EXHIBIT 4(z)
FORM OF "TYPE B" SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement"), dated as of
___________, 1997, is entered into by and among (the "Purchaser"), RPM
Incorporated ("RPM"), and The Tirex Corporation ("Tirex"). This is the Agreement
referred to as "Securities Purchase Agreement" in Section 1 of the Debenture, as
defined herein in Section 2, below. The Purchaser agrees to purchase _________
Units (as hereinafter defined) in Section 2 for an aggregate purchase price of
$_________ (the "Purchase Price").
The Parties hereto agree as follows:
1. Proposed Merger of RPM and a Wholly Owned Subsidiary of Tirex. RPM has
entered into an Agreement and Plan of Merger, dated as of October 20, 1997 (the
"Merger Agreement") with Tirex and a newly formed subsidiary of Tirex (the
"Tirex Subsidiary") that provides, subject to certain conditions, that upon an
initial closing (the "Initial Closing") of the private offering to which this
Securities Purchase Agreement pertains (the "Offering"), to take place after the
sale of not less than 30 Units: (i) RPM will merge with and into the Tirex
Subsidiary (the "Merger"); (ii) each of the Debentures, as that term is defined
in Section 2, below, purchased pursuant to this Securities Purchase Agreement
prior to the said Initial Closing will be assumed by Tirex and become
convertible into shares of the common stock of Tirex, $.001 par value, per share
("Tirex Common Stock") at the conversion ratio of one share for every $0.20 of
the principal amount of the Debenture plus all accrued, but unpaid, interest
thereon (the "Conversion Shares"); and (iii) all of the shares of the Common
Stock of RPM, $.001 par value, per share (the "Unit Shares") purchased pursuant
to this Securities Purchase Agreement prior to the Initial Closing will be
exchanged for shares of Tirex Common Stock on a share-for-share basis. The
consummation of the transactions contemplated by the Merger Agreement are a
condition to the Initial Closing of the Offering. After the Initial Closing and
the effectuation of the Merger (which will take place contemporaneously
therewith), all sales of the Units made pursuant to this Securities Purchase
Agreement will be made directly by Tirex, all Unit Shares included in the Units
sold hereunder will consist of shares of Tirex Common Stock, and Tirex's
assumption of the Debentures will have occurred concurrently with the Merger.
Upon the consummation of the Merger, the net proceeds from the Offering, ranging
from an estimated minimum of $266,000 to an estimated maximum of $761,000, will
remain in RPM, and Tirex will have acquired all of the issued and outstanding
common stock of RPM for the following consideration: (i) one share of Tirex
Common Stock for every issued and outstanding share of RPM Common Stock, and
(ii) Tirex's assumption of all of RPM's obligations and liabilities under the
Debentures. Accordingly, if, during the Offering Period, as that term is defined
in the Confidential Private Offering Memorandum pertaining to the Offering (the
"Memorandum"), a minimum of 30 Units are sold, the above described Merger will
be effected and the net proceeds from the Offering will thereby inure to the
benefit of Tirex. Alternatively, if RPM fails to sell a minimum of 30 Units
during the Offering Period, all funds will be returned to the subscribers and
the Offering will terminate without any Units having been sold. As a result, any
investment in the Units purchased pursuant to this Securities Purchase Agreement
will necessarily constitute an investment in Tirex and not in RPM. Hereinafter,
references to the "Company" are to RPM prior to the Merger and to Tirex after
the Merger.
-1-
2. Purchase and Sale of Securities. Upon the basis of the representations
and warranties, and subject to the terms and conditions set forth in this
Agreement, the Company covenants and agrees to sell to the Purchaser on the
Closing Date (as hereinafter defined) ______________ Units, each consisting of:
(i) a 10% Convertible Subordinated Debenture in the principal amount of $10,000
United States Dollars (each a "Debenture"); and (ii) 10,000 Unit Shares. (Prior
to the Merger, the Unit Shares will consist of 10,000 shares of the Common Stock
of RPM; After the Merger, the Unit Shares will consist of 10,000 shares of Tirex
Common Stock.) The Debenture is convertible in accordance with the terms and
conditions of the Debenture, the form of which is annexed hereto as Exhibit A,
at any time on the dates set forth in the Debenture (any such date of
conversion, being called herein a "Conversion Date") into shares of Common Stock
of the Company (the "Conversion Shares") at a conversion ratio of one Conversion
Share for every $0.20 of the principal amount of the Debenture plus all accrued
and unpaid interest thereon. If a Debenture is not converted, it may be redeemed
by the holder any time after Maturity at 100% of the principal amount of the
Debenture plus all accrued and unpaid interest thereon. In the event that the
Company effects the Proposed Public Offering, as that term is defined in the
Memorandum, the Unit Shares will be subject to a one-year lockup from the
effective date of the Proposed Public Offering. The Debentures and the Unit
Shares are referred to collectively herein as the "Securities". The descriptions
of the Debentures, the Conversion Shares, and the Unit Shares contained herein
are qualified in their entirety by the form of Debenture attached hereto as
Exhibit A and the information contained in the Memorandum under the Captions,
"THE OFFERING", "TERMS OF THE OFFERING", and "DESCRIPTION OF SECURITIES".
