Exhibit 10(i)
SECURITIES PURCHASE AND SUPPLEMENTAL
EXCHANGE RIGHTS AGREEMENT
SECURITIES PURCHASE AND SUPPLEMENTAL EXCHANGE RIGHTS AGREEMENT (the
"Agreement"), dated as of September 29, 2000 by and among Pro Tech
Communications, Inc., a Florida Corporation, with headquarters located at 0000
Xxxxxxxxxx 00xx Xxxxxx, Xxxx Xxxxxx, Xxxxxxx 00000 ("Pro Tech"), NCT Group,
Inc., a Delaware corporation, with headquarters located at 0000 Xxxx Xxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("NCT"), Balmore Funds, S.A.
("Balmore"), Austost Anstalt Xxxxxx ("Austost") and Zakeni Limited ("Zakeni",
"Balmore" and "Austost" are referred to herein collectively as the "Buyers" and
individually as the "Buyer").
WHEREAS, Pro Tech, NCT and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("Regulation D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
WHEREAS, Pro Tech has authorized a new series of Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), designated the Series A Convertible
Preferred Stock (the "Series A Preferred Shares") with a stated value of $1,000
per share ("Stated Value") and an accretion rate of 4% per annum on the Stated
Value ("4% Accretion"), which shall be convertible into shares of Pro Tech's
common stock, $0.001 par value per share (the "Common Stock") (as converted, the
"Conversion Shares"), in accordance with the terms of Pro Tech's Articles of
Amendment to Articles of Incorporation dated as of September 29, 2000 (the
"Articles of Amendment"), to be filed by Pro Tech with the Secretary of State of
the State of Florida on or prior to the Closing (as defined herein)
substantially in the form attached hereto as Exhibit "A";
WHEREAS, Pro Tech shall issue Warrants (as defined below) to Buyers on the
Closing Date to purchase shares of Common Stock ("Warrant Shares") as additional
consideration to induce Buyers to enter into this Agreement;
WHEREAS, the Buyers desire to purchase from Pro Tech, and Pro Tech desires
to issue and sell to the Buyers, upon the terms and conditions stated in this
Agreement, an aggregate amount of 1,500 shares of Series A Preferred Stock in
the respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers attached hereto;
WHEREAS, NCT is granting the Buyers supplemental exchange rights whereby
the Buyers may, in accordance with and subject to the terms of this Securities
Purchase Agreement, exchange Series A Preferred Shares for shares of NCT's
common stock, $0.01 par value per share (the "NCT Common Stock") (as exchanged,
the "Exchange Shares"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, (1) Pro Tech and the Buyers are executing and delivering a
Registration Rights Agreement substantially in the form attached hereto as
Exhibit "B" (the "Pro Tech Registration Rights Agreement") pursuant to which Pro
Tech has agreed to provide certain registration rights under the 1933 Act and
the rules and regulations promulgated thereunder, and applicable state
securities laws, and (2) NCT and the Buyers are executing and delivering a
Registrations Rights Agreement substantially in the form hereto as Exhibit "C"
(the "NCT Registration Rights Agreement") pursuant to which NCT has agreed, as
the case may arise, to provide certain registration rights under the 1933 Act
and the rules and regulations promulgated thereunder, and applicable state
securities laws.
NOW THEREFORE, in consideration of the premises hereof and the mutual
covenants, representations and warranties contained herein, Pro Tech, NCT and
the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF SERIES A PREFERRED SHARES.
a. Purchase of Series A Preferred Shares. Subject to the satisfaction (or
waiver) of the conditions precedent to Closing (as defined below) as set forth
in Sections 9, 10 and 11 below, on the Closing Date (as defined below), Pro Tech
shall issue and sell to the Buyers, and the Buyers shall purchase from Pro Tech,
an aggregate amount of 1,500 shares of Series A Preferred Shares, in
consideration for an aggregate of $1,500,000 cash (the "Purchase Price") in the
respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers.
b. Closing Date. The date and time of the closing (the "Closing Date")
shall be 10:00 a.m. Eastern Daylight Savings Time, within five (5) business days
following the date hereof, subject to notification of satisfaction (or waiver)
of the conditions precedent to Closing set forth herein (or such later date as
is mutually agreed to in writing by Pro Tech, NCT and the Buyers). The closing
(the "Closing") shall occur on the Closing Date at the offices of Steel Xxxxxx &
Xxxxx LLP, located at 000 Xxxxx Xxxxxxxx Xxxx., 00xx Xxxxx, Xxxxx, Xxxxxxx
00000.
c. Form of Payment. On the Closing Date, (i) each Buyer shall pay the
Purchase Price for the Series A Preferred Shares to be issued and sold to such
Buyer at the Closing, in United States dollars by wire transfer of immediately
available funds to an account designated in writing by Pro Tech for such
purpose. Pro Tech shall deliver share certificates representing such Series A
Preferred Shares, which such Buyer is then purchasing (as indicated opposite
such Buyer's name on the Schedule of Buyers), duly executed on behalf of Pro
Tech and registered in the name of such Buyer or its designee (the "Series A
Certificates").
2. WARRANTS.
a. Pro Tech will issue to Balmore Funds, S.A. a warrant ("Balmore Warrant")
to purchase 1,500,000 shares of Common Stock at an exercise price of $0.50 per
share, substantially in the form attached hereto as Exhibit "D" ("Balmore
Warrant Agreement").
b. Pro Tech will issue to Austost Anstalt Xxxxxx a warrant ("Austost
Warrant" ) to purchase 1,500,000 shares of Common Stock at an exercise price of
$0.50 per share, substantially in the form attached hereto as Exhibit "E"
("Austost Warrant Agreement").
c. Pro Tech will issue to Zakeni Limited a warrant ("Zakeni Warrant" and
together with the Balmore Warrant and the Austost Warrant, the "Warrants") to
purchase 1,500,00 shares of Common Stock at an exercise price of $0.50 per
share, substantially in the form attached hereto as Exhibit "F" ("Zakeni Warrant
Agreement" and together with the Balmore Warrant Agreement and the Austost
Warrant Agreement, the "Warrant Agreements").
3. BUYER'S SUPPLEMENTAL RIGHTS TO EXCHANGE SERIES A PREFERRED SHARES FOR
NCT COMMON STOCK
Any Buyer of Series A Preferred Shares shall be entitled, at its sole
election and in lieu of a Buyer's conversion rights provided for in the Articles
of Amendment, to exchange shares of Series A Preferred Stock for shares of NCT
Common Stock on the following terms and conditions:
a. Exchange Rights. At any time on or after six (6) months after the
Issuance Date (as defined below), a Buyer of Series A Preferred Shares shall
have the right, at such Buyer's option, to exchange up to and including fifty
percent (50%) of such Series A Preferred Shares for fully paid and nonassessable
shares of NCT Common Stock at the Exchange Rate (as defined below). Furthermore,
at any time on or after twelve (12) months after the Issuance Date (as defined
below), a Buyer of Series A Preferred Shares shall also have the right, at such
Buyer's option, to exchange up to and including one hundred percent (100%) of
such Series A Preferred Shares for fully paid and nonassessable shares of NCT
Common Stock at the Exchange Rate (as defined below).
b. Exchange Rate. The number of shares of NCT Common Stock issuable upon
exchange of each of the Series A Preferred Shares pursuant to this Section 3
shall be determined according to the following formula (the "Exchange Rate"):
Face Value Number of Shares of
---------------- = ---------------------
Exchange Price NCT Common Stock
provided that NCT shall have the option to pay the 4% Accretion accrued on each
Series A Preferred Share in either cash or cash equivalents. If NCT elects to
pay the 4% Accretion accrued in cash or cash equivalents, the Exchange Rate
shall be:
Stated Value Number of Shares of
------------- = ---------------------
Exchange Price NCT Common Stock
For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Face Value" equals the Stated Value plus the 4% Accretion accrued on
each share of Series A Preferred Stock;
(ii) "Exchange Price" means the amount obtained by multiplying 0.8 by the
lowest average of the average Closing Bid Price (as defined below) for the NCT
Common Stock for any consecutive five (5) day trading period out of the fifteen
(15) trading days preceding such relevant date;
(iii) "Closing Bid Price" means, for any security as of any date, the last
closing bid price on the Nasdaq National Market System (the "Nasdaq-NM") as
reported by Bloomberg Financial Markets ("Bloomberg"), or, if the Nasdaq-NM is
not the principal trading market for such security, the last closing bid price
of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such security in the
over-the-counter market on the pink sheets or bulletin board for such security
as reported by Bloomberg, or, if no closing bid price is reported for such
security by Bloomberg, the last closing trade price of such security as reported
by Bloomberg. If the Closing Bid Price cannot be calculated for such security on
such date on any of the foregoing bases, the Closing Bid Price of such security
on such date shall be the fair market value as reasonably determined in good
faith by the Board of Directors of the issuer of the security (all as
appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period); and
(iv) "Issuance Date" means the Closing Date.
c. Buyer's Delivery Requirements. To exchange Series A Preferred Shares
into full shares of NCT Common Stock on any date (such date, an "Exchange Date")
in accordance with and subject to the terms and conditions set forth in Section
3(a) hereof, the Buyer thereof shall (A) deliver or transmit by facsimile, for
receipt on or prior to 11:59 p.m., Eastern Time, on such date, a copy of a fully
executed notice of exchange in the form attached hereto as Exhibit "G" (the
"Notice of Exchange") to NCT (c/o Xx Xxxxxxx, NCT Group, Inc., 00 Xxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, facsimile number (000) 000-0000, with a
copy to Pro Tech at the address given in Section 14(g) herein, and (B) surrender
to a common carrier for delivery to NCT as soon as practicable following such
notice, the original certificates representing the Series A Preferred Shares,
duly endorsed for transfer or accompanied by a duly executed assignment, being
exchanged (or an indemnification undertaking with respect to such certificates
in the case of their loss, theft or destruction) (the "Preferred Stock
Certificates") and the originally executed Notice of Exchange.
d. NCT Response. Upon receipt by NCT of a facsimile copy of a Notice of
Exchange, NCT shall immediately send, via facsimile, a confirmation of receipt
of such Notice of Exchange to such Buyer ("Confirmation of Receipt"). Upon
receipt by NCT of the Preferred Stock Certificates to be exchanged pursuant to a
Notice of Exchange, together with the originally executed Notice of Exchange
(such date, "NCT's Receipt"), NCT or NCT's Transfer Agent (as applicable) shall,
within five (5) business days following NCT's Receipt, issue and surrender to a
common carrier for overnight delivery to the address as specified in the Notice
of Exchange, a certificate, duly executed on behalf of NCT and registered in the
name of the Buyer or its designee, for the number of shares of NCT Common Stock
(the "Exchange Shares") to which the Buyer shall be entitled.
