CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT dated as of
December 20, 1996 between Alcohol Sensors International, Ltd., a New York
corporation (the "Company"), and American International Insurance Company, a
New York corporation (the "Purchaser").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the
context clearly requires a different meaning, the following terms have the
meanings indicated:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Agreement, together with all Annexes and
Schedules hereto, as the same may be amended, supplemented or modified in
accordance with the terms hereof from time to time.
"Balance Sheet" means the consolidated balance sheet of the Company as
of June 30, 1996, which is contained in the Quarterly Report.
"Business Day" means any day other than Saturday and Sunday and any
other day on which banking institutions in the State of New York are required
or authorized by law to close.
"Certificate of Amendment" means the Certificate of Amendment to the
Certificate of Incorporation of the Company, which, among other things, sets
forth the number, designation, relative rights, preferences and limitations of
the Preferred Stock as fixed by the Board of Directors of the Company, and
which is in the form set forth in Annex I hereto.
"Certificates" means, collectively, the certificates evidencing the
Preferred Shares and the Warrant Certificate.
"Closing" has the meaning provided in Section 2.1(b).
"Closing Date" has the meaning provided in Section 2.1(c).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act or the
Exchange Act.
"Common Shares" means the shares of Common Stock issuable upon
conversion of the Preferred Shares or the exercise of the Warrants, as the case
may be.
"Common Stock" means the common stock, par value $0.001 per share, of
the Company.
"Confidential Memorandum" means the Confidential Private Placement
Memorandum dated October 22, 1996 relating to the proposed private placement of
certain preferred stock of the Company provided by the Company to the
Purchaser.
"Environmental Law" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement relating to the environment, natural resources, or public or
employee health and safety and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss.
1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et
seq., the Clean Water Act, 33 U.S.C. Section ss. 1251 et seq., the Clean Air
Act, 33 U.S.C. ss. 2601 et seq., the Toxic Substances Control Act, 15 U.S.C.
ss. 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7
U.S.C. ss. 136 et seq., the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et
seq. and the Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., as
such laws have been and may from time to time be further amended or
supplemented, and the regulations promulgated pursuant thereto, and all
analogous state or local statutes and any applicable transfer statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
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"Indemnifiable Costs and Expenses", "Indemnifying Party" and
"Indemnified Person" have the meanings provided in Section 7.1.
"Liens" means any and all security interests, liens, claims,
encumbrances, pledges, options, Taxes and charges of any kind or nature.
"Material Adverse Effect" means, with respect to the Company, any
action, event or occurrence which has or is reasonably likely to have a
material adverse effect on the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
"Person" means any individual, company, corporation, partnership,
limited liability company, trust, division, governmental, quasi-governmental or
regulatory entity or authority or other entity.
"Preferred Shares" means the 833,333 shares of Preferred Stock to be
sold and purchased pursuant to this Agreement.
"Preferred Stock" means the Company's Series A Cumulative
Non-redeemable Convertible Preferred Stock, par value $0.001 per share, with
the terms set forth in the Certificate of Amendment.
"Quarterly Report" means the Company's Quarterly Report on Form 10-Q
filed with the Commission for the quarterly period ended June 30, 1996.
"Registration Rights Agreement" means the Registration Rights
Agreement between the Company and the Purchaser to be executed on the Closing
Date in the form of Annex II hereto.
"SEC Documents" has the meaning provided in Section 3.8.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Shareholders Agreement" means the Shareholders Agreement among the
Purchaser, the Company, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxx to be executed on the Closing Date in
the form of Annex III hereto.
"Stock Option Plan" has the meaning provided in Section 3.2.
"Subsidiaries" means Alcohol Sensors Europe, plc, a British company.
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"Tax Authority" and "Taxes" have the respective meanings provided in
Section 3.12.
"Warrant Certificate" means the Warrant Certificate relating to the
Warrants to be executed and delivered by the Company and accepted by the
Purchaser on the Closing Date in the form of Annex IV hereto.
"Warrants" means the 833,333 warrants of the Company with the terms
set forth in the Warrant Certificate to be sold and purchased pursuant to this
Agreement.
The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms. The use of the word "including" herein shall
be interpreted to mean "including, without limitation," unless the context
clearly requires another interpretation.
ARTICLE II
PURCHASE OF PREFERRED SHARES AND WARRANTS
Section 2.1. Purchase of Preferred Shares and Warrants; the Closing.
(a) Subject to the terms and conditions herein set forth, the Company
agrees that it will sell to the Purchaser, and the Purchaser agrees that it
will purchase from the Company, on the Closing Date the Preferred Shares and
the Warrants for an aggregate purchase price of $2,500,000.
(b) The sale and purchase of the Preferred Shares and Warrants by the
parties hereto will take place at a closing (the "Closing") at the offices of
Kramer, Levin, Naftalis & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx or at
such other location as shall be agreed to by the Company and the Purchaser not
later than three Business Days after the date on which the conditions set forth
in Article VI are satisfied or such other date as the Company and the Purchaser
may mutually agree.
(c) The Company shall notify the Purchaser of the date and time of the
Closing (the "Closing Date"), which notice shall be given no later than three
Business Days prior to the Closing Date. Such notice shall specify the account
of the Company to which the purchase price is to be wire transferred.
(d) Delivery of the Preferred Shares and Warrants to be purchased by
the Purchaser pursuant to this Agreement shall be made at the Closing by the
Company delivering to the Purchaser, against payment of the purchase price
therefor, Certificates for the Preferred Shares and Warrants, in such amounts
and registered in the names (which shall be the Purchaser or such other Person
as shall be an Affiliate of the Purchaser or a nominee of the Purchaser or such
Affiliate holding for the benefit of the Purchaser or Affiliate) as the
Purchaser shall have
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designated in writing to the Company at least two Business Days prior to the
Closing Date. The Purchaser acknowledges and agrees that each Certificate shall
bear a legend to reflect the applicability of Federal and state securities laws
limitations on the transfer of the Preferred Shares and Warrants as follows (or
a substantively equivalent legend):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
(e) Payment of the purchase price for the Preferred Shares and
Warrants shall be made by the Purchaser at the Closing Date by wire transfer in
immediately available funds to the designated account of the Company.
Section 2.2. Closing Covenant. The parties hereto agree to act in good
faith in taking any and all actions as shall reasonably be necessary to
facilitate the Closing of the purchase and sale of the Preferred Shares and the
Warrants and the other transactions contemplated by this Agreement, including
the satisfaction of the respective closing conditions of the parties set forth
herein.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to, and covenants with, the
Purchaser as of the date of this Agreement and as of the Closing Date that:
Section 3.1. Corporate Organization, etc. Each of the Company and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
necessary corporate power and authority to conduct its business as currently
conducted and to own or lease the properties and assets it now owns or holds
under lease. Each of the Company and each Subsidiary is duly qualified or
licensed to do business and is in good standing as a foreign corporation in
every jurisdiction in which the conduct of its business or the ownership or
leasing of its properties requires it to be so qualified or licensed, except
where the failure to be so qualified or licensed or in good standing would not
individually, or in the aggregate, have a Material Adverse Effect on the
Company. The Company has heretofore delivered to the Purchaser true, complete
and correct copies of the Certificate of Incorporation and by-laws of the
Company and each Subsidiary, each as currently in effect, and no action has
been taken or authorized to amend or in contemplation
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of the amendment of such documents (other than in connection with the
Certificate of Amendment) or to liquidate or dissolve the Company or any
Subsidiary.
