Exhibit 10(g)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of September 12, 2000
between NCT Hearing Products, Inc., a Delaware corporation with its principal
place of business at 00 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("NCT
Hearing" or the "Buyer"), and Pro Tech Communications, Inc., a Florida
corporation, with headquarters located at 0000 Xxxxxxxxxx 00xx Xxxxxx, Xxxx
Xxxxxx, Xxxxxxx 00000 ("Pro Tech", "Company" or the "Seller").
WHEREAS, Buyer and Seller 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, the Seller's authorized capital stock consists of (i) 40,000,000
shares of common stock, $0.001 par value per share and [$_____] stated value
(face value) per share (the "Seller's Common Stock"), of which immediately prior
to the date of this Agreement approximately [________] shares are issued and are
outstanding, and (ii) 1,000,000 shares of preferred stock (the "Seller's
Preferred Stock"), all as provided in Annex I (reflecting the authorized shares,
par value, stated value, liquidation preference, and currently outstanding
shares);
WHEREAS, the Buyer desires to purchase from the Seller, and the Seller
desires to issue and sell to the Buyer, upon the terms and conditions stated in
this Agreement, shares of Seller's Common Stock in order to acquire a majority
ownership interest in the Seller; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Shareholder's
Agreement substantially in the form attached hereto as Annex II (the
"Shareholder's Agreement") pursuant to which the Seller will appoint three
executive officers of the Buyer to the Board of Directors of the Seller.
NOW THEREFORE, in consideration of the premises hereof and the mutual
covenants, representations and warranties contained herein, the Buyer and the
Seller hereby agree as follows:
1 . AGREEMENT TO PURCHASE.
a. Closing; Closing Date. The closing of the purchase and sale of the
Seller's Common Stock (the "Closing") shall take place at the offices of
Steel Xxxxxx & Xxxxx, LLP located at 000 Xxxxx Xxxxxxxx Xxxxxxxxx, 00xx
xxxxx, Xxxxx, Xxxxxxx 00000, immediately following the execution hereof or
such later date or different location as the parties shall agree in
writing, but not prior to the date that the conditions set forth in
Sections 6 and 7 have been satisfied or waived by the appropriate party.
The date of the Closing is hereinafter referred to as the "Closing Date."
b. Purchase of Seller's Common Stock. At the Closing, subject to the
satisfaction (or waiver) of the conditions precedent to Closing as set
forth in Sections 6 and 7 below, Seller shall issue and sell to Buyer, and
Buyer shall purchase from Seller, that number of unissued shares of
Seller's Common Stock such that, immediately following the Closing, Buyer
will own, on a fully diluted basis, sixty percent (60%) of the total number
of issued and outstanding shares of Seller's Common Stock, in consideration
of the Buyer's execution of a license agreement, substantially in the form
attached hereto as Annex III (the "License Agreement"). The License
Agreement shall be executed by the parties on the Closing Date.
2. REPRESENTATIONS AND WARRANTEES OF THE BUYER.
The Buyer represents and warrants with respect to only itself that:
a. Investment Purpose. The Buyer is acquiring shares of the Seller's
Common Stock 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,
the Buyer does not agree to hold any of the shares of Seller's Common Stock
for any minimum or other specific term and reserves the right to dispose of
shares of the Seller's Common Stock 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. The 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 Seller's
Common Stock and, as of the date hereof, is able to afford a total and
complete loss of its investment.
c. Sophisticated Investor. The Buyer has such knowledge, skill and
experience in business, financial and investment matters so that the Buyer
is capable of evaluating the merits and risk of an investment in the
Seller's Common Stock 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 its investment in the
Seller's Common Stock.
d. Reliance on Exemptions. The Buyer understands and acknowledges that
the shares of Seller's Common Stock 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
the Seller is relying in part upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Buyer to acquire such securities.
e. Information. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Seller and materials relating to the offer and sale of
the shares of Seller's Common Stock which have been requested by such
Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Seller. Neither such inquiries nor any
other due diligence investigations conducted by the Buyer or its advisors,
if any, or its representatives shall modify, amend or affect the Buyer's
right to rely on the Company's representations and warranties contained in
Section 3 below. The Buyer understands that its investment in the shares of
Seller's Common Stock involves a high degree of risk. 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 shares
of Seller's Common Stock.
