EXHIBIT 4.4
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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND APPLICABLE STATE SECURITIES LAWS. THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND
UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
10% SUBORDINATED NOTE
SUBSCRIPTION AGREEMENT
DATAMETRICS CORPORATION
THIS 10% SUBORDINATED NOTE SUBSCRIPTION AGREEMENT (this "Agreement") is
executed in reliance upon an exemption under the Securities and Exchange
Commission ("SEC"), under the Securities Act of 1933, as amended (the "Act").
This Agreement has been executed by the undersigned in connection with
the private placement of the 10% Subordinated Notes (the "Notes") and Warrants
to purchase 797,760 shares of common stock of DATAMETRICS CORPORATION (American
Stock Exchange symbol "DC"), with an address at 00X Xxxxxxx Xxxx, Xx. 0000,
Xxxxxxx Xxxx, XX 00000, a corporation organized under the laws of the State of
Delaware, USA (the "Company"). The terms of the Notes are set forth in the form
of the 10% Subordinated Note due 2000 annexed hereto as Exhibit A (the "Form of
Note"). The terms of the Warrants are set forth in the form annexed hereto as
Exhibit B (the "Form of Warrant"). The offer and sale of the Notes and the
Warrants (collectively the "Securities"), are being made in reliance upon an
exemption under the Act. The Form of Note and Form of Warrant are referred to
herein as the "Forms of Securities". The Closing Date shall be determined in
accordance with Section 2 hereof.
Each of the entities listed on SCHEDULE A annexed hereto (the
"Subscribers") hereby represents and warrants to, and agrees with the Company as
follows:
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SECTION 1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
1.1 CLOSING. The Company will sell and the Subscribers will buy, in
reliance upon the representations and warranties of the Company and Subscribers
contained in this Agreement and the Forms of Securities, upon the terms and
conditions set forth herein and therein, that principal amount of Notes set
forth next to their names on SCHEDULE A for an aggregate purchase price of Three
Million Three Hundred Twenty-Four Thousand ($3,324,000) U.S. Dollars (the
"Purchase Price") payable as set forth on SCHEDULE A. A portion of the Purchase
price in the case of certain Subscribers ("Existing Securityholders") consists
of the surrender and cancellation of 7% Convertible Debentures and Senior
Subordinated Debentures of the Company (the "Existing Notes") held by the
Existing Securityholders, the instruments for which shall be delivered to the
Company at the Closing together with bond powers endorsed in blank. The cash
portion of the Purchase Price shall be paid on the Closing Date by federal funds
wire transfer to the Company's account as follows:
First Union National Bank
Chatham, New Jersey Branch
ABA #000000000
Account No. 203 0000 490222
Account Name: Datametrics Corporation
In addition, the Company will pay a closing fee ("Closing Fee")
consisting of additional warrants to purchase Common Stock having the form set
forth in EXHIBIT D and in the amounts set forth on SCHEDULE A. The closing
("Closing") of such purchase and sale shall occur on December __, 1998 (the
"Closing Date"). The proceeds of the sale of the Notes will be used for working
capital purposes and for the payment of indebtedness of the Company other than
Senior Debt (as defined in the Notes).
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.
Subscribers each acknowledge, represent, warrant and agree as follows:
2.1 ORGANIZATION AND AUTHORIZATION. Each of the Subscribers is duly
incorporated or organized and validly existing in the state or country of its
incorporation or organization and has all requisite power and authority to
subscribe for and purchase and hold the Securities and to enter into this
Agreement. The decision to subscribe for the Securities and the execution and
delivery of this Agreement by the Subscribers, the performance by the
Subscribers of their obligations hereunder and the consummation by the
Subscribers of the transactions contemplated hereby have been duly authorized
and require no other proceedings on the part of the Subscribers. The undersigned
signatories have all right, power and authority to execute and deliver this
Agreement on behalf of the Subscribers. This Agreement has been duly executed
and delivered by the Subscribers and, assuming the execution and delivery hereof
and acceptance hereof by the Company, constitutes the legal, valid and binding
obligations of the Subscribers, enforceable against the Subscribers in
accordance with its terms. Each Existing Securityholder represents and warrants
to the Company
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that it is the legal and beneficial owner of the Existing Notes free of all
liens and encumbrances both on the date hereof and at the Closing.