e. Record Holder. The person or persons entitled to receive the Exchange
Shares shall be treated for all purposes as the record holder or holders of such
shares of NCT Common Stock on the Exchange Date. NCT shall be treated by Pro
Tech for all purposes as the record holder of such shares of Series A Preferred
Shares on the Exchange Date, and Pro Tech shall amend its records to so reflect.
f. NCT's Failure to Timely Exchange. If NCT shall fail to issue to a Buyer
within seven (7) business days following NCT's Receipt, a certificate for the
Exchange Shares, in addition to all other available remedies which such Buyer
may pursue hereunder, (i) NCT shall pay additional damages to such Buyer on each
day after the seventh (7th) business day following NCT's Receipt until the day
delivery is effected or a Redemption (as defined below) has occurred, an amount
equal to 1.0% of the product of (A) the number of shares of NCT Common Stock not
issued to the Buyer and to which such Buyer is entitled and (B) the Closing Bid
Price (the "Redemption Price") of the NCT Common Stock on the business day
following NCT's Receipt, and (ii) with respect to the unexchanged shares of
Series A Preferred Stock, a Buyer shall have the right, in its sole discretion,
to require NCT to redeem for cash from such Buyer those Series A Preferred
Shares for which NCT has failed to issue Exchange Shares in accordance with such
Buyer's Notice of Exchange (a "Redemption"), at the Redemption Price. The
parties agree (i) that the timely exchange of Series A Preferred Shares for
Exchange Shares is a material element of this Agreement, (ii) that the Buyers
will suffer damages which may be difficult to quantify if NCT fails, for any
reason, to timely deliver the Exchange Shares, and (iii) that any amount paid
under this subsection shall be paid as liquidated damages and not as a penalty.
4. BUYER'S REPRESENTATIONS AND WARRANTEES.
Each Buyer, with respect to only itself, represents and warrants to Pro
Tech and NCT that:
a. Investment Purpose. Such Buyer is acquiring (A) the Series A Preferred
Shares, and (i) upon conversion of the Series A Preferred Shares, will acquire
the Conversion Shares then issuable or (ii) upon any exchange of the Series A
Preferred Shares, will acquire the Exchange Shares then issuable and (B) the
Warrants, pursuant to the terms and conditions of the Warrant Agreements, and
upon exercise of the Warrants, will acquire Warrant Shares, for its own account
for investment purposes only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold any Series
A Preferred Shares, Conversion Shares, Exchange Shares, Warrants or Warrant
Shares for any minimum or other specific term and reserves the right to dispose
of Series A Preferred Shares, Conversion Shares, Exchange Shares, Warrants or
Warrant Shares at any time in accordance with or pursuant to an effective
registration statement under the 1933 Act and in compliance with applicable
state securities laws or an exemption from such registration.
b. Accredited Investor Status. Such Buyer is an "accredited investor" as
that term is defined in Rule 501(a)(3) of Regulation D. As such, the Buyer is
able to bear the economic risk of an investment in the Series A Preferred Shares
and, as of the date hereof, is able to afford a total and complete loss of its
investment.
c. Sophisticated Investors. Such Buyer has such knowledge, skill and
experience in business, financial and investment matters so that it is capable
of evaluating the merits and risk of an investment in the Series A Preferred
Shares, the Conversion Shares, the Exchange Shares and the Warrant Shares and,
to the extent necessary, has retained, at its own expense, and relied upon
appropriate professional advice regarding the investment, tax and legal merits
and consequences of such Buyer's investments in the Series A Preferred Shares,
the Conversion Shares, the Exchange Shares and the Warrant Shares.
d. Reliance on Exemptions. Such Buyer understands and acknowledges that the
Series A Preferred Shares, the Conversion Shares, the Exchange Shares, the
Warrants and the Warrant Shares are being offered and sold to it in a private
placement in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that Pro Tech and NCT are
relying in part upon the truth and accuracy of, and such Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire
such securities.
e. Information. Such Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of Pro Tech
and NCT and materials relating to the offer and sale of the Series A Preferred
Shares, the Conversion Shares, the Exchange Shares, the Warrants and the Warrant
Shares which have been requested by such Buyer. Such Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of Pro Tech and NCT.
Neither such inquiries nor any other due diligence investigations conducted by
the Buyer or its advisors, if any, or their representatives shall modify, amend
or affect the Buyer's right to rely on Pro Tech's representations and warranties
contained in Section 5 below or NCT's representations and warranties contained
in Section 6 below. Such Buyer understands that its investment in the Series A
Preferred Shares, the Conversion Shares, the Exchange Shares, the Warrants and
the Warrant Shares involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Series A
Preferred Shares, the Conversion Shares, the Exchange Shares, the Warrants and
the Warrant Shares.
f. No Governmental Review. Such Buyer 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 Series A Preferred
Shares, the Conversion Shares, the Exchange Shares, the Warrants or the Warrant
Shares, or the fairness or suitability of the investment in the Series A
Preferred Shares, the Conversion Shares, the Exchange Shares, the Warrants or
the Warrant Shares, nor have such authorities passed upon or endorsed the merits
of the offering of the Series A Preferred Shares, the Conversion Shares, the
Exchange Shares, the Warrants or the Warrant Shares.
g. No Broker Commissions or Finder Fees. To the best of its knowledge, such
Buyer has taken no action which would give rise to any claim by any person for
brokerage commissions, finders' fees or the like relating to this Agreement or
the transactions contemplated hereby.
h. Buyer Liquidity. Such Buyer has adequate means of providing for its
current needs and foreseeable financial contingencies.
i. Transfer or Resale of Series A Preferred Shares, Conversion Shares,
Warrants and Warrant Shares. Such Buyer understands that except as provided in
the Pro Tech Registration Rights Agreement: (i) the Series A Preferred Shares,
the Conversion Shares, the Warrants and the Warrant Shares have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned, transferred or otherwise disposed of by
such Buyer unless (a) subsequently registered under the 1933 Act and state
securities laws, if applicable, (b) such Buyer shall have delivered to Pro Tech
an opinion of counsel, in form and substance reasonably satisfactory to Pro
Tech, to the effect that such securities to be sold, assigned, transferred or
otherwise disposed of may be sold, assigned, transferred or otherwise disposed
of pursuant to an exemption from such registration, (c) such Buyer provides Pro
Tech with written customary assurance that such securities can be sold,
assigned, transferred or otherwise disposed of pursuant to Rule 144 promulgated
under the 1933 Act (or a successor rule thereto) ("Rule 144"), or (d) such Buyer
exchanges the Series A Preferred Shares for Exchange Shares pursuant to Section
3 above; (ii) any sale of such securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 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 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither Pro Tech nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws, if applicable, or to comply with the terms and conditions of
any exemption thereunder. Notwithstanding the registration or qualification of
the Series A Preferred Stock, the Conversion Shares, the Warrants and the
Warrant Shares of such Buyer in accordance with Section 4(i)(i)(a) through
Section 4(i)(i)(d), such Buyer agrees not to knowingly sell, transfer, assign,
pledge, exchange, hypothecate or otherwise dispose of such Series A Preferred
Stock, the Conversion Shares, the Warrants and the Warrant Shares and any
registration rights thereto to a Competitor (as defined in Section 12(b) hereof
) of Pro Tech or its affiliates (as defined in Rule 501 of Regulation D of the
0000 Xxx) ("Affiliates").
j. Transfer or Resale of Exchange Shares. Such Buyer understands that
except as provided in the NCT Registration Rights Agreement: (i) the Exchange
Shares have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned,
transferred or otherwise disposed of by such Buyer unless (a) subsequently
registered under the 1933 Act and state securities laws, if applicable, (b) such
Buyer shall have delivered to NCT an opinion of counsel, in form and substance
reasonably satisfactory to NCT, to the effect that such securities to be sold,
assigned, transferred or otherwise disposed of may be sold, assigned,
transferred or otherwise disposed of pursuant to an exemption from such
registration, or (c) such Buyer provides NCT written customary assurance that
such securities can be sold, assigned, transferred or otherwise disposed of
pursuant to Rule 144; (ii) any sale of such securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 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 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither NCT nor any other person is
under any obligation to register such securities under the 1933 Act or any state
securities laws, if applicable, or to comply with the terms and conditions of
any exemption thereunder.
k. Legends on Series A Preferred Shares, Conversion Shares, Warrants and
Warrant Shares. Such Buyer understands that the certificates or other
instruments representing (A) the Series A Preferred Shares and, until such time
as the sale of the Conversion Shares have been registered under the 1933 Act as
contemplated by the Pro Tech Registration Rights Agreement, the stock
certificates representing the Conversion Shares and (B) the Warrants and, until
such time as the sale of the Warrant Shares have been registered under the 1933
Act as contemplated by the ProTech Registration Rights Agreement, the stock
certificates representing the Warrant Shares, shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN CUSTOMARY FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and Pro Tech shall issue a
certificate or other instrument without such legend to the holder of the Series
A Preferred Shares, the Conversion Shares, and the Warrant Shares, upon which it
is stamped, if, unless otherwise required by state securities laws, (i) with
respect to the Conversion Shares and the Warrant Shares only, the sale of the
Conversion Shares or the Warrant Shares is registered under the 1933 Act,
respectively, (ii) in connection with a sale transaction, such holder provides
Pro Tech with an opinion of counsel, in form and substance reasonably acceptable
to Pro Tech, to the effect that a public sale, assignment, transfer or other
disposition of the Series A Preferred Shares, the Conversion Shares, the
Warrants and the Warrant Shares may be made without registration under the 1933
Act, or (iii) such holder provides Pro Tech with written customary assurance
that the Series A Preferred Shares, the Conversion Shares, the Warrants and the
Warrant Shares can be sold pursuant to Rule 144.
l. Legends on Exchange Shares. Such Buyer understands that the certificates
or other instruments representing the Exchange Shares and, until such time as
the sale of the Exchange Shares have been registered under the 1933 Act as
contemplated by the NCT Registration Rights Agreement, the stock certificates
representing the Exchange Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN CUSTOMARY
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.
