CONVERTIBLE DEBENTURE RETIREMENT AGREEMENT
CONVERTIBLE DEBENTURE RETIREMENT AGREEMENT dated as of February 1, 2000
(the "Agreement"), among the entities listed on Schedule A attached hereto
(referred to individually as a "Purchaser" collectively as "Purchasers"),
SETTONDOWN CAPITAL INTERNATIONAL LTD. (the "Placement Agent" and together with
the Purchasers, referred to individually as a "Holder" or collectively as
"Holders") located at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx, X.X. Xxx X. 0000,
Xxxxxx, Bahamas, a corporation organized under the laws of the Bahamas, and
DYNATEC INTERNATIONAL, INC., a corporation incorporated under the laws of the
State of Utah, and having its principal place of business at 0000 Xxxx Xxxxx
Xxxxx Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 (the "Company").
Recitals
WHEREAS, the parties to this Agreement previously have entered into a
Convertible Debenture and Private Equity Line of Credit Agreement dated as of
May 22, 1998 (the "Credit Agreement"), a Registration Rights Agreement dated as
of May 15, 1998 (the "Registration Rights Agreement"), and an Escrow Agreement
dated as of May 15, 1998 (the "Escrow Agreement," and together with the Credit
Agreement, the Registration Rights Agreement, and the other instruments and
documents executed in connection therewith, the "Funding Agreements"); and
WHEREAS, pursuant to the Credit Agreement, the Company caused to be
issued to the Purchasers convertible debentures ("Convertible Debentures") of
the Company in the aggregate principal amount of $1,500,000, which Convertible
Debentures are subject to the terms and conditions described therein and in the
Funding Agreements; and
WHEREAS, pursuant to the Credit Agreement, the Company caused to be
issued to the Holders the Company's A Warrants ("A Warrants") to purchase a
total of 300,000 shares of the Company's common stock and the Company's B
Warrants ("B Warrants") to purchase a total of 450,000 shares of the Company's
common stock (the A Warrants and the B Warrants are collectively referred to in
this Agreement as the "Warrants"); and
WHEREAS, as of the date of this Agreement, the Purchasers own
Convertible Debentures in the aggregate principal amount of $1,226,500; the
principal amount of Convertible Debentures owned by each of the Purchasers,
together with interest accrued thereon as of February 14, 2000, and the number
of Warrants owned by each of the Holders is set forth on Schedule B attached
hereto; and
WHEREAS, the Company and the Holders entered into a Modification
Agreement dated as of June 25, 1999 (the "Modification Agreement"), pursuant to
which the parties agreed to certain modifications to the Funding Agreements as
set forth therein; and
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WHEREAS, the Purchasers agreed to certain amendments to the terms and
conditions of the Modification Agreement pursuant to an Amendment to the
Modification Agreement dated as of November 13, 1999; and
WHEREAS, subject to the terms and conditions of this Agreement, (a) the
Company desires to pay, retire and cancel certain of the presently issued and
outstanding Convertible Debentures and to pay or otherwise obtain a waiver of
all of the interest accrued thereon and otherwise to satisfy and discharge all
of its obligations to the Purchasers and the Placement Agent under the Funding
Agreements, (b) the Purchasers desire to have certain of the Convertible
Debentures owned by them retired and cancelled and (c) the Holders desire to
tender to the Company for cancellation all of the Warrants owned by them and to
amend the terms and conditions of the Funding Agreements as set forth below.
Agreement
NOW, THEREFORE, in consideration of the covenants and mutual promises
below and other good and valuable consideration, the receipt and legal
sufficiency of which the parties acknowledge by their signatures appearing
below, and intending to be legally bound hereby, the parties to this Agreement
hereby agree as follows:
1. Primary Terms of Transaction.
1.1 Retirement of Convertible Debentures. In consideration of
payment by the Company to each of the Purchasers in the amounts set forth on
Schedule B hereto, which payment in the aggregate shall consist of One Million
Five Hundred Thousand Dollars (U.S. $1,500,000) (the "Cash Payment"), the
Purchasers, and each of them, shall tender to the Company for cancellation
Convertible Debentures owned by each such Purchaser in the amounts set forth on
Schedule B hereto, which Convertible Debentures each shall be marked "Paid or
Cancelled". Each of the Purchasers shall hold, after payment of the Cash
Payment, the principal amount of Convertible Debentures set forth opposite their
names on Schedule B (the "Residual Convertible Debentures").
