-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MbhGLsw8ZU6U1Ett8Z7PwXrS3MzdsvYw74WtIkmA69c6fdMqn+NjHKwaq1dRkF0V 1sgaZlSWlc5iYQ0/6w0sFQ== 0001005477-98-001456.txt : 19980507 0001005477-98-001456.hdr.sgml : 19980507 ACCESSION NUMBER: 0001005477-98-001456 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19980414 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980506 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BCAM INTERNATIONAL INC CENTRAL INDEX KEY: 0000856143 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 133228375 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10420 FILM NUMBER: 98611689 BUSINESS ADDRESS: STREET 1: 1800 WALT WHITMAN RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5167523550 MAIL ADDRESS: STREET 1: 1800 WALT WHITMAN RD CITY: MELVILLE STATE: NY ZIP: 11747 FORMER COMPANY: FORMER CONFORMED NAME: BIOMECHANICS CORP OF AMERICA DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported: April 14, 1998) BCAM INTERNATIONAL, INC. --------------------------------------------------------------------- (exact name of registrant as specified in its charter) NEW YORK 0-18109 13-3228375 - ----------------------------- --------------------- ----------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification Number 1800 WALT WHITMAN ROAD, MELVILLE, NEW YORK 11747 ------------------------------------------------------------------------------- (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: (516) 752-3550 - -------------------------------------------------------------------------------- (Former name or address, if changed since last report) Item 5. Other Events a. Recent Sales of Unregistered Securities - Sale of common stock and warrants of the Company - On April 14, 1998 the Company commenced an offering of $2,000,000 of its common stock and warrants in a private placement to accredited investors. Such offering was completed on April 22, 1998. The offering raised aggregate proceeds of $2,000,000 for the purchase of 1,980,198 shares of common stock of the Company and warrants to purchase 250,000 shares of common stock at $2.05 for three years by seven accredited investors as follows:
Common Common Common Shares in Total shares Amount Shares escrow Common under Name of purchaser paid(b) issued (a) (a)(b) Shares (a) warrants ----------------- ------- ---------- --------- ---------- -------- Balmore Funds S.A. $ 850,000 631,189 210,395 841,584 106,250 Austost Anstalt Schaan $ 750,000 556,931 185,643 742,574 93,750 Beeston Investments Ltd. $ 200,000 148,515 49,505 198,020 25,000 Manor Investments $ 100,000 74,258 24,752 99,010 12,500 Ellis Enterprises $ 50,000 37,129 12,376 49,505 6,250 East Lane Corporation, Ltd. $ 50,000 37,129 12,376 49,505 6,250 ---------- --------- ------- --------- ------- Totals $2,000,000 1,485,151 495,047 1,980,198 250,000 ========== ========= ======= ========= =======
(a) Prior to "repricing", if any, as discussed below. (b) See below regarding proceeds and shares held in escrow pending the filing of a registration statement. - -------------------------- Of the amount raised by the Company, $500,000 and 495,145 shares are held in escrow pending the Company's filing of a registration statement covering the shares and shares underlying the warrants prior to June 13, 1998. The Company has agreed to register such shares and has agreed to penalties of 3% per month should the registration statement not be declared effective within 130 days. The number of shares issuable to these investors will be "repriced" in increments pursuant to a schedule. The increments are initially four $300,000 increments and then four $200,000 increments on eight occasions. The repricing increments commence with the effectiveness of a registration statement covering the shares, then one increment 60 days later and the remaining six increments in 30 day intervals thereafter. On such dates, the investor would receive the additional number of shares, if any, that result from the difference between the number of shares actually issued and the number of shares which would have been issued at 77% of the average closing bid price, as defined, for the five trading days immediately preceeding but not including, the "repricing" date. Each "repricing' calculation is made independent of the other "repricing" calculations. The operation of the "repricing" provision could result in significantly greater number of shares being issued than the amounts listed in the above table. The investors have agreed not to sell any shares before at least 120 days after the closing. The Company is exposed to significant penalties for failure to have a registration statement declared effective covering such shares within 130 days. The Company has agreed not to issue certain financings for 270 days after 2 issuance of all shares under the "repricing" provisions without the consent of the investors and has agreed to a right of first refusal as defined in the agreements. The Company has paid a placement agent a 6.5% fee in connection with the transaction. The $2,000,000 issuance of common stock and warrants will trigger the anti-dilution provisions of the 10%/13% Convertible Notes and the Company's currently outstanding Class B and Class E warrants. Anti-dilution computations have not yet been completed. The Registrant claims exemption from registration of this placement by virtue of Section 4(2) of the Securities Act of 1933. b. Restructure of 10%/13% Convertible Notes - Effective April 14, 1998 the Company and the holders of its 10%/13% Convertible Notes and related warrants entered into a First Amendment (and related Stock Pledge Agreement and Security Agreement) of the September 1997 Note Purchase Agreement in order to restructure the obligation. The key elements of the restructuring are as follows: (1) waiving of the Company's violations of the financial covenants at December 31, 1997, as well as certain other breaches of the agreement, (2) eliminating the financial covenants through April 16, 1999, (3) securing the obligation with a pledge of all of the assets of the Company (excluding the assets of Drew Shoe which are already pledged to a bank), including the stock of the Company's subsidiaries, (4) accelerating the maturity date for the obligation from September 19, 2002 to April 16, 1999, (5) cancellation of Class DD warrants to purchase 400,000 shares of common stock of the Company and (6) issuance to the holders a total of 10% of the common shares of the Company's subsidiaries Drew Shoe Corporation and BCAM Technologies, Inc., among other matters. The Company expects to take a significant charge to operations in 1998 in connection with the finalization of the restructuring of the debt. c. Change in Directors - Effective April 1, 1998, Mr. Charles Schulyer resigned from the Board of Directors of the Company. Mr. Schulyer continues in his full-time role as President and Chief Executive Officer of the Company's Drew Shoe Corporation subsidiary. Effective April 14, 1998, Mr. Joseph Jacobs, President of Wexford Management LLC (an investment management firm providing services for a series of investment partnerships, including Impleo, LLC the holder of $5,000,000 face amount of Convertible Notes, several public companies and several private investments) joined the Registrant's Board of Directors. Item 7. Financial Statements and Exhibits Exhibits 10.70 Form of Subscription Agreement between the Company and the investors in the April 1998 private placement of common stock and warrants 10.71 Form of Common Stock Purchase Warrant between the Company and the investors in the April 1998 private placement of common stock and warrants. 10.72 Escrow Agreement between the Company, the several investors and Grushko and Mittman (as escrow agent) in connection with the April 1998 private placement of common stock and warrants. 10.73 First Amendment, dated as of April 14, 1998, to Note Purchase Agreement dated September 19, 1997 between the Company and Impleo, LLC. 3 10.74 First Amendment, dated as of April 14, 1998, to Note Purchase Agreement dated September 19, 1997 between the Company and the members of the Kirr Marbach group. 10.75 Security Agreement dated as of April 14, 1998 between Wexford Management, LLC, as agent for the noteholders, and the Company. 10.76 Stock Pledge Agreement dated as of April 14, 1998 between Wexford Management, LLC, as agent for the noteholders, and the Company. Forward Looking Statements This Form 8-K contains forward-looking statements which involve risks and uncertainties. When used herein, the words "anticipate", "believe", "estimate" and "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual results, performance or achievements could differ materially from the results expressed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences are detailed from time to time in the Company's Securities and Exchange Commission reports. Historical results are not necessarily indicative of trends in operating results for any future period. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BCAM INTERNATIONAL, INC. By: /s/ Michael Strauss ------------------------------- Michael Strauss, President Chairman of the Board and Chief Executive Officer Date: May 4, 1998 5 EX-10.70 2 FORM OF SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT You (the "Subscriber" or "Purchaser" or "Holder") hereby agree to purchase, and BCAM International, Inc., a New York corporation (the "Company") hereby agrees to issue and to sell to the Subscriber, the number of shares of the Company's Common Stock, $.01 par value per share (the "Company Shares"), and an amount of Common Stock Purchase Warrants (the "Warrants") designated on the signature page hereof, in the form annexed hereto as Exhibit A. (The Company Shares are sometimes referred to herein as the "Shares" or "Common Shares"). (The Company Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants are collectively referred to herein as, the "Securities"). Upon acceptance of this Agreement by the Subscriber, the Company shall issue and deliver to the Subscriber the Company Shares and Warrants against payment, by federal funds (U.S.) wire transfer of the amount designated on the signature page hereof pursuant to the terms of a Funds Escrow Agreement annexed hereto as Exhibit B. The following terms and conditions shall apply to this subscription. 1. Subscriber's Representations and Warranties. The Subscriber hereby represents and warrants to and agrees with the Company that: (a) Information on Company. The Subscriber has been furnished with and has read the Company's most recent Form 10-KSB for the year ended December 31, 1996 and subsequent Forms 10-Q and 8-K as filed with the U.S. Securities and Exchange Commission (the "Commission") (collectively, with exhibits thereto, hereinafter referred to as the "Reports"). In addition, the Subscriber has received from the Company such other information concerning its operations, financial condition and other matters as the Subscriber has requested, and considered all factors the Subscriber deems material in deciding on the advisability of investing in the Securities (such information in writing is collectively, the "Other Written Information"). (b) Information on Subscriber. The Subscriber is an "accredited investor", as such term is defined in Regulation D promulgated by the Commission under the Securities Act of 1933, as amended, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Subscriber to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment. The Subscriber has the authority and is duly and legally qualified to purchase and own the Securities. (c) Correctness of Representations. The Subscriber represents that the foregoing representations and warranties are true and correct as of the date hereof and, unless the Subscriber otherwise notifies the Company prior to the Closing Date (as hereinafter defined), shall be true and correct as of the Closing Date. The foregoing representations and warranties shall survive the Closing Date. 2. Company Representations and Warranties. The Company represents and warrants to and agrees with the Subscriber that: (a) Due Incorporation. The Company and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company and each of its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a material adverse effect on the business, operations or prospects or condition (financial or otherwise) of the Company. (b) Outstanding Stock. All issued and outstanding shares of capital stock of the Company and each of its subsidiaries has been duly authorized and validly issued and are fully paid and non-assessable. (c) Authority; Enforceability. This Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights generally and to general principles of equity; and the Company has full corporate power and authority necessary to enter into this Agreement and to perform its obligations hereunder. (d) Additional Issuances. There are no outstanding agreements or preemptive or similar rights affecting the Company's common stock and no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, or agreements or understandings with respect to the sale or issuance of, any shares of common stock or equity of the Company or other equity interest in any of the subsidiaries of the Company, except as described in the Reports or Other Written Information. (e) Consents. No consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the Company, or any of its affiliates is required for execution of this Agreement, including, without limitation issuance and sale of the Securities, or the performance of the Company's obligations hereunder. (f) No Violation or Conflict. Assuming the representations and warranties of the Subscriber in Paragraph 1 are true and correct and the Subscriber complies with its obligations under this Agreement, neither the issuance and sale of the Securities nor the performance of its obligations under this Agreement by the Company will: (i) violate, conflict with, result in a breach of, or constitute a default (or an event which with the giving of notice of the lapse of time or both would be reasonably likely to constitute a default) under (A) the articles of incorporation, charter or bylaws of the Company, or any of its affiliates, (B) any decree, judgment, order, law, treaty, rule, regulation or determination applicable to the Company, or any of its affiliates of any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates or over the properties or assets of the Company, or any of its affiliates, (C) the terms of any bond, debenture, note or any other evidence of indebtedness, or any agreement, stock option or other similar plan, indenture, lease, mortgage, deed of trust or other instrument to which the Company, or any of its affiliates is a party, by which the Company, or any of its affiliates is bound, or to which any of the properties of the Company, or any of its affiliates is subject, or (D) the terms of any "lock-up" or similar provision of any underwriting or similar agreement to which the Company, or any of its affiliates is a 3 party; or (ii) result in the creation or imposition of any lien, charge or encumbrance upon the Securities or any of the assets of the Company, or any of its affiliates. (g) The Securities. The Securities upon issuance: (i) are, or will be, free and clear of any security interests, liens, claims or other encumbrances; (ii) have been, or will be, duly and validly authorized and on the date of issuance and on the Closing Date, as hereinafter defined, and the date the Warrants are exercised according to their terms, as the case may be, the Shares, and the Warrants and common stock issuable upon exercise of the Warrants, will be duly and validly issued, fully paid and nonassessable, and if permitted, free trading and unrestricted; (iii) will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company; (iv) will not subject the holders thereof to personal liability by reason of being such holders; and (v) the Company Shares, are quoted on, and are listed for trading on the NASDAQ SmallCap Market. The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such listing, and the Company has maintained all requirements for the continuation of such listing. (h) Litigation. There is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates that would materially affect the execution by the Company or the performance by the Company of its obligations under this Agreement. (i) Reporting Company. The Company is a publicly-held company whose common stock is (and has been for the past 90 days) registered pursuant to Section 12(g) of the 4 Securities Exchange Act of 1934 (the "1934 Act") and is duly listed for trading on the NASDAQ SmallCap Market. Pursuant to the provisions of the 1934 Act, the Company has timely filed all reports and other materials required to be filed thereunder with the Securities and Exchange Commission during the preceding twelve months, and is eligible presently and as of the Closing Date to file a Form S-1 to register the Company Shares. (j) No Market Manipulation. The Company has not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the common stock of the Company to facilitate the sale or resale of the Company Shares or affect the price at which the Reset Shares (as herein defined) may be issued. (k) Information Concerning Company. The Reports and Other Written Information contain all material information relating to the Company and its operations and financial condition as of their respective dates which information is required to be disclosed therein. Since the date of the financial statements set forth in the Reports, and except as modified in the Other Written Information, there has been no material adverse change in the Company's business, financial condition or affairs not disclosed in the Reports. The Reports and Other Written Information do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (l) Dilution. The number of Shares issuable upon Reset (as hereinafter defined) may increase substantially in certain circumstances, including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines prior to the Reset (as herein defined). The Company's executive officers and directors have studied and fully understand the nature of the Securities being sold hereby and recognize that they have a potential dilutive effect. The board of directors of the Company has concluded, in its good faith business judgment, that such issuance is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the Shares upon Reset is binding upon the Company and enforceable regardless of the dilution such issuance 5 may have on the ownership interests of other shareholders of the Company. (m) Stop Transfer. The Company has not issued, and will not issue any stop transfer order or other order impeding the sale and delivery of the Securities. (n) Defaults. Neither the Company nor any of its subsidiaries is in violation of its Certificate of Incorporation or ByLaws. Except as described in the Reports and Other Written Information, neither the Company nor any of its subsidiaries is (i) in default under or in violation of any other material agreement or instrument to which it is a party or by which it or any of its properties are bound or affected, which default or violation would have a material adverse effect on the Company, (ii) in default with respect to any order of any court, arbitrator or governmental body or subject to or party to any order of any court or governmental authority arising out of any action, suit or proceeding under any statute or other law respecting antitrust, monopoly, restraint of trade, unfair competition or similar matters, or (iii) in violation of any statute, rule or regulation of any governmental authority material to its business. (o) No Integrated Offering. Neither the Comany, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of NASDAQ SmallCap, as applicable, nor will the Company or any of its subsidiaries take any action or steps that would require registration of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings. The Company has not conducted and will not conduct any offering that will be integrated with the issuance of the Securities solely for purposes of Rule 4460(i) of the NASDAQ Stock Market, Inc.'s Marketplace Rules. (p) Intentionally Omitted. 6 (q) No General Solicitation. Neither the Company, nor any of its affiliates, nor to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Act) in connection with the offer or sale of the Securities. (r) Correctness of Representations. The Company represents that the foregoing representations and warranties are true and correct as of the date hereof and, unless the Company otherwise notifies the Subscriber prior to the Closing Date, shall be true and correct as of the Closing Date. The foregoing representations and warranties shall survive the Closing Date. 3. Regulation D Offering. This Offering is being made pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended, afforded by Rule 506 of Regulation D promulgated thereunder. On the Closing Date, the Company will provide an opinion acceptable to Subscriber from the Company's legal counsel opining on the availability of the Regulation D exemption as it relates to the offer and issuance of the Securities. A form of the legal opinion is annexed hereto as Exhibit C. 4. Issuance of Securities. Each certificate representing the Securities shall be stamped or otherwise imprinted with a legend substantially in the following form: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS." The Company agrees to reissue certificates representing the Securities without the legend set forth above at such time as (a) the holder thereof is permitted to dispose of such Securities pursuant to Rule 144(k) under the Act, (b) the Securities are sold to a purchaser or purchasers who (in the opinion of counsel to such purchasers, in form and substance reasonably satisfactory to the Company and its counsel) are able to dispose of the Securities 7 publicly without registration under the Act, or (c) the Securities are registered under the Act. 5. Redemption/Resale. (a) The Company may not redeem the Securities without the consent of the holder of the Securities. (b) Until the 120th day after the Closing Date, the Subscriber may not sell, transfer or convey the Securities, without the consent of the Company, except by operation of law. 6. Legal Fees/Commissions. The Company shall pay to counsel to the Subscriber its bill for $20,000 for services rendered to the Subscriber in reviewing this Agreement and other subscription agreements for the aggregate subscription amounts of up to $2,000,000. The Company will pay at the time of Closing a cash commission of six and one-half percent (6-1/2%) to certain placement agents. The commissions and legal fees will be payable out of funds held pursuant to a Funds Escrow Agreement to be entered into by the Company and Subscriber. Additional cash commissions of six and one-half percent (6-1/2%) will be payable to the placement agents in connection with gross proceeds from the Company's exercise of the Put described in Section 11 of this Subscription Agreement. 7. Covenants of the Company. The Company covenants and agrees with the Subscriber as follows: (a) The Company will advise the Subscriber, promptly after it receives notice of issuance by the Commission, any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending the use of any offering of any securities of the Company, or of the suspension of the qualification of the common stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose. (b) The Company shall promptly secure the listing of the Company Shares and Common Stock issuable upon the exercise of the Warrants upon each national securities exchange other than the Boston Exchange, or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official 8 notice of issuance) and shall maintain so long as any other shares of Common Stock shall be so listed, such listing of all Common Stock from time to time issuable upon exercise of the Warrants and upon Reset. The Company will obtain and maintain the listing and trading of its Common Stock on NASDAQ SmallCap Market, and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers ("NASD") and such exchanges, as applicable. The Company shall promptly provide to each Purchaser copies of any notices it receives regarding the continued eligibility of the Common Stock for listing on such exchanges or quotation systems, or any other exchange or quotation system on which the Common Stock is then listed. (c) The Company shall notify the SEC, NASD and applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Subscriber and promptly provide copies thereof to Subscriber. (d) Until at least three (3) years after the effectiveness of the Registration Statement on Form S-1 or such other Registration Statement described in Section 10.1(iv) hereof, the Company will cause its Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, will comply in all respects with its reporting and filing obligations under such Exchange Act, will comply with all requirements related to any registration statement filed pursuant to this Agreement and will not take any action or file any document (whether or not permitted by the Act or the Exchange Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said Acts, except as permitted herein. Until at least three (3) years after the Warrants have been converted into Common Stock, the Company will take all action within its power to continue the listing or trading of its Common Stock on the NASDAQ SmallCap Market and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the NASD and NASDAQ. 8. Covenants of the Company and Subscriber Regarding Indemnifications. 9 (a) The Company agrees to indemnify, hold harmless, reimburse and defend Subscriber against any claim, costs, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon Subscriber which results, arises out of or is based upon (i) any misrepresentation by Company or breach of any warranty by Company in this Agreement or in any Exhibits or Schedules attached hereto, or Reports or other Written Information; or (ii) any breach or default in performance by Company of any covenant or undertaking to be performed by Company hereunder. (b) Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company at all times against any claim, costs, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Company which results, arises out of or is based upon (a) any misrepresentation by Subscriber in this Agreement or in any Exhibits or Schedules attached hereto; or (b) any breach or default in performance by Subscriber of any covenant or undertaking to be performed by Subscriber hereunder. 