EXHIBIT 10.2
FIRST AMENDMENT OF EXCLUSIVE FINDER'S FEE AGREEMENT
This First Amendment of Exclusive Finder's Fee Agreement ("Amendment")
is entered into on August 30, 2001, by and between Ontro, Inc., a California
corporation ("Ontro") and Aura (Pvt.) Ltd., a Pakistani corporation ("Aura").
Ontro and Aura are collectively referred to herein as the "Parties." Unless
otherwise defined herein, capitalized terms shall have the meanings given them
in the Exclusive Finder's Fee Agreement dated as of May 22, 2001 between Ontro
and Aura (the "Agreement").
RECITALS
WHEREAS, the market price of Ontro's common stock has declined since
the execution and delivery of the Agreement so that the common stock purchase
price and the warrant exercise price, respectively, specified in the Agreement
is at a premium to the market and not at a discount as intended by the Parties;
and
WHEREAS, the staff of The Nasdaq Stock Market has indicated that the
provisions of Section B.3 of the Agreement concerning an increase in the number
of directors and the appointment of four directors nominated by Aura to the
Board is not compliant with The Nasdaq Stock Market corporate governance rules:
and
WHEREAS, the Parties wish to amend and modify the terms of the
Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, the Parties hereby agree as follows:
1. AMENDMENT OF SECTION A OF THE AGREEMENT.
A. Section A.1. of the Agreement is hereby deleted in its entirety and
the following new Section A.1. is substituted therefor:
"1. FINDER. Aura agrees to use its best efforts to find one
or more purchasers from Ontro for a total of 2,000,000 shares
of authorized and un-issued common stock of Ontro for a
purchase price equal to no less then $0.80 per share
($1,600,000). In consideration therefore, Ontro agrees to
grant to Aura a warrant (the "Commitment Warrant") to
purchase 210,000 shares of Ontro common stock for $0.80 per
share, and with all other terms of the Commitment Warrant to
be the same as the Performance Warrant defined in paragraph
A.2.(b) below. The Commitment Warrant and the Performance
Warrant are sometimes collectively referred to herein as the
"Warrants"."
B. Section A.2.(b) of the Agreement is amended to delete therefrom the
reference to "$1.00" and to replace such deleted amount with a reference to
"$0.80."
C. Section A.3. of the Agreement is amended to delete therefrom the
reference to "1,600,000 Shares" and to replace such deletion with a reference to
"2,000,000 Shares."
2. AMENDMENT OF SECTION B OF THE AGREEMENT.
A. The Parties hereby agree that Section B.3. of the Agreement, which
is set forth in its entirety below, is hereby deleted from the Agreement and is
of no further force and effect:
3. BOARD OF DIRECTORS. Following the execution of this
Agreement and deposit of the Aura System Shares into the
Account as set forth in Section B. 8 herein, the Board of
Directors of Ontro (the "Ontro Board") shall appoint to
vacant seats on the Ontro Board four individuals nominated by
Aura and approved by the Ontro Board as follows:
i On May 22, 2001 the Ontro Board shall resolve to increase
the number of Directors on the Ontro Board to seven;
ii On May 22, 2001 the Ontro Board shall appoint Mir. Xxxxx
Xxxxxxx to a currently vacant seat on the Ontro Board;
iii Upon nomination of a second individual by Aura, the Ontro
Board shall appoint such nominee to a currently vacant seat on
the Ontro Board;
iv. Upon nomination of a third individual by Aura, one
Director who was a member of the Ontro Board prior to May 22,
2001 shall resign and the Aura nominee shall be appointed to
the newly vacant seat;
v. Upon nomination of a fourth individual by Aura, one
Director who was a member of the Ontro Board prior to May 22,
2001 shall resign and the Aura nominee shall be appointed to
the newly vacant seat;
The Ontro Board's approval of all nominees made by Aura shall
be promptly given and approval shall not be unreasonably
withheld.
B. Section B.6. of the Agreement is deleted in its entirety and the
following new Section B.6 is substituted therefore:
"6. BREAK-UP FEE. If Ontro fails to close a committed purchase
of Shares for no less then $0.80 per share from a Purchaser who
is ready, willing, and able to purchase Shares constituting
directly or indirectly a minimum of 250,000 Shares for a minimum
of $200,000 up to a maximum of 2,000,000 Shares for $1,600,000,
and such purchase is on other terms that are acceptable to
Ontro, which acceptance shall not be unreasonably withheld, then
Ontro shall pay Aura the fees set forth in paragraph A.2. above
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notwithstanding Ontro did not receive the funds or sell the
Shares. The Performance Warrant issued to Aura in such case
shall have all of the same registration rights and other rights
set forth in Section C, below."
C. Section B.8.(c) of the Agreement is hereby amended to delete
reference to "$1.00" at the end of the second sentence of such Section and to
replace such deletion with "$0.80".
