<PAGE>
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 (Date of earliest event reported): January 30, 1997
ROMTECH, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-27102 23-2694937
- ------------ ------- ----------
State or other juris- Commission IRS Employee
diction of incorporation File Number Identification No.
2000 Cabot Blvd. West, Suite 110, Langhorne, PA 19047-1833
- ----------------------------------------------- ----------
Address of principal executive offices zip code
(215) 750-6606
- --------------
Registrant's telephone number, including area code
<PAGE>
5. Other events
On January 30, 1997, RomTech, Inc. (the "Company") completed a private
offering to accredited investors of 1,271,340 shares of Class Two Convertible
Preferred Stock (the "Convertible Preferred Stock"), without par value, and
355,975 Common Stock Purchase Warrants (the "Warrants") to purchase 355,975
shares of the Company's Common Stock, without par value (the "Common Stock"),
for an aggregate purchase price of $1,271,340. The private offering is exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act") pursuant to Regulation D under the Act. Neither the Convertible
Preferred Stock nor the Warrants have been registered under the Act and may not
be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements of the Act and applicable state
securities laws.
The Convertible Preferred Stock is convertible at the option of the
holder beginning six months following the date of issuance into the number of
shares of Common Stock equal to the number of shares of Convertible Preferred
Stock surrendered for conversion divided by the conversion price, which will be
the lower of (i) $5.00 or (ii) ninety percent (90%) of the average of the
closing bid price of the Company's Common Stock on the Nasdaq SmallCap Market,
or the primary securities exchange on which the Common Stock is then quoted, for
the 10 business days immediately preceding the date on which the Securities and
Exchange Commission declares effective the registration statement filed by the
Company under Section 5 of the Securities Act of 1933, as amended, pursuant to
the Registration Rights Agreement between the Company and the purchasers of the
Convertible Preferred Stock.
Each Warrant entitles the holder to purchase one share of Common Stock
at any time during the period beginning six (6) months after the date of
issuance of the Warrant until five years after the date of issuance at a price
equal to the lesser of (i) $6.25 or (ii) the average of the closing bid price of
the Company's Common Stock on the Nasdaq SmallCap Market, or the primary
securities exchange on which the Common Stock is then quoted, plus $1.25, for
the 10 business days immediately preceding the date on which the Securities and
Exchange Commission declares effective the registration statement filed by the
Company under Section 5 of the Securities Act of 1933, as amended, pursuant to
the Registration Rights Agreement between the Company and the purchasers of the
Convertible Preferred Stock.
The holders of the Convertible Preferred Stock and the Warrants are
entitled to certain registration rights pursuant to a Registration Rights
Agreement, which provides that within 120 days after the date of issuance of the
Convertible Preferred Stock, the Company will file with the Commission a shelf
registration statement (the "Registration Statement") covering resales by
holders of the Common stock issuable upon conversion of the Convertible
Preferred Stock and upon exercise of the Warrants. The Company will use its best
efforts to cause the registration statement to become effective as promptly as
is practicable and to keep the registration statement effective for two (2)
years from the date of issuance of the Convertible Preferred Stock. The Company
will pay all expenses of the registration statement.
<PAGE>
2. Financial Statements and Exhibits.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Statements.
(i) Consolidated Unaudited Pro Forma Balance Sheet and Statement of
Operations.
(c) Exhibits.
*4.1 Certificate of Designation, Preferences, Powers, Rights and Number
of Shares of Class Two Convertible Preferred Stock (Exhibit 4.1)
*4.2 Form of Purchase Agreement dated as of November 15, 1996
(Exhibit 4.2)
*4.3 Form of Warrant Agreement dated as of November 15, 1996
(Exhibit 4.3)
*4.4 Form of Registration Rights Agreement dated as of November 15,
1996 (Exhibit 4.4)
*4.5 Form of Agreement dated as of November 15, 1996 (Exhibit 4.5)
4.6 Purchase Agreement dated January 30, 1997 between RomTech, Inc.
and Odyssey Capital Group, L.P.
4.7 Agreement dated January 30, 1997 between RomTech, Inc. and
Odyssey Capital Group, L.P.
4.8 Registration Rights Agreement dated January 30, 1997 between
RomTech, Inc. and Odyssey Capital Group, L.P.
- ------
*Incorporated by reference to RomTech, Inc.'s Form 8-K dated November 27, 1996.
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.
ROMTECH, INC.
Date: February 4, 1997 By: /s/ Gerald W. Klein
---------------------
Gerald W. Klein, Vice President and
Chief Financial Officer
<PAGE>
RomTech, Inc.
Consolidated Pro Forma Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
December 31, December 31,
1996 1996
Unadjusted Adjustments As Adjusted
----------------- ------------------ ------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 820,960 $ 28,000 a $ 848,960
Restricted cash 14,788 14,788
Short term investments - -
Accounts receivable, net of allowance $92,971 927,653 927,653
Inventory 337,307 337,307
Prepaid expenses 502,695 502,695
----------------- ------------------ ------------------
Total current assets 2,603,403 28,000 2,631,403
Furniture and equipment, net 194,006 194,006
Other assets 153,685 153,685
----------------- ------------------ ------------------
Total assets $ 2,951,094 $ 28,000 $ 2,979,094
================= ================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 338,192 $ (200,000)b $ 138,192
Accounts payable 773,643 773,643
Accrued expenses 504,086 504,086
----------------- ------------------ ------------------
Total current liabilities 1,615,921 (200,000) 1,415,921
Capital lease obligations net of current portion 60,226 60,226
Notes payable-long term portion 305,992 305,992
Convertible subordinated debt 150,000 150,000
----------------- ------------------ ------------------
Total liabilities 2,132,139 (200,000) 1,932,139
Stockholders' equity:
Convertible preferred stock 2,143,340 128,000 a,b 2,271,340
Common stock, no par value (40,000,000 shares authorized;
6,483,815 issued and outstanding) 4,217,517 99,344 b 4,316,861
Additional paid in capital 704,738 656 b 705,394
Accumulated deficit (6,246,640) (6,246,640)
----------------- ------------------ ------------------
Total stockholders' equity 818,955 228,000 1,046,955
----------------- ------------------ ------------------
Total liabilities and stockholders' equity $ 2,951,094 $ 28,000 $ 2,979,094
================= ================== ==================
See accompanying notes to consolidated pro forma financial statements.
</TABLE>
<PAGE>
RomTech, Inc.
