Exhibit 10(k)
AGREEMENT
THIS AGREEMENT (the "Agreement") effective as of June 18, 1997, by and
among Response USA, Inc., a Delaware corporation (the "Company") and each of the
undersigned holders (the "Holders") of the Company's 1996-Series A Convertible
Preferred Stock (the "Preferred Stock"). The Company and each of the Holders
are hereinafter collectively referred to as the "Parties."
BACKGROUND
The Company and each of the Holders have agreed in principle to the terms
set forth herein in connection with the amendment to the Certificate of
Designations, Preferences and Rights: 1996-Series A Convertible Preferred Stock
("Certificate of Designations"), which provides for the redemption of the
Preferred Stock, as well as certain other revisions to the terms of conversion
(the "Amendment"), as set forth in the Consent and Proxy Solicitation Statement
delivered simultaneously herewith in the form attached hereto as Exhibit A (the
"Solicitation Statement") and the forms of proxy and consent attached hereto as
Exhibits B and C, respectively.
To effectuate the Amendment, and in consideration of the premises hereof
and the agreements set forth below, the Parties hereto, intending to be legally
bound, hereby agree as follows:
1. ISSUANCE OF WARRANTS, FORBEARANCE OF CONVERSION AND OTHER
CONSIDERATION.
(a) Subject to the terms and conditions herein, the Company agrees to
issue and sell to each Holder, and each Holder agrees to purchase, as of the
date first set forth above, 5000 warrants, each warrant exercisable to purchase
one share of the Company's common stock, .008 par value per share (the "Common
Stock"), pursuant to the terms set forth in the form of warrant attached hereto
as Exhibit D (the "Warrants"), for each 100 shares of Preferred Stock held by
such Holder as of June 18, 1997 (except for Halifax Fund, L.P.).
(b) In consideration of the issuance of the Warrants, and subject to
the terms and conditions set forth herein, each Holder hereby agrees (a) to give
its proxy and its consent in favor of the Amendment in the forms of Exhibit B
and Exhibit C respectively, attached hereto, and (b) to refrain from any and all
conversions of such Holder's Preferred Stock, pursuant to the terms of the
Certificate of Designations, until the earlier of November 30, 1997 or upon the
occurrence of a First Conversion Date (as defined below) following the Company's
failure to perform any one of the certain obligations ("Company Obligation(s)")
on or before the dates ("Trigger Dates") set forth on Exhibit E to this
Agreement and incorporated by reference herein; provided however, that the
Company's failure to satisfy a Company Obligation on or before any Trigger Date
pursuant to the terms of Exhibit E shall not result in an activation of a
Holder's right to convert its Preferred Stock if on or before ten (10) days
following such Trigger Date ("Cure Period") the Company complies with the
Company Obligation. If the Company fails to comply with the Company Obligation
by the Trigger Date and during the Cure Period, the Holders' right to convert
its Preferred Stock shall be activated if and only if a majority of the Holders
as of such
Trigger Date have collectively provided the Company with written notice in
accordance with the notice provisions set forth in Section 10(b) herein,
describing the Company's noncompliance with the Company Obligation and the
activation of the Holders' conversion rights (the date such notice is received
by the Company is the "First Conversion Date"). Notwithstanding the foregoing,
in the event that the Company satisfies a Company Obligation after the Cure
Period but prior to the Holders giving notice as provided above, hereof, the
Company's failure to comply with a Company Obligation shall not result in a
First Conversion Date.
(c) In the event of a First Conversion Date, the Company shall
thereafter and until such time as the Amendment shall have been effected in
accordance with the requirements of the Delaware General Corporate Law, issue to
a Holder upon each conversion of Preferred Stock by such Holder (in addition to
the number of shares of Common Stock to which such Holder is entitled pursuant
to the Certificate of Designations (the "Conversion Shares")) such number of
additional shares of Common Stock (the "Trigger Date Shares") so that the sum of
the number of Trigger Date Shares plus the number of Conversion Shares issuable
with respect to such conversion equals the number of Conversion Shares which
would have been issuable upon conversion of such Preferred Stock had the
Amendment been effective for such conversion. The Company and each of the
Holders agree that the Trigger Date Shares shall constitute Registrable
Securities under that certain Registration Rights Agreement executed by the
Company and the Holders in connection with the initial issuance of the Preferred
Stock (the "Original Registration Rights Agreement").
2. DELIVERIES.
2.1 DELIVERIES BY THE COMPANY. The Company shall deliver to each
Holder or the Lead Legal Representative (as defined in Section 10(b) hereof) the
following documents within one (1) day of receipt by the Company of this
Agreement, fully and properly executed by all Holders (the "Closing"):
(a) a Registration Rights Agreement in the form attached as
Exhibit F executed by the Company;
(b) an Escrow Agreement in the form attached hereto as
Exhibit G executed by the Company and the escrow agent;
(c) such number of Warrants in the form attached hereto as
Exhibit D to which such Holder is entitled as provided herein,
executed by the Company; and
(d) an opinion of the Company's legal counsel, Xxxxxxx,
Xxxxxxx & Hashmall LLP, in the form of Exhibit H hereto.
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2.2 DELIVERIES BY THE HOLDERS AT CLOSING. Each Holder shall deliver
to the Company the following at Closing:
(a) a Registration Rights Agreement in the form attached
hereto as Exhibit F executed by each Holder; and
(b) an executed Escrow Agreement in the form attached
hereto as Exhibit G executed by each Holder.
2.3 SUBSEQUENT DELIVERIES BY HOLDERS. Within ten (10) days from
Closing, and after receipt of the Solicitation Statement, each Holder shall
deliver to the Company an executed proxy and consent (in the forms attached
hereto as Exhibits B and C, respectively,) in favor of the Amendment.
3. WARRANTS. Prior to the exercise of the Warrants by each Holder, such
Holder shall not be entitled to voting rights or other rights provided by law to
stockholders of the Company.
3.1 RESTRICTED SECURITIES. The Warrants and the shares of Common
Stock issuable upon exercise of the Warrants (the "Exercise Shares") constitute
"Restricted Securities," as that term is defined in Rule 144 under the
Securities Act of 1933, as amended (the "Act"), and accordingly, may not be
offered for sale or sold, or otherwise transferred in any transaction which
would constitute a sale thereof within the meaning of the Act, unless (i) such
security has been registered for sale under the Act and registered or qualified
under applicable state securities laws relating to the offer and sale of
securities, or (ii) exemptions from the registration requirements of the Act and
the registration or qualification requirements of all such state securities laws
are available and the Company shall have received an opinion from counsel
reasonably satisfactory to the Company, in form, scope and substance customary
for legal opinions covering such matters, that the proposed sale or other
disposition of such securities may be effected without registration under the
Act and would not result in any violation of any applicable state securities
laws relating to the registration or qualification of securities for sale, such
counsel and such opinion to be satisfactory to counsel to the Company; or
(iii) such security may be disposed of by the Holder thereof pursuant to Rule
144 of the Act.