3. Closing. The Initial Closing of the purchase and sale of the Securities
pursuant to Section 2 hereof shall take place at the offices of Xxxxx Xxxxxxx,
Esq., _____________________________ or at such other date, time and place as the
Purchaser and the Company may agree upon in writing, or at such other time at
which the Escrow Agent (as hereinafter defined) shall have received all
documents and instructions as it shall in its sole judgment deem necessary and
appropriate to consummate the transactions contemplated hereby (such time and
date for the Initial Closing is referred to herein as the "Initial Closing
Date"). Subsequent closings, if any, of the purchase and sale of the Securities
pursuant to Section 2 hereof shall take place on or before December 31, 1997 at
the offices of Xxxxxxx Xxxx Xxxxxx, Esq., 000 Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxx
Xxxx 00000 at such other dates, times and places as the Purchaser and the
Company may agree upon in writing, or at such other times at which the Escrow
Agent (as hereinafter defined) shall have received all documents and
instructions as it shall in its sole judgment deem necessary and appropriate to
consummate the transactions contemplated hereby (such times and dates for the
closing is referred to herein as the "Closing Date"). The certificates
representing the Securities to be purchased by the Purchaser shall be delivered
by, or on behalf of, the Company at the Closing Date against payment of the
Purchase Price therefor in immediately available funds by, or on behalf of, the
Purchaser to the attorney trust account of Xxxxxx, Xxxxxxx & Xxxxx (pursuant to
this Agreement and an Escrow Agreement in the form of Exhibit B hereto) (the
"Closing Instructions"), instructing Xxxxxx, Xxxxxxx & Xxxxx, as Escrow Agent,
with respect to the closing and settlement procedures, subject, however, to the
terms and conditions of this Agreement and the Escrow Agreement. Commencing on
the second business day after delivery to the Escrow Agent of the Purchase
Price, the Purchaser, if the purchase and sale transaction contemplated hereby
has not been consummated in accordance with the terms of this Agreement, may
terminate the proposed transaction by notice to the Company and the Escrow
Agent, whereupon the Escrow Agent shall redeliver the Purchase Price to the
Purchaser as soon as practicable in accordance with the written instructions of
the Purchaser.
-2-
4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser understands, and represents and warrants to, and agrees with, the
Company, that:
(a) The Securities (including the Conversion Shares and the Unit
Shares) have not been and will not be registered under the Securities Act, or
any other applicable securities law, and accordingly, may not be offered, sold,
transferred, pledged, hypothecated or otherwise disposed of ("Transferred")
unless Transferred in a transaction exempt from registration under the
Securities Act and any other applicable securities law (in which event, the
Purchaser shall be required to provide the Company with an opinion of counsel
that registration is not required, in form and substance reasonably satisfactory
to the Company and its counsel).
(b) The Purchaser recognizes that the certificates representing the
Securities (including the Conversion Shares) will bear a legend containing the
following language:
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 OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR,
UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO
ISSUER, THAT SUCH OFFER, SALE, OR TRANSFER IS EXEMPT
FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE
ACT AND SUCH LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY ALSO BE SUBJECT TO A LOCK-UP AGREEMENT,
A COPY OF WHICH IS AVAILABLE FROM THE COMPANY AT NO
CHARGE.
(c) The Purchaser is either an "Institutional Investor" or an
"Accredited Investor" within the meaning of Rule 501(a) under the Securities Act
(an "Accredited Investor"), and is acquiring or will acquire the Securities for
its own account. The Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of an
investment in the Securities. The Purchaser is aware that it may be required to
bear the economic risk of an investment in the Securities for an indefinite
period, and it is able to bear such risk for an indefinite period.
Purchaser meets at least one of the following criteria as an
"Accredited Investor" (Please check all that apply):
[ ] (a) The undersigned is a director or executive officer
of the Company;
[ ] (b) The undersigned is a natural person whose
individual net worth, or joint net worth with that
person's spouse, at the time of purchase exceeds
$1,000,000;
[ ] (c) The undersigned is a natural person who had an
individual income in excess of $200,000 in each of
the two most recent years or joint income with
that person's spouse in excess of $300,000 in each
-3-
of those years and who reasonably expects the
same income level in the current year;
[ ] (d) The undersigned is an entity, and all of the
equity owners of such entity meet the
qualifications of either (a), (b) or (c) above or
(e), (f), (g) or (h) below;
[ ] (e) Any savings and loan association or other
institution specified in section 3(a)5(A) of the
Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant
to section 15 of the Security Exchange Act of
1934; any plan established and maintained by a
state, its political subdivisions, or any agency
or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if
such plan has total assets in excess of
$5,000,000; an employee benefit plan within the
meaning of Title I of the Employee Retirement
Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined
in section 3(21) of such Act, which is a savings
and loan association, or if the employee benefit
plan has total assets in excess of $5,000,000 or,
if a self- directed plan, with investment
decisions made solely by persons that are
accredited investors;
[ ] (f) Any private business development company as
defined in section 202(a)(22) of the Investment
Advisers Act of 1940;
[ ] (g) Any organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose
of acquiring the securities offered, with total
assets in excess of $5,000,000; and
[ ] (h) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase
is directed by a sophisticated person as described
in ss.230.506(b)(2)(ii).
(d) The Purchaser is acquiring or will acquire the Securities for its
own account for investment purposes and not with a view to, or for offer or sale
in connection with, any distribution thereof, except in compliance with
applicable securities laws (including exemptions thereunder) or pursuant to an
effective registration statement under the Securities Act. The Purchaser agrees
to offer, sell or otherwise transfer the Securities only (i) in accordance with
the terms of this Agreement and (ii) pursuant to an exemption from registration
under the Securities Act and any other applicable securities law (in which
event, the Purchaser
-4-
shall be required to provide the Company with an opinion of counsel that
registration is not required, in form and substance reasonably satisfactory to
the Company and its counsel).