Section 3.2. Capitalization. As of the date hereof and immediately
prior to the Closing, (i) the authorized capital stock of the Company consists
of 28,000,000 shares of preferred stock, which includes 3,000,000 shares of
Preferred Stock, and 25,000,000 shares of Common Stock; (ii) no shares of
preferred stock (including Preferred Stock) of the Company are outstanding;
(iii) 600,000 shares of Common Stock are reserved for issuance upon the
exercise of options issued pursuant to the Company's 1996 Stock Option Plan
(the "Stock Option Plan") and 3,744,225 shares of Common Stock are reserved for
issuance upon the exercise of warrants and options; (iv) 833,333 shares of
Common Stock are reserved for issuance upon the conversion of the Preferred
Stock and 833,333 shares of Common Stock are reserved for issuance upon the
exercise of the Warrants; (v) 8,708,846 shares of Common Stock are outstanding;
and (vi) 55,672 shares of Common Stock are held in treasury. All of the
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable and were issued in compliance with all
applicable Federal and state laws concerning the issuance of securities. The
rights, preferences, privileges and restrictions of the Preferred Stock and the
Warrants are as set forth in the Certificate of Amendment and Warrant
Certificate, respectively. Except for the Stock Option Plan and the
transactions contemplated hereby and except as set forth in Schedule 3.2
hereto, there are no outstanding options, warrants, rights (including
registration, conversion or preemptive rights and rights of first refusal),
proxy or shareholders agreements or other agreements or arrangements of the
Company or any Subsidiary granted to or with any Person to purchase or acquire
or otherwise relating to any securities of the Company or any Subsidiary or any
securities convertible or exchangeable into such securities. Without limiting
the generality of the foregoing and except as provided in the Registration
Rights Agreement, neither the Company nor any Subsidiary has granted or agreed
to grant any registration rights, including piggyback rights, to any Person.
Section 3.3 Subsidiaries. Except as set forth in Schedule 3.3 hereto,
(i) the Company does not have, and is not committed to purchase or acquire, any
equity interest or equivalent interest (direct or indirect) in any Person other
than the Subsidiaries, (ii) all outstanding shares of capital stock of each
such Subsidiary are held solely by the Company and have been duly authorized
and validly issued and are fully paid and non-assessable and (iii) the Company
owns all of the issued and outstanding capital stock of each of the
Subsidiaries and has good and marketable title to all such shares of capital
stock free and clear of any and all Liens.
Section 3.4. Execution and Delivery, etc. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
the Registration Rights Agreement, the Warrant Certificate and the Shareholders
Agreement, to consummate the transactions contemplated hereby and thereby,
including the issuance of the Preferred Shares, the Warrants and, upon
conversion of the Preferred Shares or exercise of the Warrants, the Common
Shares, and to perform its obligations hereunder, thereunder and under the
Certificate of Amendment. The execution and delivery by the Company of this
Agreement, the Registration
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Rights Agreement, the Warrant Certificate and the Shareholders Agreement and
the performance of its obligations hereunder, thereunder and under the
Certificate of Amendment, including the issuance of the Preferred Shares, the
Warrants and the Common Shares upon conversion of the Preferred Shares or
exercise of the Warrants, have been duly authorized by all necessary corporate
and other action, and no further authorization on the part of the Company is
necessary to authorize such execution, delivery and performance. This Agreement
has been, and the Registration Rights Agreement, the Warrant Certificate and
the Shareholders Agreement when executed and delivered by the Company will be,
duly executed and delivered by the Company. This Agreement constitutes, and the
Registration Rights Agreement, the Warrant Certificate and the Shareholders
Agreement, when so executed and delivered, will constitute, legal, valid and
binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except as enforceability may be subject
to the application of general equitable principles and to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally.
Section 3.5. Duly Authorized Shares, etc. The Preferred Shares and the
Warrants have been duly authorized and, upon issuance at the Closing, will be
validly issued, fully paid and non-assessable, and free and clear of any and
all Liens, and the issuance of such Preferred Shares and Warrants are not and
will not be subject to any preemptive or similar right of any other stockholder
of the Company. The Common Shares have been duly authorized and reserved for
issuance upon conversion of the Preferred Shares or exercise of the Warrants,
as applicable, and, upon issuance in accordance with the terms of the
Certificate of Amendment or the Warrant Certificate, as applicable, will be
validly issued, fully paid and non-assessable, and free and clear of any and
all Liens, and the issuance of such Common Shares is not and will not be
subject to any preemptive or similar right of any other stockholder of the
Company.
Section 3.6. Consents and Approvals of Governmental Authorities.
Except for (i) the filing of the Certificate of Amendment with the Secretary of
State of New York and (ii) certain required filings under New York State "blue
sky" or securities laws, which filings shall be made on a timely basis by the
Company, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required in
connection with the execution and delivery by the Company of this Agreement,
the Registration Rights Agreement, the Warrant Certificate and the Shareholders
Agreement, the consummation of the transactions contemplated hereby or thereby,
including the issuance of the Preferred Shares, the Warrants or the Common
Shares upon the conversion of the Preferred Shares or the exercise of the
Warrants, and the performance by the Company of its obligations hereunder,
thereunder or under the Certificate of Amendment.
Section 3.7. No Violation. The execution and delivery by the Company
of this Agreement, the Registration Rights Agreement, the Warrant Certificate
and the Shareholders Agreement, the consummation of the transactions
contemplated hereby and thereby, including the issuance of the Preferred
Shares, the Warrants and the Common Shares upon the conversion of the Preferred
Shares or the exercise of the Warrants, and the performance by the Company
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of its obligations hereunder, thereunder and under the Certificate of Amendment
do not and will not (with the giving of notice or the passage of time or both)
(a) conflict with or violate or result in a breach of or constitute a default
under, or result in any right of termination by any other Person or the
creation of any Lien upon any properties or assets of the Company or any
Subsidiary pursuant to: (i) the Certificate of Incorporation or by-laws of the
Company or any Subsidiary or (ii) any material note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, lease, contract, agreement or other
instrument to which the Company or any Subsidiary is a party or by which any of
their properties are bound; (b) violate any applicable law, rule, regulation,
judgment, injunction, order or decree binding upon the Company or any of the
Subsidiaries or to which any of their properties is subject; (c) result in the
loss or impairment of any material approval, license, franchise, permit, legal
privilege or legal right enjoyed or possessed by the Company or any of the
Subsidiaries; or (d) otherwise result in the creation of any Lien.
Section 3.8. SEC Documents; Confidential Memorandum. From November 9,
1995 through the date of this Agreement, the Company filed all forms, reports
and other documents required to be filed by it with the Commission pursuant to
the Exchange Act and the Securities Act, true, correct and complete copies of
which (other than preliminary materials and exhibits) have been provided to the
Purchaser by the Company. The Company shall timely file with the Commission and
promptly provide the Purchaser with a true, correct and complete copy of any
such forms, reports and other documents required to be filed with the
Commission on or prior to the Closing Date. All such forms, reports and
documents filed from November 9, 1995 through the Closing Date are referred to
herein as the "SEC Documents." Each of the SEC Documents (i) was or, as to
documents not yet filed at the date of this Agreement, will be prepared in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, in all material respects and (ii) did not, or as to documents
not yet filed at the date of this Agreement, will not, as of its date, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The Confidential Memorandum did not, as of the date thereof, and,
as of the Closing Date, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 3.9. Financial Statements, Projections, etc. The consolidated
financial statements of the Company and the Subsidiaries (including any notes
thereto) contained in the SEC Documents were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as indicated in the notes thereto or
as otherwise permitted by the Commission with respect to the omission of
certain note and other disclosures in interim financial statements) and each
fairly presents the consolidated financial position, results of operations and
cash flows of the Company and the Subsidiaries as at the respective dates
indicated therein and for the respective periods indicated therein (subject, in
the case of unaudited statements, to normal and recurring year-end adjustments
which were
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not and are not expected, individually or in the aggregate, to be material in
amount). Neither the Company nor any Subsidiary has any debts, obligations or
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, probable of assertion or not, that are
required to be disclosed in accordance with generally accepted accounting
principles other than those reflected or disclosed in the Balance Sheet and the
notes thereto and those incurred after the date of the Balance Sheet in the
ordinary course of business. The financial projections in relation to the
Company provided to the Purchaser prior to the date hereof were prepared in
good faith and on the basis of the assumptions set forth therein, which the
Company believes are reasonable.
