EXHIBIT 4.1
CONVERSION COMMITMENT AGREEMENT
This Conversion Commitment Agreement (the "Conversion Commitment
Agreement") dated and effective as of June 23, 2003, is by and between RTIN
Holdings, Inc., a Texas corporation (the "Company"), the holders of the
Debentures (defined herein below), each of whom has executed a Holder's
Signature page attached hereto pursuant to which the holder agrees to be a party
to this Conversion Commitment Agreement (the "Holders"), and the investors, each
of whom has executed an Investor's Signature page attached hereto pursuant to
which such investor agrees to be a party to this Conversion Commitment Agreement
(the "Investors").
W I T N E S S E T H :
WHEREAS, on May 29, 2002 (the "Issue Date"), the Company filed a
Certificate of Designation to issue the Company's Series A 10% Convertible
Preferred Stock, Par Value $.10 (the "Preferred Shares");
WHEREAS, pursuant to that certain Series A Preferred Agreement, dated
June 24, 2003 (the "Series A Agreement"), the Company agreed to issue, effective
May 29, 2002, 1,999,920 shares of its Series A Preferred Stock (the " Preferred
Stock") to the Holders in exchange for that certain Convertible Debenture dated
June 28, 1998, in the original principal amount of $1,500,000 and that certain
Convertible Debenture dated February 29, 2000 in the original principal amount
of $690,000 (the "Debentures"); and
WHEREAS, as a condition to this Agreement the Company, the Holders and
the Investors have entered into a Series A Stock Agreement of even date hereof
pursuant to which the Investors acquired some of the Preferred Stock (the
"Series A Agreement"); and
WHEREAS, the Company, the Holders and the Investors have determined
that it would be each in their best interests to convert the Preferred Stock to
Common Stock, $.01 par value per share (the "Common Stock"), of the Company; and
WHEREAS, it is a condition to the obligations of the parties to the
Series A Agreement that they sign and deliver this Conversion Commitment
Agreement;
NOW, THEREFORE, the parties agree as follows:
Article I
Exchange
Section 1.1 Exchange. Conditioned upon the concurrent closing of the
transactions contemplated by the Series A Agreement, each of the Holders and the
Investors agree to transfer and deliver to the Company for exchange all shares
of Preferred Stock now owned or hereafter acquired by them, and the Company
hereby agrees to receive, cancel and exchange shares of Preferred Stock from the
Holders and the Investors for shares of Common Stock on the effective date
hereof, at the rate of two and three quarters (2.75) share (the "Shares") of
Common Stock for each share of Preferred Stock.
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Section 1.2 Manner of Delivery. Simultaneously with the execution of
this Conversion Commitment Agreement, the parties shall execute an escrow
agreement (the "Conversion Escrow Agreement") and a copy of the Conversion
Escrow Agreement and this Conversion Commitment Agreement shall be delivered to
Harbour, Xxxxx, Xxxxxx & Xxxxxxx, P.C. (the "Escrow Agent"). On or before the
Closing under the Series A Agreement (a) the Holders shall deliver to the Escrow
Agent or its designated depository one or more certificates evidencing 1,999,920
Preferred Shares, duly endorsed in blank (which endorsement may be evidenced by
one or more duly executed stock powers in blank); and (b) the Company shall
deliver to the Escrow Agent one or more duly authorized, issued and executed
certificates representing Shares in the exchange ratio set forth above in the
name of the Holders (which shall result in the delivery of 1,625,000 free
trading shares to Holders) and Investors (which shall result in the Delivery of
3,882,133 free trading shares to the Investors) or, if the Company otherwise has
been notified, in the name of the Holders' or Investors' nominees. By executing
and delivering this Conversion Commitment Agreement, the Holders, the Company
and the Investors each hereby agree to observe the terms and conditions of the
Conversion Escrow Agreement, all of which are incorporated herein by reference
as if fully set forth herein.
Article II
Representations and Warranties of Investors
Section 2.1 Representations of Investors. Each of the Investors, as to
themselves individually and not as to any other Investor, makes the following
representations, warranties and covenants.