The legend set forth above shall be removed and NCT shall issue a certificate
without such legend to the holder of the Exchange Shares, upon which it is
stamped, if, unless otherwise required by state securities laws, (i) with
respect to the Exchange Shares, the sale of the Exchange Shares is registered
under the 1933 Act, (ii) in connection with a sale transaction, such holder
provides NCT with an opinion of counsel, in form and substance reasonably
acceptable to NCT, to the effect that a public sale, assignment, transfer or
other disposition of the Exchange Shares may be made without registration under
the 1933 Act, or (iii) such holder provides NCT with written customary assurance
that the Exchange Shares can be sold pursuant to Rule 144.
x. Xxxxxx; Authorization; Enforceability. Such Buyer has all corporate or
company power and authority to enter into and perform this Agreement. This
Agreement has been duly and validly authorized, executed and delivered on behalf
of such Buyer and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, except as such enforceability may be limited by
general principles of equity and bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally the enforcement of, applicable creditors' rights and remedies.
n. Conflicts. Except as disclosed in Schedule 4(n), the execution, delivery
and performance of this Agreement by such Buyer and the consummation by such
Buyer of the transactions contemplated hereby will not (i) conflict with or
violate its organizational charters or by-laws, (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
such Buyer is a party, or (iii) to such Buyer's knowledge, result in a violation
of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer or any of its subsidiaries, or
by which any property or asset of such Buyer or any of its subsidiaries is bound
or affected.
5. REPRESENTATIONS AND WARRANTIES OF PRO TECH.
Pro Tech represents and warrants to each of the Buyers and NCT that:
a. Organization and Qualification. Pro Tech is a corporation duly organized
and validly existing in good standing under the laws of the state of Florida,
and has the requisite corporate power and authority to own and lease its
properties (if any) and assets and to carry on its business as now being
conducted. Pro Tech is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the business, operations,
properties, financial condition or results of operations of Pro Tech. As of the
date hereof, Pro Tech has no Subsidiaries. For purposes of this Agreement,
"Subsidiaries" or "Subsidiary" of a person or entity shall mean any corporation,
partnership, limited liability company, association or other business entity at
least fifty percent (50%) of the outstanding voting power of which is at the
time owned or controlled directly or indirectly by such person or entity or by
one or more of such subsidiary entities, or both.
b. Authorization, Enforcement, Compliance with Other Instruments. Pro Tech
has the requisite corporate power and authority to enter into and perform this
Agreement, the Pro Tech Registration Rights Agreement and any related agreements
(collectively, the "Transaction Documents"), and to issue the Series A Preferred
Shares, the Conversion Shares, the Warrants and the Warrant Shares in accordance
with and subject to the terms and conditions hereof and thereof. The Articles of
Amendment have been duly authorized by the Board of Directors of Pro Tech and
shall be filed with the Secretary of State of the State of Florida on or prior
to the Closing. The execution and delivery of the Transaction Documents by Pro
Tech and the consummation by it of the transactions contemplated thereby,
including, without limitation, the issuance of the Series A Preferred Shares and
the Warrants and the reservation for issuance and subsequent issuance of the
Conversion Shares and the Warrant Shares issuable upon conversion or exercise
thereof, have been duly authorized by Pro Tech's Board of Directors and no
further consent or authorization is required by Pro Tech, its Board of Directors
or its shareholders. The Transaction Documents have been duly executed and
delivered by Pro Tech and, when delivered, constitute the valid and binding
obligations of Pro Tech enforceable against Pro Tech in accordance with their
terms, except as such enforceability may be limited by general principles of
equity and applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies, and subject to the limitation that the
indemnification and contribution provisions of the Pro Tech Registration Rights
Agreement may be unenforceable as a matter of public policy. On or prior to the
Closing Date, the Articles of Amendment will be filed with the Secretary of
State of the State of Florida and will be in full force and effect, enforceable
against Pro Tech in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized capital stock of
Pro Tech consists of 40,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock, of which as of September 14, 2000, 4,266,000 shares of Common
Stock were issued and outstanding (as reflected in the Pro Tech's Quarterly
Report on Form 10-QSB filed on September 14, 2000, as amended) and, except for
(i) that certain Promissory Note dated March 27, 2000, in the amount of One
Hundred Fifty Thousand Dollars ($150,000), executed by Pro Tech payable to
Westek Communications ("Westek Note"), (ii) that certain Promissory Note dated
June 6, 2000, in the amount of One Hundred Thousand Dollars ($100,000), executed
by Pro Tech payable to Balmore, S.A. ("Balmore Note"), (iii) that certain
Promissory Note dated June 7, 2000, in the amount of One Hundred Thousand
Dollars ($100,000), executed by Pro Tech payable to Austost Anstalt Xxxxxx
("Austost Note"), and (iv) that certain Promissory Note dated July 6, 2000, in
the amount of Ninety-Nine Thousand Nine Hundred Seventy-Five Dollars ($99,975),
executed by Pro Tech payable to Zakeni Limited ("Zakeni Note"), no shares of
preferred stock, debentures or notes were issued and outstanding. All of such
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. Except as disclosed in Schedule 5(c), no shares of
Common Stock or Preferred Stock are subject to preemptive or similar rights or
any liens or encumbrances suffered or permitted by Pro Tech. Except as disclosed
in Schedule 5(c), as of the effective date of this Agreement:
(i) 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, any shares of capital stock of Pro Tech, or
contracts, commitments, understandings or arrangements by which Pro Tech is or
may become bound to issue additional shares of capital stock of Pro Tech;
(ii) there are no outstanding debt securities; and
(iii) there are no unperformed agreements or arrangements under which Pro
Tech is obligated to register the sale of any of their securities under the 1933
Act (except the Pro Tech Registration Rights Agreement).
Pro Tech has furnished to each Buyer true and correct copies of Pro Tech's
Amended and Restated Articles of Incorporation, as amended and as in effect on
the date hereof (the "Articles of Incorporation"), and Pro Tech's Bylaws, as in
effect on the date hereof (the "Bylaws").
d. Issuance of Securities. The Series A Preferred Shares are duly
authorized and, when issued and paid for in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, (ii) free from all
taxes, liens, encumbrances, security interests and charges with respect to the
issue thereof, and (iii) entitled to the rights and preferences set forth in the
Articles of Amendment. The Conversion Shares issuable upon conversion of the
Series A Preferred Shares have been duly authorized. Upon conversion or exercise
in accordance with the Articles of Amendment, the Conversion Shares will be
validly issued, fully paid and nonassessable, free from all taxes, liens,
encumbrances, security interests and charges with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common
Stock. The Warrants and the Warrant Shares issuable upon exercise of the
Warrants have been duly authorized. Upon exercise of the Warrants in accordance
with the Warrant Agreements, the Warrant Shares will be validly issued, fully
paid and nonassessable, free from all taxes, liens, encumbrances, security
interests and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.
e. No Conflicts. Except as disclosed in Schedule 5(e), the execution,
delivery and performance of this Agreement by Pro Tech and the consummation by
Pro Tech of the transactions contemplated hereby will not (i) conflict with or
violate the Articles 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 Pro Tech is a party, which conflict or default would have a
material adverse effect on the business, operations, properties, financial
condition or results of operations of Pro Tech, or (iii) to Pro Tech's
knowledge, result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the Common
Stock is traded or listed) applicable to Pro Tech, or by which any property or
asset of Pro Tech is bound or affected.
f. No Default or Violation. Except as disclosed in Schedule 5(f), Pro Tech
is not in violation of any term of or in default under its Articles of
Incorporation or By-laws, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to Pro Tech. To Pro Tech's knowledge, the business
of Pro Tech is not being conducted, and shall not be conducted in violation of
any law, ordinance or regulation of any governmental entity.
g. Consents. Except as specifically contemplated by this Agreement and as
required under the 1933 Act and applicable state securities laws, Pro Tech is
not required to obtain any consent, waiver, authorization or order of, or make
any filing or registration with, any court or governmental agency in connection
with the execution, delivery or performance of any of its obligations under or
contemplated by this Agreement or the Pro Tech Registration Rights Agreement in
accordance with the terms hereof or thereof. Except as disclosed in Section 7(f)
and Schedule 5(g), all consents, authorizations, orders, filings and
registrations which Pro Tech is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.
h. SEC Documents: Financial Statements. Since January 1, 1998, Pro Tech has
timely filed all reports, schedules, forms, statements and other documents,
except for Pro Tech's last filed Quarterly Report on Form 10-QSB for the period
ended July 31, 2000, required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act") (all of the foregoing materials filed prior to the date hereof and
all exhibits included therein and financial statements, schedules and documents
incorporated by reference therein, being hereinafter collectively referred to as
the "SEC Documents"). Pro Tech has delivered to each Buyer or its representative
true and complete copies of the SEC Documents. As of their respective dates, the
financial statements of Pro Tech contained in the SEC Documents (the "Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as in effect at the time of filing. Such Financial Statements
have been prepared in accordance with United States 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 Pro Tech 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). No other information provided by or on behalf of Pro Tech to
each Buyer which is not included in the SEC Documents, including, without
limitation, information referred to in Section 4(d) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.
i. Absence of Certain Changes. Except as disclosed in Schedule 5(i), since
the date of the financial statements included in Pro Tech's last filed Quarterly
Report on Form 10-QSB for the period ended July 31, 2000, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of Pro Tech. Pro Tech has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law, nor does Pro
Tech have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
j. Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to Pro Tech's knowledge,
threatened against or affecting Pro Tech or the Common Stock wherein an
unfavorable decision, ruling or finding would (i) have a material adverse effect
on the transactions contemplated hereby; (ii) adversely affect the validity or
enforceability of, or the authority or ability of Pro Tech to perform its
obligations under, the Transaction Documents; or (iii) except as expressly set
forth in Schedule 5(j), reasonably be expected to have a material adverse effect
on the business, operations, properties, financial condition or results of
operation of Pro Tech.
k. Acknowledgment Regarding Buyer's Purchase of Series A Preferred Shares.