(e) The Company has furnished or made available to the Purchaser all
material information relating to the business, finances and operations of the
Company and material information relating to the offer and sale of the
Securities and which have been requested by the Purchaser. The Purchaser and/or
its advisors, if any, in each case, have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Without limiting the generality of the foregoing, the
Purchaser has had the opportunity to obtain and to review the Company's
Confidential Private Offering Memorandum (the "Memorandum") dated November __,
1997 and the Exhibits attached thereto.
(f) Purchaser, in electing to subscribe for the Securities hereunder,
has relied upon an independent investigation made by it and its representative,
if any. Purchaser has been given no oral or written representations or
assurances from the Company or any representation of the Company other than as
set forth in this Agreement or in a document executed by a duly authorized
representative of the Company making reference to this Agreement.
(g) The Purchaser has no existing short position with respect to the
Common Stock and agrees not to, for a period 180 days from the Closing Date,
enter into any short sales or other hedging transactions directly involving the
Common Stock. Purchaser further agrees that, at all times after the execution of
this Agreement by the Purchaser and prior to conversion or exercise of all
Securities acquired by Purchaser, it will keep its purchase of the Securities
confidential, except as required by law, as necessary in the ordinary course of
Purchaser's business or as necessary to effectuate the conversion of such
Securities, as applicable.
(h) The Purchaser acknowledges that, except for the historical
material contained herein or in the Securities and Exchange Commission ("SEC")
documents respecting Tirex attached as Exhibits to the Memorandum (the "SEC
Documents"), the matters disclosed herein and therein are forward-looking
statements under the federal securities laws that involve risks and
uncertainties, including, but not limited to, product demand and market
acceptance risks, the effect of economic conditions, the impact of competitive
products and pricing, product development, commercialization and technological
difficulties, capacity and supply constraints or difficulties, the results of
financing efforts, actual purchases under agreements, the effect of the
Company's accounting policies, and other risks detailed in Tirex's SEC
Documents. Actual results could differ materially from those estimated or
anticipated in these forward-looking statements.
(i) The Purchaser is a resident of the state set forth on the
signature page hereto.
(j) Possible Non-Occurrence of Public Offering. The undersigned
acknowledges that the undersigned has been advised that no assurance can be
given that the proposed public offering of Tirex, which is described in the
Confidential Private Memorandum, will occur or that any public offering of Tirex
securities, underwritten by X.X. Xxxxxx & Co., Inc. or any other underwriter,
will occur. The undersigned agrees that he shall not assert any claim against
X.X. Xxxxxx & Co., Inc. or any other person based upon the non-occurrence of any
public offering of Tirex securities.
-5-
5. Possible Material Changes in Offering Terms Due to NASD Review.
Following the closing of this Offering and prior to the closing of any proposed
public offering, should such public offering take place, the company intends to
apply for the listing of its Common Stock on the National Association of
Securities Dealers ("NASD") Automated Quotation System SmallCap Market System.
In connection with such listing application, the NASD may require that the terms
of this Offering be materially modified. The Purchaser hereby agrees to make any
such changes and modifications as may be required in connection with the
foregoing and hereby further agrees to any such necessary changes that may occur
on a post-closing basis. The Purchaser agrees to take such actions and do such
things as are reasonably required by the Company in connection with the
foregoing.
6. Representations and Warranties of RPM and Tirex (Singly, and
Collectively as the "Company"). RPM and Tirex, singly and collectively, and
jointly and severally, as the case may be, hereby represent and agree with the
Purchaser that:
(a) RPM has been duly incorporated and is validly existing as a
corporation under the laws of Delaware and has the requisite corporate power to
own its properties and to carry on its business, if any, as now being conducted.
(b) The Company and each of its Subsidiaries have been duly
incorporated and are validly existing as a corporation under the laws of
Delaware or Canada or other appropriate jurisdiction and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted.
(c) This Agreement and the Debenture have been duly authorized,
executed and delivered by the Company and constitute valid and binding
agreements, enforceable in accordance with their respective terms (except to the
extent that enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally), and the Company has
full corporate power and authority necessary to enter into such agreements and
to perform its obligations thereunder.
(d) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates or of any third party or of the stockholders of the
Company is required for execution of this Agreement or the Debenture or the
performance of its obligations under such agreements, including, without
limitation, the issuance and sale of the Securities or the Conversion Shares
(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).
(e) Neither the sale of the Securities pursuant to this Agreement, nor
the performance of its obligations under this Agreement or the Debenture by the
Company will:
(f) violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under (A) the articles
of incorporation or by-laws of the Company or its subsidiaries, (B) any decree,
judgment, order, law, treaty, rule regulation or determination applicable to the
Company or its subsidiaries of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or its subsidiaries or over the
properties or assets of the Company or its subsidiaries, the violation,
conflict, breach or default of which
-6-
would have a material adverse effect on the Company and its subsidiaries
considered as a whole, (C) the terms of any bond, debenture, or any other
evidence of indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which the
Company or its subsidiaries is a party by which the Company or its subsidiaries
is bound, or to which any of the properties of the Company or its subsidiaries
is subject, the violation, conflict, breach or default of which would have a
material adverse effect on the Company and its subsidiaries considered as a
whole, or (D) the terms of any "lockup" or similar provision of any underwriting
or similar agreement to which the Company or its subsidiaries is a party; or
(g) result in the creation or imposition of any lien, claim or other
encumbrance upon any of the assets of the Company or its subsidiaries.
(h) The Securities have been duly and validly authorized and are (i)
free and clear of any security interests, liens, claims or other encumbrances,
(ii) are duly and validly issued, (iii) fully paid and nonassessable, (iv) not
issued or sold in violation of any preemptive or other similar rights of the
holders of any securities of the Company, and (v) do not subject the holders
thereof to personal liability by reason of being such holders.
