SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 1, 1996
IMSCO TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State of incorporation)
0-24520 04-3021770
(Commission File Number) (IRS Employer ID Number)
40 Bayfield Drive, North Andover, Massachusetts 01845
(Address of principal executive offices)
Registrant's telephone number, including area code:(508)689-2080
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ITEM 5. Other Events
On September 20, 1996, the registrant entered into a Marketing Agreement
with Hughes Edwards and Price, Inc.("HEP"), of Traverse City, Michigan, for HEP
to have the exclusive rights to market the registrant's decaffeination
technology, which decaffeinates coffee immediately after brewing, to the
institutional coffee brewer market in North America. The Marketing Agreement
with HEP is for a three year term and requires HEP to either sell or acquire
from the registrant $3 million of products in the first year, $5 million of
products in the second year and $7 million of products in the third year.
Also on September 20, 1996, the registrant entered into a Manufacturing and
Distribution Agreement with NEWCO Enterprises, Inc., of St. Charles, Missouri,
for NEWCO to exclusively manufacture products and accessories which incorporate
the registrant's decaffeination technology for the institutional coffee brewer
marketplace in North America. Additionally, NEWCO was given the exclusive right
to sell products incorporating the IMSCO decaffeination technology to the Office
Coffee Supply market in North America. NEWCO agreed to sell or purchase from the
registrant at least 25,000 units in the first year, 50,000 units in the second
year and 100,000 units in the third year of the agreement.
On September 20, 1996, the registrant entered into two agreements to sell
an aggregate of 2,272,728 shares of its Common Stock, par value $0.01, to
Hampton Tech Partners, LLC (1,136,364 shares) and to Proxhill Marketing, Ltd.
(1,136,364 shares). The sale price will be $1.32 per share and the gross
proceeds will be $3,000,000. The proceeds will be paid $1,500,000 in cash and
$1,500,000 in media credits at the registrant's direction. In connection with
the transaction, the registrant agreed that it will add to its Board of
Directors a qualified person designated by Hampton Tech Partners, LLC, if it
requests such an appointment. The agreements to sell and issue the shares of
Common Stock for the stated sales price and consideration per share was
determined by arms-length negotiation between the registrant and representatives
of the purchasers. The per share price was negotiated over a sixty day period,
and arrived at by applying to the then current market price of the registrant's
common stock on the NASDAQ OTC Bulletin Board a discount to reflect the act that
a large block was being sold and that, although they have certain demand
registration rights, since the shares are not presently registered under the
Securities Act of 1933, they are not readily saleable in the open market.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits.
7.(1) Marketing Agreement dated September 20, 1996 with Hughes Edwards &
Price, Inc.
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7.(2) Manufacturing and Distribution Agreement dated September 20, 1996
with NEWCO Enterprises, Inc.
7.(3) Common Stock Purchase Agreement dated September 20, 1996 with Hampton
Tech Partners, LLC.
7.(4) Media Purchase Agreement dated September 20, 1996 with Proxhill
Marketing, Ltd., et al.
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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.
IMSCO TECHNOLOGIES, INC., a Delaware corporation
By:/S/ SOL L. BERG
______________________
Sol L. Berg, President
Date: October 1, 1996
EXHIBIT 7.1
MARKETING AGREEMENT
AGREEMENT, dated September 20, 1996 between Decaf Products, Inc. ("DPI"), a
Delaware corporation having a place of business at 40 Bayfield Drive, North
Andover, Massachusetts 01845 and Hughes Edwards & Price, Inc. ("HEP"), an
Illinois corporation with its principal place of business at 870 Polaris
Cresent, Traverse City, Michigan 49685.
WHEREAS, DPI desires to appoint HEP as its exclusive representative for
marketing DPI's decaffeination device which is incorporated into a coffee maker
brew basket or into a new institutional coffee brewer as an integral part of the
brewer (collectively, the "Decaffeinator"or "Products") to the institutional
users of coffee brewers (the "Institutional Market") and HEP is willing to
accept such appointment;
NOW, THEREFORE, the parties, in consideration for the mutual covenants and
agreements contained herein, mutually agree as follows:
1. Appointment
(a) DPI hereby appoints HEP as its exclusive representative to market the
Decaffeinator to the Institutional Market within the territory of North America
(the "Territory").
(b) Payment for the Decaffeinators sold hereunder shall be made by the
respective purchasers directly to DPI, upon such terms and conditions as DPI
shall determine, and in no event shall HEP submit a bill or otherwise charge
directly any purchaser for the Decaffeinators.
(c) If any payment is made to HEP, HEP shall hold such payment in trust for
DPI and immediately transmit the amount to DPI without commingling such payment
with any of HEP's own funds.
HEP shall make all quotations and sales only upon such terms and at such
prices as agreed upon by DPI.
2. Compensation.
As compensation for services hereunder, HEP shall be entitled to a sales
commission equal to the amount of five percent (5%) of the invoices collected by
DPI on account of sales of the Decaffeinator to the Institutional Market
generated by HEP.
3. Minimums.
3.1. If HEP does not sell at least 15,000 units of Decaffeinators
during the period from the date when the Decaffeinators are first commercialized
and ready for shipment (the "Commercialization Date") to a date fifteen months
from such date, at least 25,000 units in the next calendar year thereafter, and
at least 35,000 units in the next calendar year thereafter (such amounts
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being herein called the "Minimum Requirements"), then, within 30 days after the
end of each such period or year, in order for HEP to keep this Agreement in
force, HEP shall purchase or pay to DPI an amount equal to the amount by which
HEP's sale of Decaffeinators during such year shall have been less than the
applicable Minimum Requirement.
3.2. Notwithstanding anything to the contrary contained herein, HEP
shall not be required to make any payment to DPI hereunder Section 3.1 above (a)
if HEP is hindered or prevented from the sale or distribution of the
Decaffeinators, directly or indirectly, by war, conditions of war, fire, flood,
cyclones, acts of God, strikes, lockouts, governmental interference.
4. Promotion and Service.
(a) HEP shall use its best efforts to sell the Decaffeinator and shall
aggressively and actively promote the sale and service of the Decaffeinator to
the Institutional Market to the fullest possible extent and shall assume the
responsibility of properly servicing and training purchasers in the use of the
Decaffeinator sold by DPI. HEP agrees to consult with purchasers on a regular
basis and to respond promptly to inquire and complaints made by purchasers.
(b) DPI shall provide HEP with samples of the Decaffeinator for
demonstration purposes as may be required by HEP and upon such terms and at such
cost as shall be determined by DPI.
(c) HEP shall prepare at its cost and expense all marketing and advertising
materials and papers as it deems suitable for the proper marketing of the
Decaffeinator to the Institutional Market. HEP shall submit to DPI or its duly
authorized representatives for prior approval samples of all advertising,
marketing, packaging, papers, and other materials intended to be used by HEP in
conjunction with the Decaffeinator. HEP agrees to refrain from any such use
until and unless DPI has granted its written approval, which it agrees shall not
be unreasonably withheld.
5. Price
5.1. The purchase price of the Decaffeinators shall be as set forth in
Exhibit A annexed hereto and made a part hereof, and the terms of sale shall be:
f.o.b.place of manufacture - payment net 30 days.
5.2. In the event that DPI changes any of its prices as set forth in
Exhibit A hereto, such price chances shall be made by written notice to HEP.
6. Term. The term of this Agreement shall commence on the date hereof and
end three years and three months from the date hereof (the "Initial Term"), and
unless otherwise agreed, shall be automatically renewed for successive periods
of such duration. After the Initial Term, either party has the right to cancel
this Agreement upon sixty days prior written notice to the other.
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7. Technical Assistance.
7.1. DPI shall supply HEP all reasonably necessary technical information,
in order to enable HEP properly to prepare sales literature and operating and
technical manuals concerning the Decaffeinator. DPI hereby grants to HEP the
right to use and reproduce all or any part of such literature, books and manuals
in connection with the sale and/or service by HEP of any Decaffeinators.
7.2. Any and all unpublished technical information, drawings, plans and
specifications, designs, patterns, tools and instruments made by DPI and
furnished to HEP hereunder shall be and remain the exclusive property of DPI. So
long as such information is not in the public domain, or has not been received
by HEP from independent third party sources, HEP agrees to keep the same
confidential for the term of this agreement (and for a period of 10 years from
the date of expiration or earlier termination of this agreement), and HEP agrees
to use its best efforts to require its technical employees to agree to keep the
same confidential for the same period.
8. Marketing Activities By HEP .
(i) Market Development
HEP shall diligently and faithfully exert its best efforts to develop the
market for and promote the sale of Products within the Territory to the
Institutional Market. The costs of such market development and promotion of
Products in the Territory shall be borne in full by HEP, except for such costs,
if any, as DPI shall agree in advance in writing to bear in each case.
(ii) Sales Organization
HEP shall maintain at all times a sales organization which will enable it
to efficiently promote and distribute Products to potential customers in the
Territory. From time to time during the term of this Agreement, to the extent
considered desirable by the parties, DPI shall have its representatives visit
the Territory to assist HEP in acquainting its employees with the Products and
in training them in connection with the promotion of sales thereof.
(iii) Reports by HEP
Promptly following each calendar month period, HEP shall submit to DPI such
reports as may be reasonably requested by DPI from time to time including sales
and service reports. HEP shall keep DPI informed as to information in the
possession of HEP respecting products competitive with the Products, if any,
including promotional literature and new product information.
(vi) Customer Inquiries
DPI shall notify HEP of all inquiries and orders received from potential
customers within the Institutional Market in the Territory respecting purchase
of the Products, following which the HEP shall contact such potential customers.
Similarly, HEP shall notify DPI of all inquiries received from potential
customers of the Products which relate to Products other than those for the
Institutional Market which may be marketed by HEP hereunder.
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(vii) Records and Inspection
HEP shall maintain true and complete records and books of account necessary
for performance of its obligations to DPI hereunder, and DPI shall have the
right, at its own expense, through qualified personnel or qualified designees,
to examine such records and books of account, during normal business hours at
the place of business of HEP, to the extent reasonably necessary to verify the
performance by the HEP of its obligations pursuant to this Agreement.
B. Agreement To Refrain From Other Sales. Except for sales of Products in
the Institutional Market within the Territory outlined above, unless agreed to
the contrary by the parties in a separate written document, HEP shall refrain
from the sale of any other competitive or conflicting Products.
9. Assignment. This Agreement may not be assigned by HEP without the prior
written approval of DPI.
10. Jurisdiction. This Agreement shall be governed and construed in
accordance with the laws of the State of New York. The parties submit to the
jurisdiction of the courts of the State of New York.
11. Notices. Any written notice required by this Agreement shall be sent by
telex or by prepaid registered mail at the addresses of the parties first above
written.
IN WITNESS WHEREOF, DPI and HEP have signed and sealed or caused to be
signed and sealed this Agreement, all as of the day and year first above
written.
DECAF PRODUCTS, INC.
By:__________________________________
James G. Yurak, President 9/20/96
HUGHES EDWARDS & PRICE, INC.
By:__________________________________
John Hughes, President 9/16/96
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EXHIBIT A
Decaffeinator incorporated into a brew basket
for institutional brewers $199.95/unit
EXHIBIT 7.2
MANUFACTURING AND DISTRIBUTION AGREEMENT
AGREEMENT made as of September 20, 1996 between DECAF PRODUCTS, INC., a
Delaware corporation (the "Company" or "DPI"), and NEWCO, INC., a Missouri
corporation ("Newco").
R E C I T A L S
A. DPI is or shall be in the business of designing, marketing and
distributing instruments and accessories for use in decaffeination of beverages
and, in connection therewith, has invented a decaffeinator incorporated into a
coffee maker or an accessory part thereof for the institutional marketplace as
more particularly descibed on Exhibit A hereto and made a part hereof (herein
the "Products").
B. Newco is in the business of designing, manufacturing and marketing high
quality coffee making instruments and accessories, and other similar instruments
and products.
C. DPI wishes to engage the manufacturing expertise of Newco for the
production of the Products to be sold and distributed exclusively by DPI in
North America, and to engage the design and manufacturing expertise of Newco to
assist DPI in the design, engineering and manufacturing of new products
incorporating the decaffeination technology to specifications provided by DPI or
developed by DPI or by Newco or by the two of them jointly from time to time
hereafter, for an institutional coffee brewer that incorporates DPI's
decaffeination technology and DPI's water filtration technology, and an
institutional tea brewer (collectively, the "New Brewer").
D. DPI desires to have the Products exclusively marketed, sold and
distributed by Newco to the specific market known as the Office Coffee Supply
("OCS") market on an exclusive basis
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during the Term of this Agreement, and on a non-exclusive to the
non-institutional restaurant marketplace, and Newco is willing to exclusively
sell and distribute the Products to such markets, as described, in the 50 states
of the United States of America, the District of Columbia, Puerto Rico, the U.S.