f. No Governmental Review. The 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 Seller's Common
Stock or the fairness or suitability of the investment in the shares of
Seller's Common Stock, nor have such authorities passed upon or endorsed
the merits of the offering of the shares of Seller's Common Stock.
g. No General Solicitation. At no time was the Buyer presented with or
solicited by or through any leaflet, public promotional meeting, published
or publicly available advertisement or any other form of general
solicitation or advertising relating to the Seller's Common Stock.
h. No Broker Commissions or Finders Fees. Except as otherwise provided
in Section 10(n) hereof, the 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.
i. Transfer or Resale. The Buyer understands that (i) the shares of
Seller's Common Stock have not been registered under the 1933 Act or any
state securities laws, and may not be offered by such Buyer for sale, sold,
assigned, transferred or otherwise disposed of unless (a) subsequently
registered under the 1933 Act and state securities laws, if applicable, (b)
the Buyer shall have delivered to the Seller an opinion of counsel, in form
and substance reasonably satisfactory to the Seller, 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) the Buyer provides the Seller with
evidence satisfactory to the Seller 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");
and (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
j. Legends. The Buyer understands that the certificates or other
instruments representing the shares of Seller's Common Stock and, until
such time as the sale of the shares of Seller's Common Stock have been
registered under the 1933 Act, the stock certificates representing the
shares of Seller's Common Stock, 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 FORM AND CONTENT REASONABLY
ACCEPTABLE TO THE COMPANY, 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 the Seller shall issue a
certificate without such legend to the holder of the shares of Seller's
Common Stock, upon which it is stamped, if, unless otherwise required by
state securities laws, (i) the sale of the shares of Seller's Common Stock
is registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Seller with an opinion of counsel, in
form and substance reasonably acceptable to the Seller, to the effect that
a public sale, assignment, transfer or other disposition of the shares of
Seller's Common Stock may be made without registration under the 1933 Act,
or (iii) such holder provides the Seller with evidence satisfactory to the
Seller that the shares of Seller's Common Stock can be sold pursuant to
Rule 144.
k. Authorization, Enforcement. 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.
l. Conflicts. Except as disclosed in Schedule 2(l), the execution,
delivery and performance of this Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby will not
(i) conflict with or violate the Buyer's organizational charter 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 the Buyer is a party, or (iii)
to the Buyer's knowledge, result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws) applicable to the Buyer or any of its subsidiaries, or by
which any property or asset of the Buyer or any of its subsidiaries is
bound or affected, which in the case of (ii) or (iii) would have a material
adverse effect on the business, financial condition or results of
operations of Buyer.
3 . REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyer that:
a. Organization and Qualification. The Seller 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. The Seller 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 the Seller. As of the date hereof, the Seller 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 (50) percent 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. The
Seller has the requisite corporate power and authority to enter into and
perform this Agreement, the License Agreement and any related agreements
(collectively, the "Transaction Documents"), and to issue the Seller's
Common Stock in accordance with and subject to the terms and conditions
hereof and thereof. The execution and delivery of the Transaction Documents
by the Seller and the consummation by Seller of the transactions
contemplated thereby, including, without limitation, the issuance of the
Seller's Common Stock have been duly authorized by the Seller's Board of
Directors and no further consent or authorization is required by the
Seller, its Board of Directors or its shareholders. The Transaction
Documents have been duly executed and delivered by the Seller and, when
delivered, constitute valid and binding obligations of the Seller
enforceable against the Seller 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.
c. Capitalization. As of the date of this Agreement, the authorized
capital stock of the Seller consists of 40,000,000 shares of Common Stock
and 1,000,000 shares of Preferred Stock, of which immediately prior to the
date of this Agreement, approximately [_________] shares of Common Stock
are issued and outstanding, and, except for [__________], no shares of
preferred stock, debentures or notes are 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 3(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 the
Seller. Except as disclosed in Schedule 3(c), as of the 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 the Seller or contracts, commitments, understandings
or arrangements by which the Seller is or may become bound to issue
additional shares of capital stock of the Seller;
(ii) there are no outstanding debt securities; and
(iii) there are no unperformed agreements or arrangements under which
the Seller is obligated to register the sale of any of its securities
under the 1933 Act.
