER 30, 1999
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Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of September 30, 1999, by and among ECONOMETRICS, INC., a
Colorado corporation ("ECONOMETRICS"), and SCHERER HEALTHCARE, INC., a Delaware
corporation ("SCHERER").
WHEREAS:
A. Econometrics has authorized the issuance of $2,000,000 aggregate
principal amount of its 8% Convertible Debentures due 2004 (the "DEBENTURE"),
with terms, rights and privileges set forth in EXHIBIT A to the Purchase
Agreement.
B. Econometrics and Scherer have entered into an 8% Convertible
Debenture Purchase Agreement, dated as of September 30, 1999 (the "PURCHASE
AGREEMENT"), pursuant to which Econometrics sold the Debenture to Scherer, and
Scherer purchased the Debenture from Econometrics, on the terms and subject to
the conditions set forth in the Purchase Agreement.
C. Econometrics, Scherer and certain stockholders of Econometrics have
entered into a Stockholders Agreement, dated as of September 30, 1999 (the
"STOCKHOLDERS AGREEMENT").
D. Pursuant to the terms of the Debenture, Scherer has the right to
convert all or part of the outstanding principal balance of the Debenture, plus
interest accrued thereon, into shares of common stock, no par value, of
Econometrics (the "COMMON STOCK"). The Common Stock issuable upon conversion of
the Debenture is referred to hereinafter as the "CONVERSION SECURITIES."
E. To induce Scherer to execute and deliver the Purchase Agreement,
Econometrics has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "1933 ACT"), and applicable
state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Econometrics and
Scherer hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall
have the following meanings:
i. "INVESTOR" means Scherer and any transferee
or assignee thereof who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
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ii. "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a Registration
Statement or Registration Statements in compliance with the 1933 Act, and the
declaration or ordering of effectiveness of such Registration Statement by the
United States Securities and Exchange Commission (the "SEC").
iii. "REGISTRABLE SECURITIES" means (A) the
Conversion Securities and (B) any other shares of Common Stock now held or
hereafter acquired by Scherer or any other entity that controls, is controlled
by or is under common control with Scherer, and (C) any Common Stock issued or
issuable with respect to Registrable Securities by reason of a stock dividend or
stock split or in connection with a confirmation of shares, recapitalization,
merger, consolidation or other reorganization.
iv. "REGISTRATION STATEMENT" means a
registration statement of Econometrics under the 1933 Act.
b. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement.
2. REGISTRATION.
a. PIGGY-BACK REGISTRATIONS.
i. If at any time Econometrics shall file with
the SEC a Registration Statement relating to an offering for its own account or
the account of others under the 1933 Act of any of its Common Stock (other than
on Form S-4 or Form S-8 or their then equivalents relating to Common Stock to be
issued solely in connection with any acquisition of any entity or business or
Common Stock issuable in connection with stock options or other employee benefit
plans), Econometrics shall promptly send to the Investors written notice of such
determination (which shall include a list of the jurisdictions in which
Econometrics intends to qualify such Common Stock under the applicable "blue
sky" or other state securities laws). If, within fifteen (15) days after receipt
of such notice, the Investors shall so request in writing, Econometrics shall
include in such Registration Statement all of the Registrable Securities such
Investors request to be registered, subject to Section 2(a)(ii) hereto.
ii. If, in connection with any underwritten
public offering for the account of Econometrics, the managing underwriter(s)
thereof advise Econometrics and the holders of Registrable Securities in writing
of the need to impose a limitation on the number of shares of Registrable
Securities which may be included in the Registration Statement because, in such
underwriter(s)' judgment, marketing factors (including, without limitation, the
aggregate number of shares of Common Stock requested to be registered and the
general condition of the market) dictate such limitation is necessary to
facilitate public distribution, then Econometrics shall be obligated to include
in such Registration Statement only such limited portion of the Registrable
Securities with respect to which the Investors have requested inclusion
hereunder; PROVIDED, HOWEVER, that, except in the case of Econometric's initial
registered public offering, the number of shares of Registrable Securities to be
included in such Registration Statement may be limited to not less than fifteen
percent (15%) of the Registrable Securities requested to be
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registered in such Registration Statement. Any exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities, in proportion to the number of Registrable Securities
held by such Investors; PROVIDED, HOWEVER, that Econometrics shall not exclude
any Registrable Securities unless Econometrics has first excluded all
outstanding securities, the holders of which are not contractually entitled to
inclusion of such securities in such Registration Statement or are not
contractually entitled to pro rata inclusion with the Registrable Securities;
and PROVIDED, FURTHER, HOWEVER, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right hereunder to include such
securities in the Registration Statement.