Virgin Islands and in the Dominion of Canada (herein called the "Territory");
A G R E E M E N T
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
respective meanings set forth below:
a. Products. "Products" shall mean and include the specific products,
instruments and accessories listed on Exhibit A attached hereto and any new
coffee decaffeination products incorporated into a brew basket hereafter
developed by DPI which DPI requests that Newco manufacture pursuant to the
provisions of this Agreement. Exhibit A hereto shall be amended by the parties
from time to time to reflect Product changes and the addition or deletion of
Products.
b. New Brewer. "New Brewer" shall mean that institutional coffee
brewer and/or tea brewer to be developed incorporating DPI's decaffeination
technology and water filtration technology.
c. Term. "Term" refers to the entire period during which this
Agreement is in effect which shall be three years and three months from the date
that the Product is finalized and ready for commercial sale and shipment. Upon
expiration of the initial Term, provided that Newco has substantially performed
hereunder, Newco shall have the right to renew this
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Agreement for an additional period of time on terms to be mutually agreed upon
by the parties.
d. Technical Information. "Technical Information" shall mean all
technical information and know-how relating to the specifications, processing,
manufacturing, assembly, sourcing, repair, testing, calibrating, disassembly or
servicing of the Products, whether or not such Technical Information is
patentable, and including without limitation drawings, designs, lab and
benchbooks, formulae, data, methods, specifications, lists of suppliers and
vendors, procurement specifications and prices, computer disks, jigs, lathes,
and the like, obtained, used or practiced in the development, design, assembly,
disassembly, production, manufacture, use, storage or sale of the Products.
2. MANUFACTURE AND SALES OF PRODUCTS.
a. Products. Newco agrees to manufacture and sell to DPI, or its
designees, and DPI agrees to purchase, or arrange for its customers to purchase,
from Newco the Products, subject to the conditions set forth below.
i. Price. Prices for the Products shall be set at the price to be
mutually agreed upon by the parties for the initial three year term of this
Agreement.
ii. Acceptance And Fulfilling Of Purchase Orders. All firm
purchase orders from DPI, or its customers, shall include the description and
quantity of the Products being purchased, the unit price and total purchase
price, requested delivery date, any extraordinary shipping instructions and any
other information required by this Agreement or dictated by the circumstances of
the order. Newco shall accept all purchase orders issued to it by DPI, or its
designated customers, for Products, unless such purchase orders are not in
conformity
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with the terms and conditions of this Agreement. Newco shall use all reasonable
efforts to cause the ordered Products to arrive at the location designated on
the purchase order by the desired delivery date specified by DPI or in the
purchase order, or if no delivery date is specified, as soon as is reasonably
feasible. In no event, however, shall DPI be required to accept delivery of any
Products later than 10 days following the date of its specified purchase order
delivery date, unless it otherwise agrees to do so in advance.
iii. Shipment. All shipments shall be made by ground shipment to
the designated delivery located on the Purchase Orders, or by such other means
or to such other address as DPI shall indicate in writing prior to shipment. All
shipments shall be made FOB place of manufacture. Newco shall obtain adequate
insurance for all Products shipped by it pursuant to this Agreement. Newco shall
assure at all times that all shipped Products have been adequately packed by
Newco, at Newco's sole expense. The risk of loss or damage to the Products shall
be borne by Newco until the Products are delivered and accepted by DPI or the
designated purchaser.
iv. Payment. Payment for all Products shall be made net 30 days
following the date of invoice. Newco shall issue invoices upon shipment.
b. New Brewer and Products.
i. Development. At any time and from time to time during the
Term, DPI may submit to Newco new specifications, designs and drawings for the
New Brewer and other New Products; and Newco may submit to DPI new
specifications, drawings and designs for the New Brewer and New Products; and
the parties may jointly decide to develop together the
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New Brewer and New Products. Newco and DPI shall agree in advance on the
specifications for the New Brewer and all New Products, and the parties shall
further agree on the need and schedule for development by Newco of any and all
engineering models, proof of principle and/or preproduction prototypes for any
New Brewer or New Products. In consideration and on account of the exclusive
arrangement provided herein, the costs and expenses of all services and
materials which Newco shall incur in the development of the New Brewer and other
New Products shall be borne by Newco. DPI shall be the designated assignee,
without further consideration therefor, of all inventions resulting from any
development efforts under this paragraph, and to any and all patent rights
resulting therefrom.
ii. Manufacture Of New Brewer and New Products. If Newco, after
completing the preproduction engineering and development, determines in good
faith that it is unable or believes that it is commercially impracticable for it
to manufacture the New Brewer or any New Products to the required specifications
and at the proposed prices, it may rescind this Agreement with respect to any
such New Brewer or New Products. In such case, the Agreement shall continue in
full force and effect with respect to the Products and all other New Products
which DPI has agreed to manufacture. Otherwise, the terms of Paragraph 2.a shall
thereafter apply to all orders submitted to DPI with respect to the New Brewer
and New Products, except that the prices for New Brewer and New Products, once
agreed upon by the parties, shall remain in effect through the end of the first
two full Contract Years following the date of first order of the New Brewer and
New Products, and thereafter be adjusted in the same manner as prices for the
Products are to be adjusted, as set forth in Paragraph 2.a.i above.
C. Exclusive Rights.
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In consideration for the covenants and undertakings of DPI herein, and
except as set forth below, Newco hereby agrees that Newco shall manufacture the
Products, the New Brewer and the other New Products only for sale to DPI under
the terms of this Agreement.
4. MARKETING AND DISTRIBUTION OF PRODUCTS BY NEWCO.
A. The parties agree that Newco shall have the right within the Territory
to market, sell and distribute the Products to the specific market known as the
Office Coffee Supply ("OCS") market on an exclusive basis during the Term of
this Agreement, and the non-exclusive right to market, sell and distribute the
Products to the non-institutional restaurant marketplace.
(i) Market Development
Newco shall diligently and faithfully exert its best efforts to develop the
market for and promote the sale of Products within the Territory to the OCS and
non-institutional restaurant markets. The costs of such market development and
promotion of Products in the Territory shall be borne in full by Newco, except
for such costs, if any, as DPI shall agree in advance in writing to bear in each
case.
(ii) Sales Organization
Newco shall maintain at all times a sales organization which will enable it
to efficiently promote and distribute Products to potential customers in the
Territory. From time to time during the term of this Agreement, to the extent
considered desirable by the parties, DPI shall have its representatives visit
the Territory to assist Newco in acquainting its employees with the Products and
in training them in connection with the promotion of sales thereof.
(iii) Reports by Newco
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Promptly following each calendar month period, Newco shall submit to DPI
such reports as may be reasonably requested by DPI from time to time including
sales and inventory reports. Newco shall keep DPI informed as to information in
the possession of Newco respecting products competitive with the Products, if
any, including promotional literature and new product information.
(vi) Customer Inquiries
DPI shall notify Newco of all inquiries and orders received from potential
customers within the OCS market in the Territory respecting purchase of the
Products, following which the Newco shall contact such potential customers.
Similarly, Newco shall notify DPI of all inquiries received from potential
customers of the Products which relate to Products other than those which may be
marketed and distributed b Newco hereunder.
(vii) Records and Inspection
Newco shall maintain true and complete records and books of account
necessary for performance of its obligations to DPI hereunder, and DPI shall
have the right, at its own expense, through qualified personnel or qualified
designees, to examine such records and books of account, during normal business
hours at the place of business of Newco, to the extent reasonably necessary to
verify the performance by the Newco of its obligations pursuant to this
Agreement.
B. Agreement To Refrain From Direct Sales. Except for sales of Products in
the OCS market and non-institutional restaurant market within the Territory
outlined above, unless agreed to the contrary by the parties in a separate
written document, Newco shall refrain from
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the sale of any Products, the New Brewer or any other New Products, except to
DPI or its designated purchasers as provided herein.
5. PATENTS AND TRADEMARKS..
A. Trademark Usage
Newco shall only use the trademarks of DPI in a manner approved by DPI.
Newco shall submit to DPI all advertising and other promotional literature or
material in which the trademarks or trade names of DPI are used as DPI may from
time to time request.
B. Protection of Patents and Trademarks, Etc.
Newco recognizes the right, title and interest of DPI in and to all patents
and trademarks and trade names used on or in connection with Products by DPI and
agrees not to engage in any activities or commit any acts, directly or
indirectly, which may contest, dispute or otherwise impair such right, title and
interest of DPI therein. Newco shall neither acquire nor claim any right, title
or interest in or to the said patents, trademarks and trade names adverse to the
rights of DPI by virtue of this Agreement or through the use by Newco of said
patents, trademarks and trade names through manufacturing, advertising and sale
of the Products or otherwise.
C. New or Modified Patents and Trademarks
If any patents or trademarks of DPI are used by Newco, alone or in
combination with other patents or trademarks of DPI or Newco, in such manner as
to be distinctive by reason of, inter alia, use, method, design, color or
format, such distinctive features and associated goodwill shall become the
property of and inure to the benefit of DPI, and Newco agrees that it will,
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without any payment or other consideration, sign and execute such documents as
are necessary to transfer and assign all rights thereto to DPI. Nothwitstanding,
Newco shall not have any obligation to transfer or assign to DPI any of its
rights in Newco's patented brew baskets; provided, that the rights to DPI's
decaffeination technology shall belong to DPI.
D. Identification of Patents and Trademarks
On all Products and advertising and other material on which Newco shall use
any patents or trademarks of DPI, Newco shall include the following statement in
relation to such trademark:
"Trademark owned by DECAF PRODUCTS, INC."
And the following statements in relation to such patents or patents pending:
"Patent" (or "Patents Pending" as the case may be), along with the U.S.
Patent and Trademark Commission File or Issue Number, and the name "DECAF
PRODUCTS, INC."
6. TRANSFER OF TECHNICAL INFORMATION; ONGOING COOPERATION.
a. Transfer Of Necessary Technical Information. To enable Newco to
manufacture and DPI to market and distribute the Products, each party shall
promptly furnish to the other all necessary Technical Information which the
first party possesses or which thereafter comes into its possession. The
transfer of such Technical Information is also required to enable each party to
possess copies of such information in the event of any business failure,
abandonment of business, dissolution and liquidation or cessation of business by
the other party, for the purposes contemplated below.
b. Modifications, Improvements And Upgrades. During the Term, each of
the parties shall keep the other informed at all times, by periodic disclosures
no less frequently than
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quarterly, of all modifications, improvements and upgraded versions of the
Technical Information, as well as all additional Technical Information hereafter
developed or acquired by the party. Each party shall take all reasonable steps
to permit the other party to fully utilize such modifications, improvements,
upgraded versions and additions to the Technical Information for the purposes
authorized herein.
c. Confidential Information. Each party shall keep confidential and
refrain from disclosing further (other than to those of its employees who have
executed secrecy agreements obligating them to the party at least to the same
extent as the parties obligated hereunder, and to its directors, officers,
agents and investors or potential investors under circumstances calculated to
retain the confidential nature of the information disclosed) any and all
Technical Information to be disclosed to the other party under this Agreement,
except when, after and to the extent that such Technical Information becomes
generally known to the public, or was known to the other party prior to the
other party's receipt of same from the first party and that fact is evidenced by
records in the other party's possession prior to such time, or where disclosure
is required by legal process. The provisions of this paragraph concerning
confidentiality and nondisclosure shall survive expiration or termination of
this Agreement.
d. Permitted Use In Certain Circumstances. Notwithstanding the
foregoing, in the event of a breach or default by Newco which results in DPI's
terminating this Agreement under Paragraph 14.b or14.c below, DPI shall be
authorized and entitled to utilize any Technical Information in its possession
to procure alternative sources of supply for the Products, or to itself
manufacture the Products.
7. REQUIRED APPROVALS.
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Newco shall be responsible for compliance with Good Manufacturing Practice
pursuant to the rules and regulations of the Food and Drug Administration, and
shall provide DPI with all Good Manufacturing Practice compliance documentation,
and for submitting and obtaining approval by the Underwriters Laboratory ("UL")
of the Products as safe for the public.
8. WARRANTY.
Newco warrants that all of the Products manufactured by it will conform
with the specifications therefor, and shall be free from defects in design,
material and workmanship for a period of one year from their respective dates of
delivery to the initial end user or Newco will, at its option, repair or replace
any defective components or Products, without cost to DPI and its customers.