Section 3.10. Absence of Certain Changes. Since December 31, 1995,
except, as otherwise set forth in (i) the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 and the Company's Quarterly Reports
on Form 10-Q for the respective quarterly periods ended March 31, 1996 and June
30, 1996 or (ii) Schedule 3.10 hereto, in each case as filed with the
Commission, each of the Company and each Subsidiary has conducted its business
in all material respects in the ordinary course consistent with past practices,
and without limiting the generality of the foregoing, there has not been:
(a) Any change, occurrence or circumstance in or affecting the
business, assets, liabilities, financial condition, operations or prospects of
the Company or any Subsidiary that has had or may reasonably be expected to
have a Material Adverse Effect on the Company;
(b) Any resignation or termination of any key officers, employees
or consultants of the Company or any of the Subsidiaries; and the Company, to
the best of its knowledge, does not know of the impending resignation or
termination of employment of any such officer, employee or consultant;
(c) Any material change, except in the ordinary course of business,
in the contingent obligations of the Company or any of the Subsidiaries by way
of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, that has had or may reasonably be expected to have a Material
Adverse Effect on the Company;
(e) Any waiver by the Company or any of the Subsidiaries of a
valuable right or of a material debt owed to any of them;
(f) Any direct or indirect loans or advances made by the Company or
any of the Subsidiaries to any shareholder, employee, consultant, officer,
director or Affiliate of the Company or any of the Subsidiaries, other than
loans or advances made in the ordinary course of business;
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(g) Any material change in any compensation arrangement or
agreement with any employee, consultant, officer, director or shareholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company or any of the Subsidiaries or any
direct or indirect redemption, purchase, retirement or other acquisition of any
shares of its capital stock;
(i) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company or any of the Subsidiaries, except those for
immaterial amounts or for current liabilities incurred in the ordinary course
of business;
(j) Any sale, assignment or transfer of any of the assets or rights
of the Company or any Subsidiary (other than the sale of their respective
inventory in the ordinary course of business), including patents, trademarks,
copyrights, trade secrets or other intangible assets or intellectual property,
or any mortgage or pledge of or Lien imposed upon any of the assets or
properties of the Company or any Subsidiary, except in the ordinary course of
business;
(k) Any change in or default under any material agreement to which
the Company or any of the Subsidiaries is a party or by which any of them is
bound that has had or may reasonably be expected to have a Material Adverse
Effect on the Company;
(l) Any purchase or other acquisition of any operating business or
a material amount of assets or the capital stock of any other Person;
(m) Any agreement or understanding to do or enter into any of the
foregoing; or
(n) Any other event or condition of any character that, either
individually or cumulatively, has had or may reasonably be expected to have a
Material Adverse Effect on the Company.
Section 3.11. Compliance with Laws and Instruments. Each of the
Company and each of the Subsidiaries is, and their business has been operated,
in compliance with their respective organizational documents and all applicable
laws, rules, regulations, decrees, injunctions, judgments, orders, rulings,
awards, settlements and writs, except where the failure to comply therewith
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 3.12. Taxes. "Taxes" shall mean all taxes, charges, fees,
Liens, duties or other assessments, however denominated, including any interest
or penalties that may become payable in respect thereof, imposed by the United
States government, any state, local or foreign government or any agency or
political subdivision of any such government (a "Tax Authority"),
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which taxes shall include, without limiting the generality of the foregoing,
all income taxes, payroll and employee withholding taxes, unemployment
insurance, social security, sales and use taxes, excise taxes, capital taxes,
franchise taxes, gross receipt taxes, occupation taxes, real and personal
property taxes, value added taxes, stamp taxes, transfer taxes, workers'
compensation taxes and other obligations of the same or of a similar nature.
All tax returns or reports required to be filed by or on behalf of the Company
or any Subsidiary have been timely filed or requests for extensions have been
timely filed and, to the best knowledge of the Company, any such extension has
been granted and has not expired, and all such filed returns are complete and
accurate. All Taxes due from the Company or any Subsidiary for periods through
the Closing Date have been paid in full or an adequate provision has been made
for any such Taxes on the financial statements included in the Quarterly Report
(in accordance with generally accepted accounting principles). There is no
audit, examination, deficiency, or refund litigation pending or threatened,
with respect to any Taxes of the Company or any Subsidiary that could result in
a determination that would have a Material Adverse Effect on the Company. All
Taxes, interest, additions and penalties due with respect to completed and
settled examinations or concluded litigation relating to it have been paid in
full or adequate provision has been made for any such Taxes on the financial
statements included in the Quarterly Report (in accordance with generally
accepted accounting principles). The Company has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
that is currently in effect. No rulings have been issued by or agreements
entered into with any Tax Authority with respect to the Company or any
Subsidiary.
Section 3.13. ERISA and Employee Benefit Plans. Except as listed in
Schedule 3.13, neither of the Company nor any Subsidiary maintains, sponsors,
is required to make contributions to or otherwise has any liability, direct,
indirect, contingent or otherwise, with respect to any pension, profit sharing,
thrift or other retirement plan, employee stock ownership plan, deferred
compensation, stock ownership, stock purchase, performance share, bonus or
other incentive plan, severance plan, health or group insurance plan, welfare
plan, or other similar plan, agreement, policy, arrangement or understanding,
whether written or oral, whether or not such plan is intended to be qualified
under Section 401(a) of the Code, including any employee benefit plan within
the meaning of Section 3(3) of ERISA, which plan covers any employee or former
employee of the Company or any Subsidiary (collectively, the "Plans"). The
Company has delivered to the Purchaser true, correct and complete copies of (i)
any employment agreements and any procedures and policies (including summaries
of any procedures and policies that are unwritten) relating to the employment
of employees of the Company and each Subsidiary and the use of temporary
employees and independent contractors by the Company and each Subsidiary, (ii)
each Plan and all related trust agreements, insurance and other material
contracts, and summary plan descriptions and summaries of material
modifications relating to each Plan and any related material communications
distributed to participants under the Plans and (iii) the latest reports which
have been filed (or are in fully completed form for filing) with the Internal
Revenue Service and the Department of Labor with respect to each Plan. No Plan
is subject to Title IV of ERISA. With respect to each Plan, to the best
knowledge of the Company, no party in interest or disqualified person (as
defined in Section 3(14) of ERISA
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and Section 4975 of the Code, respectively) has at any time engaged in a
transaction which could subject the Company or any of the Subsidiaries,
directly or indirectly, to a Tax, penalty or liability for prohibited
transactions imposed by ERISA or Section 4975 of the Code. To the best
knowledge of the Company, no fiduciary (as defined in Section 3(21) of ERISA)
with respect to any Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA. Each Plan is and
has been operated in compliance in all material respects with its terms and all
applicable reporting, disclosure and other requirements of ERISA and the Code
as they relate to such Plan, including where applicable the group health plan
continuation coverage requirements set forth in Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code, and by its terms can be terminated at
any time. As of the Closing Date, the Company and each Subsidiary shall have
made all required contributions under each Plan for all periods through and
including the Closing Date or adequate accruals therefor will have been
provided for by the Company or such Subsidiary. No Person will be entitled to
any severance benefits under the terms of any Plan solely by reason of the
transactions contemplated by this Agreement, the Registration Rights Agreement,
the Warrant Certificate or the Shareholders Agreement. There are no actions,
claims, lawsuits or arbitrations pending or, to the best knowledge of the
Company, threatened with respect to any Plan. No Plan provides for the payment
of retiree or post-termination medical, health, disability, life insurance or
other welfare benefits. Neither the Company nor any of the Subsidiaries has or
has ever had any ERISA Affiliate. For purposes of this Agreement, "ERISA
Affiliate" means any Person which would be treated as a single employer with
the Company or any Subsidiary under Section 414(b), (c), (m) or (o) of the Code
and the regulations promulgated thereunder or Title IV of ERISA. Neither the
Company nor any Subsidiary has incurred any liability to the Pension Benefit
Guaranty Corporation. Each Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code (and the exempt trust thereunder), has
been determined by the Internal Revenue Service to satisfy the qualification
requirements of Sections 401(a) and 501(a) of the Code and every Plan (and
related trust) which is intended to comply with the terms and requirements of
applicable statutes does so comply in all material respects. Each of the
Company and each Subsidiary has never contributed to, or withdrawn in a
complete or partial withdrawal from, any multiemployer plan (within the meaning
of Subtitle E of Title IV of ERISA) or incurred contingent liability under
Section 4204 of ERISA. Neither the Company nor any Subsidiary has proposed or
agreed to any increase in benefits under any Plan (or the creation of new
benefits) or change in employee coverage which would increase the expense of
maintaining any such Plan. The consummation of the transactions contemplated by
this Agreement and the Registration Rights Agreement, the Warrant Certificate
and the Shareholders Agreement will not result in an increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
benefits or compensation payable in respect of any employee.
