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ROM TECH, INC.
Purchase Agreement
Dated as of November 15, 1996
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TABLE OF CONTENTS
1. Purchase and Sale of Stock......................................................................1
1.1 Sale and Issuance of Class Two Convertible Preferred Stock....................1
1.2 Registration Rights Agreement.................................................1
1.3 Issuance of Warrants..........................................................1
1.4 Closing.......................................................................1
2. Representations and Warranties of the Company...................................................2
2.1 Organization and Standing.....................................................2
2.2 Capitalization................................................................2
2.3 Subsidiaries..................................................................3
2.4 Authorization.................................................................3
2.5 Validity of Stock.............................................................3
2.6 Offering Materials............................................................3
2.7 Changes.......................................................................3
2.8 Title to Property and Assets; Liabilities.....................................3
2.9 Governmental Consents.........................................................3
2.10 Compliance with Other Instruments.............................................4
2.11 Misleading Statements.........................................................4
2.12 Litigation....................................................................4
2.13 Patents; Trademarks...........................................................4
2.14 Taxes.........................................................................4
3. Representations and Warranties of the Investors...............................................5-7
4. Indemnity.......................................................................................7
5. Conditions to Investors' Obligations at Closing.................................................8
5.1 Representations and Warranties True on the Closing............................8
5.2 Performance...................................................................8
5.3 Other Agreements..............................................................8
5.4 Qualifications................................................................8
5.5 Proceedings and Documents.....................................................8
6. Conditions to the Company's Obligations at Closing..............................................8
6.1 Representations and Warranties True on the Closing............................8
6.2 Qualifications................................................................8
7. Negative Covenants..............................................................................9
8. Miscellaneous...................................................................................9
8.1 Entire Agreement..............................................................9
8.2 Governing Law.................................................................9
8.3 Counterparts.................................................................10
8.4 Titles and Subtitles.........................................................10
8.5 Notices......................................................................10
8.6 Finders' Fees................................................................10
8.7 Expenses.....................................................................10
8.8 Amendments and Waivers.......................................................10
Exhibits
Exhibit 1.1(A) - Certificate of Designation
Exhibit 1.1(B) - List of Investors
Exhibit 1.2 - Registration Rights Agreement
Exhibit 1.3(A) - Warrant Agreement
Exhibit 1.3(B) - Warrant Certificate
Exhibit 2.6 - Offering Materials
ROM TECH, INC.
Purchase Agreement
This Stock Purchase Agreement is entered into as of the 15th day of
November, 1996, by and among ROM TECH, INC., a Pennsylvania corporation (the
"Company") and the investors listed on Exhibit 1.1(B) hereto (collectively, the
"Investors").
In consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth in this Agreement, and intending to be
legally bound hereby, the parties to this Agreement mutually agree as follows:
1. Purchase and Sale of Stock and Warrants.
1.1 Sale and Issuance of Class Two Convertible Preferred
Stock.
(a) The Company has adopted and filed with the
Secretary of State of the Commonwealth of Pennsylvania the Certificate of
Designation attached to this Agreement as Exhibit "1.1(A)" hereto (the
"Certificate of Designation").
(b) Subject to the terms and conditions of this
Agreement, each of the Investors agrees to purchase at the Closing (as
hereinafter defined), and the Company agrees to sell and issue to the Investors
at the Closing, the number of shares of the Company's Class Two Convertible
Preferred Stock, having the rights and preferences set forth in the Certificate
of Designation (the "Stock") set forth opposite such Investor's name on Exhibit
"1.1(B)" hereto, for a price of five dollars ($5.00) per share.
1.2 Registration Rights Agreement. At Closing, the Company and
the Investors shall enter into a Registration Rights Agreement, substantially in
the form of Exhibit "1.2" hereto (the "Registration Rights Agreement").
1.3 Issuance of Warrants. At Closing, the Company shall enter
into a Warrant Agreement with each Investor and issue to each of the Investors
warrant certificates for the purchase of Common Stock representing the number of
warrants set forth on Exhibit "1.1(B)" hereto, which Warrant Agreements shall be
substantially in the form of Exhibit "1.3(A)" hereto (the Warrant Agreements")
and warrant certificates shall be substantially in the form of Exhibit "1.3(B)"
hereto (the "Warrants").