(a) Payment of Cash Payment. The Cash Payment shall
be paid to the Purchasers, c/o Grushko & Xxxxxxx IOLTA Account, Attn.
Xxxxxx X. Xxxxxxx, Esq., Grushko & Xxxxxxx, P.C., 000 Xxxxxxxx, Xxxxx
000, Xxx Xxxx, Xxx Xxxx 00000. The Cash Payment shall be paid via
wire transfer according to instructions to be provided by the
Purchasers or their agent prior to Closing, as that term is defined in
Section 2.
(b) Conversion of Residual Debentures. At Closing,
the Purchasers shall be deemed to have converted that number of
Residual Convertible Debentures owned by each of them after the payment
of the Cash Payment, which amounts are set forth on Schedule B hereto.
In connection with such conversion, the Company shall deliver at
Closing certificates representing shares of the Company's restricted
common stock to each of the Purchasers in the amounts set forth on
Schedule B (the "Residual Conversion Shares").
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(c) Debenture Payoff . As of the Closing Date,
defined below, subject to the payment of the Cash Payment and the
conversion of the Residual Convertible Debentures as described above,
the Convertible Debentures shall be deemed paid in full and canceled,
and all of the rights and obligations of the Purchasers and the Company
under the Convertible Debentures shall automatically terminate.
1.2 Cancellation of Warrants. At Closing, the Holders shall
surrender for cancellation all of the Warrants issued and outstanding as of the
date hereof, consisting of a total of A Warrants to purchase 300,000 shares of
the Company's common stock and B Warrants to purchase 450,000 shares of the
Company's common stock. The number of Warrants owned by each of the Holders is
set forth on Schedule B.
1.3 Funding Agreements Terminated. As of the Closing Date, the
Funding Agreements, as such may have been amended or modified to date, shall
automatically be and become null and void and of no further force and effect,
and all of the rights and obligations of the Company and the Holders or their
successors and assigns under the Funding Agreements shall automatically
terminate. Without limiting the generality of the foregoing sentence, the
parties hereto agree that (x) the Company may and should take such action as the
Company's management deems appropriate to withdraw the registration statement on
Form SB-2 that was filed with the U.S. Securities and Exchange Commission (the
"SEC") pursuant to the Registration Rights Agreement, and is pending but not
effective with the SEC as of the date of this Agreement, and the Company shall
have no obligation whatsoever with respect to registration of any securities
owned by any of the Holders, and (y) the Company's performance under this
Agreement shall constitute payment or discharge of all of the Company's
obligations under all of the Funding Agreements, including without limitation,
any obligation of the Company to pay any liquidated or other damages or
penalties of any kind whatsoever otherwise payable to the Holders, regardless of
whether any such damages are accrued or liquidated as of the date hereof.
1.4 Releases.
(a) Release of the Company. Each of the Holders, for
themselves and their affiliates and assigns, hereby agrees to discharge
and release the Company and each of its subsidiaries, divisions and
affiliated corporations, each of the Company's current or former
officers, directors, employees, managers, agents, attorneys and
representatives, as well as all of the Company's current or former
shareholders, owners, insurers, predecessors, successors and assigns,
from any and all claims or demands that any of the Holders may have in
connection with or arising out of or related in any way to the Funding
Agreements or the purchase and sale of the Convertible Debentures and
the Warrants. The release set forth in this Section 1.4(a) includes a
release of any rights or claims that any of the Holders may have based
on any facts or events, whether known or unknown by any of the Holders,
that occurred on or before the date hereof or the Closing Date,
whichever shall be later, or any of the events contemplated by this
Agreement.