Pro Tech acknowledges and agrees, based upon each Buyer's representations, that
each Buyer is acting solely in the capacity of an arms-length purchaser with
respect to this Agreement and the transactions contemplated hereby. Pro Tech
further acknowledges that each Buyer is not acting as a financial advisor or
fiduciary of Pro Tech (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by each
Buyer or any of its respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Series A Preferred Shares, the Conversion Shares or the
Warrant Shares. Pro Tech further represents to each Buyer that Pro Tech's
decision to enter into this Agreement has been based solely on the independent
evaluation by Pro Tech and its representatives.
l. No Undisclosed Events, Liabilities, Developments or Circumstances. To
Pro Tech's knowledge, no event, liability, development or circumstance has
occurred or exists, or is contemplated to occur, with respect to Pro Tech or its
business, properties, prospects, operations or financial condition, which could
be material but which has not been publicly announced or disclosed in writing to
the Buyer.
m. No General Solicitation. Neither Pro Tech, nor any of its Affiliates,
nor any person acting on its or their behalf, has distributed any offering
materials or engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 0000 Xxx) in connection with the
offer or sale of the Series A Preferred Shares, the Conversion Shares, the
Warrants or the Warrant Shares.
n. Employee Relations. Pro Tech is not involved in any labor dispute nor,
to Pro Tech's knowledge is any such dispute threatened. None of Pro Tech's
employees is a member of a union and Pro Tech believes that its relations with
its employees are satisfactory.
o. Environmental Laws. Pro Tech, to Pro Tech's knowledge, (i) is in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"); (ii) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business; and (iii) is in compliance with all material terms and conditions
of any such permit, license or approval.
p. Title. Pro Tech has good and marketable title to, or the right to use,
all personal property owned or leased by it which is material to the business of
Pro Tech, in each case free and clear of all liens, encumbrances and defects,
except as described in Schedule 5(p) and except for those which do not
materially affect the value of such property or interfere with the use made and
proposed to be made of such property by Pro Tech. Pro Tech does not own any real
property. Any real property and facilities held under lease by Pro Tech are held
by it under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be made of
such property and buildings by Pro Tech .
q. Insurance. Pro Tech is insured by insurers which Pro Tech believes are
of recognized financial responsibility against such losses and risks and in such
amounts as management of Pro Tech believes to be prudent and customary in the
businesses in which Pro Tech is engaged. Pro Tech has no knowledge that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or obtain similar coverage from like insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations
of Pro Tech.
r. Regulatory Permits. Pro Tech, to Pro Tech's knowledge, possesses all
certificates, authorizations, licenses and permits required by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its
business, except where failure to have such certificates, authorizations,
licenses or permits would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business or operations of Pro Tech. Pro
Tech has no knowledge of, or has not received notice of, proceedings relating to
the revocation or modification of any such certificate, authorization, license
or permit.
s. Internal Accounting Controls. Pro Tech maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
t. No Materially Adverse Contracts, etc. Pro Tech is not subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which, in the judgment of Pro Tech's officers, has or is
reasonably expected in the future to have a material adverse effect on the
businesses, properties, operations, financial condition, results of operations
or prospects of Pro Tech. Pro Tech is not a party to any contract or agreement
which, in the judgment of Pro Tech's officers, has or is reasonably expected to
have a material adverse effect on the businesses, properties, operations,
financial condition, results of operations or prospects of Pro Tech.
u. Tax Status. Except as set forth on Schedule 5(u), Pro Tech has made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that Pro Tech has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations (except those being contested in good faith) and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of Pro Tech have no
knowledge of, and know of no basis for, any such claim.
v. Certain Transactions. Except as set forth on Schedule 5(v), in the SEC
Documents and arms-length transactions pursuant to which Pro Tech makes payments
in the ordinary course of business upon terms no less favorable than Pro Tech
could obtain from third parties and other than the grant of stock options
disclosed on Schedule 5(c), none of the officers, directors, or employees of Pro
Tech is presently a party to any transaction with Pro Tech (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to Pro
Tech's knowledge, any corporation, partnership, trust or other entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
w. Dilutive Effect. Pro Tech understands and acknowledges that the number
of Conversion Shares and Warrant Shares issuable upon conversion of the Series A
Preferred Shares and exercise of the Warrants will increase in certain
circumstances. Pro Tech further acknowledges that its obligation to issue
Conversion Shares upon the conversion of the Series A Preferred Shares in
accordance with this Agreement and the Articles of Amendment is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders of Pro Tech. Pro Tech further
acknowledges that its obligation to issue Warrant Shares upon the exercise of
the Warrants in accordance with this Agreement and the Warrants is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of Pro Tech.
x. Fees and Rights of First Refusal. Pro Tech is not obligated to offer the
securities offered hereunder on a right of first refusal basis or similar right
to any third parties including, but not limited to, current or former
shareholders of Pro Tech, underwriters, brokers, agents or other third parties.
y. Investment Company. Pro Tech is not, and is not controlled by or under
common control with an Affiliate of, an "investment company" within the meaning
of the Investment Company of Act of 1940, as amended.
z. No Broker Commissions or Finder Fees. Pro Tech has taken no action which
would give rise to any claim by any person for brokerage commissions, finders'
fees or the like relating to this Agreement or the transactions contemplated
hereby.
aa. Pro Tech's Representations and Warranties Generally. To Pro Tech's
knowledge, neither this Agreement nor the Schedules attached hereto furnished by
or on behalf of Pro Tech contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein not misleading.
bb. Pro Tech's Knowledge Generally. Where any representation, warranty or
statement contained herein regarding a specific matter relating to Pro Tech or
its business or affairs is qualified by the phrase "to Pro Tech's knowledge" or
any similar phrase relating to the knowledge of Pro Tech, it is intended to mean
the actual knowledge of any executive, manager or director of Pro Tech, and an
individual shall be deemed to have "knowledge" of a particular fact,
circumstance or other matter if: (a) such person is actually aware of such fact
or matter or (b) a prudent individual would be expected to discover or otherwise
become aware of such fact, circumstance or other matter in the course of
conducting a reasonable inquiry concerning the truth or existence of such fact,
circumstance, or other matter.
6. REPRESENTATIONS AND WARRANTIES OF NCT
NCT represents and warrants to each of the Buyers that:
a. Organization and Qualification. NCT is a corporation duly organized and
validly existing in good standing under the laws of the state of Delaware, and
has the requisite corporate power and authority to own and use its properties
(if any) and assets and to carry on its business as now being conducted. NCT has
no material subsidiaries other than as set forth on NCT's most recently filed
Annual Report on Form 10-K. Each of such subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the full
corporate power and authority to carry on its business as currently conducted.
Each of NCT and its subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on NCT and its
subsidiaries taken as a whole.
b. Authorization, Enforcement, Compliance with Other Instruments. NCT has
the requisite corporate power and authority to enter into and perform this
Agreement, the NCT Registration Rights Agreement and any related agreements
(collectively, the "NCT Transaction Documents"), and to issue the Exchange
Chares in accordance with the terms hereof and thereof. The execution and
delivery of the NCT Transaction Documents by NCT and the consummation by it of
the transaction contemplated thereby, including, without limitation, the
reservation for issuance of the Exchange Shares issuable upon exchange thereof,
have been duly authorized by NCT's Board of Directors and no further consent or
authorization is required by NCT, its Board of Directors or its stockholders.
The NCT Transaction Documents have been duly executed and delivered by NCT and,
when delivered, constitute the valid and binding obligations of NCT enforceable
against NCT in accordance with their terms, except as such enforceability may be
limited by general principles of equity and applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies, and
subject to the limitation that the indemnification and contribution provisions
of the NCT Registration Rights Agreement may be unenforceable as a matter of
public policy.
c. Capitalization. As of the date hereof, the authorized capital stock of
NCT consists of 450,000,000 shares of NCT Common Stock and 10,000,000 shares of
NCT Preferred Stock, of which approximately 322,000,000 shares of NCT Common
Stock were issued and outstanding as of September 13, 2000, and, except for 924
shares of Series G Preferred Stock, no shares of preferred stock were issued and
outstanding. All of such outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 6(c), no shares of NCT Common Stock or NCT Preferred Stock are subject
to preemptive or similar rights or any liens or encumbrances suffered or
permitted by NCT. Except as disclosed in Schedule 6(c), as of the effective date
of this Agreement:
(i) there are no outstanding options, warrants, scrip, notes or debentures,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of NCT or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which NCT or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of NCT or any of its
subsidiaries;
(ii) there are no outstanding debt securities; and
(iii) there are no unperformed agreements or arrangements under which NCT
or any of its subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the NCT Registration Rights Agreement).
NCT has furnished to the Buyer true and correct copies of NCT's Restated
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and NCT's By-laws, as in effect on the
date hereof (the "NCT By-laws").
d. Issuance of Securities. The Exchange Shares issuable upon exchange of
the Series A Preferred Shares have been duly authorized. Upon the exchange and
against delivery of the Series A Preferred Shares as provided herein, the
Exchange Shares will be validly issued, fully paid and nonassessable, free from
all liens, encumbrances, security interests and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of NCT Common Stock. NCT shall pay any stamp transfer tax that may be due
in connection with any such exchange.
e. No Conflicts. Except as disclosed in Schedule 6(e), the execution,
delivery and performance of this Agreement by NCT and the consummation by NCT of
the transactions contemplated hereby will not (i) conflict with or violate the
Certificate of Incorporation or NCT 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
NCT or any of its subsidiaries is a party, or (iii) to NCT's knowledge, result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the NCT Common Stock is
traded or listed) applicable to NCT or any of its subsidiaries, or by which any
property or asset of NCT or any of its subsidiaries is bound or affected.
f. No Default or Violation. Except as disclosed in Schedule 6(f), neither
NCT nor its subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation or By-laws or their organizational charter or
by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to NCT or its subsidiaries. To NCT's knowledge,
the business of NCT and its subsidiaries is not being conducted, and shall not
be conducted in violation of any law, ordinance or regulation of any
governmental entity.
g. Consents. Except as specifically contemplated by this Agreement and as
required under the 1933 Act and applicable state securities laws, NCT is not
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or governmental agency in connection with
the execution, delivery or performance of any of its obligations under or
contemplated by this Agreement or the NCT Registration Rights Agreement in
accordance with the terms hereof or thereof. Except as disclosed in Section 7(f)
and Schedule 6(g), all consents, authorizations, orders, filings and
registrations which Pro Tech is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. NCT and
its subsidiaries have no knowledge of any facts or circumstances which might
give rise to any of the foregoing.
h. SEC Documents: Financial Statements. Since January 1, 1998, NCT has
timely 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 materials filed prior to the date hereof
and all exhibits included therein and financial statements, schedules and
documents incorporated by reference therein, being hereinafter collectively
referred to as "NCT's SEC Documents"). NCT has delivered to the Buyer or its
representative true and complete copies of NCT's SEC Documents. As of their
respective dates, the financial statements of NCT contained in NCT's SEC
Documents (the "NCT Financial Statements") complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such NCT Financial Statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such NCT
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 Pro Tech 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). No other information provided
by or on behalf of NCT to the Buyer which is not included in NCT's SEC
Documents, including, without limitation, information referred to in Section
4(d) of this Agreement, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading.
i. Absence of Certain Changes. Except as disclosed in Schedule 6(i), since
the date of the financial statements included in NCT's last filed Quarterly
Report, as amended, on Form 10-Q for the period ended June 30, 2000, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of NCT or its subsidiaries. NCT has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law, nor does NCT or its subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
j. Absence of Litigation. Except as disclosed in NCT's registration
statement on Form S-1 (Registration No. 333-87757) originally filed with the SEC
on September 24, 1999, as amended by Pre-effective Amendment No. 1 filed on
October 28, 1999, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of NCT or any of its
subsidiaries, threatened against or affecting NCT, the NCT Common Stock or any
of NCT's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a material adverse effect on the transactions contemplated hereby; (ii)
adversely affect the validity or enforceability of, or the authority or ability
of NCT to perform its obligations under, the Transaction Documents; or (iii)
except as expressly set forth in Schedule 6(j), would reasonably be expected to
have a material adverse effect on the business, operations, properties,
financial condition or results of operation of NCT and its subsidiaries taken as
a whole.
k. Acknowledgment Regarding Buyer's Purchase of Series A Preferred Shares.