1.4 Closing. The purchase and sale of the Stock and the
Warrants shall take place via facsimile, with all signature pages of the
Investors sent via facsimile to the offices of XxXxxxxxxx, Keen & Xxxxxxx at
610-341-1099, and all signature pages of the Company sent to the offices of Xxxx
Marks & Xxxxx at 000-000-0000 on or within five business days of November 15,
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1996, or at such other time, date, or place as the Company and the Investors
shall mutually agree (which time, date, and place are referred to in this
Agreement as the "Closing"). At or promptly after the Closing, the Company shall
deliver to the Investors certificates representing the shares of the Stock and
the Warrants that each Investor is purchasing against delivery to the Company by
the Investors of wire transfers or other immediately-available funds in the
amount of the purchase price of such shares and warrants.
2. Representations and Warranties of the Company.
The Company represents and warrants to the Investors that:
2.1 Organization and Standing. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania, has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted, and is
duly qualified as a foreign corporation and is in good standing in all other
jurisdictions in which such qualification is required; provided, however, that
the Company need not be qualified in a jurisdiction in which its failure to
qualify would not have a material adverse effect on its operations or financial
condition.
2.2 Capitalization. The authorized capital of the Company
consists of:
(a) Preferred Stock: 10,000,000 shares of Preferred
Stock, of which 1,000,000 shares have been designated Class One Convertible
Preferred Stock and 1,000,000 have been designated Class Two Convertible
Preferred Stock. The 1,000,000 shares of Class One Convertible Preferred Stock
are validly issued and outstanding, fully paid, and nonassessable, and were
issued in compliance with all applicable federal and state securities laws. The
rights, privileges, and preferences of the Class One Convertible and Class Two
Convertible Preferred Stock will be as stated in the Company's Articles of
Incorporation, the Certificate of Designation with respect to the Class One
Convertible Preferred Stock and the Certificate of Designation with respect to
the Class Two Convertible Preferred Stock.
(b) Common Stock: 40,000,000 shares of Common Stock,
of which 6,234,043 shares are validly issued and outstanding, fully paid, and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
The Company has reserved 482,000 shares of Common Stock for
issuance pursuant to its 1994 Stock Option Plan and its Amended and Restated
1995 Employee Stock Option Plan; 580,000 shares for issuance pursuant to
outstanding warrants; 303,030 shares for issuance pursuant to conversion
privileges associated with the outstanding Class One Convertible Preferred Stock
; 300,000 shares for issuance pursuant to conversion privileges associated with
the Class Two Convertible Preferred Stock; 420,000 shares for issuance pursuant
to the Warrants issued herein; and 210,000 shares for issuance pursuant to
warrants issued to PJM Trading Company, Inc. There are
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no other options, warrants, conversion privileges, preemptive rights, or other
rights presently outstanding to purchase any of the authorized but unissued
stock of the Company.
2.3 Subsidiaries. Except for Virtual Reality Laboratories,
Inc., a Pennsylvania corporation which is a wholly-owned subsidiary of the
Company, the Company does not presently own or control, directly or indirectly,
any other corporation, association, joint venture, partnership, or other
business entity.
2.4 Authorization. All corporate action on the part of the
Company and its officers, directors, and shareholders necessary for the
authorization, execution, delivery and performance of all obligations of the
Company under this Agreement, the Registration Rights Agreement and the Warrant
Agreements, and for the authorization, issuance, and delivery of the Stock and
the Warrants being sold under this Agreement and the Warrant Agreements and of
the Common Stock issuable upon conversion of the Stock and upon exercise of the
Warrants has been (or will be) taken prior to the Closing. This Agreement, the
Registration Rights Agreement and the Warrant Agreements, when executed and
delivered, shall constitute valid and legally binding obligations of the
Company.
2.5 Validity of Stock. The Stock, when issued, sold, and
delivered in accordance with the terms of the Agreement, shall be duly and
validly issued, fully paid, and nonassessable. The Common Stock issuable upon
conversion of the Stock and upon exercise of the Warrants has been (or, prior to
the Closing, will be) duly and validly reserved and, upon issuance in accordance
with the conversion provisions of the Stock and the exercise provisions of the
Warrants shall be duly and validly issued, fully paid, and non-assessable.
2.6 Offering Materials. The Company has furnished each of the
Investors with the Offering Materials attached hereto as Exhibit "2.6" (the
"Offering Materials").
2.7 Changes. To the best of the Company's knowledge, since the
date of the Offering Materials, there has not been any event or condition of any
type that has materially and adversely affected the Company's business,
prospects, condition, affairs, operations, properties, or assets.