The Seller has furnished to the Buyer true and correct copies of: (i) the
Seller's Amended and Restated Articles of Incorporation, as amended and as
in effect on the date hereof (the "Articles of Incorporation"), (ii) the
Seller's Bylaws, as in effect on the date hereof (the "Bylaws") and (iii)
the Articles of Amendment to Articles of Incorporation of the Seller dated
as of September __, 2000 which provides the terms of the Series A
Convertible Preferred Stock of the Seller convertible into or exercisable
for Seller's Common Stock and the material rights of the holders thereof in
respect thereto.
d. Issuance of Securities. The shares of Seller's Common Stock 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 all rights
accorded to a holder of Seller's Common Stock.
e. No Conflicts. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of this Agreement by the Seller and the
consummation by the Seller 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 the Seller is a party, which
conflict or default would have a material adverse effect on the business,
financial condition or results of operations of the Seller, or (iii) to the
Seller'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 Seller's Common Stock is traded or listed) applicable
to the Seller, or by which any property or asset of the Seller is bound or
affected, which would have a material adverse effect on the business,
financial condition or results of operations of Seller.
f. No Default or Violation. Except as disclosed in Schedule 3(f), the
Seller 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 the Seller. To the Seller's
knowledge, the business of the Seller 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, the
Seller 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 in accordance with the terms hereof. Except as disclosed in
Section 4(f) and Schedule 3(g), all consents, authorizations, orders,
filings and registrations which the Seller 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, 1997, the
Seller has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 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"). The Seller has delivered to the Buyer
or its representative true and complete copies of the SEC Documents. As of
their respective dates, the financial statements of the Seller 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 the Seller 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 the Seller to the Buyer which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(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 3(i),
since the date of the financial statements included in the Company's last
filed Quarterly Report on Form 10-QSB for the period ended April 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 the Seller. The Seller has not taken
any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law, nor does the Seller 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 the knowledge
of the Seller, threatened against or affecting the Seller or the Seller's
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 the Seller to perform its obligations under, the Transaction
Documents; or (iii) except as expressly set forth in Schedule 3(j), would
reasonably be expected to have a material adverse effect on the business,
operations, properties, financial condition or results of operation of the
Seller.
k. Acknowledgment Regarding Buyer's Purchase of Seller's Common Stock.
The Seller 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.
The Seller further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Seller (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 shares of the
Seller's Common Stock. The Seller further represents to the Buyer that the
Seller's decision to enter into this Agreement has been based solely on the
independent evaluation by the Seller and its representatives.
l. No Undisclosed Events, Liabilities, Developments or Circumstances.
To the Seller's knowledge, no event, liability, development or circumstance
has occurred or exists, or is contemplated to occur, with respect to the
Seller 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 the Seller, nor any of its
affiliates (as defined in Rule 501 of Regulation D of the 0000 Xxx)
("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 shares of
Seller's Common Stock.
n. Employee Relations. The Seller is not involved in any labor dispute
nor, to the Seller's knowledge, is any such dispute threatened. None of the
Seller's employees is a member of a union and the Seller believes that its
relations with its employees are satisfactory.
o. Intellectual Property Rights. Schedule 3(o) describes all rights in
patents, patent applications, trademarks, service marks, trade names,
corporate names, copyrights, mask works, trade secrets, know-how or other
intellectual property rights owned by, licensed to or otherwise controlled
by the Seller or used in, developed for use in, or necessary to the conduct
of the Seller's business as now conducted or planned to be conducted
(collectively, the "IP Rights"). Schedule 3(o) describes all IP Rights
which have been licensed to third parties and those IP Rights which are
licensed from third parties and identifies all contracts containing the
licenses to and from third parties. The Seller has taken reasonably
appropriate measures to protect the secrecy, confidentiality and value of
the IP Rights. The Seller has not received any notice of, nor are there any
facts known to the Seller that indicate a likelihood of, any infringements
or misappropriation by or conflict from any third party with respect to the
IP Rights. No claim by any third party contesting the validity or ownership
of any IP Rights has been made, is currently outstanding or, to the best of
the Seller's knowledge, is threatened. The Seller has not received any
notice of any infringement, misappropriation or violation by the Seller of
any intellectual property rights of any third party and, to the best of the
Seller's knowledge, the Seller's use of the IP Rights in connection with
its business, does not infringe, misappropriate or otherwise violate any
such intellectual property rights
p. Environmental Laws. The Seller, to the Seller'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 terms and
conditions of any such permit, license or approval.