3.2 REGISTRATION RIGHTS. Each Holder shall have certain registration
rights with regard to the Exercise Shares as set forth in the Registration
Rights Agreement by and among the Parties attached hereto and made a part hereof
as Exhibit F.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each of the Holders as follows:
4.1 ORGANIZATION AND STANDING OF THE COMPANY. The Company and each
of its subsidiaries is a duly organized and validly existing corporation in good
standing under the laws of the state of its incorporation with the power and
authority to conduct the business in which it is now engaged, and is in good
standing in and qualified to do business in such other states or jurisdictions
as is necessary to enable it to carry on its business, except where failure to
so qualify would not have a material adverse effect on the operations,
properties, financial condition
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or prospects of the Company or on the transactions contemplated hereby (a
"Material Adverse Effect").
4.2 CAPITALIZATION. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Preferred Stock and Warrants) exercisable
for, or convertible into or exchangeable for any shares of Common Stock and the
number of shares reserved for issuance upon conversion of the Preferred Stock
and exercise of the Warrants, is set forth on Schedule 4.2 and in the
Solicitation Statement. All of such outstanding shares of capital stock have
been, or upon issuance will be, validly issued, fully paid and nonassessable.
No shares of capital stock of the Company (including the Preferred Stock, the
Exercise Shares or the shares issuable upon conversion of the Preferred Stock)
are subject to preemptive rights or any other similar rights of the stockholders
of the Company or any liens or encumbrances. Except as disclosed in Schedule
4.2, the Solicitation Statement or as contemplated herein, as of the date of
this Agreement, (i) there are no outstanding options, warrants, script, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
and (ii) there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act (except the Registration Rights Agreement
and the Halifax Registration Rights Agreement). The Company has previously
furnished to each Purchaser true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws as in effect on the date hereof (the
"By-laws"), and all other instruments and agreements governing securities
convertible into or exercisable or exchangeable for Common Stock of the Company.
4.3 CORPORATE POWER AND AUTHORITY. Except as set forth in the
Solicitation Statement, the execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrant and the Escrow Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of the Company. No other corporate act or
proceeding on the part of the Company is necessary to authorize this Agreement,
the Registration Rights Agreement, the Warrants or the Escrow Agreement or the
consummation of the transactions contemplated hereby and thereby, and when duly
executed and delivered by the Parties hereto, this Agreement, the Registration
Rights Agreement, the Warrants and the Escrow Agreement will constitute valid
and legally binding obligations of the Company enforceable against it in
accordance with their terms.
4.4 WARRANTS. Each of the Warrants, when issued, sold and delivered
in accordance with the terms of this Agreement, will be duly and validly issued.
Subject to the authorization of additional shares of Common Stock, the Common
Stock issuable upon the exercise of the Warrants and pursuant to Section 1(c)
hereof has been duly and validly reserved
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and, upon issuance, in accordance with the exercise provisions of the Warrants
and payment of the exercise price, will be duly and validly issued, fully paid
and nonassessable and free from all taxes, liens, claims and encumbrances and
will not be subject to preemptive or other similar rights of stockholders of the
Company.
4.5 APPROVALS. Except as disclosed in the Solicitation Statement, no
authorization, approval or consent of any court, governmental body, regulatory
agency, or stock exchange or market is required for the execution and delivery
of this Agreement, the Registration Rights Agreement, the Warrants or the Escrow
Agreement or the transactions contemplated hereby or thereby (including, without
limitation), the issuance and exercise of the Warrants as contemplated by this
Agreement and the issuance of the Company's Common Stock as contemplated by
Section 1(c) hereof, other than the approval of the Common Stockholders to
authorize additional shares of Common Stock.
4.6 INFORMATION PROVIDED. The information provided by or on behalf
of the Company to the Holder does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
4.7 ABSENCE OF CERTAIN CHANGES. Since March 31, 1997, there has been
no material adverse change and no material adverse development in the business,
properties, operations, financial conditions, results of operations or prospects
of the Company or any of its subsidiaries, except as disclosed in the Company's
reports filed pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), filed prior to the date hereof.
4.8 ABSENCE OF LITIGATION. Except as disclosed in the Solicitation
Statement, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending, or to the knowledge of the
Company, threatened against or affecting the Company or any of its subsidiaries
wherein an adverse ruling finding or decision would have a Material Adverse
Effect on the Company or the transactions contemplated by this Agreement or any
of the documents contemplated hereby or which would adversely affect the
validity or enforceability of, or the authority of the Company to perform, its
obligations under this Agreement or under any of such other documents.
4.9 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Warrants, the Registration Rights Agreement and the Escrow
Agreement by the Company, the performance by the Company of its obligations
under the Certificate of Designation, and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance, as applicable, of the Preferred Shares,
Warrants, Exercise Shares or shares issuable upon the conversion of the
Preferred Stock) will not (i) result in a violation of the Certificate of
Incorporation or By-laws; or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or result in a violation of any law, rule, regulation, order,
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judgment or decree (including U.S. federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Except as
disclosed in the Solicitation Statement, neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation, By-laws or
other organizational documents and is not in default (and no event has occurred
which, with notice or lapse of time or both, would put the Company or any of its
subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for possible defaults
or rights as would not, individually or in the aggregate, have a Material
Adverse Effect. The business of the Company and its subsidiaries is not being
conducted, and shall not be conducted so long as a Holder owns any of the
Preferred Stock, in violation of any law, ordinance or regulation of any
regulation of any governmental entity, except for possible violations the
sanctions for which either singly or in the aggregate would not have an Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Registration Rights
Agreement, the Escrow Agreement or the Warrants, or to perform its obligations
under the Certificate of Designation, in each case in accordance with the terms
hereof or thereof. The Company is not in violation of the listing requirements
of the NASDAQ Small Cap Market ("NASDAQ") and does not reasonably anticipate
that the Common Stock will be delisted by NASDAQ for the foreseeable future.
4.10 COMPLIANCE WITH LAWS. The Company is not in violation of any law
where such violation would have a Material Adverse Effect on the Company.