9. Reset. (a) The amount of Company Shares issuable to the Subscriber shall be redetermined from time to time as described herein (the "Reset") and if appropriate additional shares of Common Stock (the "Additional Shares") will be issued and delivered to the Subscriber. The original purchase price set forth on the signature page of this Subscription Agreement (the "Purchase Price") shall be deemed the purchase price of all the Common Stock to be delivered pursuant to this Subscription Agreement. (b) The Reset shall be determined on the following dates (each a "Reset Date") for the designated amounts of the Purchase Price. The initial Reset Date shall be the effective date of the Registration Statement described in Section 10.1(iv) of this Subscription Agreement or at the Subscriber's election on the 180th day after the Closing Date if the Registration Statement has not been declared effective by such date, ("Trigger Date"). In the event the effective date of the Registration Statement described in Section 10.1(iv) of this Subscription Agreement is sooner than the 120th day after the Closing Date, then the Trigger Date shall be the 120th day after 10 the Closing Date. In the event any portion of the Common Shares comprising the Registration Escrow (as hereinafter defined) is released to the Company pursuant to Section 10.1(iv), then the Designated Portion of the Purchase Price shall mean that portion of the Purchase Price set forth on the signature page to this Subscription Agreement less the corresponding amount of Purchase Price returned to the Subscriber. To the extent a Registration Escrow is held in escrow on a Reset Date, then such Common Shares issuable in connection with such Registration Escrow will be deposited in escrow to be held pursuant to the Funds Escrow Agreement. Designated Portion of Purchase Price Date -------------- ---- 15% Trigger Date 15% 60 Days after Trigger Date 10% 90 Days after Trigger Date 10% 120 Days after Trigger Date 10% 150 Days after Trigger Date 10% 180 Days after Trigger Date 10% 210 Days after Trigger Date 10% 240 Days after Trigger Date 10% 270 Days after Trigger Date (c) On each Reset Date a number of Company Shares will be calculated for the designated portion of the Purchase Price by dividing the Designated Portion of the Purchase Price by a number equal to seventy-seven percent (77%) of the average closing bid price for the Common Stock on the NASDAQ SmallCap Market, or on any securities exchange or other securities market on which the Common Stock is then being traded, for the five trading days immediately preceding, but not including, the Reset Date (the "Average Price"). If the Average Price is less than $1.01 then the Company will issue to the Subscriber the number of shares of Common Stock obtained by subtracting (y) the number of shares obtained by dividing the Designated Portion of Purchase Price by $1.01 from (z) the number of shares obtained by dividing the Designated Portion of Purchase Price by the Average Price. (d) In no event will the Subscriber be required to return any Company Shares to the Company. Each Reset calculation shall be made independent of all other Reset 11 calculations. (e) The Company agrees to deliver the Additional Shares to the Subscriber in hand, no later than fourteen (14) days after the Reset Date (the "Delivery Date"). The Company understands that a delay in the delivery of the Additional Shares beyond the Delivery Date could result in economic loss to the Subscriber. As compensation to the Subscriber for such loss, the Company agrees to pay late payments to the Subscriber for late delivery of Additional Shares beyond the Delivery Date, in the amount of $100 per business day after the Delivery Date for each $10,000 of Designated Portion of Purchase Price for which a Reset has been calculated. The Company shall pay any payments incurred under this Section in immediately available funds upon demand. The late payment charges described above shall be payable through the date the Additional Shares are received in hand by the Subscriber. (f) Company Shares as defined and employed in this Subscription Agreement shall mean and include Additional Shares for all purposes including but not limited to Section 10 of this Subscription Agreement. (g) Nothing contained herein or in any document referred to herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Subscriber and thus refunded to the Company. 100 Registration Rights; Procedure; Indemnification. 10.1. Registration Rights. The Company hereby grants the following registration rights to holders of the Company Shares and the Warrants. (i) On one occasion, for a period commencing 50 days after the Closing Date, but not later than three years from the date hereof, the Company, upon a written request 12 therefor from any record holder or holders of more than 50% of the aggregate of the Company's Shares and Common Stock issuable upon exercise of the Warrants (the Company Shares and Common Stock issuable upon exercise of the Warrants being, the "Registrable Securities"), shall prepare and file with the SEC a registration statement under the Act covering the Registrable Securities which are the subject of such request. In addition, upon the receipt of such request, the Company shall promptly give written notice to all other record holders of the Registrable Securities that such registration statement is to be filed and shall include in such registration statement Registrable Securities for which it has received written requests within 20 days after the Company gives such written notice. Such other requesting record holders shall be deemed to have exercised their demand registration right under this Section 10.1. As a condition precedent to the inclusion of Registrable Securities, the holder thereof shall provide the Company with such information as the Company reasonably requests. The obligation of the Company under this Section 10.1(i) shall be limited to one registration statement. (ii) If the Company at any time proposes to register any of its securities under the Act for sale to the public, whether for its own account or for the account of other security holders or both, except with respect to registration statements on Forms S-4, S-8 or another form not available for registering the Registrable Securities for sale to the public, provided the Registrable Securities are not otherwise registered for resale by the Subscriber pursuant to an effective registration statement, each such time it will give at least 30 days' prior written notice to the record holder of the Registrable Securities of its intention so to do. Upon the written request of the holder, received by the Company within 30 days after the giving of any such notice by the Company, to register any of the Registrable Securities, the Company will cause such Registrable Securities as to which registration shall have been so requested to be included with the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent required to permit the sale or other disposition of the Registrable Securities so registered by the holder of such Registrable Securities (the "Seller"). In the event that any registration pursuant to this Section 10.1(ii) shall be, in whole or in part, an underwritten public offering of common stock of the Company, the number of shares of Registrable Securities to be included in such an underwriting may be reduced 13 by the managing underwriter if and to the extent that the Company and the underwriter shall reasonably be of the opinion that such inclusion would adversely affect the marketing of the securities to be sold by the Company therein; provided, however, that the Company shall notify the Seller in writing of any such reduction. Notwithstanding the forgoing provisions, the Company may withdraw any registration statement referred to in this Section 10.1(ii) without thereby incurring any liability to the Seller. (iii) If, at the time any written request for registration is received by the Company pursuant to Section 10.1(i), the Company has determined to proceed with the actual preparation and filing of a registration statement under the Act in connection with the proposed offer and sale for cash of any of its securities for the Company's own account, such written request shall be deemed to have been given pursuant to Section 10.1(ii) rather than Section 10.1(i), and the rights of the holders of Registrable Securities covered by such written request shall be governed by Section 10.1(ii) except that the Company or underwriter, if any, may not withdraw such registration or limit the amount of Registrable Securities included in such registration. (iv) The Company shall file with the Commission, within sixty (60) days of the Closing Date, and use its reasonable commercial efforts to cause to be declared effective a Form S-1 registration statement in order to register for resale and distribution under the Act, and Company Shares and all shares of Common Stock issuable upon exercise of the Warrants. The registration statement described in this paragraph must be declared effective by the Commission within 130 days of the Closing Date. The Company will register not less than 20,000 shares of Common Stock in the S-1 registration statement for each $10,000 of Purchase Price as set forth on the signature page hereto and one share of Common Stock for each share of Common Stock issuable upon exercise of the Warrants. These shares to be registered shall be reserved and set aside exclusively for the benefit of the Subscriber and not issued, employed or reserved for anyone other than the Subscriber. It is the intention of the parties that these shares include the Additional Shares described in Section 9 hereof. Such registration statement will be promptly amended or additional registration statements will be promptly filed by the Company as required to register additional shares of Common Stock issuable upon Reset. In the event the Company may employ an S-3 Registration Statement, then the 14 Company will file such form of registration statement in order to register the Registrable Securities. One-quarter of the Purchase Price and one-quarter of the Common Shares purchased as set forth on the signature page of this Subscription Agreement shall be held in escrow pursuant to the Funds Escrow Agreement annexed hereto as Exhibit B until the acceptance for filing by the Securities and Exchange Commission of the registration statement described in this Section 10.1(iv) ("Registration Escrow"). In the event the registration statement relating to the Registrable Securities is not filed within 60 days from the Closing Date then the Registration Escrow shall be employed as a non-exclusive remedy, to pay the damages described in Section 10.2(j) of this Subscription Agreement. In the event the Registration Statement is not filed within 130 days from the Closing Date, unless otherwise agreed to in writing by the Subscriber, then one-quarter of the Purchase Price shall be released to the Subscriber, and one-quarter of the Common Shares purchased as set forth on the signature page hereof shall be returnable to the Company. In such event the Company shall not be released from any of its obligations under this Subscription Agreement or any agreement delivered in connection herewith including the Company's obligations pursuant to this Section 10 and Reset provisions described in Section 9 of this Subscription Agreement except that the Company shall no longer be required to file a registration statement in connection with only those Common Shares released to the Company and damages shall not accrue to the Subscriber in relation to the Common Shares released to the Company from and after the date the corresponding portion of the Purchase Price is returned to the Subscriber. To the extent any part of the Purchase Price portion of the Registration Escrow is released to a Subscriber, then that portion of the Registration Escrow may, at the Subscriber's election, first be applied in satisfaction of payment by the Company of damages accrued to such Subscriber under Section 9(e) and Section 10.2(j). Anything to the contrary herein or in the Funds Escrow Agreement notwithstanding, the Company Shares component of the Registration Escrow will not be released to the Company until all outstanding monetary obligations to the Subscriber are satisfied. The Subscriber may elect to satisfy any such outstanding Company obligations by demanding the release from escrow of cash funds and/or Company Shares at a per share value equivalent to 77% of the lowest bid price of the Company's Common Stock on the NASDAQ SmallCap Market or on any exchange or other securities market on which the Common Stock is then being traded, for the five trading days prior to the date notice of such election is given to the 15 Company. It is not the intention of the Subscriber to appoint an underwriter in connection with the S-1 registration statement described in this Section 10.1(iv). 10.2. Registration Procedures. If and whenever the Company is required by the provisions hereof to effect the registration of any shares of Registrable Securities under the Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as hereinafter provided): (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified in paragraph (a) above and comply with the provisions of the Act with respect to the disposition of all of the Registrable Securities covered by such registration statement in accordance with the Seller's intended method of disposition set forth in such registration statement for such period; (c) furnish to the Seller, and to each underwriter if any, such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or their disposition of the securities covered by such registration statement; (d) use its best efforts to register or qualify the Seller's Registrable Securities covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as the Seller or, in the case of an underwritten public offering, the managing underwriter shall reasonably request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (e) list the Registrable Securities covered by such registration statement with any securities exchange on which 16 the Common Stock of the Company is then listed; (f) immediately notify the Seller and each underwriter under such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (g) make available for inspection by the Seller, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by the Seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by the seller, underwriter, attorney, accountant or agent in connection with such registration statement. (h) at the request of the Seller, provided a demand for registration has been made pursuant to Section 10.1(i) or a request for registration has been made pursuant to Section 10.1(ii), the Registrable Securities will be included in a registration statement filed pursuant to this Section 10. In the event of a firm commitment underwritten public offering in which the Registrable Securities are so included, the lockup, if any, requested by the managing underwriter may not exceed ninety (90) days after the effective date thereof. (i) In connection with each registration hereunder, the Seller will furnish to the Company in writing such information with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws. In connection with each registration pursuant to Section 10.1(i) or 10.1(ii) covering an underwritten public offering, the Company and the Seller agree to enter into a written agreement with the managing underwriter in such form and containing such provisions as are customary in the securities business for such an arrangement between such underwriter and companies of the Company's size and investment stature. 17 (j) The Company and the Subscriber agree that the Seller will suffer damages if any registration statement required under Section 10.1(i) or 10.1(ii) above is not filed within 45 days after request by the Holder and not declared effective by the Commission within 130 days after such request [or 45 days and 130 days, respectively, after the Closing Date in reference to the Registration Statement on Form S-1 described in Section 10.1(iv)], and maintained in the manner and within the time periods contemplated by Section 10 hereof, and it would not be feasible to ascertain the extent of such damages with precision. Accordingly, if (i) the Registration Statement described in Sections 10.1(i) or 10.1(ii) is not filed within 45 days of such request, or is not declared effective by the Commission on or prior to the date that is 130 days after such request, or (ii) the registration statement on Form S-1 described in Section 10.1(iv) is not filed within 60 days after the Closing Date or not declared effective within 130 days of the Closing Date, or (iii) any registration statement described in Sections 10.1(i), 10.1(ii) or 10.1(iv) is filed and declared effective but shall thereafter cease to be effective (without being succeeded immediately by an additional registration statement filed and declared effective) for a period of time which shall exceed 30 days in the aggregate per year but not more than 20 consecutive calendar days (defined as a period of 365 days commencing on the date the Registration Statement is declared effective) (each such event referred to in clauses (i), (ii) and (iii) of this Section 10.2(j) is referred to herein as a "Registration Default"), then, for so long as such default shall continue, the Company shall pay in cash as Liquidated Damages to each holder of any Securities an amount equal to three (3%) percent per month for each thirty (30) days or part thereof thereafter of the Purchase Price of the Company Shares then owned of record by such holder together with the aggregate amount of the exercise prices of the Warrants whether or not exercised, as of immediately following the occurrence of such Registration Default. Payments to be made pursuant to this Section 10.2(j) shall be due and payable immediately upon demand in immediately available funds. 10.3. Expenses. All expenses incurred by the Company in complying with Section 10, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or "blue sky" 18 laws, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, fee of one counsel, if any, to represent all the Sellers, and costs of insurance are called "Registration Expenses". All underwriting discounts and selling commissions applicable to the sale of Registrable Securities, including any fees and disbursements of any special counsel to the Seller, are called "Selling Expenses". The Seller shall pay the fees of its own counsel, if any. The Company will pay all Registration Expenses in connection with the registration statement under Section 10. All Selling Expenses in connection with each registration statement under Section 10 shall be borne by the Seller in proportion to the number of shares sold by the Seller relative to the number of shares sold under such registration statement or as all Sellers thereunder may agree. 10.4. Indemnification and Contribution. (a) In the event of a registration of any Registrable Securities under the Act pursuant to Section 10, the Company will indemnify and hold harmless the Seller, each officer of the Seller, each director of the Seller, each underwriter of such Registrable Securities thereunder and each other person, if any, who controls such Seller or underwriter within the meaning of the Act, against any losses, claims, damages or liabilities, joint or several, to which the Seller, or such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities was registered under the Act pursuant to Section 10, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Seller, each such underwriter and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged 19 untrue statement or omission or alleged omission so made in conformity with information furnished by any such Seller, the underwriter or any such controlling person in writing specifically for use in such registration statement or prospectus. (b) In the event of a registration of any of the Registrable Securities under the Act pursuant to Section 10, the Seller will indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the Act, each officer of the Company who signs the registration statement, each director of the Company, each underwriter and each person who controls any underwriter within the meaning of the Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Registrable Securities were registered under the Act pursuant to Section 10, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the Seller will be liable hereunder in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Seller, as such, furnished in writing to the Company by such Seller specifically for use in such registration statement or prospectus, and provided, further, however, that the liability of the Seller hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the Registrable Securities sold by the Seller under such registration statement bears to the total public offering price of all securities sold thereunder, but not in any event to exceed the gross proceeds 20 received by the Seller from the sale of Registrable Securities covered by such registration statement. (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 10.4(c) and shall only relieve it from any liability which it may have to such indemnified party under this Section 10.4(c) if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 10.4(c) for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. (d) In order to provide for just and equitable contribution in the event of joint liability under the Act in any case in which either (i) the Seller, or any controlling person of the Seller, makes a claim for indemnification pursuant to this Section 10.4 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right 21 of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 10.4 provides for indemnification in such case, or (ii) contribution under the Act may be required on the part of the Seller or controlling person of the Seller in circumstances for which indemnification is provided under this Section 10.4; then, and in each such case, the Company and the Seller will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Seller is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, provided, however, that, in any such case, (A) the Seller will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 11.1. Future Offerings. (a) Offering Restriction. Until 270 days after the delivery of all Common Stock issuable upon Reset pursuant to Section 9 hereof, the Company and its subsidiaries will not issue any equity, or convertible debt or other securities or conduct any public or private offering without the consent of the Subscriber if such offering would or could result in the issuance of Common Stock or any other security of the Company that would be freely tradable on the books of the Company, with or without registration with the Securities and Exchange Commission or in reliance on any exemption from registration prior to the effective date of a Registration Statement described in Section 10.1(iv) relating to all the Registrable Securities. The foregoing restriction shall not apply in connection with an offering, to raise no more than $5,500,000 on terms more favorable to the investor, than the terms described herein, for the sole purpose of purchasing the Wexford BCAM interest. (b) Right of First Refusal. The Subscriber shall be given not less than fifteen (15) business days prior written notice of any proposed sale by the Company of its common stock or other securities in offerings made pursuant to the last sentence 22 of Section 11.1(a) above. The Subscriber shall have the right during the ten (10) business days following the notice to agree to purchase an amount of securities in the same proportion as being purchased in the aggregate offering to which this Subscription Agreement relates (i.e. $2,000,000 in the aggregate), of those securities proposed to be issued and sold, in accordance with the terms and conditions set forth in the notice of sale. In the event such terms and conditions are modified during the notice period, the Subscriber shall be given prompt notice of such modification and shall have the right during the original notice period or for a period of fifteen (15) business days following the notice of modification, whichever is longer, to exercise such right. 11.2. Obligation To Purchase. (a) Until two years from the Closing Date, the Subscriber agrees to purchase from the Company additional shares of Common Stock of the Company (the "Put Shares") for the aggregate consideration designated on the signature page hereof (the "Put"). (b) The agreement to purchase the Put Shares is contingent on the Company registering the Put Shares with the Securities and Exchange Commission on the Form S-3 or such other registration statement described in Section 10.1(iv) of this Subscription Agreement or another form suitable for such purpose and with such States designated by the Purchaser on or before 130 days from the Closing Date, and such registration statement being declared effective by the Securities and Exchange Commission on or before 130 days from the Closing Date. (c) The agreement to purchase is further contingent on the following: (1) As of the effective date of the registration statement described in Section 11.2(b), the Company will be a full reporting company with the class of Shares registered pursuant to Section 12(g) of the Securities Exchange Act of 1934. 23 (2) The Company's Common Stock will have traded at an average daily trading volume of 75,000 shares for the thirty trading days prior to the effective date of the registration statement described in Section 11.2(b) above, with an average daily closing bid price of not less than $1.30 per share for the same period. (3) The Company's financial condition will be at least equivalent to the Company's financial condition as reported in the Company's most recent financial statements included in the Reports and Other Information. (4) None of the following events of default ("Event of Default") shall have occurred or be continuing: (i) The Company shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed. (ii) Any money judgment, writ or similar process shall be entered or filed against Company or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of forty-five (45) days. (iii) Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company. (iv) Delisting of any of the Company's securities from the NASDAQ SmallCap Market or such other principal exchange on which such security is listed for trading, except for the Boston Exchange. (v) A concession by the Company of a default under any one or more obligation in an aggregate monetary amount in excess of $50,000. (vi) An SEC stop trade order or NASDAQ trading suspension, if either applies for a period of ten days or longer. (vii) Any representation or warranty of the Company made in this Subscription Agreement or in connection 24 herewith, or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith shall be false or misleading. (viii) The occurrence of a Registration Default as described in Section 10.2(j) of this Subscription Agreement. (ix) Any default by the Company of any covenant or undertaking described in this Subscription Agreement or any document delivered in connection herewith. (5) A Closing shall have occurred on the aggregate $2,000,000 offering described in this Subscription Agreement. (6) The Put Shares will be free-trading, unrestricted, unlegended and not subject to volume resale limitations. (7) Such other terms and condition as would reasonably and customarily be included in an Underwriter's Firm Commitment or Best Efforts underwriting agreement. (d) The Subscriber is required to purchase Put Shares within ten (10) business days of notice by the Company that the Company is exercising the Put ("Put Notice"). The date notice is given is the "Put Date". The Company's right to give a Put Notice expires two years from the Closing Date. The Company may not give such notice more often than once each twenty-one (21) days, nor within ten (10) days prior to nor within ten (10) days subsequent to a Reset Date, as defined in Section 9 of this Subscription Agreement. Unless otherwise agreed to by the Subscribers, Put Notices must be given to all Subscribers in the same proportion to the amounts agreed to be purchased by all Subscribers undertaking to purchase Put Shares. Payment for the Put Shares will be made upon receipt of the Put Shares by the Subscriber or an escrow agent to be designated by the Company and Subscriber. (e) The price per common share for each Put Share shall be 77% of the lowest bid price of the Company's Common Stock on the NASDAQ SmallCap Market, or on any securities exchange or other securities market on which the Common Stock is then being traded, for the five trading days commencing two 25 trading days prior to the Put Date and ending two trading days after the Put Date (the "Put Price"). (f) The aggregate purchase price of Put Shares for which each Put Notice may be given to all Subscribers is as follows: Average Per Common Average Daily Aggregate Dollar Share Closing Common Stock Purchase Price of Bid Price For Trading Volume For Put Shares For 15 Trading Days 15 Trading Days All Put Notices Prior to Put Date Prior to Put Date On a Put Date - ------------------ ------------------ ----------------- Between $1.30 Not Less Than Up to $500,000 and $1.60 75,000 Common Shares Between $1.61 Not Less Than Up to $750,000 and $1.90 100,000 Common Shares More than $1.90 Not Less Than Up to $1,000,000 125,000 Common Shares (g) The Put Price and number of Common Shares to be issued pursuant to this Section shall be subject to adjustment from time to time upon the happening of certain events while the Put right remains outstanding, as follows: (1) Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Put Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event. (2) Share Issuance. Subject to the provisions of this Section, if the Company at any time shall issue any shares of Common Stock prior to the exercise of the aggregate Put amounts (otherwise than as provided in Section 26 11.2(f)(1) or this subparagraph 11.2(f)(2) for a consideration less than the Put Price that would be in effect at the time of such issue, then, and thereafter successively upon each such issue, the Put Price shall be reduced as follows: (i) the number of shares of Common Stock outstanding immediately prior to such issue shall be multiplied by the Put Price in effect at the time of such issue and the product shall be added to the aggregate consideration, if any, received by the Company upon such issue of additional shares of Common Stock; and (ii) the sum so obtained shall be divided by the number of shares of Common Stock outstanding immediately after such issue. The resulting quotient shall be the adjusted Put Price. For purposes of this adjustment, the issuance of any security of the Company carrying the right to convert such security into shares of Common Stock or of any warrant, right or option to purchase Common Stock shall result in an adjustment to the Put Price upon the issuance of shares of Common Stock upon exercise of such conversion or purchase rights. (h) The Company shall not be entitled to exercise the Put without the consent of the Subscriber, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Subscriber and its affiliates on a Put Date, and (ii) the number of shares of Common Stock issuable upon the exercise of the Put with respect to which the determination of this proviso is being made on a Put Date, which would result in beneficial ownership by the Subscriber and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder, except as otherwise provided in clause (i) of such proviso. 