q. Title. The Seller 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 the Seller, in each case free and clear of all liens,
encumbrances and defects, except as described in Schedule 3(q) 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 the
Seller. The Seller does not own any real property. Any real property and
facilities held under lease by the Seller 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 the Seller.
r. Insurance. The Seller is insured by insurers which the Seller
believes are of recognized financial responsibility against such losses and
risks and in such amounts as management of the Seller believes to be
prudent and customary in the businesses in which the Seller is engaged. The
Seller 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 the
Seller.
s. Regulatory Permits. The Seller possesses all certificates,
authorizations, licenses and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct its respective
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 the Seller. The Seller 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.
t. Internal Accounting Controls. The Seller 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.
u. No Materially Adverse Contracts, etc. The Seller is not subject to
any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which, in the judgment of the Seller's officers,
has or is reasonably expected in the future to have a material adverse
effect on the business, properties, operations, financial condition,
results of operations or prospects of the Seller. The Seller is not a party
to any contract or agreement which, in the judgment of the Seller's
officers, has or is reasonably expected to have a material adverse effect
on the business, properties, operations, financial condition, results of
operations or prospects of the Seller.
v. Tax Status. Except as set forth on Schedule 3(v), the Seller 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 the Seller 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 the Seller have no knowledge of, and know
of no basis for, any such claim.
w. Certain Transactions. Except as set forth on Schedule 3(w), in the
SEC Documents and arms-length transactions pursuant to which the Seller
makes payments in the ordinary course of business upon terms no less
favorable than the Seller could obtain from third parties and other than
the grant of stock options disclosed on Schedule 3(c), none of the
officers, directors, or employees of the Seller is presently a party to any
transaction with the Seller (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 Seller'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.
x. Dilutive Effect. The Seller understands and acknowledges that its
obligation to issue the shares of Seller's Common Stock upon Closing, is,
subject to certain closing conditions as set forth in this Agreement,
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other shareholders of the
Seller.
y. Fees and Rights of First Refusal. The Seller 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 the Seller, underwriters, brokers, agents or
other third parties.
z. Investment Company. The Seller 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.
aa. No Broker Commissions or Finder Fees. Except as otherwise provided
in Section 10(o) hereof, the Seller 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.
bb. No Untrue Statements. No representation, warranty or statement
made by Seller in this Agreement, nor any certificate furnished by the
Seller pursuant to this Agreement, contains or will contain on the Closing
Date, any untrue statement of a material fact, or omits or will omit, on
the Closing Date, to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
cc. Seller's Representations and Warranties Generally. Where any
representation, warranty or statement contained herein regarding a specific
matter relating to the Seller or its business or affairs is qualified by
the phrase "to the Seller's knowledge" or any similar phrase relating to
the knowledge of the Seller, it is intended to indicate that each of the
executive officers and directors of the Seller do not have, without
undertaking any investigation or inquiry, current actual knowledge of the
inaccuracy of such representation, warranty or statement.
4. 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 6 and 7 of this Agreement.
b. Form D. The Seller agrees to file a Form D with respect to the
Seller's Common Stock as required under Regulation D promulgated under the
1933 Act and to provide a copy thereof to the Buyer promptly after such
filing. The Seller shall, on or before the Closing Date, take such action
as the Seller shall reasonably determine is necessary to qualify the
Seller's Common Stock for, or obtain exemption for the Seller's Common
Stock for, sale to the Buyer at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the state of Connecticut
and shall provide evidence of any such action so taken to the Buyer as soon
as practicable following the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of which the
Buyer may sell all of the Seller's Common Stock without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which (A) the Buyer shall have sold all the
Seller's Common Stock and (B) none of the shares of the Seller's Common
Stock is outstanding (the "Registration Period"), the Seller shall file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Seller 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. Financial Information. The Seller agrees to send the following to
the Buyer upon the Buyer's request during the Registration Period: (i)
within five (5) days after the later of (A) the filing thereof with the SEC
or (B) the date the Buyer's request was received by the Seller, 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) the release thereof or (B) the date the Buyer's request
was received by the Seller, copies of all press releases issued by the
Seller; and (iii) copies of the same notices and other information given to
the shareholders of the Seller generally, contemporaneously with the giving
thereof to the shareholders.