4.11 REGISTRATION FORM. The Company is currently eligible to register
the resale of its Common Stock on Registration Form S-3 under the Securities Act
of 1933 (the "Act").
4.12 SEC DOCUMENTS, FINANCIAL STATEMENTS. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
of the foregoing filed prior to the date hereof, and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the
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SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents filed prior to the date
hereof, the Company has no liabilities contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to March
31, 1997 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such financial statements, which liabilities and
obligations referred to in clauses (i) and (ii), individually or in the
aggregate, are not material to the financial condition or operating results of
the Company.
4.13 HALIFAX SETTLEMENT. Halifax shall receive no more than 900,000
shares of Common Stock upon conversion of its Preferred Stock in accordance with
the terms of the Halifax Settlement provided in the agreement attached to the
Solicitation Statement as Exhibit A.
5. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. Each Holder represents
and warrants to the Company as follows:
5.1 The Holder is purchasing the Warrants for its own account for
investment only and not with a view toward the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof.
5.2 The Holder is (i) an accredited investor as that term is defined
in Rule 501 of the General Rules and Regulations under the Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement, and the related documents, (iii) able, by reason of the business
and financial experience of its officers and professional advisors (who are not
affiliated with or compensated in any way by the Company or any of its
affiliates or selling agents), to protect its own interests in connection with
the transactions described in this Agreement, and the related documents, and
(iv) able to afford the entire loss of its investment in the Warrants.
5.3 Each Holder understands that the Warrants are being offered and
issued to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Holder's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Holder set forth herein in order to determine the
availability of such exemptions and the eligibility of the Holder to acquire the
Warrants.
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5.4 Each Holder and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and issuance of the Warrants which have been
requested by the Holder. The Holder and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received what
it believes to be complete and satisfactory answers to any such inquiries.
Without limiting the generality of the foregoing, the Holder has had the
opportunity to obtain and to review the Company's (1) Annual Report on Form
10-KSB for the fiscal year ended June 30, 1996, as amended, (2) Quarterly
Reports on Forms 10-QSB for the fiscal quarters ended September 30, 1996,
December 31, 1996 and March 31, 1997, (3) Current Report on Form 8-K, dated
March 20, 1997, (4) the Solicitation Statement, (5) Registration Statement as
declared effective by the SEC on September 6, 1996, in each case as filed with
the SEC. The filings with the SEC described in items (1), (2), (3) and (5) are
hereinafter collectively referred to as the "SEC Filings."
5.5 The Holder understands that its investment in the Warrants and
the Preferred Stock involves a high degree of risk.
5.6 The Holder understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Warrants or the Preferred Stock.
5.7 This Agreement has been duly and validly authorized, executed and
delivered on behalf of each of the Holders and is the valid and binding
agreement of each Holder enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
6. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
6.1 By execution of this Agreement, each Holder hereby acknowledges
that he or she has received the Solicitation Statement, has had adequate time
and opportunity to consider the disclosure contained therein, and has reviewed
such Solicitation Statement with the Lead Legal Representative.
6.2 The Warrants, the Trigger Date Shares and the Exercise Shares,
have not been registered under the Act or any state securities laws and are
being issued and sold in reliance upon certain of the exemptions contained in
the Act.
6.3 The Warrants, the Trigger Date Shares and Exercise Shares are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Act.
6.4 The Warrants, the Trigger Date Shares and Exercise Shares cannot
be sold or transferred without registration under the Act and applicable state
securities laws, or unless the Company receives from counsel reasonably
satisfactory to the Company, an opinion in form, scope and substance customary
for opinions in such circumstances that such registration is not necessary, or
unless sold or transferred pursuant to Rule 144 under the Act.
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6.5 Each Holder understands and acknowledges that (i) except as
provided in the Registration Rights Agreement, neither the Warrants nor the
Exercise Shares have been, and neither the Warrants nor the Exercise Shares nor
the Trigger Date Shares are being, registered under the Act or any state
securities laws, and may not be transferred unless (a) subsequently registered
thereunder, or (b) Holder shall have delivered to the Company an opinion of
counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the Warrants
or Exercise Shares or Trigger Date Shares, as applicable, to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (c) sold pursuant to Rule 144 promulgated under the Act (or a
successor rule); (ii) any sale of such securities made in reliance on Rule 144
may be made only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any resale of such securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the Act) may require compliance
with some other exemption under the Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder (in
each case, other than pursuant to the Registration Rights Agreement).
6.6 Holder understands that the Warrants and, until such time as the
Exercise Shares and Trigger Date Shares have been registered under the Act and
presented for transfer as contemplated by the Registration Rights Agreement or
otherwise may be sold by Holder pursuant to Rule 144, the certificates for the
Exercise Shares and Trigger Date Shares may bear a restrictive legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN
OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF
COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed, and the Company shall issue a
certificate without such legend to the holder of any security upon which it is
stamped, if, unless otherwise required by state securities laws, (a) the
Security is registered for resale under the Act and is presented for transfer,
or (b) such holder provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may
be made without registration under the Act or (c) such holder provides the
Company with reasonable assurances that such security can be sold pursuant to
Rule 144.
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6.7 The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Preferred Stock as required by United States
laws and regulations, or by any domestic securities exchange or market, and to
provide a copy thereof to the Holder promptly after such filing.
6.8 The Company shall promptly secure the listing of the Trigger Date
Shares and Exercise Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing. The Company will
take all action necessary to continue the listing and trading of its Common
Stock on the NASDAQ, will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers ("NASD") and such exchanges, as applicable.
6.9 The Company shall file its Registration Statement on Form S-3 or
other appropriate form, with respect to the registration for resale of all of
the Exercise Shares and Trigger Date Shares, and at least 150% of the shares of
Common Stock issuable upon conversion of the Preferred Stock on or before the
close of business on August 21, 1997. Such Registration Statement shall
indicate the new terms of the Preferred Stock as contemplated by the Amended and
Restated Certificate of Designations and shall state that such Registration
Statement covers pursuant to Rule 416 under the Act such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion of the
Preferred Stock, exercise of Warrants and under this Agreement (i) to prevent
dilution resulting from stock splits, stock dividends or similar transactions or
(ii) by reason of changes in the conversion price of the Preferred Stock or
exercise price of the Warrants in accordance with the terms thereof. In the
event that the Company fails to file such Registration Statement by the close of
business on August 21, 1997, the Holder shall be entitled to exercise its
conversion rights as set forth in the Certificate of Designations.