Section 3.14. Contracts, etc. Neither the Company nor any of the
Subsidiaries, nor to the best knowledge of the Company any other party thereto,
is in default or breach (and there is no event which, with notice or lapse of
time or both, would constitute such a default or breach) under any agreement,
arrangement, bond, commitment, contract, franchise, indemnity,
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indenture, instrument, lease, license or understanding, whether or not in
writing, to which it is a party or to which any of its assets are subject, in
each case that has had or may reasonably be expected to have a Material Adverse
Effect on the Company.
Section 3.15. Legal Proceedings, etc. (i) There is no legal,
administrative, arbitral or other investigation, claim, action or proceeding
pending or, to the best knowledge of the Company, threatened against the
Company or any of the Subsidiaries or any of their respective directors,
officers or employees or to which any of their properties are subject or
against any Plan or the trustee of any Plan which challenges the validity of
this Agreement, the Registration Rights Agreement, the Warrant Certificate, the
Shareholders Agreement, the Certificate of Amendment, the Preferred Stock, the
Warrants or any action taken or to be taken pursuant hereto or thereto, which
seeks to impose or confirm any limitation on the ability of the Purchaser
effectively to acquire, hold or exercise full rights of ownership of the
Preferred Shares, the Warrants or the Common Shares, or, except as disclosed on
Schedule 3.15 hereto, which in the aggregate with all other such
investigations, claims, actions and proceedings would have a Material Adverse
Effect on the Company; (ii) neither the Company nor any Subsidiary is a party
or is subject to the provisions of any order, writ, injunction, award,
settlement, judgment or decree of any court, board or other governmental agency
or instrumentality or administrative agency or any arbiter, which would,
individually or in the aggregate, have a Material Adverse Effect on the
Company; and (iii) there is no action, suit, proceeding or investigation by the
Company or any Subsidiary currently pending or which the Company or any
Subsidiary intends to initiate.
Section 3.16. Brokerage. No placement agent, banker, broker or finder
has acted directly or indirectly for the Company in connection with this
Agreement or the transactions contemplated hereby, and no placement agent,
banker, broker or finder is entitled to any commission, brokerage or finder's
fee in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Company.
Section 3.17. Agreements; Action. (a) Except as otherwise disclosed in
Schedule 3.17 hereto, there are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, injunctions, awards,
settlements, writs or decrees to which the Company or any Subsidiary is a party
or by which it is bound which may involve or contain (i) obligations
(contingent or otherwise) of, or payments to, the Company or any Subsidiary in
excess of $50,000 (other than obligations of, or payments to, the Company or
any Subsidiary arising from purchase or sale agreements entered into in the
ordinary course of business), (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company (other than licenses
arising from the purchase of "off the shelf" or other standard products), (iii)
provisions restricting or affecting the development, manufacture or
distribution of the Company's or any Subsidiary's products or services or (iv)
indemnification by the Company or any Subsidiary with respect to infringements
of proprietary rights (other than indemnification obligations arising from
purchase or sale agreements entered into in the ordinary course of business).
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(b) Since December 31, 1995, neither the Company nor any Subsidiary
has incurred any indebtedness for money borrowed or any other liabilities
(other than with respect to obligations incurred in the ordinary course of
business) individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of $250,000 in the
aggregate.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons the
Company has reason to believe are affiliated therewith) shall be aggregated for
the purpose of meeting the individual minimum dollar amounts of such
subsections.
(d) Neither the Company nor any Subsidiary has engaged in the past
three (3) months in any discussion (i) with any Person or any representative of
such Person regarding the consolidation or merger of the Company or any
Subsidiary with or into any such Person or another Person, (ii) with any Person
regarding the sale, conveyance or disposition of all or substantially all of
the assets of the Company or any Subsidiary, or a transaction or series of
related transactions in which more than fifty percent (50%) of the voting power
of the Company or any Subsidiary is disposed of or (iii) regarding any other
form of acquisition, liquidation, dissolution or winding up of the Company or
any Subsidiary.
Section 3.18. Transactions with Related Persons. (a) Except as
otherwise disclosed in Schedule 3.18 hereto, there are no agreements,
understandings or proposed transactions of the Company or any Subsidiary with,
and no debts, obligations or liabilities of the Company or any Subsidiary owed
to, any of their respective officers, directors, shareholders, employees,
consultants or Affiliates or any Affiliate thereof other than (i) for payment
of salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company or any such Subsidiary and (iii) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company or any such Subsidiary). None of the
officers, directors or shareholders of the Company or any Subsidiary, or any
members of their immediate families or any of their Affiliates, is indebted to,
or has any cause of action or legal claim against, the Company or any
Subsidiary or, to the best knowledge of the Company, has any direct or indirect
ownership interest in any Person with which the Company or any Subsidiary is
affiliated or with which the Company or any Subsidiary has a business
relationship, or any Person which competes with the Company or any Subsidiary,
except that officers, directors and/or shareholders of the Company or any
Subsidiary may own stock in publicly traded companies which may compete with
the Company or any Subsidiary. No officer, director or shareholder of the
Company or any Subsidiary, or any member of their immediate families or any of
their Affiliates, is, directly or indirectly, interested in any material
contract with the Company or any Subsidiary. Except as otherwise disclosed in
Schedule 3.18, neither the Company nor any Subsidiary is a guarantor,
indemnitor or contributor of any indebtedness or liability of any other Person.
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Section 3.19. Title to Properties and Assets; Liens, etc. Each of the
Company and each Subsidiary has good and marketable title to its properties and
assets, and good title to its leasehold estates, in each case subject to no
Lien, other than (i) those identified on the Balance Sheet, (ii) those
resulting from taxes which have not yet become delinquent, (iii) minor Liens
which do not materially detract from the value of the property or materially
impair the operations of the Company or such Subsidiary and (iv) those that
have otherwise arisen in the ordinary course of business. All facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased or
used by the Company and each Subsidiary are in good operating condition and
repair and are reasonably fit and usable for the purposes for which they are
being used. Schedule 3.19 hereto sets forth a true, complete and correct list
of all of the real property that is leased to the Company and each Subsidiary.
The Company and each Subsidiary enjoys peaceful and undisturbed possession of
all such real property leased to it. Neither the Company nor any Subsidiary has
ever owned or presently owns any real property. The Company has never
manufactured or produced, and does not presently manufacture or produce, any of
its products or goods; except as set forth on Schedule 3.19, such products and
goods have been and are presently manufactured and produced by independent
third Persons.
Section 3.20. Patents and Trademarks. Each of the Company and each
Subsidiary owns or possesses sufficient legal rights to all trademarks, service
marks, trade names, copyrights, trade secrets, patents, information, other
proprietary rights and processes necessary for its business as now conducted
and as proposed to be conducted, without any known infringement of the rights
of others. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is the Company or any Subsidiary bound by or a
party to any options, licenses or agreements of any kind with respect to the
trademarks, service marks, trade names, copyrights, trade secrets, patents,
licenses, information and other proprietary rights and processes of any other
Person other than such licenses or agreements arising from the purchase of "off
the shelf" or standard products. Each of the Company and each Subsidiary has
not received any communications alleging that the Company or any Subsidiary has
violated or, by conducting its business as proposed, would violate any of the
trademarks, service marks, trade names, copyrights, trade secrets, patents or
other proprietary rights of any other Person. Each of the Company and each
Subsidiary is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree, injunction, award, settlement or
order of any court or administrative agency, that would interfere with his or
her duties to the Company or any Subsidiary or that would conflict with the
Company's or any Subsidiary's business as presently conducted and as proposed
to be conducted.