9. PRODUCT LIABILITY.
In view of the fact that Newco will be manufacturing the Products on a
contract basis for DPI's account, the parties agree that Newco's product
liability exposure shall be limited to those cases, if any, where Newco shall be
shown to have failed to manufacture any Products according to the applicable
specifications and approved standards therefor. In all other cases, and beyond
such extent, DPI shall be solely responsible for product liability in the same
manner and to the same degree as if it were the manufacturer. DPI represents and
warrants to Newco that at all times during the Term and while DPI is engaged in
the sale and distribution of Products, DPI shall maintain product liability
insurance in force, covering the Products, with single claim and aggregate
damage coverage of no less than $10 million. Newco likewise represents and
warrants to DPI that at all times during the Term and while Newco is engaged in
the manufacture of the Products, Newco shall maintain product liability
insurance in force, covering the Products, with
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single claim and aggregate damage coverage of no less than $10 million. Each
party hereby indemnifies and agrees to hold the other party harmless and defend
it from any and all claims and liabilities, including attorneys' fees, within
the scope of the indemnifying party's responsibility as set out in this
paragraph.
10. RIGHT TO HAVE ORDERS COMPLETED AFTER TERMINATION. In the event of
termination of this Agreement for any reason other than by its breach or default
which is not cured within any applicable term for cure provided herein, DPI
shall be entitled to have all orders placed by it before or within 30 days
subsequent to the effective date of termination honored in accordance with their
terms.
11. FORCE MAJEURE. Subject only to DPI's rights to terminate this Agreement
as provided below, Newco shall not otherwise be liable for any delays in
delivering the Products if such delays are occasioned by any cause which is
beyond the reasonable control of Newco, including without limitation labor
troubles, riots, public disturbances, fires, acts of God, embargoes, government
intervention or controls (collectively, "Force Majeure").
12. CANCELLATIONS.
DPI may cancel any delivery scheduled under this Agreement upon written
notice to Newco at least 60 days before the requested delivery date.
13. INDEPENDENT CONTRACTOR.
This Agreement does not constitute either party as the partner, joint
venturer, employee, agent or legal representative of the other party for any
purpose whatsoever. Neither party has granted any right or authority to assume
or create any obligation or responsibility, express or implied, on behalf of or
in the name of the other party or to bind the other party in any manner.
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At all times each party, in fulfilling its obligations pursuant to this
Agreement, shall be acting as an independent contractor, and each party hereby
indemnifies and agrees to hold the other party harmless from any liability which
may be asserted against the other by any third parties as the result of any act
or failure to act by the first party in connection with its duties and
obligations hereunder.
14. TERMINATION.
a. By Newco.
i. Breach Or Default. This Agreement may be terminated by Newco
at any time if DPI breaches or defaults in the performance by it of any of the
terms or provisions hereunder, and if DPI fails to cure such breach or default
within 30 days following written notice thereof from Newco.
b. By DPI.
i. Breach Or Default. This Agreement may be terminated by DPI at
any time if Newco breaches or defaults in the performance by it of any of the
terms or provisions hereunder, and if Newco fails to cure such breach or default
within 30 days following written notice thereof from DPI.
c. Inability To Perform. This Agreement may also be terminated by DPI
upon written notice to Newco if, due to causes within or beyond Newco's control,
Newco is unable to satisfy DPI's orders or is habitually late in filling such
orders at any time during any four out of any eight consecutive months, whether
due to Force Majeure or any other reasons, provided that in each instance DPI
had advised Newco in writing that Newco was at least ten
13
<PAGE>
(10) days late on a shipment and Newco did not cure such lateness within five
(5) days thereafter.
15. MINIMUM ORDERS AND SALES BY NEWCO.
As additional consideration for this Agreement, Newco agrees that it will
order and sell to the OCS and non-institutional restaurant market a minimum of
25,000 units of the Products during the first 15 months after the Product is
ready for commercial sale, 50,000 units of the Products during the next twelve
months following the first period and 100,000 units of the Products during the
next twelve months following the second period. On all such orders and sales by
Newco to the OCS market Newco shall pay DPI within thirty (30) days after
invoices for such sales are collected by Newco. In the event that sales by Newco
for any year are less than the minimum number required above, in order for Newco
to keep this Agreement in force, it shall either purchase from or pay to DPI the
amount by which Newco's sales were less than the minimum sales required
hereunder.
16. MISCELLANEOUS.
a. No Implied Waivers. The failure of either party at any time to
require performance by the other party of any provision hereof shall not affect
in any way the right to require such performance at any time thereafter, nor
shall the waiver by either party of a breach of any provision hereof be taken or
held to be a waiver of any subsequent breach of the same provision or any other
provision.
b. Entire Agreement. This Agreement and the document attached hereto
as an exhibit constitute the entire agreement and understanding between the
parties with respect to the subject matters herein and therein, and supersede
and replace any prior agreements and
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understandings, whether oral or written, between them with respect to such
matters. The provisions of this Agreement may be waived, altered, amended or
repealed in whole or in part only upon the written consent of both parties to
this Agreement.
c. Arbitration. Any controversy or claim arising out of or relating to
this Agreement or any alleged breach thereof shall be settled by binding
arbitration and judgment upon the award rendered by the arbitrator shall be
final and may be entered in any court having jurisdiction. (Notwithstanding the
foregoing, nothing in this Agreement shall be interpreted to bar any party
hereto from seeking injunctive relief with respect to any controversy or claim
arising out of or relating to this Agreement.) The party desiring arbitration
shall serve notice upon the other party, together with designation of the first
party's representative. If the person designated by the first party is
acceptable to the second party as an arbitrator, the second party shall so
notify the first party within 10 days and such representative shall serve as the
sole arbitrator; if not acceptable, the second party shall designate his or its
own representative in a notice to the first party within the same 10-day period.
The two representatives so named, if such is the case, shall within 10 days
thereafter appoint an arbitrator, and the arbitrator shall then proceed
forthwith to hear and unilaterally determine the matter. If either party fails,
within the time allowed therefor, to appoint its representative, the
representative named by the other party shall act as the sole arbitrator and
unilaterally decide the matter. If the two representatives are unable to agree
upon an arbitrator within the 10 days allowed therefor, either party may at any
time apply to the presiding Judge of any court of competent jurisdiction for the
appointment of an arbitrator, and the arbitrator shall proceed forthwith to hear
and unilaterally determine the matter. The arbitrator selected shall comply with
the rules of the American Arbitration Association as
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then in effect. In no event shall the demand for arbitration be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute of
limitations. This agreement to arbitrate shall be specifically enforceable under
the prevailing arbitration law. All arbitration shall be held in the State of
Florida.
d. Attorneys' Fees, Costs. In the event a party breaches this
Agreement, the breaching party shall pay all costs and attorneys' fees incurred
by the other party in connection with such breach upon the final adjudication of
liability of the breaching party by a court of competent jurisdiction.
e. Notices. All notices provided for in this Agreement shall be in
writing and sent by certified mail or by personal delivery to the other party at
the respective addresses set out below their names at the conclusion of this
Agreement, or to such other addresses of which one party shall have given notice
to the other party in the manner prescribed herein, or by telefax with
confirmation of receipt, to the respective telefax numbers set out below their
names at the conclusion of this Agreement, or to such other telefax numbers of
which one party shall have given notice to the other party in the manner
prescribed herein. Notices shall be deemed given three business days after the
date when mailed or on the date when personally delivered or telefaxed.
f. Successors And Assigns. This Agreement and the rights and
obligations hereunder shall not be assignable by Newco without the prior written
consent of DPI, which it may grant or withhold in its sole discretion, except
that Newco may assign this Agreement to any
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<PAGE>
corporation which succeeds to substantially all of the business and assets of
Newco, provided that Newco shall remain at all times the owner, beneficially and
of record, of at least 51% of the voting power of such successor corporation,
and Newco shall provide prompt notice to DPI of such assignment. Any attempt to
assign this Agreement without such consent shall be null and void. Subject to
the foregoing, this Agreement and the rights and obligations of the parties
hereunder shall inure to the benefit of the respective successors and assigns of
each party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
DECAF PRODUCTS, INC. NEWCO ENTERPRISES, INC.
By:_________________________ By:_______________________________
James G. Yurak, President JOSEPH P. WEBSTER, President
9/20/96 9/18/96
40 Bayfield Drive
North Andover, MA 01845
17
EXHIBIT 7.3
================================================================================
IMSCO TECHNOLOGIES, INC.
COMMON STOCK
ACCREDITED INVESTOR PURCHASE AGREEMENT
================================================================================
<PAGE>
IMSCO Technologies, Inc.
Common Stock
ACCREDITED INVESTOR PURCHASE AGREEMENT
AGREEMENT made this as of the 20th day of September, 1996, by and between
IMSCO Technologies, Inc., a Delaware corporation (the "Company" or "IMSCO"), and
HAMPTON TECH PARTNERS, LLC (the "Purchaser" or "Hampton").
WHEREAS, Hampton has made a bridge loan in the amount of $300,000 to the
Company (the "Bridge Loan") and in connection therewith also received 150,000
shares of the Company's common stock, for par value of $.001 per share ("Bridge
Stock"); and
WHEREAS, as an inducement for Hampton to make the Bridge Loan, the Company
agreed to a subsequent financing of approximately $1.5 million by Hampton for
$1.32 per share of common stock, which financing is more particularly described
and set forth in this Agreement.
WHEREAS, the Company is also conducting a media financing in the amount of
$1.5 million concurrent with the offering and sale of coomon stock under this
Agreement, as more particularly described herein.
NOW, THEREFORE, the parties agree to the following terms and conditions:
1. Issuance of Securities. The Company proposes to issue and sell 1,136,000
shares of its common stock, $0.001 par value (the "Shares") at a price of $1.32
per Share to Purchaser, for the aggregate amount of $1,499,520.
The Shares will be offered and sold to Purchaser pursuant to an exemption
from registration provided by Regulation D ("Regulation D") promulgated under
the Securities Act of 1933, as amended (the "Act"). The Company has prepared an
offering memorandum dated January 16, l995, which has as exhibits thereto and
incorporates by reference therein the Form 10-KSB of the Company for the period
ended December 31, l995, the Proxy Statement dated June 19, l996 for the l996
Annual Meeting of Shareholders held on July 9, 1996, and the most recent Form
10-Q for the period ended June 30, 1996 as filed with the Securities and
Exchange Commission (collectively, the "Disclosure Documents"), relating to the
Company and the Shares.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Shares shall
bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED PURSUANT TO REGULATION D IN A TRANSACTION EXEMPT FROM
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REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM ABOVE."
Within 30 days of the Closing, the Company agrees to commence the
registration of the Shares sold herein concurrently with the registration of the
shares Bridge Stock on a Form S-3 or similar suitable registration statement
(the "Registration Statement") to be filed with the Securities and Exchange
Commission and which the Company agrees to keep current and effective for at
least the term of the applicable "lock-up" periods as set forth below. The
registration expenses (exclusive of underwriting discounts and commissions) of
the Registration Statement shall be borne by the Company, except that the
expenses borne by the Company shall not include the expenses of any experts
retained by the selling holders, any selling commissions or discounts, nor shall
they include the fees of more than one counsel for all selling holders, whose
fee shall not exceed $15,000 for any registration. Upon completion of the
registration of the Shares, the Shares shall be restricted from sale under a
"lock-up" agreement until January 15, 1997. Under the lock-up agreement, the
Company will release one-third (1/3) of the Shares at any time between effective
date of the Registration Statement and January 15, 1997 if the Company's
publicly traded Common Stock trades at an average closing "bid" price of at
least $3.00 per share for a period of ten consecutive trading days.
After the release of the initial one-third of the Shares, if the Company
has become effective under any subsequent registration statement filed with the
SEC by January 15, 1997 for the purpose of additional raising capital, including
but not limited to any capital formation or value conferred having an immediate
cash benefit or value to the Company in excess of $5,000,000 including private
or public financing, joint venture or licensing, the remaining two-thirds (2/3)
of the Shares shall be locked-up for six months from the date of such subsequent
registration statement, but in no event later than July 15, 1997. If there is
not a subsequent registration statement by January 15, 1997, the Shares will be
released from the lock-up on January 15, 1997. Upon the release of any Shares
after the expiration of the lock-up periods set forth above, after the release
of the initial one-third (1/3) of the Shares, the investor will be permitted to
release the remaining shares at no greater rate than the formula permitted under
the liquidation provisions of SEC Rule 144, as amended.
2. Agreement to Sell and Purchase Shares. On the basis of the
representations and warranties contained in this Purchase Agreement (this
"Agreement"), and subject to its terms and conditions and further subject to
acceptance of this Agreement by the Company, the Company agrees to issue and
sell the Shares to the Purchaser and the Purchaser agrees, to purchase from the
Company 1,136,000 Shares which represents a purchase price of $1,499,520 at the
rate of $1.32 per Share.
3. Delivery and Payment. Delivery of and payment for the Shares shall be
made at such place in New York, New York as the Company shall designate, at
10:00 a.m. on or before October 18, 1996 (the "Payment Date"). Purchaser shall
have the right to have initial and incremental closings for amounts less than
$1,499,520. The Payment Date may be varied by mutual agreement
3
<PAGE>
between Purchaser and the Company.