D. Remaining Sections B.4. through B.8. of the Agreement are hereby
redesignated as Sections B.3. to B.7., respectively
3. RIGHT TO TERMINATE INVESTMENT OBLIGATION. Notwithstanding any
provision of the Agreement or this Amendment to the contrary, Aura shall be
entitled to terminate the Agreement as to any obligations not then performed by
either of the Parties and recover all securities deposited by Aura and all
proceeds of sale of such securities if the Ontro shareholders fail to elect
Aura's nominee(s) to the Ontro Board of Directors at any meeting of Ontro
shareholders held to elect directors following the date of the Agreement.
4. NO FURTHER CHANGES. Except as otherwise set forth in Sections 1
through 3 of this Amendment, the Agreement shall remain in full force and effect
with no further changes.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be
executed as of August 30, 2001.
Ontro, Inc.
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx, President
Aura (Pvt.) Ltd.
a Pakistani corporation
By: /s/ Mir Xxxxx Xxxxxxx
----------------------------
Mir Xxxxx Xxxxxxx
Its: Agent/Attorney-in-Fact
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Exhibit 10.19
EXCLUSIVE FINDER'S FEE AGREEMENT
This agreement is entered into on May 22, 2001, by and between Ontro,
Inc., a California corporation ("Ontro") and Aura (Pvt.) Ltd., a Pakistani
corporation ("Aura") subject to the conditions specified in Section F below.
Ontro and Aura are collectively referred to herein as the "Parties."
TERMS
A. FINDER'S FEES, COMMITMENT TO PURCHASE, AND ESCROW OF SECURITIES.
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1. FINDER. Aura agrees to use its best efforts to find one or
more purchasers from Ontro for a total of 1,600,000 shares of authorized and
un-issued common stock of Ontro for a purchase price equal to no less then $1.00
per share ($1,600,000). In consideration therefore, Ontro agrees to grant to
Aura a warrant (the "Commitment Warrant") to purchase 210,000 shares of Ontro
common stock for $1.00 per share, and with all other terms of the Commitment
Warrant to be the same as the Performance Warrant defined in paragraph A.2.(b)
below. The Commitment Warrant and the Performance Warrant are sometimes
collectively referred to herein as the "Warrants".
2. FINDER'S FEE. In the event Ontro accepts funds from the
sale of Ontro common stock ("Shares") from any one ("Purchaser") during the
Period (as defined below), Ontro shall pay Aura a finder's fee in the amount of:
(a) below, Shares of the common stock of Ontro
equal to 5% of the Shares sold to the Purchaser; plus
(b) below, a warrant (the "Performance Warrant")
to purchase the number of shares of common stock of Ontro equal to 15% of
the number of shares of Ontro common stock purchased by the Purchaser.
The exercise price of the Warrants shall be equal to the purchase price of
the Shares ($1.00). The Warrants shall have a five-year term from the date
of issuance. The Warrants shall be issued to Aura or its designee provided
Aura and the designee provide to Ontro the same representations and warranties
with regard to the designee as are provided by Aura in regard to itself and its
affiliates in this Agreement, and in the form of warrant attached hereto as
Exhibit A. In addition no designee may directly or indirectly be in a business
similar to, or in competition with, Ontro or any of its licensees sub-licensees
or potential customers, and no designee may be affiliated directly or indirectly
with any owner cumulatively (including the shares underlying the Warrants) of 5%
or more of any class or cumulatively any classes of Ontro securities, unless
such designee is approved by Ontro which approval shall not be unreasonably
withheld.
3. PERFORMANCE PERIOD; PAYMENT OF FEE. Ontro shall pay a
finder's fee in connection with funds received by Ontro from the sale of Shares
at any time from any Purchaser during the period May 22, 2001 through October
30, 2001, (the "Period"). In the event Ontro sells 1,600,000 Shares to
Purchasers during the Period Aura shall have the right in its sole discretion to
extend the Period through April 30, 2002.
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A Purchaser includes affiliates and related parties of a Purchaser.
Ontro shall pay the finder's fee upon closing of the sale of the Shares. All
sales of Shares shall be pursuant to a Stock Purchase Agreement by and between
Ontro and the Purchaser substantially in the form set forth in Exhibit B.
4. ONTRO PURCHASERS. Notwithstanding the provisions of
paragraph A.(3), above, no finder's fee shall be due in connection with funds
received by Ontro from the sale of any security to Unilever and its affiliates
and designees.
B. COMPLETION OF PRIOR AGREEMENT; ADDITIONAL RIGHTS TO AURA.
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1. COMPLETION OF PRIOR AGREEMENT. On January 19, 2001, Ontro
and Aura entered into a similar Exclusive Finder's Fee Agreement (the "Prior
Agreement") a copy of which is attached hereto as Exhibit "C." Aura has
substantially completed the Prior Agreement. Prior to execution of this
Agreement, Aura shall complete the Prior Agreement, by finding one or more
purchasers to purchase the remainder of the 1,300,000 shares of common stock of
Ontro referenced in the Prior Agreement which on that date have not been
previously purchased by Aura or its designees (the "Remaining Shares"), or by
purchasing the Remaining Shares itself including at Aura's election by
authorizing Ontro to withdraw and sell for Ontro's benefit an adequate number of
the escrowed securities referenced in the Prior Agreement which are currently
held in the Account referenced in paragraph B.7 herein.