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(b) Release of the Holders. The Company, for itself
and its affiliates and assigns, hereby agrees to discharge and release
each of the Holders and each of their respective subsidiaries,
divisions and affiliated corporations, and each of the Holders'
respective current or former officers, directors, employees, managers,
agents, attorneys and representatives, as well as all of the Holders'
respective current or former shareholders, owners, insurers,
predecessors, successors and assigns, from any and all claims or
demands that the Company may have against any of them in connection
with or arising out of or related in any way to the Funding Agreements
or the purchase and sale of the Convertible Debentures and the
Warrants. The release set forth in this Section 1.4(b) includes a
release of any rights or claims that the Company may have based on any
facts or events, whether known or unknown by the Company, that occurred
on or before the date hereof or the Closing Date, whichever shall be
later, or any of the events contemplated by this Agreement.
1.5 Indemnification.
(a) Indemnification By the Holders. The Holders
severally, and not jointly, shall indemnify, defend and hold harmless
the Company and each of its subsidiaries, divisions and affiliated
corporations, each of the Company's current or former officers,
directors, employees, managers, agents, attorneys and representatives,
as well as all of the Company's current or former shareholders, owners,
insurers, predecessors, successors and assigns, against any and all
claims, demands, losses, expenses, costs, obligations, defenses and
liabilities, including interest, penalties, and reasonable attorneys'
fees, that the Company and each of its subsidiaries, divisions and
affiliated corporations, each of the Company's current or former
officers, directors, employees, managers, agents, attorneys and
representatives, as well as all of the Company's current or former
shareholders, owners, insurers, predecessors, successors and assigns
may incur by reason of (i) any breach of, or failure by the
indemnifying Holder to perform, any of its obligations, covenants, or
agreements set forth in this Agreement, (ii) any inaccuracy in the
representations and warranties of the indemnifying Holder in Section 4
of this Agreement, or (iii) the failure of the indemnifying Holder to
release fully and effectively the Company from its obligations under
the Convertible Debentures and the Funding Agreements, pursuant to
Section 1.4(a), above.
(b) Indemnification By the Company.The Company shall
indemnify, defend and hold harmless each of the Holders and each of
their subsidiaries, divisions and affiliated corporations, each of
their current or former officers, directors, employees, managers,
agents, attorneys and representatives, as well as all of the Holders'
current or former shareholders, owners, insurers, predecessors,
successors and assigns, against any and all claims, demands, losses,
expenses, costs, obligations, defenses and liabilities, including
interest, penalties, and reasonable attorneys' fees, that any of the
Holders and each of their subsidiaries, divisions and affiliated
corporations, each of their current or former officers, directors,
employees, managers, agents, attorneys and representatives, as well as
all of the Holders' current or former shareholders, owners, insurers,
predecessors, successors and assigns may incur by reason of (i) any
breach of, or failure by the Company to perform, any of its
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obligations, covenants, or agreements set forth in this Agreement, (ii)
any inaccuracy in the representations and warranties of the Company in
Section 3 of this Agreement, or (iii) the failure of the Company to
release fully and effectively the Holders from its obligations under
the Convertible Debentures and the Funding Agreements pursuant to
Section 1.4(b), above.
1.6 Effect of Failure to Close. In the event that the Closing
shall not occur as described herein on or prior to the Closing Date, except for
such changes or delays as the Purchasers may expressly waive at or before
Closing, this Agreement shall have no effect whatsoever on the status of the
Convertible Debentures or the Company's obligations thereunder, or on any of the
Funding Agreements, which shall continue according to their terms, as amended or
modified prior to the date hereof. Furthermore, in such event, and if the
Company does not obtain the approval of its shareholders as required under
Section 6.13 of the Credit Agreement within ninety (90) days after this
Agreement ceases to have effect pursuant to this Section 1.6, the Company shall
have a period of thirty (30) days during which to seek a waiver from the Nasdaq
Stock Market from any applicable shareholder approval requirements, failing
which the Company shall take such action as shall be necessary to cause its
common stock to be delisted from the Nasdaq SmallCap Market and shall thereafter
honor all conversions of the Convertible Debentures without regard to the 20%
limitation described in Section 6.13 of the Credit Agreement. To the extent the
Company honors such conversion, the Company's obligation to pay liquidated or
other monetary damages under Section 6.13 of the Credit Agreement shall be
proportionally discharged.