Shares shall be registered in Purchaser's name and issued in such
denominations as Purchaser shall request, not later than two full business days
prior to the Payment Date, in writing.
The Company shall deliver the Shares to Purchaser on the Payment Date with
any transfer taxes thereon, if any, duly paid by the Company, for Purchaser's
account, against payment of the Purchase Price by wire transfer to the account
of the legal counsel of the Company as follows:
Citibank, N.A..
120 Broadway
New York, NY 10017
ABA # 021000089
FAO: Campbell & Fleming Attorney Escrow Account
Account # 37091508
4. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) The Purchaser has received a copy of the Disclosure Documents and
the Purchaser has carefully reviewed the Disclosure Documents and
this Agreement.
(b) The Purchaser has the full right, power and authority to enter
into this Agreement and to carry out and consummate the
transactions contemplated herein. This Agreement constitutes the
legal, valid and binding obligation of the Purchaser enforceable
in accordance with its terms.
(c) The Purchaser is acquiring the Shares for its own account and
risk and not as part of any plan or scheme to evade the
registration requirements of the Act, and no other person has any
interest in or participation in the Shares or any right, option,
security interest, pledge or other interest in or to the Shares.
The Purchaser has no plan to redistribute or resell the Shares.
The Purchaser understands and agrees that it must bear the
economic risk of its investment in the Shares for an indefinite
period of time. The Shares of Common Stock have not been
registered under the Act. The Shares may not be offered or sold,
directly or indirectly, in the United States unless registered or
exempt from registration under the Act and any applicable state
securities or blue sky laws (the "State Acts").
(d) The Purchaser agrees to dispose of or encumber its Shares only if
(i) the Shares are duly registered under the Act and all
applicable State Acts, or (ii) an exemption from registration
under the Act, including any exemption from the registration
requirements of the Act pursuant to Regulation D, and all
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<PAGE>
applicable State Acts, is available.
(e) If the Purchaser is a corporation or trust or other entity, the
officer or trustee or other person executing this Agreement
represents and warrants that he is authorized to so sign; that
the entity is authorized by the governing documents of the entity
as the case may be, to make this investment;
(f) The Purchaser understands that the offer and sale of the Shares
is being made only by means of this Agreement and the Disclosure
Documents. In deciding to subscribe for the Shares, the Purchaser
has not considered any information other than that contained in
this Agreement and the Disclosure Documents and any documents
provided to the Purchaser by the Company upon request. The
Purchaser acknowledges that each of such documents contain on the
cover thereof a legend as to the absence of registration of the
Shares under the Act and the restrictions arising under the Act.
The Purchaser is aware that the purchase of the Shares involves a
high degree of risk and that the Purchaser may sustain, and has
the financial ability to sustain, the loss of its entire
investment.
(g) The Purchaser (i) has adequate means of providing for his current
needs and possible personal contingencies, and has no need for
liquidity of his investment in the Company, and (ii) is an
"Accredited Investor" as defined in Rule 501 under Regulation D
of the Securities Act of 1933, as amended (the "Securities Act").
Under Regulation D, to qualify as an "Accredited Investor", the
Purchaser understands he must be (i) a natural person whose net
worth (determined either by excluding the assets or liabilities
of his spouse or including such assets or liabilities) exceeds
$1,000,000; (ii) a natural person who had in each of the two most
recent years, and reasonably expects to have during the current
year, an individual income (that is, adjusted gross income as
reported on his federal income tax return, increased by any
deductions for long-term capital gain or depletion, any
tax-exempt interest, and allocable losses of any partnership of
which he is a partner) in excess of $200,000 or a combined income
with his spouse in excess of $300,000; (iii) a domestic bank, or
any savings and loan association or similar institution, such as
a credit union (whether acting in its individual or fiduciary
capacity), (iv) any broker or dealer registered pursuant to the
Securities Exchange Act of 1934, (v) any domestic insurance
company, any investment company registered under the Investment
Company Act or "business development company" (within the meaning
of such act), (vi) any small business investment company licensed
by the United States Small Business Administration, (vii) any
plan established and maintained by a state, any political
subdivision thereof, or any agency or instrumentality thereof,
for the benefit of its employees, if such plan has total assets
in excess of
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<PAGE>
$5,000,000, any employee benefit plan within the meaning of Title
I of ERISA (if the investment decision is made by a plan
fiduciary which is either a bank, savings and loan association,
insurance company, or investment adviser registered under the
Investment Advisers Act, or if the plan has total assets in
excess of $5,000,000, or, in the case of a self-directed plan, if
the investment decisions are made solely by persons who qualify
as accredited investors); (viii) any organization described in
Section 501(c)(3) of the Code or any corporation, Massachusetts
or similar business trust, or partnership (not formed for the
specific purpose of acquiring the Units) with total assets in
excess of $5,000,000; or (ix) any trust with total assets in
excess of $5,000,000 (not formed for the specific purpose of
acquiring Common Stock if the investment decision is made by a
person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and
risks of a prospective investment in the Shares or (x) any entity
in which all of the equity owners satisfy one or more of the
requirements set forth in clauses (i) through (ix).
(h) The Purchaser has alone, or together with his Purchaser
Representative (as hereinafter defined), such knowledge and
experience in financial matters that he is capable of evaluating
the relative risks and merits of this investment. He acknowledges
that (i) the person or persons, if any, named at the foot of this
Agreement has or have acted as his "Purchaser Representative" as
defined in Rule 501 under Regulation D of the Securities Act,
(ii) in evaluating his investment as contemplated hereby, he has
been advised by his Purchaser Representative(s), as to the merits
and risks of the investment in general and the suitability of the
investment for the undersigned in particular, and (iii) his
Purchaser Representative, if any, has or have confirmed to the
undersigned in writing (a copy of which instrument shall be
annexed to this Agreement by the undersigned upon execution) of
any past, present or future material relationship, actual or
contemplated, between the Purchaser Representative and the
Company or any affiliate of the Company.
(i) Purchaser has received and read or reviewed with his Purchaser
Representative and is familiar with this Agreement and he
confirms that all documents, records and books pertaining to the
investment in the Company and requested by him or his Purchaser
Representative have been made available or delivered to him
and/or his Purchaser Representative upon request.
(j) Purchaser and/or his Purchaser Representative have had an
opportunity to ask questions of and receive answers from the
Company, or a person or
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persons acting on its behalf, concerning the terms and conditions
of this investment.
(k) Purchaser acknowledges that the Company is concurrently
conducting a offering of its shares for up to $1,500,000 in media
credits to be purchased by a single institutional provider of the
media credits at the same rate of $1.32 per share.
5. Agreements of the Company. The Company agrees with the Purchaser as
follows:
(a) To advise the Purchaser, promptly after it receives notice of the
issuance by the Commission, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending
the use of the Disclosure Documents, or of the suspension of the qualification
of the Shares or Common Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose.
(b) To advise you promptly and, if requested by you, to confirm such
advice in writing, of the happening of any event that makes any statement of a
material fact made in the Disclosure Documents untrue or that requires the
making of any additions to or changes in the Disclosure Documents in order to
make the statement therein not misleading, unless such event was promptly
reported by the Company in a publicly filed document.
(c) The Company will use commercially reasonable efforts to apply the
net proceeds from the sale of the Shares in accordance with the description set
forth in the Disclosure Documents under the caption "Use of Proceeds."
(d) The Company will use commercially reasonable efforts to do and
perform all things required or necessary to be done and performed under this
Agreement by it prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Shares.
(e) For so long as any of the Shares or the Common Stock remain
outstanding and during any period in which the Company is not subject to Section
13 or 15 (d) of the Securities Exchange Act of 1934, as amended (the" Exchange
Act"), the Company agrees to make available to the Purchaser and any prospective
or subsequent beneficial owner of the Shares or Common Stock in connection with
any sale thereof, the information required by Rule 144A(d)(4) under the Act or
any other applicable resale provision under the Act.
(f) The Company has agrees that, for three (3) years after the Closing
Date of this Agreement, the Purchaser will have the right to designate one
individual to be elected to the Company's Board of Directors. Such individual
may be a director, officer, employee or affiliate of thePurchaser. In the event
the Purchaser elects not to designate a person to serve on the Company's Board
of Directors, the Purchaser may designate an observer to attend meetings of the
Board of Directors.
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6. Representations and Warranties of the Company. The Company represents
and warrants to the Purchaser, except as otherwise disclosed in the Disclosure
Documents, that:
(a) True and correct copies of the Disclosure Documents and the
amendments thereto have been delivered by the Company to the Purchaser. No stop
order to other similar order to decree preventing the use of the Disclosure
Documents or any amendment or supplement thereto, or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose have
been commenced or are pending or, to the knowledge of the Company are
contemplated.
(b) The Disclosure Documents contain all the information specified in,
and meeting the requirements of Rule 144A(d)(4) of the Act and do not, and any
amendment or supplement thereto, will not, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) This Agreement has been duly authorized, validly executed and
delivered by the Company and is a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(d) The authorized, issued and outstanding capital stock and other
securities of the Company conform in all material respects to the descriptions
thereof in the Disclosure Documents. The shares of authorized, issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive or similar
rights. The Shares to be issued by the Company have been duly authorized and,
when issued and delivered against payment therefor in accordance with the terms
of this Agreement will be validly issued and outstanding, fully paid,
nonassessable and free of preemptive or similar rights.
(e) The authorized, issued and outstanding capital stock and other
securities of each of the Company's material subsidiaries ("Subsidiaries") have
been duly authorized and validly issued and, in the case of equity securities,
are fully paid, nonassessable and free of preemptive or similar rights. Except
as described in the Disclosure Documents, there are no outstanding rights,
warrants or options to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale or issuance of,
any shares of capital stock or other equity interest in any of the Company's
Subsidiaries.
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware. Each of
the Company's Subsidiaries has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its respective jurisdiction of
incorporation. The Company and each of its Subsidiaries have the corporate power
and authority necessary to own, lease and operate their respective properties
and to conduct their respective businesses as currently conducted and as
described in the Disclosure Documents. The Company has the corporate power and
authority necessary to enter into and perform its obligations under this
Agreement, and to issue, sell and deliver the Shares to be sold by it pursuant
hereto. The Company and each of its Subsidiaries are duly registered or
qualified as
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foreign corporations or to conduct their respective businesses, and are in good
standing, in each jurisdiction where such qualification is required by reason of
the owning or leasing of property or the conducting of business.
(g) The Company and each of its Subsidiaries have good and marketable
title, free and clear of all liens, charges and encumbrances, to all of the
properties and assets described in the Disclosure Documents as owned by them,
except as otherwise described in the Disclosure Documents. The properties of the
Company and its Subsidiaries are insured in accordance with industry practice
and are suitable for their uses.
(h) There is (i) no action, suit or proceeding before or by any court,
arbitrator or governmental agency, body or official, domestic or foreign, now
pending, threatened or, to the knowledge of the Company, contemplated to which
the Company or any of its Subsidiaries is or may be a party or to which the
business or property of the Company or any of its Subsidiaries is or may be
subject and (ii) no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or that has been proposed by any
governmental body, in the case of clauses (i) and (ii) above, that is not
disclosed in the Disclosure Documents and which might have a material adverse
effect on the Company and its Subsidiaries, the property of the Company and its
Subsidiaries, the issuance of the Shares or the consummation of any of the
transactions contemplated by this Agreement.
(i) Neither the Company nor any of its Subsidiaries is in material
violation of its charter or bylaws, or other equivalent instrument, or is in
material default in any respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or to which any of them or their respective properties or assets are
subject. There exists no condition that, with notice, the passage of time or
otherwise, would constitute a material default under any such document,
instrument or agreement. The execution, delivery and performance of, and the
consummation of the transactions contemplated by, this Agreement, will not
conflict with or constitute a material breach of any of the terms or provisions
of, or constitute a material default (with notice, the passage of time or
otherwise) under, or result in the imposition of a lien or encumbrance on any
properties of the Company or any of its Subsidiaries or an acceleration of
indebtedness pursuant to (i) the charter or bylaws, or other equivalent
instrument, of the Company or any of its Subsidiaries, (ii) any bond, debenture,
note or any other evidence of indebtedness or any indenture, mortgage, deed of
trust or any other material agreement instrument to which the Company or any of
its Subsidiaries is a party or to which any of them or their respective
properties or assets or assets are subject, except such as have been waived or
(iii) any law, regulation or order of any court or governmental agency or
authority applicable to the Company or any of its Subsidiaries, or any of their
respective material properties or assets.