2.2 EVALUATION OF RISKS. Each of the Subscribers has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting its interests in connection with
this transaction. They each recognize that their investment in the Company
involves a high degree of risk and could result in the complete loss of their
investment.
2.3 INDEPENDENT COUNSEL. Each of the Subscribers acknowledge that
they have been advised to consult with their own attorney regarding legal
matters concerning the Company and their investment in the Securities and to
consult with their tax advisor regarding the tax consequences of acquiring the
Securities.
2.4 DISCLOSURE DOCUMENTATION. Each of the Subscribers has each
received and reviewed copies of the Company's reports and registration
statements filed under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the Act, including the Company's 10-Ks, 10-Qs, 8-K's, and
registration statements filed by the Company since June 1, 1997 (collectively,
the "Reports"). Except for the Reports, the Subscribers are not relying on any
other information relating to the offer and sale of the Securities. Subscribers
acknowledge that the Company has offered to make available any additional public
information that the Subscribers may reasonably request, including technical
information, and other material public information about the Company and
Subscribers have been offered the Company's full and unconditional cooperation
in making such information available to Subscribers and acknowledge that the
Company has recommended that the Subscribers request and review such information
prior to making an investment decision. Except as set forth in herein, no oral
or written representations have been made, or oral or written information
furnished to the undersigned, the Subscribers or their advisors, if any, in
connection with the offering of the Securities which were or are in any way
inconsistent with the Reports.
2.5 OPPORTUNITY TO ASK QUESTIONS. Each of the Subscribers has had a
reasonable opportunity to ask questions of and receive answers from the Company
concerning the Company and the offering of the Securities, and all such
questions, if any, have been answered to the full satisfaction of each of the
Subscribers.
2.6 REPORTS CONSTITUTE SOLE REPRESENTATIONS. Except as set forth in
the Reports and elsewhere herein, no representations or warranties have been
made to Subscribers by (a) the Company or any agent, employee or affiliate of
the Company or (b) any other person, and in entering into this transaction
Subscribers are not relying upon any information, other than that contained in
the Reports and the results of independent investigation by Subscribers.
2.7 EACH OF THE SUBSCRIBERS IS AN ACCREDITED INVESTOR. All of the
Subscribers are "Accredited Investors", as defined under Regulation D, and
represent and warrant that they are included within one or more of the following
categories of "Accredited Investors."
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(i) Any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan associated or other institution as defined in
Section 3(a)(5)A of the Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the 1934 Act; any insurance company
as defined in Section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of
that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Act of 1958; any plan established
and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivision, for the benefits of its employees if such plan
has total assets in excess of $5,000,000; and employee benefit
plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974 if the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association,
insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of
$5,000,000;
(ii) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(iii) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
(iv) Any director, executive officer, or general partner of the
Company, or any director, executive officer, or general
partner of a general partner of that issuer;
(v) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(vi) Any natural person who had an individual income in excess of
$200,000 in each of the two (2) most recent years or joint
income with that person's spouse in excess of $300,000 in each
of those years and has a reasonable expectation of reaching
that same income level in the current year;
(vii) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
as described in Section 230.506(b)(2)(ii) of Regulation D
under the Act;
(viii) Any entity in which all of the equity owners are accredited
investors; and
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(ix) Any self-directed employee benefit plan with investment
decisions made solely by persons that are accredited investors
within the meaning of Rule 501 of Regulation D promulgated
under the Act.