A. Organization, Existence and Power. Each Investor is a corporation,
limited liability company, limited partnership or other organization
duly organized, validly existing and in good standing, and has full
corporate or partnership power and authority to enter into this
Conversion Commitment Agreement and to consummate the transactions
contemplated hereunder. Neither the execution and delivery of this
Conversion Commitment Agreement, nor the consummation of the
transactions contemplated hereunder conflicts with, or will result in
any violation of (a) the charter, by-laws, partnership agreement or
other organizational documents of such Investor, each as currently in
effect, or (b) any material loan or credit agreement, note, bond,
mortgage, indenture, lease, contract or other agreement to which such
Investor is a party or by which any of its assets are bound.
B. Authorization and Execution. This Conversion Commitment Agreement
has been duly and validly authorized, executed and delivered by the
Investors and is a valid and binding agreement of each of the Investors
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally.
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C. Approvals. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the
Investors for the execution of this Conversion Commitment Agreement or
the consummation of the transactions contemplated hereby, except such
authorizations, approvals and consents as have been obtained by the
Investors prior to the date hereof.
D. Investment Intent. Each Investor purchased or acquired the shares of
Preferred Stock for its own account, for investment purposes only and
not with a view towards or in connection with the public sale or
distribution thereof in violation of the Securities Act. Each Investor
is acquiring the Shares for its own account, for investment purposes
only and not with a view towards or in connection with the public sale
or distribution thereof in violation of the Securities Act.
E. Accredited Investor. Each Investor is (i) an "accredited investor"
within the meaning of Rule 501 of Regulation D under the Securities
Act, (ii) experienced in making investments in securities with similar
risks as the Shares, (iii) capable, by reason of their business and
financial experience, of evaluating the relative merits and risks of an
investment in the Shares, and (iv) able to afford the loss of its
investment in the Shares.
F. Unregistered Securities. Each Investor understands that the Shares
have not been approved or disapproved by the Securities and Exchange
Commission (the "Commission") or any state securities commission and
that the Shares are being offered and sold by the Company in reliance
on an exemption from the registration requirements of the Securities
Act and any relevant state securities and "blue sky" laws. The Company
is relying upon the accuracy of, Investors' compliance with, Investors'
representations, warranties and covenants set forth in this Conversion
Commitment Agreement to determine the availability of such exemption
and the eligibility of the Investors to acquire the Shares.
G. Access to Information. Each Investor has received and has carefully
reviewed a copy of the documents and reports (and exhibits thereto)
filed by the Company with the Commission and available on the
Commission's XXXXX system, including, but not necessarily limited to,
the Company's Annual Report or Form 10-KSB for the year ended December
31, 2002, the Quarterly Report on Form 10-QSB for the fiscal quarter
ended since then, the Proxy Statement for the stockholder meeting held
in April 2003 (collectively, the "Documents"). Each Investor has also
received any additional information that the Investor has requested and
has had the opportunity to communicate with representatives of the
Company, to each Investor's satisfaction and understands the material
contained in the Documents. Each Investor realizes that the purchase of
the Shares is a speculative investment, and that the tax and other
economic benefits that may be derived therefrom are uncertain. In
determining whether or not to proceed with the transaction described
herein, each Investor has relied solely upon information set forth in
the Documents and upon independent investigations made by such
Investor. None of the Investors have been furnished with any other
offering literature or prospectus, or received or been furnished with
any information, statement or representation, oral or written, that
varies in any material way from the information presented and
statements made in the Documents.
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Section 2.2 Representations and Warranties of the Company. The Company
hereby represents and warrants to the Holders and the Investors as follows.
A. Organization, Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing, and has full
corporate or partnership power and authority to enter into this
Conversion Commitment Agreement and to consummate the transactions
contemplated hereunder. Neither the execution and delivery of this
Conversion Commitment Agreement, nor the consummation of the
transactions contemplated hereunder conflicts with, or will result in
any violation of (a) the charter or by-laws of the Company, each as
currently in effect, or (b) any material loan or credit agreement,
note, bond, mortgage, indenture, lease, contract or other agreement to
which such the Company is a party or by which any of its assets are
bound.
B. Authorization and Execution. This Conversion Commitment Agreement
has been duly and validly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally.
