CONTRIBUTION AND INVESTMENT
AGREEMENT
This Contribution
and Investment Agreement (“Investment Agreement”),
dated November 20, 2005, is by and among JJJ-RT, LLC
(“JJJ-RT”), whose address is 30700 Carter Street,
Solon, OH 44139, Sentex Sensing Technologies, Inc.
(“Sentex”) whose address is 1801 East 9
th St Suite 1501, Cleveland, OH 44114, Regency
Technology, Ltd (“Regency”), an Ohio limited liability
company and wholly owned subsidiary of Sentex, and Regency
Acquisition, LLC, a wholly owned limited liability company of
Regency (“New LLC”).
(A) CONTRIBUTION OF REGENCY
BUSINESS
Regency hereby
contributes all of its right, title and interest in and to all of
its assets to New LLC, and New LLC hereby assumes all of the
obligations of Regency (whether known or unknown) (other than all
amounts due from the loan from Robert S. Kendall in the principal
amount of $200,000 and inter-company accounts payable and
receivable between Regency and Sentex in the amount of $47,000) and
agrees to discharge all such obligations as and when they become
due. Regency will execute all necessary and proper documents in
order to assign and transfer good and marketable title of such
assets.
JJJ-RT will make
an investment in New LLC in the aggregate amount of up to $800,000
(the “Investment”) under the following terms and
conditions:
(1) Funds
will be invested at such times as the executive management of New
LLC determines such funds are necessary within the terms and
condition of this Section (B) and make a request for such
funds from JJJ-RT.
(2) JJJ-RT
can purchase a 1% equity interest for each $10,000 investment in
New LLC; provided that until the earlier of (a) any time at
which Sentex or one of its operating subsidiaries is actively
carrying on another trade or business, or (b) January 31,
2006 (the “Event Date”), JJJ-RT may not acquire more
than 50% of the equity interests in New LLC.
(3) If the
executive management determines that more than $500,000 in funds
are required to be invested in New LLC prior to the Event Date,
then such funds may be invested in New LLC as a loan, which
principal amount of the loan may be converted into equity interests
of New LLC after the Event Date at a rate of 1% of an equity
interest for each $10,000 of principal that is converted. Upon
conversion of any such loans, all accrued interest on that portion
of the converted principal will be forgiven.
(4) JJJ-RT
may not purchase more than 80% of equity interests in New LLC,
whether by a direct investment in cash or upon conversion of any
loans under the terms of this Section (B).
(5) Nothing
in this Section (B) is intended to prohibit JJJ-RT from making
or proposing to make other investments in New LLC that are agreed
or consented to by Regency.
(1) As
soon as practicable after the closing, the name of New LLC will be
changed to “Regency Technologies, Ltd.” and the name of
Regency will be changed to “RT Holding,
LLC.”
(2) New
LLC will enter into a note with Julius Hess to provide for the
repayment of any remaining loans outstanding with Julius Hess. The
note shall bear interest at 0% for three months, and then at prime
thereafter, and be payable in not more than 6 monthly
installments beginning December 1, 2005, pre-payable without
penalty and to mature May 1, 2006.
(3) At
this closing, Sentex will assign, and New LLC will assume, with the
consent of NCP Capital Partners, the lease for the premises at 3700
Carter St., Suite F, Solon, OH 44139, pursuant to the
Assignment attached hereto as Exhibit 1.
(4) At
this closing the Operating Agreement of New LLC in the form
attached hereto as Exhibit 2 will be executed and delivered by
both parties.
(D) REPRESENTATIONS AND WARRANTIES OF
REGENCY AND SENTEX
(1) STATUS
OF REGENCY AND SENTEX
Regency is a
validly existing Ohio limited liability company, and has all
necessary authority to own its properties and carry on its
business, including but not limited to the transaction contemplated
by this Investment Agreement.
Sentex is a New
Jersey corporation in good standing, and has all necessary
authority to own its properties and carry on its business,
including but not limited to the transaction contemplated by this
Investment Agreement.
(2) AUTHORITY AND VALIDITY
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