2.8 NO REGISTRATION, REVIEW OR APPROVAL. Each of the Subscribers
acknowledges and understands that the limited private offering and sale of
Securities pursuant to this Agreement has not been reviewed or approved by the
SEC or by any state securities commission, authority or agency, and is not
registered under the Act or under the securities or "blue sky" laws, rules or
regulations of any state. Each of the Subscribers acknowledges, understands and
agrees that the Securities are being offered and sold hereunder pursuant to (i)
a private placement exemption to the registration provisions of the Act pursuant
to Section 3(b) or Section 4(2) of such Act, and (ii) a similar exemption to the
registration provisions of applicable state securities laws. Each of the
Subscribers understands that the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and
understandings of the Subscribers set forth herein in order to determine the
applicability of such exemptions and the suitability of the Subscribers to
acquire the Securities.
2.9 INVESTMENT INTENT. Without limiting their ability to resell
the Securities pursuant to an effective registration statement under the Act,
each of the Subscribers is acquiring the Securities solely for its own account
and not with a view to the distribution, assignment or resale to others. Each of
the Subscribers understands and agrees that it may have to bear the economic
risk of its investment in the Securities for an indefinite period of time.
2.10 NO ADVERTISEMENTS. The Subscribers are not subscribing for the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting.
2.11 REGISTRATION RIGHTS. The parties have entered into a
Registration Rights Agreement in the form of EXHIBIT C.
2.12 EXISTING NOTES. The Existing Securityholders hereby agree to
execute all documents and instruments reasonably required to terminate all liens
and encumbrances on assets of the Company in favor of the holders of Senior
Secured Debentures of the Company.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
acknowledges, represents, warrants and agrees as follows:
3.1 ORGANIZATION/QUALIFICATION. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware and is in
good standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in which the ownership of its
property or the
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nature of its business requires such qualification, except where its failure to
be so qualified would not have a material adverse effect on the Company.
3.2 ACCURACY OF REPORTS AND INFORMATION. Except as otherwise
disclosed herein or in any schedule hereto, the Company is in compliance, to the
extent applicable, with all reporting obligations under either Section 12(b),
12(g) or 15(d) of the 1934 Act, and shall maintain such status on a timely
basis. The Company has registered its Common Stock pursuant to Section 12 of the
1934 Act and the Common Stock is listed and trades on the American Stock
Exchange. The Company has filed all material required to be filed pursuant to
all reporting obligations, under either Section 13(a) or 15(d) of the 1934 Act
during the twelve (12) months immediately preceding the offer and sale of the
Securities (or for such shorter period that the Company has been required to
file such material).
3.3 SEC FILINGS/FULL DISCLOSURE. None of the Company's filings with
the Securities and Exchange Commission contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made, not misleading. The Company has timely filed all requisite
forms, reports and exhibits thereto with the Securities and Exchange Commission.
There is no fact known to the Company (other than general economic conditions
known to the public generally) that has not been publicly disclosed by the
Company or disclosed in writing to each of the Subscribers which (i) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or on the earnings, business affairs, properties, or
assets of the Company (a "Material Adverse Effect"), or (ii) could reasonably be
expected materially and adversely to affect the ability of the Company to
perform its obligations pursuant to this Agreement.
3.4 AUTHORIZATION. The Company has all requisite corporate right,
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Securities and the performance
of the Company's obligations hereunder has been taken. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy as they may apply to the indemnification provisions set forth in this
Agreement. Upon their issuance and delivery in accordance with this Agreement,
the Securities will be validly issued, fully paid and nonassessable and will be
free of any liens or encumbrances; provided, however, that the Securities are
subject to restrictions on transfer under state and/or federal securities laws.
The issuance and sale of the Securities will not give rise to any preemptive
right or right of first refusal or right of participation on behalf of any
person.
3.5 NO CONFLICT. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not
result in any violation of, or default,
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or give rise to a right of termination, cancellation or acceleration of any
material obligation or to a loss of a material benefit, under, any provision of
the Certificate of Incorporation, and any amendments thereto, Bylaws, and any
amendments thereto of the Company or any material mortgage, indenture, lease or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company, its properties or assets and which (i) would reasonably be expected to
have a Material Adverse Effect, or (ii) could reasonably be expected materially
and adversely to affect the ability of the Company to perform its obligations
pursuant to this Agreement.