Section 3.21. Employees. Each of the Company and each Subsidiary has
no collective bargaining agreements with any of its employees. There is no
labor union organizing activity pending or, to the Company's best knowledge,
threatened with respect to the Company or any Subsidiary. To the Company's best
knowledge, no employee of the Company or any Subsidiary, nor any consultant
with whom the Company or any Subsidiary has contracted, is in violation of any
term of any employment contract, proprietary information agreement or any
-15-
other agreement relating to the right of any such individual to be employed by,
or to contract with, the Company or such Subsidiary because of the nature of
the business to be conducted by the Company or such Subsidiary; and, to the
Company's best knowledge, the continued employment by the Company and each
Subsidiary of its present employees, and the performance of the Company's and
each Subsidiary's contracts with its independent contractors, will not result
in any such violation. The Company and the Subsidiaries have not received any
notice alleging that any such violation has occurred. Except as set forth in
Schedule 3.21 hereto, no employee or consultant of the Company or of any
Subsidiary has been granted the right to continued employment by the Company or
such Subsidiary or to any material compensation following termination of
employment with or by the Company or such Subsidiary.
Section 3.22. Permits. Each of the Company and each Subsidiary has all
franchises, permits, licenses, consents and approvals and any similar
authority, all of which are in full force and effect, necessary for the conduct
of its business as now being conducted by it, the lack of which would have a
Material Adverse Effect on the Company.
Section 3.23. Environmental Matters. As used herein, "Subject
Premises" means the real property now owned, operated, used or leased or
previously owned, operated, used or leased (but only through the date of
termination of such ownership, operation, use or lease) by, to or for the
Company or the Subsidiaries or any of their Affiliates. (i) To the best
knowledge of the Company, none of the Subject Premises has any condition or
conditions which would require notification or remediation under any
Environmental Law (collectively, "Environmental Defects"); (ii) except as set
forth on Schedule 3.23 hereto, to the best knowledge of the Company, there are
not now and never have been any underground tanks or above-ground tanks located
on the Subject Premises; (iii) neither the Company nor any of the Subsidiaries,
nor, to the Company's best knowledge, any other Person has at any time during
its possession of the Subject Premises disposed of any wastes, Hazardous Waste
(as defined below) or otherwise, other than in accordance with applicable
Environmental Laws and Environmental Permits (as defined below); (iv) neither
the Company nor any of the Subsidiaries has received any letter or other
communication, written or oral, from the Federal Environmental Protection
Agency or any other local, state or Federal regulatory agencies or any other
Person relating to the existence of Environmental Defects at the Subject
Premises; (v) to the best knowledge of the Company, there do not exist any
judgments, orders, directives, decrees or awards of any court, arbitrator or
administrative or governmental agency or entity or any other Person concerning
the Company or any of the Subsidiaries or any of their agents' or contractors'
compliance with any Environmental Law or Environmental Permit (in the case of
agents and contractors, relating to the Company, any of the Subsidiaries or the
Subject Premises); (vi) no claims have been asserted or, to the best knowledge
of the Company, are threatened against the Company or any of the Subsidiaries
relating to any Environmental Defect or condition which with the passage of
time could become an Environmental Defect; (vii) to the best knowledge of the
Company, there do not exist any consent decrees, administrative orders,
settlement agreements or other settlement documents entered into with any
administrative or governmental agency or entity or any other Person concerning
compliance with any Environmental Law or
-16-
Environmental Permit applicable to the Company or any Subsidiary or any of the
Subject Premises; (viii) the Subject Premises and all operations conducted
thereon by the Company or any Subsidiary are and have at all times been
conducted in compliance in all material respects with all Environmental Laws
and Environmental Permits; (ix) the Company and each Subsidiary have obtained
and currently maintain in full force and effect all environmental permits,
approvals, authorizations, licenses, variances, registrations and permissions
(collectively, "Environmental Permits") required for the conduct of their
respective businesses and operations; and (x) to the best knowledge of the
Company, there are no Hazardous Substances or Hazardous Waste on, under or
about the Subject Premises other than those customarily used in or incident to
the business of the Company or any Subsidiary, which in any event are used or
maintained in all material respects in accordance with all applicable
Environmental Laws and Environmental Permits. For purposes hereof, "Hazardous
Substances" or "Hazardous Waste" are defined as any pollutant, contaminant,
chemical or industrial or toxic substance or waste, petroleum products,
asbestos, urea formaldehyde, radon, polychlorinated biphenyls, flammable
explosives, nuclear radioactive fuel or waste or any other substance, waste,
material, substance, pollutant or contaminant that is defined as a hazardous
waste or substance under any applicable Environmental Law or that may cause
damage to human health or the environment, safety or real property and/or any
substance for which the generation, manufacture, storage, treatment or release
is prohibited or regulated under any Environmental Law.
Section 3.24. Offering Valid. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Article IV hereof,
the offer, sale and issuance of the Preferred Shares, the Warrants and the
Common Shares upon conversion of the Preferred Shares or exercise of the
Warrants, as applicable, will be exempt from the registration requirements of
the Securities Act and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the
Preferred Shares or Warrants to any Person or Persons or has taken or will take
any other action so as to bring the sale of such Preferred Shares, Warrants or
the Common Shares by the Company within the registration provisions of the
Securities Act.
Section 3.25. Full Disclosure. This Agreement, the Registration Rights
Agreement, the Warrant Certificate and the Shareholders Agreement and all other
documents delivered by the Company to the Purchaser or its attorneys or agents
in connection herewith or therewith or with the transactions contemplated
hereby or thereby, do not contain any untrue statement of a material fact nor,
to the Company's best knowledge, omit to state a material fact necessary in
order to make the statements contained herein or therein in light of the
circumstances under which they were made not misleading. To the Company's best
knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company that have not been set forth
in this Agreement, the Registration Rights Agreement, the Warrant Certificate
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or the Shareholders Agreement or in other documents delivered to the Purchaser
or its attorneys or agents in connection herewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company as of the date of
this Agreement and as of the Closing Date that:
Section 4.1. Organization, Existence and Authority of Purchaser;
Enforceability. The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. The Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement, the Registration Rights Agreement and the
Shareholders Agreement, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The execution
and delivery by the Purchaser of this Agreement, the Registration Rights
Agreement and the Shareholders Agreement, and the performance of its
obligations hereunder and thereunder, have been duly authorized by all
necessary corporate and other action, and no further authorization on the part
of the Purchaser is necessary to authorize such execution, delivery and
performance. This Agreement has been, and the Registration Rights Agreement and
the Shareholders Agreement when executed and delivered by the Purchaser will
be, duly executed and delivered by the Purchaser. This Agreement constitutes,
and the Registration Rights Agreement, the Warrant Certificate and the
Shareholders Agreement, when so executed and delivered, will constitute, legal,
valid and binding agreements of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, except as enforceability
may be subject to the application of general equitable principles and to
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally.
Section 4.2. No Consent or Violation. No consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required in connection with the execution and
delivery by the Purchaser of this Agreement, the Registration Rights Agreement,
the Warrant Certificate and the Shareholders Agreement, the consummation of the
transactions contemplated hereby and thereby and the performance by the
Purchaser of its obligations hereunder and thereunder. The execution and
delivery by the Purchaser of this Agreement, the Registration Rights Agreement,
the Warrant Certificate and the Shareholders Agreement, the consummation of the
transactions contemplated hereby and thereby and the performance by the
Purchaser of its obligations hereunder and thereunder do not and will not (with
the giving of notice or the passage of time or both) (a) conflict with or
violate or result in a breach of or constitute a default under, or result in
any right of termination by any other Person or the creation of any Lien upon
any properties or assets of the Purchaser pursuant to: (i) the organizational
documents of the Purchaser or (ii) any material note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract,
agreement or other
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instrument to which the Purchaser is a party or by which any of its properties
are bound or (b) violate any applicable law, rule, regulation, judgment,
injunction, order or decree binding upon the Purchaser or to which any of its
properties is subject.
Section 4.3. Purchase for Own Account. The Preferred Shares and the
Warrants to be acquired by the Purchaser pursuant to this Agreement will be
acquired for its own account for investment purposes and not with a view to the
resale or distribution of any part thereof.
Section 4.4 Restricted Securities. The Purchaser understands that the
Preferred Shares and the Warrants being acquired pursuant hereto are
characterized as "restricted securities" under the Federal and state securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act and
applicable state securities laws only in certain limited circumstances. The
Purchaser is familiar with Rule 144 ("Rule 144") of the Commission, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act and applicable state securities laws, pursuant to which
the Preferred Shares and the Warrants (and the Common Shares issuable upon
conversion of the Preferred Shares or exercise of the Warrants) must be held
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt from such
registration.