e. Reservation of Shares. The Seller shall take all action necessary
to, at all times, have authorized and reserved for the purpose of issuance,
no less than 100% of the number of shares of Seller's Common Stock needed
to provide for the issuance of the Seller's Common Stock at Closing.
f. Listings. The Seller shall take all steps reasonably necessary to
cause its Common Stock to be approved for quotation on the OTC Bulletin
Board, and the Seller 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. The Seller shall promptly
provide to the Buyer copies of any notices it receives regarding the
continued eligibility of the Seller's Common Stock for trading on the
facility on which it is listed.
g. Expenses. Each of the Seller and the Buyer shall pay all costs and
expenses incurred by such party in connection with the negotiation,
investigation, preparation, execution and delivery of the Transaction
Documents. The Seller and the Buyer 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.
h. Corporate Existence. So long as any of the shares of the Seller's
Common Stock remain outstanding, the Seller shall not directly or
indirectly consummate any merger, reorganization, restructuring,
consolidation, sale of all or substantially all of the Seller's assets or
any similar transaction or related transactions (each such transaction, a
"Sale of the Company") except if the surviving or successor entity in such
transaction expressly assumes, in writing, the Seller's obligations
hereunder, and any other agreements and instruments entered into or
delivered by the Company in connection herewith.
i. Transactions With Affiliates. So long as the Buyer owns Seller's
Common Stock with an aggregate Market Value (as defined below) as of the
date of the Transaction (as defined below) equal to or greater than
[$200,000], the Seller 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-K 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 Seller's 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, or (c) any Transaction which is approved by a majority of the
Disinterested Directors of the Seller.
For purposes of this Section 4(i), the following terms shall have the
following meanings:
(i) "Market Value" per share of Seller's Common Stock is equal to the lowest
average of the average of the Closing Bid Price and the Closing Ask Price
for the Seller's Common Stock for any consecutive five (5) day trading
period out of the fifteen (15) trading days preceding the date of the
Transaction.
(ii) "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 Seller (all as appropriately adjusted for any stock
dividend, stock split or other similar transaction during such period);
(iii)"Closing Ask Price" means, for any security as of any date, the last
closing ask price on the Nasdaq-NM as reported by Bloomberg, or, if the
Nasdaq-NM is not the principal trading market for such security, the last
closing ask 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 ask 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 ask
price is reported for such security by Bloomberg, the last closing trade
price of such security as reported by Bloomberg. If the Closing Ask Price
cannot be calculated for such security on such date on any of the foregoing
bases, the Closing Ask 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);
(iv) "Disinterested Director" for purposes of approving of a Transaction
pursuant to this Section 4(k) means a director of the Seller who is not a
party, and who is not an Affiliate of a party, to such Transaction;
(v) "Affiliate" 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) shares
common control with that person or entity; and
(vi) "Control" or "controls" means that a person or entity has the power, direct
or indirect, to conduct or govern the policies of another person or entity.
j. At the Closing, the Board of Directors ("Board") of the Seller
shall appoint Xxxxx Xxxxxxxx, Xx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxx
("Designated Persons") to the Board. The Seller makes no warranty or
representation that the Seller's shareholders will reelect the Designated
Persons to the Board at the next annual meeting of the Seller's
shareholders.
5. TRANSFER AGENT INSTRUCTIONS.
At Closing, the Seller 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 shares of the Seller's Common Stock (the
"Irrevocable Transfer Agent Instructions"). All such certificates shall bear the
restrictive legend specified in Section 2(j) of this Agreement. The Seller
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(i) hereof will be given by the Seller to its transfer
agent and that the Seller's Common Stock shall otherwise be freely transferable
on the books and records of the Seller as and to the extent provided in this
Agreement. Nothing in this Section 5 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 Seller's Common Stock. If the Buyer provides
the Seller with an opinion of counsel, reasonably satisfactory in form and
substance to the Seller, that registration for resale by the Buyer of any of the
Seller's Common Stock is not required under the 1933 Act, the Seller shall
permit the transfer, subject to the limitations and restrictions set forth in
this Agreement and the other Transaction Documents, and promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by the Buyer. The Seller 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, the Seller acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Seller of the provisions of this Section 5,
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.
6. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO SELL.
The obligation of the Seller hereunder to issue and sell the Seller's
Common Stock to the Buyer 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 Seller at any time in its sole discretion:
a. The Buyer shall have executed this Agreement, the Shareholder's
Agreement and the License Agreement and delivered same to the Company.
b. The representations and warranties of the Buyer 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 Buyer 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 Buyer at or prior to the
Closing Date. The Seller shall have received a certificate, executed by the
Chief Financial Officer, or other executive officer acting in such
capacity, of the Buyer, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by the
Seller.
7. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Seller's Common Stock
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 Buyer at any time in its sole discretion:
a. The Seller shall have executed this Agreement, the Shareholder's
Agreement and the License Agreement, and delivered same to the Buyer.
b. The Seller's 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 NYSE, and trading in the Seller's Common Stock shall
not have been suspended for any reason.
c. The representations and warranties of the Seller 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 3 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 the
Seller 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 Seller at or
prior to the Closing Date. The Buyer shall have received a certificate,
executed by the President or Chairman of the Board of the Seller, dated as
of the Closing Date, to the foregoing effect and as to such other matters
as may be reasonably requested by the Buyer including, without limitation,
an update as of the Closing Date regarding the representation contained in
Section 3(c) above.
d. The Buyer shall have received the opinion of the Seller's counsel,
dated as of the Closing Date, in form and substance reasonably satisfactory
to the Buyer and in substantially the form of Annex V attached hereto.
e. The Seller shall have executed and delivered to the Buyer (or the
Buyer's designee) certificates (in such denominations as the Buyer shall
request) for the shares of the Seller's Common Stock being purchased by the
Buyer at the Closing.
f. The Board of Directors of the Seller shall have adopted the
resolutions in substantially the form of Annex VI attached hereto.
g. The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Seller's transfer agent.
h. Shareholder Approval. The Seller shall have submitted to its
shareholders at a shareholder meeting a proposal for ratification of the
authorization for issuance of sufficient shares of Seller's Common Stock
needed to provide for the issuance of Seller's Common Stock to Buyer at the
Closing, and shareholders of Seller shall have adopted such proposal at the
shareholder meeting.
8. CONFIDENTIALITY, NONDISCLOSURE AND NONCOMPETITION.
a. The Seller agrees that for a period of three (3) years following
the Closing Date:
(i) The Seller and its current management (as defined below) will not compete
with the Buyer, without the prior written consent of the Buyer, in any
activity relating to the Buyer's active noise cancellation and speech
enhancement business. For purposes of the preceding sentence, competition
shall include, without limitation, direct or indirect competition by the
Seller or its employees.
(ii) The Seller's current management (as defined below) shall not compete with
the Seller, without the prior written consent of the Buyer, in any activity
relating to the Seller's headset business, whether or not the Seller's
current management is employed or is no longer employed by Seller during
such three (3) year period. For purposes of the preceding sentence,
competition shall include, without limitation, direct or indirect
competition by such individual or other persons employed by him or her.
(iii)The Seller and its current management (as defined below) will not,
directly or indirectly, appropriate any of the Buyer's business
opportunities (as defined below) or any of the Buyer's clients (as defined
below).
(iv) The Seller's current management (as defined below) shall not, directly or
indirectly, appropriate any of Seller's business opportunities (as defined
below) or any of Seller's clients (as defined below).