(i) The Conversion Shares and the Unit Shares have been duly and
validly authorized and when issued (i) will be free and clear of any security
interests, liens, claims or other encumbrances, (ii) will be duly and validly
issued, (iii) will be fully paid and nonassessable, (iv) will not have been
issued or sold in violation of any preemptive or other similar rights of the
holders of any securities of the Company, and (v) will not subject the holders
thereof to personal liability solely by reason of being such holders.
(j) Except as set forth in the SEC Documents, there is no pending or,
to the best knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company or any of its affiliates that would
materially affect the results of operations of the Company or its subsidiaries
or adversely affect the execution by the Company of, or adversely affect the
performance by the Company of its obligations under, this Agreement or the
Debenture or the transactions contemplated hereby or thereby.
(k) Neither the Company, nor any authorized representative of the
Company, has made, at any time, any written or oral communication in connection
with the offer or sale of the securities offered hereby which contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the circumstances
under which they were made, not misleading.
(l) Assuming the accuracy of, and compliance with, the
representations, warranties and covenants of the Purchaser in this Agreement,
the sale of the Securities offered hereby pursuant to this Agreement have been
made in accordance with the provisions and requirements of Section 4(2)
("Section 4(2)") under the Securities Act and Regulation D and Rule 506
promulgated thereunder and any applicable state law.
(m) None of the Company, any affiliate of the Company, or any person
acting on behalf of the Company or any such affiliate has engaged, or will
engage, in any general solicitation or general advertising with respect to the
Securities.
(n) Both RPM and Tirex are corporation's duly organized, validly
existing and in good standing under the laws of the State of Delaware and each
is duly qualified as a foreign
-7-
corporation in all jurisdictions in which the failure to so qualify would have a
material adverse effect on either such corporation and its subsidiaries taken as
a whole. Tirex's subsidiary, 3143619 Canada, Inc., doing business as Tirex
Canada, is duly organized, validly existing and is duly qualified as a foreign
corporation in all jurisdictions in which the failure to so qualify would have a
material adverse effect on the Company and its subsidiaries taken as a whole.
Neither Tirex nor RPM has registered its Common Stock pursuant to the Exchange
Act of 1934, as amended (the "Exchange Act"), the Common Stock of RPM is not
publicly traded; the Common Stock of Tirex is listed and trades on the NASD
Over-the-Counter Electronic Bulletin Board System. Tirex has filed all materials
required to be filed pursuant to all reporting obligations under either Section
13(a) or 15(d) of the Exchange Act for at least 12 months immediately preceding
the date hereof, and has received no notice, either oral or written, with
respect to the continued eligibility for such listing. As of their respective
dates, the financial statements of the Company included in the 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 exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company and its subsidiaries as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Prior
to the date hereof, the Company has corrected all statements in the SEC
Documents which have required correction and has filed all necessary amendments
to the SEC Documents, in each case as required by applicable law.
(o) As of the date hereof, the authorized capital stock of the Company
consists of (i) 50,000,000 shares of which 35,000,000 shares are designated in
the certificate of incorporation as common stock, par value $.001 per share and
fifteen million (15,000,000) shares are designated as Open Stock, par value
$.001 per share. All of the shares of Open Stock have been or will be designated
as shares of Common Stock, par value $.001 per share, of which 38,774,625 shares
are issued and outstanding, and (ii) no shares of preferred stock, no par value
per share, of which no shares are issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company. Except in connection with: (i) employee compensation agreements; (ii) a
certain stock purchase option held by CG TIRE, Inc., as described in the
Company's 1997 10-K; and (iii) certain stock options held by consultants, as
described in the 1996 10-K, there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into 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 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 outstanding debt securities of the Company
except as may be incurred pursuant to the issuance of certain Subordinated
Convertible Debentures, which form part of certain Units being offered
concurrently herewith by Tirex, in a maximum aggregate principal amount of
$700,000 (which may, under certain circumstances, be increased to a maximum
aggregate principal amount of $875,000). The Company has made available to the
Purchaser true and correct copies of the Company's Certificate of Incorporation,
as amended, as in effect on the date hereof ("Certificate of Incorporation"),
and the Company's By-laws, as in effect on the date hereof (the "Bylaws").
-8-
(p) The Company undertakes and agrees to make all necessary filings in
connection with the sale of the Securities offered hereby as required by the
United States laws and the regulations or any domestic securities exchange or
trading market.
(q) Except as set forth in the SEC Documents or the Memorandum, there
has been no material adverse development in the assets, liabilities, business
properties, operations, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, except as disclosed in the
filings of the Company with the SEC.
(r) None of the filings of the Company with the SEC contained at the
time they were filed, and the Memorandum does not contain, any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has filed
all requisite forms, reports and exhibits thereto with the SEC. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents.
(s) Except as set forth in the SEC Documents and in the Memorandum,
there is no known fact to the Company or any subsidiary (other than general
economic conditions generally known to the public) that has not been disclosed
in writing to the Purchaser that (i) could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise) or in the
earnings, business affairs, business prospects, properties or assets of the
Company or any subsidiary, or (ii) could reasonably be expected to adversely
affect the ability of the Company or any subsidiary to perform its obligations
pursuant to this Agreement or the Debenture.
(t) The Company acknowledges and agrees that Purchaser is acting
solely in the capacity of an arm's length purchaser with respect to this
Agreement, the Debenture, and the transactions contemplated hereby and thereby.