2.8 Title to Property and Assets; Liabilities. Except (a) as
reflected in the Offering Materials, (b) for liens for current taxes not yet
delinquent, (c) for liens imposed by law and incurred in the ordinary course of
business for obligations not yet due, (d) for liens in respect of pledges or
deposits under workers' compensation laws or similar legislation, or (e) for
minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company owns its
property free and clear of all mortgages, liens, loans, and encumbrances.
2.9 Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with any federal or state
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governmental authority on the part of the Company required in connection with
the consummation of the transactions contemplated by this Agreement shall have
been obtained prior to, and be effective as of, the Closing, except that any
notices of sale required to be filed with the Securities and Exchange Commission
pursuant to Regulation D promulgated under the Securities Act of 1933 or any
state securities law authority pursuant to applicable blue sky laws may be filed
within the applicable periods therefor.
2.10 Compliance with Other Instruments. The Company is not in
violation of any provisions of its Articles of Incorporation or By-Laws as
amended and in effect on and as of the Closing, or, in any material respect, of
any provision of any material mortgage, indenture, agreement, instrument or
contract to which it is a party, or, to the best of its knowledge, of any
provision of any federal or state judgment, writ, decree, order, statute, rule,
or governmental regulation applicable to the Company. The execution, delivery,
and performance of this Agreement will not result in any such violation or be in
conflict with or constitute a default under any such provision.
2.11 Misleading Statements. No representation or warranty by
the Company in this Agreement or in the Offering Materials contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements made not misleading.
2.12 Litigation. There is no action, proceeding, or, to the
Company's knowledge, investigation pending or, to the Company's knowledge,
threatened against the Company or any of its employees before any court or
administrative agency (or any basis therefore known to the Company), that may
result, either individually or in the aggregate, in any material adverse change
in the business, prospects, condition, affairs, operations, properties, or
assets of the Company or in any material liability on the part of the Company.
2.13 Patents; Trademarks. The Company owns or possesses, has
access to, or can become licensed on reasonable terms under, all patents,
inventions, trademarks, trade names, copyrights, licenses, information,
proprietary rights, and processes necessary for the lawful conduct of its
business as now conducted and as proposed to be conducted, without any
infringement of or conflict with the rights of others. The Company has not
received any notice of infringement of or conflict with the asserted rights of
others.
2.14 Taxes. The Company has accurately prepared and timely
filed all United States income tax returns and all state and municipal tax
returns that are required to be filed by it and has paid or made provision for
the payment of all taxes that have become due pursuant to such returns. The
United States income tax returns of the Company have not been audited by the
Internal Revenue Service. No deficiency assessment or proposed adjustment of the
Company's United States income tax or state or municipal taxes is pending and
the Company has no knowledge of any proposed liability for any tax to be imposed
upon its properties or assets for which there is not an adequate reserve
reflected in the Financial Statements.
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2.15 Compliance with Laws. The Company has complied with all
of the registration, filing, reporting and record keeping requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") during the
period in which the Company has been subject to the requirements of the Exchange
Act, except where such non-compliance, individually or collectively, has not had
and will not have a material adverse affect on the Company. The Company has
complied in all material respects with all Legal Requirements (as hereinafter
defined), including without limitation, any Legal Requirements in connection
with the sale by the Company of the Stock and the Warrants, except where such
non-compliance, individually or collectively, has not had and will not have a
material adverse affect on the Company. "Legal Requirements" shall mean all
federal, state and local statutes, rules and regulations.
3. Representations and Warranties of the Investors.
By executing this Agreement, each of the Investors severally
makes the following representations and warranties to the Company as to such
Investor, with the intent and understanding that the Company will rely thereon:
3.1 THE INVESTOR ACKNOWLEDGES THAT THE STOCK AND WARRANTS
ISSUED HEREUNDER, AND ANY COMMON STOCK ACQUIRED UPON CONVERSION OF THE STOCK OR
EXERCISE OF THE WARRANTS, HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION ("SEC").
3.1 The Investor acknowledges that the Stock and the Warrants
are being issued hereunder in reliance on an exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended (the "Act").