1.7 Condition Precedent; Consent. An express condition
precedent to the Company's obligations under this Agreement shall be the
completion, on or before February 11, 2000, by the Company of a private
placement of its equity securities yielding aggregate proceeds to the Company of
at least $1,500,000 and involving a corresponding number of shares of the
Company's common stock, which shares shall be valued at the greater of (i) one
hundred percent (100%) of the average closing bid prices of the Company's common
stock as quoted on the Nasdaq Stock Market for the five (5) trading days
immediately preceding the closing of such private placement, or (ii) one dollar
(US $1.00). By their signatures appearing below, the Holders waive any rights
any of them may have with respect to any subsequent equity offering by the
Company arising under the Funding Agreements or otherwise, including without
limitation, any right of consent to or participation in such equity offering.
2. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall occur at the offices of Durham Xxxxx &
Xxxxxxx, P.C., 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000,
counsel for the Company, on or before February 14, 2000 or such later date as
the parties may mutually agree in writing (the "Closing Date").
2.1 Deliveries of the Company at Closing. At the Closing, the
Company shall deliver to the Purchasers: (i) the Cash Payment (payable as
described in Section 1.1(a) above), (ii) a certificate of the corporate
secretary of Company as to the incumbency of the officer executing this
Agreement on behalf of the Company; (iii) certified copies of resolutions of the
Company's board of directors authorizing the Company's execution of and
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performance under this Agreement; and (iv) certificates representing the
Residual Conversion Shares.
2.2 Deliveries of the Purchasers or Holders at Closing. At the
Closing, (i) the Purchasers shall deliver to the Company the original execution
copies of all of the Convertible Debentures, marked "Paid in Full" across the
face of the Convertible Debentures and signed by the Purchasers who own the
Convertible Debentures, and (ii) the Holders shall deliver to the Company for
cancellation the original execution copies of all of the Warrants presently
issued and outstanding. If any of the instruments required to be delivered at
Closing by the Holders have been lost, stolen or destroyed, the Company shall
accept in lieu thereof from any Holder a completed and fully executed Lost
Instrument Certificate in the form attached to this Agreement as Exhibit "A".
3. Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Holders, and
the Company warrants that the following are true and accurate as of the date
hereof and shall be true and accurate on the Closing Date:
3.1 Organization; Qualification. The Company is a corporation
duly organized and validly existing under the laws of the State of Utah 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 nature of its business requires such qualification, except where
failure to so qualify would not have a material adverse effect on the Company.
3.2 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 and the performance of the Company's obligations hereunder have been
taken. When this Agreement has been duly executed and delivered by the Company
it shall constitute 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.
3.3 No Conflict. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default, or give rise to a
right of termination, cancellation or acceleration of any material obligation or
to a loss of a material benefit, under, (i) any provision of the Articles of
Incorporation and any amendments thereto, or the By-laws and any amendments
thereto of the Company, (ii) 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
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Company, its properties or assets and which would have a material adverse effect
on the Company's business and financial condition, or (iii) any law, judgment,
order, arbitration award, rule, regulation, ordinance, writ, injunction or
decree of any governmental agency or instrumentality or court applicable to or
having jurisdiction over the Company or any of its assets or properties.
3.4 Consents. 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 or the consummation of any transaction contemplated hereby.
3.5 Solvency. As of the date of this Agreement the Company is,
and as of the Closing Date the Company shall be, able to pay its current debts
and liabilities when and as due.
3.6 Fair Value. The Cash Payment and the other performance of
the parties under this Agreement represents a fair present value of that portion
of the Convertible Debentures, the interest accrued thereon, and any damages and
penalties payable under any of the Funding Agreements, based on the relevant
risks, the nature of the Convertible Debentures, the market for the Company's
common stock, the value of the Warrants and the present status of the
transactions contemplated by the Funding Agreements.
4. Representations and Warranties of the Purchasers. Each of the
Purchasers hereby makes the following representations and warranties to the
Company, and each of the Purchasers warrants that the following are true and
accurate on the date hereof and will be true and correct on the Closing Date,
provided that each Purchaser's representations and warranties as set forth below
shall be deemed to pertain only to that Purchaser, and no Purchaser shall be
deemed to have made any representation or warranty for, on behalf of or about
any other Purchaser:
4.1 Holder of Debenture. The Purchaser is the sole and
complete owner and, in such capacity owns and holds all of the rights and has
all of the obligations under the Convertible Debentures owned by such Purchaser
as indicated on Schedule B hereto, free and clear of all liens, encumbrances,
security agreements, assignments, charges, restrictions or any other claims of
any type, kind or nature whatsoever.