(v) For purposes of this Section 8, the following terms shall have the
following meanings:
(A) "Current management" shall include any present directors or officers of the
Seller;
(B) "Buyer's business opportunities" shall include existing opportunities and
prospective opportunities within the scope of the Buyer's business which
the Buyer has reduced to a written business plan during the twelve (12)
month period immediately preceding the Closing Date, whether such
opportunities arise in the United States or in any foreign country in which
the Buyer conducts business;
(C) "Seller's business opportunities" shall include existing opportunities and
prospective opportunities within the scope of the Seller's business which
the Seller has reduced to a written business plan during the twelve (12)
month period immediately preceding the Closing Date, whether such
opportunities arise in the United States or in any foreign country in which
the Seller conducts business;
(D) "Buyer's clients" shall include both individuals and business entities that
were (x) existing clients of the Buyer as of the Closing Date, (y) clients
of the Buyer at any time during the three-year period immediately preceding
the Closing Date, and (z) prospective clients actively solicited by the
Buyer at any time during the six (6) month period immediately preceding the
Closing; and
(E) "Seller's clients" shall include both individuals and business entities
that were (x) existing clients of the Seller as of the Closing Date, (y)
clients of the Seller at any time during the three-year period immediately
preceding the Closing Date, and (z) prospective clients actively solicited
by the Seller at any time during the six (6) month period immediately
preceding the Closing.
(v) The Seller will not hire, contract with or solicit for employment any
employee of the Buyer or any former employee of the Buyer who left such
employment less than six (6) months prior to the Closing.
b. The parties acknowledge and agree that each of their businesses is
specialized and not confined to any geographic market and agree that such
geographic scope is reasonable. The parties further acknowledge that the
identities and needs of their clients and prospective clients are not
generally known, and that such information is confidential and proprietary
to the parties. The parties agree that their services to each other have
been unique and extraordinary that in the context of the transaction
contemplated by this Agreement the parties have legitimate interests in
ensuring that such special skills and confidential information will not be
used by the other party or any competitor of the other party in competition
with the other party, and that the restrictions set forth herein are
reasonable in their face.
c. The restrictions set forth in this Section are considered by the
parties to be reasonable for the purposes of protecting the legitimate
business interests of the parties. The parties acknowledge and agree that
monetary damages would not provide an adequate remedy in the event of a
breach or threatened breach of the provisions of this Section. The parties
agree that, in addition to any other remedies available to the parties, the
parties shall be entitled to injunctive relief, specific performance and
other equitable relief to secure the enforcement of these provisions, and
shall be entitled to receive reimbursement from the other party for all
reasonable attorneys' fees and expenses incurred by the party enforcing
these provisions, should such party enforcing these provisions prevail. If
a party breaches the covenants set forth in this Section, the running of
the Restriction Period described herein shall be tolled for so long as such
breach continues. It is the desire and intent of the parties that the
provisions of this Section be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which
enforcement is sought. If any provisions of this Section relating to the
time period, scope of activities, geographic area of restrictions or
otherwise is declared by a court of competent jurisdiction to exceed the
maximum permissible time period, scope of activities, geographic area or
other matter of public policy, the maximum time period, scope of
activities, geographic area or other matter, as the case may be, shall be
reduced to the maximum which such court deems enforceable. If any
provisions of this Section other than those described in the preceding
sentence are adjudicated to be invalid or unenforceable, the invalid or
unenforceable provisions shall be deemed amended (with respect only to the
jurisdiction in which such adjudication is made) in such manner as to
render them enforceable and to effectuate as nearly as possible the
original intentions and agreement of the parties.
d. The parties acknowledge that the restrictions set forth in this
Section are a material inducement to the parties entering into the other
transactions contemplated hereby.
9. INDEMNIFICATION.
(a) In consideration of the Buyer's execution and delivery of this
Agreement and acquisition of the Seller's Common Stock, and in addition to
all of the Seller's other obligations under this Agreement, the Seller
shall defend, protect, indemnify and hold harmless the Buyer and its
successors, permitted assigns, Affiliates, parents, subsidiaries,
directors, officers, employees, and controlling persons thereof, past and
present ("Buyer Indemnitees") 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 the
Buyer 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 the Buyer or any of them in
connection with or as a result of any breach by the Seller 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 the Seller 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 the
Seller contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; provided, however,
that this Section 9 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 the Buyer. To the extent that the foregoing undertaking by the Seller
may be unenforceable for any reason, the Seller shall make the maximum
contribution to the payment and satisfaction of each of the Buyer
Indemnified Liabilities which is permissible under applicable law.
b. In consideration of the Seller's execution and delivery of this
Agreement and issuance of the Seller's Common Stock, and in addition to all
of the Buyer's other obligations under this Agreement, the Buyer shall
defend, protect, indemnify and hold harmless the Seller and its successors,
assigns, Affiliates, parents, subsidiaries, directors, officers, employees,
and controlling persons thereof, past and present, (collectively, the
"Seller Indemnitees") 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 Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Seller Indemnified Liabilities") or any of them in
connection with or as a result of any breach by the 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 the 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 the
Buyer contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; provided, however,
that this Section 9 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 the Seller. To the extent that the foregoing undertaking by the Buyer
may be unenforceable for any reason, the Buyer shall make the maximum
contribution to the payment and satisfaction of each of the Seller
Indemnified Liabilities which is permissible under applicable law.