(j) Except as disclosed in the Disclosure Documents, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or the Purchaser for a
brokerage commission, finder's fee or like payment
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<PAGE>
relating to the Shares, except First Capital Investments, Inc., which shall be
paid a commission equal to 10% of the purchase price of Shares sold herein and a
nonaccountable expense allowance equal to 3% of the purchase price of Shares
sold hereunder..
7. Indemnification. The Purchaser acknowledges that he understands the
meaning and legal consequences of the representations and warranties contained
in Paragraph 4 hereof, and he hereby agrees to indemnify and hold harmless the
Company and each officer, director, agent or affiliate thereof from and against
any and all loss, damage or liability due to or arising out of a breach of any
representation or warranty of the undersigned contained in this Agreement.
8. Conditions of the Company's Obligations. The Company's obligations to
sell the Shares under this Agreement on the Payment Date, is subject to the
satisfaction of each and every one of the following conditions as of such
Payment Date:
(a) All of the representations and warranties of the Purchaser
contained in this Agreement shall be true and correct on such Payment Date with
the same force and effect as if made on and as of such Payment Date. The
Purchaser shall have performed or complied with all agreements and satisfied all
conditions on its part to be performed, complied with or satisfied at or prior
to such Payment Date.
(b) At such Payment Date, no stop order or other similar decree
preventing the use of the Disclosure Documents or any amendment or supplement
thereto, or any order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Act shall have
been issued and no proceedings for that purpose shall have been commenced or
shall be pending or, to the knowledge of the Company, be contemplated. No stop
order suspending the sale of the Shares or the Company's Common Stock in any
jurisdiction shall have been issued and no proceedings for that purpose shall
have been commenced or shall be pending or, to the knowledge of the Company, are
contemplated.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
as of such Payment Date that would prevent the issuance of the Shares. No
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction shall have been issued as of such Payment Date that
would prevent the issuance of the Shares. On such Payment Date no action, suit
or proceeding shall be pending against or affecting or, to the knowledge of the
Company, threatened against, the Company or any of its Subsidiaries before any
court, arbitrator or governmental body, agency or official that would interfere
with or adversely affect the issuance of the Shares or would individually or in
the aggregate, have a material adverse effect on the condition (financial or
other), business, properties, prospects, net worth or results of operations of
the Company and its Subsidiaries, or in any manner draw into question the
validity of this Agreement or the Shares.
9. Revocation. The Purchaser agrees that he shall not cancel, terminate or
revoke this Agreement or any agreement of the undersigned made hereunder and
that this Agreement shall
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survive the death or disability of the undersigned, except as provided below in
Paragraph 10.
10. Termination of Agreement. If any representation or warranty of the
Purchaser contained in Paragraph 4 hereof shall not be true prior to delivery of
the funds hereunder and written notice of such fact has been given to the
Company, or , if any representation or warranty of the Company contained herein
shall not be true in any material respect, then and in any such event this
Agreement shall be null and void and of no further force and effect, and no
party shall have any rights against any other party hereunder or under the
Company Agreement, and the Company shall promptly return to the undersigned the
funds, if any, and the Agreement shall be destroyed.
11. Acknowledgments of the Undersigned
Subscribers residing in one of the states noted below acknowledge and/or
represent as follows:
NOTICE TO RESIDENTS OF ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANS FERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
FOR CALIFORNIA RESIDENTS ONLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE CALIFORNIA CORPORATIONS CODE BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE CALIFORNIA CORPORATIONS CODE, IF SUCH REGISTRATION IS REQUIRED.
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FOR COLORADO RESIDENTS ONLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE COLORADO SECURITIES ACT OF 1981 BY REASON OF SPECIFIC
EXEMPTION THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE COLORADO SECURITIES ACT OF 1981, IF SUCH REGISTRATION IS
REQUIRED.
FOR CONNECTICUT RESIDENTS ONLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF THE
CONNECTICUT UNIFORM SECURITIES ACT AND, THEREFORE, CANNOT BE RESOLD UNLESS THEY
ARE REGISTERED UNDER SUCH ACT, OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
FOR FLORIDA RESIDENTS ONLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE STATE OF FLORIDA.
PURSUANT TO THE LAWS OF THE STATE OF FLORIDA, RESIDENTS OF FLORIDA SUBSCRIBING
FOR ShareS ARE PERMITTED TO WITHDRAW THEIR SUBSCRIPTIONS UPON WRITTEN (OR
TELEGRAPHIC) NOTICE DURING THE THREE DAY PERIOD FOLLOWING THE DATE THEIR
SUBSCRIPTIONS ARE MADE.
FOR NEW JERSEY RESIDENTS ONLY:
THIS OFFERING HAS NOT BEEN FILED WITH OR REVIEWED BY THE NEW JERSEY BUREAU
OF SECURITIES OF THE DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEW
JERSEY PRIOR TO ITS ISSUANCE AND USE. NEITHER THE ATTORNEY GENERAL OF THE STATE
OF NEW JERSEY NOR THE BUREAU OF SECURITIES HAS PASSED ON OR ENDORSED THE MERITS
OF THIS OFFERING. ANY REPRESENTATIONS TO THE CONTRARY ARE UNLAWFUL.
FOR NEW YORK RESIDENTS ONLY:
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. THIS MEMORANDUM HAS NOT BEEN FILED WITH, OR
REVIEWED BY, THE ATTORNEY GENERAL OF ANY STATE PRIOR TO ITS ISSUANCE AND USE.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be
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addressed as follows: (i) if to the Company, to IMSCO Technologies, Inc., 40
Bayfield Drive, North Andover, Massachusetts 01845, attention Sol L. Berg, with
a copy to Campbell & Fleming, P.C., 250 Park Avenue, New York, New York, 10177,
attention: David E. Fleming, Esq., (ii) if to the Purchaser at the address set
forth at the signature page of this Agreement, or in any case to such other
address as the person to be notified may have requested in writing.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, you, any controlling
persons referred to herein, and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other persons shall acquire
or have any right under or by virtue of this Agreement. Your rights under this
Agreement are not assignable.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
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This Agreement may be signed in various counterparts, which together shall
constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement between the Company the Purchaser by signing
this Agreement and completing the information requested below.
IN WITNESS WHEREOF, the parties have executed this Agreement, the ___ day
of September, 1996.
HAMPTON TECH PARTNERS, LLC
By: Jeffrey Robinson
----------------------------------
(Signature)
Title, if applicable: Managing Member
Address:
IMSCO TECHNOLOGIES, INC.
By:__________________________________
Sol L. Berg
President
14
EXHIBIT 7.4
MEDIA PURCHASE AGREEMENT
THIS MEDIA PURCHASE AGREEMENT ("Agreement") is made this 20th day of
September, 1996 (and shall be effective upon closing of the private placement
scheduled on or before October 15, 1995) by and among IMSCO Technologies, Inc.,
a publicly-owned Delaware corporation with principal offices at 40 Bayfield
Drive, North Andover, MA 01845, and its subsidiaries and affiliates
(collectively referred to herein as the "Company"); Source Corp. ("Source") and
ADEX ("ADEX"), affiliated companies of GRO Enterprises ("GRO"), each
privately-owned Illinois corporations, with principal offices at 18 West 100
22nd Street, Oakbrook Terrace, Illinois 60181 (hereinafter sometimes
collectively referred to as "SC"); and Proxhill Marketing, Ltd., a
privately-owned Colorado corporation with principal offices at 9250 East
Costilla Avenue, Suite 650, Englewood, Colorado 80112 ("Proxhill"). The Company,
SC and Proxhill are hereinafter collectively referred to as the "Parties". The
capitalized terms in this Agreement shall have the meaning ascribed thereto in
Article I "Definitions."
W I T N E S E T H:
WHEREAS, the Company, its subsidiaries and affiliates, is engaged in the
business of, but not limited to, the research, development and production of
products involving and utilizing electrostatic and polymer technology and
related products and services; and
WHEREAS, the Company desires to obtain Media (as more fully described in
Article I) for itself, its subsidiaries and affiliates, for promotion of, but
not limited to, its products and/or services; and
WHEREAS, Proxhill is engaged in the business of providing Media services,
including the purchasing, selling, loaning, trading and reselling of Media and
Media-related services to and for emerging and mid-sized growth companies and in
connection therewith issues Prepaid Purchase Orders (as more fully described in
Article I); and
WHEREAS, SC is engaged in the business of offering Media and other
services, including the purchasing, selling, trading and reselling of Media, the
performance of Media Research, Media Plan preparation and Media Plan Execution
(all as more fully described in Article I) from conventional and unconventional
sources to and for participating individuals, firms, and entities located
throughout the United States; and
WHEREAS, the Company desires to acquire a specified amount of Prepaid
Purchase Orders from Proxhill relating to Media Sources or Media Vendors with
which the Company has not theretofore established a prior media business
relationship; and
WHEREAS, Proxhill is willing to issue to the Company a Prepaid Purchase
Order entitling the Company to purchase Media as agreed and approved by Proxhill
and SC on the terms and subject to the conditions hereinafter set forth; and
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WHEREAS, SC is willing to honor the Prepaid Purchase Order and recognize,
accept, and utilize the same as payment for a portion of the transactions
enumerated herein and which otherwise would be paid by the Company by means of
cash.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the representations, warranties, covenants, and agreements herein
contained, the Parties hereby incorporate the foregoing recitals into this
Agreement by reference and hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
I. When used herein, the following terms shall have the meaning ascribed hereto
in this Article:
1.1 "Ad" shall mean the unit of advertising used to deliver the Company's
message, including (i) time duration specifications for radio, television,
and cable television Media Sources; and (ii) size and physical or
mechanical specifications of non-electronic Media Sources (e.g.,
newspapers, magazines, billboards, flyers, etc).
1.2 "Ad Placement" shall mean the insertion of an Ad in a given Media Source
to enable it to appear and/or become published on a specified date and
time.
1.3 "Affiliate" shall have the meaning ascribed thereto under the rules and
regulations adopted by the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "33 Act") and the
Securities Exchange Act of 1934 (the "34 Act").
1.4 "Aid and Assistance" shall mean customer support services offered by SC to
the Company in connection with any transaction made the subject of this
Agreement in conformity with those historically rendered by SC's customer
service department. These services shall include, but not be limited to,
telephone and fax cooperation and support in planning and executing Media
transactions, furnishing of quotes in a timely manner, furnishing
information concerning competitive rates and terms and generally affording
the Company the benefit of the expertise, knowledge and experience of SC's
staff.
1.5 "Campaign" shall mean the sum of all Schedules comprising a designated
portion of the Media Plan as defined by time and/or budget and/or Media
Source and/or thematic parameters.
1.6 "Closing" shall mean the date on which this Agreement shall be executed by
the Parties hereto, and as otherwise provided herein.
1.7 "Commercials" shall mean 10, 15, 30, 60, 90 or 120 second advertisements
for use on
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television and/or radio that promote the products of the Company and which
shall be produced by the Company or by SC for and on behalf of the Company
at the Company's expense.
1.8 "Communication(s)" shall mean oral or written establishment of a prior,
current, or subsequent communication or contact with a Media Vendor or
Media Source wherein it was or is understood that the Company would use
that vendor as a Media provider or conduit for a given period of time or
for a given project other than the project made the subject of this
Agreement.
1.9 "Cost Per Point" shall mean the estimated amount of Dollars required to
deliver one rating point (or one percent) of the designated demographic
audience within a given spot, television or radio market, as established
by a Recognized Industry Source.
1.10 "Cost Per Thousand" shall mean the cost for every 1,000 units of audience
exposed to a Media vehicle.
1.11 "Insertion" shall mean an individual publication or broadcast of an Ad in
or by a Media Source.
1.12 "Make Good" shall mean the re-scheduling of an Insertion that was
pre-empted during the contracted schedule, within a pre-determined, agreed
upon period of time following the preemption. That period of time will be
stated as part of the proposed Media Campaign or Plan.
1.13 "Market Research" shall mean the identification of the particular market
and/or markets as well as the identification of the particular
demographics within each such market that the Company desires to reach
with any Media Plan hereunder.
1.14 "Media" shall mean 10, 15, 30, 60, 90, 120-second, or infomercial length
if available, advertising spot time on television and/or radio stations or
cable systems, 10, 15, 30, 60, 90 120-second, or infomercial length if
available, spot time on syndicated or non-syndicated programs and shows
broadcast on television and/or radio stations, advertising space on
outdoor or indoor billboards, advertising space in local, regional or
national magazines, newspapers or other publications of mass appeal, and
time and/or space on or in such cross-promotional combination of the
foregoing as shall be available from SC's sources.
1.15 "Media Plan" shall mean the written proposal prepared by SC on the basis
of the Media Research (hereinafter defined) and submitted to the Company
for approval. The Media Plan will detail the terms and objectives of a
given advertising Campaign (as described herein), or series of Campaigns,
which will include creative advertising services, based on the budget and
duration parameters stated to SC by the Company. The Media Plan will
delineate: (i) the Media Sources, dates and times of Ad Placement and
price per Insertion; (ii) the number and nature of Ads that shall be
required to be produced for Insertion; (iii) delivery of Target
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Demographic(s); (iv) such other and further information consistent with
industry practices.
