EXHIBIT 10.55
AGREEMENT
This Agreement (the "Agreement") entered into as of June 25, 2001 by
and between Xxxxx & Xxxxxx, LLP ("Creditor"), a California limited liability
partnership with its principal place of business at 000 Xxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxx Xxxx, Xxxxxxxxxx 00000, and Telenetics Corporation ("Telenetics"), a
California corporation, having its principal place of business at 00000 Xxxxxx
Xxxxx, Xxxx Xxxxxx, Xxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, as of the date hereof, Telenetics is indebted to Creditor in
the amount of $474,852.32 as a result of services provided by Creditor to
Telenetics, which amount does not include an additional $59,285.75 which shall
be payable by Telenetics concurrent with the execution of this Agreement; and
WHEREAS, Telenetics and Creditor wish to agree upon a payment mechanism
that would permit Telenetics to pay in full such debt.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, it is hereby agreed:
1. ACKNOWLEDGMENT OF DEBT. The parties hereby agree that, as of the
date of this Agreement, the total amount due and owing by Telenetics to Creditor
is equal to Four Hundred Seventy-Four Thousand Eight Hundred Fifty-two Dollars
and Thirty-Two Cents ($474,852.32) (such sum being hereafter referred to as the
"Liquidated Debt"). Telenetics agrees to pay the Liquidated Debt to Creditor
pursuant to the terms and conditions set forth in this Agreement.
2. ISSUANCE OF SECURED NOTE.
2.1 SECURED NOTE. Simultaneously with the execution of this
Agreement, Telenetics shall issue to Creditor a 6% Convertible Subordinated
Secured Promissory Note Due 2003 (the "Secured Note") in the principal amount of
the Liquidated Debt. The Liquidated Debt, together with any accrued and unpaid
interest thereon shall be convertible into shares (the "Shares") of common stock
of Telenetics at the option of Creditor pursuant to the terms of the Secured
Note. Concurrent with the issuance of the Secured Note, Creditor and Telenetics
shall enter into a Security Agreement (the "Security Agreement") to create a
security interest in the assets of Telenetics to secure all of Telenetics'
obligations under the Secured Note.
2.2 REGISTRATION OF SHARES. Telenetics agrees that when it next
files a Registration Statement (the "Registration Statement") with the
Securities and Exchange Commission to register the resale of shares of its
common stock under the Securities Act of 1933, as amended (the "Securities
Act"), it will include in such Registration Statement the Shares.
2.3 INDEMNIFICATION. Telenetics agrees to indemnify and hold
harmless Creditor and its officers, directors, agents, partners and any person
who may be deemed to control Creditor under the Securities Act or the Securities
Exchange Act of 1934, as amended, to the fullest extent permitted by law, from
and against any and all losses, claims, damages, liabilities, costs and expenses
(including without limitation attorneys' fees), as incurred, arising out or
relating to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement or the prospectus contained therein, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding the Creditor
furnished in writing by the Creditor to Telenetics expressly for use therein.
3. REPRESENTATIONS AND WARRANTIES OF TELENETICS.
Telenetics hereby represents and warrants to Creditor as follows:
3.1 CORPORATE QUALIFICATIONS. Telenetics is a California
corporation in good standing, is qualified to do business in the State of
California, and is subject to no legal disability which would prevent it from
entering into this Agreement.
3.2 CORPORATE APPROVALS. Telenetics has received all approvals of
shareholders, officers and directors required by its Articles, Bylaws, and
applicable law in order to enter into this Agreement and to issue the Secured
Note and the Shares. Upon issuance, the Shares shall be duly and validly
authorized, fully paid and nonassessable.
4. REPRESENTATIONS AND WARRANTIES OF CREDITOR.
Creditor hereby represents and warrants to Telenetics as
follows:
4.1 CORPORATE QUALIFICATIONS. Creditor is a limited liability
partnership in good standing, is qualified to do business in the State of
California, and is subject to no legal disability which would prevent it from
entering into this Agreement.
4.2 CORPORATE APPROVALS. Creditor has received all approvals of
partners required by its partnership agreement and applicable law and any other
understandings among its partners in order to enter into this Agreement.
4.3 KNOWLEDGE OF, AND CAPACITY TO ASSUME, ECONOMIC RISK. Creditor
acknowledges and represents that:
(a) Creditor is an "accredited investor" as defined in the
Securities Act.
(b) Creditor has received and reviewed Telenetics' Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000, and its
quarterly report on Form 10-QSB for the quarter ended March 31, 2001.
(c) To the extent Creditor exercises its conversion rights
under the Secured Note, Creditor is in a financial position to hold the Shares
for an indefinite period of time, is able to bear the economic risk of an
investment in the Shares and is able to withstand a complete loss of its
investment in the Shares.