12. Miscellaneous. (a) Notices. All notices or other communications given or made hereunder shall be in writing and shall be personally delivered or deemed delivered the day telecopied (with copy mailed by regular, certified or registered mail, or overnight courier) to the party to receive the same at its address set forth below or to such other address as either party shall hereafter give to the other by notice duly made under this Section: (i) if to the Company, to BCAM International, Inc., 27 1800 Walt Whitman Road, Melville, New York 11747, telecopier number: (516) 752-3558; and (ii) if to the Subscriber, to the name, address and telecopy number set forth on the first page hereof. (b) Closing. The consummation of the transactions contemplated herein shall take place at the offices of Grushko & Mittman, 277 Broadway, Suite 801, New York, New York 10007, upon the satisfaction of all conditions to Closing set forth in this Agreement. The closing date shall be the date one-half of the subscriber funds are transmitted by wire transfer to the Company and the other-half retained in escrow pursuant to Section 10.1(iv) hereof (the "Closing Date"). (c) Entire Agreement; Assignment. This Agreement represents the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by both parties. No right or obligation of either party shall be assigned by that party without prior notice to and the written consent of the other party. (d) Execution. This Agreement may be executed by facsimile transmission, followed by delivery of an executed original copy. (e) Law Governing this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the United States of America and the State of New York. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Both parties agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. 28 (f) Cancellation. Until a Closing actually takes place, either or both the Company or Subscriber may withdraw without penalty from the transactions described herein. (g) Automatic Termination. This Agreement shall automatically terminate without any further action of either party hereto if the Closing shall not have occurred by the seventh (7th) business day following the date this Agreement is accepted by the Subscriber, provided, however, that any such termination shall not terminate the liability of any party which is then in breach of the Agreement. Please acknowledge your acceptance of the foregoing Subscription Agreement by signing and returning a copy to the undersigned whereupon it shall become a binding agreement between us. Very truly yours, BCAM INTERNATIONAL, INC. By: -------------------------------- Dated: April ____, 1998 Accepted: BALMORE FUNDS S.A. Francois Morax P.O. Box 4603 Zurich, Switzerland Fax: 011-411-201-6262 By: ------------------------ Dated as of April 13, 1998 Purchase Price: $850,000.00 29 Common Shares Purchased: 841,584 Common Stock Purchase Warrants Obtained: 106,250 Aggregate Put Consideration: $1,275,000.00 Please acknowledge your acceptance of the foregoing Subscription Agreement by signing and returning a copy to the undersigned whereupon it shall become a binding agreement between us. Very truly yours, BCAM INTERNATIONAL, INC. By: ------------------------------- Dated: April ____, 1998 Accepted: BEESTON INVESTMENTS LTD. 119 Rothschild Boulevard Tel Aviv, Israel Fax: 011-972-25600201 By: ------------------------ Dated as of April 13, 1998 Purchase Price: $200,000.00 Common Shares Purchased: 198,020 Common Stock Purchase Warrants Obtained: 25,000 Aggregate Put Consideration: $300,000.00 EX-10.71 3 FORM OF COMMON STOCK PURCHASE WARRANT THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO BCAM INTERNATIONAL, INC. THAT SUCH REGISTRATION IS NOT REQUIRED. Right to Purchase 93,750 Shares of Common Stock of BCAM International, Inc. (subject to adjustment as provided herein) COMMON STOCK PURCHASE WARRANT No. 1 April 13, 1998 BCAM International, Inc., a corporation organized under the laws of the State of New York (the "Company"), hereby certifies that, for value received, BALMORE FUNDS S.A., or assigns, is entitled, subject to the terms set forth below, to purchase from the Company after April 13, 1998 at any time or from time to time before 5:00 p.m., New York time, on April 13, 2001 (the "Expiration Date"), up to 93,750 fully paid and nonassessable shares of Common Stock (as hereinafter defined), $.01 par value per share, of the Company, at a purchase price of $2.05 per share (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: (a) The term Company shall include BCAM International, Inc. and any corporation which shall succeed or assume the obligations of BCAM International, Inc. hereunder. (b) The term "Common Stock" includes (a) the Company's Common Stock, $.01 par value per share, as authorized on the date of the Agreement, (b) any other capital stock of any class or classes (however designated) of the Company, authorized on or after such date, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and the holders of which shall ordinarily, in the absence of contingencies, be entitled to vote for the election of a majority of directors of the Company (even if the right so to vote has been suspended by the happening of such a contingency) and (c) any other securities into which or for which any of the securities described in (a) or (b) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 1 (c) The term "Other Securities" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 5 or otherwise. 1. Exercise of Warrant. 1.1. Number of Shares Issuable upon Exercise. From and after the date hereof through and including the Expiration Date, the holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject to adjustment pursuant to Section 4. 1.2. Full Exercise. This Warrant may be exercised in full by the holder hereof by surrender of this Warrant, with the form of subscription attached as Exhibit A hereto (the Subscription Form") duly executed by such holder, to the Company at its principal office or at the office of its Warrant agent (as provided in Section 11), accompanied by payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price (as hereinafter defined) then in effect. 1.3. Partial Exercise. This Warrant may be exercised in part (but not for a fractional share) by surrender of this Warrant in the manner and at the place provided in subsection 1.2 except that the amount payable by the holder on such partial exercise shall be the amount obtained by multiplying (a) the number of shares of Common Stock designated by the holder in the Subscription Form by (b) the Purchase Price then in effect. On any such partial exercise, the Company, at its expense, will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes), may request, the number of shares of Common Stock for which such Warrant may still be exercised. 1.4. Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the "Determination Date") shall mean the Fair Market Value of a share of the Company's Common Stock. Fair Market Value of a share of Common Stock as of a Determination Date shall mean: (a) If the Company's Common Stock is traded on an exchange or is quoted on the National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") National Market System or the NASDAQ SmallCap Market, then the closing or last sale price, respectively, reported for the last business day immediately preceding the Determination Date. 2 (b) If the Company's Common Stock is not traded on an exchange or on the NASDAQ National Market System or the NASDAQ SmallCap Market but is traded in the over-the-counter market, then the mean of the closing bid and asked prices reported for the last business day immediately preceding the Determination Date. (c) Except as provided in clause (d) below, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree or in the absence of agreement by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided. (d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date. 1.5. Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the holder hereof acknowledge in writing its continuing obligation to afford to such holder any rights to which such holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such holder any such rights. 1.6. Trustee for Warrant Holders. In the event that a bank or trust company shall have been appointed as trustee for the holders of the Warrants pursuant to Subsection 3.1, such bank or trust company shall have all the powers and duties of a warrant agent appointed pursuant to Section 10 and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 2. Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share, together with any other 3 stock or other securities and property (including cash, where applicable) to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 3. Adjustment for Reorganization, Consolidation, Merger, etc. 3.1. Reorganization, Consolidation, Merger, etc. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 5. 3.2. Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the holders of the Warrants, if exercised, after the effective date of such dissolution pursuant to this Section 3 to a bank or trust company having its principal office in New York, NY, as trustee for the holder or holders of the Warrants. 3.3. Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 5. 4. Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by 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, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same 4 manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be increased to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise. 5. Chief Financial Officer's Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 10 hereof). 6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant. This Warrant entitles the holder hereof to receive copies of all financial and other information distributed or required to be distributed to the holders of the Company's Common Stock. 7. Assignment; Exchange of Warrant. Subject to compliance with applicable Securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a "Transferor") with respect to any or all of the Shares. On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the Transferor Endorsement Form"), to the Company, the Company at its expense but with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. 8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, 5 on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 9. Registration Rights. The holder of this Warrant has been granted certain registration rights by the Company. These registration rights are set forth in a Subscription Agreement entered into by the Company and the initial issuee of this Warrant at or prior to the issue date of this Warrant. The terms of the Subscription Agreement are incorporated herein by this reference. 10. Warrant Agent. The Company may, by written notice to the each holder of the Warrant, appoint an agent having an office in New York, NY for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. 11. Transfer on the Company's Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 12. Notices, etc. All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company. 13. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of New York. Any dispute relating to this Warrant shall be adjudicated in New York State. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of the date first written above. BCAM INTERNATIONAL, INC. By: ------------------------------- 6 Title: ---------------------------- Witness: - ------------------------------ 7 Exhibit A FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant) TO: BCAM INTERNATIONAL, Inc. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder, _______ shares of Common Stock of BCAM International, Inc. and herewith makes payment of $_______ therefor, and requests that the certificates for such shares be issued in the name of, and delivered to _______ whose address is _________________________________________. Dated:___________________ ------------------------------------------ (Signature must conform to name of holder as specified on the face of the Warrant) ------------------------------------------ (Address) 8 Exhibit B FORM OF TRANSFEROR ENDORSEMENT (To be signed only on transfer of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of BCAM International, Inc. to which the within Warrant relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of BCAM International, Inc. with full power of substitution in the premises. ================================================================================ Percentage Number Transferees Transferred Transferred ----------- ----------- ----------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ Dated:__________ , 19___ ------------------------------------ (Signature must conform to name of holder as specified on the face of the warrant) Signed in the presence of: - ------------------------------- ------------------------------------ (Name) (address) ------------------------------------ ACCEPTED AND AGREED: (address) [TRANSFEREE] - --------------------------------- (Name) EX-10.72 4 FUNDS ESCROW AGREEMENT FUNDS ESCROW AGREEMENT This Agreement is dated as of the 13th day of April, 1998 among BCAM INTERNATIONAL, INC. (the "Company"), BALMORE FUNDS S.A., AUSTOST ANSTALT SCHAAN, BEESTON INVESTMENTS LTD., MANOR INVESTMENTS, ELLIS ENTERPRISES, and EAST LANE CORPORATION LTD., ("Subscriber" or "Subscribers"), and GRUSHKO & MITTMAN (the "Escrow Agent"): W I T N E S S E T H: WHEREAS, the Company and Subscriber have entered into a Subscription Agreement ("Subscription Agreement") calling for the sale by the Company of Common Stock ("Company Shares") and 250,000 Common Stock Purchase Warrants for the aggregate purchase price of up to $2,000,000 to the Subscribers in the denominations set forth on Schedule A hereto, against payment therefor; and WHEREAS, the parties hereto require the Company to deliver the Notes against payment therefor, with such Notes and payment to be delivered to the Escrow Agent to be held in escrow and released by the Escrow Agent in accordance with the terms and conditions of this Agreement; and WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to the terms and conditions of this Agreement; NOW THEREFORE, the parties agree as follows: ARTICLE I INTERPRETATION 1.1. Definitions. Whenever used in this Agreement, the following terms shall have the following respective meanings: (a) "Agreement" means this Agreement and all amendments made hereto and thereto by written agreement between the parties; (b) "Company Shares" means Common Stock, $.01 par value per share, of the Company issued or to be issued to the Subscribers for the aggregate consideration of up to $2,000,000, together with such additional common shares which may be 1 deposited pursuant to Section 9(b) of the Subscription Agreement. (c) "Escrowed Payment" means the sum of up to $2,000,000 to be held in escrow by the Escrow Agent on behalf of the Company and the Subscribers as allocated on Schedule A hereto. (d) "Subscription Agreement" means the Subscription Agreement entered into or to be entered into by the parties in reference to the Company Shares and Warrants (including the original legal opinion referenced therein). (e) "Warrants" means the 250,000 Common Stock Purchase Warrants issued or to be issued to the Subscribers in the amounts designated on Schedule A hereto, the form of which Warrant is annexed to the Subscription Agreement as Exhibit A. (f) Collectively, this Agreement signed by the Company, Company Shares, Warrants, and Subscription Agreement are referred to as "Company Documents." (g) Collectively, this Agreement, Escrowed Payment and Subscription Agreement signed by a Subscriber without exhibits thereto are referred to as "Subscriber Documents." 1.2. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the Company Documents and Subscriber Documents and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no warranties, representations and other agreements made by the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. 1.3. Extended Meanings. In this Agreement words importing the singular number include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders. The word "person" includes an individual, body corporate, partnership, trustee or trust or unincorporated association, executor, administrator or legal representative. 1.4. Waivers and Amendments. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a 2 written instrument signed by all parties, or, in the case of a waiver, by the party waiving compliance. Except as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or future exercise of any other right, power or privilege hereunder. 1.5. Headings. The division of this Agreement into articles, sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.6. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to principles of conflict of laws. 1.7. Consents to Service of Process. The Company and the Subscribers each hereby irrevocably consent to the exclusive jurisdiction of the courts of the State of New York and of any Federal Court located in the State of New York, each as may have competent jurisdiction, in connection with any action, suit or other proceeding arising out of or relating to this Agreement or any action taken or omitted hereunder, and waive personal service of any summons, complaint or other process and agree that the service thereof may be made by certified or registered mail directed to such person at such person's address for purpose of notice hereunder. 1.8. Fees. The Company shall pay the Escrow Agent a fee of $5,000 in connection with the Escrow Agent's service hereunder in addition to the fee described in Section 6 of the Subscription Agreement. These fees shall be paid by deduction from the Escrowed Payment, but only if the balance of the Escrowed Payment is to be released to or on behalf of the Company pursuant to this Agreement. The Escrow Agent shall be paid an additional fee of $5,000 (without apportionment) on each anniversary of the date of this Agreement upon which the Escrow Agent is holding any Company Documents or Subscriber Documents. ARTICLE II STOCK TO BE DELIVERED TO THE ESCROW AGENT 3 2.1. Delivery of Company Documents to Escrow Agent. On or about the date hereof, the Company shall deliver to the Escrow Agent the Company Documents. 2.2 Delivery of Subscriber Documents to Escrow Agent. On or about the date hereof, the Subscriber shall deliver to the Escrow Agent the Subscriber Documents and the Escrowed Payment pursuant to the following wire transfer instructions: Citibank, N.A. 250 Broadway New York, New York 10007, USA ABA Number: 0210-00089 For Credit to: Grushko & Mittman IOLA Trust Account Account Number: 037-45208884 2.3. Intention to Create Escrow Over Company Documents and Subscriber Documents. The Subscriber and Company intend that the Company Documents and Subscriber Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement for their benefit as set forth herein. 2.4. Escrow Agent to Deliver Company Documents and Subscriber Documents. The Escrow Agent shall hold and release the Company Documents and Subscriber Documents only in accordance with the terms and conditions of this Agreement. ARTICLE III RELEASE OF ESCROWED DOCUMENTS 3.1. Release of Escrow. Subject to the provisions of Section 4.2, the Escrow Agent shall release the Company Documents and Subscriber Documents as follows: (a) Upon receipt by the Escrow Agent of the Company Documents and the corresponding Subscriber Documents, the Escrow Agent will simultaneously release the Company Documents to the Subscribers and release the corresponding Subscriber Documents to the Company except that one-quarter of each Escrowed Payment shall be retained in escrow and released in accordance with 4 Section 3.2 of this Agreement and one-quarter of the Company Shares allocated to each Subscriber (collectively one-quarter of the Escrowed Payments and one-quarter of the Company Shares is the "Registration Escrow"). The Registration Escrow shall be employed to satisfy any monetary obligations of the Company to each Holder pursuant to the Subscription Agreement including Sections 9 and 10 of the Subscription Agreement. The Company will provide written facsimile or original written instructions to the Escrow Agent as to the disposition of all funds releasable to the Company. (b) In the event the Escrow Agent does not receive Company Documents and the corresponding Subscriber Documents prior to April 15, 1998, then the Escrow Agent will return the Company Documents to the Company, and return the Subscriber Documents to the Subscribers. 3.2. Release of Escrow. (a) Upon receipt by the Escrow Agent of a notice ("Notice of Return") signed by a Holder, reciting that a Holder is entitled to receive all or part of the Registration Escrow designated on Schedule A hereto in accordance with the terms of the Subscription Agreement, the Escrow Agent shall promptly deliver a copy of such Notice of Return to the Company. If the Escrow Agent does not receive from the Company within three (3) business days after notice is given to the Company by the Escrow Agent, a written notice of objection stating the reasons for the objection in accordance with the terms of the Subscription Agreement ("Notice of Objection") signed by the Company, or if the Escrow Agent shall within such period receive a written consent signed by the Company to such return, then the Escrow Agent shall deliver to the Holder that amount of the Registration Escrow as is called for in the Notice of Delivery. If the Escrow Agent receives Notice of Objection from the Company within such three (3) business day period, the Escrow Agent shall continue to hold the Registration Escrow until otherwise authorized and directed to distribute the same pursuant to the provisions of Sections 3.3(a) or 3.3(b). (b) Upon receipt by the Escrow Agent of a notice ("Notice of Delivery") signed by the Company stating that the Company is entitled to receipt of the Registration Escrow or any portion thereof, in accordance with the provisions of the Subscription Agreement, and stating the reasons therefor, the 5 Escrow Agent shall promptly send a copy of such Notice of Payment to the Holder. If the Escrow Agent does not receive from the Holder within three (3) business days after notice is given to the Holder by the Escrow Agent, a written Notice of Objection stating the reasons for the objection in accordance with the terms of the Subscription Agreement signed by the Holder, or if the Escrow Agent shall within such period receive a written consent signed by the Holder, then the Escrow Agent shall deliver the Registration Escrow or such portion thereof to the Company in accordance with the Notice of Delivery. If the Escrow Agent receives a Notice of Objection from the Holder within such three (3) day period, then the Escrow Agent shall continue to hold the Registration Escrow until otherwise authorized and directed to distribute the same pursuant to the provision of Sections 3.3(a) or 3.3(b). 3.3. Joint Instructions. (a) Upon receipt by the Escrow Agent of joint written instructions ("Joint Instructions") signed by the Company and the Subscriber, it shall deliver the Company Documents and Subscriber Documents in accordance with the terms of the Joint Instructions. (b) Upon receipt by the Escrow Agent of a final and non-appealable judgment, order, decree or award of a court of competent jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Company Documents and Subscriber Documents in accordance with the Court Order. Any Court Order shall be accompanied by an opinion of counsel for the party presenting the Court Order to the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect that the court issuing the Court Order has competent jurisdiction and that the Court Order is final and non-appealable. 3.4. Acknowledgement of Company and Subscriber; Disputes. The Company and the Subscriber acknowledge that the only terms and conditions upon which the Company Documents and Subscriber Documents are to be released are set forth in Sections 3 and 4 of this Agreement. The Company and the Subscriber reaffirm their agreement to abide by the terms and conditions of this Agreement with respect to the release of the Notes and Escrowed Payment. Any dispute with respect to the release of the Notes and Escrowed Payment shall be resolved pursuant to Section 4.2 or by agreement between the Company and Subscriber. 