NCT acknowledges and agrees, based upon Buyer's representations, that the Buyer
is acting solely in the capacity of an arms-length purchaser with respect to
this Agreement and the transactions contemplated hereby. NCT further
acknowledges that the Buyer is not acting as a financial advisor or fiduciary of
NCT (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by the Buyer or any of its
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Buyer's purchase
of the Series A Preferred Shares or exchange of the Series A Preferred Shares
for the Exchange Shares. NCT further represents to the Buyer that NCT's decision
to enter into this Agreement has been based solely on the independent evaluation
by NCT and its representatives.
l. No Undisclosed Events, Liabilities, Developments or Circumstances. To
NCT's knowledge, no event, liability, development or circumstance has occurred
or exists, or is contemplated to occur, with respect to NCT or its subsidiaries
or their respective businesses, properties, prospects, operations or financial
condition, which could be material but which has not been publicly announced or
disclosed in writing to the Buyer.
m. No General Solicitation. Neither NCT, nor any of its Affiliates, nor any
person acting on its or their behalf, has distributed any offering materials or
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 0000 Xxx) in connection with the offer or sale
of the Exchange Shares.
n. Employee Relations. Neither NCT nor any of its subsidiaries is involved
in any labor dispute nor, to the knowledge of NCT or any of its subsidiaries, is
any such dispute threatened. None of NCT's or its subsidiaries' employees is a
member of a union and NCT and its subsidiaries believe that their relations with
their employees are satisfactory.
o. Environmental Laws. NCT and its subsidiaries, to NCT's knowledge, (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"); (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
p. Title. NCT and its subsidiaries have good and marketable title to, or
the right to use, all personal property owned or leased by them which is
material to the business of NCT and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects, except as described in Schedule
6(p) and except for those which do not materially affect the value of such
property or interfere with the use made and proposed to be made of such property
by NCT and its subsidiaries. Neither NCT nor its subsidiaries own any real
property. Any real property and facilities held under lease by NCT and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by NCT and its
subsidiaries.
q. Insurance. NCT and each of its subsidiaries are insured by insurers
which NCT believes are of recognized financial responsibility against such
losses and risks and in such amounts as management of NCT believes to be prudent
and customary in the businesses in which NCT and its subsidiaries are engaged.
Neither NCT nor any such subsidiary has been refused any insurance coverage
sought or applied for, and neither NCT nor any such subsidiary has any knowledge
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or obtain similar coverage from like insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of NCT and its subsidiaries, taken as a whole.
r. Regulatory Permits. NCT and its subsidiaries possess all certificates,
authorizations, licenses and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective businesses,
except where failure to have such certificates, authorizations, licenses or
permits would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business or operations of NCT and its subsidiaries,
taken as a whole. Neither NCT nor any such subsidiary has no knowledge of, and
has received no notice of, proceedings relating to the revocation or
modification of any such certificate, authorization, license or permit.
s. Internal Accounting Controls. NCT and each of its subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
t. No Materially Adverse Contracts, etc. Neither NCT nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which, in the judgment of NCT's
officers, has or is expected in the future to have a material adverse effect on
the businesses, properties, operations, financial condition, results of
operations or prospects of NCT or its subsidiaries. Neither NCT nor any of its
subsidiaries is a party to any contract or agreement which, in the judgment of
NCT's officers, has or is expected to have a material adverse effect on the
businesses, properties, operations, financial condition, results of operations
or prospects of NCT or its subsidiaries.
u. Tax Status. Except as set forth on Schedule 6(u), NCT and each of its
subsidiaries has made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that NCT and each of its subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations (except those being contested in
good faith) and has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of NCT have no knowledge of, and know of no basis for, any such
claim.
v. Certain Transactions. Except as set forth on Schedule 6(v), in the NCT's
SEC Documents and arms-length transactions pursuant to which NCT makes payments
in the ordinary course of business upon terms no less favorable than NCT could
obtain from third parties and other than the grant of stock options disclosed on
Schedule 6(c), none of the officers, directors, or employees of NCT is presently
a party to any transaction with NCT (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of NCT, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
w. Dilutive Effect. NCT understands and acknowledges that the number of
Exchange Shares issuable upon exchange of the Series A Preferred Shares will
increase in certain circumstances. NCT further acknowledges that its obligation,
if any, to issue NCT Common Stock upon the exchange of the Series A Preferred
Stock in accordance with this Agreement is absolute and unconditional regardless
of the dilutive effect that such issuance may have on the ownership interests of
other stockholders of NCT.
x. Fees and Rights of First Refusal. NCT is not obligated to offer the
securities offered hereunder on a right of first refusal basis or similar right
to any third parties including, but not limited to, current or former
shareholders of NCT, underwriters, brokers, agents or other third parties.
y. Investment Company. NCT is not, and is not controlled by or under common
control with an Affiliate of, an "investment company" within the meaning of the
Investment Company of Act of 1940, as amended.
7. COVENANTS.
a. Commercially Reasonable Efforts. Each party shall use its commercially
reasonable efforts to timely satisfy each of the conditions precedent to Closing
as provided in Sections 9, 10 and 11 of this Agreement.
b. Form D. Pro Tech agrees to file a Form D with respect to the Series A
Preferred Shares, the Conversion Shares, the Warrants and the Warrant Shares as
required under Regulation D promulgated under the 1933 Act and to provide a copy
thereof to each Buyer promptly after such filing. Pro Tech shall, on or before
the Closing Date, take such action as Pro Tech shall reasonably determine is
necessary to qualify the Series A Preferred Shares, the Conversion Shares, the
Warrants and the Warrant Shares for, or obtain exemption for the Series A
Preferred Shares, the Conversion Shares, the Warrants and the Warrant Shares
for, sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the State of Florida and shall
provide evidence of any such action so taken to the Buyers as soon as
practicable following the Closing Date.
NCT agrees to file a Form D with respect to the Exchange Shares as required
under Regulation D promulgated under the 1933 Act and to provide a copy thereof
to each Buyer promptly after such filing. NCT shall, on or before the Exchange
Date (as defined in Section 3 above), take such action as NCT shall reasonably
determine is necessary to qualify the Exchange Shares for, or obtain exemption
for the Exchange Shares for, exchange to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the state of
Delaware and shall provide evidence of any such action so taken to the Buyers as
soon as practicable following the Exchange Date (as defined in Section 3 above).
c. Reporting Status. Until the earlier of (i) one year after the date as of
which the Investors (as that term is defined in the Pro Tech Registration Rights
Agreement) may sell all of the Conversion Shares and the Warrant Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which (A) the Investors shall have sold all the
Conversion Shares and the Warrant Shares and (B) none of the Series A Preferred
Shares or Warrants is outstanding (the "Pro Tech Registration Period"), Pro Tech
shall file all reports required to be filed with the SEC pursuant to the 1934
Act, and Pro Tech shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would otherwise permit such termination.
Until the earlier of (i) one year after the date as of which the Investors
(as that term is defined in the NCT Registration Rights Agreement) may sell all
of the Exchange Shares without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto), or (ii) the date on which (A) the
Investors shall have sold all the Exchange Shares and (B) none of the Series A
Preferred Shares is outstanding (the "NCT Registration Period"), NCT shall file
all reports required to be filed with the SEC pursuant to the 1934 Act, and NCT
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.
d. Use of Proceeds. Pro Tech shall use all of the proceeds from the sale of
the Series A Preferred Stock purchased hereunder for working capital and general
corporate purposes and not for the satisfaction of any portion of Pro Tech
borrowings outside the normal course of business. Subject to Section 7(h)
hereof, while any shares of Series A Preferred Stock or any Conversion Shares
remain outstanding, Pro Tech shall not satisfy any obligation or liability of
any kind, except that Pro Tech may use the proceeds from the sale of the Series
A Preferred Stock purchased hereunder to satisfy the $150,000 loan from Westek
Communications, the $100,000 loan from Balmore, S.A., the $100,000 loan from
Austost Anstalt Xxxxxx and the $99,975 loan from Zakeni Limited to Pro Tech as
evidenced by the Westek Note, the Balmore Note, the Austost Note and Zakeni
Note, respectively, including, but not limited to, those owed to a shareholder,
officer or director of Pro Tech, or redeem Pro Tech equity or equity-equivalent
securities.
e. Financial Information. Pro Tech agrees to send the following to each
Buyer upon such Buyer's request during the Pro Tech Registration Period: (i)
within five (5) days after the later of (A) the filing thereof with the SEC or
(B) the date Buyer's request was received by Pro Tech, a copy of its Annual
Reports on Form 10-KSB, its Quarterly Reports on Form 10-QSB, any Current
Reports on Form 8-K and any registration statements or amendments filed pursuant
to the 1933 Act; (ii) within one (1) day after the later of (A) release thereof
or (B) the date Buyer's request was received by Pro Tech, copies of all press
releases issued by Pro Tech or any of its subsidiaries; and (iii) copies of the
same notices and other information given to the shareholders of Pro Tech
generally, contemporaneously with the giving thereof to the shareholders.
NCT agrees to send the following to each Buyer upon such Buyer's request
during the NCT Registration Period: (i) within five (5) days after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly
Reports on Form 10-Q, any Current Reports on Form 8-K and any registration
statements or amendments filed pursuant to the 1933 Act; (ii) within one (1) day
after release thereof, copies of all press releases issued by NCT or any of its
subsidiaries; and (iii) copies of the same notices and other information given
to the stockholders of NCT generally, contemporaneously with the giving thereof
to the stockholders.
f. Reservation of Shares. Pro Tech shall take all action necessary to, at
all times, have authorized and reserved for the purpose of issuance, no less
than 115% of the number of shares of Common Stock needed to provide for the
issuance of (i) the Conversion Shares to effect the conversion of the Series A
Preferred Shares then issued and outstanding, and (ii) the Warrant Shares for
which the Warrants may be exercised.
NCT shall take all action necessary to, at all times, have authorized and
reserved for the purpose of issuance, no less than 115% of the number of shares
of NCT Common Stock needed to provide for the issuance of the Exchange Shares to
effect the exchange of the Series A Preferred Shares then issued and
outstanding.
g. Listings. Pro Tech shall take all steps reasonably necessary to cause
the Conversion Shares and the Warrant Shares to be approved for quotation on the
OTC Bulletin Board, subject to the terms and conditions of the Pro Tech
Registration Rights Agreement, and Pro Tech shall use its commercially
reasonable efforts to maintain the quotation of its Common Stock on such market,
as long as the rules governing such quotation do not change. Pro Tech shall
promptly provide to each Buyer copies of any notices it receives regarding the
continued eligibility of the Common Stock for trading on the facility on which
it is listed.