The Company further acknowledges that Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement, the Debenture, or the transactions contemplated hereby and
thereby and any advice given by Purchaser or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereby and thereby is merely incidental to Purchaser's purchase of the
Securities. The Company further represents to Purchaser that the Company's
decision to enter into this Agreement, and the Debenture has been based solely
on the independent evaluation by the Company and its representatives.
(u) Neither the Company, nor any of its affiliates, has, directly or
indirectly, made any offers or sales of any securities or solicited any offers
to buy any security, under circumstances that would require registration of the
Securities under the 1933 Act.
(v) Except as set forth within this Agreement, the SEC Documents, or
the Memorandum, the Company and its subsidiaries own, have obtained or possess
rights to use the patents, trademarks, trade names, service marks, service xxxx
registrations, patents, copyrights, licenses, approvals, governmental
authorizations, trade secrets and other rights necessary to conduct their
respective businesses as now conducted, the Company does not have any knowledge
of any material infringement by the Company or its subsidiaries of any
trademark, trade name rights, patent rights, copyrights, licenses, service
marks, service xxxx registrations, trade secrets or other similar rights of
others and there is no claim being made against the Company or its subsidiaries
regarding trademark, trade name, patent, copyright, license, service marks,
service xxxx registrations, trade secret or other infringement which could have
a material
-9-
adverse effect on the Company. The Company and its subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.
(w) The Company understands and acknowledges the potentially dilutive
effect to its Common Stock upon the issuance of each of the Conversion Shares
and each share of the Common Stock.
7. Covenants of the Company. The Company covenants and agrees with the
Purchaser:
(a) To comply with all requirements of Section 4(2) and Section
3(a)(9), as applicable, and to the extent applicable Regulation D under the
Securities Act, with respect to the sale of the Securities and the Conversion
Shares.
(b) To notify the Purchaser promptly if at any time during the period
beginning on the date of this Agreement and ending on the final Closing Date of
any event shall have occurred as a result of which any written or oral
communication made by the Company, any authorized person representing the
Company, would include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) To cause the Conversion Shares and the shares of Common Stock,
which form part of the Units being purchased hereunder, to be, upon delivery,
fully paid, nonassessable, free of preemptive rights and free from all taxes,
liens, charges, security interests or other encumbrances.
(d) Have at all times authorized and reserved for issuance, free from
preemptive rights, a sufficient number of shares of Common Stock to satisfy the
conversion and exercise rights of the Purchaser pursuant to the terms and
conditions of all Securities and to satisfy the issuance of any other shares of
Common Stock which are reserved for issuance or which are issuable upon the
exercise, conversion, exchange or satisfaction of any outstanding securities or
obligations or rights of the Company.
(e) Each party shall use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary,
including without limitation, timely to satisfy the conditions to be satisfied
as provided in Section 8 and 9 of this Agreement, to consummate the transactions
contemplated hereby.
(f) Until the date on which the holders may sell all of the Conversion
Shares and shares of Common Stock, which form part of the Units being purchased
hereunder, without restriction pursuant to Rule 144(k) promulgated under the
1933 Act (or successor thereto), Tirex shall use its best efforts to timely file
all reports required to be filed with the SEC pursuant to the 1934 Act, and
Tirex shall not voluntarily terminate its status as a Company required to file
reports under the 1934 Act even if the Act or the rules and regulations
thereunder would permit such termination.
(g) The Company covenants and agrees that it will not without the
prior written consent of the Purchaser, (a) enter into any subsequent or further
offer or sale of Common Stock or securities convertible or exercisable into
Common Stock with any third party until May 31, 1998 unless the Company first
offers X.X. Xxxxxx & Co., Inc. the right to place
- 10 -
such securities, after which X.X. Xxxxxx shall have five business days from the
time of the offer to accept or reject it. If X.X. Xxxxxx accepts the offer, the
placement of such additional securities shall be made upon substantially the
same terms as set forth herein or such other terms to be agreed upon between the
Company and X.X. Xxxxxx. If X.X. Xxxxxx rejects the offer, the Company shall be
permitted to proceed with the additional offering. However, this restriction
shall not apply to (i) the issuance of securities (other than for cash) in
connection with the terms of presently existing employee compensation agreements
a merger, consolidation, sale of assets, disposition of a business, product or
license by the Company, strategic alliance, bank loan or agreement, public
offering, securities issued at the then current market price (as determined in
good faith by the board of Directors), or the exercise of options, or presently
outstanding options or (ii) the exchange of the capital stock for assets, stock
or other joint venture interests. However, nothing contained herein shall be
deemed to preclude the Company from taking such action as may be reasonably
required to cure any alleged default under agreements to which the Company is or
may become a party.
8. Conditions Precedent to the Purchaser's Obligations. The obligations of
the Purchaser hereunder are subject to the performance by the Company of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent:
(a) The representations and warranties made by the Company in this
Agreement shall, unless waived by the Purchaser, be true and correct in all
material respects as of the date hereof and at the Closing Date, with the same
force and effect as if they had been made on and as of the Closing Date. The
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. If requested, the Company shall certify to Purchaser and the Escrow Agent
that the requirements of this Section 8(a) have been met.
(b) Pursuant to this Agreement (this "Agreement"), the Company shall
have: (i) instructed its transfer agent, Continental Stock Transfer and Trust
Co. Inc., to issue to the Purchaser the shares of Common Stock, forming part of
the Units being purchased hereunder and (ii) have issued to Purchaser a
Debenture in the form annexed hereto as Exhibit A.
(c) If requested, the Company will provide to the Purchaser an opinion
or opinions of counsel satisfactory to counsel for the Purchaser.