6 ARTICLE IV CONCERNING THE ESCROW AGENT 4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's duties and responsibilities shall be subject to the following terms and conditions: (a) The Subscriber and Company acknowledge and agree that the Escrow Agent (i) shall not be responsible for or bound by, and shall not be required to inquire into whether either the Subscriber or Company is entitled to receipt of the Company Documents and Subscriber Documents pursuant to, any other agreement or otherwise; (ii) shall be obligated only for the performance of such duties as are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii) may rely on and shall be protected in acting or refraining from acting upon any written notice, instruction, instrument, statement, request or document furnished to it hereunder and believed by the Escrow Agent in good faith to be genuine and to have been signed or presented by the proper person or party, without being required to determine the authenticity or correctness of any fact stated therein or the propriety or validity or the service thereof; (iv) may assume that any person purporting to give notice or make any statement or execute any document in connection with the provisions hereof has been duly authorized to do so; (v) shall not be under any duty to give the property held by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its own similar property; and (vi) may consult counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and complete authorization and protection in respect of any action taken, suffered or omitted by Escrow Agent hereunder in good faith and in accordance with the opinion of such counsel. (b) The Subscriber and Company acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and that the Escrow Agent shall not be liable for any action taken by Escrow Agent in good faith and believed by Escrow Agent to be authorized or within the rights or powers conferred upon Escrow Agent by this Agreement. The Subscriber and Company, jointly and severally, agree to indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners, employees, agents and representatives for any action taken or omitted to be taken by Escrow Agent or any of them hereunder, including the fees of outside counsel and other costs and expenses of 7 defending itself against any claim or liability under this Agreement, except in the case of gross negligence or willful misconduct on Escrow Agent's part committed in its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a duty only to the Subscriber and Company under this Agreement and to no other person. (c) The Subscriber and Company jointly and severally agree to reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including counsel fees) incurred in connection with the performance of its duties and responsibilities hereunder. (d) The Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5) days prior written notice of resignation to the Subscriber and the Company. Prior to the effective date of the resignation as specified in such notice, the Subscriber and Company will issue to the Escrow Agent a Joint Instruction authorizing delivery of the Notes and Escrowed Payment to a substitute Escrow Agent selected by the Subscriber and Company. If no successor Escrow Agent is named by the Subscriber and Company, the Escrow Agent may apply to a court of competent jurisdiction in the State of New York for appointment of a successor Escrow Agent, and to deposit the Notes and Escrowed Payment with the clerk of any such court. (e) The Escrow Agent does not have and will not have any interest in the Company Documents and Subscriber Documents, but is serving only as escrow Subscriber, having only possession thereof. The Escrow Agent shall not be liable for any loss resulting from the making or retention of any investment in accordance with this Escrow Agreement. (f) This Agreement sets forth exclusively the duties of the Escrow Agent with respect to any and all matters pertinent thereto and no implied duties or obligations shall be read into this Agreement. (g) The Escrow Agent shall be permitted to act as counsel for the Subscriber or the Company, as the case may be, in any dispute as to the disposition of the Company Documents and Subscriber Documents, in any other dispute between the Subscriber and Company, whether or not the Escrow Agent is then holding the Company Documents and Subscriber Documents and 8 continues to act as the Escrow Agent hereunder. (h) The provisions of this Section 4.1 shall survive the resignation of the Escrow Agent or the termination of this Agreement. 4.2. Dispute Resolution: Judgments. Resolution of disputes arising under this Agreement shall be subject to the following terms and conditions: (a) If any dispute shall arise with respect to the delivery, ownership, right of possession or disposition of the Company Documents and Subscriber Documents, or if the Escrow Agent shall in good faith be uncertain as to its duties or rights hereunder, the Escrow Agent shall be authorized, without liability to anyone, to (i) refrain from taking any action other than to continue to hold the Company Documents and Subscriber Documents pending receipt of a Joint Instruction from the Subscriber and Company, or (ii) deposit the Company Documents and Subscriber Documents with any court of competent jurisdiction in the State of New York, in which event the Escrow Agent shall give written notice thereof to the Subscriber and the Company and shall thereupon be relieved and discharged from all further obligations pursuant to this Agreement. The Escrow Agent may, but shall be under no duty to, institute or defend any legal proceedings which relate to the Company Documents and Subscriber Documents. The Escrow Agent shall have the right to retain counsel if it becomes involved in any disagreement, dispute or litigation on account of this Agreement or otherwise determines that it is necessary to consult counsel. (b) The Escrow Agent is hereby expressly authorized to comply with and obey any Court Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow Agent shall not be liable to the Subscriber and Company or to any other person, firm, corporation or entity by reason of such compliance. ARTICLE V GENERAL MATTERS 5.1. Termination. This escrow shall terminate upon the release of all of the Company Documents and Subscriber Documents or at any time upon the agreement in writing of the Subscriber 9 and Company. 5.2. Notices. All notices, request, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given one (1) day after being sent by telecopy (with copy delivered by overnight courier, regular or certified mail): (a) If to the Company, to: BCAM International, Inc. 1800 Walt Whitman Road Melville, New York 11747 (516) 757-3558 (Telecopier) (b) If to the Subscriber, to the addresses and telecopier numbers set forth on Schedule A hereto. (c) If to the Escrow Agent, to: Grushko & Mittman Attorneys at Law 277 Broadway, Suite 801 New York, New York 10007 (212) 227-5865 (telecopier) or to such other address as any of them shall give to the others by notice made pursuant to this Section 5.2. 5.3. Interest. The Escrowed Payment and Registration Escrow shall not be held in an interest bearing account nor will interest be payable in connection therewith. 5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or obligation hereunder shall be assignable by any party without the prior written consent of the other parties hereto. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective legal 10 representatives, successors and assigns. 5.5. Invalidity. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 5.6. Counterparts/Execution. This Agreement may be executed in any number of counterparts and by different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission. 5.7. Agreement. Each of the undersigned states that he has read the foregoing Escrow Agreement and understands and agrees to it. BCAM INTERNATIONAL, INC. "Company" By: ------------------------------ BALMORE FUNDS S.A. "Subscriber" By: ------------------------------ 11 AUSTOST ANSTALT SCHAAN "Subscriber" By: ------------------------------ BEESTON INVESTMENTS LTD. "Subscriber" By: ------------------------------ MANOR INVESTMENTS "Subscriber" By: ------------------------------ ELLIS ENTERPRISES "Subscriber" By: ------------------------------ EAST LANE CORPORATION LTD. "Subscriber" By: ------------------------------ ESCROW AGENT: GRUSHKO & MITTMAN By: ------------------------------ 12
SCHEDULE A ============================================================================================= ESCROWED WARRANTS COMMON ALLOC. OF ALLOC. OF SUBSCRIBERS PAYMENT SHARES $500,000 COMPANY REGIST. SHARES OF ESCROW REGIST. ESCROW ============================================================================================= ============================================================================================= BALMORE FUNDS S.A. $ 850,000 106,250 631,189 and $212,500 210,395 Francois Morax 210,395 P.O. Box 4603 Zurich, Switzerland Fax: 011-411-201-6262 - --------------------------------------------------------------------------------------------- AUSTOST ANSTALT SCHAAN $ 750,000 93,750 556,931 and $187,500 185,643 7440 Fuerstentum 185,643 Lichenstein Landstrasse 163 Fax: 011-431-534532895 - --------------------------------------------------------------------------------------------- BEESTON INVESTMENTS LTD. $ 200,000 25,000 148,515 and $ 50,000 49,505 119 Rothschild Blvd. 49,505 Tel Aviv, Israel Fax: 011-972-25600201 - --------------------------------------------------------------------------------------------- MANOR INVESTMENTS $ 100,000 12,500 74,258 and $ 25,000 24,752 c/o Y. Englander 24,752 9 Aharonson Street Bnei-Brak, Israel Fax: - --------------------------------------------------------------------------------------------- ELLIS ENTERPRISES $ 50,000 6,250 37,129 and $ 12,500 12,376 42A Waterloo Road 12,376 London, England NW2 7UF Fax: 011-441-814509004 - --------------------------------------------------------------------------------------------- EAST LANE CORPORATION LTD. $ 50,000 6,250 37,129 and $ 12,500 12,376 5 Rehov Eloi 12,376 Jerusalem, Israel Fax: 011-972-2-679-9266 - --------------------------------------------------------------------------------------------- =============================================================================================
13 ============================================================================================= TOTALS 2,000,000 250,000 1,980,198 $500,000 495,047 =============================================================================================
14 EX-10.73 5 FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT FIRST AMENDMENT dated as of April 14, 1998 (the "First Amendment"), to the NOTE PURCHASE AGREEMENT (the "Agreement") dated as of September 19, 1997, among BCAM INTERNATIONAL, INC., a New York corporation (the "Company"), IMPLEO LLC, a Connecticut limited liability company (the "Purchaser"), and WEXFORD MANAGEMENT LLC, as agent for the Purchaser and the holders of Other Notes (the "Agent"). Capitalized terms used herein shall have the respective meanings ascribed thereto in the Agreement unless herein defined or the context shall otherwise require. W I T N E S S E T H WHEREAS, the Purchaser and the Company have heretofore entered into that certain Note Purchase Agreement dated as of September 19, 1997 (the "Agreement"). The Company has heretofore issued, and the Purchaser has heretofore purchased, the Company's 10%/13% convertible subordinated promissory notes (the "Notes") in the aggregate principal amount of $5,000,000 pursuant to the Agreement; WHEREAS, concurrently with the Agreement, the Company entered into that certain Note Purchase Agreement (the "Other Note Agreement"), on terms substantially identical to the terms contained in the Agreement, providing for the issuance of $1,000,000 principal amount of the Company's 10%/13% convertible subordinated promissory notes (the "Other Notes"); WHEREAS, the Company has requested the Purchaser to make certain adjustments to the covenants and other terms of the Agreement; WHEREAS, the Purchaser and the Company now desire to amend and/or waive certain provisions of the Agreement in the respects, but only in the respects, hereinafter set forth; WHEREAS, the Company has agreed to grant to the Agent, for the benefit of the Purchaser and the holders of the Other Notes collateral security for the prompt payment when due and performance by the Company of its obligations under the Notes and the Other Notes; WHEREAS, the Purchaser and the holders of the Other Notes desire to appoint Wexford Management LLC as collateral agent for the purpose of administering the collateral security; NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this First Amendment set forth in Section 2 hereof, and in consideration of good and valuable consideration the receipt of which is hereby acknowledged, the Purchaser and the Company hereby agree as follows: 1. AMENDMENTS 1.1 Maturity Date. Section 1.1 of the Agreement shall be and is hereby amended by substituting the words "a final maturity date of September 19, 2002" as such words appear in the second full sentence of said Section 1.1 with the words "a final maturity date of April 16, 1999". No later than April 30, 1998, the Company shall execute and deliver to the Purchaser one or more new Notes (the "New Notes") in the aggregate principal amount of $5,000,000, in form and substance identical to the Notes issued to the Purchasers pursuant to the Purchase Agreement, but bearing the amended Maturity Date. In exchange for the delivery by the Company of the New Notes, the Purchaser shall deliver to the Company the original Note issued pursuant to the Purchase Agreement. 1.2 Affirmative Covenants. Section 4.1 of the Agreement shall be and is hereby amended by deleting the existing Section 4.1 and replacing in its entirety as follows): "(n) Board of Directors. Concurrently with the effectiveness of this First Amendment, the Company agrees that it will appoint Joseph Jacobs to its board of directors. In addition, so long as the Notes are outstanding, the Purchaser shall have the right to designate a number of directors of the Company equal to at least 25% (and if the number of directors is not divisible by four, rounded up to the next whole number) of the number of such directors. The Company also agrees that it will cause each of Drew Shoe Corporation, an Ohio corporation ("Drew"), and BCAM Technologies, Inc., a Delaware corporation ("BT"), to appoint Kenneth Rubin to their respective boards of directors as the nominee of the Purchaser. In the case that any nominee designated by the Purchaser ceases to serve as a director of the Company, Drew or BT for any reason, the Company agrees that, it will nominate to its board of directors or the board of directors of Drew or BT, as the case may be, one or more replacement nominees designated by the Purchaser and use its best efforts to cause such replacement nominees to be elected." 1.3 Negative Covenants. Article 4 of the Agreement is hereby amended by adding new Sections 4.2 (k), 4.2(l) and 4.2(m), which shall provide in their entirety as follows: "(k) Transactions with Drew. Without the consent of the Purchaser, neither the Company nor any Subsidiary shall transfer any assets to Drew. Without the consent of the Purchaser, neither the Company nor Drew shall create any Subsidiaries of Drew. (l) No Lien on Cash. The Company agrees that it will not, nor permit any Subsidiary to, create any Lien on cash of the Company or such Subsidiary. (m) BCAM Technologies, Inc. - New York. The Company represents and warrants to the Purchaser that BCAM Technologies, Inc., a New York corporation ("BT-NY"), is inactive. The Company agrees that it will not transfer any assets to, or conduct any business through, BT-NY, and neither the Company nor any Subsidiary will create any Subsidiary of BT-NY. In addition, no later than April 30, 1998, the Company shall merge BT-NY with and into the Company, with the Company being the surviving corporation.." 1.4 Notices. Section 8.9 of the Agreement shall and is hereby amended by substituting the following address for the Purchaser and its counsel: 2 If to the Purchaser: Impleo LLC c/o Wexford Management LLC 411 West Putnam Avenue Greenwich, Connecticut 06830 Attention: Joseph Jacobs Tel: (203) 862-7020 Fax: (203) 862-7320 McDermott, Will & Emery 50 Rockefeller Plaza, 11th Fl. New York, New York 10020 Attention: Stephen B. Selbst, Esq. Telephone: (212) 547-5400 Telecopier: (212) 547-5444 1.5 Schedule II. Schedule II of the Agreement shall be and is hereby amended in its entirety by substituting Schedule II attached hereto in place of said Schedule II. 1.6 Schedule VI. Schedule VI of the Agreement shall be and is hereby amended in its entirety by substituting Schedule VI attached hereto in place of said Schedule VI. 2. WAIVERS 2.1 Events of Default. The Company hereby acknowledges the existence of Events of Default under the Agreement arising as a result of (a) the failure of the Company to make timely deliveries to required by Section 401(a) of the Agreement to the Purchaser by March 31, 1998; (b) the breaches by the Company of the debt service coverage covenant contained in Section 4.1(1) of the Agreement; (c) the breaches by the Company of the leverage ratio covenant contained in Section 4.1(m) of the Agreement; (d) the material inaccuracy of the representation made by the Company in Section 6.1(b) of the Agreement; and (e) the material inaccuracy of the representation made by the Company in Section 6.1(f) of the Agreement. The foregoing Events of Default are hereinafter referred to collectively as the "Breaches". 2.2 Waivers. The Purchaser hereby waives (a) all Events of Default arising under or related to the Breaches through and including the date hereof and (b) compliance by the Company with Sections 4.1(l) and 4.1(m) of the Agreement through and including April 16, 1999. 3. AGREEMENTS 3.1 Company Undertakings. In consideration of the agreement of the Purchaser to waive the existing Events of Default under the Agreement as set forth in Section 2.2 hereof and to consent to amend the Agreement in the respects set forth in Article 1 hereof, the Company and the Purchaser agree as follows: 3 (i) Concurrently herewith, each of the Company, BT and BCA Services, Inc., a New York corporation ("BCA"), shall execute and deliver in favor of the Agent a Security Agreement substantially in the form of Exhibit A attached hereto providing for the grant of a security interest in favor of the Agent with respect to the Collateral described therein; (ii) Concurrently herewith, the Company shall execute and deliver in favor of the Agent a Stock Pledge Agreement substantially in the form of Exhibit B attached hereto providing for the pledge of (A) ninety percent (90%) of the issued and outstanding Capital Stock of each of Drew and BT, (B) to one hundred percent (100%) of the issued and outstanding Capital Stock of HumanCad Systems, Inc., an Ontario corporation ("HCS"), and (C) one hundred percent (100%) of the issued and outstanding common stock of BCA. (iii) Concurrently herewith, the Company shall deliver to the Purchaser stock certificates evidencing the issuance to the Purchaser of 8.33% of the issued and outstanding shares of common stock of each of Drew and BT; (iv) Unless and until the Company shall have transferred to BT all of the Company's right, title and interest in any technology patents, pending patents, trademarks, license agreements, any General Intangibles (as such term is defined in the Security Agreement), and all other assets associated with the intelligent surface technology and micro-valve projects that the Company is engaged in (collectively, the "Intellectual Property"), the Purchaser and the holders of the Other Notes shall be entitled to receive a royalty (the "Noteholder Royalty") in the amount of ten percent (10%) of the gross revenues received by the Company or any Subsidiary from the sale, license royalty, use or any other form of exploitation of the Intellectual Property, payable pro rata in accordance with their holdings of Notes and the Other Notes. The Noteholder Royalty shall be paid to the Agent monthly within fifteen days following the end of each calendar month, and at the time of making each payment, the Company shall deliver a certificate, executed by its Chief Financial Officer as to the sources of and calculation of the amount of the Noteholder Royalty. 3.2 Cancellation of Warrants. On or prior to April 30, 1998 the Purchaser agrees to cancel and return to the Company 333,333 Warrants to purchase 333,333 Shares of the Company previously issued to the Purchaser pursuant to the Warrant Agreement. Concurrently with the delivery by the Purchaser to the Company of Warrant Certificate W-1 issued pursuant to the Warrant Agreement, the Company shall execute and deliver to the Purchaser one or more Warrant Certificates in the amount of 1,666,667 Warrants. 4. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT 4.1 Conditions. This First Amendment shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied: (a) First Amendment. The Purchaser shall have received executed counterparts of this First Amendment, duly executed by the Purchaser and the Company. (b) Opinion of Counsel. The Purchaser shall have received from Ruskin, Moscou, Evans & Faltischek, P.C., counsel to the Company, a favorable opinion dated the date 4 of this First Amendment, which opinion shall be in form and substance satisfactory to the Purchaser. (c) Security Agreement. The Agent and each of the Company, BT and BCA shall have executed and delivered the Security Agreement substantially in the form of Exhibit A attached hereto. (d) Stock Pledge Agreement. The Company and the Agent shall have executed and delivered the Stock Pledge Agreement substantially in the form of Exhibit B attached hereto. (e) Issuance of Shares. The Company shall have delivered to the Purchaser one or more stock certificates evidencing 8.33% of the issued and outstanding common stock of each of Drew and BT. (f) Amendment with Regard to Purchase and Sale of Other Notes. Concurrently with the consummation of the transactions contemplated by this First Amendment, the Company shall have entered into an amendment agreement with the holders of the Other Notes on terms satisfactory to the Purchaser. (g) Representations and Warranties; No Default. The representations and warranties of the Company contained in this First Amendment, the Security Agreement and the Stock Pledge Agreement (collectively, the "Transaction Documents") or any other agreement or document executed pursuant to the Transaction Documents shall be true in all material respects on and as of the date of this First Amendment; the Company shall have complied with all of its agreements and satisfied all conditions to be complied with or satisfied on or prior to the date of this First Amendment. (h) Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in substance and form to the Purchaser, and the Purchaser shall have received (i) copies of all corporate action taken to authorize the Transaction Documents (including, without limitation, a copy of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance by the Company of the Transaction Documents, certified by the Secretary or an Assistant Secretary of the Company), and (ii) all such counterpart originals or certified or other copies of such other documents as it may reasonably request. (i) Charter Documents. The Purchaser shall have received copies of the certificate of incorporation of each of Drew, BT, HCS and BCA, and by-laws of Drew, BT, HCS and BCA, certified in each case as being true and complete as of the date of this First Amendment. No later than April 30, 1998, the Company shall deliver to the Purchaser long-form good standing certificates for Drew, BT, HCS and BCA. (j) Payment of Fees. The Purchaser shall have received evidence that the Company has paid (i) the fees and disbursements of McDermott, Will & Emery, counsel to the Purchaser, in connection with the negotiation, preparation, approval, execution and delivery of 5 the Transaction Documents (ii) and any unpaid fees and disbursements owed to Berlack, Israels & Liberman LLP, prior counsel to the Purchaser. Upon receipt of all of the foregoing, this First Amendment shall become effective. 5. REPRESENTATIONS AND WARRANTIES 5.1 Representations, Warranties and Agreements of the Company. To induce the Purchaser to execute and deliver this First Amendment (which representations shall survive the execution and delivery of this First Amendment), the Security Agreement and the Stock Pledge Agreement, the Company represents and warrants to and agrees with the Purchaser: (a) Authorization and Validity. The Company has the power and authority and legal right to execute and deliver the Transaction Documents and to perform its obligations hereunder. The execution and delivery by the Company of the Transaction Documents and the performance of its obligations thereunder have been duly authorized by the Company, and each of the Transaction Documents constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. (b) No Violation. Neither the execution and delivery by the Company of each of the Transaction Documents nor the consummation of the transactions therein contemplated, nor compliance with the provisions hereof will (i) violate the Company's or any Subsidiary's certificate of incorporation or by-laws; (ii) violate any judgment, decree, order, statute, law, regulation or rule of any court or governmental authority to which the Company or any of its Subsidiaries or any of their respective properties may be subject; or (iii) (A) cause the acceleration of the maturity of any Debt or obligation of the Company or any of its Subsidiaries or (B) violate, or be in conflict with, or constitute a default under, or permit the termination of, or result in the creation of, any Lien upon any property of the Company or any of its Subsidiaries under any agreement or instrument to which such Person is a party or by which such Person (or its properties) may be bound. Neither the Company nor any of its Subsidiaries is (1) in violation of any term of its respective certificates of incorporation or by-laws, or (2) in default of or non-compliance with any material instrument, contract or agreement to which it is a party or of any judgment, decree, order, statute, rule or governmental regulation which is applicable to it or its business or properties. (c) Subsidiaries. The Subsidiaries and the capitalization thereof are listed on Schedule II hereto. (d) No Default. As of the date hereof and after giving effect to this First Amendment, no Default or Event of Default has occurred which is continuing, except to the extent expressly waived hereunder by the Purchaser. (e) Representations and Warranties of Agreement. All the representations and warranties contained in the Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof. 6 6. AGENCY PROVISIONS 6.1 Appointment. The Purchaser hereby appoints Wexford Management LLC as its lawful agent and attorney-in-fact, with full power of substitution, for all purposes under this First Amendment and all of the other Transaction Documents. The Purchaser acknowledges and agrees that the Agent will also act as agent for the holders of the Other Notes. This appointment is coupled with an interest, and the Company as well as the Purchaser and the holders of Other Notes (collectively, the "Noteholders") will rely upon the irrevocable nature of such appointment. 6.2 Acceptance of Appointment. The Agent hereby accepts such appointment, and agrees to exercise the powers granted hereunder and pursuant to the Transaction Documents with the same degree of care it would use if the entire risks and rewards were for its own account. 6.3 Application of Funds. In the event any monies received from the Company directly or pursuant to any Transaction Document is in an amount insufficient to pay all sums due to the Agent, the Purchaser and the holders of the Other Notes, the Agent shall first apply the sum received to its own out-of-pocket costs reasonably reimbursable under the terms of the Transaction Documents, and shall pay the balance to the Noteholders pro rata in accordance with the amounts then due and owing to each of them. 6.4 Agent's Liability. The Agent shall not be liable, except for its own gross negligence or willful misconduct, and except with respect to claims based upon such gross negligence or willful misconduct, that are successfully asserted against the Agent, and any Person acting as the successor to the Agent, from and against any and all losses, liabilities, claims, actions, damages and expenses, including reasonable attorneys' fees and disbursements, arising out of or in connection with the Agent's good faith acceptance of or performances of its duties and obligations under the Transaction Documents. The Agent shall be under no duty to institute any suit, or to take any remedial procedures or to enter any appearance or in any way defend any suit in which it may be made a defendant hereunder until it shall be indemnified as provided herein. The Agent may act pursuant to the advice of counsel with respect to any matter relating to the Transaction Documents, and shall not be liable for any action taken or omitted in accordance with such advice. 6.5 Indemnity. The Purchaser agrees to indemnify, save and hold the Agent (and any officer, director, manager, employee or agent thereof) harmless if the Agent shall at any time or from time to time suffer any damage, liability, loss, cost, expense (including reasonable attorneys' fees and expenses), penalties, impositions or fines arising out of or resulting from the performance of its duties hereunder; provided, however, that the Agent shall not be indemnified for any acts of gross negligence or willful misconduct. 