Consolidated Pro Forma Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
1996 1995 1996 1995
---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net revenues $ 1,283,466 $ 675,108 $ 2,354,483 $ 1,304,232
Cost of revenues 365,039 226,550 682,496 433,067
---------------- ---------------- ---------------- -----------------
Gross profit 918,427 448,558 1,671,987 871,165
Operating expenses:
Product development 157,287 165,161 279,279 302,182
Selling, general and administrative 1,104,305 708,473 1,955,864 1,099,643
---------------- --------------- ---------------- -----------------
Total operating expenses 1,261,592 873,634 2,235,143 1,401,825
Operating (loss) (343,165) (425,076) (563,156) (530,660)
Interest income (expense), net (14,967) (15,880) (28,480) (78,889)
---------------- --------------- ---------------- -----------------
Loss before taxes (358,132) (440,956) (591,636) (609,549)
Provision for income tax - 3,952 - 800
---------------- --------------- ---------------- -----------------
Net loss $ (358,132) $ (444,908) $ (591,636) $ (610,349)
================ =============== ================ =================
Net loss per common share $ (0.06) $ (0.08) $ (0.09) $ (0.14)
Weighted average common
shares outstanding 6,285,128 5,670,609 6,285,128 4,265,024
See accompanying notes to consolidated pro forma financial statements.
</TABLE>
<PAGE>
RomTech, Inc.
Consolidated Pro Forma Balance Sheet Entries
at December 31, 1996
(Unaudited)
Description Dr. Cr.
------------- ---- ----
A Cash $28,000.00
Convertible preferred stock $28,000.00
To record the sale of Class Two
Convertible Preferred Stock.
B Notes payable $200,000.00
Convertible preferred stock $100,000.00
Common stock $99,344.00
Additional paid in capital $656.00
To record the conversion of $200,000
of notes payable to $100,000 of Class
Two Convertible Preferred Stock and
$100,000 to exercise warrants outstanding.
<PAGE>
Exhibit 4.6
===============================================================================
ROM TECH, INC.
Purchase Agreement
Dated January 30, 1997
==============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. Purchase and Sale of Stock and Warrants.........................................................1
1.1 Sale and Issuance of Class Two Convertible Preferred Stock....................1
1.2 Registration Rights Agreement.................................................1
1.3 Issuance of Warrants..........................................................1
1.4 Closing.......................................................................1
2. Representations and Warranties of the Company...................................................2
-
2.1 Organization and Standing.....................................................2
2.2 Capitalization................................................................2
2.3 Subsidiaries..................................................................2
2.4 Authorization.................................................................3
2.5 Validity of Stock.............................................................3
2.6 Offering Materials............................................................3
2.7 Changes.......................................................................3
2.8 Title to Property and Assets; Liabilities.....................................3
2.9 Governmental Consents.........................................................3
2.10 Compliance with Other Instruments.............................................4
2.11 Misleading Statements.........................................................4
2.12 Litigation....................................................................4
2.13 Patents; Trademarks...........................................................4
2.14 Taxes.........................................................................4
3. Representations and Warranties of the Investor..................................................5
4. Indemnity ......................................................................................7
5. Conditions to Investor's Obligations at Closing.................................................8
5.1 Representations and Warranties True on the Closing............................8
5.2 Performance...................................................................8
5.3 Other Agreements..............................................................8
5.4 Qualifications................................................................8
5.5 Proceedings and Documents.....................................................8
6. Conditions to the Company's Obligations at Closing..............................................8
6.1 Representations and Warranties True on the Closing............................8
6.2 Qualifications................................................................8
7. Negative Covenants..............................................................................9
8. Affirmative Covenants..........................................................................10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
9. Miscellaneous..................................................................................11
9.1 Entire Agreement.............................................................11
9.2 Governing Law................................................................11
9.3 Counterparts.................................................................11
9.4 Titles and Subtitles.........................................................11
9.5 Notices......................................................................11
9.6 Finders' Fees................................................................11
9.7 Expenses.....................................................................11
9.8 Amendments and Waivers.......................................................12
</TABLE>
<PAGE>
Exhibits
- --------
Exhibit 1.1 - Certificate of Designation
Exhibit 1.2 - Registration Rights Agreement
Exhibit 1.3(A) - Warrant Agreement
Exhibit 1.3(B) - Warrant Certificate
Exhibit 1.4 - Purchase Agreement and Exercise of Warrant Agreement
Exhibit 2.6 - Offering Materials
<PAGE>
ROM TECH, INC.
Purchase Agreement
This Stock Purchase Agreement is entered into as of the 30th day of
January, 1997, by and among ROM TECH, INC., a Pennsylvania corporation (the
"Company") and Odyssey Capital Group, L.P. (the "Investor").
In consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth in this Agreement, and intending to be
legally bound hereby, the parties to this Agreement mutually agree as follows:
1. Purchase and Sale of Stock and Warrants.
1.1 Sale and Issuance of Class Two Convertible Preferred
Stock.
(a) The Company has adopted and filed with the
Secretary of State of the Commonwealth of Pennsylvania the Certificate of
Designation attached to this Agreement as Exhibit "1.1" hereto (the "Certificate
of Designation").
(b) Subject to the terms and conditions of this
Agreement, the Investor agrees to purchase at the Closing (as hereinafter
defined), and the Company agrees to sell and issue to the Investor at the
Closing, 100,000 shares of the Company's Class Two Convertible Preferred Stock,
having the rights and preferences set forth in the Certificate of Designation
(the "Stock") for a price of one dollar ($1.00) per share.
1.2 Registration Rights Agreement. At Closing, the Company and
the Investor shall enter into a Registration Rights Agreement, substantially in
the form of Exhibit "1.2" hereto (the "Registration Rights Agreement").
1.3 Issuance of Warrants. At Closing, the Company shall enter
into a Warrant Agreement with the Investor and issue to the Investor a warrant
certificate for the purchase of Common Stock representing 28,000 warrants which
Warrant Agreement shall be substantially in the form of Exhibit "1.3(A)" hereto
(the Warrant Agreement") and warrant certificate shall be substantially in the
form of Exhibit "1.3(B)" hereto (the "Warrant").
1.4 Closing. The purchase and sale of the Stock and the
Warrants shall take place on January 30, 1997 (the "Closing"). At or promptly
after the Closing, the Company shall deliver to the Investor certificates
representing the shares of the Stock and the Warrants that the Investor is
purchasing in exchange for the application of a $100,000 principal payment owed
by the Company to the Investor in payment of the purchase price of such shares
and warrants pursuant to the Purchase Agreement and Exercise of Warrant
Agreement attached hereto as Exhibit "1.4."