(d) None of the following shall have occurred: (i) any general
suspension of trading in, or limitation on prices listed for, the Common Stock
on the NASD Over-the-Counter Electronic Bulletin Board System, (ii) a
declaration of a banking moratorium or any suspension of payments in respect to
banks in the United States, (iii) a commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States, (iv) in the case of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof, or (v) any limitation
by the federal or state authorities on the extension of credit by lending
institutions that materially and adversely affects the Purchaser.
(e) No action, suit, investigation or proceeding before or by any
governmental authority shall have been commenced or threatened in writing
against the Company or any of the officers, directors or affiliates of the
Company, which seeks to restrain, prevent or challenge the transactions
contemplated by this Agreement or the Debenture or which seeks damages in
connection with such transactions.
-11-
9. Conditions Precedent to the Company's Obligations.
(a) The obligations of the Company hereunder are subject to the
performance by the Purchaser of its obligations hereunder and to the
satisfaction of the condition precedent that the representations and warranties
made by the Purchaser in this Agreement shall, unless waived by the Company, be
true and correct in all material respects as of the date hereof and at the
Closing Date, with the same force and effect as if they had been made on and as
of the Closing Date.
(b) The Purchaser shall have delivered to the Escrow Agent by check or
wire transfer the Purchase Price for the Securities.
10. Transfer of Securities.
(a) Securities Act Legend. Each of the certificates evidencing the
Securities and the Conversion Shares, and any certificates issued upon transfer
or exchange of the foregoing, shall be stamped or imprinted with a legend
containing language similar to the following:
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 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 ISSUER'S COUNSEL THAT IT IS EXEMPT FROM
REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT
AND SUCH LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY ALSO BE SUBJECT TO A LOCK-UP AGREEMENT,
A COPY OF WHICH IS AVAILABLE FROM THE COMPANY AT NO
CHARGE.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities and the
Conversion Shares, as applicable, if, unless otherwise required by state
securities laws, such holder provides the Company with reasonable assurances
that the shares of Common Stock, constituting part of the Units being purchased
hereunder, and the Conversion Shares, as applicable, can be sold pursuant to
Rule 144 under the 1993 Act (or a successor rule thereto). Notwithstanding the
removal of any such legend, Purchaser agrees to Transfer the Securities and the
Conversion Shares, including those represented by certificate(s) from which the
legend has been removed, in compliance with all applicable securities laws and,
if, in connection with any Transfer, a legend would be appropriate under
applicable securities laws, Purchaser shall, in connection with any such
Transfer ensure that the certificates representing any securities so Transferred
shall bear the foregoing legend.
-12-
(b) Securities Act Compliance. Each holder (a "Holder") of a
certificate evidencing the shares of Common Stock, constituting part of the
Units being purchased hereunder, and the Conversion Shares which bears the
restrictive legend set forth in Section 4(b) above (the "Restricted
Securities"), and who proposes to Transfer (as defined in Section 4(a) of this
Agreement) any Restricted Securities (other than pursuant to Rule 144), shall
give written notice to the Company of such Holder's intention to effect such
Transfer. Each such notice shall describe the manner and circumstances of the
proposed sale or other disposition in sufficient detail and may be accompanied
by an opinion of legal counsel to the Holder. Promptly upon receipt of such
notice, the Company shall present a copy thereof (together with any accompanying
opinion of legal counsel to the Holder) to its legal counsel, and the following
provisions shall apply:
(c) If, in the opinion of legal counsel to such Holder, reasonably
satisfactory in form and substance to the Company and its legal counsel, or if
such notice was not accompanied by an opinion of legal counsel to the Holder,
then, if, in the opinion of legal counsel to the Company, the proposed sale or
other disposition may be effected without registering the Restricted Securities
involved under the Securities Act or under state securities law, such Holder
shall be entitled to so Transfer such Restricted Securities in accordance with
the terms of such notice delivered to the Company pursuant to this paragraph
(b). The Company will advise the Holder, within five business days after
submission of such notice, whether the Company believes such Holder is entitled
to so Transfer the restricted Securities in accordance with the foregoing. If
the Holder is entitled to so Transfer, he shall submit the stock certificate or
certificates evidencing the Restricted Securities to be Transferred to the
Company in proper form for Transfer and accompanied by appropriate instruments
of Transfer and the Company shall promptly issue new certificates giving effect
to such Transfer. Certificates for Restricted Securities thus Transferred (and
each of the certificates evidencing any untransferred balance of the Conversion
Shares not so transferred) shall bear the restrictive legend set forth in
Section 4(b), unless, in the opinion of such Holder's legal counsel, which
opinion shall be reasonably satisfactory in form and substance to legal counsel
to the Company, such legend is not required by the applicable provisions of the
Securities Act or state securities laws; and
(d) If in the reasonable opinion of the legal counsel to the Company
that, the proposed Transfer cannot be effected without registering the
Restricted Securities involved under the Securities Act or state securities
laws, such Holder shall not offer to Transfer such Restricted Securities unless
and until an exemption from such registration becomes available.
(e) Subject to the restrictions set forth in Section 10 (a) and (b)
above, upon the valid conversion of the Debenture, the Company shall instruct
its transfer agent to issue certificates, registered in the name of Purchaser or
its nominee, for the Conversion Shares in such amounts as specified from time to
time by the respective Purchasers to the Company. The Company shall provide
instructions and opinions of counsel to its transfer agent in accordance with
this Section 10. The Company warrants that no instruction other than such
instructions referred to in this Section 10 will be given by the Company to its
transfer agent. Nothing in this Section shall affect in any way Purchaser's
obligations and agreement to comply with all applicable securities laws upon
resale of the Conversion Shares.