6.6 Resignation of Agent. The Agent (or any successor Agent) may at any time resign as such by delivering to the Company, and the Noteholder at least fifteen (15) days' written notice of such resignation. Within fifteen days after the giving of such notice, the Agent shall affect a transfer of all funds still held in such Agent's possession to any successor Agent jointly designated by the Company and the Noteholders in writing, or in the event no such successor has been designated within such fifteen day period, to any court of competent 7 jurisdiction, whereupon the Agent shall be discharged of and from any and all further obligations arising in connection with the Transaction Documents. The Agent's sole responsibility following the delivery of a notice of resignation and prior to the delivery of the funds still under the Agent's control to a successor Agent or to a court of competent jurisdiction shall be to safeguard such funds until delivery thereof as aforesaid pursuant to a joint written disposition instruction by all the other parties hereto or a final order of a court of competent jurisdiction. 7. MISCELLANEOUS 7.1 Effect of Amendment. This First Amendment shall be construed in connection with and as part of the Agreement, and except as modified and expressly amended by this First Amendment, all terms, conditions and covenants contained in the Agreement and the Notes are hereby ratified and shall be and remain in full force and effect. From and after the effective date of this First Amendment, references to the Agreement shall mean the Agreement as amended by this First Amendment. 7.2 Limited Waiver. Upon and by virtue of this First Amendment becoming effective as herein contemplated, the waivers set forth in Section 2.2 hereof shall become effective. The Company understands and agrees that the waivers contained in Section 2.2 pertain only to the Events of Default described in Section 2.1 and to the extent so described and not to any other Default or Event of Default which may exist under, or any other matters arising in connection with, the Agreement or to any rights which the holders of the Notes have arising by virtue of any such other actions or matters. 7.3 No Waiver by Purchaser. The Purchaser's failure, at any time or times, to require strict performance by the Company of any provision of the Agreement shall not waive, affect or diminish any right of the Purchaser thereafter to demand strict compliance and performance therewith. Except as specifically provided herein, any suspension or waiver by the Purchaser of any breach of the Agreement shall not suspend, waive or affect any breach or Event of Default under the Agreement, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of the Company contained in the Agreement shall be deemed to have been suspended or waived by the Purchaser, except to the extent set forth in Section 2.2 hereof and unless such suspension or waiver is by an instrument in writing signed by the Purchaser specifying such suspension or waiver. 7.4 Notices, etc.. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this First Amendment may refer to the Agreement without making specific reference to this First Amendment but nevertheless all such references shall include this First Amendment unless the context otherwise requires. 7.5 Headings. The descriptive headings of the various Sections or parts of this First Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. 8 7.6 Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 7.7 Severability. If any part of this First Amendment shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining portions. 7.8 Counterparts. The execution hereof by the parties hereto shall constitute a contract between such parties for the uses and purposes hereinabove set forth, and this First Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, and all of which shall together constitute one agreement. IN WITNESS WHEREOF, the parties have executed this First Amendment to Note Purchase Agreement as of the date first written above. BCAM INTERNATIONAL, INC. By ------------------------------ Michael Strauss President IMPLEO LLC By ------------------------------ WEXFORD MANAGEMENT LLC, as Agent for Impleo LLC By: -------------------------- Joseph Jacobs President WEXFORD MANAGEMENT LLC, As Agent By ------------------------------ Joseph Jacobs Title: 9 SCHEDULE II SUBSIDIARIES Jurisdiction of Company's Name Organization Form Of Entity Percentage Ownership ---- ------------ -------------- -------------------- Drew Shoe Corporation Ohio corporation 90%* BCAM Technologies, Inc. Delaware corporation 90%* HumanCAD Systems, Inc. Canada corporation 100% BCAM Technologies, Inc. New York corporation 100% - Inactive BCA Services, Inc. New York corporation 100% of Common 0% of the Preferred Stock - ---------- * After giving effect to the stock issued to the Noteholders 10 SCHEDULE VI INTELLECTUAL PROPERTY 11 IMPLEO EXECUTION COPY BCAM INTERNATIONAL, INC. ------------------------------------ FIRST AMENDMENT Dated as of April 14, 1998 to Note Purchase Agreement Dated as of September 19, 1997 ------------------------------------ EX-10.74 6 FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT KIRR MARBACH EXECUTION COPY BCAM INTERNATIONAL, INC. ------------------------------------ FIRST AMENDMENT Dated as of April 14, 1998 to Note Purchase Agreement Dated as of September 19, 1997 ------------------------------------- FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT FIRST AMENDMENT dated as of April 14, 1998 (the "First Amendment"), to the NOTE PURCHASE AGREEMENT (the "Agreement") dated as of September 19, 1997, among BCAM INTERNATIONAL, INC., a New York corporation (the "Company"), Ralph E. Weil, Joseph Schueller, 621 Partners, R. Weil & Associates, Strafe & Company for the account of David M. Kirr, Strafe & Company for the account of Terry B. Marbach, and Strafe and Company for the account of Gregg T. Summerville, (the "KM Purchasers"), and WEXFORD MANAGEMENT LLC, as agent for the KM Purchasers and the holders of Other Notes (the "Agent"). Capitalized terms used herein shall have the respective meanings ascribed thereto in the Agreement unless herein defined or the context shall otherwise require. W I T N E S S E T H WHEREAS, the KM Purchasers and the Company have heretofore entered into that certain Note Purchase Agreement dated as of September 19, 1997 (the "Agreement"). The Company has heretofore issued, and the KM Purchasers has heretofore purchased, the Company's 10%/13% convertible subordinated promissory notes (the "Notes") in the aggregate principal amount of $1,000,000 pursuant to the Agreement; WHEREAS, concurrently with the Agreement, the Company entered into that certain Note Purchase Agreement (the "Impleo Note Agreement") with Impleo LLC, on terms substantially identical to the terms contained in the Agreement, providing for the issuance of $5,000,000 principal amount of the Company's 10%/13% convertible subordinated promissory notes (the "Impleo Notes"); WHEREAS, the Company has requested the KM Purchasers to make certain adjustments to the covenants and other terms of the Agreement; WHEREAS, the KM Purchasers and the Company now desire to amend and/or waive certain provisions of the Agreement in the respects, but only in the respects, hereinafter set forth; WHEREAS, the Company has agreed to grant to the Agent, for the benefit of the KM Purchasers and the holders of the Impleo Notes collateral security for the prompt payment when due and performance by the Company of its obligations under the Notes and the Impleo Notes; WHEREAS, the KM Purchasers and the holders of the Other Notes desire to appoint Wexford Management LLC as collateral agent for the purpose of administering the collateral security; NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this First Amendment set forth in Section 2 hereof, and in consideration of good and valuable consideration the receipt of which is hereby acknowledged, the KM Purchasers and the Company hereby agree as follows: 1. AMENDMENTS 1.1 Maturity Date. Section 1.1 of the Agreement shall be and is hereby amended by substituting the words "a final maturity date of September 19, 2002" as such words appear in the second full sentence of said Section 1.1 with the words "a final maturity date of April 16, 1999". No later than April 30, 1998, the Company shall execute and deliver to the KM Purchasers one or more new Notes (the "New Notes") in the aggregate principal amount of $1,000,000, in form and substance identical to the Notes issued to the KM Purchasers pursuant to the Purchase Agreement, but bearing the amended Maturity Date. In exchange for the delivery by the Company of the New Notes, the KM Purchasers shall deliver to the Company the original Note issued pursuant to the Purchase Agreement. 1.2 Notes. Section 8.9 of the Agreement shall and is hereby amended by substituting the address under "With a copy to" under Purchaser's address with the following: McDermott, Will & Emery 50 Rockefeller Plaza, 11th Fl. New York, New York 10020 Attention: Stephen B. Selbst, Esq. Telephone: (212) 547-5400 Telecopier: (212) 547-5444 1.3 Negative Covenants. Article 4 of the Agreement is hereby amended by adding new Sections 4.2(k), 4.2(l) and 4.2(m), which shall provide in their entirety as follows: "(k) Transactions with Drew. Without the consent of the KM Purchasers, neither the Company nor any Subsidiary shall transfer any assets to Drew Shoe Corporation, an Ohio corporation ("Drew"). With the consent of the KM Purchasers, neither the Company nor Drew shall create any Subsidiaries of Drew. (l) No Lien on Cash. The Company agrees that it will not, nor permit any Subsidiary to, create any Lien on cash of the Company or such Subsidiary. (m) BCAM Technologies, Inc. - New York. The Company represents and warrants to the KM Purchasers that BCAM Technologies, Inc., a New York corporation ("BT-NY"), is inactive. The Company agrees that it will not transfer any asset to, or conduct any business through, BT-NY, and neither the Company nor any Subsidiary will create any subsidiary of BT-NY. In addition, no later than April 30, 1998, the Company shall merge BT-NY with and into the Company, with the Company being the surviving corporation." 1.4 Schedule II. Schedule II of the Agreement shall be and is hereby amended in its entirety by substituting Schedule II attached hereto in place of said Schedule II. 2 1.5 Schedule VI. Schedule VI of the Agreement shall be and is hereby amended in its entirety by substituting Schedule VI attached hereto in place of said Schedule VI. 2. WAIVERS 2.1 Events of Default. The Company hereby acknowledges the existence of Events of Default under the Agreement arising as a result of (a) the failure of the Company to make timely deliveries required by Section 4.1(a) of the Agreement to the KM Purchasers by March 31, 1998; (b) the breaches by the Company of the debt service coverage covenant contained in Section 4.1(1) of the Agreement; (c) the breaches by the Company of the leverage ratio covenant contained in Section 4.1(m) of the Agreement; (d) the material inaccuracy of the representation made by the Company in Section 6.1(b) of the Agreement; and (e) the material inaccuracy of the representation made by the Company in Section 6.1(f) of the Agreement. The foregoing Events of Default are hereinafter referred to collectively as the "Breaches". 2.2 Waivers. The KM Purchasers hereby waive (a) all Events of Default arising under or related to the Breaches through and including the date hereof and (b) compliance by the Company with Sections 4.1(l) and 4.1(m) of the Agreement through and including April 16, 1999. 3. AGREEMENTS 3.1 Company Undertakings. In consideration of the agreement of the KM Purchasers to waive the existing Events of Default under the Agreement as set forth in Section 2.2 hereof and to consent to amend the Agreement in the respects set forth in Article 1 hereof, the Company and the KM Purchasers agree as follows: (i) Concurrently herewith, each of the Company and BCAM Technologies, Inc. ("BT") and BCA shall execute and deliver in favor of the Agent a Security Agreement substantially in the form of Exhibit A attached hereto providing for the grant of a security interest in favor of the Agent with respect to the Collateral described therein; (ii) Concurrently herewith, the Company shall execute and deliver in favor of the Agent a Stock Pledge Agreement substantially in the form of Exhibit B attached hereto providing for the pledge of (A) ninety percent (90%) of the issued and outstanding of the Capital Stock of each of Drew and BT, (B) one hundred percent (100%) of the issued and outstanding Capital Stock of HumanCad Systems, Inc., an Ontario corporation ("HCS"), and (C) one hundred percent (100%) of the issued and outstanding common stock of BCA Services, Inc., a New York corporation ("BCA"). (iii) Concurrently herewith, the Company shall deliver to the KM Purchasers such Certificates evidencing the issuance to the KM Purchasers of 1.67% of the issued and outstanding shares of common stock of each of Drew and BT; 3 (iv) Unless and until the Company shall have transferred to BT all of the Company's right, title and interest in any technology patents, pending patents, trademarks, license agreements, and all other assets associated with the intelligent surface technology and micro-valve projects that the Company is engaged in (collectively, the "Intellectual Property"), the KM Purchasers and the holders of the Other Notes shall be entitled to receive a royalty (the "Noteholder Royalty") in the amount of ten percent (10%) of the gross revenues received by the Company or any Subsidiary from the sale, license royalty, use or any other form of exploitation of the Intellectual Property, payable pro rata in accordance with their holdings of Notes and the Other Notes. The Noteholder Royalty shall be paid to the Agent monthly within fifteen days following the end of each calendar month, and at the time of making each payment, the Company shall deliver a certificate, at its Chief Financial Officer as to the sources of and calculation of the amount of the Noteholder Royalty. 3.2 Cancellation of Warrants. On or prior to April 30,, 1998 the KM Purchasers agrees to cancel and return to the Company 66,667 Warrants to purchase 66,667 Shares of the Company previously issued to the KM Purchasers pursuant to the Warrant Agreement. Concurrently with the delivery by the KM Purchasers to the Company of Warrant Certificates issued pursuant to the Warrant Agreement, the Company shall execute and deliver to the KM Purchasers one or more Warrant Certificates in the amount of 333,333 Warrants. 4. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT 4.1 Conditions. This First Amendment shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied: (a) First Amendment. The KM Purchasers shall have received executed counterparts of this First Amendment, duly executed by the KM Purchasers and the Company. (b) Opinion of Counsel. The KM Purchasers shall have received from Ruskin, Moscou, Evans & Faltischek, P.C., counsel to the Company, a favorable opinion dated the date of this First Amendment, which opinion shall be in form and substance satisfactory to the KM Purchasers. (c) Security Agreement. The Agent and each of the Company, BT and BCA have executed and delivered the Security Agreement substantially in the form of Exhibit A attached hereto. (d) Stock Pledge Agreement. The Agent and the Company shall have executed and delivered the Stock Pledge Agreement substantially in the form of Exhibit B attached hereto. (e) Issuance of Shares. The Company shall have delivered to the KM Purchasers stock certificates evidencing 1.67% of the issued and outstanding common 4 stock of each of Drew and BT, which shares shall be allocated pro rata among the holders of the notes. (f) Amendment with Regard to Purchase and Sale of Other Notes. Concurrently with the consummation of the transactions contemplated by this First Amendment, the Company shall have entered into an amendment agreement with the holders of the Impleo Notes on terms satisfactory to the Purchaser. (g) Representations and Warranties; No Default. The representations and warranties of the Company contained in this First Amendment, the Security Agreement and the Stock Pledge Agreement (collectively, the "Transaction Documents") or any other agreement or document executed pursuant to the Transaction Documents shall be true in all material respects on and as of the date of this First Amendment; the Company shall have complied with all of its agreements and satisfied all conditions to be complied with or satisfied on or prior to the date of this First Amendment. (h) Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in substance and form to the KM Purchasers, and the KM Purchasers shall have received (i) copies of all corporate action taken to authorize the Transaction Documents (including, without limitation, a copy of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance by the Company of the Transaction Documents, certified by the Secretary or an Assistant Secretary of the Company), and (ii) all such counterpart originals or certified or other copies of such other documents as it may reasonably request. (i) Charter Documents. The KM Purchasers shall have received copies of the certificate of incorporation of each of Drew, BT, HCS and BCA, and by-laws of Drew , BT, HCS and BCA, certified in each case as being true and complete as of the date of this First Amendment. No later than April 30, 1998, the Company shall deliver to the KM Purchasers long-form good standing certificates for Drew, BT, HCS and BCA. (j) Payment of Fees. The KM Purchasers shall have received evidence that the Company has paid the fees and disbursements of McDermott, Will & Emery, counsel to the Purchaser, in connection with the negotiation, preparation, approval, execution and delivery of the Transaction Documents and (ii) any unpaid fees and disbursements owed to Berlack, Israels & Liberman LLP, prior counsel to the KM Purchasers.. Upon receipt of all of the foregoing, this First Amendment shall become effective. 5. REPRESENTATIONS AND WARRANTIES 5.1 Representations, Warranties and Agreements of the Company. To induce the KM Purchasers to execute and deliver this First Amendment (which representations shall survive the execution and delivery of this First Amendment), the Security Agreement and the Stock Pledge Agreement, the Company represents and warrants to and agrees with the KM Purchasers: 5 (a) Authorization and Validity. The Company has the power and authority and legal right to execute and deliver the Transaction Documents and to perform its obligations hereunder. The execution and delivery by the Company of the Transaction Documents and the performance of its obligations thereunder have been duly authorized by the Company, and each of the Transaction Documents constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. (b) No Violation. Neither the execution and delivery by the Company of each of the Transaction Documents nor the consummation of the transactions therein contemplated, nor compliance with the provisions hereof will (i) violate the Company's or any Subsidiary's certificate of incorporation or by-laws; (ii) violate any judgment, decree, order, statute, law, regulation or rule of any court or governmental authority to which the Company or any of its Subsidiaries or any of their respective properties may be subject; or (iii) (A) cause the acceleration of the maturity of any Debt or obligation of the Company or any of its Subsidiaries or (B) violate, or be in conflict with, or constitute a default under, or permit the termination of, or result in the creation of, any Lien upon any property of the Company or any of its Subsidiaries under any agreement or instrument to which such Person is a party or by which such Person (or its properties) may be bound. Neither the Company nor any of its Subsidiaries is (1) in violation of any term of its respective certificates of incorporation or by-laws, or (2) in default of or non-compliance with any material instrument, contract or agreement to which it is a party or of any judgment, decree, order, statute, rule or governmental regulation which is applicable to it or its business or properties. (c) Subsidiaries. The Subsidiaries and the capitalization thereof are listed on Schedule II hereto. (d) No Default. As of the date hereof and after giving effect to this First Amendment, no Default or Event of Default has occurred which is continuing, except to the extent expressly waived hereunder by the KM Purchasers. (e) Representations and Warranties of Agreement. All the representations and warranties contained in the Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof. 6. AGENCY PROVISIONS 6.1 Appointment. The KM Purchasers hereby appoints Wexford Management LLC as its lawful agent and attorney-in-fact, with full power of substitution, for all purposes under this First Amendment and all of the other Transaction Documents. The KM Purchasers acknowledges and agrees that the Agent will also act as agent for the holders of the Impleo Notes. This appointment is coupled with an interest, and the Company as well as the KM Purchasers and the holders of Impleo Notes (collectively, the "Noteholders") will rely upon the irrevocable nature of such appointment. 6.2 Acceptance of Appointment. The Agent hereby accepts such appointment, and agrees to exercise the powers granted hereunder and pursuant to the Transaction 6 Documents with the same degree of care it would use if the entire risks and rewards were for its own account. 6.3 Application of Funds. In the event any monies received from the Company directly or pursuant to any Transaction Document is in an amount insufficient to pay all sums due to the Agent and the Noteholders, the Agent shall first apply the sum received to its own out-of-pocket costs reasonably reimbursable under the terms of the Transaction Documents, and shall pay the balance to the Noteholders pro rata in accordance with the amounts then due and owing to each of them. 6.4 Agent's Liability. The Agent shall not be liable, except for its own gross negligence or willful misconduct, and except with respect to claims based upon such gross negligence or willful misconduct, that are successfully asserted against the Agent, and any Person acting as the successor to the Agent, from and against any and all losses, liabilities, claims, actions, damages and expenses, including reasonable attorneys' fees and disbursements, arising out of or in connection with the Agent's good faith acceptance of or performances of its duties and obligations under the Transaction Documents. The Agent shall be under no duty to institute any suit, or to take any remedial procedures or to enter any appearance or in any way defend any suit in which it may be made a defendant hereunder until it shall be indemnified as provided herein. The Agent may act pursuant to the advice of counsel with respect to any matter relating to the Transaction Documents, and shall not be liable for any action taken or omitted in accordance with such advice. 6.5 Indemnity. The KM Purchasers agree, jointly and severally, to indemnify, save and hold the Agent harmless if the Agent shall at any time or from time to time suffer any damage, liability, loss, cost, expense (including reasonable attorneys' fees and expenses), penalties, impositions or fines arising out of or resulting from the performance of its duties hereunder; provided, however, that the Agent shall not be indemnified for any acts of gross negligence or willful misconduct. 6.6 Resignation of Agent. The Agent (or any successor Agent) may at any time resign as such by delivering to the Company, and the Noteholder at least fifteen (15) days' written notice of such resignation. Within fifteen days after the giving of such notice, the Agent shall affect a transfer of all funds still held in such Agent's possession to any successor Agent jointly designated by the Company and the Noteholders in writing, or in the event no such successor has been designated within such fifteen day period, to any court of competent jurisdiction, whereupon the Agent shall be discharged of and from any and all further obligations arising in connection with the Transaction Documents. The Agent's sole responsibility following the delivery of a notice of resignation and prior to the delivery of the funds still under the Agent's control to a successor Agent or to a court of competent jurisdiction shall be to safeguard such funds until delivery thereof as aforesaid pursuant to a joint written disposition instruction by all the other parties hereto or a final order of a court of competent jurisdiction. 7 7. MISCELLANEOUS 7.1 Effect of Amendment. This First Amendment shall be construed in connection with and as part of the Agreement, and except as modified and expressly amended by this First Amendment, all terms, conditions and covenants contained in the Agreement and the Notes are hereby ratified and shall be and remain in full force and effect. From and after the effective date of this First Amendment. References to the Agreement shall mean the Agreement as amended by this First Amendment. 7.2 Limited Waiver. Upon and by virtue of this First Amendment becoming effective as herein contemplated, the waivers set forth in Section 2.2 hereof shall become effective. The Company understands and agrees that the waivers contained in Section 2.2 pertain only to the Events of Default described in Section 2.1 and to the extent so described and not to any other Default or Event of Default which may exist under, or any other matters arising in connection with, the Agreement or to any rights which the holders of the Notes have arising by virtue of any such other actions or matters. 7.3 No Waiver by KM Purchasers. The KM Purchasers' failure, at any time or times, to require strict performance by the Company of any provision of the Agreement shall not waive, affect or diminish any right of the KM Purchasers thereafter to demand strict compliance and performance therewith. Except as specifically provided herein, any suspension or waiver by the KM Purchasers of any breach of the Agreement shall not suspend, waive or affect any breach or Event of Default under the Agreement, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of the Company contained in the Agreement shall be deemed to have been suspended or waived by the KM Purchasers, except to the extent set forth in Section 2.2 hereof and unless such suspension or waiver is by an instrument in writing signed by the KM Purchasers specifying such suspension or waiver. 7.4 Notices, etc.. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this First Amendment may refer to the Agreement without making specific reference to this First Amendment but nevertheless all such references shall include this First Amendment unless the context otherwise requires. 7.5 Headings. The descriptive headings of the various Sections or parts of this First Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. 7.6 Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 7.7 Severability. If any part of this First Amendment shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining portions. 8 7.8 Counterparts. The execution hereof by the parties hereto shall constitute a contract between such parties for the uses and purposes hereinabove set forth, and this First Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, and all of which shall together constitute one agreement. 