6.10 Subject to the approval of the Company's stockholders at the
joint meeting of Common Stock holders and Holders scheduled for September 17,
1997, the Company shall at all times thereafter have authorized, and reserved
for issuance, a sufficient number of shares of Common Stock to provide for the
full exercise of the outstanding Warrants and the issuance of the Exercise
Shares in connection therewith, and the issuance of the Trigger Date Shares
hereunder. The Company shall not reduce the number of shares of Common Stock
reserved for issuance upon exercise of the Warrants without the consent of the
Holder, which consent shall not be unreasonable withheld.
6.11 The Company agrees that in the event that the Company settles or
reaches agreement with Halifax Fund L.P. ("Halifax") on terms substantively more
favorable than those attached as Exhibit A to the Solicitation Statement, and on
terms more favorable than those set forth herein and in the Amendment, such
Holder shall have the right to receive, in lieu of the rights set forth herein,
the substantively more favorable terms provided to Halifax. In the event a
Holder elects to receive such terms, such Holder agrees to return the Warrants
granted hereunder (or the Exercise Shares) to the Company. Notwithstanding the
foregoing, each Holder hereby
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acknowledges that the terms of the settlement executed, by and between the
Company and Halifax as attached to the Solicitation Statement as Exhibit A, are
not deemed, for purposes of this Section 6.11, to be substantively more
favorable than the terms provided to the Holders herein and in the Amendment.
6.12 The Company shall (i) on or before July 10, 1997, file with the
SEC a preliminary proxy statement for a meeting of its Common Stock holders
scheduled for September 17, 1997, soliciting the approval of the holders of its
Common Stock of the Amendment and an increase in the Company's authorized Common
Stock to at least 37,500,000 shares (collectively, the "Proposals") and
(ii) hold a meeting of its stockholders no later than September 17, 1997 and use
its reasonable best efforts to obtain at such meeting such approvals of the
Company's stockholders as may be required to approve the Proposals. The Company
shall comply with the filing and disclosure requirements of Section 14
promulgated under the Exchange Act in connection with the solicitation,
acquisition and disclosure of such stockholder approval. Upon approval of
either or both of the Proposals, the Company shall, as soon as practicable
thereafter (but in any event within two (2) business days), make such filings
(and provide copies thereof to each Holder or the Lead Legal Representative)
with the Secretary of State of Delaware or as may otherwise be required to
effect such Proposals. Upon the completion of such filings, the Company shall
cause Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP to deliver an opinion to the Holders
substantially in the form of Exhibit I attached hereto with respect to the
Amendment. In the event the Company's stockholders fail to approve the
Proposals, the Company shall continue to use its best efforts to increase the
Company's authorized shares of Common Stock to enable the Company to satisfy its
obligations hereunder and under the Stock Purchase Agreement dated as of July 1,
1996 and the Certificate of Designations.
7. RELEASES.
7.1 Effective upon Closing, each Holder, for himself and his heirs,
executors, administrators, representatives, successors and assigns or for itself
and its present and former affiliates, hereby releases, settles, cancels,
acquits and discharges the Company and its respective predecessor and successor
corporations, partnerships and affiliates, and its respective present and former
officers, directors, employees, employers, agents, partners, attorneys,
insurers, shareholders, subsidiary corporations, parent corporations,
partnerships and affiliated entities, and its present and former officers,
directors, employees, employers, agents, partners, attorneys, insurers,
shareholders, subsidiary corporations and parent corporations (collectively, the
"Company's Released Parties"), from any and all rights, actions, claims,
demands, costs, debts, accounts, contracts, covenants, agreements, promises,
losses, reimbursements, compensation, expenses (including without limitation
attorneys' fees), allegations, liabilities, obligations, trusts, damages and
causes of action, of any and every kind, nature or description whatsoever,
whether known, suspected, doubted, contingent, accrued, unaccrued or unknown,
whether in law or in equity (collectively "Claims"), which each such Holder had
or now has or may claim to have had or now have or asserts against the Company
by reason of any matter or thing whatsoever from the beginning of time up to and
including the date hereof including, but not limited to: (a) the Company's
alleged failure to honor the conversions of Preferred Stock prior to the date
hereof;
-11-
(b) the Company's alleged failure to have a sufficient number of shares of
Common Stock reserved for issuance upon conversion of the Preferred Stock as
required by the Certificate of Designations or the Stock Purchase Agreement
dated July 1, 1996 (the "Stock Purchase Agreement"); or (c) the Company's
alleged failure to register all of the Registrable Securities under the Original
Registration Rights Agreement as required thereunder; provided, however, that in
the event that the Company shall fail to redeem all of the Preferred Stock on or
before November 30, 1997 pursuant to the terms of the Amendment, this
Section 7.1 shall be void and of no further effect and each Holder shall have
all rights and remedies which it had prior to the execution of this release.
Nothing in this Section 7.1 shall release the Company or any of the Company's
Released Parties from any Claims a Holder may have under this Agreement or the
exhibits annexed hereto (including the Registration Rights Agreement, the
Warrants, the Escrow Agreement, the Amendment (upon filing with the Department
of State of Delaware) and the Consent and Proxy Solicitation Statement).
7.2 Effective upon Closing, the Company, for itself and its present
and former affiliates, successors and assigns, hereby releases, settles,
cancels, acquits and discharges each Holder, and his respective heirs,
executors, administrators, representatives, successors, assigns or its
respective predecessor and successor corporations, partnerships and affiliates,
and its respective present and former officers, directors, employees, employers,
agents, partners, attorneys, insurers, shareholders, subsidiary corporations,
parent corporations, partnerships and affiliated entities, and its present and
former officers, directors, employees, employers, agents, partners, attorneys,
insurers, shareholders, subsidiary corporations and parent corporations
(collectively, the "Holder's Released Parties"), from any and all Claims, which
the Company had or now has or may claim to have had or now have or asserts
against any such Holder by reason of any matter or thing whatsoever from the
beginning of time up to and including the date hereof including, but not limited
to: (a) the Company's alleged failure to honor the conversions of Preferred
Stock prior to the date hereof; (b) the Company's alleged failure to have a
sufficient number of shares of Common Stock reserved for issuance upon
conversion of the Preferred Stock as required by the Certificate of Designations
or the Stock Purchase Agreement dated July 1, 1996 (the "Stock Purchase
Agreement"); or (c) the Company's alleged failure to register all of the
Registrable Securities under the Original Registration Rights Agreement as
required thereunder; provided, however, that in the event that the Company shall
fail to redeem all of the Preferred Stock on or before November 30, 1997
pursuant to the terms of the Amendment, this Section 7.2 shall be void and of no
further effect and the Company shall have all rights and remedies which it had
prior to the execution of this release. Nothing in this Section 7.2 shall
release any Holder or any of the Holder's Released Parties from any Claims which
the Company may have under this Agreement or the exhibits annexed hereto
(including the Registration Rights Agreement, the Warrants, the Escrow
Agreement, the Amendment (upon filing with the Department of State of Delaware)
and the Consent and Proxy Solicitation Statement).