1
<PAGE>
2. Representations and Warranties of the Company.
The Company represents and warrants to the Investor that:
2.1 Organization and Standing. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania, has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted, and is
duly qualified as a foreign corporation and is in good standing in all other
jurisdictions in which such qualification is required; provided, however, that
the Company need not be qualified in a jurisdiction in which its failure to
qualify would not have a material adverse effect on its operations or financial
condition.
2.2 Capitalization. The authorized capital of the Company
consists of:
(a) Preferred Stock: 10,000,000 shares of Preferred
Stock, of which 1,000,000 shares have been designated Class One Convertible
Preferred Stock and 1,500,000 have been designated Class Two Convertible
Preferred Stock. The 1,000,000 shares of Class One Convertible Preferred Stock
are validly issued and outstanding, fully paid, and nonassessable, and were
issued in compliance with all applicable federal and state securities laws. The
rights, privileges, and preferences of the Class One Convertible and Class Two
Convertible Preferred Stock will be as stated in the Company's Articles of
Incorporation, the Certificate of Designation with respect to the Class One
Convertible Preferred Stock and the Certificate of Designation with respect to
the Class Two Convertible Preferred Stock.
(b) Common Stock: 40,000,000 shares of Common Stock,
of which 6,234,043 shares are validly issued and outstanding, fully paid, and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
The Company has reserved 482,000 shares of Common Stock for
issuance pursuant to its 1994 Stock Option Plan and its Amended and Restated
1995 Employee Stock Option Plan; 580,000 shares for issuance pursuant to
outstanding warrants; 303,030 shares for issuance pursuant to conversion
privileges associated with the outstanding Class One Convertible Preferred Stock
; 300,000 shares for issuance pursuant to conversion privileges associated with
the Class Two Convertible Preferred Stock; 420,000 shares for issuance pursuant
to the Warrants issued herein; and 210,000 shares for issuance pursuant to
warrants issued to PJM Trading Company, Inc. There are no other options,
warrants, conversion privileges, preemptive rights, or other rights presently
outstanding to purchase any of the authorized but unissued stock of the Company.
2.3 Subsidiaries. Except for Virtual Reality Laboratories,
Inc., a Pennsylvania corporation which is a wholly-owned subsidiary of the
Company, the Company does not presently own or control, directly or indirectly,
any other corporation, association, joint venture, partnership, or other
business entity.
2
<PAGE>
2.4 Authorization. All corporate action on the part of the
Company and its officers, directors, and shareholders necessary for the
authorization, execution, delivery and performance of all obligations of the
Company under this Agreement, the Registration Rights Agreement and the Warrant
Agreements, and for the authorization, issuance, and delivery of the Stock and
the Warrants being sold under this Agreement and the Warrant Agreements and of
the Common Stock issuable upon conversion of the Stock and upon exercise of the
Warrants has been (or will be) taken prior to the Closing. This Agreement, the
Registration Rights Agreement and the Warrant Agreements, when executed and
delivered, shall constitute valid and legally binding obligations of the
Company.
2.5 Validity of Stock. The Stock, when issued, sold, and
delivered in accordance with the terms of the Agreement, shall be duly and
validly issued, fully paid, and nonassessable. The Common Stock issuable upon
conversion of the Stock and upon exercise of the Warrants has been (or, prior to
the Closing, will be) duly and validly reserved and, upon issuance in accordance
with the conversion provisions of the Stock and the exercise provisions of the
Warrants shall be duly and validly issued, fully paid, and non-assessable.
2.6 Offering Materials. The Company has furnished to the
Investor the Offering Materials attached hereto as Exhibit "2.6" (the "Offering
Materials").
2.7 Changes. To the best of the Company's knowledge, since the
date of the Offering Materials, there has not been any event or condition of any
type that has materially and adversely affected the Company's business,
prospects, condition, affairs, operations, properties, or assets.
2.8 Title to Property and Assets; Liabilities. Except (a) as
reflected in the Offering Materials, (b) for liens for current taxes not yet
delinquent, (c) for liens imposed by law and incurred in the ordinary course of
business for obligations not yet due, (d) for liens in respect of pledges or
deposits under workers' compensation laws or similar legislation, or (e) for
minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company owns its
property free and clear of all mortgages, liens, loans, and encumbrances.
2.9 Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with any federal or state governmental authority on the part of the
Company required in connection with the consummation of the transactions
contemplated by this Agreement shall have been obtained prior to, and be
effective as of, the Closing, except that any notices of sale required to be
filed with the Securities and Exchange Commission pursuant to Regulation D
promulgated under the Securities Act of 1933 or any state securities law
authority pursuant to applicable blue sky laws may be filed within the
applicable periods therefor.
3
<PAGE>
2.10 Compliance with Other Instruments. The Company is not in
violation of any provisions of its Articles of Incorporation or By-Laws as
amended and in effect on and as of the Closing, or, in any material respect, of
any provision of any material mortgage, indenture, agreement, instrument or
contract to which it is a party, or, to the best of its knowledge, of any
provision of any federal or state judgment, writ, decree, order, statute, rule,
or governmental regulation applicable to the Company. The execution, delivery,
and performance of this Agreement will not result in any such violation or be in
conflict with or constitute a default under any such provision.
2.11 Misleading Statements. No representation or warranty by
the Company in this Agreement or in the Offering Materials contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements made not misleading.
2.12 Litigation. There is no action, proceeding, or, to the
Company's knowledge, investigation pending or, to the Company's knowledge,
threatened against the Company or any of its employees before any court or
administrative agency (or any basis therefore known to the Company), that may
result, either individually or in the aggregate, in any material adverse change
in the business, prospects, condition, affairs, operations, properties, or
assets of the Company or in any material liability on the part of the Company.
2.13 Patents; Trademarks. The Company owns or possesses, has
access to, or can become licensed on reasonable terms under, all patents,
inventions, trademarks, trade names, copyrights, licenses, information,
proprietary rights, and processes necessary for the lawful conduct of its
business as now conducted and as proposed to be conducted, without any
infringement of or conflict with the rights of others. The Company has not
received any notice of infringement of or conflict with the asserted rights of
others.