2. COMPLETION OF ISSUANCES PURSUANT TO PRIOR AGREEMENT. No
later than the date of this Agreement, Ontro shall have issued all shares of
Ontro common stock and warrants to purchase Ontro common stock that are due to
Aura pursuant to the Prior Agreement.
3. BOARD OF DIRECTORS. Following the execution of this
Agreement and deposit of the Aura System Shares into the Account as set forth in
Section B. 8 herein, the Board of Directors of Ontro (the "Ontro Board") shall
appoint to vacant seats on the Ontro Board four individuals nominated by Aura
and approved by the Ontro Board as follows:
i. On May 22, 2001 the Ontro Board shall
resolve to increase the number of Directors
on the Ontro Board to seven;
ii. On May 22, 2001 the Ontro Board shall
appoint Mir. Xxxxx Xxxxxxx to a currently
vacant seat on the Ontro Board;
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iii. Upon nomination of a second individual by
Aura, the Ontro Board shall appoint such
nominee to a currently vacant seat on the
Ontro Board;
iv. Upon nomination of a third individual by
Aura, one Director who was a member of the
Ontro Board prior to May 22, 2001 shall
resign and the Aura nominee shall be
appointed to the newly vacant seat;
v. Upon nomination of a fourth individual by
Aura, one Director who was a member of the
Ontro Board prior to May 22, 2001 shall
resign and the Aura nominee shall be
appointed to the newly vacant seat;
The Ontro Board's approval of all nominees made by Aura shall be promptly given
and approval shall not be unreasonably withheld.
4. DISCONTINUATION OF CASH PAYMENTS TO NON-EMPLOYEE DIRECTORS.
Upon execution of this Agreement and continuing thereafter until all four
nominees of Aura have been appointed to the Ontro Board, Ontro shall cease
making or accruing the obligation to make any cash payments to non-employee
Directors.
5. EXPENSE REVIEW. During the term of this Agreement Ontro
shall provide access to financial records and shall upon request meet and confer
in person or otherwise with a representative or representatives of Aura
sufficient to allow the Aura representative(s) to review all of the expenditures
of Ontro on a weekly basis.
6. BREAK-UP FEE. If Ontro fails to close a committed purchase
of Shares for no less then $1.00 per share from a Purchaser who is ready,
willing, and able to purchase Shares constituting directly or indirectly a
minimum of 200,000 Shares for a minimum of $200,000 up to a maximum of 1,600,000
Shares for $1,600,000, and such purchase is on other terms that are acceptable
to Ontro, which acceptance shall not be unreasonably withheld, then Ontro shall
pay Aura the fees set forth in paragraph A. 2 above notwithstanding Ontro did
not receive the funds or sell the Shares. The Performance Warrant issued to Aura
in such case shall have all of the same registration rights and other rights set
forth in Section C, below.
7. RIGHT OF FIRST REFUSAL TO AURA. Aura shall have the first
right of refusal to provide any additional funds from the sale of Ontro
securities that Ontro believes it needs at any time prior to the expiration of
the term of this Agreement. This right shall not apply to any funds that may be
provided by Unilever or its affiliates or designees. In the event Ontro intends
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to raise additional capital through the sale of its securities prior to the end
of the term of this Agreement to any party other than Unilever or its affiliates
and designees then Ontro shall provide written notice to Aura of the terms of
such proposed issuance, and Aura shall have the right for 15 days from receipt
of Ontro's notice to Aura to notify Ontro in writing that Aura will act as a
finder to supply a Purchaser for the proposed issuance, or Aura or its designee
will purchase the securities on the terms set forth in Ontro's notice to Aura.
If Aura elects to act as a finder and supply a Purchaser for the proposed
issuance or Aura or its designee elects to purchase the securities Aura shall be
paid the fees set forth in paragraph A. 2 above in connection with the issuance
of the securities.
8. ESCROW OF SECURITIES. In consideration of Ontro entering
into this agreement Aura agrees that upon execution of this Agreement Aura or
its designee shall deposit into Ontro's existing securities brokerage account
with Xxxxx Fargo Xxx Xxxxxx (the "Account") for Ontro's benefit 2,500,000 shares
of freely transferable common stock of Aura Systems, Inc. (the "Aura Systems
Shares").
(a) After May 22, 2001 and from time to time
thereafter Ontro may withdraw and sell the Aura System Shares for its benefit.
Subject only to the other terms of this Agreement Ontro may withdraw and sell
Aura System Shares in an amount (net of all costs of sale) Ontro needs to fund
its ongoing operations, but in no event more then $230,000 in any one month.