-2-
(d) To the extent Creditor exercises its conversion rights
under the Secured Note, Creditor has such knowledge and experience in business
and financial matters that make it capable of evaluating the merits and risks of
an investment in the Shares.
(e) Creditor understands that an investment in the Secured
Note and the Shares is highly speculative and involves a high degree of risk but
believes that an investment in the Secured Note and the Shares is suitable based
upon its investment objectives and financial needs, and that it has adequate
means to undertake the risk and to provide for its current financial needs and
has no need for liquidity of investment with respect to the Shares.
(f) Creditor has had the opportunity to ask questions of, and
receive answers from, representatives of Telenetics, for the purpose of
obtaining any additional information to the extent reasonably available that is
necessary to verify the information provided.
(g) To the extent Creditor exercises its conversion rights
under the Secured Note, Creditor understands that the Shares may be resold by it
only (i) upon registration of the Shares pursuant to the Act or (ii) in a
transaction that is exempt from registration under the Act. Creditor understands
that until the resale of the Shares is registered under the Securities Act, the
certificates representing the Shares will bear a legend restricting the sale or
other disposition thereof.
(h) To the extent Creditor exercises its conversion rights
under the Secured Note, Creditor is acquiring the Shares for purposes of
investment, and without a view to the distribution or resale thereof except
where such distribution or resale is registered under the Act or otherwise
permitted by applicable securities laws.
(i) Creditor is a resident of or domiciled in the state set
forth under its name in Section 4.1 hereof.
5. MISCELLANEOUS.
5.1 NOTICE. Whenever notice is permitted or required by this
Agreement, it shall be deemed given as of the date of receipt if sent by
facsimile transmission to the numbers shown below, or by a nationally recognized
overnight courier, signature required, and addressed to the party at such
address shown below, or at such other address or facsimile numbers as the party
may time to time give by written notice.
For notice to Telenetics:
Telenetics Corporation
Attn: Xxxxx Xxxxx
00000 Xxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
-3-
For notice to Creditor:
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this subparagraph prior to 4:00 p.m. (California
time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 4:00 p.m. (California time) on any date and
earlier than 11:59 p.m. (California time) on such date, (iii) the Business Day
following the date of sending, if sent by a nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given.
5.2 ASSIGNMENT. This Agreement may not be assigned in whole or
part by either party without the prior written approval by the other party.
5.3 ENTIRE AGREEMENT. This Agreement and the Shares referred to
herein constitutes the entire agreement among the parties with respect to the
subject matter hereof. In addition, this Agreement may not be modified except by
a subsequent writing duly executed by all parties.
5.4 GOVERNING LAW. The internal law of the State of California,
without regard to conflicts of laws principles, will govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
5.5 COUNTERPARTS. This Agreement may be executed in counterparts
with any two counterparts signed by each party having the full force, effect and
authority of an original document signed by all parties.
5.6 NO WAIVER. No failure or delay by any party in the exercise of
any of its rights hereunder will be deemed to be a waiver of any of its rights.
5.7 SEVERANCE. In the event that any provision or provisions are
found by any tribunal of competent jurisdiction to be null or void, such
provisions will be deemed to be severed from this Agreement and the remainder of
the Agreement will remain in full force and effect.
5.8 HEADINGS. The headings contained in this Agreement are for
reference only and shall not be used to resolve any questions of interpretation
or construction.
5.9 ATTORNEYS' FEES. If either party commences litigation to
enforce or interpret this Agreement or the Shares, the nonprevailing party in
-4-
such litigation shall reimburse the prevailing party for the prevailing party's
expenses in connection with such litigation, including without limitation the
prevailing party's attorneys' fees.
5.10 WAIVER OF CONFLICT OF INTEREST. TELENETICS ACKNOWLEDGES THAT
THE CREDITOR IS ITS LEGAL COUNSEL, AND THAT AS A RESULT THE CREDITOR HAS A
CONFLICT OF INTEREST INSOFAR AS IT HAS PARTICIPATED IN THE NEGOTIATION AND
PREPARATION OF THIS AGREEMENT, THE SECURED NOTE, THE SECURITY AGREEMENT AND ANY
OTHER RELATED AGREEMENTS. TELENETICS IRREVOCABLY AND PERMANENTLY WAIVES ANY SUCH
CONFLICT OF INTEREST ON THE PART OF CREDITOR, AND ACKNOWLEDGES THAT IT HAS BEEN
ADVISED TO OBTAIN SEPARATE LEGAL REPRESENTATION IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the undersigned officers of the party, having been
duly authorized to bind their respective parties, have executed this Agreement
on behalf of their respective parties as of the date last below written.
XXXXX & XXXXXX, LLP TELENETICS CORPORATION
By: /s/ XXXXX XXXXXXX By: /s/ XXXXX XXXXX
------------------------------ ------------------------------------
Xxxxx X. Xxxxxxx, Partner Xxxxx Xxxxx, Chief Financial Officer
-5-