11. Fees and Expenses. Each of the Purchaser and the Company agrees to pay
its respective expenses incident to the performance of its obligations
hereunder, including, but not limited to, the fees, expenses and disbursements
of such party's counsel.
-13-
12. Survival of the Representations, Warranties, etc. The respective
agreements, representations, warranties, indemnities and other statements made
by or on behalf of the Company and the Purchaser, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of any payment for the Units.
13. Notices. All notices, requests and other communications hereunder must
be in writing and delivered to the parties at the following addresses or
facsimile numbers:
If to Purchaser, to: __________________________
__________________________
__________________________
Telephone:
Telecopy:
If to RPM, to: RPM Incorporated
c/o The Tirex Corporation
000 Xx. Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to: Xxxxx Xxxxxxx, Esq.
0000 Xxxxx Xxxxx Xxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Xxxxxxx Xxxxxx, Esq.
000 Xxxxx Xxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Tirex: The Tirex Corporation
000 Xx. Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
-14-
with a copy to: Xxxxxxx Xxxxxx, Esq.
000 Xxxxx Xxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
All such notices, requests and other communications will (i) if delivered
personally (including, without limitation, by reputable overnight courier
service) to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon telecopy generated confirmation
of receipt; provided that prior telephonic notice of such facsimile transmission
is given and that each such facsimile is forwarded to the party receiving notice
by prepaid overnight delivery service for receipt the following business day;
and (iii) if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
14. Third Party Beneficiary. Any permitted transferee of any part of the
principal amount of the Securities or the Conversion Shares, shall be a third
party beneficiary of the Company's obligations under this Agreement and the
Debenture. Such person shall have all the rights of a third party beneficiary
with respect to the enforcement against the Company of any provision of this
Agreement and the Debenture.
15. Miscellaneous.
(a) This Agreement may be executed in one or more counterparts and it
is not necessary that signatures of all parties appear on the same counterpart,
but such counterparts together shall constitute but one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party by
facsimile transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their respective successors and permitted assigns.
(c) This agreement shall be governed by, and construed in accordance
with, the laws of the State of New York (without given effect to conflicts of
laws principles). With respect to any suit, action or proceedings relating to
this Agreement, each of the Company and the Purchaser irrevocably submits to the
exclusive jurisdiction of the state courts of the State of New York and the
Federal courts located in Monroe County in the City of Rochester and hereby
waives to the fullest extent permitted by applicable law any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. Subject to
applicable law, the Company agrees that final judgment against it in any legal
action or proceeding arising out of or relating to this Agreement, or any
transaction contemplated hereby or thereby, shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified copy of which judgment shall be conclusive evidence
thereof and the amount of its indebtedness, or by such other means provided by
law.
-15-
(d) The headings of the sections of this document have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
(e) The provisions of this Agreement are severable, and if any clause
or provision shall be held invalid, illegal or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect in
that jurisdiction only such clause or provision, or part thereof, and shall not
in any manner affect such clause or provision in any other jurisdiction or any
other clause or provision of this Agreement in any jurisdiction.
(f) This Agreement, including the exhibits hereto, constitutes the sole
and entire agreement of the parties with respect to the subject matter hereof.
(g) Purchaser shall have the right to approve before issuance any press
releases or any other public statements with respect to the transaction
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions not referring directly by
name to Purchaser and as is required by applicable law, rules or regulations, or
the requirements imposed by the NASD Over-the-Counter Bulletin Board System
Stock Market (although Purchaser shall be provided with a copy of any such press
release or other public disclosure upon its release).
(h) 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 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.
(i) Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the Company and Purchaser, the
Company and Purchaser does not thereby or in any manner waive any rights granted
to it or him under U.S. Federal or state securities laws.
16. Time of Essence. Time shall be of the essence in this Agreement.
17. Escrow Agent. The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and its liability hereunder shall be
limited to liability for gross negligence or willful misconduct on its part. The
Company and the Purchaser agree to save harmless, indemnify and defend the
Escrow Agent for, from and against their respective share of any loss, damage,
liability, judgment, cost and expense whatsoever, by reason of, or on account
of, any misrepresentation made to it or its status or activities as Escrow Agent
under this Agreement except for any loss, damage, liability, judgment, cost or
expense resulting from gross negligence or willful misconduct on the part of the
Escrow Agent.
The Escrow Agent shall not be responsible for any failure or inability
of any of the parties to perform or comply with the provisions of this
Agreement, or the agreements delivered in connection herewith.
In the performance of its duties hereunder, the Escrow Agent shall be
entitled to rely in good faith upon any document (including facsimile
transmitted copies of documents), instrument or signature believed by it in good
faith to be genuine and to be signed by any party
-16-
hereto or an authorized officer or agent thereof, and shall not be required to
investigate the truth or accuracy of any statement contained in any such
document or instrument. The Escrow Agent may assume in good faith that any
person purporting to give any notice in accordance with the provisions hereof
has been duly authorized to do so.
Each party hereto acknowledges that the Escrow Agent is serving as an
accommodation to the parties hereto. Each party further acknowledges that the
Escrow Agent has acted, acts, and will continue to act as legal counsel in
certain matters to X.X. Xxxxxx & Co., Inc. ("Xxxxxx").