iii. The obligations of Econometrics under this
Section 2(a) may be waived by Scherer. If an offering in connection with which
Investors are entitled to registration under this Section 2(a) is an
underwritten offering, then the Investors who include Registrable Securities in
the offering (each a "PARTICIPATING INVESTOR") shall, unless otherwise agreed by
Econometrics, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as other shares
of Common Stock included in such underwritten offering.
iv. If an Investor disapproves of the terms of
any underwritten offering, it may elect to withdraw therefrom by written notice
to Econometrics and the underwriter(s) delivered on or prior to the effective
date of the Registration Statement. Any Registrable Securities excluded or
withdrawn from such underwritten offering shall be withdrawn from such
registration.
b. ELIGIBILITY FOR FORM S-3. From and after December 31, 1999,
Econometrics shall file all reports required to be filed by Econometrics with
the SEC in a timely manner so as to establish eligibility for the use of Form
S-3.
3. OBLIGATIONS OF ECONOMETRICS.
In connection with the registration of the Registrable Securities,
Econometrics shall have the following obligations:
a. After the date notice is given to the Investors pursuant to
Section 2(a), Econometrics shall prepare promptly, and file with the SEC, a
Registration Statement with respect to the number of Registrable Securities
specified as provided in Section 2(a) as soon as practicable and thereafter
shall use its best efforts to cause such Registration Statement relating to
Registrable Securities to become effective as soon as possible after such
filing, which Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
b. Econometrics shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the
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prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective for such period as to
permit the distribution of the Registrable Securities in accordance with the
plan of distribution set forth in the Registration Statement, and, during such
period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of Econometrics covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in the Registration Statement.
c. Econometrics shall furnish to each Participating Investor
and its legal counsel (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by Econometrics, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as each Participating Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
d. Econometrics shall furnish to the counsel of each
Participating Investor each letter written by or on behalf of Econometrics to,
and each item of correspondence from, the SEC or the staff of the SEC, or to any
other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange), in each
case relating to such Registration Statement (other than any portion of any
thereof which contains information for which Econometrics has sought
confidential treatment).
e. Econometrics shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Participating Investors reasonably request, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof for such period as to permit the
distribution of the Registrable Securities in accordance with the plan of
distribution set forth in the Registration Statement, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect as necessary to permit the distribution of the Registrable Securities in
accordance with the plan of distribution described in the Registration
Statement, and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; PROVIDED,
HOWEVER, that Econometrics shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(e), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction.
f. As promptly as practicable after becoming aware of such
event, Econometrics shall notify each Participating Investor of the happening of
any event of which Econometrics 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 omission to state a 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, and use
its best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue
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statement or omission, and deliver such number of copies of such supplement or
amendment to each Participating Investor as it may reasonably request.
g. Econometrics shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Participating Investor (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.
h. Econometrics shall permit a single firm of counsel,
designated as selling stockholders' counsel by Scherer, to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects.
i. Econometrics shall make generally available to its security
holders as soon as practicable, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 1933 Act) covering a twelve-month
period beginning not later than the first day of Econometrics's fiscal quarter
next following the effective date of the Registration Statement.
j. At the request of a Participating Investor, Econometrics
shall use reasonable efforts to cause to be furnished, on the date that
Registrable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement (i) if required by an underwriter, a
"comfort" letter, dated such date, from Econometrics's independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such date, from
counsel representing Econometrics for purposes of such Registration Statement
and the underwriting agreement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriters and the
Participating Investors.
k. Econometrics shall make available for inspection by (i)
each Participating Investor, (ii) any underwriter participating in any
disposition pursuant to the Registration Statement, (iii) one firm of attorneys
and one firm of accountants or other agents retained by the Participating
Investors (and designated by Scherer), and (iv) one firm of attorneys retained
by all such underwriters (collectively, the "INSPECTORS") all pertinent
financial and other records, and pertinent corporate documents and properties of
Econometrics (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause Econometrics's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; PROVIDED, HOWEVER, that each Inspector shall
hold in confidence and shall not make any disclosure (except to Scherer and to
other Inspectors) of any Record or other information which Econometrics
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (x) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (y) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent
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jurisdiction, or (z) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. Econometrics shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to Econometrics) with Econometrics with respect thereto,
substantially in the form of this Section 3(k). Each Participating Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to Econometrics and allow Econometrics, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential.
l. Econometrics shall hold in confidence and not make any
disclosure of information concerning any Participating Investor provided to
Econometrics unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement.