2.14 Taxes. The Company has accurately prepared and timely
filed all United States income tax returns and all state and municipal tax
returns that are required to be filed by it and has paid or made provision for
the payment of all taxes that have become due pursuant to such returns. The
United States income tax returns of the Company have not been audited by the
Internal Revenue Service. No deficiency assessment or proposed adjustment of the
Company's United States income tax or state or municipal taxes is pending and
the Company has no knowledge of any proposed liability for any tax to be imposed
upon its properties or assets for which there is not an adequate reserve
reflected in the Financial Statements.
4
<PAGE>
2.15 Compliance with Laws. The Company has complied with all
of the registration, filing, reporting and record keeping requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") during the
period in which the Company has been subject to the requirements of the Exchange
Act, except where such non-compliance, individually or collectively, has not had
and will not have a material adverse affect on the Company. The Company has
complied in all material respects with all Legal Requirements (as hereinafter
defined), including without limitation, any Legal Requirements in connection
with the sale by the Company of the Stock and the Warrants, except where such
non-compliance, individually or collectively, has not had and will not have a
material adverse affect on the Company. "Legal Requirements" shall mean all
federal, state and local statutes, rules and regulations.
3. Representations and Warranties of the Investor.
By executing this Agreement, the Investor makes the following
representations and warranties to the Company, with the intent and understanding
that the Company will rely thereon:
3.1 THE INVESTOR ACKNOWLEDGES THAT THE STOCK AND WARRANTS
ISSUED HEREUNDER, AND ANY COMMON STOCK ACQUIRED UPON CONVERSION OF THE STOCK OR
EXERCISE OF THE WARRANTS, HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION ("SEC").
3.1 The Investor acknowledges that the Stock and the Warrants
are being issued hereunder in reliance on an exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended (the "Act").
The exemption under the Act depends, in part, on the investment experience and
qualifications of the prospective investors. The Stock and the Warrants will be
acquired for investment and not with a view to distribution or resale. The Stock
and the Warrants must, in fact, be held indefinitely unless the Stock, the
Warrants and any Common Stock issuable upon conversion of the Stock or exercise
of the Warrants is registered under the Act or any applicable state securities
laws or there is an applicable exemption from registration (in which case the
undersigned will be required to provide the Corporation with an opinion of
counsel that registration is not required).
3.2 The Investor is an Accredited Investor (as that term is
defined in Rule 501(a) promulgated under the Act.) The Investor has received and
carefully read the Offering Materials attached hereto as Exhibit "2.6".
3.3 The Investor has based the decision to purchase the Stock
and the Warrants on the information contained in this Agreement and the Offering
Materials and the Investor has not been furnished with any other offering
literature or prospectus.
3.4 The Investor acknowledges that a designated representative
of the Investor has read, understood and is familiar with the Risk Factors
contained in the Offering Materials, is
5
<PAGE>
familiar with the nature of risks attending investments of this type, and has
determined that the purchase of the Stock and the Warrants is consistent with
Investor's investment objectives.
3.5 The Investor acknowledges that it has been given the
opportunity to ask questions of, and receive answers from, representatives of
the Company regarding the business and current plans of the Company, and to
inspect such documents and obtain any additional information as the Investor has
required so as more fully to understand the nature of the investment and to
verify the accuracy of the information supplied to the Investor. The Investor
acknowledges that, except as set forth herein, no representations or warranties
have been made to the Investor, or to Investor's advisors or representatives, by
the Company or others with respect to the business of the Company and its
financial condition.
3.6 The Investor can bear the economic risks of this
investment and can afford the loss of its entire investment in the Stock and the
Warrants. The Investor has adequate means of providing for the Investor's
current needs and possible contingencies, and has no present or anticipated need
for liquidity of the Stock and/or Warrants to be issued hereunder. The purchase
of the Stock and the Warrants by the Investors is reasonable in relation to the
Investor's net worth and financial needs.
3.7 The Investor understands that the purchase price of the
Stock and the Warrants have been determined by the Company and not by an
independent accountant or auditor; and that no assurances have been given about
any increase in value, if any, of the Stock and/or Warrants.
3.8 The Investor has such knowledge and experience in
financial, tax and business matters that will enable it to evaluate the merits
and risks of the purchase of the Stock and the Warrants and make an informed
decision with respect thereto.
3.9 The Investor understands that the purchase of the Stock
and the Warrants has not been passed upon, nor have the merits of this exchange
been endorsed or approved by, any state or federal authorities.
3.10 The Investor recognizes that the Company has limited
financial or operating history and that the purchase of the Stock and the
Warrants involves significant risks.
3.11 The Investor recognizes that the certificates
representing the Stock, the Warrants and any Common Stock issuable upon
conversion of the Stock or exercise of the Warrants will bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, IN THE
ABSENCE OF SUCH REGISTRATION
6
<PAGE>
OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR, UNLESS, IN THE OPINION OF COUNSEL, IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, OR TRANSFER IS
EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND
SUCH LAWS.
The certificates for shares of the Stock, the
Warrants, and any Common Stock issued upon conversion of the Stock or upon
exercise of the Warrants shall also bear any legend required by any applicable
state securities law.
In addition, the Company shall make a notation
regarding the restrictions on transfer of the Stock (and any Common Stock issued
on conversion thereof) and the Warrants (and any Common Stock issued upon
exercise thereof) in its stockbooks, and shares of the Stock (and any Common
Stock issued on conversion thereof) shall be transferred on the books of the
Company only if transferred or sold pursuant to an effective registration
statement under the 1933 Act covering such shares or an exemption therefrom if
available.
3.12 The Investor understands that the Investor must bear the
economic risk of purchasing the Stock and the Warrants for an indefinite period.
The Investor has been advised and is aware that neither the Stock, the Warrants,
nor any Common Stock issuable upon conversion of the Stock or exercise of the
Warrants have been registered under the Act or the securities laws of any state
or other jurisdiction, and, therefore, cannot be sold -- AND THE INVESTOR AGREES
NOT TO SELL OR OTHERWISE DISPOSE OF ANY SUCH SECURITIES ACQUIRED BY THE INVESTOR
- -- unless such securities are subsequently registered under the Act and such
state securities laws as are applicable or unless there are available exemptions
from such registration that are supported by an opinion of counsel for the
Investor, which opinion is satisfactory to the Company.
3.13 The Investor understands the meaning and legal
consequences of the foregoing representations and warranties. The Investor
certifies that each of the representations and warranties set forth in this
Section 3 is true and correct as of the date hereof and shall survive such date.