C. Approvals. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the
Company for its execution of this Conversion Commitment Agreement or
the consummation of the transactions contemplated hereby, except such
authorizations, approvals and consents as have been obtained by the
Company prior to the date hereof.
D. Issuance of Shares. When issued pursuant to this Conversion
Commitment Agreement, the Shares will be duly authorized, validly
issued, fully paid and non-assessable. There are no outstanding
agreements or preemptive or similar rights affecting the Shares.
E. No Misrepresentation. No representation or warranty of the Company
contained in this Conversion Commitment Agreement or any of the other
Documents, any schedule, annex or exhibit hereto or thereto or any
agreement, instrument or certificate furnished by the Company to the
Holders or the Investors pursuant to this Conversion Commitment
Agreement contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
F. No Integrated Offering. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly
or indirectly, made any offer or sales of any security or solicited any
offers to buy any security under circumstances that would eliminate the
availability of the exemption from registration under Regulation D
and/or Rule 144 in connection with the offer and sale of the Common
Shares as contemplated hereby.
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G. Prior Issues. During the twelve (12) months preceding the date
hereof, the Company has not issued any common stock or convertible
securities in capital transactions which have not been fully disclosed
in the Company's filings with the SEC. All such issuances have been
fully converted into shares of common stock and there is no outstanding
unconverted debt or convertible securities from those transactions.
Representations and Warranties of Holders
Section 2.3 Representations of Holders. Each of the Holders, as to
themselves individually and not as to any other Investor, makes the following
representations, warranties and covenants.
A. Organization, Existence and Power. Each of the Holders is a
corporation, limited liability company, limited partnership or other
organization duly organized, validly existing and in good standing, and
has full corporate or partnership power and authority to enter into
this Conversion Commitment Agreement and to consummate the transactions
contemplated hereunder. Neither the execution and delivery of this
Conversion Commitment Agreement, nor the consummation of the
transactions contemplated hereunder conflicts with, or will result in
any violation of (a) the charter, by-laws, partnership agreement or
other organizational documents of such Holder, each as currently in
effect, or (b) any material loan or credit agreement, note, bond,
mortgage, indenture, lease, contract or other agreement to which such
Investor is a party or by which any of its assets are bound.
B. Authorization and Execution. This Conversion Commitment Agreement
has been duly and validly authorized, executed and delivered by the
Investors and is a valid and binding agreement of each of the Holders
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally.
C. Approvals. No authorization, approval or consent of any court or
public or governmental authority is required to be obtained by the
Holders for the execution of this Conversion Commitment Agreement or
the consummation of the transactions contemplated hereby, except such
authorizations, approvals and consents as have been obtained by the
Holders prior to the date hereof.
Article III
Covenants
Section 3.01. Exempt Offering. This exchange is being made pursuant to
the exemption from the registration contained in Section 3(a)(9) of the
Securities Act and afforded by Rule 149 thereunder. The Company is relying in
part on the Holders' and Investors' representations as set forth herein for
purposes of claiming such exemptions.
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Section 3.02 Tacking. The common shares which will be issued pursuant
to this transaction will carry tacking privileges whereby the holding period for
the shares began at the time of investment by the Holders and is therefore
immediately subject to resale without volume limitations pursuant to Rule 144 of
the Securities Act.
Section 3.04. Indemnification.
A. The Company agrees to indemnify, hold harmless, reimburse and defend
the Holders and the Investors against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees)
of any nature, incurred by or imposed upon the Holders and the
Investors which results, arises out of or is based upon (a) any
misrepresentation by Company or breach of any warranty by Company in
this Agreement or in any Exhibits or Schedules attached hereto, or
Reports or other Written Information; or (b) any breach or default in
performance by Company of any covenant or undertaking to be performed
by Company hereunder, or any other agreement entered into by the
Company and the Holders or the Investors relating hereto.
B. the Investors agree to indemnify, hold harmless, reimburse and
defend the Company at all times against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees)
of any nature, incurred by or imposed upon the Company which results,
arises out of or is based upon (a) any misrepresentation by the
Investors in this Agreement or in any Exhibits or Schedules attached
hereto; or (b) any breach or default in performance by the Investors of
any covenant or undertaking to be performed by the Investors hereunder,
or any other agreement entered into by the Company and the Holders or
the Investors relating hereto.