The exemption under the Act depends, in part, on the investment experience and
qualifications of the prospective investors. The Stock and the Warrants will be
acquired for investment and not with a view to distribution or resale. The Stock
and the Warrants must, in fact, be held indefinitely unless the Stock, the
Warrants and any Common Stock issuable upon conversion of the Stock or exercise
of the Warrants is registered under the Act or any applicable state securities
laws or there is an applicable exemption from registration (in which case the
undersigned will be required to provide the Corporation with an opinion of
counsel that registration is not required).
3.2 Each of the Investors is an Accredited Investor (as that
term is defined in Rule 501(a) promulgated under the Act.) Each of the Investors
has received and carefully read the Offering Materials attached hereto as
Exhibit "2.6".
3.3 Each of the Investors have each based the decision to
purchase the Stock and the Warrants on the information contained in this
Agreement and the Offering Materials and no Investor has been furnished with any
other offering literature or prospectus.
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3.4 Each of the Investors acknowledges that he or she has
read, understood and is familiar with the Risk Factors contained in the Offering
Materials, is familiar with the nature of risks attending investments of this
type, and has determined that the purchase of the Stock and the Warrants is
consistent with Investor's investment objectives.
3.5 Each of the Investors acknowledges that he or she has been
given the opportunity to ask questions of, and receive answers from,
representatives of the Company regarding the business and current plans of the
Company, and to inspect such documents and obtain any additional information as
each of the Investors has required so as more fully to understand the nature of
the investment and to verify the accuracy of the information supplied to such
Investor. Each of the Investors acknowledges that, except as set forth herein,
no representations or warranties have been made to the Investors, or to
Investors' advisors or representatives, by the Company or others with respect to
the business of the Company and its respective financial condition.
3.6 Each of the Investors is at least 21 years of age. Each of
the Investors maintains his or her domicile at the address shown on Exhibit
1.1(B) of this Agreement.
3.7 Each of the Investors can bear the economic risks of this
investment and can afford the loss of his or her entire investment in the Stock
and the Warrants. Each of the Investors has adequate means of providing for such
Investor's current needs and possible personal contingencies, and has no present
or anticipated need for liquidity of the Stock and/or Warrants to be issued
hereunder. The purchase of the Stock and the Warrants by the Investors is
reasonable in relation to such Investor's net worth and financial needs.
3.8 Each of the Investors understands that the purchase price
of the Stock and the Warrants have been determined by the Company and not by an
independent accountant or auditor; and that no assurances have been given about
any increase in value, if any, of the Stock and/or Warrants.
3.9 Each of the Investors has in his or her own right, or
together with his or her Purchaser Representative (as that term is defined in
Rule 501 promulgated under the Act), such knowledge and experience in financial,
tax and business matters that will enable him or her to evaluate the merits and
risks of the purchase of the Stock and the Warrants and make an informed
decision with respect thereto.
3.10 Each of the Investors understands that the purchase of
the Stock and the Warrants has not been passed upon, nor have the merits of this
exchange been endorsed or approved by, any state or federal authorities.
3.11 Each of the Investors recognizes that the Company has
limited financial or operating history and that the purchase of the Stock and
the Warrants involves significant risks.
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3.12 Each of the Investors recognizes that the certificates
representing the Stock, the Warrants and any Common Stock issuable upon
conversion of the Stock or exercise of the Warrants will bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR, UNLESS, IN THE OPINION OF
COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER,
SALE, OR TRANSFER IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
COMPLIANCE WITH THE ACT AND SUCH LAWS.
The certificates for shares of the Stock, the
Warrants, and any Common Stock issued upon conversion of the Stock or upon
exercise of the Warrants shall also bear any legend required by any applicable
state securities law.
In addition, the Company shall make a notation
regarding the restrictions on transfer of the Stock (and any Common Stock issued
on conversion thereof) and the Warrants (and any Common Stock issued upon
exercise thereof) in its stockbooks, and shares of the Stock (and any Common
Stock issued on conversion thereof) shall be transferred on the books of the
Company only if transferred or sold pursuant to an effective registration
statement under the 1933 Act covering such shares or an exemption therefrom if
available.
3.13 Each of the Investors understands that such Investor must
bear the economic risk of purchasing the Stock and the Warrants for an
indefinite period. Each of the Investors has been advised and is aware that
neither the Stock, the Warrants, nor any Common Stock issuable upon conversion
of the Stock or exercise of the Warrants have been registered under the Act or
the securities laws of any state or other jurisdiction, and, therefore, cannot
be sold -- AND EACH OF THE INVESTORS AGREES NOT TO SELL OR OTHERWISE DISPOSE OF
ANY SUCH SECURITIES ACQUIRED BY SUCH INVESTOR -- unless such securities are
subsequently registered under the Act and such state securities laws as are
applicable or unless there are available exemptions from such registration that
are supported by an opinion of counsel for such Investor, which opinion is
satisfactory to the Company.