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
8.1 Each Holder understands and acknowledges that the Company's
obligation to issue the Warrants to the Holder pursuant to this Agreement is
conditioned upon:
(a) The receipt by the Company of the consent and proxy,
executed by the Holder of even date herewith.
(b) The accuracy on the date hereof of the representations
and warranties of the Holder contained in this Agreement.
(c) The absence of any law, rule or regulation, prohibiting
or restricting the transactions contemplated hereby, or requiring
the consent or approval which shall not have been obtained.
-12-
9. LEAD LEGAL REPRESENTATIVE AND LEGAL FEES. Each Holder hereby
acknowledges and authorizes Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx ("Xxxxx
Xxxxxxxx") as the lead legal representative in connection with the negotiation,
preparation, review, delivery and performance of this Agreement and the other
agreements to be executed in connection herewith (including the Registration
Rights Agreement, Warrants and Escrow Agreement) and all exhibits hereto (the
"Lead Legal Representative"). The Company shall be responsible for the legal
fees incurred by Xxxxx Xxxxxxxx in its role as the Lead Legal Representative, as
described herein and those legal fees payable to the Lead Legal Representative
hereunder shall be paid by the Company up to $10,000 within 10 days and the
remainder within 30 days after the Company's receipt of each itemized xxxx for
services rendered by the Lead Legal Representative and only for the services
described herein in its role as the Lead Legal Representative.
10. NOTICES.
(a) All notices, requests, consents or other communications required
or permitted hereunder shall be in writing and shall be hand delivered or mailed
first class postage prepaid, registered or certified mail, to the following
addresses:
If to the Company:
RESPONSE USA, INC.
00-X Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, President
With a copy to:
XxXxxxx Xxxxx, Esquire
Xxxxxxxx Ingersoll, P.C.
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
and an additional copy to:
Xxxxxx X. Xxxx, Esquire
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
-13-
If to a Holder:
To each Holder at the address and facsimile number set forth in
Exhibit J attached hereto and incorporated by reference herein.
With a copy to:
Xxxx Xxxxxxxxxx, Esquire
Klehr, Harrison, Harvey, Branzburg, & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Such notices and other communications shall for all purposes of this
Agreement (except for the notice provisions set forth in Section 1(b) hereof) be
treated as being effective upon being delivered personally or, if sent by mail,
five days after it has been deposited in a regularly maintained receptacle for
the deposit of United States Mail, addressed as set forth above, and postage
prepaid, registered or certified to the address set forth above.
(b) Notice of a First Conversion Date as set forth in Section 1(b)
shall be effective only upon receipt by the Company as provided in Section 1(b)
and shall be delivered to the Company at the address for the Company and its
representatives as set forth in Section 10(a).
11. PARTIES IN INTEREST. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto, provided that
this Agreement and the interests herein may not be assigned by either party
without the express written consent of the other party.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
in and to be performed in the State of Delaware, without regard to that State's
conflict of laws provisions. The Parties irrevocably consent to the
jurisdiction of the United States federal courts located in Delaware in any suit
or proceeding based on or arising under this Agreement and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in such
courts. The Parties irrevocably waive the defense of an inconvenient forum to
the maintenance of such suit or proceeding. The Parties further agree that
service of process upon the Parties mailed by first class mail shall be deemed
in every respect effective service of process upon the Parties in any suit or
proceeding based on or arising under this Agreement. The Parties agree that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
13. SECTIONS AND OTHER HEADINGS. The section and other headings contained
in this Agreement are for the convenience of reference only, do not constitute
part of this Agreement or otherwise affect any of the provisions hereof.
-14-
14. COUNTERPART SIGNATURES. This Agreement may be signed in counterpart
and all counterparts together shall become effective only when the
counterpart(s) have been executed and delivered by and on behalf of the Company
and each of the Holders.
15. NON ASSIGNABILITY. This Agreement is not assignable by either of the
Parties hereto.
16. ENTIRE AGREEMENT. This Agreement, the Registration Rights Agreement,
the Warrants and the Escrow Agreement represent the entire agreement between the
Parties with respect to the subject matter hereof and supersede all prior
arrangements or understandings with respect thereto. For the avoidance of
doubt, the Stock Purchase Agreement and the Original Registration Rights
Agreement constitute separate and distinct agreements and, except as expressly
provided in Section 7 hereof, all agreements and representations contained
therein shall survive the execution of this Agreement.
17. SURVIVAL. The representations and warranties of the Company and the
agreements and covenants set forth herein shall survive the closings hereunder
for a period of three (3) years from Closing notwithstanding any due diligence
investigation conducted by or on behalf of any of the Holders. Moreover, none
of the representations and warranties made by the Company herein shall act as a
waiver of any rights or remedies a Holder may have under applicable federal or
state securities laws.
18. FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(INTENTIONALLY LEFT BLANK)
-15-
IN WITNESS WHEREOF, intending to be legally bound, the parties hereto
have caused this Agreement to be signed by their duly authorized officers.
RESPONSE USA, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxx
President
HOLDERS:
A. J. Gesundheit
By: ___________________________________
Title: ___________________________________
Deer Park Partners, L.P.
By: ___________________________________
Title: ___________________________________
Xxxxxxxx, LP
By: ___________________________________
Title: ___________________________________
Raphael, LP
By: ___________________________________
Title: ___________________________________
AG Superfund International Partners
By: ___________________________________
Title: ___________________________________
-16-
GAM Arbitrage Investments Inc.
By: ___________________________________
Title: ___________________________________
Capital Ventures International
By: ___________________________________
Title: ___________________________________
The OTATO Limited Partnership
By: ___________________________________
Title: ___________________________________
Zanett Lombardier
By: ___________________________________
Title: ___________________________________
UC Financial Ltd.
By: ___________________________________
Title: ___________________________________
Lake Management
By: ___________________________________
Title: ___________________________________
KA Investments
By: ___________________________________
Title: ___________________________________
-17-
Xxxxxxx X. Xxxxxx
By: ___________________________________
Title: ___________________________________
Wood Gundy London Ltd.