It is understood and further agreed that the Escrow Agent shall:
(a) be under no duty to enforce payment of any subscription that is to be
paid to and held by it hereunder,
(b) promptly notify the Purchaser and the Company of any discrepancy
between the amounts set forth on any statement delivered by the Purchaser and/or
the Company and the sum or sums delivered to it therewith;
(c) be under no duty to accept funds, checks, drafts or instruments for
the payment of money from anyone other than the Company or the Purchaser, or to
give any receipt therefor except to the Company or the Purchaser, with a copy in
each case to the Company;
(d) be protected in acting upon any notice, request, certificate,
approval, consent or other paper reasonably believed by it to be genuine and to
be signed by the proper party or parties (including, but not limited to, copies
of documents transmitted by facsimile);
(e) be permitted to consult with counsel of its choice, and shall not be
liable for any action taken, suffered, or omitted by it in accordance with the
advice of such counsel; provided, however, that nothing in this subsection (e),
nor any action taken by the Escrow Agent, or suffered or omitted by it in
accordance with the advice of any counsel, shall relieve the Escrow Agent from
liability for any claims that are occasioned by its gross negligence or willful
misconduct;
(f) not be bound by any modification, amendment, termination,
cancellation, or recision of this Agreement, unless the same shall be in writing
and signed by it;
(g) be entitled to refrain from taking any action other than to keep all
property held in escrow if it (i) shall be uncertain concerning its duties or
rights hereunder, or (ii) shall have received claims or demands from any party,
or (ii) shall have received instructions from the Purchaser and/or the Company
that, in the Escrow Agent's opinion, are in conflict with any of the provisions
of this Agreement, until it shall have received a final judgment by a court of
competent jurisdiction;
(h) have no liability for following the instructions herein or expressly
provided for herein, or the written instructions given jointly by the Purchaser
and/or the Company; and/or
(i) have the right, at any time, to resign hereunder by giving written
notice of its resignation to all other parties hereto at least three business
days prior to the date specified for such resignation to take effect, and upon
the effective date of such resignation all cash and other payments and all other
property then held by the Escrow Agent hereunder shall be delivered by it to
such person as may be designated in writing by the other parties executing this
-17-
Agreement, whereupon the Escrow Agent's obligations hereunder shall cease and
terminate. If no such person has been designated by such date, all obligations
of the Escrow Agent hereunder shall, nevertheless, cease and terminate. The
Escrow Agent's sole responsibility thereafter shall be to keep safely all
property then held by it and to deliver the same to a person designated by the
other parties executing this Agreement or in accordance with the directions of a
final order or judgment of a court of competent jurisdiction.
18. Delivery of Securities. Subject to the Notice provisions of Section
13, above, the Company will permit the Purchaser to exercise its right to
convert the Debenture by telecopying a duly executed and completed notice of
conversion or exercise, as applicable, containing Purchaser's name, address and
amount of the Debenture to be converted, in a form understandable by the Company
and delivering within five business days thereafter, the original notice of
conversion and Debenture (the "Original Documentation"), by express courier.
Each date on which a notice of conversion is telecopied to and received by the
Company (pursuant to Paragraph 11 hereof) in accordance with the provisions
hereof shall be deemed a Conversion Date. The Company will issue the
certificates representing the Conversion Shares via express courier within five
business days after receipt by the Company of the Original Documentation.
19. Liquidated Damages for Failure to Deliver. The Company understands
that a delay beyond the deadline for delivery, specified in Paragraph 16, could
result in economic loss to the Purchaser. As compensation to the Purchaser for
such loss, the Company agrees to pay late payments to the Purchaser for the late
issuances of shares issuable at conversion or exercise in accordance with the
following schedule (where "No. Business Days Late" is defined as the number of
business days beyond five business days after receipt by the Company of the
original documentation):
No.
Business Days Late Payment for Each $5,000 of
Late Debenture Being Converted
------------- -------------------------------
5 $50.00
6 $100.00
7 $150.00
8 $200.00
9 $250.00
10 $300.00
11 $350.00
12 $400.00
>13 $400 + $100.00 for each Business
Day Late Beyond 10 Days
The Company shall make any payments incurred under this Section in
immediately available funds upon demand. Nothing herein shall limit a
Purchaser's right to actual damages for the Company's failure to issue and
deliver the Conversion Shares to the Purchaser. Furthermore, in addition to any
other remedy which may be available to the Purchaser, in the event that the
Company fails for any reason to effect delivery of Conversion Shares within five
business days after the date on which the Company has received the Original
Documentation, the Purchaser will be entitled to elect to be deemed to be
treated as not having exercised the relevant Notice of Conversion by delivering
a notice to such effect to the Company whereupon the Company and the Purchaser
shall each be restored to their respective positions immediately prior to such
Notice of Conversion; provided, however, that no such election shall constitute
-18-
waiver of any right or remedy Purchaser may have and the Company shall still be
obligated not withstanding any such election to make penalty payments hereunder
and for any actual damages.
20. Non-Delivery of the Shares. If, within five business days of the date
after receipt by the Company of the Original Documentation, the Company shall
fail to (i) issue the Conversion Shares and (ii) deliver to the Purchaser the
Conversion Shares for any reason other than failure by the Purchaser to comply
with its obligations hereunder, then the Company shall:
(a) hold the Purchaser harmless against any loss, claim or damage
arising from or as a result of such failure by the Company (including, without
limitation, any such loss, claim or damage resulting from an obligation to
resell the Conversion Shares); and
(b) reimburse the Purchaser for all of its out-of-pocket expenses
reasonably incurred, including fees and disbursements of its counsel, incurred
by the Purchaser in connection with this Agreement and the transactions
contemplated herein; provided, however, that the Company shall not have further
liability to the Purchaser except as provided for in this Section 18.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer(s) of each party hereto as of the date first above
written.
Purchaser: RPM Incorporated:
____________________________ By____________________________
Name:
Title:
The Tirex Corporation
By___________________________
Name:
Title:
-19-