1.16 "Media Plan Execution" shall mean the implementation of the Media Plan by
SC within the time and financial parameters set forth in such Media Plan.
1.17 "Media Research" shall mean the identification by SC of the proper Media
to effectively reach the Company's target markets and audiences, based on
the goals and objectives of the Company's Media Program.
1.18 "Media Research Report" shall mean the written report prepared by SC's
media department and submitted to the Company that details the parameters
of Media Research required to fulfill any Media Plan covered by this
Agreement.
1.19 "Media Source" shall mean the individual vehicle used for Insertion such
as but not limited to radio and television station(s), cable system(s),
newspaper publisher(s), magazine publisher(s), billboard vendor(s), media
time/space broker(s), or syndicator(s), etc.
1.20 "Media Vendor" shall mean a specific company, contact, representative, or
affiliate that can provide written verification of media placement and/or
purchase for Media.
1.21 "Prepaid Purchase Order" or "Media Credit" shall mean a written form of
Media voucher issued by Proxhill that SC has agreed to honor and which
shall be accepted as payment in full and entitle the Company to acquire
Media for the promotion of its products and services and the Company's
other projects.
1.22 "Placement" (including words used in this Agreement, such as "Place" and
"Placed" or any other form thereof) with regard to Schedules, Campaigns,
and Media Plans, shall mean the process of requesting and/or ordering,
and/or negotiating, and/or confirming Insertions with a Media Source.
1.23 "Recognized Industry Source (Standard)" shall mean nationally recognized
media rate authorities (such as the Media Market Guide published by
Bethlehem Publishing Company, Incorporated, P.O. Box 119, Bethlehem, New
Hampshire, 03574-9981) which have established fair, estimated Media Costs
Per Point and/or Costs Per Thousand, for standard demographic audiences,
within designated market areas. Cost Per Point and/or Cost Per Thousand
estimates may vary to a greater or lesser extent from the estimates
provided by a Recognized Industry Standard Source, due to current and
immediate market conditions. However, combined markets Cost Per Point
and/or Cost Per Thousand estimates provided by a Recognized Industry
Standard Source should be realizable.
1.24 "Schedule" shall mean the number and time parameters of Insertions placed
with a Media Source.
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1.25 "Successful Underwriting" shall mean any benefit or value conferred upon
the Company after arranging a bridge or similar loan, or a public, or
private placement financing of the Company.
1.26 "Target Demographics" shall mean the specific grouping of persons
according to (i) age; and/or (ii) gender; and/or (iii) income; and/or (iv)
geographic location; and/or (v) lifestyle; and/or (vi) psychographic
profile, as stipulated by the Company for the purpose of defining the type
of person to whom the Company would like to advertise and/or market its
products and/or services.
1.27 "Transaction Fee" shall mean the cash fee that the Company shall pay under
the terms and conditions as described in Article II of this Agreement.
1.28 "Warrants" if applicable, shall mean the right granted to Proxhill by the
Company to purchase the common stock of the Company under the terms and
conditions stated herein.
ARTICLE II
SALE AND PURCHASE
2.1 Sale and Purchase. Upon the terms and subject to the conditions
hereinafter set forth, and by virtue of their respective execution of this
Agreement, Proxhill hereby sells to the Company and the Company hereby purchases
and accepts from Proxhill a Prepaid Purchase Order for $1,500,000 worth of Media
as more fully described in Article III. At the Closing, Proxhill shall deliver
to the Company a duly executed Prepaid Purchase Order containing a notarized
signature of an executive officer of Proxhill granting the Company's right to
purchase Media under the terms of this Agreement.
2.2 Stock Issuance. As consideration herein, and at the Closing of this
transaction, the Company shall issue to Proxhill or its designees 1,136,364
Shares of the Company's common stock priced at $1.32 per Share.
2.3 Payment of Transaction Fee. The Company shall pay a $150,000 cash
Transaction Fee, equal to ten (10%) of the value of the media financing
transaction, to First Capital Investments, Inc. as agent for Proxhill, plus
Warrants to purchase 126,364 shares of the Company's stock, for five (5) years,
at 110% of the price paid by the initial investors for the stock of the Company
($1.45). The Warrants or documentation representing such Warrants shall be
issued at Closing, and the Cash portion of the Transaction Fee may be paid as
the media is utilized by the Company.
ARTICLE III
TERMS AND CONDITIONS
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3.1 Payment of Compensation. All Media transactions pursuant to this
Agreement shall be paid from the Prepaid Purchase Order, (as more fully
described in Article III, Section 3.3.). The Company, by virtue of its execution
of this Agreement, hereby acknowledges that its timely payment of the
compensation as set forth above is one of the fundamental and material
requirements for the operation of the Media Plan, and affect the ability of
Proxhill and SC to implement the intent of the Parties as enumerated in this
Agreement. Accordingly, and in the event the Company does not tender the
securities when due, such a course of action or failure to act shall be
construed as and be deemed to be a fundamental and material breach of this
Agreement, entitling Proxhill and SC to suspend further implementation of this
Agreement on three (3) business days advance written notice to the Company.
Thereafter, the Company shall have ten (10) business days to cure any default.
In the event of termination as a result of the failure of the Company to make a
payment within the provisions of this Agreement, Proxhill shall be entitled to
retain any Shares and/or Warrants and if applicable, any payments previously
tendered as liquidated damages.
3.2 Deposit of Prepaid Purchase Order for Media. As soon as practicable
following the Closing, but in no event later than five days thereafter, the
Company shall deliver the Prepaid Purchase Order to SC; and SC hereby agrees to
accept the Prepaid Purchase Order and hold the same for and on behalf of the
Company. In this regard, the Company hereby acknowledges, accepts and agrees
that the Prepaid Purchase Order shall only be deposited and credit may only be
executed with SC. The only exception shall be the substitution of an alternate
Media Vendor as hereinafter provided in Article III, Section 3.7 of this
Agreement. When the Company consummates a Media transaction under and pursuant
to this Agreement, SC shall debit the Prepaid Purchase Order with the amount of
Media utilized by the Company and shall confirm the same to the Company in
writing, with a copy to Proxhill. SC hereby specifically covenants and agrees
that any Media Plan implemented for and on behalf of the Company hereunder will
equal or be less than the Cost Per Point and/or Cost Per Thousand criteria for
the same target demographics of any specific market as established by a
Recognized Industry Source (as more fully described in Article I) and as
selected by Proxhill or in cases where there is no industry standard or
Recognized Industry Source, published rates. In addition, SC shall furnish the
Company with a monthly statement reflecting the amount of Media still held by SC
for and on behalf of the Company and shall send a copy thereof to Proxhill. Upon
the expiration of this Agreement, SC shall return the Prepaid Purchase Order to
Proxhill along with a final statement of unused Media, if any, via overnight
delivery service for cancellation.
3.3 Use of Prepaid Purchase Order For Media. Within twenty (20) business
days from the date of this Agreement, SC shall initiate a Media Research Report
by sending one or more experienced and qualified Media specialists to the
Company's facilities, at the Company's expense, as outlined in Article III,
Section 3.3, to initiate the process of preparing an initial Media Plan
utilizing the Prepaid Purchase Order to purchase Media (the "Initial Media
Plan") in markets designated by the Company. With respect to all Media Plans
after the Initial Media Plan, the Company shall advise SC at least ninety (90)
calendar days prior to the Company's intended use thereof. In the event the
Company requests Media that is to be purchased and executed prior to the ninety
(90) calendar days to the intended use thereof, the Company understands that SC
is under no obligation to obtain the Media for the Company under the terms of
this Agreement, but may elect,
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at SC's sole option, to obtain the requested Media on a best efforts basis for
the Company. The Company hereby acknowledges and accepts that the Prepaid
Purchase Order may only be utilized by it to purchase Media pursuant to a Media
Plan. All the Company Media Plans submitted pursuant to this Agreement shall be
of a minimum duration of one month; and all Media shall be acquired by SC on a
subject-to-availability basis. SC shall submit any and all Media Plans to the
Company for approval not less than 45 calendar days prior to the proposed
commencement date, with a copy to Proxhill. The Company shall promptly review
SC's Media Plan and communicate either its written approval or its written
objections or suggestions to SC within five (5) business days from its receipt
thereof. The failure of the Company to respond to SC as herein indicated shall
be deemed to be a disapproval of the submitted Media Plan. No Media Plan shall
proceed without the Company's written approval.
In the event that the Company desires or instructs SC to amend an approved
Media Plan, and depending upon the nature and extent of the commitments made to
date, SC may, at its sole discretion, deem the approved Media Plan null and void
and of no further force or effect. In such event, SC shall prepare and submit a
new Media Plan. Any funds or Media Credit held by SC on behalf of the Company
shall be used by SC for subsequent Media Plans.
All Media Plans will be prepared pursuant to the terms and conditions of
this Agreement, and the Parties agree that the Media Credits shall be dedicated
solely for the purchase of Media under this Agreement. The duration, terms and
conditions of the Media may be extended or modified only with the written
consent of the Company, Proxhill and SC.
The Company understands and agrees that, if the Company, its affiliates or
representatives have had prior Communications with a given Media Source or Media
Vendor, then that Media Source or Media Vendor requested by the Company shall be
excluded and shall not be subject to the terms and conditions of this Agreement.
Recognizing that every media purchasing service (such as SC) has its
specific resources to secure and purchase media, which is generally governed
under contractual arrangements and/or purchasing mechanisms, Media will be
purchased exclusively on a subject-to-availability basis. If for any reason SC
cannot provide the specific Media requested, or confirmation of its
availability, within ten (10) business days from the request thereof, then the
Company will be notified in writing from SC of the lack of availability and that
specific Media will not be governed by the terms of this Agreement, and the
Company is free to negotiate or utilize any service of its own choosing.
3.4 Services. During the term of this Agreement, in addition to those
services to be rendered by Proxhill and SC as set forth above, and so long as
the Company shall own Media Credit and shall furnish its Market Research to SC
(if any), SC shall provide the Company with Aid and Assistance in the
consummation of transactions involving Media. These services, which shall be
offered at no cost to the Company, (other than the expenses as set forth in
Article III, Section 3.5), shall include the conduct of further Media Research,
the preparation and submission to the Company of written Media Plans and aid and
assistance in implementing the Media Plans. In addition, SC
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shall: (i) furnish the Company and Proxhill with monthly statements summarizing
any and all Media activity during the preceding 30 calendar days as well as
current Prepaid Purchase Order balances; (ii) assign a customer service
representative to the Company to coordinate and expedite Media related
transactions.
3.5 Fees and Expenses. Proxhill shall be responsible for any transaction
fee payable to SC, and for all out-of-pocket disbursements incurred by SC on the
Company's behalf in connection with the consummation of any transaction under
this Agreement. All such expenses shall be billed monthly and paid monthly by
Proxhill. SC shall not incur any expense in excess of $100.00 without prior
written consent.
3.6 Termination. This Agreement shall expire at the end of sixty (60)
months from the effective date herein, or upon the depletion of the Prepaid
Purchase Order, whichever occurs first.
3.7 Transfer. The Parties hereby agree that in the event that SC is not
providing adequate pricing and/or delivery of the Media as defined in this
Agreement, and SC has not remedied the situation after having been given
reasonable opportunity to do so, the Company will notify Proxhill and SC in
writing within ten business days providing a full description of the issues
giving rise to its complaint. If SC cannot rectify the situation within 21
business days to the Company's reasonable satisfaction, Proxhill will use its
best efforts to transfer the remaining, unused portion of the Prepaid Purchase
Order within sixty (60) days to another Media Vendor selected by Proxhill. No
additional commission or cash fee will be charged to the Company for the
transfer.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby makes the following representations and warranties to
and covenants with Proxhill and SC as follows:
4.1 Valid Corporate Existence; Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and if applicable, its securities were issued under said
laws. The Company has the corporate power to carry on its business as now
conducted and to own its assets. The Company is qualified to conduct business in
all foreign jurisdictions in which failure to qualify would have a material
adverse effect on the Company and its assets, properties or business, and there
has not been any claim by any jurisdiction to the effect that the Company is
required to qualify or otherwise be authorized to do business as a foreign
corporation therein.
4.2 Consents. No consents of governmental and other regulatory agencies,
foreign or domestic, or of other parties are required to be received by or on
the part of the Company to enable it to enter into and carry out this Agreement
in all material respects.
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4.3 Corporate Authority, Binding Nature of Agreement. The Company, through
its Chief Executive Officer, has the corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement constitutes the valid and
binding obligations of the Company and is enforceable in accordance with its
terms. The Company shall cooperate fully with Proxhill and SC in supplying any
information necessary for Proxhill and SC complete their responsibilities
pursuant to this Agreement.