3.6 NO UNDISCLOSED LIABILITIES OR EVENTS. The Company has no
liabilities or obligations, other than those disclosed in the Reports, this
Agreement or those incurred in the ordinary course of the Company's business
since June 15, 1998, which individually or in the aggregate, would (i)
reasonably be expected to have a Material Adverse Effect, or (ii) reasonably be
expected materially and adversely to affect the ability of the Company to
perform its obligations pursuant to this Agreement. Except as set for in Section
3.24, to the knowledge of the Company, no event or circumstance has occurred or
exists with respect to the Company which (i) could reasonably be expected to
have a Material Adverse Effect, or (ii) could reasonably be expected materially
and adversely to affect the ability of the Company to perform its obligations
pursuant to this Agreement.
3.7 NO DEFAULT. Except as set forth in Section 3.24, the Company
is not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound, and neither the execution, nor the
delivery by the Company, nor the performance by the Company of its obligations
under this Agreement or the Exhibits annexed hereto, will result in the breach
or violation of any of the terms or provisions of, or constitute a default or
result in the creation or imposition of any lien or charge on any assets or
properties of the Company under, any material indenture, mortgage, deed of trust
or other agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound or any statute or the Certificate of
Incorporation or by-laws of the Company, or any decree, judgment, order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or its properties, or the Company's listing agreement for its Common
Stock, which individually or in the aggregate (i) could reasonably be expected
to have a Material Adverse Effect, or (ii) could reasonably be expected
materially and adversely to affect the ability of the Company to perform its
obligations pursuant to this Agreement.
3.8 ABSENCE OF EVENTS OF DEFAULT. Except as set forth in the
Reports and this Agreement and on Schedule 3.8 attached hereto (including all
Exhibits annexed hereto), no default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become a default, has occurred and is
continuing, which would (i) reasonably be expected to have a Material Adverse
Effect, or (ii) could reasonably be expected materially and adversely to affect
the ability of the Company to perform its obligations pursuant to this
Agreement.
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3.9 GOVERNMENTAL CONSENT, ETC. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement (including all Exhibits annexed
hereto), or the offer, sale or issuance of the Securities, or the consummation
of any other transaction contemplated hereby, except as may be required by
applicable securities laws.
3.10 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the
Reports, the Company has sufficient trademarks, trade names, patent rights,
copyrights and licenses to conduct its business as presently conducted in the
Reports. Except as disclosed in the Reports, to the knowledge of the Company,
neither the Company nor its services is infringing or will infringe any
trademark, trade name, patent right, copyright, license, trade secret or other
similar right of others currently in existence; and there is no claim being made
against the Company regarding any trademark, trade name, patent, copyright,
license, trade secret or other intellectual property right which could (i)
reasonably be expected to have a Material Adverse Effect, or (ii) could
reasonably be expected materially and adversely to affect the ability of the
Company to perform its obligations pursuant to this Agreement.
3.11 MATERIAL CONTRACTS. Except as set forth in the Reports and in
Section 3.24, the agreements to which the Company is a party described in the
Reports are valid agreements, in full force and effect, and the Company is not
in breach or default under any of such agreements which could (i) reasonably be
expected to have a Material Adverse Effect, or assets of the Company, or (ii)
could reasonably be expected materially and adversely to affect the ability of
the Company to perform its obligations pursuant to this Agreement.
3.12 LITIGATION. Except as disclosed in the Reports, there is no
action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any Material Adverse Effect. Except as set forth on Schedule
3.8, the Company is not a party to or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality which could (i) reasonably be expected to have a Material
Adverse Effect, or (ii) could reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations pursuant to this
Agreement.
3.13 TITLE TO ASSETS. Except as set forth in Reports, the Company
has good and marketable title to all properties and material assets described in
the Reports as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than such as are not
material to the business of the Company.
3.14 SUBSIDIARIES. Except as disclosed in the Reports, the Company
does not presently own or control, directly or indirectly, any interest in any
other corporation, partnership, association or other business entity.
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3.15 REQUIRED GOVERNMENTAL PERMITS. The Company is in possession of
and operating in material compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities which are material to the conduct of its business, all of
which are valid and in full force and effect.