Section 4.5. Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D, promulgated under
the Securities Act, and was not organized for the specific purpose of acquiring
the Preferred Shares and the Warrants.
Section 4.6. Investor Sophistication. The Purchaser, by reason of its
business and financial experience, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the prospective investment and is able to bear the economic
risk of such investment.
Section 4.7. Brokerage. No placement agent, banker, broker or finder
has acted directly or indirectly for the Purchaser in connection with this
Agreement or the transactions contemplated hereby, and no placement agent,
banker, broker or finder is entitled to any commission, brokerage or finder's
fee in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Purchaser.
ARTICLE V
CERTAIN COVENANTS
Section 5.1. Use of Proceeds. The proceeds from the sale of the
Preferred Shares and Warrants will be used by the Company for its working
capital needs.
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Section 5.2. Certain Actions. From the date hereof through the Closing
Date, the Company (i) shall not, and shall cause each Subsidiary not to, take
any action that would cause any of the representations or warranties of the
Company set forth herein to become untrue or misleading and (ii) shall not take
any action which if taken after the Closing Date would require adjustment of
the conversion price of the Preferred Shares, adjustment of the exercise price
of the Warrants or adjustment of the number of Common Shares issuable upon
conversion of the Preferred Shares pursuant to the Certificate of Amendment or
upon exercise of the Warrants pursuant to the Warrant Certificate.
ARTICLE VI
CLOSING CONDITIONS
CONDITIONS PRECEDENT TO CLOSING
Section 6.1. Conditions Precedent to Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Preferred Shares and Warrants
hereunder is subject to the satisfaction of the following conditions on or
before the Closing Date:
(a) The representations and warranties made by the Company herein and
in the Registration Rights Agreement, the Warrant Certificate and the
Shareholders Agreement shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had been
made on and as of such date.
(b) The Company shall have performed and complied in all material
respects with all covenants, agreements and conditions set forth or
contemplated herein and in the Registration Rights Agreement, the Warrant
Certificate and the Shareholders Agreement required to be performed or complied
with by it on or prior to the Closing Date.
(c) The Company shall have filed the Certificate of Amendment with the
Secretary of State of New York and the Certificate of Amendment shall be in
full force and effect.
(d) The Company shall have executed and delivered the Registration
Rights Agreement, the Warrant Certificate and the Shareholders Agreement.
(e) The purchase of and payment for the Preferred Shares and Warrants
hereunder shall not (i) be prohibited by any applicable law, rule or
regulation, (ii) subject the Purchaser to any penalty or other onerous
condition pursuant to any applicable law, rule or regulation or (iii) be
prevented, prohibited or materially restricted by any judgment, injunction
(whether temporary or permanent), order or decree at the Closing Date.
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(f) All authorizations, consents, approvals, permits and licenses and
filings with, by or in respect of any federal, state, local or foreign
governmental authority, agency, court or other body required to be taken, given
or obtained that are necessary in connection with the transactions contemplated
herein and in the other documents related hereto, shall have been taken, given
or obtained, be in full force and effect and not be subject to any waiting
periods or any pending proceedings or appeals, administrative, judicial or
otherwise.
(g) Since the date of this Agreement, there shall not have occurred
any change, occurrence or circumstance in or affecting the business, assets,
liabilities, financial condition, operations or prospects of the Company or any
Subsidiary that has had or may reasonably be expected to have a Material
Adverse Effect on the Company.
(h) At least one vacancy shall exist on the Board of Directors of the
Company to be filled on the Closing Date by the Purchaser pursuant to the
Shareholders Agreement.
(i) The Closing Date shall not be later than 5:00 p.m., New York time,
on December 20, 1996, or such later time as the Purchaser may agree to.
(j) On or before the Closing Date, the Purchaser shall have received
all of the following from the Company in form and substance reasonably
satisfactory to the Purchaser:
(i) Certificates representing the Preferred Shares and the Warrant
Certificate issued to the Purchaser in accordance with Section 2.1;
(ii) Certificate of the Secretary of the Company dated as of the
Closing Date certifying as to (A) the Certificate of Incorporation of the
Company, recently certified by the Secretary of State of New York, as duly
filed and currently in full force and effect without further amendment,
other than as amended by the Certificate of Amendment; (B) the by-laws of
the Company as currently in full force and effect; (C) the resolutions, in
form and substance reasonably satisfactory to the Purchaser, of the
shareholders and the Board of Directors of the Company duly authorizing the
execution, delivery and performance of this Agreement, the Registration
Rights Agreement, the Warrant Certificate, the Shareholders Agreement and
any other documents, instruments or agreements executed in connection
herewith or therewith to which it is a party and the absence of other
resolutions relating thereto; (D) the absence of proceedings for the
merger, consolidation, sale of assets, dissolution, liquidation or similar
proceedings with respect to the Company; and (E) the incumbency and
signature of the individuals authorized to execute and deliver documents on
the Company's behalf;
(iii) Certificate of the Secretary of each of the Subsidiaries dated
as of the Closing Date certifying as to (A) the Certificate of
Incorporation of such Person, recently certified by the appropriate
governmental authority of the jurisdiction in which such Person is
organized, as duly filed and currently in full force and effect without
further
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amendment; (B) the by-laws of such Person as currently in full force and
effect; (C) the absence of proceedings for the merger, consolidation, sale
of assets, dissolution, liquidation or similar proceedings with respect to
such Person; and (D) the incumbency and signature of the individuals
authorized to execute and deliver documents on such Person's behalf;
(iv) Certificate executed by an officer of the Company dated as of the
Closing Date, certifying that the representations and warranties of the
Company contained in this Agreement, the Registration Rights Agreement, the
Warrant Certificate and the Shareholders Agreement are true and correct as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date;
(v) An opinion addressed to the Purchaser and dated as of the Closing
Date of Xxxxxx & Xxxx, special counsel to the Company, substantially in the
form of Annex V hereto; and
(vi) Such additional documentation as the Purchaser may reasonably
request.
Section 6.2. Conditions Precedent to Obligations of the Company. The
obligations of the Company to issue and sell the Preferred Shares and Warrants
pursuant to this Agreement are subject to the satisfaction of the following
conditions on or before the Closing Date:
(a) The representations and warranties made by the Purchaser herein
and in the Registration Rights Agreement and the Shareholders Agreement shall
be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date.
(b) The Purchaser shall have performed and complied in all material
respects with all covenants, agreements and conditions set forth or
contemplated herein and in the Registration Rights Agreement and the
Shareholders Agreement required to be performed or complied with by it on or
prior to the Closing Date.
(c) The sale of the Preferred Shares and Warrants by the Company
hereunder shall not (i) be prohibited by any applicable law, rule or regulation
or (ii) be prevented, prohibited or materially restricted by any judgment,
injunction (whether temporary or permanent), order or decree at the Closing
Date.
(d) The Purchaser shall have delivered to the Company the funds in
connection with the sale of the Preferred Shares and the Warrants in accordance
with Section 2.1.
(e) The Purchaser shall have executed and delivered the Registration
Rights Agreement, the Warrant Certificate and the Shareholders Agreement.
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(f) All authorizations, consents, approvals, permits and licenses and
filings with, by or in respect of any federal, state, local or foreign
governmental authority, agency, court or other body required to be taken, given
or obtained that are necessary in connection with the transactions contemplated
herein and in the other documents related hereto, shall have been taken, given
or obtained, be in full force and effect and not be subject to any waiting
periods or any pending proceedings or appeals, administrative, judicial or
otherwise.
(g) The Closing Date shall not be later than 5:00 p.m., New York time,
on December 20, 1996 or such later time as the Company may agree to.