4.4 Authorized Shares. As of the date of this Agreement, the Company has,
and will reserve for issuance, a sufficient number of Shares so as to be able to
comply with the terms and conditions of this Agreement.
4.5 Reporting Status. As of the date of this Agreement, the Company is
current in all applicable reporting obligations with all governing bodies
including but not limited to, those required by the 34 Act. The Company will
remain current in these obligations during the term of this Agreement.
4.6 Cooperation with Registration of Securities. Upon the closing of the
media financing contemplated herein, which shall occur simultaneously with any
private placement financing, the Company agrees that, at its own expense, it
will use its best efforts to diligently and expeditiously file an S-3
registration, and maintain an open registration for the term of this Agreement,
under the rules and regulations of the Securities and Exchange Commission
("SEC") of the securities issued pursuant to the financing. Upon completion of
said S-3 registration, Proxhill agrees to a lock-up of said shares issued
pursuant to the closing of any private placement or media financing, until
January 15, 1997.
The Company will release one-third (1/3) of the private placement shares
(267,000 shares) and one-third (1/3) of the media shares (400,000 shares) at any
time between the completion of the S-3 registration and January 15, 1997 if the
Company's stock trades at an average closing bid price of at least $3.00 per
share for a period of ten (10) consecutive days. If the Company's stock fails to
reach said trading price by January 15, 1997, then such shares will not be
released until January 15, 1997.
After the release of the initial one-third (1/3) of the private placement
shares and one-third (1/3) of the media shares as set forth above, whether or
not the Company has become effective under any subsequent registration statement
for the purpose of raising capital, including but not limited to any capital
formation or value conferred in excess of $5,000,000 including private or public
financing, joint venture or licensing, then Proxhill agrees to a lock-up of the
shares for six (6) months from the date of such registration, but in no event
later than July 15, 1997.
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Upon the release of any securities after the expiration of any lock-up
period set forth herein, Proxhill agrees that after the release of the initial
one-third (1/3) shares, the shareholder will release the remaining shares at no
greater rate than that formula permitted under the liquidation provisions of SEC
Rule 144, as amended.
Thereafter, upon request by Proxhill or its investors, the Company will
timely cooperate with, approve, cause its counsel to execute and deliver
opinions and execute as necessary, any registration statements and documents
customarily utilized in connection therewith (including any and all amendments
thereto including post-effective amendments), standby or other underwriting or
selling agreements, instructions to its transfer agent, sales or transfer
documentation reasonably requested by Proxhill or its investors that shall be
necessary or required to implement Proxhill's or its investor's sale, transfer,
pledge or hypothecation of the shares under SEC rules and regulations, the
securities or "blue sky" laws of the various states or the rules of any other
governing body having jurisdiction thereover, and including but not limited to
any private sale requested, as long as such sale does not contravene the lock-up
provisions as stated herein.
In connection with the preparation and filing of any Registration
Statement required under this Article, the Company covenants and agrees not to
request or demand the inclusion of any other securities of the Company therein,
whether on a "piggy back" basis or otherwise, without the prior written consent
of Proxhill.
4.7 Permits and Licenses. The Company has, to the best of its knowledge,
all permits, licenses, orders and approvals of all federal, state, local and
foreign governmental or regulatory bodies required to carry on its business as
presently conducted; all such permits, licenses, orders, franchises and
approvals are in full force and effect, and to the knowledge of the Company,
after reasonable inquiry, no suspension or cancellation of any of such permits,
licenses, etc. is threatened; and to its knowledge the Company is in compliance
in all material respects with all requirements, standards and procedures of the
federal state, local and foreign procedures of the federal, state, local and
foreign governmental bodies which issued such permits, licenses, orders,
franchises and approvals.
4.8 No Breach. To the best knowledge of the Company, and its legal counsel
and accountants, neither the execution and delivery of this Agreement nor
compliance by the Company with any of the provisions hereof nor the consummation
of the transactions contemplated hereby, will, to the best of its knowledge: (i)
violate or conflict with any provision of the Articles of Incorporation or
By-laws of the Company; (ii) violate or, alone or with notice of the passage of
time, result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a default under, the terms
of any Agreement or other document or undertaking, oral or written, to which the
Company is a party or by which any of its properties or assets may be bound
(except for such violations, conflicts, breaches or defaults as to which
required waivers or consents by other parties have been, or will, prior to the
execution of this Agreement, be, obtained); (iii) result in the creation of any
lien, security interest, charge or encumbrances upon the Shares and Warrants or
any of the properties or assets of the Company pursuant to the terms of any such
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Agreement or instrument; (iv) violate any judgment, order, injunction, decree or
award against, or binding upon the Company or upon its properties or assets; or
(v) violate any law or regulation of any jurisdiction relating to the Company,
its securities, assets or properties, the violation of which would have a
material adverse effect on the Company or the Shares and/or Warrants.
4.9 Finders. Neither the Company, its officers, directors, nor any of
their affiliates have engaged, consented to, or authorized any broker, finder,
investment banker or other third party other than First Capital Investments,
Inc. to act on its or their behalf, directly or indirectly, as a broker or
finder in connection with the transactions contemplated by this Agreement. The
Company shall indemnify and hold Proxhill and SC harmless from liability,
including attorneys fees, arising out of any claim to compensation as a broker
or finder by an individual, firm or entity engaged by the Company, and the
Company takes full responsibility for compensation, if any, to said entity.
4.10 Issuance of the Shares and Warrants, Affiliations. The Shares and
Warrants, when issued to Proxhill, will be duly and validly issued, fully paid,
and non-assessable with no personal liability attached to the ownership thereof.
No executive officer, director, shareholder or affiliate of the Company is
affiliated with Proxhill or SC as an executive officer or director. The Shares
and Warrants represent less that 5% of the Company's issued and outstanding
common stock capitalization as of the date of this Agreement.
4.11 Litigation. The Company is not aware of any pending or threatened
litigation that would prohibit it from entering into this Agreement, issuing the
Shares and Warrants, or otherwise implementing the terms and conditions of this
Agreement.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SC
SC hereby makes the following representations and warranties to Proxhill and the
Company:
5.1 Valid Corporate Existence; Qualification. ADEX, Source and GRO are
corporations duly organized, validly existing and in good standing under the
laws of the State of Illinois. Each has the corporate power to carry on its
business as now conducted and to own its assets. Each is qualified to conduct
business in all foreign jurisdictions in which failure to qualify would have a
material adverse effect on ADEX, Source and GRO and their assets, properties or
business, and there has not been any claim by any jurisdiction to the effect
that ADEX, Source and GRO is required to qualify or otherwise by authorized to
do business as a foreign corporation therein.
5.2 Corporate Authority, Binding Nature of Agreement. ADEX, Source and GRO
through their respective Presidents, have the corporate power to enter into this
Agreement and to carry out their respective obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of each
entity and no other corporate proceedings on the part of any such entity are
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necessary to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement constitutes
the valid and binding obligation of ADEX, Source and GRO and is enforceable in
accordance with its terms.
5.3 Permits and Licenses. ADEX, Source and GRO have all permits, licenses,
orders and approvals of all federal, state, local and foreign governmental or
regulatory bodies required, to the best of their respective knowledge, to carry
on their respective business as presently conducted; all such permits, licenses,
orders, franchises and approvals are in full force and effect, and to the
knowledge of ADEX, Source and GRO, after reasonable inquiry, no suspension or
cancellation of any of such permits, licenses, etc. is threatened; and ADEX,
Source and GRO are in compliance in all material respects with all requirements,
standards and procedures of the federal state, local and foreign procedures of
the federal, state, local and foreign governmental bodies which issued such
permits, licenses, orders, franchises and approvals.
5.4 Consents. No consents of governmental and other regulatory agencies,
foreign or domestic, or of other parties are required to be received by or on
the part of ADEX, Source and GRO to enable each of them to enter into and carry
out this Agreement in all material respects.
5.5 Litigation; Compliance with Law. ADEX, Source and GRO hereby jointly
and severally warrant that they are not aware of any litigation, pending, that
would prohibit them from entering into this Agreement, or otherwise implementing
the terms and conditions of this Agreement.
5.6 No Breach. To the best of their respective knowledge, neither the
execution and delivery of this Agreement nor compliance by ADEX, Source and GRO
with any of the provisions hereof nor the consummation of the transactions
contemplated hereby, will: (i) violate or, alone or with notice of the passage
of time, result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a default under, the terms
of any agreement or other document or undertaking, oral or written to which
ADEX, Source and GRO is a party or by which any of their properties or assets
may be bound (except for such violations, conflicts, breaches or defaults as to
which required waivers or consents by other parties have been, or will, prior to
the execution of this Agreement, be, obtained); (ii) result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of ADEX, Source and GRO pursuant to the terms of any such Agreement or
instrument; (iii) violate any judgment, order, injunction, decree or award
against, or binding upon ADEX, Source and GRO or upon their properties or
assets; or (iv) violate any law or regulation of any jurisdiction relating to
ADEX, Source and GRO, their assets or properties, the violation of which would
have a material adverse effect on ADEX, Source and GRO.
5.7 Brokers. Neither SC, Adex, Source and GRO nor any of their respective
affiliates have engaged, consented to or authorized any broker, finder,
investment banker or other third party to act on its behalf, directly or
indirectly, as a broker or finder in connection with the transactions
contemplated by this Agreement.
5.8 Recognition. ADEX, Source and GRO hereby agree and covenant that they
will
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accept the Prepaid Purchase Order for the Media portion of any transaction
sought to be consummated by the Company hereunder. ADEX, Source and GRO shall
treat and accept the Prepaid Purchase Order in accordance with this Agreement
regardless of whether or not Proxhill is in existence when the Prepaid Purchase
Order is sought to be utilized by the company.
5.9 Pricing. ADEX, Source and GRO hereby specifically covenant and agree
that any Media Plan implemented for and on behalf of the Company hereunder will
equal or be less than the Cost Per Point and/or Cost Per Thousand criteria for
the targeted demographics of any given market as established by a Recognized
Industry Standard Source or, in the event where there is no industry standard or
Recognized Industry Source, published rates.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PROXHILL
Proxhill hereby makes the following representations and warranties to SC and the
Company:
6.1 Valid Corporate Existence; Qualification. Proxhill is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado. Proxhill has the corporate power to carry on its business as
now conducted and to own its assets. Proxhill is qualified to conduct business
in all foreign jurisdictions in which failure to qualify would have a material
adverse effect on Proxhill and its assets, properties or business, and there has
not been any claim by any jurisdiction to the effect that Proxhill is required
to qualify or otherwise be authorized to do business as a foreign corporation
therein.
6.2 Corporate Authority, Binding Nature of Agreement. Proxhill through its
President has the corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Proxhill and no other corporate proceedings on the
part of Proxhill are necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes the valid and binding obligations of Proxhill and is
enforceable in accordance with its terms.
6.3 Consents. No consents of governmental and other regulatory agencies,
foreign or domestic, or of other parties are required to be received by or on
the part of Proxhill to enable it to enter into and carry out this Agreement in
all material respects.
6.4 Permits and Licenses. Proxhill has, to the best of its knowledge, all
permits, licenses, orders and approvals of all federal, state, local and foreign
governmental or regulatory bodies required to carry on its business as presently
conducted; all such permits, licenses, orders, franchises and approvals are in
full force and effect, and to the knowledge of Proxhill, after reasonable
inquiry, no suspension or cancellation of any of such permits, licenses, etc. is
threatened;
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and to its knowledge Proxhill is in compliance in all material respects with all
requirements, standards and procedures of the federal state, local and foreign
procedures of the federal, state, local and foreign governmental bodies which
issued such permits, licenses, orders, franchises and approvals.
6.5 Binding Nature of Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly reviewed and approved by Proxhill and no other proceedings on the part of
Proxhill are necessary to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein.
6.6 Litigation; Compliance with Law. Proxhill hereby warrants that it is
not aware of any litigation, pending, that would prohibit it from entering into
this Agreement, issuing the Prepaid Purchase Order, or otherwise implementing
the terms and conditions of this Agreement.
6.7 No Breach. To the best of its knowledge, neither the execution and
delivery of this Agreement nor compliance by Proxhill with any of the provisions
hereof nor the consummation of the transactions contemplated hereby, will: (i)
violate or, alone or with notice or the passage of time, result in the material
breach or termination of, or otherwise give any contracting party the right to
terminate, or declare a default under, the terms of any Agreement or other
document or undertaking, oral or written to which Proxhill is a party or by
which any of its properties or assets may be bound (except for such violations,
conflicts, breaches or defaults as to which required waivers or consents by
other parties have been, or will, prior to the execution of this Agreement, be,
obtained); (ii) result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Proxhill pursuant to the
terms of any such Agreement or instrument; (iii) violate any judgment, order,
injunction, decree or award against, or binding upon Proxhill or upon its
properties or assets; or (iv) violate any law or regulation of any jurisdiction
relating to Proxhill, its assets or properties, the violation of which would
have a material adverse effect on Proxhill.