3.16 LISTING. The Company will use reasonable efforts to maintain
the listing of its Common Stock on the American Stock Exchange, the successors
thereto, or other organized United States market or quotation system. The
Company has not received any notice, oral or written, affecting its continued
listing on such Exchange and the Company will take no action which would impact
its continued listing or eligibility of the Company for such listing.
3.17 OTHER OUTSTANDING SECURITIES/FINANCING RESTRICTIONS. Except as
disclosed in the Reports, the Company has no outstanding restricted shares, or
shares of Common Stock sold under Regulation S, Regulation D or outstanding
under any other exemption from registration, which are available for sale as
unrestricted ("free trading") stock.
3.18 REGISTRATION ALTERNATIVE. The Company covenants and agrees
that for so long as any of the Common Stock issuable upon conversion of the
Notes remains outstanding and continues to be "restricted securities" within the
meaning of Rule 144 under the Act, the Company shall cooperate in all reasonable
respects in order to permit resales of the underlying Common Stock pursuant to
Rule 144 under the Act.
3.19 CAPITALIZATION. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, $0.01 par value per share, of
which 15,397,830 are outstanding. There are 5,000,000 shares of Preferred Stock
authorized and none outstanding. All issued and outstanding shares of Common
Stock have been duly authorized, validly issued and fully paid and
nonassessable.
3.20 DILUTION. The parties are aware and acknowledge that exercise
of the Warrants would cause dilution to existing stockholders and could
significantly increase the outstanding number of shares of Common Stock.
3.21 EMPLOYEE RELATIONS. The Company is not involved in any labor
dispute, nor, to the knowledge of the Company, is any such dispute threatened.
None of the Company's employees is a member of a union and the Company believes
that its relations with its employees are good.
3.22 ENVIRONMENTAL LAWS. To its knowledge, the Company is (i) in
compliance with any and all foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants and which the Company knows are applicable to it ("Environmental
Laws"), (ii) has received all permits, licenses or other approvals required
under applicable Environmental Laws to conduct its business, and (iii) is in
compliance with all terms and conditions of any such permit, license or
approval, except in each case where one failure to do so could reasonably be
expected to have a Material Adverse Effect.
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3.23 INSURANCE. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company is engaged. The Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires, or obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operation of the Company.
3.24 REPRESENTATIONS. Notwithstanding any other provision hereof,
the Subscribers understand and acknowledge that the Company is in material
default under its senior bank facility with Imperial Bank and under certain
indebtedness that is intended be repaid with the proceeds hereof. The Company is
currently in default under its agreement governing Senior Debt (as defined in
the Notes).
Section 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SUBSCRIBERS. Each of the Subscribers, and the Company represent, warrant,
covenant, and agree to the other the following with respect to itself:
4.1 SUBSCRIPTION AGREEMENT. This Agreement has been duly
authorized, validly executed and delivered on behalf of the Company and each of
the Subscribers, and is a valid and binding agreement, enforceable in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally.
4.2 NO-CONFLICT. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to a loss of a material benefit, under any
provision of the Certificate of Incorporation, and any amendments thereto,
bylaws and any amendments thereto of any Subscriber or any material mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree statute, law, ordinance, rule or
regulation applicable to any Subscriber, or its respective properties or assets.
4.3 APPROVALS. Neither the Company, nor any Subscriber, is aware
of any authorization, approval or consent of any governmental body which is
legally required for the Company's issuance and sale of the Securities to the
Subscribers.
4.4 INDEMNIFICATION. The Company and each of the Subscribers
agrees to indemnify the other, and to hold the other harmless, from and against
any and all losses, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) which the other may sustain or incur in connection
with the breach by the indemnifying party of any representation, warranty or
covenant made by it in this Agreement.