NCT shall also take all steps reasonably necessary to cause the Exchange
Shares to be approved for quotation on the OTC Bulletin Board, and NCT shall use
its best efforts to maintain the quotation of its NCT Common Stock on such
market, as long as the rules governing such quotation do not change. NCT shall
promptly provide to each Buyer copies of any notices it receives regarding the
continued eligibility of the NCT Common Stock for trading on the facility on
which it is listed.
h. Expenses. Each of Pro Tech, NCT and the Buyers shall pay all costs and
expenses incurred by such party in connection with the negotiation,
investigation, preparation, execution and delivery of the Transaction Documents.
Pro Tech and NCT shall pay all fees, costs and expenses of their respective
counsel in connection with the negotiation, investigation, preparation,
execution and delivery of the Transaction Documents at Closing.
i. [LEFT INTENTIONALLY BLANK]
j. Corporate Existence. So long as any Series A Preferred Shares remain
outstanding, Pro Tech shall not directly or indirectly consummate any merger,
reorganization, restructuring, consolidation, sale of all or substantially all
of Pro Tech's assets or any similar transaction or related transactions (each
such transaction, a "Sale of Pro Tech") except if the surviving or successor
entity in such transaction (i) expressly assumes, in writing, Pro Tech's
obligations hereunder and under the Pro Tech Registration Rights Agreement, the
Series A Preferred Shares and any other agreements and instruments entered into
or delivered by Pro Tech in connection herewith; and (ii) is a publicly traded
corporation whose common stock is listed for trading on the OTC Bulletin Board,
New York Stock Exchange, Inc., the American Stock Exchange or the NASDAQ Small
Cap or National Market.
k. Transactions With Affiliates. So long as (i) twenty-five percent (25%)
of the originally issued shares of the Series A Preferred Shares issued pursuant
to this Agreement are outstanding or (ii) the Buyers collectively own Conversion
Shares with an aggregate Market Value (as defined below) as of the date of the
Transaction (as defined below) equal to or greater than $375,000, Pro Tech shall
not enter into, amend, modify or supplement any transaction (the type of which
is required to be disclosed under Item 404 of Regulation S-B promulgated under
the 0000 Xxx) ("Transaction") with any of its officers, directors, persons who
were officers or directors at any time during the previous two years,
shareholders who beneficially own 5% or more of the Common Stock, affiliates (as
defined below), any individual related by blood, marriage, or adoption to any
such individual or with any entity in which any such entity or individual owns a
5% or more beneficial interest (each a "Related Party"), except for (a)
customary employment arrangements and benefit programs on reasonable terms, (b)
any Transaction on an arms-length basis on terms no less favorable than terms
which would have been obtainable from a person other than such Related Party,
and (c) any Transaction which is approved by a majority of the disinterested
directors of Pro Tech. For purposes hereof, "Market Value" per share of
Conversion Shares is equal to the lowest average of the average of the Closing
Bid Price (as defined in Section 3(b) hereof) for the Common Stock for any
consecutive five (5) day trading period out of the fifteen (15) trading days
preceding the date of such Transaction. "Disinterested director" for purposes of
approving a Transaction pursuant to this Section 7(k) means a director of Pro
Tech who is not a party to such Transaction. "Affiliate" for purposes of this
Section 7(k) means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a 5% or more equity interest in
that person or entity, (ii) has 5% or more common ownership with that person or
entity, (iii) controls that person or entity, or (iv) share common control with
that person or entity. "Control" or "controls" for purposes hereof means that a
person or entity has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
So long as (i) any Series A Preferred Shares are outstanding or (ii) the
Buyers collectively own Exchange Shares with a market value equal to or greater
than $375,000, NCT shall not, and shall cause each of its subsidiaries not to,
enter into, amend, modify or supplement, or permit any subsidiary to enter into,
amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any subsidiary's officers, directors, person who
were officers or directors at any time during the previous two years,
stockholders who beneficially own 5% or more of the NCT Common Stock,
affiliates, any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual owns a 5%
or more beneficial interest (each a "Related Party"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b) any
agreement, transaction, commitment, or arrangement on an arms-length basis on
terms no less favorable than terms which would have been obtainable from a
person other than such Related Party, (c) any agreement, transaction,
commitment, or arrangement which is approved by a majority of the disinterested
directors of NCT. For purposes hereof, any director who is also an officer of
NCT or any subsidiary of NCT shall not be a disinterested director with respect
to any such agreement, transaction, commitment, or arrangement.
l. No Short Sales of the Common Stock or NCT Common Stock. So long as a
Buyer has Conversion Shares, Exchange Shares or Warrant Shares registered under
a registration statement which have not been sold, such Buyer or its Affiliates
shall not engage in any short sales or third party short sales of the Common
Stock or NCT Common Stock in violation of Regulation M promulgated under the
1934 Act, or hold a "put equivalent position" with respect to the Common Stock
or NCT Common Stock (as defined in Rule 16a-1 under the 1934 Act); provided
however, that the Buyer's sale of Common Stock or NCT Common Stock which the
Buyer owned prior to such registration and which were acquired outside of this
Agreement shall not be deemed a short sale under this Agreement.
8. TRANSFER AGENT INSTRUCTIONS.
a. Pro Tech shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of a Buyer or its respective
nominee(s), for the Conversion Shares and Warrant Shares in such amounts as
specified from time to time by such Buyer to Pro Tech upon conversion of the
Series A Preferred Shares ("Pro Tech's Irrevocable Transfer Agent
Instructions"). All such certificates shall bear the restrictive legend
specified in Section 4(k) of this Agreement. Pro Tech warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 8, and stop transfer instructions to give effect to Section 4(i)
hereof (in the case of the Conversion Shares and Warrant Shares prior to
registration of such shares under the 0000 Xxx) will be given by Pro Tech to its
transfer agent and that the Series A Preferred Shares , the Conversion Shares,
the Warrants and the Warrant Shares shall otherwise be freely transferable on
the books and records of Pro Tech as and to the extent provided in the
Transaction Documents. Nothing in this Section 8 shall affect in any way such
Buyer's obligations and agreement to comply with all applicable federal and
state securities laws upon resale of the Series A Preferred Shares, Conversion
Shares, the Warrant or the Warrant Shares. If such Buyer provides Pro Tech with
an opinion of counsel, reasonably satisfactory in form and substance to Pro
Tech, that registration for resale by such Buyer of any of the Series A
Preferred Shares, Conversion Shares, the Warrant or the Warrant Shares is not
required under the 1933 Act, Pro Tech shall permit the transfer, subject to the
limitations and restrictions set forth in this Agreement and the other
Transaction Documents, and, in the case of the Conversion Shares and the Warrant
Shares, promptly instruct its transfer agent to issue one or more certificates
in such name and in such denominations as specified by such Buyer. Pro Tech
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to such Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, Pro Tech acknowledges that the
remedy at law for a breach of its obligations under this Section 8 will be
inadequate and agrees, in the event of a breach or threatened breach by Pro Tech
of the provisions of this Section 8, that such Buyer shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
b. NCT shall issue irrevocable instructions to its transfer agent to issue
certificates, registered in the name of the Buyer or its respective nominee(s),
for the Exchange Shares in such amounts as specified from time to time by the
Buyer to NCT upon exchange of the Series A Preferred Shares for NCT Common Stock
(the "NCT's Irrevocable Transfer Agent Instructions"). Prior to registration of
the Exchange Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 4(l) of this Agreement. NCT warrants
that no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 8, and stop transfer instructions to give effect to
Section 4(j) hereof (prior to registration of such shares under the 0000 Xxx)
will be given by NCT to its transfer agent and that the Exchange Shares shall
otherwise be freely transferable on the books and records of NCT as and to the
extent provided in this Agreement and the NCT Registration Rights Agreement.
Nothing in this Section 8 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable federal and state securities laws upon
resale of the Exchange Shares. If the Buyer provides NCT with an opinion of
counsel, reasonably satisfactory in form and substance to NCT, that registration
for resale by the Buyer of any of the Exchange Shares is not required under the
1933 Act, NCT shall permit the transfer and promptly instruct its transfer agent
to issue one or more certificates in such name and in such denominations as
specified by the Buyer. NCT acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, NCT acknowledges
that the remedy at law for a breach of its obligations under this Section 8 will
be inadequate and agrees, in the event of a breach or threatened breach by NCT
of the provisions of this Section 8, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
9. CONDITIONS PRECEDENT TO PRO TECH'S OBLIGATION TO SELL.
The obligation of Pro Tech hereunder to issue and sell the Series A
Preferred Shares to the Buyers at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions may be waived by Pro Tech at any time in its sole discretion:
a. The Buyers shall have executed this Agreement, the Pro Tech Registration
Rights Agreement, the NCT Registration Rights Agreement and delivered same to
Pro Tech.
b. NCT shall have executed this Agreement and the NCT Registration Rights
Agreement and delivered same to Pro Tech.
c. The Buyers shall have delivered to Pro Tech, and Pro Tech shall have
received, the Purchase Price for the Series A Preferred Shares being purchased
by the Buyers at the Closing in United States dollars by wire transfer of
immediately available funds pursuant to the wire instructions provided by Pro
Tech or as otherwise provided in paragraph 1(c) above.
d. Pro Tech shall have received the opinion of NCT's counsel, dated as of
the Closing Date, in form and substance reasonably satisfactory to Pro Tech and
in substantially the form of Exhibit "H" attached hereto
e. The representations and warranties of the Buyers shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyers 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
Buyers at or prior to the Closing Date. Pro Tech shall have received a
certificate, executed by the Chief Financial Officer, or other executive officer
acting in such capacity, of each of the Buyers, dated as of the Closing Date, to
the foregoing effect and as to such other matters as may be reasonably requested
by Pro Tech.
f. The representations and warranties of NCT shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and NCT 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 NCT at or prior to
the Closing Date. Pro Tech shall have received a certificate, executed by the
Chief Financial Officer, or other executive officer acting in such capacity, of
NCT, dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by Pro Tech including, without
limitation, an update as of the Closing Date regarding the representation
contained in Section 6(c) above.