By: ___________________________________
Title: ___________________________________
Ailouros Ltd.
By: ___________________________________
Title: ___________________________________
Darissco Diversified Investments
By: ___________________________________
Title: ___________________________________
-18-
EXHIBIT INDEX
Description Exhibit
----------- -------
Consent and Proxy Solicitation Statement A
Form of Proxy B
Form of Consent C
Warrant D
Trigger Dates E
Registration Rights Agreement F
Escrow Agreement G
Opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx (Section 2(d)) H
Form of Opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx (Issued I
upon filing of the Amendment)
Addresses of Holders J
EXHIBIT E
TRIGGER DATES
Company Obligation Trigger Date
---------------------------------------- ---------------------------------------
Filing with the Securities Exchange July 10, 1997
Commission ("SEC") of a preliminary
proxy statement for the Company's
joint meeting of the Common Stock
Shareholders and the Holders scheduled
for September 17, 1997 (the
"Stockholders' Meeting").
Mailing of definitive proxy statement August 4, 1997, notwithstanding the
to the Company's stockholders for the Company Obligation, in the event that
Stockholders' Meeting. the SEC determines to review the
preliminary proxy materials, the
August 4, 1997 date shall be
automatically extended after August 4,
1997 by that number of days during
which the SEC conducts its review and
until the SEC gives no further comment
to the Company ("Review Period") plus
five (5) days following the conclusion
of such Review Period, if the Company
is proceeding in good faith to respond
to the SEC during such Review Period.
The Company shall file a registration August 21, 1997
statement on Form S-3 or other
appropriate form, with respect to the
registration for resale of all of the
Exercise Shares, the Trigger Date
Shares and the shares issuable upon
conversion of the Preferred Stock.
Filing of the Amendment and an September 18, 1997, notwithstanding the
amendment to the Company's Company Obligation, in the event that
Certificate of Incorporation to the SEC determines to review the
increase the Company's authorized definitive proxy statement, the
Common Stock to at least 37,500,000 September 18, 1997 date shall be
shares. automatically extended by that number of
days after September 18, 1997 as shall
constitute the Review Period plus five
(5) days following the conclusion of
such Review Period, if the Company is
proceeding in good faith to respond to
the SEC during such Review Period.
Filing by the Company of a October 1, 1997
registration statement with the SEC
for the primary issuance by the
Company of securities to generate
approximately $ 8,750,000 of net
proceeds for use by the Company to
redeem all of the Preferred Stock
("the Registration Statement").
In the event that the Company Such applicable date.
abandons or withdraws the
Registration Statement prior to the
Registration Statement being declared
effective for use by the Company on
November 30, 1997.
EXHIBIT J
ADDRESSES OF HOLDERS
A. J. Gesundheit Deere Park Partners, LP
c/o Xx. Xxxxxx Xxxx c/o Xx. Xxxx Xxxxxxx
Bear Xxxxxxx Deere Park Equities
000 Xxxx Xxxxxx 000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Xxxxxxxx, LP; Raphael, LP; AG Lake Management; KA Investments
Superfund International c/o Xx. Xxx Xxxx
Partners; GAM Arbitrage Xxxxxxx Xxxxx Group
Investments, Inc. 000 Xxxx Xxxxxx
c/o Xx. Xxxx X. Xxxx Xxxxxxx, XX 00000
Xxxxxx, Xxxxxx & Co. Facsimile: (000) 000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Capital Ventures International Xxxxxxx X. Xxxxxx
c/o Xx. Xxxxxxx Xxxxxx c/o Carlyle International
Heights Capital Management 00xx Xxxxx
000 Xxxxxxxxxx Xxxxxx 000 Xxxxx Xxxxxx
Xxxxx 0000 Xxx Xxxx, XX 00000
Xxx Xxxxxxxxx, XX 00000 Facsimile:(000) 000-0000
Facsimile: (000) 000-0000
The OTATO Limited Partnership Wood Gundy London Ltd.
c/o Xx. Xxxx Xxxxxxx c/o Mr. Xxxxx Xxxxx
OTA Limited Partnership CIBC Wood Gundy PLC
0 Xxxxxxxxxxxxxx Xxxxxxx Xxxx, Xxxxxx Centre
Purchase, NY 10577 Xxxxxx, XXXXXXX XX00XX
Facsimile: (000) 000-0000 Facsimile: 011-44-171-234-7220
Zanett Lombardier Ailouros Ltd.
c/o Xx. Xxxxxxx X. Xxxxxxxx c/o Mr. Xxxxxxx Xxxx
Zanett Capital, Inc. c/o Isis,
000 Xxxxx Xxxxxx, 00xx Xxxxx 000 X. Xxxxxx Xxxx
Xxx Xxxx, XX 00000 Xxxxxx, XXXXXXX XX0 0XX
Facsimile: (000) 000-0000 Facsimile: 011-44-171-581-4851
UC Financial Ltd. Darissco Diversified Investments
c/o Xx. Xxxxxxx Xxxxx c/o Xx. Xxxxx Xxxxxxxxxx
Xxxxx & Xxxxxxxx Place du Canada
000 Xxxx 00xx Xxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000 Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
AMENDMENT TO AGREEMENT
dated as of June 18, 1997
by and among Response USA, Inc. and
each of the Holders of the 1996-Series A Convertible Preferred Stock
The undersigned ("Undersigned") parties hereto each hereby agree as of
November 30, 1997 (1) to amend that certain agreement, dated as of June 18, 1997
(the "Agreement") by and among Response USA, Inc., a Delaware corporation (the
"Company") and each of the holders (the "Holders") of the Company's 1996-Series
A Convertible Preferred Stock (the "Preferred Stock"), and (2) to amend the
Amended and Restated Certificate of Designations, Preferences and Rights,
1996-Series A Convertible Preferred Stock (the "Certificate of Designations")
(Exhibit C to the Proxy and Consent Solicitation Statement dated July 8, 1997
(the "Solicitation Statement," attached as Exhibit A to the Agreement), as
follows:
I. THE AGREEMENT
A. SECTION 1(A) - WARRANTS
1. Section 1(a) of the Agreement is hereby amended to replace the
defined term "Warrants" with the defined term "June Warrants."