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Section 5. REGISTRATION OR EXEMPTION REQUIREMENTS. Each of the
Subscribers acknowledges and understands that the Securities (and any shares of
Common Stock issued upon exercise of the Warrants) may not be resold or
otherwise transferred except in a transaction registered under the Act and any
applicable state securities laws or unless an exemption from such registration
is available. Each of the Subscribers understands that the Securities will be
imprinted with a legend that prohibits the transfer of the Securities unless (i)
they are registered under applicable securities laws or such registration is not
required, or (ii) if the transfer is pursuant to an exemption from registration,
an opinion of counsel reasonably satisfactory to the Company is obtained to the
effect that the transaction is so exempt.
Section 6. LEGEND. The certificates representing the Securities shall
be subject to a legend restricting transfer under the Act, such legend to be
substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE OFFERED OR SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT."
The certificates representing these Securities, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state securities law.
Section 7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. Each of the
Subscribers understands that the Company's obligation to sell the Securities is
conditioned upon:
(i) The receipt and acceptance by the Company of this Subscription
Agreement and all Exhibits duly executed by all other parties
thereto;
(ii) Delivery by each of the Subscribers of the Purchase Price set
forth in Schedule A as payment in full for the purchase of the
Securities;
(iii) All representations and warranties of each of the Subscribers
contained herein shall remain true and correct as of the
Closing Date; and
(iv) The Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Notes, or
shall have the availability of exemptions therefrom. At the
Closing Date, the sale and issuance of the Securities shall be
legally permitted by all laws and regulations to which each of
the Subscribers and the Company are subject.
Section 8. CONDITIONS TO SUBSCRIBER'S OBLIGATION TO PURCHASE. The
Company understands that each of the Subscriber's obligation to purchase the
Securities is conditioned upon:
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(i) Acceptance by the Company of each of the Subscriber's
Subscription Agreement in the form hereof and due execution by
all parties of the Exhibits hereto;
(ii) Delivery into escrow of the original Securities as described
herein;
(iii) All representations and warranties of the Company contained
herein shall remain true and correct in all material respects
as of the Closing Date;
(iv) The Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Securities
or shall have the availability of exemptions therefrom. At the
Closing Date, the sale and issuance of the Securities shall be
legally permitted by all laws and regulations to which the
Company and each of the Subscribers are subject.
Section 9. MISCELLANEOUS.
9.1 GOVERNING LAW/JURISDICTION. This Agreement will be construed
and enforced in accordance with and governed by the laws of the State of New
York, except for matters arising under the Act, without reference to principles
of conflicts of law. Each of the parties consents to the jurisdiction of the US
District Court for the Southern District of the State of New York in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if another party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any state or country
having jurisdiction over the party against whom such judgment was obtained, and
each party hereby waives any defenses available to it under local law and agrees
to the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
9.2 CONFIDENTIALITY. The Company and each of the Subscribers
agrees to keep confidential and not to disclose to or use for the benefit of any
third party the terms of this Agreement (including the names of the Subscribers)
or any other information which at any time is communicated by the other party as
being confidential without the prior written approval of the other party;
provided, however, that this provision shall not apply to information which, at
the time of disclosure, is already part of the public domain (except by breach
of this Agreement) and information which is required to be disclosed by law. If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any such
information obtained from any other party, including the names of the
Subscribers (except information publicly available or in such party's domain
prior to the date hereof, and except as required by court order) and shall
promptly return to the other parties all schedules, documents, instruments, work
papers or other
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written information, without retaining copies thereof, previously furnished by
it as a result of this Agreement or in connection herewith.
9.3 FACSIMILE/COUNTERPARTS/ENTIRE AGREEMENT. Except as otherwise
stated herein, in lieu of the original, a facsimile transmission or copy of the
original shall be as effective and enforceable as the original. This Agreement
may be executed in counterparts which shall be considered an original document
and which together shall be considered a complete document. This Agreement and
Exhibits hereto constitute the entire agreement between the Subscribers and the
Company with respect to the subject matter hereof.
9.4 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
9.5 RELIANCE BY COMPANY. Each of the Subscribers represents to the
Company that the representations and warranties of each Subscriber contained
herein are complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under federal and
state securities laws in connection with a private offering of securities.
9.6 LEGAL FEES AND EXPENSES. Each of the parties shall pay its own
fees and expenses (including the fees of any accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby.