(b) Ontro may only withdraw and sell the Aura Systems
Shares from the Account if all cash and marketable securities owned by Ontro
have a total value less then $400,000 at the time of the withdrawal. Ontro may
only withdraw and sell Aura Systems Shares from the Account until all proceeds
from the sale of the Aura Systems Shares withdrawn from the Account (net of all
costs of sale) is equal to $1,600,000 less all proceeds received from the sale
of Shares pursuant to this Agreement.
(c) Every time Ontro withdraws and sells Aura Systems
Shares from the Account, Ontro shall immediately issue to Aura or its designee
shares of common stock of Ontro. The number of shares of Ontro common stock to
be issued to Aura or its designee shall be equal to the proceeds received by
Ontro from the sale of the Aura Systems Shares withdrawn from the Account
valuing each Ontro common share at $1.00. In addition Ontro shall pay to Aura
the fees set forth in paragraph A. 2 above in connection with all Ontro common
stock issued to Aura or its designee pursuant to this Section B.8.(c). Aura or
its designee who receives the Ontro common shares shall execute all documents
reasonably required by Ontro to issue the common stock, such documents to
include by way if illustration and not limitation substantially all of the same
representations and warranties Aura makes in section D below.
(d) After Ontro has received a total of $1,600,000
from the combined sale of Shares and the sale of Aura Systems Shares withdrawn
from the Account (net of all costs of sale of the Aura Systems Shares) Ontro
shall have no further right to the Aura Systems Shares in the Account, and Ontro
shall immediately cause all of the remaining Aura Systems Shares in the Account
to be returned to Aura or its designee.
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C. THE WARRANTS
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1. REGISTRATION RIGHTS. Common shares issued to Aura or its
designee pursuant to this Agreement and all Ontro common stock which may be
purchased upon exercise of the Warrants shall be registered by Ontro with the
Securities and Exchange Commission ("SEC") by the earlier of (a) the next
subsequent Registration Statement filed by Ontro with the SEC which is filed to
register the sale of common stock, such shares to be registered by Ontro as part
of such subsequent filing ("piggyback registration"), or (b) within 90 days
following written demand by Aura ("demand registration rights").
2. TRANSFERABILITY OF WARRANTS. The Warrants, or any portion
thereof, may only be transferred by the holder prior to exercise if (a) such
transfer is made pursuant to an effective registration statement filed with the
SEC, and provided the transfer is also in compliance with all applicable state
securities laws; or (b) if the transferor provides the Company with a legal
opinion from counsel to the transferor in form and content satisfactory to the
Company and its counsel stating that registration is not required, and the
transfer is in compliance with all applicable securities laws. In such an event,
upon the written request of the holder, Ontro shall promptly re-issue the
Warrants, or any portion thereof, to the holder's designated transferee(s) and
shall re-issue any residual portion of such Warrants (if any) to the holder. The
transferee shall be subject to the same terms and conditions, and shall enjoy
the same rights, as the holder.
3. FORM OF WARRANTS. The Warrants shall be substantially in
the form of the warrant attached hereto as Exhibit A, and shall include the
provisions set forth in paragraph C.4 below.
4. PROTECTION AGAINST DILUTION.
(a) If at any time and from time to time Ontro shall:
(i) declare a dividend in shares of common stock to a holder of common stock or
make a distribution in shares of common stock to holders of common stock, (ii)
subdivide its outstanding shares of common stock, (iii) combine its outstanding
shares of common stock, or (iv) otherwise effect a re-capitalization of such
character that the shares of common stock shall be changed into or become
exchangeable for a greater or lesser number of shares of common stock, then the
Exercise Price in effect on the record date of such dividend or distribution or
the effective date of such subdivision, combination or reclassification
(individually an "Event" and collectively the "Events") shall be adjusted, or
further adjusted, to a price (to the nearest cent) determined by multiplying (i)
the exercise price of the Warrant(s) in effect immediately prior to such Event
by (ii) a fraction, the numerator of which shall be the number of shares of
common stock outstanding immediately prior to such Event, and the denominator of
which shall be the number of shares of common stock outstanding immediately
after such Event. Upon each adjustment in the exercise price resulting from an
Event, the number of shares of Ontro common stock which may be purchased upon
exercise of the Warrants shall be adjusted (to the nearest one-thousandth share)
by multiplying (i) the number of shares of Ontro common stock which may be
purchased upon exercise of the Warrants immediately prior to such Event by (ii)
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a fraction, the numerator of which shall be the exercise price in effect
immediately prior to such Event, and the denominator of which shall be the
exercise price in effect immediately after such Event. Notice of each such
adjustment and each such readjustment shall be forthwith mailed to the Holder
setting forth such adjustments or readjustments and the facts and calculations
thereof in reasonable detail. Any dividend paid or distributed upon the common
stock in stock of any other class of securities convertible into shares of
common stock shall be treated as a dividend paid in common stock to the extent
that shares of common stock are to be issued upon the conversion thereof.