C. the Holders agree to indemnify, hold harmless, reimburse and defend
the Company at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Company which results, arises
out of or is based upon (a) any misrepresentation by the Holders in
this Agreement or in any Exhibits or Schedules attached hereto; or (b)
any breach or default in performance by the Holders of any covenant or
undertaking to be performed by the Holders hereunder, or any other
agreement entered into by the Company and the Holders or the Investors
relating hereto.
Article IV
Miscellaneous.
Section 4.01. Notices. All notices or other communications given or
made hereunder shall be in writing and shall be personally delivered or deemed
delivered the first business day after being telecopied (provided that a copy is
delivered by first class mail) to the party to receive the same at its address
set forth below or to such other address as either party shall hereafter give to
the other by notice duly made under this Section;
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if to the Company, to:
RTIN Holdings, Inc.
Attn: Xxxxxx Xxxxxxx
0000 Xxxx Xxxx
Xxxxxxxx, Xxxxx 00000
Fax: 000.000.0000
With a copy to:
Franklin, Xxxxxxxx & Xxxxx
Attn: Xxxxx Xxxxxx
0000 XxXxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Fax: 000.000.0000
if to the Holders, to such Stockholder at the address on the
books and records of the Company with a copy to:
Law Offices of Xxxxxxx X. Xxxxxxxxx
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx, 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (fax)
if to the Investors, to such Investor at the address on the
Investor's Signature Page:
if to the Escrow Agent, to:
Harbour, Xxxxx, Xxxxxx & Xxxxxxx, PC
Attn: Xxxxx Xxxxx
X.X. Xxx 0000 Xxxxxxxx, Xxxxx 00000
(000) 000-0000 (fax)
Section 4.02. Closing. The consummation of the transactions
contemplated herein shall take place at the offices of the Escrow Agent, as soon
as practical after Closing of the Series A Agreement.
Section 4.03. Entire Agreement; Assignment. This Agreement, The Series
A Agreement and all agreements expressly referred to herein or therein represent
the entire agreement between the parties hereto with respect to the subject
matter hereof and may be amended only by a writing executed by both parties. No
right or obligation of any party shall be assigned by that party without prior
notice to and the written consent of the other parties.
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Section 4.04. Execution. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. A facsimile
signature by any party on a counterpart of this Agreement shall be binding and
effective for all purposes. Such party shall, however, subsequently deliver to
the other party an original executed copy of this Agreement.
Section 4.05. Law Governing this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of laws. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the federal courts sitting in the district of
which New York, New York is a part if it can acquire jurisdiction or in the
state courts of the State of New York located in the city of New York, New York.
Both parties and the individuals executing this Agreement and other agreements
on behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.
Section 4.06. Consent to Jurisdiction. Subject to Section 4.05 hereof,
each of the Company, the Holders and the Investors hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
Section 4.07. Execution by Facsimile. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier or facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
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IN WITNESS WHEREOF, the / parties have signed and delivered this
Conversion Commitment Agreement as of the date first above written.
RTIN HOLDINGS, INC.
By:
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Name:
Title:
THE HOLDERS
DOMINION CAPITAL FUND LIMITED
BY:
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Name:
Title:
SOVEREIGN PARTNERS LIMITED PARTNERSHIP
BY:
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Name:
Title:
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INVESTOR'S SIGNATURE PAGE
The undersigned Investor hereby subscribes to the foregoing Conversion
Commitment Agreement. If the Investor is an entity, this Conversion Commitment
Agreement has been executed by its duly authorized officer or signatory.
The undersigned Investor specifically represents and acknowledges that it (a) is
a sophisticated investor who, by expertise and experience, is familiar with the
risks of speculative investments, (b) has had the opportunity to pose questions
to and receive answers from the management of RTIN Holdings, Inc. regarding the
investment, (c) is financially able invest in speculative investments and afford
the potential loss of its entire investment, and (d) has not received any
information about RTIN Holdings, Inc. and has not relied upon any
representations of any person except as set forth in the Conversion Commitment
Agreement.
Investor Name:
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By:
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Name:
Title:
ADDRESS OF INVESTOR:
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Phone:
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Fax:
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