4. Indemnity.
(a) The representations and warranties made by the Investor
herein shall survive the Closing Date. The Investor hereby agrees to indemnify
and hold harmless the Company from and against any and all loss, liability,
claim, damage and expense (including, without limitation, reasonable attorneys'
fees and disbursements) suffered or incurred as a result of a misrepresentation
or breach of any warranty made by the Investor in this Agreement or in any other
document furnished by the Investor in connection with this transaction.
(b) The representations and warranties made by the Company
herein shall survive the Closing Date. The Company hereby agrees to indemnify
and hold harmless the Investor from and
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against any and all loss, liability, claim, damage and expense (including,
without limitation, reasonable attorney's fees and disbursements) suffered or
incurred as a result of a misrepresentation or breach of warranty made by the
Company in this Agreement.
5. Conditions to Investor's Obligations at Closing.
The obligations of the Investor under Section 1.1 of this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions:
5.1 Representations and Warranties True on the Closing. The
representations and warranties of the Company contained in Section 2 shall be
true on and as of the Closing with the same force and effect as if they had been
made at the Closing.
5.2 Performance. The Company shall have performed and complied
with all agreements and conditions contained in this Agreement required to be
performed or complied with by it on or before the Closing.
5.3 Other Agreements. All agreements between the Company and
the Investor shall have been fully executed and delivered. Company shall have
executed and delivered the Registration Rights Agreement, the Warrant Agreement
and other instruments provided for herein, and such other documents, reasonably
satisfactory to Investor's counsel, as shall be necessary or appropriate to
effectuate the issuance of the Stock and the Warrants to the Investor.
5.4 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock and the Warrants pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing.
5.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be in form and
substance satisfactory to the Investor, and the Investor shall have received all
such counterpart originals or certified or other copies of such documents as the
Investor may reasonably request.
6. Conditions to the Company's Obligations at Closing.
The obligations of the Company to the Investor under Section
1.1 of this Agreement are subject to the fulfillment on or before the Closing of
each of the following conditions:
6.1 Representations and Warranties True on the Closing. The
representations and warranties of the Investor contained in Section 3 shall be
true on and as of the Closing with the same force and effect as if they had been
made at the Closing.
6.2 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in
8
<PAGE>
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of the
Closing.
7. Negative Covenants.
So long as not less than twenty-five percent (25%) of the
Stock is still outstanding, the Company shall not, without the prior written
consent of the holders of not less than sixty percent (60%) of the Stock then
outstanding, (which consent shall not be unreasonably conditioned, withheld or
delayed):
(a) Designate or issue any additional shares of preferred
stock, unless such preferred stock is junior to the Stock in all respects,
including without limitation as to preference or priority in liquidation,
dividends or otherwise;
(b) Incur directly or indirectly, or permit any Subsidiary to
incur directly or indirectly, any indebtedness except for indebtedness which is
subordinate to the liquidation, dividend and other preferences of the Stock and
except for trade payable financing incurred in the ordinary course of business;
(c) Create, incur or assume after the date hereof any lien
upon the Company's existing or future, tangible or intangible, real, personal or
mixed property, except:
(i) Pledges or deposits under workmen's compensation
laws, unemployment compensation laws or other similar laws;
(ii) Good faith deposits in connection with bids,
tenders, contracts (other than for the purpose of borrowing money or obtaining
credit) and leases to which the Company is a party, including rent security
deposits;
(iii) Deposits to secure public or statutory
obligations of the Company surety or appeal bonds to which the Company is a
party, payment of contested taxes of the Company, or payment of import duties of
the Company;
(iv) Any lien which is imposed by law, e.g., those of
carriers, materialmen, mechanics and warehousemen, if payment secured by that
lien is not yet due, or if the validity or the amount of payment is being
contested in good faith by appropriate proceedings for which adequate reserves
have been established;
(v) Any lien arising from a judgment or award against
the Company with regard to which the Company is prosecuting an appeal or
proceedings for review, and has obtained a stay of execution pending such appeal
or proceedings for review;
(vi) Any lien for taxes, assessments or other
governmental charges or levies not yet subject to penalties for nonpayment, or
the validity or amount of which is being contested by appropriate legal
proceedings, and with regard to which adequate reserves have been established;
and
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<PAGE>
(vii) Any lien imposed or arising in connection with
the Company's trade payables in the ordinary course of business;
(viii) Any lien that is junior to the Stock in all
respects, including without limitation as to preference or priority in
liquidation, dividends or otherwise; and
(ix) Any lien created for the sole purpose of
extending, renewing or refunding any lien permitted under subparagraphs (i)
through (viii), if such lien is limited to all or part of the same property
covered by the original lien, and if the amount of the debt secured by the lien
does not exceed the amount of debt secured by the lien at the time of extension,
renewal or refunding;
(d) Make any substantial change in the nature of the business
of the Company; or
(e) Become liable, directly or indirectly, in connection with
the obligations, stock or dividends of any person, firm, corporation or other
entity, whether by guarantee, endorsement, agreement to supply or advance funds,
agreement to maintain working capital or net worth, agreement to purchase or
repurchase goods or services whether or not such goods or services are actually
acquired, or otherwise (collectively, "Contingent Liabilities"), which
Contingent Liabilities exceed $300,000 in the aggregate, except that the Company
may endorse negotiable instruments for collection in the ordinary course of its
business and in connection with the acquisition of the capital stock or assets
of an unaffiliated entity in an arms'-length transaction ("Acquisition
Transactions"). Notwithstanding the foregoing, nothing contained herein shall
limit the Company's ability to become liable for indemnity obligations in
connection with Acquisition Transactions.
8. Affirmative Covenants. On and after the date of this Agreement and
so long as not less than twenty-five percent (25%) of the Stock is still
outstanding, the Company will observe the following covenants unless the holders
of not less than sixty percent (60%) of the Stock then outstanding shall
otherwise consent in writing (which consent shall not be unreasonably
conditioned, withheld or delayed):
(a) The Company will maintain its corporate existence, its
qualification to do business and its good standing in each jurisdiction in which
qualification is necessary for the proper conduct of its business;
(b) The Company will comply with all laws and regulations
applicable to it in the operation of its business;
(c) The Company will reserve and keep available that maximum
number of its authorized but unissued shares of Common Stock, which are issuable
upon conversion of the Stock and upon exercise of the Warrants outstanding from
time to time, and
(d) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Exchange Act, the Company, at its expense,
shall furnish to the Investor; (i) an annual report (including financial
statements audited by its independent public accountants); (ii) as soon as they
are available, a copy of all reports (financial or other) mailed to the
Company's security holders;
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<PAGE>
and (iii) as soon as they are available, a copy of all nonconfidential reports
and financial statements furnished to or filed with the Securities and Exchange
Commission.