(b) In case: (i) a distribution in the form of stock
or other securities of any other corporation or other entity shall be made or
paid by Ontro on, or with respect to, the then outstanding shares of common
stock, (ii) Ontro shall effect a re-capitalization of such character that the
shares of common stock will be changed into or become exchangeable for shares of
common stock with a different par value or no par value, or (iii) Ontro (or a
successor corporation) shall be consolidated or merged with or into another
corporation or entity or shall sell, lease or convey all or substantially all of
its assets in exchange for stock or property (including cash) with the view of
distributing such stock or property to its shareholders, each share issuable
upon exercise of the Warrants shall be replaced by, and/or shall include, as the
case may be, for the purposes hereof, the stock or property issued or
distributed in respect of each share of common stock upon such
re-capitalization, reclassification, merger, sale, lease or conveyance as the
Holder would have been entitled to had the Holder exercised the Warrants
immediately prior to any such occurrence, and adequate provision to that effect
shall be made at the time thereof.
(c) In case: (i) of any classification,
reclassification or other reorganization of the capital stock of Ontro,
consolidation or merger of Ontro with or into another corporation, or the sale,
lease or conveyance of all or substantially all of the assets of Ontro; or (ii)
of the voluntary or involuntary dissolution, liquidation or winding up of Ontro;
then, and in any such case, Ontro shall mail to the Holder, at least 15 days
prior thereto, a notice stating the date or expected date on which a record is
to be taken. Such notice shall also specify the date or expected date, if any is
to be fixed, as of which holders of common stock of record shall be entitled to
exchange their shares of common stock for securities or other property
deliverable upon such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation, winding up or any
other appropriate action, as the case may be.
5. SUBSEQUENT AGREEMENTS. It is understood that subsequent or
contemporaneous agreements or writings may be executed by Aura, Aura's designees
or Ontro in order to effectuate issuance or exercise of the Warrants. In the
case of any conflict between this Agreement and any such agreements or writings,
or the Warrants, or the terms thereof, unless the terms of the subsequent or
contemporaneous agreement expressly state otherwise, the terms of this Agreement
shall control notwithstanding any contrary provision of any subsequent
agreements, writings, or warrants.
6. CERTIFICATES. Ontro or its transfer agent shall re-issue
the Warrants or certificates for shares issued to Aura or its designee pursuant
to this Agreement, or purchased upon exercise of the Warrants in lesser
denominations upon request of the holder, subject to a minimum of 5,000 shares.
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7. CASH OR SHARE EQUIVALENT. In the event the common stock to
be issued to Aura or its designees pursuant to this Agreement, the Warrant(s) or
common stock purchased upon a valid exercise of the Warrant(s,) are not or
cannot be issued pursuant to the terms of this Agreement by no fault of the
holder, in addition to all other remedies, Ontro shall be responsible to pay the
holder, upon demand, the equivalent value of the Warrants (a) in cash or (b) at
Ontro's option, in registered, immediately tradable shares of Ontro that can
actually be sold within 30 days of delivery for an amount equal to the value of
the warrants on the date of delivery.
In such an event the value of the common stock and
the Warrant(s) shall be deemed to be the closing share price of Ontro shares on
the day of otherwise valid receipt of the common stock or exercise of the
Warrants, less in the case of the Warrants only the per share exercise price of
the Warrant(s), times the number of shares not issued.
In the case of the Warrants upon payment Ontro of the
equivalent value pursuant to this Section, the holder of any Warrants shall
return the Warrant(s) for which equivalent value is paid.
D. REPRESENTATIONS AND WARRANTIES OF AURA. This Agreement is made with
Aura in reliance upon Aura's representation and warranties to Ontro, which by
Aura's execution of this Agreement Aura hereby confirms that:
1. PURCHASE ENTIRELY FOR OWN ACCOUNT. The securities to be
received by Aura will be acquired for investment for Aura's own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and Aura has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Aura further represents Aura does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant any
participation to such person or to any third person, with respect to any of the
Warrants or common stock which can be purchased upon exercise of the Warrants.
2. DISCLOSURE OF INFORMATION. Aura believes it has received
all the information regarding Ontro it considers material or desirable in order
to decide to acquire the Warrants. Aura further represents that it has had an
opportunity to ask questions and receive answers from Ontro regarding Ontro, its
business and the terms and conditions of the Warrants.
3. DEVELOPMENT STAGE COMPANY. Aura recognizes Ontro is a
development stage company, that it has an accumulated deficit and a working
capital deficit, has not generated any revenue from operations and is not
expected to generate any revenue from operations for some time and perhaps for
years, and that proposed development expenditures are expected to result in
substantial and increasing losses over at least the next several years, and
possibly much longer. Investment in Ontro involves substantial risk, and Aura
should not acquire the Warrants unless it can afford the complete loss of its
investment. Aura has taken full cognizance of and understands all of the risk
factors related to the receipt of the Warrants.