9.7 AUTHORIZATION. Each of the parties hereto represents that the
individual executing this Agreement on its behalf has been duly and
appropriately authorized to execute the Agreement.
9.8 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received), (b) on the second business day following the date of mailing by
reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur or (c) on the fifth
business day following date of mailing by registered or certified mail, return
receipt requested, postage prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
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(i) If to the Company:
Datametrics Corporation
00X Xxxxxxx Xxxx No. 3305
Xxxxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxx Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) If to the Subscribers, at the addresses and numbers listed on
Schedule A annexed hereto.
Any party hereto may from time to time change its address or
facsimile number for notices under this Section by giving at
least ten (10) days' prior written notice of such changed
address or facsimile number to the other party hereto.
9.9 AMENDMENTS AND WAIVERS. Any term of this Agreement or of the
Notes may be amended and the observance of any term of this Agreement or of the
Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of at least seventy-five percent (75%) in principal amount of the
Notes at the time outstanding, provided that (a) without the prior written
consent of the holders of all the Notes at the time outstanding, no such
amendment or waiver shall (i) extend the fixed maturity or reduce the principal
amount of, or reduce the rate or extend the time of payment of interest on, or
reduce the amount or extend the time of payment of any principal or premium
payable on any redemption or prepayment of, any Note or (ii) reduce the
aforesaid percentage of the principal amount of the Notes the holders of which
are required to consent to any such amendment or waiver.
9.10 PRO RATA PAYMENTS. All interest payments and payments,
redemptions or prepayments of principal (and premium, if any) on the Notes shall
be made and applied pro rata on all Notes outstanding.
[Remainder of Page Intentionally Left Blank]
[Signature Page Follows]
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IN WITNESS WHEREOF, this 10% Subordinated Note Subscription Agreement
was duly executed on the date first written below.
Agreed to and Accepted as of
this ____ day of December, 1998
DATAMETRICS CORPORATION
DATAMETRICS CORPORATION
By:
-------------------------------
Name:
Title:
LITTLE WING, L.P.
By:
----------------------------------
Name:
Title:
TRADEWINDS FUND LTD.
By:
----------------------------------
Name:
Title:
LITTLE WING TOO, L.P.
By:
----------------------------------
Name:
Title:
THE CUTTYHUNK FUND LIMITED
By:
----------------------------------
Name:
Title:
TONGA PARTNERS, L.P.
By:
----------------------------------
Name:
Title:
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SCHEDULE A
PURCHASERS PURCHASE PRICE CLOSING FEE NUMBER OF WARRANTS
LITTLE WING, L.P.
Little Wing, L.P. $933,750 of 7%
x/x Xxxxxxx Corp. Convertible Debentures
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 $263,000 of Senior
Subordinated Debentures
($39,220 Interest Due on Notes
and Debentures) 526,152 296,634
------- -------
TRADEWINDS FUND LTD.
Tradewinds Fund Ltd. $715,000 of 7%
x/x Xxxxxxx Corp. Convertible Debentures
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 $210,000 of Senior
Subordinated Debentures
($30,340 Interest Due on Notes
and Debentures) 406,735 229,281
------- -------
LITTLE WING TOO, L.P.
Little Wing Too, L.P. $101,250 of 7%
x/x Xxxxxxx Corp. Convertible Debentures
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 $27,000 of Senior
Subordinated Debentures
($4,440 Interest Due on Notes
and Debentures) 56,913 31,845
------ ------
THE CUTTYHUNK FUND LIMITED
The Cuttyhunk Fund Limited $350,000
00 Xxxxx Xxxxxx Cash 70,000 84,000
---- ------ ------
Xxxxxxxx, XX 12 Bermuda
TONGA PARTNERS, L.P.
Tonga Partners, L.P. $650,000 130,000 156,000
------- -------
000 Xxxxxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Totals: $3,324,000 1,189,800 warrants 797,760
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SCHEDULE 3.8
A judgment against the Company was entered on September 28, 1998 in the
amount of approximately $1,300,000 in favor of certain former officers of the
Company. The Company plans to appeal the judgment.
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