Promptly after receipt by a Seller Indemnitee or a Buyer Indemnitee
(each Buyer Indemnitee and Seller 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 or Seller Indemnified
Liabilities are incurred.
10. 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 FLORIDA 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 and state courts located in
the County of Miami-Dade, Florida, for the adjudication of any civil action
related to or arising out of, in whole or in part, the Transaction
Documents.
c. Counterparts. This Agreement may be executed in two 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
party. 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 party 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 between the Buyer, the Seller, 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 the
Seller nor 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 the Seller: Pro Tech Communications, Inc.
0000 Xxxxxxxxxx 00xx Xxxxxx
Xxxx Xxxxxx, Xxxxxxx 00000
Attention: 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 Xxxx.
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer: NCT Hearing Products, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
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 the Transfer Agent: American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Each party shall provide five (5) days' prior written notice to the other
party of any change in address or facsimile number.
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. Neither party shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
other party.
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. The representations and warranties of the Buyer and the
Seller contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 10 and the indemnification provisions set forth
in Section 9 shall survive for a period of one (1) year from the Closing,
provided that the representations and warranties contained in Section 2(b),
Section 2(c), Section 2(e), Sections 2(k) through 2(l), and Sections 3(a)
through 3(e) shall survive for a period of two (2) years from the Closing.
The agreements and covenants set forth in Section 8 shall survive for a
period of three (3) years from the Closing.
k. Publicity. The Seller and the Buyer 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
the Seller shall be entitled, without the prior approval of the Buyer, to
make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Seller 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. 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.
n. Placement Agent. The Seller acknowledges that it has engaged a
placement agent, Union Atlantic LC, in connection with the sale of the
Seller's Common Stock, which placement agent may have formally or
informally engaged other agents on its behalf. At the Closing Date, the
Seller and the Buyer shall each be responsible for the payment of one-half
of the placement fee to Union Atlantic LC equaling in the aggregate two
percent (2%) of the total number of shares of Seller's Common Stock issued
to Buyer as of the Closing Date relating to or arising out of the
transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Stock
Purchase Agreement to be duly executed as of the date first written above.
"SELLER"
PRO TECH COMMUNICATIONS, INC.
/s/ XXXXXXX XXXXXXXXX
By: Xxxxxxx Xxxxxxxxx
Its: President and Secretary
"BUYER"
NCT HEARING PRODUCTS, INC.
/s/ XXXXX XXXXXXXX
By: Xxxxx Xxxxxxxx
Its: President
ACKNOWLEDGED AND AGREED,
AS TO SECTION 8 ABOVE:
By: /s/ XXXXXXX XXXXXXXXX
-----------------------------------------
Xxxxxxx Xxxxxxxxx, in his
individual capacity
By: /s/ XXXXX XXXXXX
-----------------------------------------------------
Xxxxx Xxxxxx, in his
individual capacity
ANNEX I
Capitalization
ANNEX II
Shareholder's Agreement]
ANNEX III
License Agreement
ANNEX IV
Intentionally Omitted
ANNEX V
Opinion of Counsel of Seller
ANNEX VI
Board Resolutions
SCHEDULE 2(l)
Conflicts
None.
SCHEDULE 3(c)
Capitalization
SCHEDULE 3(e)
Conflicts
SCHEDULE 3(f)
Defaults, Violations
SCHEDULE 3(g)
Consents
SCHEDULE 3(i)
Subsequent Events
SCHEDULE 3(j)
Litigation
SCHEDULE 3(o)
Intellectual Property Rights
SCHEDULE 3(q)
Title
SCHEDULE 3(v)
Tax Status
SCHEDULE 3(w)
Certain Transactions