10. CONDITIONS PRECEDENT TO THE BUYERS' OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Series A Preferred
Shares at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions may be
waived by the Buyers at any time in their sole discretion:
a. Pro Tech and NCT shall have executed this Agreement and delivered same
to the Buyers.
b. NCT shall have executed the NCT Registration Rights Agreement and
delivered same to the Buyers.
c. Pro Tech shall have executed the Pro Tech Registration Rights Agreement
and delivered same to the Buyers.
d. The Articles of Amendment shall have been duly authorized by the Board
of Directors of Pro Tech and filed with the Secretary of State of the State of
Florida.
e. Both the Common Stock and the NCT Common Stock shall be authorized for
quotation on the OTC Bulletin Board, over-the-counter market, AMEX, the NASDAQ
Small Cap or National Market or The New York Stock Exchange, Inc., and trading
in the Common Stock and NCT Common Stock shall not have been suspended for any
reason.
f. The representations and warranties of Pro Tech shall be true and correct
in all material respects (except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 5 above, in
which case, such representations and warranties shall be true and correct
without further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and Pro Tech 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 Pro
Tech at or prior to the Closing Date. The Buyers shall have received a
certificate, executed by the Chief Financial Officer, or other executive officer
acting in such capacity, of Pro Tech, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
the Buyers including, without limitation, an update as of the Closing Date
regarding the representation contained in Section 5(c) above.
g. The representations and warranties of NCT shall be true and correct in
all material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 6 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date) and NCT 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 Pro Tech at or
prior to the Closing Date. The Buyers shall have received a certificate,
executed by the Chief Financial Officer, or other executive officer acting in
such capacity, of NCT, dated as of the Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by the Buyers including,
without limitation, an update as of the Closing Date regarding the
representation contained in Section 6(c) above.
h. The Buyers shall have received the opinion of Pro Tech's counsel, dated
as of the Closing Date, in form and substance reasonably satisfactory to the
Buyers and in substantially the form of Exhibit "I" attached hereto.
i. The Buyers shall have received the opinion of NCT's counsel, dated as of
the Closing Date, in form and substance reasonably satisfactory to the Buyers
and in substantially the form of Exhibit "H" attached hereto.
j. Pro Tech shall have executed and delivered to each of the Buyers (or the
Buyers' designees) the Series A Certificates (in such denominations as the
Buyers shall request) for the Series A Preferred Shares being purchased by each
such Buyer at the Closing.
k. The Board of Directors of Pro Tech shall have adopted the resolutions in
substantially the form of Exhibit "J" attached hereto.
l. Pro Tech's Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyers, shall have been delivered to and
acknowledged in writing by Pro Tech's transfer agent.
m. NCT's Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyers, shall have been delivered to and acknowledged in
writing by NCT's transfer agent.
11. CONDITIONS PRECEDENT TO NCT'S OBLIGATION TO EXCHANGE
The obligation of NCT hereunder to issue the Exchange Shares to each such
Buyer at an Exchange Date is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions may be waived by NCT at any time in its sole discretion:
a. Such Buyer shall have executed this Agreement, the Pro Tech Registration
Rights Agreement and the NCT Registration Rights Agreement and delivered same to
NCT.
b. Pro Tech shall have executed this Agreement and the Pro Tech
Registration Rights Agreement and delivered same to NCT.
c. The Articles of Amendment shall have been duly authorized by the Board
of Directors of Pro Tech and filed with the Secretary of State of the State of
Florida.
d. Such Buyer shall have delivered to Pro Tech the Purchase Price for the
Series A Preferred Shares being purchased by such Buyer at the Closing in United
States dollars by wire transfer of immediately available funds pursuant to the
wire instructions provided by Pro Tech or as otherwise provided in paragraph
1(c) above.
e. NCT shall have received an opinion of Pro Tech's counsel, dated as of
the Closing Date, in form and substance reasonably satisfactory to NCT and in
substantially the form of Exhibit "I" attached hereto.
12. INDEMNIFICATION.
a. By Pro Tech.
(i) In consideration of the Buyers' execution and delivery of this
Agreement and acquisition of the Series A Preferred Shares, the Conversion
Shares, the Warrants and the Warrant Shares hereunder, and in addition to all of
Pro Tech's other obligations under this Agreement, but subject to the
limitations set forth in Section 6 of the Pro Tech Registration Rights
Agreement, Pro Tech shall defend, protect, indemnify and hold harmless each
Buyer (each a "Buyer Indemnitee") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether such
Buyer Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the "Buyer
Indemnified Liabilities") incurred by a Buyer Indemnitee in connection with or
as a result of any breach by Pro Tech of any representation, warranty or
covenant in the Transaction Documents, including, but not limited to: (a) any
misrepresentation or breach of any representation or warranty made by Pro Tech
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby; or (b) any breach of any covenant, agreement or
obligation of Pro Tech contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby; provided,
however, that this Section 12(a)(i) shall not apply to the extent that it is
finally judicially determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith resulted solely from the gross negligence or bad faith of
such Buyer Indemnitee. To the extent that the foregoing undertaking by Pro Tech
may be unenforceable for any reason, Pro Tech shall make the maximum
contribution to the payment and satisfaction of each of the Buyer Indemnified
Liabilities which is permissible under applicable law.
(ii) In consideration of NCT's execution and delivery of this Agreement,
and in addition to all of Pro Tech's other obligations under this Agreement, Pro
Tech shall defend, protect, indemnify and hold harmless NCT and its respective
officers, directors, agents, and controlling persons thereof and permitted
assigns (each a "NCT Indemnitee"), from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
NCT Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the "NCT
Indemnified Liabilities") incurred by the NCT Indemnitees or any of them in
connection with or as a result of any breach by Pro Tech of any representation,
warranty or covenant in the Transaction Documents, including, but not limited
to: (a) any misrepresentation or breach of any representation or warranty made
by Pro Tech in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby; or (b) any breach of any covenant,
agreement or obligation of Pro Tech contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby;
provided, however, that this Section 12(a)(ii) shall not apply to the extent
that it is finally judicially determined that such actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith resulted solely from the gross negligence or
bad faith of such NCT Indemnitee. To the extent that the foregoing undertaking
by Pro Tech may be unenforceable for any reason, Pro Tech shall make the maximum
contribution to the payment and satisfaction of each of the NCT Indemnified
Liabilities which is permissible under applicable law.
b. By NCT.
(i) In consideration of the Buyers' execution and delivery of this
Agreement and acquisition of Exchange Shares hereunder, and in addition to all
of NCT's other obligations under this Agreement, but subject to the limitations
set forth in Section 6 of the NCT Registration Rights Agreement, NCT shall
defend, protect, indemnify and hold harmless each Buyer Indemnitee from and
against the Buyer Indemnified Liabilities incurred by such Buyer Indemnitee in
connection with or as a result of any matter referred to in the Transaction
Documents, including, but not limited to: (a) any misrepresentation or breach of
any representation or warranty made by NCT in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby; or (b)
any breach of any covenant, agreement or obligation of NCT contained in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby; provided, however, that this Section 12(b)(i)
shall not apply to the extent that it is finally judicially determined that such
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith resulted solely
from the gross negligence or bad faith of such Buyer Indemnitee. To the extent
that the foregoing undertaking by NCT may be unenforceable for any reason, NCT
shall make the maximum contribution to the payment and satisfaction of each of
the Buyer Indemnified Liabilities which is permissible under applicable law.
(ii) In consideration of Pro Tech's execution and delivery of this
Agreement and issuance of the Series A Preferred Shares which may be exchanged
for Exchange Share as described herein, and in addition to all of NCT's other
obligations under this Agreement, NCT shall defend, protect, indemnify and hold
harmless Pro Tech and its directors, officers, agents and controlling persons
thereof (each a "Pro Tech Indemnitee"), from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Pro Tech Indemnitee is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys' fees and disbursements (the "Pro
Tech Indemnified Liabilities"), incurred by the ProTech Indemnitees or any of
them in connection with or as a result of any matter referred to in the
Transaction Documents, including, but not limited to: (a) any misrepresentation
or breach of any representation or warranty made by NCT in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby; or (b) any breach of any covenant, agreement or obligation of NCT
contained in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby; provided, however, that this Section
12(b)(ii) shall not apply to the extent that it is finally judicially determined
that such actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith resulted
solely from the gross negligence or bad faith of such Pro Tech Indemnitee, as
the case may be, respectively. To the extent that the foregoing undertaking by
NCT may be unenforceable for any reason, NCT shall make the maximum contribution
to the payment and satisfaction of each of the Pro Tech Indemnified Liabilities,
as the case may be, which is permissible under applicable law.
c. By the Buyers.
(i) In consideration of Pro Tech's execution and delivery of this Agreement
and issuance of the Series A Preferred Shares, the Conversion Shares, Warrants
and Warrant Shares hereunder, and in addition to all of the Buyers' other
obligations under this Agreement, but subject to the limitations set forth in
Section 6 of the Pro Tech Registration Rights Agreement, each Buyer, severally
and not jointly, shall defend, protect, indemnify and hold harmless the Pro Tech
Indemnitees from and against the Pro Tech Indemnified Liabilities incurred by
the Pro Tech Indemnitees or any of them in connection with or as a result of any
breach by such Buyer of any representation, warranty or covenant in the
Transaction Documents, including, but not limited to: (a) any misrepresentation
or breach of any representation or warranty made by such Buyer in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby; or (b) any breach of any covenant, agreement or
obligation of such Buyer contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby; provided,
however, that this Section 12(c)(i) shall not apply to the extent that it is
finally judicially determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith resulted solely from the gross negligence or bad faith of
such Pro Tech Indemnitee. To the extent that the foregoing undertaking by such
Buyer may be unenforceable for any reason, such Buyer shall make the maximum
contribution to the payment and satisfaction of each of the Pro Tech Indemnified
Liabilities which is permissible under applicable law.
(ii) In consideration of NCT's execution and delivery of this Agreement and
issuance of the Exchange Shares hereunder, and in addition to all of the Buyers'
other obligations under this Agreement, but subject to the limitations set forth
in Section 6 of the NCT Registration Rights Agreement, as the case may be, each
Buyer, severally and not jointly, shall defend, protect, indemnify and hold
harmless the NCT Indemnitees from and against the NCT Indemnified Liabilities
incurred by the NCT Indemnitees or any of them in connection with or as a result
of any breach by such Buyer of any representation, warranty or covenant in the
Transaction Documents, including, but not limited to: (a) any misrepresentation
or breach of any representation or warranty made by such Buyer in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby; or (b) any breach of any covenant, agreement or
obligation of such Buyer contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby; provided,
however, that this Section 12(c) shall not apply to the extent that it is
finally judicially determined that such actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith resulted solely from the gross negligence or bad faith of
such NCT Indemnitee. To the extent that the foregoing undertaking by such Buyer
may be unenforceable for any reason, such Buyer shall make the maximum
contribution to the payment and satisfaction of each of the NCT Indemnified
Liabilities which is permissible under applicable law.
d. Promptly after receipt by a Buyer Indemnitee, a NCT Indemnitee or a Pro
Tech Indemnitee (each Buyer Indemnitee, NCT Indemnitee and Pro Tech Indemnitee
are sometimes referred to herein as "Indemnified Party") under this Section of
notice of the commencement of any action or proceeding involving any breach of
any representation, warranty or covenant in the Transaction Documents ("Claim"),
such Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party (the "Indemnifying Party") under this Section,
deliver to the Indemnifying Party a written notice of the commencement thereof.