9 IN WITNESS WHEREOF, the parties have executed this First Amendment to Note Purchase Agreement as of the date first written above. BCAM INTERNATIONAL, INC. By ------------------------------------ Michael Strauss President WEXFORD MANAGEMENT LLC, As Agent By ------------------------------------ Joseph Jacobs By ------------------------------------ Ralph E. Weil By ------------------------------------ Joseph Schueller 621 PARTNERS By ------------------------------------ R. WEIL & ASSOCIATES By ------------------------------------ [Signatures continued on following page] 10 STRAFE & COMPANY for the account of David M. Kirr By ------------------------------------ STRAFE & COMPANY for the account of Terry B. Marbach By ------------------------------------ STRAFE & COMPANY for the account of Gregg T. Summerville By ------------------------------------ 11 SCHEDULE II SUBSIDIARIES Company's Jurisdiction of Form Of Percentage Name Organization Entity Ownership ---- ------------ ------- --------- Drew Shoe Corporation Ohio corporation 90%* BCAM Technologies, Inc. Delaware corporation 90%* BCAM New York corporation 100% Technologies, Inc. Human Cad Systems Inc. Ontario corporation 100% BCA Services, Inc. New York corporation 100% of the Common Stock 0% of the Preferred Stock * After giving effect to the stock issued to the Noteholders, 12 EX-10.75 7 SECURITY AGREEMENT SECURITY AGREEMENT SECURITY AGREEMENT, dated as of April 14, 1998, made by BCAM INTERNATIONAL, INC., a New York corporation (the "Company"), BCA SERVICES, INC., a New York corporation ("BCA"), and BCAM TECHNOLOGIES, INC., a Delaware corporation ("BT" and collectively with the Company and BCA, the "Pledgors") in favor of WEXFORD MANAGEMENT LLC, a Connecticut limited liability company, as agent (the "Agent") for the Noteholders (as herein defined). W I T N E S S E T H : WHEREAS, pursuant to that certain Note Purchase Agreement dated as of September 19, 1997, between the Company and Impleo LLC, as amended by that certain First Amendment (the "First Amendment") dated as of April 14, 1998 (as the same may from time to time be further amended, modified or supplemented, collectively the "Purchase Agreement"), the Purchaser purchased the Notes (as defined in the Purchase Agreement) from the Company; WHEREAS, pursuant to that certain Note Purchase Agreement dated as of September 19, 1997 among the Company, Ralph E. Weil, Joseph Schueller, R. Weil & Associates, 621 Partners, Strafe & Company for the account of David M. Kirr, Strafe & Company for the account of Terry B. Marbach and Strafe & Company for the account of Gregg T. Summerville (collectively, the "KM Purchasers"), as amended by that certain First Amendment (the "KM First Amendment") dated as of April 14, 1998 (as the same may from time to time be further amended, modified or supplemented, the "KM Purchase Agreement"), the KM Purchasers purchased the Other Notes from the Company; WHEREAS, the Purchaser is willing to enter into the First Amendment, but only upon the condition, among others, that the Company shall have executed and delivered to the Agent this Security Agreement; and WHEREAS, the KM Purchasers are willing to enter into the KM First Amendment, but only on the condition, among others, that the Company shall have executed and delivered to the Agent the Security Agreement; WHEREAS, each of the Pledgors will derive substantial direct and indirect benefit from the transactions contemplated by the First Amendment and the KM First Amendment; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Defined Terms. Unless otherwise defined herein, terms defined in the Purchase Agreement are used herein as therein defined, and the following terms shall have the following meanings (such meanings being equally applicable to both the singular and plural forms of the terms defined): "Account Debtor" shall mean any "account debtor," as such term is defined in Section 9-105(1)(a) of the UCC. "Accounts" shall mean any "account," as such term is defined in Section 9-106 of the UCC, now owned or hereafter acquired by the Pledgors and, in any event, shall include, without limitation, all accounts receivable, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received or acquired by or belonging or owing to the Pledgors (including, without limitation, under any trade names, styles or divisions thereof) whether arising out of goods sold or services rendered by the Pledgors or from any other transaction, whether or not the same involves the sale of goods or services by the Pledgors (including, without limitation, any such obligation which might be characterized as an account or contract right under the UCC) and all of the Pledgors' rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of the Pledgors' rights to any goods represented by any of the foregoing (including, without limitation, unpaid seller's rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), and all moneys due or to become due to the Pledgors under all contracts for the sale of goods or the performance of services or both by the Pledgors (whether or not yet earned by performance on the part of the Pledgors or in connection with any other transaction), now in existence or hereafter occurring, including, without limitation, the right to receive the proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing. "Chattel Paper" shall mean any "chattel paper," as such term is defined in Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by the Pledgors. "Collateral" shall have the meaning assigned to such term in Section 2 of this Security Agreement. "Contracts" shall mean all contracts, undertakings, or other agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which the Pledgors may now or hereafter have any right, title or interest, including, without limitation, with respect to an Account, any agreement relating to the terms of payment or the terms of performance thereof. "Documents" shall mean any "documents," as such term is defined in Section 9-105(1)(f) of the UCC, now owned or hereafter acquired by the Pledgors. "Equipment" has the meaning set forth in Section 9-109(2) of the UCC. "hereby," "herein," "hereof," "hereunder" and words of similar import refer to this Security Agreement as a whole (including, without limitation, any schedules hereto) and not merely to the specific section, paragraph or clause in which the respective word appears. "Instruments" shall mean any "instrument," as such term is defined in Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by the Pledgors, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. "Inventory" shall mean all "inventory," as such term is defined in Section 9-109(4) of the UCC, now owned or hereafter acquired by the Pledgors and, in any event, shall include, without limitation, all inventory, merchandise, goods and other personal property now owned or hereafter acquired by the Pledgors which are held for sale or lease or are furnished or are to be furnished under a contract of service or which constitute raw materials, work in process or materials used or consumed or to be used or consumed in any Pledgors' business, or the processing, packaging, delivery or shipping of the same, and all finished goods. "KM Warrant Agreement" shall mean that certain Warrant Agreement dated as of September 19, 1997 between the Company and the KM Purchasers. "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, Lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction). "Noteholders" shall mean the holders of the Notes and the Other Notes. "Proceeds" shall mean "proceeds," as such term is defined in Section 9-306(1) of the UCC and, in any event, shall include, without limitation, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Pledgors from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to the Pledgors from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental body, authority, bureau or agency (or any person acting under color of governmental authority), and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral. "Secured Obligations" shall mean (i) all of the unpaid principal amount of, and accrued interest on, the Notes and the Other Notes, (ii) all other indebtedness, liabilities and obligations of the Pledgors to the Agent, whether now existing or hereafter incurred, and whether created under, arising out of or in connection with the Transaction Documents. This term includes, without limitation, all fees, charges, expenses, attorneys' fees and any other sum chargeable to the Company under any of the Transaction Documents. "Security Agreement" shall mean this Security Agreement, as the same may from time to time be amended, modified or supplemented and shall refer to this Security Agreement as in effect on the date such reference becomes operative. "Transaction Documents" shall mean, collectively, this Security Agreement, the Stock Pledge Agreement, the Purchase Agreement, the KM Purchase Agreement, the Warrant Agreement, the KM Warrant Agreement, the Notes and the Other Notes. "UCC" shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Agent's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. 2. Grant of Security Interest. (a) As collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of all the Secured Obligations and to induce the Purchaser to enter into the First Amendment and the KM Purchasers to enter into the KM First Amendment, and the transactions contemplated thereby, each of the Pledgors hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the Agent, and hereby grants to the Agent, for the benefit of the Noteholders, a security interest in, all of such Pledgor's right, title and interest in, to and under the following (all of which being hereinafter collectively called the "Collateral"): (i) all Accounts of such Pledgor; (ii) all Chattel Paper of such Pledgor; (iii) all Contracts of such Pledgor; (iv) all Documents of such Pledgor; (v) all Equipment of such Pledgor; (vi) all Instruments of such Pledgor; (vii) all Inventory of such Pledgor; (viii) the United States Patents and applications for patent described on Schedule VI to the First Amendment, and the patents and applications for patent in other countries described on Schedule VI to the First Amendment, and all other United States and foreign patents and applications for patent of the Pledgors now existing or hereafter filed or acquired; (ix) the inventions disclosed and/or claimed in all of the said United States and foreign patents and applications for patents, and all other inventions now owned by the Pledgors or hereinafter made, created or acquired by or for the Pledgors whether or not any of said inventions are patentable; (x) all other applications for patent or like protection on any of said inventions that have now or may in the future be filed by the Pledgors, or by the assignor(s) of the rights to said inventions to the Pledgors, whether in the United States or in any other country or place anywhere in the world; (xi) all other patents or like protection that have been or may in the future be granted on any of the aforesaid inventions and/or applications to the Pledgors, or to any assignor of the rights to any such invention to the Pledgors, whether in the United States or in any other country or place anywhere in the world; (xii) the United States copyrights and applications for copyrights described on Schedule VI to the First Amendment, and the copyrights and applications for copyrights in other countries described on Schedule VI to the First Amendment, and all other copyrights of the Pledgors, now existing or hereafter acquired, whether or not the underlying works of authorship have been published and whether said copyrights are statutory or arise under the common law, all applications of the Pledgors for copyright presently existing or hereafter filed or acquired and all works of authorship and other intellectual property rights now owned or hereafter created by or for, or acquired by the Pledgors; (xiii) the United States registered trademarks and applications for registrations of trademarks described on Schedule VI to the First Amendment, and the trademarks and applications for registrations of trademarks in other countries described on Schedule VI to the First Amendment, and all other trademarks, service marks and applications to register the same of the Pledgors, whether registered or unregistered and wherever registered, now existing or hereafter arising, created or acquired by the Pledgors; (xiv) all renewals, reissues, continuations, extensions or the like of any patents, copyrights, trademarks, service marks and like protection, including without limitation, those obtained or permissible under past, present and future laws and statutes; (xv) all rights of action on account of past, present and future unauthorized use of any of said inventions, copyrights, trademarks or service marks and for infringement of said patents, copyrights, trademarks or service marks and like protection; (xvi) the right to file and prosecute applications for patents, copyrights, and for registration of trademarks and service marks on any of said inventions, copyrights, trademarks, service marks or for similar intellectual property in the United States or any other country or place anywhere in the world; (xvii) the entire goodwill of the businesses of the Pledgors connected with and symbolized by the trademarks, service marks, trade names and the other general intangibles of the Pledgors; (xviii) all of the Pledgors' trade names, customer lists, trade secrets, corporate and other business records, license rights, advertising materials, operating manuals, methods, processes, know-how, sales literature, drawings, specifications, descriptions, inventions, name plates, catalogs, dealer contracts, supplier contracts, distributor agreements, confidential information, consulting agreements, engineering contracts, and all other assets which uniquely reflect the goodwill of the businesses of the Pledgor to which said general intangibles relate; (xix) all of the proceeds of any of the foregoing (the intangible assets enumerated in subparagraphs (vii) through (xvii) being hereinafter collectively referred to as the "General Intangibles"); and (xx) to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing. (b) If Drew Shoe Corporation ("Drew") repays its loan from Bank One, N.A. prior to the repayment in full of the Secured obligations, the Company shall cause Drew to grant to the Agent a Lien on substantially all of the assets of Drew (whether such assets are real property, personal property or mixed) pursuant to such mortgages and security agreements as the Agent may require Drew to execute and deliver. The Company agrees to take, and to cause Drew to take, any and all acts and to execute and deliver any and all documents necessary, or in the opinion of the Agent, desirable, to give effect to the foregoing covenant. (c) If the Company shall create any subsidiary after the date hereof, the Company shall cause such Subsidiary to grant to the Agent a Lien on substantially all of the assets of such subsidiary (whether such assets are real property, personal property or mixed) pursuant to such mortgages and security agreements as the Agent may require such Subsidiary to execute and deliver. The Company agrees to take, and to cause such Subsidiary to take, any and all acts and to execute and deliver any and all documents necessary, or in the opinion of the Agent, desirable, to give effect to the foregoing covenant. 3. Rights of the Agent; Limitations on the Agent's Obligations. (a) It is expressly agreed by each Pledgor that, anything herein to the contrary notwithstanding, each Pledgor shall remain liable under each of its Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder and each Pledgor shall perform all of its duties and obligations thereunder, all in accordance with and pursuant to the terms and provisions of each such Contract. The Agent shall not have any obligation or liability under any Contract by reason of or arising out of this Security Agreement or the granting to the Agent of a security interest therein or the receipt by the Agent of any payment relating to any Contract pursuant hereto, nor shall the Agent be required or obligated in any manner to perform or fulfill any of the obligations of the Pledgors under or pursuant to any Contract, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) The Agent authorizes each Pledgor to collect its Accounts, provided that such collection is performed in a prudent and businesslike manner, and the Agent may, upon the occurrence and during the continuation of an Event of Default and without notice, limit or terminate said authority at any time. If required by the Agent at any time during the continuation of any Event of Default, any Proceeds, when first collected by any Pledgor, received in payment of any such Account or in payment for any of its Inventory or on account of any of its Contracts, shall be promptly deposited by such Pledgor in precisely the form received (with all necessary endorsements) in a special bank account maintained by the Agent subject to withdrawal by the Agent only, as hereinafter provided, and until so turned over shall be deemed to be held in trust by such Pledgor for and as the Agent's property and shall not be commingled with such Pledgor's other funds or properties. Such Proceeds, when deposited, shall continue to be collateral security for all of the Secured Obligations and shall not constitute payment thereof until applied as hereinafter provided. The Agent shall apply all or a part of the funds on deposit in said special account to the principal of or interest on or both in respect of any of the Secured Obligations in accordance with the provisions of Section 8(d) hereof and any part of such funds which the Purchaser elects not so to apply and deems not required as collateral security for the Secured Obligations shall be paid over from time to time by the Agent to the Pledgors. If an Event of Default has occurred and is continuing, at the request of the Agent the Pledgors shall deliver to the Agent all original and other documents evidencing, and relating to, the sale and delivery of such Inventory or the performance of labor or service which created such Accounts, including, without limitation, all original orders, invoices and shipping receipts. (c) The Agent may at any time, upon the occurrence and during the continuation of any Event of Default (whether or not waived), after first notifying the Pledgors of its intention to do so, notify Account Debtors of the Pledgors, parties to the Contracts of the Pledgors, obligors of Instruments of the Pledgors and obligors in respect of Chattel Paper of the Pledgors that the Accounts and the right, title and interest of the Pledgors in and under such Contracts, Instruments and Chattel Paper have been assigned to the Agent and that payments shall be made directly to the Agent. Upon the request of the Agent, the Pledgors will so notify such Account Debtors, parties to such Contracts, obligors of such Instruments and obligors in respect of such Chattel Paper. Upon the occurrence and during the continuation of or an Event of Default (whether or not waived) the Agent may in its own name or in the name of others communicate with such Account Debtors, parties to such Contracts, obligors of such Instruments and obligors in respect of such Chattel Paper to verify with such Persons to the Agent's satisfaction the existence, amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper. (d) Upon reasonable prior notice to the Pledgors (unless an Event of Default has occurred and is continuing, in which case no notice is necessary), the Agent shall have the right, during normal business hours, to make test verifications of the Accounts and physical verifications of the Inventory in any manner and through any medium that it considers advisable, and each Pledgor agrees to furnish all such assistance and information as the Agent may require in connection therewith. Each Pledgor at its expense will prepare and deliver to the Agent at any time and from time to time promptly upon the Agent's request, the following reports: (i) a reconciliation of all its Accounts, (ii) an aging of all its Accounts, (iii) trial balances, and (iv) a test verification of such Accounts as the Agent may request. (e) The Agent (a) shall have no obligation or responsibility to protect or defend the General Intangibles or the right to use thereof, and the Pledgors shall, at their own expense, protect, defend and maintain the General Intangibles to the full extent advisable for their business, and (b) to use their best efforts to detect any infringers of the rights described herein and shall forthwith advise the Agent in writing of material infringements detected, and (c) if the Pledgors fails to comply with the foregoing, the Agent may do so in the Pledgors' name to the extent permitted by law, but at the Pledgors' expense, and the Pledgors hereby agree to reimburse the Agent in full for all expenses, including reasonable attorney's fees, incurred by the Agent in protecting, defending and maintaining the General Intangibles. 4. Representations and Warranties. Each Pledgor hereby represents and warrants that: (a) Except for the security interest granted to the Agent pursuant to this Security Agreement, such Pledgor is the sole owner of each item of the Collateral in which it purports to grant a security interest hereunder, having good and marketable title thereto, free and clear of any and all Liens. No material amounts payable under or in connection with any of its Accounts or Contracts are evidenced by Instruments which have not been delivered to the Agent. (b) No effective security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Collateral is on file or of record in any public office, except such as may have been filed by such Pledgor in favor of the Agent pursuant to this Security Agreement. (c) When appropriate financing statements have been filed in the jurisdictions listed on Schedule I hereto, this Security Agreement will be effective to create a valid and continuing lien on and first priority perfected security interest in the Collateral with respect to which a security interest may be perfected by filing pursuant to the UCC, prior to all other Liens, and will be enforceable as such as against creditors of and purchasers from such Pledgor (other than purchasers of Inventory in the ordinary course of business). (d) Each Pledgor's principal place of business and the place where its records concerning the Collateral are kept and the location of its Inventory are set forth on Section 11 hereof, and such Pledgor will not change such principal place of business or remove such records or change the location of its Inventory unless it has taken such action as is necessary to cause the security interest of the Agent in the Collateral to continue to be perfected. Each Pledgor will not change its principal place of business or the place where its records concerning the Collateral are kept or change the location of its Inventory and Equipment without giving thirty (30) days' prior written notice thereof to the Agent. (e) The amount represented by each Pledgor to the Agent from time to time as owing by each Account Debtor or by all Account Debtors in respect of the Accounts of the Pledgors will at such time be the correct amount actually and unconditionally owing by such Account Debtors thereunder. 5. Covenants. Each Pledgor covenants and agrees with the Agent that from and after the date of this Security Agreement and until the Secured Obligations are fully satisfied: (a) Further Documentation; Pledge of Instruments. At any time and from time to time, upon the written request of the Agent, and at the sole expense of such Pledgor, such Pledgor will promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Agent may reasonably deem desirable to obtain the full benefits of this Security Agreement and of the rights and powers herein granted, including, without limitation, using its best efforts to secure all consents and approvals necessary or appropriate for the assignment to the Agent of any Contract held by such Pledgor or in which such Pledgor has any rights not heretofore assigned, the filing of any financing or continuation statements under the UCC with respect to the Liens and security interests granted hereby, and transferring Collateral to the Agent's possession (if a security interest in such Collateral can be perfected by possession). Each Pledgor hereby authorizes the Agent to file any such financing or continuation statement without the signature of such Pledgor to the extent permitted by applicable law. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, such Instrument shall be immediately pledged to the Agent hereunder, and shall be duly endorsed in a manner satisfactory to the Agent and delivered to the Agent. (b) Maintenance of Records. Each Pledgor will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral. Each Pledgor will mark its books and records pertaining to the Collateral to evidence this Security Agreement and the security interests granted hereby. All Chattel Paper will be marked with the following legend: "This writing and the obligations evidenced or secured hereby are subject to the security interest of Wexford Management LLC, as Agent". For the Agent's further security, each Pledgor agrees that the Agent shall have a special property interest in all of such Pledgor's books and records pertaining to the Collateral and, upon the occurrence and during the continuation of an Event of Default, each Pledgor shall deliver and turn over any such books and records to the Agent or to its representatives at any time on demand of the Agent. Prior to the occurrence of an Event of Default and upon reasonable notice from the Agent, each Pledgor shall permit any representative of the Agent to inspect such books and records and will provide photocopies thereof to the Agent. (c) Indemnification. In any suit, proceeding or action brought by the Agent relating to any Account, Chattel Paper, Contract, or Instrument for any sum owing thereunder, or to enforce any provision of any Account, Chattel Paper, Contract, or Instrument, each Pledgor will save, indemnify and keep the Agent harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligor there-under, arising out of a breach by any Pledgor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from any Pledgor, and all such obligations of any Pledgor shall be and remain enforceable against and only against such Pledgor and shall not be enforceable against the Agent. (d) Compliance with Laws, etc. The Pledgors will comply, in all material respects, with all acts, rules, regulations, orders, decrees and directions of any govern-mental authority, applicable to the Collateral or any part thereof or to the operation of such Pledgor's business; provided, however, that the Pledgors may contest any act, regulation, order, decree or direction in any reasonable manner which shall not in the sole opinion of the Agent adversely affect the Agent's rights hereunder or adversely affect the first priority of its security interest in the Collateral. (e) Payment of Obligations. Each Pledgor will pay promptly when due all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of its income or profits therefrom and all claims of any kind (including, without limitation, claims for labor, materials and supplies), except that no such charge need be paid if (i) such nonpayment does not involve any danger of the sale, forfeiture or loss of any of the Collateral or any interest therein, and (ii) such charge is being contested in good faith, by proper proceedings, and adequate reserves therefor have been established by such Pledgor in accordance with and to the extent required by GAAP. (f) Compliance with Terms of Accounts, etc. In all material respects, each Pledgor will perform and comply with all obligations in respect of Accounts, Chattel Paper, Contracts and all other agreements to which it is a party or by which it is bound. (g) Limitation on Liens on Collateral. Each Pledgor will not create, permit or suffer to exist, and will defend the Collateral against and take such other action as is necessary to remove, any Lien on the Collateral, and will defend the right, title and interest of the Purchaser in and to any of such Pledgor's rights under the Chattel Paper, Contracts, Documents, and Instruments and Inventory and in and to the Proceeds thereof against the claims and demands of all Persons whomsoever. Without limiting the foregoing, each of the Pledgors acknowledges and agrees that the Agent has not had an opportunity to conduct a Lien search against the Pledgors. If and to the extent that a Lien search discloses that there are Liens on any of the Collateral, the Pledgors shall provide the Agent with satisfactory evidence of the release of such Lien within ten (10) Business Days. The failure by any Pledgor to deliver evidence of the release of any such Lien within ten (10) Business Days shall be an Event of Default under the Notes and the Other Notes. (h) Limitations on Modifications of Accounts. Upon the occurrence and during the continuation of any Event of Default, each Pledgor will not, without the Agent's prior written consent, grant any extension of the time of payment of any of the Accounts, Chattel Paper or Instruments, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof, or allow any credit or discount whatsoever thereon other than trade discounts granted in the ordinary course of business of such Pledgor. (i) Maintenance of Insurance. Each Pledgor will maintain, with financially sound and reputable companies, insurance policies (i) insuring its Inventory against loss by fire, explosion, theft and such other casualties as are usually insured against by companies engaged in the same or similar businesses and (ii) insuring each Pledgor and the Agent against liability for personal injury and property damage relating to such Inventory, and Equipment, such policies to be in such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business, naming the Agent as an additional insured with losses payable to each Pledgor and the Agent as their respective interests may appear under a standard Agent "loss-payable" clause. (j) Limitations on Disposition. Each Pledgor will not sell, lease, transfer or otherwise dispose of any of the Collateral, or attempt or contract to do so except for sales of Inventory or licenses of General Intangibles in the ordinary course of business. (k) Further Identification of Collateral. Each Pledgor will, if so requested by the Agent, furnish to the Agent, as often as the Agent reasonably requests, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may reasonably request, all in reasonable detail. (l) Notices. Each Pledgor will advise the Agent promptly, in reasonable detail, (i) of any material Lien, security interest, encumbrance or claim made or asserted against any of the Collateral, (ii) of any material change in the composition of the Collateral, and (iii) of the occurrence of any other event which would have a material adverse effect on the aggregate value of the Collateral or on the security interests created hereunder. (m) Right of Inspection. Upon reasonable notice to each Pledgor (unless an Event of Default has occurred and is continuing, in which case no notice is necessary), the Agent shall at all times have full and free access during normal business hours to all the books and records and correspondence of each Pledgor, and the Agent or its representatives may examine the same, take extracts therefrom and make photocopies thereof. (n) Continuous Perfection. Each Pledgor will not change its name, identity or corporate structure in any manner which might make any financing or continuation statement filed in connection herewith seriously misleading within the meaning of Section 9-402(7) of the UCC (or any other then applicable provision of the UCC) unless such Pledgor shall have given the Agent at least thirty (30) days' prior written notice thereof and shall have taken all action (or made arrangements to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by the Agent to amend such financing statement or continuation statement so that it is not seriously misleading. (o) General Intangibles. (i) The Pledgors shall diligently prosecute all applications for patents, copyrights and trademarks and shall file and prosecute any and all continuations, continuations-in-part, applications for reissue, applications for certificate of correction and like matters as shall be reasonably indicated to be desirable from facts available to it from time to time during the term of this Agreement, and the Pledgors shall bear the entire cost of all such filing and proceedings. The Pledgors agree to retain a licensed patent attorney if necessary and an experienced copyright and trademark counsel approved by the Agent for the filing and prosecution of all such applications and other proceedings. (ii) The Pledgors agrees to pay when due all fees, including license fees, taxes and other expenses which shall be incurred or which shall accrue with respect to any of the patents or patent applications, copyrights and copyright applications, trademarks and trade mark applications and know-how within the General Intangibles. (iii) The Pledgors shall not allow any patent, copyright, trademark, trade name, service mark or any application for patent, copyright, trademark or like protection included within the General Intangibles to become abandoned, nor any patent, copyright, trademark or like protection to be forfeited or dedicated to the public without express written approval of the Agent and any license thereof by the Pledgors shall be legally sufficient to prevent any abandonment, forfeiture or dedication to public use. In the event any pending or hereafter filed patent or trademark application, other than trademark renewal applications, has been finally rejected by the United States Patent and Trademark Office or any foreign patent or trademark office and the Pledgors have exhausted their administrative remedies, the Pledgors may abandon the same after sixty (60) days written notice to the Agent, who may thereafter at its own expense pursue judicial appeals. The Pledgors shall cooperate in any such appeal. (iv) The Agent may, at its option, whether before or after default, but without obligation to do so, discharge taxes, Liens, or security interests or other encumbrances at any time levied or placed upon the General Intangibles, or pay for maintenance or preservation of the General Intangibles, or pay any other fee, attorneys' fee or other expenses necessary to preserve and protect the assignment and security interest hereby granted. 6. Agent's Appointment as Attorney-in-Fact. (a) Each Pledgor hereby irrevocably constitutes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Pledgor and in the name of such Pledgor or in its own name, from time to time in the Agent's sole and absolute discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement and, without limiting the generality of the foregoing, hereby gives the Agent the power and right, on behalf of such Pledgor, without notice to or assent by such Pledgor to do the following: (i) to ask, demand, collect, receive and give acquittances and receipts for any and all moneys due and to become due under any Collateral and, in the name of such Pledgor or its own name or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other Instruments for the payment of moneys due under any Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Agent for the purpose of collecting any and all such moneys due under any Collateral whenever pay-able and to file any claim or to take any other action or proceeding in any court of law or equity or other-wise deemed appropriate by the Agent for the purpose of collecting any and all such moneys due under any Collateral whenever payable; (ii) to pay or discharge taxes, Liens, security interests or other encumbrances levied or placed on or threatened against the Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and (iii) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due, and to become due thereunder, directly to the Agent or as the Agent shall direct; (B) to receive payment of and receipt for any and all moneys, claims and other amounts due, and to become due at any time, in respect of or arising out of any Collateral; (C) to sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts and other Documents constituting or relating to the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against any Pledgor with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as the Purchaser may deem appropriate; (G) generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Purchaser's option and such Pledgors's expense, at any time, or from time to time, all acts and things which the Agent reasonably deems necessary to protect, preserve or realize upon the Collateral and the Agent's Lien therein, in order to effect the intent of this Security Agreement, all as fully and effectively as such Pledgor might do. (b) The Agent agrees that, except upon the occurrence and during the continuation of an Event of Default, it will forebear from exercising the power of attorney or any rights granted to the Agent pursuant to this Section 6. Each Pledgor hereby ratifies, to the extent permitted by law, all that said attorneys shall lawfully do or cause to be done by virtue hereof. The power of attorney granted pursuant to this Section 6 is a power coupled with an interest and shall be irrevocable until the Secured Obligations are indefeasibly paid in full. (c) The powers conferred on the Agent hereunder are solely to protect the Agent's interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and neither it nor any of its officers, directors, employees or agents shall be responsible to each Pledgor for any act or failure to act, except for its own gross negligence or willful misconduct. (d) Each Pledgor also authorizes the Agent, at any time and from time to time upon the occurrence and during the continuation of an Event of Default, (i) to communicate in its own name with any party to any Contract with regard to the assignment of the right, title and interest of such Pledgor in and under the Contracts hereunder and other matters relating thereto and (ii) to execute, in connection with the sale provided for in Section 8 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral. 7. Performance by the Agent of each Pledgor's Obligations. If any Pledgor fails to perform or comply with any of its agreements contained herein and the Agent, as provided for by the terms of this Security Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the reasonable expenses of the Agent incurred in connection with such performance or compliance, together with interest thereon at the rate then in effect in respect of the Notes and the Other Notes, shall be payable by such Pledgor to the Agent on demand and shall constitute Secured Obligations secured hereby. 8. Remedies, Rights Upon Default. (a) If an Event of Default shall occur and be continuing, in addition to all other rights and remedies granted to it in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, the Agent may exercise all rights and remedies of a secured party under the UCC. Without limiting the generality of the foregoing, each Pledgor expressly agrees that in any such event the Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon such Pledgor or any other person (all and each of which demands, advertisements and/or notices are hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may forth-with collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any exchange or broker's board or at the Agent's offices or elsewhere at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption each Pledgor hereby releases. Each Pledgor further agrees, at the Agent's request, to assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at such Pledgor's premises or elsewhere. The Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, as provided in Section 8(d) hereof, each Pledgor remaining liable for any deficiency remaining unpaid after such application, and only after so paying over such net proceeds and after the payment by the Agent of any other amount required by any provision of law, including Section 9-504(1)(c) of the UCC, need the Agent account for the surplus, if any, to such Pledgor. To the maximum extent permitted by applicable law, each Pledgor waives all claims, damages, and demands against the Agent arising out of the repossession, retention or sale of the Collateral except such as arise out of the gross negligence or willful misconduct of the Agent. Each Pledgor agrees that the Agent need not give more than ten (10) days' notice (which notification shall be deemed given when mailed or delivered on an overnight basis, postage prepaid, addressed to such Pledgor at its address referred to in Section 11 hereof) of the time and place of any public sale or of the time after which a private sale may take place and that such notice is reasonable notification of such matters. Each Pledgor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which the Purchaser is entitled, such Pledgor also being liable for the fees of any attorneys employed by the Purchaser to collect such deficiency. In addition to the foregoing, during the existence of any Event of Default, the Agent shall have the right (x) to obtain an absolute assignment of any General Intangible, (y) to sell, assign, transfer, or convey any General Intangible, or (z) to license any Person to use any General Intangible on terms deemed reasonable by the Agent. (b) Each Pledgor also agrees to pay all costs of the Agent, including, without limitation, reasonable attorneys' fees, incurred in connection with the enforcement of any of its rights and remedies hereunder. (c) Each Pledgor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral. (d) The Proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be distributed by the Agent in the following order of priorities: first, to the Agent in an amount sufficient to pay in full the expenses of the Agent in connection with such sale, disposition or other realization, including all expenses, liabilities and advances incurred or made by the Agent in connection therewith, including, without limitation, attorney's fees; second, to the Agent in an amount equal to the then unpaid principal of and accrued interest on the Secured Obligations; third, to the Agent in an amount equal to any other Secured Obligations which are then unpaid; and finally, upon payment in full of all of the Secured Obligations, to pay to each Pledgor, or its representatives or as a court of competent jurisdiction may direct, any surplus then remaining from such Proceeds. 9. Limitation on the Agent's Duty in Respect of Collateral. The Agent shall not have any duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of it or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto, except that the Purchaser shall use reasonable care with respect to the Collateral in its possession or under its control. Upon request of any Pledgor, the Agent shall account for any moneys received by it in respect of any foreclosure on or disposition of the Collateral. 10. Termination of Security Interests. Upon the payment in full of all Secured Obligations, the Agent shall release all Liens granted in its favor and shall file appropriate UCC termination statements. 11. Reinstatement. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Pledgor for liquidation or reorganization, should any Pledgor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Pledgor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a "voidable preference", "fraudulent conveyance", or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 12. Notices. Except as otherwise provided here-in, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give or serve upon any other communication with respect to this Security Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback addressed as follows: If to the Agent, at: c/o Wexford Management LLC 411 West Putnam Avenue Greenwich, Connecticut 06830 Attention: Joseph Jacobs Telephone: (203)862-7020 Telecopier: (203)862-7320 With a copy to: McDermott, Will & Emery 50 Rockefeller Plaza, 11th Fl. New York, New York 10020 Attention: Stephen B. Selbst, Esq. Telephone: (212) 547-5400 Telecopier: (212) 547-5444 If to either of the Pledgors, at: c/o BCAM International, Inc. 1800 Walt Whitman Road Melville, New York 11747 Attention: Michael Strauss, President Telephone: (516) 752-7530 Telecopier: (516) 752-3558 With a copy to: Ruskin, Moscou, Evans & Faltischek, PC 170 Old Country Road Mineola, New York 11501 Attention: Norman Friedland, Esq. Telephone: (516) 663-6600 Telecopier: (516) 663-6642 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three (3) Business Days after the same shall have been deposited in the United States mail. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 13. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability with-out invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. No Waiver; Cumulative Remedies. The Agent shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by the Agent, and then only to the extent therein set forth. A waiver by the Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Agent would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of the Agent, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the Agent and, where applicable by each Pledgor. 15. Successors and Assigns; Governing Law. (a) This Security Agreement and all obligations of each Pledgors hereunder shall be binding upon the successors and assigns of such Pledgor, and shall, together with the rights and remedies of the Agent hereunder, inure to the benefit of the Agent, all future holders of the Notes and their respective successors and assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein shall in any manner affect the security interest granted to the Agent hereunder. (b) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PROVISIONS THEREOF RELATING TO CONFLICT OF LAWS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 16. Waiver of Jury Trial. EACH PLEDGOR WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES HEREUNDER, UNDER THE AGREEMENT, THE KM AGREEMENT OR UNDER THE OTHER TRANSACTION DOCUMENTS OR RELATING TO EACH OF THE FOREGOING. 17. Section Titles. The Section titles contained in this Security Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 18. Counterparts. This Security Agreement may be executed in any number of counterparts, which shall, collectively and separately, constitute one agreement. IN WITNESS WHEREOF, the Agent and each Pledgor have caused this Security Agreement to be executed and delivered by its duly authorized officer on the date first set forth above. BCAM INTERNATIONAL, INC. By: ---------------------------------- Name: Michael Strauss Title: President BCAM TECHNOLOGIES, INC. By: ---------------------------------- Name: Title: BCA SERVICES, INC. By: ---------------------------------- Name: Title: WEXFORD MANAGEMENT LLC, as Agent By: ---------------------------------- Name: Joseph Jacobs Title: President SCHEDULE I FILINGS Jurisdiction Filing Office ------------ ------------- New York Secretary of State New York Suffolk County Clerk EX-10.76 8 STOCK PLEDGE AGREEMENT STOCK PLEDGE AGREEMENT STOCK PLEDGE AGREEMENT, dated as of April 14, 1998, between WEXFORD MANAGEMENT LLC, a Connecticut limited liability company, as agent for the Noteholders (the "Agent") and BCAM International, Inc., a New York corporation (the "Pledgor"). W I T N E S S E T H: WHEREAS, Pledgor is the record and beneficial owner of the shares of common stock described on Schedule I hereto (the "Pledged Shares") issued by the Subsidiaries of the Pledgor named therein; and WHEREAS, Pledgor and IMPLEO LLC are parties to that certain Note Purchase Agreement dated as of September 19, 1997, as amended by that certain First Amendment (the "First Amendment") dated as of April 14, 1998 (as the same may be further amended, modified and supplemented from time to time, the "Purchase Agreement") pursuant to which the Purchaser purchased certain Notes from the Company; WHEREAS, Pledgor and Ralph E. Weil, Joseph Schueller, 621 Partners, R. Weil & Associates, Strafe & Company for the account of David M. Kirr, Strafe & Company for the account of Terry B. Marbach, and Strafe & Company for the account of Gregg T. Summerville (collectively, the "KM Purchasers") are parties to that certain Note Purchase Agreement dated as of September 19, 1997, as amended by that certain First Amendment (the "KM First Amendment") dated as of April 14, 1998 (as the same may be further amended, modified and supplemented from time to time, the "KM Purchase Agreement") pursuant to which the KM Purchasers purchased the Other Notes from the Company. WHEREAS, terms defined in the Purchase Agreement, unless separately defined herein, shall have the meanings assigned to such terms therein; and WHEREAS, in connection with the transactions contemplated under the Purchase Agreement, as amended by the First Amendment thereto, and the KM Purchase Agreement, as amended by the KM First Amendment, and as security for all of the obligations of the Company under the Notes, the Other Notes and the Transaction Documents, the Purchaser and the KM Purchasers are requiring that Pledgor shall have executed and delivered this Stock Pledge Agreement and granted the security interest contemplated hereby in favor of the Agent; NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and to induce the Purchaser to enter into the First Amendment and to induce the KM Purchasers to enter into the KM First Amendment, it is agreed as follows: 1. Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and the Notes are used herein as therein defined, and the following shall have (unless otherwise provided elsewhere in this Agreement) the following respective meanings (such meanings being equally applicable to both the singular and plural form of the terms defined): "Agreement" means this Stock Pledge Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. "Bankruptcy Code" means title 11, United States Code, as amended from time to time, and any successor statute thereto. "Capital Stock" means any shares of authorized capital stock of a corporation. "KM Warrant Agreement" means that certain Warrant Agreement dated as of September 19, 1997 among the Company and the KM Purchasers. "Noteholders" means the holders of the Notes and the Other Notes. "Pledged Collateral" has the meaning assigned to such term in Section 2 hereof. "Secured Obligations" has the meaning assigned to such term in Section 3 hereof. "Security Agreement" means the Security Agreement of even date herewith among BCAM International, Inc., BCAM Technologies, Inc., and Impleo LLC, as the Agent as the same may be amended from time to time hereafter. "Transaction Documents" means this Agreement, the Security Agreement, the Purchase Agreement, the KM Purchase Agreement, the Notes, the Other Notes, the Warrant Agreement and the KM Warrant Agreement. "Warrant Agreement" means that certain Warrant Agreement dated as of September 19, 1997 between the Company and Impleo LLC. 2. Pledge. The Pledgor hereby pledges to the Agent, and grants to the Agent, a first priority security interest in, all of the following (collectively, the "Pledged Collateral"): (a) the Pledged Shares owned by the Pledgor listed on Schedule I hereto and the certificates representing the Pledged Shares, and all dividends, distributions, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; (b) all additional shares of stock of any issuer of the Pledged Shares from time to time acquired by the Pledgor in any manner (which shares shall be deemed to be part of the Pledged Shares), and the certificates representing such additional shares, and all dividends, distributions, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and 2 (c) all shares of any Person who, after the date of this Agreement, becomes, as a result of any occurrence, a wholly-owned Subsidiary of the Pledgor (which shares shall be deemed to be part of the Pledged Shares) and the certificates representing such shares, and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares. (d) Notwithstanding the foregoing, if the Pledgor is unable to deliver to the Agent stock certificates representing all of the issued and outstanding shares of Capital Stock of HumanCAD Systems, Inc., an Ontario corporation, concurrently with the execution and delivery of this Agreement, then the Pledgor agrees (i) not to pledge such shares of Capital Stock in favor of any other Person, and (ii) to pledge such shares of Capital Stock to the Agent as promptly as practicable after the Pledgor comes into possession thereof. 3. Security for Obligations. This Agreement secures, and the Pledged Collateral is security for, the prompt payment in full when due, whether at stated maturity, by acceleration or otherwise, and performance of the obligations, whether for principal, premium, interest, fees, costs and expenses, and all obligations of the Pledgor now or hereafter existing under the Transaction Documents (collectively, the "Secured Obligations"). This term includes, without limitation, the Notes and any and all future advances, as well as all interest, fees, charges, expenses, attorneys' fees and any other sum chargeable to the Company under any of the Transaction Documents. 4. Delivery of Pledged Collateral. All certificates representing or evidencing the Pledged Shares shall be delivered to and held by or on behalf of the Agent pursuant hereto and shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Agent. Upon the occurrence of an Event of Default, the Agent shall have the right, at any time in its sole and absolute discretion and without notice to the Pledgor, to transfer to or to register in the name of the Agent or any of its nominees any or all of the Pledged Shares. In addition, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Shares for certificates or instruments of smaller or larger denominations. 5. Representations and Warranties. The Pledgor represents and warrants to the Agent that: (a) The Pledgor is, and at the time of delivery of the Pledged Shares to the Agent pursuant to Section 4 hereof will be, the sole holder of record and the sole beneficial owner of the Pledged Collateral free and clear of any Lien thereon or affecting the title thereto, except for the Lien created by this Agreement. (b) All of the Pledged Shares pledged pursuant to this Agreement have been duly authorized, validly issued and are fully paid and non-assessable. (c) The Pledgor has the right and requisite corporate authority to pledge, assign, transfer, deliver, deposit and set over the Pledged Collateral pledged by the Pledgor to the Agent as provided herein. 3 (d) None of the Pledged Shares pledged pursuant to this Agreement has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject. (e) The authorized Capital Stock of each of the corporations listed on Schedule I hereto consists of the number of shares of common stock, with the number of shares issued and outstanding that are described in Schedule I hereto. Schedule I correctly states the Company's ownership percentage of each class of Capital Stock of the Subsidiaries listed thereon. No Subsidiary listed on Schedule I owns, directly or indirectly, any Subsidiaries. As of the date the Pledged Collateral is delivered to the Agent, there are no existing options, warrants, calls or commitments of any character whatsoever relating to any Capital Stock of any of such corporations. Except as listed on Schedule I, the Company has no Subsidiaries. (f) No consent, approval, authorization or other order of any Person and no consent, authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority is required either (i) for the pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Pledgor or (ii) for the exercise by the Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally. (g) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement will create a valid first priority Lien on and a first priority perfected security interest in the Pledged Collateral pledged by the Pledgor, and the proceeds thereof, securing the payment of the Secured Obligations, subject to no other Lien or security interest. (h) This Agreement has been duly authorized, executed and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with its terms. (i) Schedule I correctly states the Company's ownership percentage of each class of Capital Stock of the Subsidiaries listed thereon. The representations and warranties set forth in this Section 5 shall survive the execution and delivery of this Agreement. 