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4. CONFIDENTIALITY. Aura hereby represents, warrants and
covenants that it shall maintain in confidence, and shall not use or disclose
without the prior written consent of Ontro, any information about Ontro
furnished to it by Ontro, whether or not such information was acquired or
disclosed in connection with this Agreement.
5. INVESTMENT EXPERIENCE. Aura is an investor in securities of
privately held development stage companies, and acknowledges that it is able to
protect itself in connection with the Warrants, can bear the economic risk of a
complete loss of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the Warrants.
6. ADVICE OF PROFESSIONALS. Aura has carefully considered and
has been advised by Ontro to have any material provided by anyone regarding
Ontro including but not limited to this agreement, related documents and the
acquisition of the Warrants reviewed by its legal counsel prior to acquisition,
and to discuss with its professional tax and financial advisers the suitability
of the acquisition of the Warrants for its particular tax and financial
situation, and it has determined the Warrants are suitable for it. Ontro
specifically disclaims any representations regarding the legal, tax or financial
consequences of the Warrants, other than the representation this is a high risk
transaction.
7. AUTHORITY. Aura's execution, delivery and performance of
and under this agreement, and all documents ancillary hereto, and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized, and Aura is duly authorized (a) to execute and deliver this
agreement and all other instruments executed and delivered on behalf of such
partnership, corporation, trust, estate or other entity, in connection with the
issuance in its name of the Warrants; and (b) to acquire and hold the Warrants,
(ii) such entity has not been formed for the specific purpose of acquiring the
Warrants; and (iii) when executed and delivered by Ontro, will constitute such
partnership's, corporation's, trust's, estate's or other entity's legal, valid
and binding obligation enforceable against it in accordance with its terms.
8. RESTRICTED SECURITIES. Aura understands the Warrants and
the shares of common stock it may purchase upon exercise of the Warrants are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from Ontro in a transaction not involving a
public offering and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act of 1933,
as amended (the "Securities Act"), only in certain limited circumstances. In
this connection, Aura represents it is familiar with Securities and Exchange
Commission ("SEC") Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
9. ACCREDITED INVESTOR. Aura is an accredited investor as
defined in Rule 501(a) of Regulation D of the SEC, as amended, under the
Securities Act.
10. NO REPRESENTATIONS REGARDING FUTURE RESULTS. It never has
been represented, guaranteed or warranted by Ontro, any of the officers,
directors, shareholders, partners, employees, legal counsel, auditor or agents
of Ontro or its advisors, or any other persons, whether expressly or by
implication, that the past performance or experience of the management of Ontro,
or of any other person, or any present business and financial plans of Ontro,
will in any way indicate the future results which may be achieved from the
ownership of the Warrants or the common stock of Ontro.
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11. ACKNOWLEDGMENT AND PRIOR AGREEMENT. Aura understands the
meaning and legal consequences of the representations and warranties contained
in this Agreement, and Aura hereby agrees Ontro and each officer, director,
employee, agent, legal counsel and controlling person of Ontro, past, present or
future, may rely on each such representation and warranty.
12. SURVIVAL. The foregoing representations and warranties
shall be true and accurate as of the date of the acceptance hereof by Ontro and
shall survive the execution and delivery of this Agreement and the delivery of
the Warrants and any common stock upon exercise of the Warrants thereafter.
E. REPRESENTATIONS AND WARRANTIES OF ONTRO. This Agreement is made with
Ontro in reliance upon Ontro's representation and warranties to Aura, which by
Ontro's execution of this Agreement Ontro hereby confirms that:
1. MONTHLY EXPENSES. Ontro shall maintain its monthly cash
expenses at no more than $230,000 per month during the term of this Agreement.
During the term of the Agreement, Ontro shall not increase these expense levels
unless Ontro receives funds from the sale of securities to Unilever or its
affiliates, in which case, Ontro may increase the amount of monthly expenses up
to, but not in excess of $320,000 per month. Ontro shall provide confirmation of
compliance with this provision upon Aura's written request, and to allow Aura or
its agents at Aura's expense to audit Ontro's financial records to confirm
compliance with this representation.
2. L.L. XXXXXXXXXXXXX COMMON STOCK. Upon the written request
of Aura Ontro shall include any of the shares of Ontro common stock currently
owned by the L.L. Xxxxxxxxxxxxx Company in any registration statement filed by
Ontro pursuant to section C.1.(b) of this Agreement provided the same shares are
not then able to be freely transferred by the L.L. Xxxxxxxxxxxxx Company
pursuant to Rule 144(k) under the United States Securities Act of 1933.