9. Miscellaneous.
9.1 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein. The terms and conditions of this Agreement and such other
documents shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties, except to the extent
assignability is limited herein and therein.
9.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania.
9.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Postal Service, by
registered or certified mail, postage prepaid, addressed to the Company at 2000
Cabot Boulevard West, Suite 110, Langhorne, Pennsylvania 19047, and to the
Investor at the address set forth on the signature page of this Agreement or at
such other address as any party may designate by ten (10) days' advance written
notice to the other party.
9.6 Finders' Fees. Each party represents that it neither is,
nor will be, obligated for any finders' fee or commission in connection with
this transaction.
The Investor agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its partners, employees,
or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees, or
representatives is responsible.
9.7 Expenses. The Company shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery, and
performance of this Agreement, and the Investor shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery, and
performance of this Agreement.
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<PAGE>
9.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least sixty percent (60%) of the outstanding shares of the Stock (including, for
such purposes, on a proportional basis, any shares of Common Stock into which
any shares of the Stock have been converted that have not been sold to the
public). Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities have been converted), each future holder of all such securities, and
the Company.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ROM TECH, INC.
By:______________________________
Joseph A. Falsetti, Chief Executive Officer
INVESTOR:
ODYSSEY CAPITAL GROUP, L.P.
By: Odyssey Capital Group, Inc.,
Corporate General Partner
By:______________________________
John P. Kirwin, III
Title:_____________________________
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<PAGE>
Exhibit 4.7
AGREEMENT
This Agreement is entered into as of the 30th day of January, 1997, by
and among Rom Tech, Inc., a Pennsylvania corporation (the "Company") and Odyssey
Capital Group, L.P. (the "Investor").
WHEREAS, the Investor has agreed to purchase 100,000 shares of the
Company's Class Two Convertible Preferred Stock (the "Preferred Stock") and
warrants (the "Warrants") for the purchase of 28,000 shares of the Company's
common stock, without par value (the "Common Stock"), for a purchase price of
$100,000 pursuant to a Purchase Agreement of even date herewith by and among the
Company and the Investor (the "Purchase Agreement"); and
WHEREAS, the Company has agreed to certain amendments to the Warrants;
and
WHEREAS, the Company has also agreed to certain amendments to the
Registration Rights Agreement of even date herewith by and among the Company and
the Investor (the "Investor Registration Rights Agreement"); and
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and intending to be legally bound hereby, the parties to this
Agreement mutually agree as follows:
1. Amendments to Warrants.
The definition of "Purchase Price" as set forth in Section
1(g) of the Warrant Agreement for the issuance of the Warrants is hereby amended
and restated in its entirety as follows:
"Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8, the lower of (i) $6.25, or (ii) the Average
Quoted Price (as defined in Section 1(b)(vii) of the Certificate of
Designation), plus $1.25, for the 10 business days immediately preceding the
date on which the Securities and Exchange Commission declares effective the
registration statement filed by the Company under Section 5 of the Securities
Act of 1933, as amended, pursuant to that certain Registration Rights Agreement
of even date herewith by and among the Company and the purchasers of the Class
Two Convertible Preferred Stock, and further subject to the Company's right, in
its sole discretion, to decrease the Purchase Price for a period of not less
than 30 days on not less than 30 days' prior written notice to the Registered
Holder.
2. Amendment to Investor Registration Rights Agreement.
Paragraph 3(a) of the Investor Registration Rights Agreement
is hereby amended and restated in its entirety as follows:
<PAGE>
Within 120 days after the Effective Time, the Company shall
file with the SEC under the Securities Act, on Form S-3 or other appropriate or
necessary form, a registration statement under Section 5 of the Securities Act
(together with the documents incorporated by reference therein, the
"Registration Statement") for an offering to be made on a continuous or delayed
basis covering the Registrable Securities held by the Holder; provided, however,
that the Company may defer making such filing for a reasonable period after the
Effective Time (but not in excess of 90 days) if in the good faith judgment of
the Company's Board of Directors such filing would, at such time, (a) require
the disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential, (b) require the providing of information
required by the SEC that at such time the Company would be unable to provide, or
(c) adversely affect active negotiations or planning for a proposed or pending
merger or acquisition. In the event that the Company fails to file the
Registration Statement on or prior to the date that is 120 days after the
Effective Time (the "Registration Deadline"), the Company shall pay to the
Investor an amount equal to ten percent (10%) of the Stated Value (as
hereinafter defined) of the Preferred Stock for each 30-day period after the
Registration Deadline that the Company fails to file the Registration Statement
(the "Filing Penalty"); provided, however, that Company shall be required to pay
such Filing Penalty for no more than one year following the Registration
Deadline, and provided further that if the Company files the Registration
Statement prior to the end of any such 30-day period, the Company shall only be
required to pay a portion of such Filing Penalty based on the number of days
that have elapsed during each such 30-day period. The term "Stated Value" per
share of the Preferred Stock means five dollars ($5.00). All Filing Penalty
payments shall be due and payable at end of each such 30-day period following
the Registration Deadline.
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above.
ROM TECH, INC.
By: ________________________________
Name: _____________________________
Title:_____________________________
ODYSSEY CAPITAL GROUP, L.P.
By: Odyssey Capital Group, Inc.
Corporate General Partner
By:________________________________
John P. Kirwin, III
Title:_______________________________
<PAGE>
Exhibit 4.8
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of this 30th day of January, 1997, among ROM TECH, INC., a Pennsylvania
corporation with an address of 2000 Cabot Boulevard, Suite 110, Langhorne,
Pennsylvania 19047 (the "Company"), and Odyssey Capital Group, L.P. (the
"Investor").
W I T N E S S E T H:
WHEREAS, the Investor has agreed to purchase from the Company (i)
100,000 shares of Class Two Convertible Preferred Stock (the "Preferred Stock"),
which Preferred Stock is convertible into shares of Common Stock, without par
value, of the Company (the "Common Stock"), and (ii) 28,000 warrants (the
"Warrants") to purchase shares of the Common Stock; and
WHEREAS, the Company has agreed to enter into this Registration Rights
Agreement with the Investor as a condition to the purchase of the Preferred
Stock and the Warrants.