Econometrics agrees that it shall, upon learning that disclosure of such
information concerning a Participating Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Participating Investor and allow the Participating Investor, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
m. Econometrics shall use its best efforts to cause all the
Registrable Securities covered by the Registration Statement to be listed on
each national securities exchange and United Stated inter-dealer quotation
system on which Common Stock of Econometrics is then listed, with expenses in
connection therewith to be paid in accordance with Section 5 hereof.
n. Econometrics shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities, and shall provide
CUSIP numbers for the Registrable Securities, not later than the effective date
of the Registration Statement.
o. Econometrics shall cooperate with the Participating
Investors and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Participating Investors may
reasonably request and registered in such names as the managing underwriter or
underwriters, if any, or the Participating Investors may request. No later than
the effective date of any Registration Statement registering the resale of
Registrable Securities, Econometrics shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of counsel, that
permit sales of legended securities in a timely fashion that complies with then
mandated securities settlement procedures for regular way market transactions.
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p. Econometrics shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Participating Investors
of Registrable Securities pursuant to the Registration Statement.
4. OBLIGATIONS OF THE PARTICIPATING INVESTORS.
In connection with the registration of the Registrable Securities, each
Participating Investor shall have the following obligations:
a. It shall be a condition precedent to the obligations of
Econometrics to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a Participating Investor that such
Participating Investor shall furnish to Econometrics such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as Econometrics may
reasonably request. At least five (5) days prior to the first anticipated filing
date of the Registration Statement, Econometrics shall notify each Participating
Investor in writing of the information Econometrics requires from such
Participating Investor if it elects to have any of its Registrable Securities
included in the Registration Statement.
b. Each Participating Investor, by its acceptance of the
Registrable Securities, agrees to cooperate with Econometrics as reasonably
requested by Econometrics in connection with the preparation and filing of the
Registration Statement hereunder.
c. In the event Econometrics determines to engage the services
of an underwriter, each Participating Investor agrees to enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities.
d. Each Participating Investor agrees that, upon receipt of
any notice from Econometrics of the happening of any event of the kind described
in Section 3(f) or 3(g), such Participating Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Participating
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or 3(g) and, if so directed by Econometrics, such
Participating Investor shall deliver to Econometrics (at the expense of
Econometrics) or destroy (and deliver to Econometrics a certificate of
destruction) all copies in such Participating Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
e. A Participating Investor may not participate in any
underwritten registration hereunder unless such Participating Investor (i)
agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by such Participating Investor, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
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of such underwriting arrangements, and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses (other than underwriting discounts, selling
concessions and discounts) incurred in connection with registrations, filings or
qualifications pursuant to this Agreement, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, the
fees and disbursements of counsel for Econometrics, the fees and disbursements
of counsel to the Participating Investors designated by Scherer, and the costs
incident to an underwritten offering shall be borne by Econometrics.