4.2 No Liens. The Purchaser has not caused any lien,
encumbrance, security agreement, charge, restriction, or any other claim of any
type, kind or nature whatsoever, to be recorded or filed against any of the
property or assets of the Company.
4.3 Authorization. The Purchaser 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 Purchaser, and its directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement by the
Purchaser and the performance of the Purchaser's obligations hereunder have been
taken. When this Agreement has been duly executed and delivered by the Purchaser
it shall constitute a legal, valid and binding obligation of the Purchaser
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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.
4.4 No Conflict. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default, or give rise to a
right of termination, cancellation or acceleration of any material obligation or
to a loss of a material benefit, under, (i) any provision of the certificate or
articles of incorporation or any other charter or organization documents, and
any amendments thereto or the By-laws, operating agreements or similar
documents, and any amendments thereto of the Purchaser, (ii) 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 Purchaser, its properties or assets and which would
have a material adverse effect on the Purchaser's business and financial
condition, or (iii) any law, judgment, order, arbitration award, rule,
regulation, ordinance, writ, injunction or decree of any governmental agency or
instrumentality or court applicable to or having jurisdiction over the Purchaser
or any of its assets or properties.
4.6 Valid Corporate Organization and Good Standing. To the
extent the Purchasers are not natural persons, each of the Purchasers is a
corporation, partnership, limited liability company or other entity duly
organized, validly existing and in good standing under the laws of the state,
country or jurisdiction of its organization or incorporation, and has the
corporate or other entity power and authority necessary and appropriate to own
its properties and to engage in the business in which it is presently engaged.
4.9 Fair Value. The Cash Payment and the other performance of
the Company under this Agreement represents a fair present value of that portion
of the Convertible Debentures, the interest accrued thereon, and any damages and
penalties payable under any of the Funding Agreements based on the relevant
risks, the nature of the Convertible Debentures, the market for the Company's
common stock, the value of the Warrants and the present status of the
transactions contemplated by the Funding Agreements.
4.10 Investment Intent. In respect of the Residual Conversion
Shares, the Purchasers represent that they are and will be the sole and true
parties in interest, and no other person or entity has or will have upon the
issuance of the Residual Conversion Shares any beneficial interest in the
Residual Conversion Shares or any portion of the Residual Conversion Shares,
whether direct or indirect. The Purchasers shall receive the Residual Conversion
Shares for its own account for investment purposes only and not with a view to
or for distributing or reselling the Residual Conversion Shares or any part
thereof or interest therein, without prejudice, however, to each Purchaser's
right at all times to sell or otherwise dispose of all or any part of the
Residual Conversion Shares pursuant to an effective registration statement under
the Securities Act, as that term is defined below, and in compliance with
applicable state securities laws or under an exemption from such registration.
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4.11 Accredited Investor. As of the date of this Agreement,
the Purchasers are, and on the Closing Date they will be, "accredited investors"
as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act").
4.12 No Representations. The Purchasers acknowledge that the
Company files reports under the Securities Exchange Act of 1934, as amended,
with the SEC, which reports are available to the public. The Purchasers have had
access to such reports and other publicly available information as they have
deemed appropriate. Without limiting the generality of the foregoing, the
Purchasers acknowledge that they have read the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998, and the Quarterly Reports on Form
10-QSB for the periods ended March 31, June 30 and September 30, 1999. No
representative, director, officer, employee, shareholder or agent of the Company
has made any representation of any kind about the Company, its operations or
financial condition other than as set forth in publicly available reports.
4.13 Transfer Restrictions; Legends. The Purchasers
acknowledge that the Residual Conversion Shares may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements thereof. In connection with any transfer of any of
the Residual Conversion Shares, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act. The parties agree to the imprinting of the following legend
on the certificate or certificates representing the Residual Conversion Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Nothwithstanding the foregoing, the Company acknowledges generally that the
Purchasers shall be able to sell the Residual Conversion Shares to the full
extent permitted by Rule 144 under the Securities Act, and specifically that, as
amended to date, Rule 144(d)(3)(ii) under the Securities Act would allow the
Purchasers to deem any Residual Conversion Shares to have been acquired by the
Purchasers at the same time as the Residual Convertible Debentures were
acquired.