ARTICLE VII
INDEMNIFICATION
Section 7.1. General. (a) The Company (the "Indemnifying Party")
agrees and covenants to hold harmless and indemnify the Purchaser and each of
its Affiliates, and their respective managed accounts, shareholders, employees,
directors, officers, principals, equity holders, controlling Persons, advisors
and agents (each of the foregoing Persons being an "Indemnified Person"), from
and against any losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and expenses of investigation) incurred by such
Indemnified Person (collectively, "Indemnifiable Costs and Expenses") in
connection with (i) any actual or threatened third-party action, suit,
proceeding or investigation arising out of or based in any manner upon the
Purchaser's negotiation, execution or performance of its obligations hereunder
or under the Registration Rights Agreement, the Warrant Certificate or the
Shareholders Agreement or its ownership of the Preferred Shares, the Warrants
or Common Shares, (ii) arising out of or based upon any breach by the
Indemnifying Party of any its representations, warranties or covenants
contained herein, in the Registration Rights Agreement, the Warrant Certificate
or the Shareholders Agreement or in any agreement, instrument or document
delivered by the Company hereunder or thereunder or (iii) enforcing the rights
of an Indemnified Person under this Agreement or under the Registration Rights
Agreement, the Warrant Certificate or the Shareholders Agreement.
(b) The Indemnifying Party further agrees promptly upon demand by each
Indemnified Person to reimburse each Indemnified Person for any Indemnifiable
Costs and Expenses as they are incurred by it; provided that if the
Indemnifying Party reimburses an Indemnified Person hereunder for any expenses
incurred in connection with a lawsuit, claim, inquiry or other proceeding or
investigation for which indemnification is sought, such Indemnified Person
agrees to refund such reimbursement of expenses to the extent it is finally
judicially determined that the indemnity provided for in this Article VII is
not applicable to such Indemnified Person in accordance with the terms hereof
or otherwise. The Indemnifying Party further agrees that the indemnification,
contribution and reimbursement commitments set forth in this Article VII shall
apply whether or not an Indemnified Person is a formal party to any such
lawsuits, claims or other proceedings. The indemnity, contribution and expense
-23-
reimbursement obligation of the Indemnifying Party under this Article VII shall
be in addition to any liability it may otherwise have.
(c) The obligations of the Indemnifying Party hereunder shall survive
the Closing and any repurchase, conversion, exchange or transfer of the
Preferred Shares or Warrants and the termination of this Agreement and shall
not be extinguished with respect to any Person because any other Person is not
entitled to indemnity or contribution hereunder.
Section 7.2 Procedure. Promptly after receipt by an Indemnified Person
of notice from any third party of the commencement of any lawsuit, inquiry or
other proceeding or investigation thereof, such Indemnified Person will, if a
claim in respect thereof is to be made against the Indemnifying Party
hereunder, notify the Indemnifying Party in writing of the commencement
thereof; but the omission so to notify the Indemnifying Party will not relieve
the Indemnifying Party (x) from any liability which it may have to any
Indemnified Person hereunder unless the Indemnifying Party is actually
prejudiced thereby or (y) from any liability which it may have to any
Indemnified Person otherwise than pursuant to this Article VII. Each
Indemnified Person shall permit the Indemnifying Party to assume the defense of
such claim with counsel reasonably satisfactory to such Indemnified Person;
provided, however, that any Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (A) the Indemnifying Party has agreed to pay such fees or expenses, (B)
the Indemnifying Party shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such Indemnified Person in a
timely manner or (C) in the reasonable judgment of such Indemnified Person,
based upon advice of its counsel, a conflict of interest may exist between such
Indemnified Person and the Indemnifying Party with respect to such claims (in
which case, if such Indemnified Person notifies the Indemnifying Party in
writing that such Indemnified Person elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such claim on behalf of such Indemnified
Person). The Indemnifying Party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld or delayed). No Indemnified Person will be required to consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of a release from all liability in respect of such claim or
litigation. An Indemnifying Party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all Indemnified Persons with respect to
such claim, as well as one local counsel in each relevant jurisdiction.
Section 7.3. Contribution. (a) In order to provide for just and
equitable contribution in circumstances under which the indemnity provided for
in this Article VII is for any reason held to be unenforceable by the
Indemnified Person, the Indemnifying Party, in lieu of indemnifying such
Indemnified Person, shall have an obligation to contribute, and shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses,
-24-
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect not only the relative benefits received by the Indemnifying Party
and the Indemnified Persons, but also to reflect the relative fault of the
Indemnifying Party and the Indemnified Persons in connection with the statement
or omissions which result in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations; provided,
however, that no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The relative fault of the Indemnifying Party and the
Indemnified Persons shall be determined, if applicable, by reference to, among
other things, whether the untrue statement of a material fact or the omission
to state a material fact has been made by, or relates to information supplied
by, the Indemnifying Party or Indemnified Persons and the Persons' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a Person as a result
of the losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any reasonable legal or other fees or expenses
reasonably incurred by such Person in connection with investigation or
defending any such claim.
(b) The Company and the Purchaser agree that it would not be just and
equitable if contribution pursuant to the immediately preceding paragraph were
determined by any method of allocation which does not take into account the
equitable considerations referred to in such paragraph.
Section 7.4. Notification. Each party agrees to notify in writing
promptly the other party of the commencement of any litigation or proceeding
against it or any of its shareholders, officers, directors or agents in
connection with the issue of any the Preferred Shares, Warrants or Common
Shares.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Entire Agreement; Survival of Provisions. This Agreement,
together with the other agreements, instruments and documents expressly
referred to herein, constitute the entire agreement of the parties with respect
to the transactions contemplated hereby and supersede all prior agreements and
understandings with respect thereto, whether written or oral. All of the
covenants of the parties made herein shall remain operative and in full force
and effect regardless of acceptance of any of the Preferred Shares or Warrants
and payment therefor. The representations and warranties set forth herein shall
survive the execution and delivery of this Agreement, the issuance of the
Preferred Shares and the Warrants, the Closing and the issuance of the Common
Shares upon conversion of the Preferred Shares or exercise of the Warrants, as
applicable, and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchaser or the Company. The
representations, warranties, agreements and covenants made herein and in the
Registration Rights Agreement, the Warrant
-25-
Certificate and the Shareholders Agreement shall be deemed to have been relied
upon by the parties hereto.
Section 8.2. No Waiver; Modifications in Writing. No failure or delay
by a party in exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
party at law or in equity or otherwise. No waiver of or consent to any
departure by a party from any provision of this Agreement shall be effective
unless signed in writing by the parties entitled to the benefit thereof. No
amendment, modification or termination of any provision of this Agreement shall
be effective unless signed in writing by all parties. Any amendment, supplement
or modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given.
Section 8.3. Notices. All notices, demands and other communications
provided for hereunder shall be in writing, shall be given by registered or
certified mail, return receipt requested, telegram, telecopy, courier service
or personal delivery, addressed to the Company as follows:
Alcohol Sensors International, Ltd.
00 Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy: (000) 000-0000
and to the Purchaser as follows:
American International Insurance Company
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
-26-
with copies to:
American International Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
or to such other address as any party shall designate in writing, and shall be
deemed given when received.
Section 8.4. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 8.5. Binding Effect; Assignment. The rights and obligations of
the parties under this Agreement may not be assigned or otherwise transferred
to any other Person, except with the prior written consent of the other party
hereto, provided that the Purchaser may assign or otherwise transfer any or all
of such rights and/or obligations to any of its Affiliates without obtaining
any such consent. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective successors
and permitted assigns. This Agreement shall be binding upon and shall inure to
the benefit of the Company, the Purchaser and their respective successors and
permitted assigns.
Section 8.6. Governing Law. This Agreement shall be deemed to be a
contract made under and shall be governed by and construed in accordance with
the internal laws of the State of New York without reference to the principles
of conflict of laws.
Section 8.7. Consent to Jurisdiction and Service of Process. Any suit,
action or proceeding arising out of or relating to this Agreement or the
Registration Rights Agreement, the Warrant Certificate or the Shareholders
Agreement or the transactions contemplated hereby or thereby may be instituted
in any Federal court situated in the State of New York or any state court of
the State of New York in each case, in the Borough of Manhattan, City of New
York, and each party agrees not to assert, by way of motion, as a defense or
otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of such
-27-
court, that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper or that this
Agreement, the Registration Rights Agreement, the Warrant Certificate or the
Shareholders Agreement or the subject matter hereof or thereof may not be
enforced in or by such court. Each party further irrevocably submits to the
jurisdiction of such court in any such suit, action or proceeding. Any and all
service of process and any other notice in any such suit, action or proceeding
shall be effective against any party if given personally or by registered or
certified mail, return receipt requested, or by any other means of mail that
requires a signed receipt, postage fully prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the right
of any party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against any other party in any other
jurisdiction.