6. Covenants. The Pledgor covenants and agrees that until the payment in full of all of the Secured Obligations: (a) Without the prior written consent of the Agent, the Pledgor will not sell, assign, transfer, pledge, or otherwise encumber any of its rights in or to the Pledged Collateral pledged by the Pledgor or any unpaid dividends or other distributions or payments with respect thereto or grant a Lien therein. (b) The Pledgor will, at its expense, promptly execute, acknowledge and deliver all such instruments and take all such action as the Agent from time to time may reasonably request in order to ensure to the Agent the benefits of the Liens in and to the Pledged Collateral intended to be created by this Agreement, including the filing of any necessary 4 Uniform Commercial Code financing statements, which may be filed by the Agent with or without the signature of the Pledgor, and will cooperate with the Agent, at the Pledgor's expense, in obtaining all necessary approvals and making all necessary filings under federal or state law in connection with such Liens or any sale or transfer of the Pledged Collateral. (c) The Pledgor has and will defend the title to the Pledged Collateral and the Liens of the Agent thereon against the claim of any Person and will maintain and preserve such Liens until the payment in full of all of the Secured Obligations. (d) The Pledgor will, upon obtaining any additional shares of any Subsidiaries or any new directly owned Subsidiary, which shares are not already Pledged Collateral, promptly (and in any event within three (3) Business Days) deliver to the Agent a Pledge Amendment, duly executed by the Pledgor, in substantially the form of Schedule II hereto (a "Pledge Amendment"), in respect of the additional Pledged Shares which are to be pledged pursuant to this Agreement. The Pledgor hereby authorizes the Agent to attach each Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on any Pledge Amendment delivered to the Agent shall for all purposes hereunder be considered Pledged Collateral. 7. Pledgors' Rights. As long as no Event of Default shall have occurred and be continuing and until written notice shall be given to the Pledgor in accordance with Section 8(a) hereof, (a) the Pledgor shall have the right, from time to time, to vote and give consents with respect to the Pledged Collateral or any part thereof for all purposes not inconsistent with the provisions of this Agreement, the Notes, the Other Notes and any Transaction Document; provided, however, that no vote shall be cast, and no consent shall be given or action taken, which would have the effect of impairing the position or interest of the Agent in respect of the Pledged Collateral or which would authorize or effect (i) the dissolution or liquidation, in whole or in part, of any corporation listed on Schedule I, (ii) the consolidation or merger of any corporation listed on Schedule I with any other Person, (iii) the sale, disposition or encumbrance of all or substantially all of the assets of any corporation or partnership listed on Schedule I, (iv) any change in the authorized number of shares, the stated capital or the authorized share capital of any corporation listed in Schedule I or the issuance of any additional shares of its capital stock, or (v) the alteration of the voting rights with respect to the Capital Stock of any corporation listed on Schedule I; and (b) all dividends and all other distributions in respect of any of the Pledged Shares of the Pledgor, whenever paid or made, shall be delivered to the Agent to hold as Pledged Collateral and shall, if received by the Pledgor, be received in trust for the benefit of the Agent, be segregated from the other property or funds of the Pledgor, and be forthwith delivered to the Agent as Pledged Collateral in the same form as so received (with any necessary endorsement). 8. Defaults and Remedies. (a) Upon the occurrence of an Event of Default and during the continuation of such Event of Default, then or at any time after such declaration and following written notice to the Pledgor, the Agent (personally or through an agent) is hereby authorized and empowered to transfer and register in its name or in the name of its nominee the whole or any part of the 5 Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Securities for certificates or instruments of smaller or larger denominations, to exercise the voting rights with respect thereto, to collect and receive all cash dividends and other distributions made thereon, to sell in one or more sales after seven (7) days' notice of the time and place of any public sale or of the time after which a private sale is to take place (which notice the Pledgor agrees is commercially reasonable), but without any previous notice or advertisement, the whole or any part of the Pledged Collateral and to otherwise act with respect to the Pledged Collateral as though the Agent was the outright owner thereof, the Pledgor hereby irrevocably constituting and appointing the Agent as the proxy and attorney-in-fact of the Pledgor, with full power of substitution to do so, and which shall remain in effect until the Secured Obligations are paid in full; provided, however, the Agent shall not have any duty to exercise any such right or to preserve the same and shall not be liable for any failure to do so or for any delay in doing so. Any sale shall be made at a public or private sale at the Agent's place of business, or at any public building in the City of New York or elsewhere to be named in the notice of sale, either for cash or upon credit or for future delivery at such price as the Agent may deem fair, and the Agent may be the purchaser of the whole or any part of the Pledged Collateral so sold and hold the same thereafter in its own right free from any claim of the Pledgor or any right of redemption. Each sale shall be made to the highest bidder, but the Agent reserves the right to reject any and all bids at such sale which, in its sole and absolute discretion, it shall deem inadequate. Demands of performance, except as otherwise herein specifically provided for, notices of sale, advertisements and the presence of property at sale are hereby waived and any sale hereunder may be conducted by an auctioneer or any officer or agent of the Agent. (b) If, at the original time or times appointed for the sale of the whole or any part of the Pledged Collateral, the highest bid, if there be but one sale, shall be inadequate to discharge in full all the Secured Obligations, or if the Pledged Collateral be offered for sale in lots, if at any of such sales, the highest bid for the lot offered for sale would indicate to the Agent, in its sole and absolute discretion, the unlikelihood of the proceeds of the sales of the whole of the Pledged Collateral being sufficient to discharge all the Secured Obligations, the Agent may, on one or more occasions and in its sole and absolute discretion, postpone any of said sales by public announcement at the time of sale or the time of previous postponement of sale, and no other notice of such postponement or postponements of sale need be given, any other notice being hereby waived; provided, however, that any sale or sales made after such postponement shall be after seven (7) days' notice to the Pledgor. (c) In the event of any sales hereunder the Agent shall, after deducting all costs or expenses of every kind (including reasonable attorneys' fees and disbursements) for care, safekeeping, collection, sale, delivery or otherwise, apply the residue of the proceeds of the sales to the payment or reduction, either in whole or in part, of the Secured Obligations in accordance with the agreements and instruments governing and evidencing such Obligations, returning the surplus, if any, to the Pledgor. (d) If, at any time when the Agent in its sole and absolute discretion determines, following the occurrence and during the continuance of an Event of Default, that, in connection with any actual or contemplated exercise of its rights (when permitted under this Section 8) to sell the whole or any part of the Pledged Collateral hereunder, it is necessary or advisable to effect a public registration of all or part of the Pledged Collateral pursuant to the 6 Securities Act of 1933, as amended (or any similar statute then in effect) (the "Act"), the Pledgor shall, in an expeditious manner, cause its Subsidiaries, if any, to: (i) Prepare and file with the Securities and Exchange Commission (the "Commission") a registration statement with respect to the Pledged Collateral and use its best efforts to cause such registration statement to become and remain effective. (ii) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Act with respect to the sale or other disposition of the Pledged Collateral covered by such registration statement whenever the Agent shall desire to sell or otherwise dispose of the Pledged Collateral. (iii) Furnish to the Agent such numbers of copies of a prospectus and a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as the Agent may request in order to facilitate the public sale or other disposition of the Pledged Collateral by the Agent. (iv) Use its best efforts to register or qualify the Pledged Collateral covered by such registration statement under such other securities or blue sky laws of such jurisdictions within the United States as the Agent shall request, and do such other reasonable acts and things as may be required of it to enable the Agent to consummate the public sale or other disposition in such jurisdictions of the Pledged Collateral by the the Agent. (v) Furnish, at the request of the Agent, on the date that shares of the Pledged Collateral are delivered to the underwriters for sale pursuant to such registration or, if the security is not being sold through underwriters, on the date that the registration statement with respect to such shares of the Pledged Collateral becomes effective, (A) an opinion, dated such date, of the independent counsel representing such registrant for the purposes of such registration, addressed to the underwriters, if any, and in the event the Pledged Collateral is not being sold through underwriters, then to the Agent, in customary form and covering matters of the type customarily covered in such legal opinions; and (B) a comfort letter, dated such date, from the independent certified public accountants of such registrant, addressed to the underwriters, if any, and in the event the Pledged Collateral is not being sold through underwriters, then to the Agent, in a customary form and covering matters of the type customarily covered by such comfort letters and as the underwriters or the Agent shall reasonably request. The opinion of counsel referred to above shall additionally cover such other legal matters with respect to the registration in respect of which such opinion is being given as the Agent may reasonably request. The letter referred to above from the independent certified public accountants shall additionally cover such other financial matters (including information as to the period ending not more than five (5) Business Days prior to the date of such letter) with respect to the registration in respect of which such letter is being given as the Agent may reasonably request. 7 (vi) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the registration statement, an earnings statement covering the period of at least 12 months beginning with the first full month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Act. (e) All expenses incurred in complying with Section 8(d) hereof, including, without limitation, all registration and filing fees (including all expenses incident to filing with the National Association of Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel for the registrant, the fees and expenses of counsel for the Agent, expenses of the independent certified public accountants (including any special audits incident to or required by any such registration) and expenses of complying with the securities or blue sky laws or any jurisdictions, shall be paid by the Pledgor. (f) If, at any time when the Agent shall determine to exercise its right to sell the whole or any part of the Pledged Collateral hereunder, such Pledged Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Act, the Agent may, in its sole and absolute discretion (subject only to applicable requirements of law), sell such Pledged Collateral or part thereof by private sale in such manner and under such circumstances as the Agent may deem necessary or advisable, but subject to the other requirements of this Section 8, and shall not be required to effect such registration or to cause the same to be effected. Without limiting the generality of the foregoing, in any such event the Agent in its sole and absolute discretion (x) may, in accordance with applicable securities laws, proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Pledged Collateral or part thereof could be or shall have been filed under the Act (or similar statute), (y) may approach and negotiate with a single possible purchaser to effect such sale, and (z) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution or sale of such Pledged Collateral or part thereof. In addition to a private sale as provided above in this Section 8, if any of the Pledged Collateral shall not be freely distributable to the public without registration under the Act (or similar statute) at the time of any proposed sale pursuant to this Section 8, then the Agent shall not be required to effect such registration or cause the same to be effected but, in its sole and absolute discretion (subject only to applicable requirements of law), may require that any sale hereunder (including a sale at auction) be conducted subject to restrictions (i) as to the financial sophistication and ability of any Person permitted to bid or purchase at any such sale, (ii) as to the content of legends to be placed upon any certificates representing the Pledged Collateral sold in such sale, including restrictions on future transfer thereof, (iii) as to the representations required to be made by each Person bidding or purchasing at such sale relating to that Person's access to financial information about the Pledgor and such Person's intentions as to the holding of the Pledged Collateral so sold for investment, for its own account, and not with a view to the distribution thereof, and (iv) as to such other matters as the Agent may, in its sole and absolute discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with the Bankruptcy Code and other laws affecting the enforcement of creditors' rights and the Act and all applicable state securities laws. 8 (g) The Pledgor acknowledges that notwithstanding the legal availability of a private sale or a sale subject to the restrictions described above in Section 8(f), the Agent may, in its sole and absolute discretion, elect to register any or all the Pledged Collateral under the Act (or any applicable state securities law) in accordance with its rights hereunder. The Pledgor, however, recognizes that the Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof. The Pledgor also acknowledges that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the registrant to register such securities for public sale under the Act, or under applicable state securities laws, even if the Pledgor would agree to do so. (h) The Pledgor agrees that following the occurrence and during the continuance of an Event of Default it will not at any time plead, claim or take the benefit of any appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in force in order to prevent or delay the enforcement of this Agreement, or the absolute sale of the whole or any part of the Pledged Collateral or the possession thereof by any purchaser at any sale hereunder, and the Pledgor waives the benefit of all such laws to the extent it lawfully may do so. The Pledgor agrees that it will not interfere with any right, power and remedy of the Agent provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Agent of any one or more of such rights, powers or remedies. No failure or delay on the part of the Agent to exercise any such right, power or remedy and no notice or demand which may be given to or made upon the Pledgor by the Agent with respect to any such remedies shall operate as a waiver thereof, or limit or impair the right of the Agent to take any action or to exercise any power or remedy hereunder, without notice or demand, or prejudice its rights as against the Pledgor in any respect. (i) The Pledgor further agrees that a breach of any of the covenants contained in this Section 8 will cause irreparable injury to the Agent, that the Agent have no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this Section 8 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that the Secured Obligations are not then due and payable in accordance with the agreements and instruments governing and evidencing such obligations. The Pledgor further acknowledges the impossibility of ascertaining the amount of damages which would be suffered by the Agent by reason of a breach of any of such covenants and, consequently, agrees that, if the Agent shall sue for damages for breach, it shall pay, as liquidated damages and not as a penalty, an amount equal to the lesser of (i) the value of the Pledged Collateral pledged by the Pledgor on the date the Agent shall demand compliance with this Section 8, and (ii) the amount required to pay in full the Secured Obligations. 9. Application of Proceeds. Any cash held by the Agent as Pledged Collateral and all cash proceeds received by the Agent in respect of any sale of, liquidation of, or other realization upon all or any part of the Pledged Collateral shall be applied by the Agent as follows: 9 first, to the Agent in an amount sufficient to pay in full the expenses of the Agent in connection with such sale, disposition or other realization, including all expenses, liabilities and advances incurred or made by the Agent in connection therewith, including, without limitation, attorneys' fees; second, to the Agent in an amount equal to the then unpaid principal of and accrued interest and prepayment premiums, if any, on the Secured Obligations; third, to the Agent in an amount equal to any other Secured Obligations which are then unpaid; and finally, after payment in full of all Secured Obligations, to pay to the Pledgor, or its successors or assigns, or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds. 10. Waiver. No delay on the part of the Agent in exercising any power of sale, Lien, option or other right hereunder, and no notice or demand which may be given to or made upon the Pledgor by the Agent with respect to any power of sale, Lien, option or other right hereunder, shall constitute a waiver thereof, or limit or impair the Agent's right to take any action or to exercise any power of sale, Lien, option, or any other right hereunder, without notice or demand, or prejudice any of their rights as against the Pledgor in any respect. 11. Assignment. The Agent may assign, endorse or transfer any instrument evidencing all or any part of the Secured Obligations as provided in, and in accordance with, the Transaction Documents, and the holder of such instrument shall be entitled to the benefits of this Agreement. 12. Termination. Immediately following the payment of all Secured Obligations, the Agent shall deliver to the Pledgor the Pledged Collateral at the time subject to this Agreement and all instruments of assignment executed in connection therewith, free and clear of the Liens hereof and, except as otherwise provided herein, all of the Pledgor's obligations hereunder shall at such time terminate. 13. Lien Absolute. All rights of the Agent hereunder, and all obligations of the Pledgor hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any Transaction Document or any other agreement or instrument governing or evidencing any Secured Obligations; (b) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any Transaction Document or any other agreement or instrument governing or evidencing any Secured Obligations; (c) any exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Secured Obligations; or 10 (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Pledgor. 14. Release. The Pledgor consents and agrees that the Agent may at any time, or from time to time, in its sole and absolute discretion (a) renew, extend or change the time of payment, and/or the manner, place or terms of payment of all or any part of the Secured Obligations and (b) exchange, release and/or surrender all or any of the Pledged Collateral, or any part thereof, by whomsoever deposited, which is now or may hereafter be held by the Agent in connection with all or any of the Secured Obligations; all in such manner and upon such terms as the Agent may deem proper, and without notice to or further assent from the Pledgor, it being hereby agreed that the Pledgor shall be and remain bound upon this Agreement, irrespective of the existence, value or condition of any of the Pledged Collateral, and notwithstanding any such change, exchange, settlement, compromise, surrender, release, renewal or extension, and notwithstanding also that the Secured Obligations may, at any time, exceed the aggregate principal amount thereof set forth in the Notes, or any other agreement governing any Secured Obligations. The Pledgor hereby waives notice of acceptance of this Agreement, and also presentment, demand, protest and notice of dishonor of any and all of the Secured Obligations, and promptness in commencing suit against any party hereto or liable hereon, and in giving any notice to or of making any claim or demand hereunder upon the Pledgor. No act or omission of any kind on the part of the Agent shall in any event affect or impair this Agreement. 15. Indemnification. The Pledgor agrees to indemnify and hold the Agent harmless from and against any taxes, liabilities, claims and damages, including reasonable attorney's fees and disbursements, and other expenses incurred or arising by reason of the taking or the failure to take action by the Agent, in good faith, in respect of any transaction effected under this Agreement or in connection with the Lien provided for herein, including, without limitation, any taxes payable in connection with the delivery or registration of any of the Pledged Collateral as provided herein. Whether or not the transactions contemplated by this Agreement shall be consummated, the Pledgor agrees to pay to the Agent all out-of-pocket costs and expenses incurred in connection with this Agreement and all reasonable fees, expenses and disbursements, including registration costs under the Act (or similar statute) and the reasonable fees of the Agent's agents or representatives, incurred in connection with the execution and delivery of this Agreement and the performance by the Agent of the provisions of this Agreement and of any transactions effected in connection with this Agreement. The obligations of the Pledgor under this Section 15 shall survive the termination of this Agreement. 16. Reinstatement. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Pledgor for liquidation or reorganization, should the Pledgor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Pledgor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a "violable preference", "fraudulent conveyance", or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 11 17. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO DEFEND ANY RIGHTS OR REMEDIES HEREUNDER, UNDER THE AGREEMENT, THE KM AGREEMENT OR UNDER THE OTHER TRANSACTION DOCUMENTS OR RELATING TO ANY OF THE FOREGOING. 18. Miscellaneous. (a) The Agent may execute any of its duties hereunder by or through agents or employees and shall be entitled to advice of counsel concerning all matters pertaining to its duties hereunder. (b) The Pledgor agrees to promptly reimburse the Agent for actual out-of-pocket expenses, including, without limitation, reasonable counsel fees, incurred by the Agent in connection with the administration and enforcement of this Agreement. (c) None of the Agent, nor any of their respective officers, directors, employees, agents or counsel shall be liable for any action lawfully taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct. (d) This Agreement shall be binding upon the Pledgor and its successors and assigns, and shall inure to the benefit of, and be enforceable by, the Agent and its respective successors and assigns, and shall be governed by, and construed and enforced in accordance with, the internal laws in effect in the State of New York without giving effect to principles of conflict of laws, and none of the terms or provisions of this Agreement may be waived, altered, modified or amended except in writing duly signed for and on behalf of the Agent and the Pledgor. 19. Severability. If for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or effect those portions of this Agreement which are valid. 20. Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give or serve upon any other a communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy and addressed as follows: (a) If to the Agent, at: Wexford Management LLC 411 West Putnam Avenue Greenwich, Connecticut 06830 Attention: Joseph Jacobs 12 Telephone: (203) 862-7020 Telecopier: (203) 862-7320 with a copy to: McDermott, Will & Emery 50 Rockefeller Plaza, 11th Fl. New York, New York 10020 Attn: Stephen B. Selbst, Esq. Telephone: (212) 547-5400 Telecopier: (212) 547-5444 13 (b) If to the Pledgors, to: c/o BCAM International, Inc. 1800 Walt Whitman Road Melville, New York 11747 Attn: Michael Strauss, President Telephone: (516) 752-7530 Telecopier: (516) 752-3558 With a copy to: Ruskin, Moscou, Evans & Faltischek, PC 170 Old Country Road Mineola, New York 11501 Attn: Norman Friedland, Esq. Telephone: (212) 663-6600 Telecopier: (212) 663-6642 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three (3) Business Days after the same shall have been deposited in the United States mail. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 21. Section Titles. The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 14 22. Counterparts. This Agreement may be executed in any number of counterparts, which shall, collectively and separately, constitute one agreement. IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge Agreement to be duly executed as of the date first written above. BCAM INTERNATIONAL, INC. By: -------------------------------------- Name: Michael Strauss Title: President WEXFORD MANAGEMENT LLC, as the Agent for the Noteholders By: -------------------------------------- Name: Joseph Jacobs Title: President 15 SCHEDULE I to the Stock Pledge Agreement Issued and Outstanding State of Authorized Shares Before Issuance of Company Organization Capital Stock to the Noteholders ------- ------------ ------- ------------------------- Drew Shoe Ohio 1,711.3422 shares 1,709.829 Corporation of common stock, no par value BCAM Technologies, Delaware 1,000 shares 1,000 Inc common stock par value $.001 per share 100 shares of mutual 0 stock, par value $.001 preferred per share HumanCAD Systems, Ontario An unlimited number [to be provided] Inc. of shares, without par value BCAM Technologies, New York [to be provided] [to be provided] Inc. BCA Services, Inc. New York 10,000,000 shares of 10,000,000 common stock, par value $.01 per share 16 SCHEDULE II to the Stock Pledge Agreement PLEDGE AMENDMENT This Pledge Amendment, dated __________ __, 19__ is delivered pursuant to Section 6(d) of the Stock Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to that certain Stock Pledge Agreement, dated as of April __, 1998 by the undersigned, as Pledgor, to Wexford Management LLC, as Agent, and that the Pledged Securities listed on this Pledge Amendment shall be and become a part of the Pledged Collateral referred to in said Stock Pledge Agreement and shall secure all Secured Obligations referred to in said Stock Pledge Agreement. BCAM INTERNATIONAL, INC. By: ------------------------------ Name: Title:
Class of Certificate Number of Shares Issued Name and Address of Pledgor Issuer Stock Number(s) Number of Shares and Outstanding - --------------------------- ------ ----- --------- ---------------- ---------------
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