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5. Miscellaneous Provisions.
5.1 Costs. The Purchasers and the Company shall each pay all
of their own costs and expenses incurred or to be incurred by each of them
respectively in negotiating and preparing this Agreement and in taking whatever
actions may be necessary or appropriate to consummate the transactions
contemplated by this Agreement, including the costs of obtaining any consents or
approvals.
5.2 Further Acts. The parties, at any time before or after the
Closing, will execute, acknowledge, and deliver any assignments, releases,
conveyances, and other assurances, documents, and instruments of transfer,
reasonably requested by any other party, and will take any other action
consistent with the terms of this Agreement that may reasonably be requested by
any other party.
5.3 Captions. The subject headings or captions of the sections
and subsections of this Agreement are included only for purposes of convenience
and shall not affect the construction or interpretation of any provision
contained herein.
5.4 Entire Agreement. This Agreement (together with all
schedules and exhibits to this Agreement) constitutes the entire agreement
between the parties pertaining to the subject matter hereof, and supersedes any
and all prior or contemporaneous written or oral negotiations, agreements,
representations, and understandings of the parties with respect to such subject
matter.
5.5 Expenses. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
5.6 Modification, Amendment or Waiver. This Agreement may not
be amended, supplemented or otherwise modified, and none of its terms may be
waived, unless such amendment, supplement, modification or waiver is in writing
and executed by the party or parties to be bound thereby. The failure of any
party at any time or times to require performance of any provision hereof shall
not affect the right of such party at a later time to enforce the same, and no
waiver of any term or provision hereof on any one occasion shall be deemed to be
a waiver of the same or any other provision hereof at any subsequent time or
times.
5.7 Binding Effect; Assignment. This Agreement shall be
binding upon, and shall enure to the benefit of and be enforceable by, the
parties hereto, and their respective heirs, successors, assigns and legal
representatives; provided, however, that no assignment of any rights or
delegation of any obligations provided for herein may be made by any party to
this Agreement without the prior written consent of the other parties hereto.
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5.8 Construction. This Agreement shall be construed in
accordance with its intent and without regard to any presumption or any other
rule requiring construction against the party causing the same to be drafted.
The parties acknowledge that this Agreement, and the terms hereof, were arrived
at after negotiations between the parties, and each provision hereof shall be
construed as having been drafted by each and all of the parties hereto.
5.9 Governing Law. The laws of the State of New York shall
govern the validity, performance and enforcement of this Agreement. Each of the
parties consents to the jurisdiction of the U.S. District Court sitting in the
Southern District of the State of New York or the state courts of the State of
New York sitting in Manhattan in connection with any dispute arising under this
Agreement.
5.10 Counterparts; Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed an original and all of
which taken together shall constitute the same instrument. A facsimile copy of
an original signature shall have the same effect as an original signature.
5.11 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and benefit of the Company and the Holders,
their respective successors and assigns, and no other person or persons shall
have any right of action hereon.
5.12 Severability. If any provision of this Agreement, or any
portion of any provision, shall be deemed invalid or unenforceable for any
reason whatsoever, such invalidity or unenforceability shall not affect the
enforceability and validity of the remaining provisions hereof.
5.13 Definitions. Capitalized terms used in this Agreement but
not specifically defined in this Agreement shall have the meanings set forth in
the Funding Agreements.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THE COMPANY: THE PURCHASERS:
DYNATEC INTERNATIONAL, INC. XXXXX ENTERPRISES
By: /s/ Xxxxxxxxx X. Xxxxxxxxx, Xx. By: /s/ Illegible
------------------------------------- -----------------------------------
Its: Chief Executive Officer Its: Director
By: /s/ Xxxxxxx Xxxxxx TLG REALTY
------------------------------------
Its: Chief Financial Officer
By: /s/ Illegible
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Its: President
PLACEMENT AGENT:
SETTONDOWN CAPITAL BALMORE FUNDS, S.A.
INTERNATIONAL, LTD.