3.14 Each of the Investors understands the meaning and legal
consequences of the foregoing representations and warranties. Each of the
Investor certifies that each of the representations and warranties set forth in
this Section 3 is true and correct as of the date hereof and shall survive such
date.
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4. Indemnity.
(a) The representations and warranties made by the Investors
herein shall survive the Closing Date. Each of the Investors hereby agrees to
indemnify and hold harmless the Company from and against any and all loss,
liability, claim, damage and expense (including, without limitation, reasonable
attorneys' fees and disbursements) suffered or incurred as a result of a
misrepresentation or breach of any warranty made by such Investor in this
Agreement or in any other document furnished by such Investor in connection with
this transaction.
(b) The representations and warranties made by the Company
herein shall survive the Closing Date. The Company hereby agrees to indemnify
and hold harmless the Investors from and against any and all loss, liability,
claim, damage and expense (including, without limitation, reasonable attorney's
fees and disbursements) suffered or incurred as a result of a misrepresentation
or breach of warranty made by the Company in this Agreement.
5. Conditions to Investors' Obligations at Closing.
The obligations of the Investors under Section 1.1 of this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions:
5.1 Representations and Warranties True on the Closing. The
representations and warranties of the Company contained in Section 2 shall be
true on and as of the Closing with the same force and effect as if they had been
made at the Closing.
5.2 Performance. The Company shall have performed and complied
with all agreements and conditions contained in this Agreement required to be
performed or complied with by it on or before the Closing.
5.3 Other Agreements. All agreements between the Company and
the Investors shall have been fully executed and delivered. Company shall have
executed and delivered the Registration Rights Agreement, the Warrant Agreement
and other instruments provided for herein, and such other documents, reasonably
satisfactory to Investors' counsel, as shall be necessary or appropriate to
effectuate the issuance of the Stock and the Warrants to the Investors.
5.4 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock and the Warrants pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing.
5.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be in form and
substance satisfactory to the Investors, and the Investors shall have received
all such counterpart originals or certified or other copies of such documents as
the Investors may reasonably request.
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6. Conditions to the Company's Obligations at Closing.
The obligations of the Company to the Investors under Section
1.1 of this Agreement are subject to the fulfillment on or before the Closing of
each of the following conditions:
6.1 Representations and Warranties True on the Closing. The
representations and warranties of the Investors contained in Section 3 shall be
true on and as of the Closing with the same force and effect as if they had been
made at the Closing.
6.2 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall have been duly obtained and shall
be effective on and as of the Closing.
7. Negative Covenants.
So long as not less than twenty-five percent (25%) of the
Stock is still outstanding, the Company shall not, without the prior written
consent of the holders of not less than sixty percent (60%) of the Stock then
outstanding, (which consent shall not be unreasonably conditioned, withheld or
delayed):
(a) Designate or issue any additional shares of preferred
stock, unless such preferred stock is junior to the Stock in all respects,
including without limitation as to preference or priority in liquidation,
dividends or otherwise;
(b) Incur directly or indirectly, or permit any Subsidiary to
incur directly or indirectly, any indebtedness except for indebtedness which is
subordinate to the liquidation, dividend and other preferences of the Stock and
except for trade payable financing incurred in the ordinary course of business;
(c) Create, incur or assume after the date hereof any lien
upon the Company's existing or future, tangible or intangible, real, personal or
mixed property, except:
(i) Pledges or deposits under workmen's compensation
laws, unemployment compensation laws or other similar laws;
(ii) Good faith deposits in connection with bids,
tenders, contracts (other than for the purpose of borrowing money or obtaining
credit) and leases to which the Company is a party, including rent security
deposits;
(iii) Deposits to secure public or statutory
obligations of the Company surety or appeal bonds to which the Company is a
party, payment of contested taxes of the Company, or payment of import duties of
the Company;
9
(iv) Any lien which is imposed by law, e.g., those of
carriers, materialmen, mechanics and warehousemen, if payment secured by that
lien is not yet due, or if the validity or the amount of payment is being
contested in good faith by appropriate proceedings for which adequate reserves
have been established;
(v) Any lien arising from a judgment or award against
the Company with regard to which the Company is prosecuting an appeal or
proceedings for review, and has obtained a stay of execution pending such appeal
or proceedings for review;
(vi) Any lien for taxes, assessments or other
governmental charges or levies not yet subject to penalties for nonpayment, or
the validity or amount of which is being contested by appropriate legal