Section 8.8. Further Assurances. Each of the parties hereto shall
execute and deliver such documents, instruments and agreements and take such
further actions as may be reasonably required or desirable to carry out the
provisions of this Agreement and the Registration Rights Agreements, the
Warrant Certificate and the Shareholders Agreement and the transactions
contemplated hereby and thereby, and each of the parties hereto shall cooperate
with each other in connection with the foregoing.
Section 8.9. Specific Performance. The Company acknowledges that
irreparable damage would occur to the Purchaser in the event that any of the
provisions of this Agreement, the Registration Rights Agreement, the Warrant
Certificate or the Shareholders Agreement were not performed by the Company in
accordance with their specific terms or were otherwise breached by the Company
and that money damages would not provide an adequate remedy to the Purchaser.
It is accordingly agreed that the Purchaser shall be entitled to an injunction
and other equitable remedies to prevent breaches by the Company of this
Agreement, the Registration Rights Agreement, the Warrant Certificate and the
Shareholders Agreement and to enforce specifically the terms and provisions
hereof or thereof in any court of the United States or any state thereof having
jurisdiction, this being in addition to any other remedy to which the Purchaser
may be entitled at law or in equity.
Section 8.10. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.11. Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 8.12. Costs, Expenses and Taxes. The Company shall pay any and
all stamp, transfer and other similar Taxes payable or determined to be payable
in connection with the execution and delivery at the Closing Date of this
Agreement or the original issuance of the
-28-
Preferred Shares or Warrants, and shall save and hold Purchaser harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying, or omission to pay, such Taxes. The Company and the Purchaser shall
pay all costs and expenses that each respectively incurs with respect to the
negotiation, execution and delivery of this Agreement, the Registration Rights
Agreement, the Warrant Certificate and the Shareholders Agreement.
Section 8.13. Waiver of Jury Trial. The parties hereto hereby
irrevocably waive all right to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement, the Registration
Rights Agreement, the Warrant Certificate or the Shareholders Agreement or the
transactions contemplated hereby or thereby.
Section 8.14. Publicity. The parties agree that no public release or
announcement concerning this Agreement, the Registration Rights Agreements, the
Warrant Certificate or the Shareholders Agreement or the transactions
contemplated hereby or thereby shall be made without advance review and
approval by each party hereto, except as otherwise required by applicable law.
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers hereunto duly authorized, as of the
date first above written.
ALCOHOL SENSORS INTERNATIONAL, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President & CEO
AMERICAN INTERNATIONAL INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President and Director
-30-
Annex I: Certificate of Amendment
Annex II: Registration Rights Agreement
Annex III: Shareholders Agreement
Annex IV: Warrant Certificate
Annex V: Opinion of Xxxxxx & Xxxx
Schedule 3.2: Rights and Agreements Relating to Securities of the Company
and the Subsidiaries
Schedule 3.3: Certain Disclosure Relating to Subsidiaries and Other
Matters
Schedule 3.10: Disclosure Relating to Certain Changes
Schedule 3.13: ERISA Plans
Schedule 3.15: Legal Proceedings
Schedule 3.17: Certain Agreements
Schedule 3.18: Transactions with Related Persons and Guarantees
Schedule 3.19: Real Property and Certain Disclosure Relating to
Manufacturing
Schedule 3.21: Certain Agreements with Employees and Consultants
Schedule 3.23: Environmental Matters
SCHEDULE 3.2 A Warrants, totaling 1,150,000, were issued as
part of the Company's public offering of
November 9, 1995.
B Warrants ("B Warrant"), totaling 575,000, were
issued as part of the Company's public offering of
November 9, 1995.
There are in excess of 20 holders of 505 Warrants
as a result of the July 1995 offering, who have
400,000 warrants.
There are in excess of 50 holders of 504 Warrants
as a result of three offerings of December 1992,
May 1993 and July 1994, who have 519,999 warrants.
The Company issued 150,000 Warrants to Xxxx
Xxxxxxxxxx.
The Company issued 75,000 options to each Xx
Xxxxxxxxxx and Xxxxxx Xxxxxx, engineers of the
Company.
The Company has issued 100,000 options to Xxxxxxx
Xxxxxxxxx; 100,000 options to Ariel Enterprises (a
trust for the benefit of Xxxxxx Xxxxxxxx); a total
of 129,500 options to Xxxxxx X. Xxxxxx; a total of
13,000 options to Xxxxx Xxxx and 750 options to
Xxxxx XxXxxxxxxxx.
The Company issued 100,000 options to Xxxxxxx Xxxxx
as a result of the public offering of November 9,
1995.
Each of the above-referenced options and warrants is exercisable for one share
of Common Stock, except for the B Warrants, each of which is exercisable for
one-half share of Common Stock.
SCHEDULE 3.3 ASE (Alcohol Sensors Europe, Plc.) is the only
subsidiary and is 80% owned by ASI with the
balance, 20%, being owned by Xxxxxxx Xxxxxxxxx.
SCHEDULE 3.10 Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxx and Xxxxxx Xxxxxxx
each contributed 10,000 of their own shares to the
Company toward the payment of the settlement of a
prior litigation matter, entitled Xxxxx Xxxxx vs,
ASI and some of its officers.
SCHEDULE 3.13 Company has a 401(K) plan in place. Company has a
health insurance plan in place.
SCHEDULE 3.15 The Company and some of its officers have been
named as a defendants in an action filed by Xxxxx
Eplan in the United States District Court for the
Eastern District of the State of New York.
The Company and some of its officers have been
named defendants in an action filed by Xxxxx
Xxxxxxxxx in the United States District Court for
the Eastern District of the State of New York.
The Company and some of its officers have been
named defendants in an action filed by Xxxxxx Xxxx
and Xxx Xxxxx, in the Supreme Court of the State of
New York County of Orange. This action was
subsequently removed to the United States District
Court for the Southern District of the State of New
York.
The Company has received a letter of inquiry from
NASDAQ with regard to a possible delisting due to
insufficient capital and the avenues the Company is
pursuing in order to comply with NASDAQ's
guidelines.
SCHEDULE 3.17 (a) Company is party to an agreement with FCI
Environmental, Inc. for the purchase and
application of a polymer, to the microchip which
ASI incorporated in its sensor, that helps provide
ASI's Alcohol Specific Technology. The Agreement
provides ASI with exclusivity to FCI's trade
secrets and proprietary rights to this polymer.
SCHEDULE 3.18 (a) ASI owns 80% of its subsidiary, ASE, Plc., with
the remaining 20% owned by Xxxxxxx Xxxxxxxxx, who
is director of ASI.
(a) ASI is a party to an agreement with WeatherEye,
Inc., to sell the WeatherEye headlight management
system in North America.
(a) ASE, the subsidiary of ASI, has an agreement with
Scarico, srl., of Caronno, Italy, whereby Scarico
will manufacture, test and supply to ASE the
products of ASI for distribution throughout Europe.
(a) The Company owes a debt of $118,437.00 to Xxxxxxx
Xxxxxxxxx, who is an officer, director and
shareholder of ASI.
The Company owes a debt of $55,000.00 to Xxxxxxx
Xxxxxxxxx, who is an officer, director and
shareholder of ASI.
The Company owes a debt of $55,000 to Xxxxxx
Xxxxxxx, who is an officer, director and
shareholder of ASI.
The Company owes a debt of $55,000.00 to Xxxx
Xxxxxx, who is an officer, director and shareholder
of ASI.
The Company owes a debt of $15,000.00 to Xxxxxx
Xxxxxxxx, who is an officer, director and
shareholder of ASI.
SCHEDULE 3.19 The Company does not own any real property.
The Company leases office space at 00 Xxxx Xxxxx,
Xxxxxxxx, Xxx Xxxx 00000.
The subsidiary, ASE, leases office space at
Beaufort House, 10th floor, 00, Xx. Xxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX.
SCHEDULE 3.21 None.
SCHEDULE 3.23 None. The Company does not perform the
manufacturing of its product.