The Indemnifying Party shall have the right to participate in, and, to the
extent the Indemnifying Party so desires, jointly with any other Indemnifying
Party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the Indemnifying Party and the Indemnified Party, as
the case may be; provided, however, that an Indemnified Party shall have the
right to retain its own counsel with the fees and expenses to be paid by the
Indemnifying Party, if, in the reasonable opinion of counsel retained by the
Indemnifying Party, the representation by such counsel of the Indemnified Party
and the Indemnifying Party would be inappropriate due to actual or potential
conflicts of interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. The Indemnified Party shall
cooperate fully with the Indemnifying Party in connection with any negotiation
or defense of any such action or claim by the Indemnifying Party and shall
furnish to the Indemnifying Party all information reasonably available to the
Indemnified Party which relates to such action or claim. The Indemnifying Party
shall keep the Indemnified Party fully apprised as to the status of the defense
or any settlement negotiations with respect thereto. No Indemnifying Party shall
be liable for any settlement of any action, claim or proceeding effected without
its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the consent of the Indemnified Party, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Following indemnification as provided for
hereunder, the Indemnifying Party shall be subrogated to all rights of the
Indemnified Party with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the Indemnifying Party within a reasonable time of the
commencement of any such action shall not relieve such Indemnifying Party of any
liability to the Indemnified Party under this Section, except to the extent that
the Indemnifying Party is prejudiced in its ability to defend such action. The
indemnification required by this Section shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Buyer Indemnified Liabilities, NCT Indemnified
Liabilities or Pro Tech Indemnified Liabilities are incurred.
e. Limitation of Liability. No Buyer shall be liable to Pro Tech or NCT
pursuant to this Section 12 in an aggregate amount greater than the ratable
amount of the Purchase Price relating to the Series A Preferred Shares, the
Warrants, the Conversion Shares and the Warrant Shares purchased by such Buyer.
Pro Tech and NCT shall not be liable to the Buyers pursuant to this Section 12
for any amount in excess of the aggregate Purchase Price. No party may seek to
limit their liability pursuant to this subsection 12(e) in the event the
liability such party seeks to limit arises from (i) such party's knowing or
willful misconduct or gross negligence or (ii) in the case of indemnification by
Pro Tech or NCT, a third party claim or governmental claim arising from Pro
Tech's or NCT's violation or alleged violation of federal or state securities
laws.
13. GOVERNING LAW, MISCELLANEOUS.
a. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS.
b. Consent to Jurisdiction. The parties expressly consent to the exclusive
jurisdiction and venue of the federal courts whose districts encompass any part
of the City of New York, New York or the state courts of the State of New York
sitting in the City of New York, New York, for the adjudication of any civil
action related to or arising out of, in whole or in part, this Agreement and the
Transaction Documents.
c. Counterparts. This Agreement may be executed in three or more identical
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties. In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional originally executed signature pages to be
physically delivered to the other parties within five (5) days of the execution
and delivery hereof.
d. Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.
e. Severability. If any term, provision, covenant or restriction of this
Agreement is held to be illegal, void, invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
f. Entire Agreement, Amendments. This Agreement supersedes all other prior
oral or written agreements among the Buyers, Pro Tech, NCT, their Affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and,
except as specifically set forth herein, neither Pro Tech, NCT nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by each of the parties hereto.
g. Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy
is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested; or (iv) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If to NCT: NCT Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx X. X'Xxxxx, Esq.
Xxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX, 00xx xxxxx
Xxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Pro Tech: Pro Tech Communications, Inc.
0000 Xxxxxxxxxx 00xx Xxxxxx
Xx. Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxx, P.A.
Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyers, to their address and facsimile number on the signature page
hereof, with copies to the Buyers' counsel as set forth in a notice to Pro Tech
and NCT.
h. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective permitted successors and
assigns. None of the parties shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties.
i. No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
j. Survival. Unless this Agreement is terminated under Section 13(m), the
representations and warranties of Pro Tech, NCT and the Buyers contained in
Sections 4, 5 and 6, the agreements and covenants set forth in Sections 7, 8,
and 13 and the indemnification provisions set forth in Section 12 shall survive
for a period of one (1) year from the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
k. Publicity. Pro Tech, NCT and the Buyers shall have the right to approve
before issuance any press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, that Pro Tech or NCT
shall each be entitled, without the prior approval of the Buyers, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Buyers shall be
consulted by Pro Tech and NCT in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
l. 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.
m. Termination. In the event that the Closing shall not have occurred with
respect to the Buyers on or before five (5) business days from the date hereof
due to Pro Tech's, NCT's or any of the Buyer's failure to satisfy the conditions
precedent to Closing as set forth in Sections 9, 10 and 11 above (and a
nonbreaching party's failure to waive such unsatisfied condition(s)), any
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.
n. Construction of Agreement. This Agreement has been fully negotiated
among the parties, and none of the parties shall have any greater burden than
the other parties in construing this Agreement, including one party being
charged with the drafting of the Agreement.
IN WITNESS WHEREOF, the Buyer, Pro Tech and NCT have caused this Securities
Purchase and Supplemental Exchange Rights Agreement to be duly executed as of
the date first written above.
PRO TECH COMMUNICATIONS, INC.
By: /s/ XXXXXXX XXXXXXXXX
Name: Xxxxxxx Xxxxxxxxx
Its: President and Secretary
NCT GROUP, INC.
By: /s/ XX X. XXXXXXX
Name: Xx X. Xxxxxxx
Its: Senior Vice President and
Chief Financial Officer
[SIGNATURES CONTINUE ON NEXT PAGE]
"BUYERS"
BALMORE FUNDS, S.A.
By: /s/ XXXXXX KINDLE
Name: Xxxxxx Kindle
Title: Director
Address:Balmore Funds, S.A.
Trident Xxxxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxx BVI
Telephone:(000) 0000-000-0000
Facsimile:(000) 0000-000-0000
AUSTOST ANSTALT XXXXXX
By: /s/ XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: Represenative
Address:Austost Anstalt Xxxxxx
744 Fuerstentum
Landstrusse, 163
Lichtestein
Telephone:(____) ___________________
Facsimile:(____) ___________________
ZAKENI LIMITED
By: /s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: President
Address:Zakeni Limited
Grand Bahamas
Telephone:(000) 0000-000-0000
Facsimile:(000) 0000000-0000
EXHIBIT "A"
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF PRO TECH COMMUNICATIONS, INC.
EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT
OF PRO TECH COMMUNICATIONS, INC.
EXHIBIT "C"
REGISTRATION RIGHTS AGREEMENT
OF NCT GROUP, INC.
EXHIBIT "D"
WARRANT FOR BALMORE FUNDS, S.A.
EXHIBIT "E"
WARRANT FOR AUSTOST ANSTALT XXXXXX
EXHIBIT "F"
WARRANT FOR ZAKENI LIMITED
EXHIBIT "G"
NCT GROUP, INC.
NOTICE OF EXCHANGE
Reference is made to the Securities Purchase and Supplemental Exchange
Rights Agreement (the "Securities Purchase Agreement"). In accordance with and
pursuant to the Securities Purchase Agreement, the undersigned hereby elects to
exchange the number of shares of Series A Convertible Preferred Stock, $.01 par
value per share (the "Series A Preferred Shares"), of Pro Tech Communications,
Inc., a Florida corporation, indicated below for shares of Common Stock, $.01
par value per share, of NCT Group, Inc. (the "NCT Common Stock"), by tendering
the stock certificate(s) representing the share(s) of Series A Preferred Shares
specified below as of the date specified below, based on the Exchange Rate set
forth in Section 3(b) of the Securities Purchase Agreement.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exchange of the Series A Preferred
Shares shall be made only pursuant to (i) a registration statement effective
under the Securities Act of 1933, as amended (the "Act"), or (ii) an opinion of
counsel in form and content reasonably satisfactory to the Corporation that such
sale is exempt from registration required by Section 5 of the Act.
Date of Exchange:
-----------------------------------------
Number of Series A Preferred Shares to
be exchanged:
-----------------------------------------
Stock certificate no(s). of Series A
Preferred Shares to be exchanged:
-----------------------------------------
Please confirm the following information:
Exchange Price:
-----------------------------------------
Number of shares of NCT Common Stock to
be issued:
-----------------------------------------
Please issue the NCT Common Stock for which the Series A Preferred Shares are
being exchanged in the following name and to the following address:
Issue to:20
=========================================
Facsimile Number:
-----------------------------------------
Authorization:
-----------------------------------------
By:______________________________________
Title:_____________________________________
Dated:
-----------------------------------------
ACKNOWLEDGED AND AGREED:
NCT GROUP, INC.
By: _____________________________
Name:___________________________
Title:____________________________
Date:____________________________
EXHIBIT "H"
OPINION OF COUNSEL OF
NCT GROUP, INC.
EXHIBIT "I"
OPINION OF COUNSEL OF
PRO TECH COMMUNICATIONS, INC.
EXHIBIT "J"
BOARD RESOLUTIONS
SCHEDULE OF BUYERS
SCHEDULE 4(n)
Buyers: Conflicts
SCHEDULE 5(c)
Pro Tech: Capitalization
SCHEDULE 5(e)
Pro Tech: Conflicts
None.
SCHEDULE 5(f)
Pro Tech: Defaults, Violations
SCHEDULE 5(g)
Pro Tech: Consents
SCHEDULE 5(i)
Pro Tech: Subsequent Events
SCHEDULE 5(j)
Pro Tech: Litigation
SCHEDULE 5(p)
Pro Tech: Title
SCHEDULE 5(u)
Pro Tech: Tax Status
SCHEDULE 5(v)
Pro Tech: Certain Transactions
SCHEDULE 6(c)
NCT: Capitalization
SCHEDULE 6(e)
NCT: Conflicts
None.
SCHEDULE 6(f)
NCT: Defaults, Violations
SCHEDULE 6(g)
NCT: Consents
SCHEDULE 6(i)
NCT: Subsequent Events
SCHEDULE 6(j)
NCT: Litigation
SCHEDULE 6(p)
NCT: Title
SCHEDULE 6(u)
NCT: Tax Status
SCHEDULE 6(v)
NCT: Certain Transactions