3. LIMITATION ON FURTHER SALES OF SECURITIES. During the term
of this Agreement without the prior written consent of Aura which consent shall
not be unreasonably withheld, Ontro shall not issue additional equity securities
of Ontro other than:
(a) Securities issued to Unilever its affiliates or
designees;
(b) Securities issued for fair value to its
non-employee directors with a value no greater then $15,000 per month;
(c) Options issued pursuant to its 1996 Stock Option
Plan for no more then a total of 20,000 shares;
(d) Common stock or options issued in lieu of
payments due to current officers, directors, employees and non-employee
professionals.
9
F. CONDITION TO PERFORMANCE OF AGREEMENT. Notwithstanding any other
-------------------------------------
provision of this agreement to the contrary, this agreement shall not become
effective and the Parties shall not be required to perform their respective
obligations hereunder at any time prior to the last to occur of (i) the
consent of the Ontro shareholders to the issuance of the Warrants as defined
in the Prior Agreement and to this agreement as required by Rule 4350(i) of
The Nasdaq Stock Market, Inc. ("Rule 4350(i)"), or (ii) the receipt of an
exemption issued by The Nasdaq Stock Market, Inc. from the shareholder
consent requirement of Rule 4350(i) and (iii) this issuance to Aura of the
Warrants as defined in the Prior Agreement.
G. OTHER TERMS
-----------
1. SUCCESSORS AND ASSIGNS. The obligation to pay the finder's
fee is binding on Ontro and on its successors and assigns.
2. COMPLETE AGREEMENT; MODIFICATION. This Agreement
constitutes the complete agreement of the parties on the subject matter hereof.
This agreement may not be modified except by a writing signed by both parties
that specifically references that this Agreement is being changed.
3. NO REPRESENTATIONS. Each party has conducted its own
investigation of all facts and circumstances surrounding this Agreement and
hereby deems that investigation to be sufficient. Neither party is relying upon
any representations or statements made, or not made, by the other in entering
into this Agreement and related agreements. Each party hereby waives the right
to contend otherwise in the future.
4. GOVERNING LAW, VENUE. This Agreement shall be governed by
and construed under the laws of the State of California, irrespective of its
choice of law principles. Venue for any action brought in connection with the
subject matters of this Agreement shall be in a court of competent jurisdiction
located in San Diego County, California.
5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7. NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or, upon
deposit with the United States Post Office, by registered or certified mail, or
upon deposit with a recognized overnight air courier who requires and obtains a
signature from the recipient, in each case postage prepaid and addressed to the
party to be notified at the address indicated for such party on the signature
page hereof, or at
10
such other address as such party may designate by 10 days'
advance written notice to the other party.
8. SPECIFIC PERFORMANCE. The parties agree that the terms of
this agreement can be enforced by specific performance in addition to all other
remedies, with any bond requirement waived.
9. SEVERABILITY. In the event that any term of this agreement
is found to be invalid or unenforceable, the remaining terms shall remain in
full force and effect.
[THIS PORTION OF THE PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE TO FOLLOW]
11
10. BINDING EFFECT; AUTHORITY. Each party warrants and
represents that it has the power to enter into this Agreement and be bound by
the terms thereof. The persons signing below warrant and represent that they
have the power to bind their respective companies to this Agreement.
ACCEPTED AND AGREED:
Ontro, Inc.
a California corporation
By: /S/ XXXXX X. XXXXXXX
---------------------------
Xxxxx X. Xxxxxxx, President
Aura (Pvt.) Ltd.
a Pakistani corporation
By: /S/ XXXXX XXXXXXX
Print Name: Xxxxx Xxxxxxx
Its: Agent/Atty-in-Fact
12
EXHIBIT A
---------
FORM OF WARRANTS
A
EXHIBIT B
---------
FORM OF STOCK PURCHASE AGREEMENT
B
EXHIBIT C
---------
EXCLUSIVE FINDER'S FEE AGREEMENT
DATED JANUARY 19, 2001
C
EXHIBIT 10.20
FIRST AMENDMENT OF EXCLUSIVE FINDER'S FEE AGREEMENT
This First Amendment of Exclusive Finder's Fee Agreement ("Amendment")
is entered into on August 30, 2001, by and between Ontro, Inc., a California
corporation ("Ontro") and Aura (Pvt.) Ltd., a Pakistani corporation ("Aura").
Ontro and Aura are collectively referred to herein as the "Parties." Unless
otherwise defined herein, capitalized terms shall have the meanings given them
in the Exclusive Finder's Fee Agreement dated as of May 22, 2001 between Ontro
and Aura (the "Agreement").