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound, the parties to this Agreement hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:
(a) "Holder" shall mean any person holding Registrable
Securities or any permitted assignee in accordance with Section 8 hereof.
(b) "Registrable Securities" shall mean (i) the shares of the
Common Stock acquired by the Investor upon conversion of the Preferred Stock and
upon exercise of the Warrants, and (ii) any Common Stock of the Company issued
as a dividend or other distribution with respect to, or in exchange for or in
replacement of, shares of the Common Stock described in clause (i) above.
2. Restricted Nature of the Common Stock. The Investor hereby
acknowledges that the Common Stock issuable upon conversion of the Preferred
Stock and upon exercise of the Warrants is subject to the following:
(a) The Investor may not, directly or indirectly, offer, sell,
transfer, assign or otherwise dispose of the Common Stock issuable upon
conversion of the Preferred Stock and upon exercise of the Warrants (or solicit
any offers to purchase or otherwise acquire or take a pledge of such Common
Stock), except pursuant to (i) an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder and (ii) an effective registration statement or
qualification under applicable "Blue Sky" state securities laws (the "Blue Sky
Laws"), or unless such Investor shall have delivered to the Company an opinion
of counsel,
<PAGE>
which opinion of counsel shall be satisfactory to the Company, to the effect
that no registration statement or qualification is required because of the
availability of exemptions from registration and/or qualification under the
Securities Act or Blue Sky Laws;
(b) The Investor understands that, although the Company will
use its best efforts to cause the Registration Statement (as defined in Section
3 below) to become effective in accordance with such provisions, (i) the offer
and sale of such Common Stock issuable upon conversion of the Preferred Stock or
upon exercise of the Warrants has not been registered under the Securities Act
or registered or qualified under any Blue Sky Laws as of the date hereof and
will not be registered or qualified under the Securities Act or any Blue Sky
Laws on the closing date of the purchase of the Preferred Stock and Warrants
(the "Effective Time"), (ii) each Investor must continue to bear the economic
risk of the investment in his or her shares of the Common Stock issuable upon
conversion of the Preferred Stock or upon exercise of the Warrants until the
offer and sale of such Common Stock is subsequently registered and/or qualified
under the Securities Act and any applicable Blue Sky Laws pursuant to this
Agreement or an exemption from such registration and/or qualification is
available, (iii) when and if such Common Stock issuable upon conversion of the
Preferred Stock or upon exercise of the Warrants may be disposed of without
registration in reliance upon Rule 144 under the Securities Act ("Rule 144"),
the offer and sale of such Common Stock may not qualify under Rule 144 since
dispositions under such Rule can be made only in limited amounts in accordance
with the terms and conditions of such Rule, (iv) if the exemption afforded by
Rule 144 is not available, public offer or sale of the Common Stock issuable
upon conversion of the Preferred Stock or upon exercise of the Warrants without
registration will require the availability of another exemption under the
Securities Act, (v) a restrictive legend in substantially the form hereinafter
set forth shall be placed upon such Common Stock, and (vi) a notation shall be
made in the appropriate records of the Company indicating that such Common Stock
is subject to restrictions on transfer and appropriate stop-transfer
instructions will be issued to the transfer agent of the Company with respect to
such Common Stock;
(c) If such Common Stock is disposed of in accordance with
Rule 144, such Investor shall deliver to the Company at or prior to the time of
such disposition an executed copy of Form 144 (if required by Rule 144) and such
other documentation as the Company may reasonably require in connection with
such disposition;
(d) The Investor has been furnished with a copy of the
Company's Offering Materials, dated November 13, 1996, to which is attached,
among other things, the Company's Form 10-KSB for the year ended June 30, 1996
and Form 10-QSB for the fiscal quarter ended September 30, 1996, each as filed
with the Securities and Exchange Commission (the "SEC"); and
(e) The Investor understands that such Common Stock shall bear
a legend in substantially the following form:
2
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR, UNLESS, IN THE OPINION OF COUNSEL , IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER,
SALE, OR OTHER TRANSFER IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS.
3. Registration.
(a) Within six months after the Effective Time, the Company
shall file with the SEC under the Securities Act, on Form S-3 or other
appropriate or necessary form, a registration statement under Section 5 of the
Securities Act (together with the documents incorporated by reference therein,
the "Registration Statement") for an offering to be made on a continuous or
delayed basis covering the Registrable Securities held by the Holder; provided,
however, that the Company may defer making such filing for a reasonable period
after the Effective Time (but not in excess of 90 days) if in the good faith
judgment of the Company's Board of Directors such filing would, at such time,
(a) require the disclosure of material information that the Company has a bona
fide business purpose for preserving as confidential, (b) require the providing
of information required by the SEC that at such time the Company would be unable
to provide, or (c) adversely affect active negotiations or planning for a
proposed or pending merger or acquisition.
(b) At such time as it shall file the Registration Statement,
the Company agrees to use its best efforts to register or qualify the
Registrable Securities covered by the Registration Statement under the Blue Sky
Laws of such jurisdictions, not to exceed ten in number, as shall be reasonably
requested by the Holder in writing to permit the Holder to sell or otherwise to
dispose of any and all Registrable Securities in such states, provided that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it shall not then be
qualified.
(c) The Company agrees to use its best efforts to cause the
Registration Statement and all such state filings to become effective and to
remain effective until the earlier of (A) the date when all Registrable
Securities covered by the Registration Statement have been sold or (B) two years
after the Effective Time if the Registration Statement is filed pursuant to Rule
415 of the Act (or any similar rule that may be adopted by the SEC).
(d) The Holder undertakes to provide all such information and
materials and take all such actions as may be required in order to permit the
Company to comply with all applicable requirements of the Securities Act and the
SEC, to obtain any desired acceleration of the effective
3
<PAGE>
date of such Registration Statement and to comply with all requirements of
applicable Blue Sky Laws or other administrative agency of any state of the
United States.
(e) The Company agrees to prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement effective during the period
referred to in Section 3(c) and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement, and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed with the SEC.
(f) The Company agrees to furnish to the selling Holder such
numbers of copies of the Registration Statement, each amendment thereto, the
prospectus included in such Registration Statement (including each preliminary
prospectus), each supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(g) The Company shall promptly notify each selling Holder of
such Registrable Securities at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading and, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading.