Notwithstanding anything in this Agreement to the contrary, in the event any
jurisdiction in which the securities shall be qualified imposes a nonwaivable
requirement that expenses incurred in connection with the qualification of the
securities be borne by selling stockholders, such expenses shall be payable pro
rata by selling stockholders.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, Econometrics will
indemnify, hold harmless and defend (i) each Participating Investor, (ii) the
directors, officers, legal counsel, accountants and each person who controls
such Participating Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), if any, and (iii) any
underwriter (as defined in the 1933 Act); and the directors, officers and each
person who controls any such underwriter within the meaning of the 1933 Act or
the 1934 Act, if any, (each, an "INDEMNIFIED PERSON"), against any losses,
claims, damages, liabilities or expenses (joint or several) (collectively,
"CLAIMS") to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or the omission or
alleged omission to state a material fact therein required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
Econometrics files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by Econometrics of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject to the
restrictions set forth in Section 6(d) with respect to the number of legal
counsel, Econometrics shall reimburse each Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by it in connection with
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investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply as to a particular Indemnified Person with
respect to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to
Econometrics by such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) with respect to any preliminary prospectus, shall not
inure to the benefit of any such person from whom the person asserting any such
Claim purchased the Registrable Securities that are the subject thereof (or to
the benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented; (iii) shall not be available
as to a particular Indemnified Person with respect to the extent such Claim is
based on a failure of such Indemnified Person to deliver or to cause to be
delivered the prospectus made available by Econometrics; and (iv) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of Econometrics, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
b. In connection with any Registration Statement in which a
Participating Investor is participating, each Participating Investor, severally
and not jointly, agrees to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), Econometrics, each of
its directors, legal counsel and accountants, each of its officers who signs the
Registration Statement, each person, if any, who controls Econometrics within
the meaning of the 1933 Act or the 1934 Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such violation occurs
in reliance upon and in conformity with written information furnished to
Econometrics by such Participating Investor expressly for use in connection with
such Registration Statement; and such Participating Investor will reimburse any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; PROVIDED, HOWEVER, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Participating Investor, which consent shall not be unreasonably
withheld; PROVIDED, FURTHER, HOWEVER, that such Participating Investor shall be
liable under this Section 6(b) for only that amount of a Claim as does not
exceed the net proceeds to such Participating Investor as a result of the sale
of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by such Participating Investor pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact
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contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; PROVIDED, HOWEVER, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; PROVIDED, HOWEVER, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of such fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to holders of Registrable Securities
the benefits of Rule 144 promulgated under the 1933 Act ("RULE 144") or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of Econometrics to the public without registration,
Econometrics agrees to:
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a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of Econometrics under the 1933 Act and the 1934 Act so long
as Econometrics remains subject to such requirements (it being understood that
nothing herein shall limit Econometrics's obligations under the Purchase
Agreement or the Debenture) and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
c. furnish to the Investors so long as they own Registrable
Securities, promptly upon request, (i) a written statement by Econometrics that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of
Econometrics and such other reports and documents so filed by Econometrics, and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have Econometrics register Registrable Securities
pursuant to this Agreement shall be automatically assignable by Scherer to any
transferee of all or any portion of the Debenture or the Registrable Securities
if: (i) Scherer agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to Econometrics within a
reasonable time after such assignment, (ii) Econometrics is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned, and
(iii) at or before the time Econometrics receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with Econometrics to be bound by all of the provisions contained
herein.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Econometrics
and Scherer. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon Scherer, Econometrics and the Investors.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If Econometrics receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, Econometrics shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. NOTICES. All notices, claims, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if
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personally delivered or if sent by nationally-recognized overnight
courier, by telecopy, or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
If to Econometrics: Econometrics, Inc.
One Illinois Center
111 East Wacker Drive, Suite 1250
Chicago, Illinois 60601
Telecopy: (312) 616-8401
Attention: Chairman and Chief Executive Officer
With copy to:
Ross & Hardies
150 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601
Telecopy: (312) 750-8600
Telephone: (312) 750-8693
Attention: Lawrence R. Samuels
If to Scherer: Scherer Healthcare, Inc.
120 Interstate North Parkway
Suite 305
Atlanta, Georgia 30339
Telecopier: (770) 933-1880
Attention: Robert P. Scherer, Jr., Chairman of the Board,
President and Chief Executive Officer
With copy to:
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
Telecopy: (404) 365-9532
Telephone (404) 233-7000
Attention: David M. Calhoun
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the fifth business day following that on which the piece
of mail containing such communication is posted.
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c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and construed
in accordance with the laws of the State of Illinois without giving effect to
any choice or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
e. This Agreement, the Purchase Agreement, the Stockholders
Agreement and the Debenture constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the Purchase Agreement, the
Stockholders Agreement and the Debenture supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of day and year first above written.
ECONOMETRICS, INC.
By: /s/ Robert R. McGuire
---------------------------------
Name: Robert R. McGuire
Title: Chairman/CEO
------------------------------
SCHERER HEALTHCARE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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