6.8 Brokers. Neither Proxhill nor any of its affiliates have engaged,
consented to or authorized any broker, finder, investment banker or other third
party to act on its behalf, directly or indirectly, as a broker or finder in
connection with the transactions contemplated by this Agreement.
6.9 Issuance of Credits. Proxhill has the full right and authority to
issue the Prepaid Purchase Order to the Company hereunder and the same when
issued, will be duly and validly issued.
6.10 Restricted Securities. Proxhill has been advised by counsel, and by
virtue of its execution of this Agreement, hereby accepts and acknowledges that
the Shares and Warrants will not be registered under the 33 Act; and that in
executing this Agreement and issuing the Shares and Warrants to Proxhill, the
Company will be relying upon an exemption from registration based upon the
investment representations of Proxhill. In this regard, Proxhill hereby
represents and warrants to and covenants with the Company that it will be
acquiring the Shares and Warrants for investment purposes and without a view
towards the distribution or resale thereof and any sale of the Shares and
Warrants will be accomplished only in accordance with the 33 Act or the rules
and regulations of the
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SEC adopted thereunder. Proxhill acknowledges that a standard form of stop
transfer order will be placed against the Shares and Warrants on the books and
records of the Company's transfer agent and that a legend reading substantially
as follows has been placed on all certificates representing the Shares and
Warrants:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"). They may not be
sold, assigned or transferred in the absence of an effective registration
statement, receipt of a "no action" letter from the SEC or an opinion of
counsel satisfactory to the Company that registration is not required
under the Act."
6.11 No Inducement. Proxhill has not relied upon or been induced by any
statements, representations or warranties (whether expressed, implied in fact or
implied by law) of any kind, nature or description, concerning the chances or
probability of the Shares and Warrants to either increase or decrease in value
made by the Company, its agents, servants or employees; and has entered into
this Agreement and is agreeing to accept the Shares and Warrants based solely
upon its independent findings and conclusions concerning the Company and its
financial condition and not upon any representation, statements or warrants of
the Company or any obligations to make any such representations.
ARTICLE VII
REGISTRATION RIGHTS PROVISIONS
7.1 Cooperation. IMSCO agrees to cooperate with Proxhill in any
registration and transfer of securities Proxhill requires and deems necessary or
advisable to transfer or liquidate for its own business purposes, including but
not limited to all S-3 registration rights as described in Article IV, Section
4.6.
7.2 Filing fees. Also pursuant to Article IV, Section 4.6, IMSCO shall pay
all applicable filing fees and will retain competent legal counsel to prepare
all registration and blue sky applications, documents and memorandums as
necessary for the securities being offered in jurisdictions as designated by
Proxhill, including without limitation, (i) all filing fees with the SEC; (ii)
fees and expenses of compliance with securities or blue sky laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Shares and Warrants); (iii) printing expenses; (iv) the fees and expenses
incurred in connection with the listing of the Shares and Warrants; (v) fees and
expenses of counsel (limited to one counsel for all selling shareholders whose
fee shall be limited to $15,000 for any one registration) and independent
certified public accountants for the Company (including the expenses of any
comfort letters), including costs associated with registrations requested by
Proxhill, and (vi) any registration statement that is requested by Proxhill that
must be executed by the Company on its own behalf or for Proxhill. The Company
agrees to provide full cooperation in a timely manner for any registration
statement for or by Proxhill.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival. The Parties agree that their respective representations,
warranties, covenants and agreements contained in this Agreement shall survive
and extend until the complete utilization of the Prepaid Purchase Order or the
termination of this Agreement, whichever is the later.
8.2 Indemnification. Each of the Parties agrees to save, defend and
indemnify the other Parties against and hold them harmless from any and all
liabilities, of every kind, nature and description, fixed or contingent
(including, without limitations, counsel fees and expenses in connection with
any action, claim or proceeding relating to such liabilities) arising out of any
transaction or event commencing or occurring on or prior to the date hereof
related to the Prepaid Purchase Order or by reason of any breach or failure of
observance or performance of any representation, warranty, covenant, agreement
or commitment made by each party hereunder or as a result of any such
representation, warranty, covenant, agreement or commitment being untrue or
incorrect in any respect.
8.3 Defense of Claims. A party entitled to indemnification hereunder (an
"Indemnified Party") agrees to notify each party required to indemnify hereunder
(an "Indemnifying Party") with reasonable promptness of any claim asserted
against it in respect to which any Indemnifying Party may be liable under this
Agreement, which notification shall be accompanied by a written statement
setting forth the basis of such claim and the manner of calculation thereof. An
Indemnifying Party shall have the right to defend any such claim at its own
expense and with counsel of its choice; provided, however, that such counsel
shall have been approved by the Indemnified Party prior to engagement, which
approval shall not be unreasonably withheld or delayed; and provided further,
that the Indemnified Party may participate in such defense, if it so chooses,
with its own counsel and at its own expense.
8.4 Rights Without Prejudice. The rights of the Parties under this Article
are without prejudice to any other right or remedies that it may have by reason
of this Agreement or as otherwise provided by law.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Expenses. Each of the Parties shall bear its own expenses in
connection herewith, including attorneys' and accountants fees, except for the
expenses other wise specified herein.
9.2 Assignment. This Agreement shall not be assigned without the prior
written consent of the Company, SC, and Proxhill.
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9.3 Non-Disclosure, Confidential Information. For a period of twenty-four
(24) months following the execution date of this Agreement, Proxhill and the
Company, their subsidiaries, representatives and agents hereby acknowledge and
agree that in the process of negotiating, entering into, and executing this and
any subsequent transaction(s), the Parties will be exposed to certain trade
secrets, and confidential knowledge which the Parties consider as their
confidential, proprietary, trade secret information, the confidentiality of
which is fundamental to the business operations of the respective Parties. Each
party to this Agreement acknowledges and agrees that such party and its
representatives will hold in a fiduciary capacity and in strict confidence all
information, knowledge, data and documents received from the other Parties and,
if the transactions herein contemplated shall not be consummated, each party
will continue to hold such information and documents in strict confidence and
will return to such other Parties all such documents (including the schedules
and exhibits attached to this Agreement) then in such receiving party's
possession without retaining copies thereof; provided, however, that each
party's obligations under this Article to maintain such confidentiality shall
not apply to any information or documents that are in the public domain at the
time furnished by the others or that become in the public domain thereafter
through any means other than as a result of any act of the receiving party or of
its agents, officers, directors or stockholders which constitutes a breach of
this Agreement, or that are required by applicable law to be disclosed. The
Parties agree that the remedy-at-law in any breach of the provisions of this
Article will be inadequate and/or difficult to calculate, and therefore in
addition to those remedies, each party will be entitled to injunctive relief to
compel the breaching party to perform or refrain from action required or
prohibited hereunder.
Each party also acknowledges and agrees that they shall not divulge to
others, nor allow any of its employees, representatives, confidants, associates,
or agents to divulge, by written, oral, electronic or by any other means
whatsoever, any trade secret or confidential knowledge, pertaining to the
business and affairs of the other party, obtained by a party as a result of its
engagement hereunder, unless authorized in writing, by the other party.
In the event either party breaches this portion of the Agreement, the
damages incurred will be difficult to calculate and determine in sufficiently
definite terms. Therefore, both Proxhill and the Company acknowledge and agree
that in the event of a breach, the non-breaching party will be entitled, in
addition to its equitable and other legal remedies, the sum of $1,000,000,
whichever is greater, as liquidated damages.
9.4 Publicity. The Parties agree that no publicity, releases or other
public announcement concerning the transactions contemplated by this Agreement
shall be issued by either party without the advance approval of both the form
and substance of the same by the other party and its counsel, which approval, in
the case of any publicity, release or other public announcement required by
applicable law, shall not be unreasonably withheld or delayed; provided this
Article shall not serve to prevent a delay of disclosure which, in the opinion
of counsel for the disclosing party is advisable under applicable state or
federal law.
9.5 Entire Agreement. This Agreement including all of the exhibits to be
attached hereto
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constitutes the entire Agreement of the Parties with respect to the subject
matter hereof. The representations, warranties, covenants and agreements set
forth in this Agreement and in any schedules or exhibits delivered pursuant
hereto constitute all the representations, warranties, covenants and agreements
of the Parties and upon which the Parties have relied and except as may be
specifically provided herein, no change, modification, amendment, addition or
termination of this Agreement or any part thereof shall be valid unless in
writing and signed by or on behalf of the party to be charged therewith.
9.6 Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by certified or registered mail, return receipt requested, and postage
prepaid, Federal Express, Express Mail, hand delivered or sent by telegraph or
telex with confirmation as follows:
If to SC, at:
18 West 100 22nd Street
Oakbrook Terrace, IL 60181
Office # (708) 953-0400
Fax # (708) 953-8101
Attn.: Keith Groenwald
If to the Company, at:
40 Bayfield Drive,
North Andover, MA 01845
Office # 508-689-2080
Fax # 508-689-2585
Attn.: Sol Berg
If to Proxhill, at its agent, First Capital Investments, Inc., at:
9250 East Costilla, Suite 650
Englewood, CO 80112
Office # (303) 792-0414
Fax # (303) 792-0533
Attn.: Gary J. Graham
or at such other address as any party may specify by notice given to other party
in accordance with this Article. The date of giving of any such notice shall be
the date of the actual receipt thereof.
9.7 Waiver. No waiver of the provisions hereof shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed a continuing waiver or waiver in respect of any subsequent
breach or default, either of similar or different nature, unless expressly so
stated in writing.
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9.8 Laws of the State of Colorado. This Agreement shall be deemed to have
been made and delivered in and governed by and interpreted under and construed
in all respects in accordance with the laws of the State of Colorado,
irrespective of the place of domicile or residence of any party. In the event of
controversy arising out of the interpretation, construction, performance or
breach of this Agreement, the Parties hereby agree and consent to the
jurisdiction and venue of the District Court of Arapahoe County, or the United
States District Court within the State of Colorado, and further agree and
consent that personal service of process in any such action or proceeding
outside of the State of Colorado and Arapahoe County shall be tantamount to
service in person within Arapahoe County Colorado, and shall confer personal
jurisdiction and venue upon either of said courts.
9.9 Injunctive Relief. Solely by virtue of their respective execution of
this Agreement and in consideration for the mutual covenants of each other, SC,
Proxhill and the Company hereby agree, consent and acknowledge that, in the
event of a material breach and/or violation or any of the other material terms,
conditions and restrictions imposed hereunder, the Parties will be without
adequate remedy-at-law and shall, therefore, be entitled to immediately redress
any material breach of this Agreement by temporary or permanent injunctive or
mandatory relief obtained in an action or proceeding instituted in the District
Court of the State of Colorado, or the United States District Court for the
District of Colorado without the necessity of proving damages and in addition
and without prejudice to any other remedies which they may have at law or in
equity. For the purposes of this Agreement, the Parties hereby agree and consent
that upon a material breach of this Agreement, any party may present a conformed
copy of this Agreement to the aforesaid courts and shall thereby be able to
obtain a permanent injunction enforcing this Agreement or barring, enjoining or
otherwise prohibiting the other from circumventing the express written intent of
the Parties as enumerated in this Agreement. The jurisdictional, venue and
service provisions of this Agreement shall be applicable hereto. Additionally,
in any action commenced to enforce the terms of this Agreement, the prevailing
party in any such action shall be entitled to recover its related costs and
reasonable attorneys fees associated with such action.
9.10 Headings. The headings or captions under articles of this Agreement
are for convenience and reference only and do not in any way modify, interpret
or construe the intent of the Parties or effect any of the provisions of this
Agreement.
9.11 Facsimile signatures / Counterparts. This Agreement may be executed
in counterparts by facsimile, each of which so executed shall be deemed an
original and constitute one and the same agreement.
(The remainder of this page intentionally left blank)
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written by the undersigned duly authorized person.
GRO ENTERPRISES:
By:____________________________________
By: Keith Groenwald, Secretary
SOURCE CORP.:
By:____________________________________
By: Keith Groenwald, President
ADEX CORP.:
By:____________________________________
By: Scott Thomas, Vice President
IMSCO TECHNOLOGIES, INC.:
By:____________________________________
By: Sol Berg, President
PROXHILL MARKETING, LTD:
By:____________________________________
By: Gary J. Graham, President
FIRST CAPITAL INVESTMENTS, INC.:
(With respect to Article II, Section 2.3)
By:____________________________________
Gary J. Graham, President
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