2. Section 1(a) of the Agreement is hereby amended to add the
following paragraph 1(a)(i):
"1(a)(i). Subject to the terms and conditions herein, the
Company agrees to issue and sell to each Holder, and each Holder
agrees to purchase, as of the date first set forth above, an
additional 7500 warrants, each warrant exercisable to purchase one
share of Common Stock pursuant to the terms set forth in the form of
warrant attached hereto as Exhibit D-1 (the "November Warrants" and,
together with the June Warrants, the "Warrants"), for each 100 shares
of Preferred Stock held by such Holder as of November 18, 1997."
B. SECTION 1(B) - FORBEARANCE FROM CONVERSION AND TRIGGER DATES
1. Section 1(b) of the Agreement is hereby amended and restated in
its entirety as follows:
"1(b)(i). In consideration of the issuance of the Warrants, and
subject to the terms and conditions set forth herein, each Holder
hereby agrees (a) to give its proxy and its consent in favor of the
Amendment in the forms of Exhibit B-1 and Exhibit C-1 respectively,
attached hereto, and (b) to refrain from any and all conversions of
such Holder's Preferred Stock, pursuant to the terms of the
Certificate of Designations, until the earlier of the Redemption Date
(as
hereinafter defined) or upon the occurrence of a First Conversion
Date (as defined below) following the Company's failure to perform any
one of the certain obligations ("Company Obligations(s)") on or before
the dates ("Trigger Dates") set forth on Exhibit E-1 to this Agreement
and incorporated by reference herein; provided however, if the
Company fails to comply with the Company Obligation by the Trigger
Date, the Holders' right to convert its Preferred Stock shall be
activated if and only if a majority in interest of the Holders as of
such Trigger Date have collectively provided the Company with written
notice in accordance with the notice provisions set forth in
Section 10(b) herein, describing the Company's noncompliance with the
Company Obligation and the activation of the Holders' conversion
rights (the date such notice is received by the Company is the "First
Conversion Date"). Notwithstanding the foregoing, in the event that
the Company satisfies a Company Obligation after the Trigger Date but
prior to the Holders giving notice as provided above, the Company's
failure to comply with a Company Obligation shall not result in a
First Conversion Date.
2. Section (1)(b) of the Agreement is hereby amended to add the
following paragraph 1(b))(ii):
1(b)(ii). (x) The Company shall repurchase that number of
shares of the Preferred Stock that is equivalent to an aggregate of
20% of the Preferred Stock outstanding as of December 15, 1997, fifty
percent (50%) of such amount to be repurchased and paid for (an
aggregate of ten percent (10%) of the outstanding on December 15,
1997) on each of December 15, 1997 (the "December Repurchase") and
January 15, 1998 (the "January Repurchase," together with the December
Repurchase, the "Repurchases"), from all Holders on a pro rata basis
based on the number of shares of Preferred Stock held by each Holder
compared to the number of shares held by all Holders as of
December 15, 1997, for a per share purchase price of One Thousand
Three Hundred and Fifty Dollars ($1,350) and an aggregate purchase
price of One Million, Five Hundred Ninety Thousand, Three Hundred
Dollars ($1,590,300 ) (the "Purchase Price"). In any event, the
Company shall repurchase 589 shares of Preferred Stock in each of the
December Repurchase and the January Repurchase. The Company shall use
its best efforts to obtain third-party financing to be privately
arranged by the Company for the purpose of funding the Repurchases.
In the event the Company fails to conduct any of the Repurchases
(including because of the Company's failure to obtain third party
financing), such failure shall constitute a First Conversion Date.
(y) On February 2, 1998, the outstanding Preferred Stock as of
such date shall be redeemed in its entirety pursuant to the terms of
the Certificate of Designations ("February Redemption").
2
C. SECTIONS 7.1 AND 7.2 - DATE
Sections 7.1 and 7.2 of the Agreement are each hereby amended to change
each and every reference to the date "November 30, 1997" to "February 2, 1998."
D. SECTIONS 6.9, 6.10, 6.11 AND 6.13- BEST EFFORTS, DATES AND COVENANT TO
COMMENCE OFFERING TO GENERATE NOT LESS THAN $18,000,000
1. Section 6.9 of the Agreement is hereby amended to add the following
sentence to the end of the paragraph:
"In all cases, including the occurrence of a First Conversion Date,
the Company shall use reasonable best efforts to obtain the
effectiveness of the Registration Statement as soon as practicable."
2. Section 6.10 of the Agreement is hereby amended to change each and
every reference to the "September 17, 1997" date to "January 7, 1998."
3. Section 6.12 of the Agreement is hereby amended to change each and
every reference to the "September 17, 1997" date to "January 7, 1998."
4. Section 6 of the Agreement shall be amended to add the following
Section 6.13 to read in its entirety as follows:
"6.13. The Company shall effectuate the underwritten primary
issuance of a sufficient number of its securities, pursuant to its
Registration Statement on Form SB-2 filed with the Securities and
Exchange Commission on October 10, 1997 (the "Underwritten Primary
Issuance"), to generate gross proceeds of $18,000,000 (less that
aggregate amount which was previously paid for by the Company pursuant
to a repurchase or redemption of shares of Preferred Stock by the
Company), regardless of the price at which such securities are sold,
subject only to the underwriter's best efforts to place the
securities. The Company shall use the proceeds of the Underwritten
Primary Issuance to redeem the Preferred Stock. In the event that
Company complies with the Repurchases or at any time redeems or
repurchases the Preferred Stock from the Holders such that no
Preferred Stock is outstanding as of or prior to January 7, 1998, the
Company shall thereafter immediately be under no obligation to
effectuate the Underwritten Primary Issuance or to comply with the
Trigger Dates related thereto as set forth on Exhibit E-1. In the
event that the Company redeems or repurchases all of the Preferred
Stock from the Holders after January 7, 1998, the Company shall
immediately be under no further obligation to effect the Underwritten
Primary Issuance or to comply with the Trigger Dates related thereto
as set forth on Exhibit E-1 as of such date of redemption or
repurchase."
3
E. SECTION 9 - LEAD LEGAL REPRESENTATIVE AND LEGAL FEES
Section 9 of the Agreement is hereby amended and restated in its entirety
as follows:
"9. LEAD LEGAL REPRESENTATIVE AND LEGAL FEES. Each Holder
hereby acknowledges and authorizes Klehr, Harrison, Xxxxxx, Xxxxxxxxx
& Xxxxxx ("Xxxxx Xxxxxxxx") as the lead legal representative in
connection with the negotiation, preparation, review, delivery and
performance of this Agreement and the other agreements to be executed
in connection herewith (including the Registration Rights Agreement,
Warrants and Escrow Agreement), any and all amendments hereto and
thereto and all exhibits hereto and thereto (the "Lead Legal
Representative"). The Company shall be responsible for the legal fees
incurred by Xxxxx Xxxxxxxx in its role as the Lead Legal
Representative, as described herein and those legal fees payable to
the Lead Legal Representative hereunder shall be paid by the Company
up to $10,000 within 10 days and the remainder within 30 days after
the Company's receipt of each itemized xxxx for services rendered by
the Lead Legal Representative and only for the services described
herein in its role as the Lead Legal Representative."