By: /s/ Illegible By: /s/ Illegible
------------------------------------ -----------------------------------
Its: Director Its:
-------------------------------- -------------------------------
AUSTOST ANSTALT XXXXXX
By: /s/ Illegible
-----------------------------------
Its:
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HEWLETT FUND
By: /s/ Illegible
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Its:
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Schedule A
Purchasers
Austost Anstalt Schaan
733 Fuerstentum Liechtenstein
Landstrasse 163
Balmore Funds S.A.
Trident Xxxxxxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxx BVI
Xxxxx Enterprises
00X Xxxxxxxx Xxxx
Xxxxxx XX0 0XX, Xxxxxxx
Hewlett Fund
0000 Xxxxxx X
Xxxxxxxx, XX 00000
TLG Realty
c/o Melo
000 Xxxx 00xx Xx.
Xxx Xxxx, XX 00000
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Schedule B
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Holder Convertible Debentures Warrants Owned Residual Common Stock Purchase
At February 14, 2000 At February 14, 2000 Principal Issuable Upon Price Payable
Amount of Conversion
Principal Interest A B Convertible
Amount Accrued Warrants Warrants Debentures
---------------------------- -------------------------- -------------------------- ----------------- --------------- --------------
---------------------------- ------------- ------------ ------------ ------------- ----------------- --------------- --------------
Austost Anstalt Xxxxxx $531,000 $ 112,041 62,500 62,500 $25,325 40,891 $ 649,409
Balmore Funds, S.A. 531,000 112,041 62,500 62,500 $25,325 40,891 649,409
Xxxxx Enterprises 57,000 12,027 10,000 10,000 $ 2,718 4,389 69,711
Hewlett Fund 25,000 5,275 5,000 5,000 $ 1,192 1,925 30,575
TLG Realty 82,500 17,407 10,000 10,000 $ 3,935 6,354 100,896
Settondown Capital 0 0 82,500 0 0 0 0
International
Manchester Asset Management 0 0 67,500 50,000 0 0 0
Limited
Avalon Capital Limited 0 0 0 125,000 0 0 0
Avalon Capital, Inc. 0 0 0 125,000 0 0 0
Totals $ 1,226,500 $ 258,792 300,000 450,000 58,495 94,450 $1,500,000
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EXHIBIT "A"
LOST INSTRUMENT CERTIFICATE
The undersigned, is the holder of the following instrument(s) issued by
Dynatec International, Inc., a Utah corporation (the "Company"), on May 22,
1998, in connection with the closing of the transactions contemplated by that
certain Convertible Debenture and Private Equity Line of Credit Agreement by and
among the Company, Settondown Capital International, Ltd., Xxxxx Enterprises,
TLG Realty, Balmore Funds, S.A., Austost Anstalt Xxxxxx and Hewlett Fund, dated
as of May 22, 1998 [Check all that apply]:
Convertible Debenture No. ________ in the principal amount of
_________________ Dollars ($___________); and/or
A Warrant No. _________ entitling the holder thereof to acquire
____________ (____________) shares of the Company's common stock;
and/or
B Warrant No. _________ entitling the holder thereof to acquire
____________ (____________) shares of the Company's common stock.
The undersigned hereby certifies that said instrument(s) as indicated
immediately above is(are) lost or has(have) been destroyed and cannot be located
and agrees that, in the event such instrument(s) is(are) found, the undersigned
will forthwith deliver such instrument(s) to Dynatec International, Inc., 0000
Xxxx Xxxxx Xxxxx Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attn. Xxxxxxx X. Xxxxxx,
Chief Financial Officer. Further, the undersigned represents and warrants that
the securities or other rights represented by such instrument(s) have not been
encumbered, transferred, assigned or pledged by the undersigned to any other
person or entity and the undersigned is the lawful owner of and has marketable
title to all such securities or other rights. The undersigned further agrees to
indemnify and hold the Company and its officers, directors, representatives,
agents and attorneys and their successors and assigns, harmless for any and all
loss, expense (including counsel fees and damages) or liability the Company or
any of such persons may suffer due to such lost instrument(s) or as a result of
any of the statements made herein by the undersigned being untrue.
Dated: , 2000
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Signature:
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Printed Name:
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