RECITALS
WHEREAS, the market price of Ontro's common stock has declined since
the execution and delivery of the Agreement so that the common stock purchase
price and the warrant exercise price, respectively, specified in the Agreement
is at a premium to the market and not at a discount as intended by the Parties;
and
WHEREAS, the staff of The Nasdaq Stock Market has indicated that the
provisions of Section B.3 of the Agreement concerning an increase in the number
of directors and the appointment of four directors nominated by Aura to the
Board is not compliant with The Nasdaq Stock Market corporate governance rules:
and
WHEREAS, the Parties wish to amend and modify the terms of the
Agreement in accordance with the terms of this Amendment;
NOW, THEREFORE, the Parties hereby agree as follows:
1. AMENDMENT OF SECTION A OF THE AGREEMENT.
A. Section A.1. of the Agreement is hereby deleted in its entirety and
the following new Section A.1. is substituted therefor:
"1. FINDER. Aura agrees to use its best efforts to find one
or more purchasers from Ontro for a total of 2,000,000 shares
of authorized and un-issued common stock of Ontro for a
purchase price equal to no less then $0.80 per share
($1,600,000). In consideration therefore, Ontro agrees to
grant to Aura a warrant (the "Commitment Warrant") to
purchase 210,000 shares of Ontro common stock for $0.80 per
share, and with all other terms of the Commitment Warrant to
be the same as the Performance Warrant defined in paragraph
A.2.(b) below. The Commitment Warrant and the Performance
Warrant are sometimes collectively referred to herein as the
"Warrants"."
B. Section A.2.(b) of the Agreement is amended to delete therefrom the
reference to "$1.00" and to replace such deleted amount with a reference to
"$0.80."
C. Section A.3. of the Agreement is amended to delete therefrom the
reference to "1,600,000 Shares" and to replace such deletion with a reference to
"2,000,000 Shares."
2. AMENDMENT OF SECTION B OF THE AGREEMENT.
A. The Parties hereby agree that Section B.3. of the Agreement, which
is set forth in its entirety below, is hereby deleted from the Agreement and is
of no further force and effect:
3. BOARD OF DIRECTORS. Following the execution of this
Agreement and deposit of the Aura System Shares into the
Account as set forth in Section B. 8 herein, the Board of
Directors of Ontro (the "Ontro Board") shall appoint to
vacant seats on the Ontro Board four individuals nominated by
Aura and approved by the Ontro Board as follows:
i On May 22, 2001 the Ontro Board shall resolve to increase
the number of Directors on the Ontro Board to seven;
ii On May 22, 2001 the Ontro Board shall appoint Mir. Xxxxx
Xxxxxxx to a currently vacant seat on the Ontro Board;
iii Upon nomination of a second individual by Aura, the Ontro
Board shall appoint such nominee to a currently vacant seat on
the Ontro Board;
iv. Upon nomination of a third individual by Aura, one
Director who was a member of the Ontro Board prior to May 22,
2001 shall resign and the Aura nominee shall be appointed to
the newly vacant seat;
v. Upon nomination of a fourth individual by Aura, one
Director who was a member of the Ontro Board prior to May 22,
2001 shall resign and the Aura nominee shall be appointed to
the newly vacant seat;
The Ontro Board's approval of all nominees made by Aura shall
be promptly given and approval shall not be unreasonably
withheld.
B. Section B.6. of the Agreement is deleted in its entirety and the
following new Section B.6 is substituted therefore:
"6. BREAK-UP FEE. If Ontro fails to close a committed purchase
of Shares for no less then $0.80 per share from a Purchaser who
is ready, willing, and able to purchase Shares constituting
directly or indirectly a minimum of 250,000 Shares for a minimum
of $200,000 up to a maximum of 2,000,000 Shares for $1,600,000,
and such purchase is on other terms that are acceptable to
Ontro, which acceptance shall not be unreasonably withheld, then
Ontro shall pay Aura the fees set forth in paragraph A.2. above
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notwithstanding Ontro did not receive the funds or sell the
Shares. The Performance Warrant issued to Aura in such case
shall have all of the same registration rights and other rights
set forth in Section C, below."
C. Section B.8.(c) of the Agreement is hereby amended to delete
reference to "$1.00" at the end of the second sentence of such Section and to
replace such deletion with "$0.80".
D. Remaining Sections B.4. through B.8. of the Agreement are hereby
redesignated as Sections B.3. to B.7., respectively
3. RIGHT TO TERMINATE INVESTMENT OBLIGATION. Notwithstanding any
provision of the Agreement or this Amendment to the contrary, Aura shall be
entitled to terminate the Agreement as to any obligations not then performed by
either of the Parties and recover all securities deposited by Aura and all
proceeds of sale of such securities if the Ontro shareholders fail to elect
Aura's nominee(s) to the Ontro Board of Directors at any meeting of Ontro
shareholders held to elect directors following the date of the Agreement.
4. NO FURTHER CHANGES. Except as otherwise set forth in Sections 1
through 3 of this Amendment, the Agreement shall remain in full force and effect
with no further changes.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be
executed as of August 30, 2001.
Ontro, Inc.
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx, President
Aura (Pvt.) Ltd.
a Pakistani corporation
By: /s/ Mir Xxxxx Xxxxxxx
----------------------------
Mir Xxxxx Xxxxxxx
Its: Agent/Attorney-in-Fact
3