II. CERTIFICATE OF DESIGNATIONS
The Certificate of Designations, is hereby restated and amended in its
entirety in the form attached hereto as Exhibit A (the "Amended and Restated
Certificate of Designations"). Each and every reference in the Agreement to the
Certificate of Designations shall hereby be deemed to be reference to the
Amended and Restated Certificate of Designations.
III. BINDING OBLIGATION/EFFECTIVENESS
This Amendment to Agreement shall become binding upon such Holder's
execution and delivery thereof to the Company and shall become effective and
binding upon all Holders upon execution and delivery to the Company by the
Holders of all of the outstanding shares of the Preferred Stock.
IV. DEFINED TERMS
Capitalized terms used herein and not defined herein shall have the
meanings ascribed to such terms in the Agreement.
4
V. GENERAL
Except as hereby amended, in all other respects the Agreement is hereby
restated, ratified, confirmed and all of the terms and conditions thereof are
incorporated by reference herein, and each shall remain in full force and
effect.
[INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, the Undersigned have executed this Amendment to
Agreement as of this ____ day of November, 1997.
RESPONSE USA, INC.
By: __________________________
Title: _________________________
HOLDERS:
A. J. Gesundheit
By: __________________________
Title: _________________________
Deer Park Partners, L.P.
By: __________________________
Title: _________________________
Xxxxxxxx, LP
By: __________________________
Title: _________________________
Raphael, LP
By: __________________________
Title: _________________________
AG Superfund International Partners
By: __________________________
Title: _________________________
6
GAM Arbitrage Investments Inc.
By: __________________________
Title: _________________________
Capital Ventures International
By: __________________________
Title: _________________________
The OTATO Limited Partnership
By: __________________________
Title: _________________________
Zanett Lombardier
By: __________________________
Title: _________________________
UC Financial Ltd.
By: __________________________
Title: _________________________
Lake Management
By: __________________________
Title: _________________________
7
KA Investments
By: __________________________
Title: _________________________
Xxxxxxx X. Xxxxxx
By: __________________________
Title: _________________________
Wood Gundy London Ltd.
By: __________________________
Title: _________________________
Ailouros Ltd.
By: __________________________
Title: _________________________
Darissco Diversified Investments
By: __________________________
Title: _________________________
8
EXHIBIT E-1
TO AMENDED AGREEMENT
REVISED TRIGGER DATES
COMPANY OBLIGATION TRIGGER DATE
--------------------------------------- ---------------------------------------
Repurchase of 10% of the aggregate DECEMBER 15, 1997
number of shares of Preferred Stock
outstanding as of December 15, 1997.
Printing of red xxxxxxx prospectus JANUARY 7, 1998, notwithstanding the
relating to the Company's offering of Company Obligation, in the event that
securities (the "Offering") to the Company files a response to
generate approximately $18,000,000 of comments with the SEC by Tuesday,
gross proceeds (less the aggregate December 2, 1997 and receives further
amount which was previously paid for additional comments from the SEC with
upon a repurchase or redemption) for respect to its review of the Company's
use by the Company to redeem all of the Form 10-KSB, the January 7, 1998 date
Preferred Stock ("the Registration shall be automatically extended after
Statement"). January 7, 1998 by that number of days
equal to the number of days from
Tuesday, December 2, 1997 until the
date on which the SEC gives no further
comment to the Company ("Review
Period"), if the Company is proceeding
in good faith to respond to the SEC
during such Review Period.
Holding of the Company's joint meeting JANUARY 7, 1998, notwithstanding the
of the Common Stock Shareholders and Company Obligation, in the event that
the Holders (the "Stockholders' the Company files a response to
Meeting"). comments with the SEC by Tuesday,
December 2, 1997 and receives further
additional comments from the SEC with
respect to its review of the Company's
Form 10-KSB, the January 7, 1998 date
shall be automatically extended after
January 7, 1998 by the Review Period,
if the Company is proceeding in good
faith to respond to the SEC during such
Review Period.
Filing of the Amendment and an JANUARY 7, 1998, notwithstanding the
amendment to the Company's Certificate Company Obligation, in the event that
of Incorporation to increase the the Company files a response to
Company's authorized Common Stock to at comments with the SEC by Tuesday,
least 37,500,000 shares. December 2, 1997 and receives further
additional comments from the SEC with
respect to its review of the Company's
Form 10-KSB, the January 7, 1998 date
shall be automatically extended after
January 7, 1998 by the Review Period,
if the Company is proceeding in good
faith to respond to the SEC during
such Review Period.
Commencement of road show relating JANUARY 16, 1998, notwithstanding the
to the Offering Company Obligation, in the event that
the Company files a response to
comments with the SEC by Tuesday,
December 2, 1997 and receives further
additional comments from the SEC with
respect to its review of the Company's
Form 10-KSB, the January 16, 1998 date
shall be automatically extended after
January 16, 1998 by the Review Period,
if the Company is proceeding in good
faith to respond to the SEC during
such Review Period.
Repurchase of 10% of the aggregate JANUARY 15, 1998
shares of Preferred Stock outstanding
as of December 15, 1997.
Redemption of remaining shares of FEBRUARY 2, 1998, notwithstanding the
Preferred Stock outstanding as of Company Obligation, in the event that
February 2, 1998. the Company files a response to
comments with the SEC by Tuesday,
December 2, 1997, and receives further
additional comments from the SEC with
respect to its review of the Company's
Form 10-KSB, the February 2, 1998 date
shall be automatically extended by the
Review Period, if the Company is
proceeding in good faith to respond to
the SEC during such Review Period.
Notwithstanding the foregoing, for
purposes of the February 2, 1998
Trigger Date, the Review Period shall
in no event extend beyond February 12,
1998.
In the event that the Company abandons SUCH APPLICABLE DATE.
or withdraws (in accordance with the
last sentence of Section 6.13 of the
Amended Agreement) the Registration
Statement prior to the Registration
Statement being declared effective for
use by the Company