(h) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement that the selling
Holder shall furnish to the Company such information regarding them, the
Registrable Securities held by them and the intended method of disposition of
such Registrable Securities and execute such documents regarding the sale of the
Registrable Securities as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
(i) Each selling Holder of Registrable Securities agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 3(g) hereof, such Holder will discontinue disposition
of Registrable Securities until such Holder's receipt of copies of a
supplemented or amended prospectus contemplated by Section 3(g) or 5 hereof, as
the case may be, or until it is advised in writing (the "Advice") by the Company
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, such Holder will deliver to the
Company (at the expense of the Company) all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, or in the event of the suspension
of the Company's obligations as described in Section 5 hereof, the time periods
mentioned in Section 3(c) hereof shall be extended by the number of days during
the period from and including
4
<PAGE>
the date of the giving of such notice pursuant to Section 3(g) or 5 hereof, as
the case may be, to and including the date when each selling Holder of
Registrable Securities shall have received the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or 5 hereof, as the case may be,
or the Advice.
4. Expenses. The Company shall pay all expenses incurred by the Company
in connection with the preparation, filing and execution of the Registration
Statement referred to in Section 3; provided, however, that the Company shall
not be obligated to pay any underwriting or brokerage commissions, discounts or
fees relating to any sale of the Registrable Securities or the fees and expenses
of any counsel to the selling Holder.
5. Notice of Proposed Sale. If the Registrable Securities have been
registered pursuant to Rule 415, then if the Holder desires to sell or otherwise
transfer any of such Holder's Registrable Securities pursuant to the
Registration Statement, such Holder shall notify the Company of such Holder's
intention to do so by written notice received by the Company at least two (2)
business days prior to such sale or transfer. Such Holder may effect a sale or
transfer within 20 days after the delivery of such notice unless the Company
shall have provided notice to such Holder pursuant to Section 3(g).
6. Reports. From and after the Effective Time and for so long as
necessary in order to permit the undersigned Investor to sell the Common Stock
pursuant to Rule 144 under the Securities Act, to the extent applicable, the
Company will file on a timely basis all reports required to be filed by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange "Act"), referred to in paragraph (c) (1) of Rule 144 under the
Securities Act (or, if applicable, will use its best efforts to make publicly
available the information regarding itself referred to in paragraph (c) (2) of
Rule 144), in order to permit the undersigned Investor to sell, pursuant to the
applicable provisions of Rule 144, the Common Stock.
7. Eligibility for Form S-3. The Company represents and warrants that
as of the date hereof, the Company meets the conditions for use of Form S-3 for
the registration of the Registrable Securities to be offered for the account of
the Investor.
8. Transfer of Registration Rights. The rights to cause the Company to
use its best efforts to register the Registrable Securities hereunder may be
assigned by gift or inheritance to a relative of a Holder (or his/her spouse) or
to a trust established by a Holder or his/her spouse; provided, that the Company
shall be entitled to written notice within ten (10) days after any such
transfer.
9. Indemnification. In connection with any registration of securities
under this Agreement, the Company hereby agrees to indemnify the selling Holder
and each underwriter, if any, against all losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of a material
fact contained in any registration statement or prospectus (and as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus or caused by any omission, or alleged
omission, to state therein a material fact
5
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement or omission based
upon information furnished in writing to the Company by such selling Holder or,
as the case may be, any underwriter, expressly for use therein, and the Company,
each officer, director and controlling person of the Company and each
underwriter, if any, for the Company shall be indemnified by each selling Holder
for all such losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement or omission, or alleged omission, based upon
information furnished in writing to the Company or the underwriter by such
selling Holder for any such use.
Promptly upon receipt by a party indemnified under this
Section 9 of notice of the commencement of any action against such indemnified
party in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section, such indemnified party shall notify the
indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party otherwise than under this
Section 9. In the case that notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party shall
be obligated to participate in and, jointly with any other indemnifying party
similarly notified, shall assume the defense of such action at its own expense,
with counsel chosen by it and reasonably satisfactory to such indemnified party.
The indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be paid by the indemnified party unless the indemnifying
party either agrees to pay the same or fails to assume the defense of such
action with counsel reasonably satisfactory to the indemnified party. No
indemnifying party shall be liable for any settlement entered into without its
consent, such consent not to be unreasonably withheld.
10. Contribution. If the indemnification provided for in section 9 is
for any reason, other than pursuant to the terms thereof, held to be unavailable
to an indemnified party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the selling Holder from the registration of the Registrable
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the selling Holder in connection with the
statements or omission which resulted in such losses, claims, damages,
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the Company or
the selling Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the selling Holder agree that it would not be just and equitable
if contribution pursuant to this paragraph were determined by pro rata
allocation or by any other method of allocation which
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does not take account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this paragraph shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
11. Amendment of Registration Rights. This Agreement may be amended
only with the written consent of the Company and of the Holder of the
Registrable Securities.
12. Notices. Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by first class, registered
or certified mail, return receipt requested, postage prepaid, or transmitted by
hand delivery, overnight express, telegram, telex or facsimile addressed (a) if
to a Investor, at Investor's address set forth on Exhibit A, or at such other
address as Investor shall have furnished to the Company in writing, or (b) if to
the Company, one copy should be sent to its address set forth the cover page of
this Agreement and addressed to the attention of the Corporate Secretary, or at
such other address as the Company shall have furnished to the Holder. Each
notice, demand, request, or communication that shall be mailed, delivered or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation unless if mailed, in which case on the third
business day after the mailing thereof.
13. Captions and Headings. The captions and headings used herein are
for convenience and ease of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
14. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the matters set forth herein and
supersedes all prior agreements and understandings between the parties relating
to the subject matter hereof.
15. Governing Law. This Agreement is made pursuant to and shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania.
16. Severability. If any provision of this Agreement or any portion
thereof is finally determined to be unlawful or unenforceable, such provision or
portion thereof shall be deemed to be severed from this Agreement. Every other
provision, and any portion of such an invalidated provision that is not
invalidated by such a determination, shall remain in full force and effect.
17. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no
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restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
ROM TECH, INC.
By: ________________________________
Name: _____________________________
Title:_____________________________
ODYSSEY CAPITAL GROUP, L.P.
By: Odyssey Capital Group, Inc.,
Corporate General Partner
By:__________________________________
John P. Kirwin, III
Title:_________________________________
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