proceedings, and with regard to which adequate reserves have been established;
and
(vii) Any lien imposed or arising in connection with
the Company's trade payables in the ordinary course of business;
(viii) Any lien that is junior to the Stock in all
respects, including without limitation as to preference or priority in
liquidation, dividends or otherwise; and
(ix) Any lien created for the sole purpose of
extending, renewing or refunding any lien permitted under subparagraphs (i)
through (viii), if such lien is limited to all or part of the same property
covered by the original lien, and if the amount of the debt secured by the lien
does not exceed the amount of debt secured by the lien at the time of extension,
renewal or refunding;
(d) Make any substantial change in the nature of the business
of the Company; or
(e) Become liable, directly or indirectly, in connection with
the obligations, stock or dividends of any person, firm, corporation or other
entity, whether by guarantee, endorsement, agreement to supply or advance funds,
agreement to maintain working capital or net worth, agreement to purchase or
repurchase goods or services whether or not such goods or services are actually
acquired, or otherwise (collectively, "Contingent Liabilities"), which
Contingent Liabilities exceed $300,000 in the aggregate, except that the Company
may endorse negotiable instruments for collection in the ordinary course of its
business and in connection with the acquisition of the capital stock or assets
of an unaffiliated entity in an arms'-length transaction ("Acquisition
Transactions"). Notwithstanding the foregoing, nothing contained herein shall
limit the Company's ability to become liable for indemnity obligations in
connection with Acquisition Transactions.
8. Affirmative Covenants. On and after the date of this Agreement and
so long as not less than twenty-five percent (25%) of the Stock is still
outstanding, the Company will observe the following covenants unless the holders
of not less than sixty percent (60%) of the Stock then outstanding shall
otherwise consent in writing (which consent shall not be unreasonably
conditioned, withheld or delayed):
(a) The Company will maintain its corporate existence, its
qualification to do business and its good standing in each jurisdiction in which
qualification is necessary for the proper conduct of its business;
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(b) The Company will comply with all laws and regulations
applicable to it in the operation of its business;
(c) The Company will reserve and keep available that maximum
number of its authorized but unissued shares of Common Stock, which are issuable
upon conversion of the Stock and upon exercise of the Warrants outstanding from
time to time, and
(d) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Exchange Act, the Company, at its expense,
shall furnish to each of the Investors; (i) an annual report (including
financial statements audited by its independent public accountants); (ii) as
soon as they are available, a copy of all reports (financial or other) mailed to
the Company's security holders; and (iii) as soon as they are available, a copy
of all nonconfidential reports and financial statements furnished to or filed
with the Securities and Exchange Commission.
9. Miscellaneous.
9.1 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein. The terms and conditions of this Agreement and such other
documents shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties, except to the extent
assignability is limited herein and therein.
9.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania.
9.3 Counterparts. This Agreement may be executed 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.
9.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Postal Service, by
registered or certified mail, postage prepaid, addressed to the Company at 0000
Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxxxx 00000, and to the
Investor at the address set forth on the signature page of this Agreement or at
such other address as any party may designate by ten (10) days' advance written
notice to the other party.
9.6 Finders' Fees. Each party represents that it neither is,
nor will be, obligated for any finders' fee or commission in connection with
this transaction.
Each Investor agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of
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defending against such liability or asserted liability) for which such Investor
or any of its partners, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each of the
Investors from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Company or any of its officers, employees,
or representatives is responsible.
9.7 Expenses. The Company shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery, and
performance of this Agreement, and each of the Investors shall pay all costs and
expenses that he or she incurs with respect to the negotiation, execution,
delivery, and performance of this Agreement.
9.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least sixty percent (60%) of the outstanding shares of the Stock (including, for
such purposes, on a proportional basis, any shares of Common Stock into which
any shares of the Stock have been converted that have not been sold to the
public). Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities have been converted), each future holder of all such securities, and
the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ROM TECH, INC.
By:______________________________
Xxxxxx X. Xxxxxxxx, Chief Executive Officer
INVESTORS:
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Signatures, Continued:
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