EXHIBIT 10.1
REDEMPTION AND CONVERSION AGREEMENT
This Agreement is dated as of the 11th day of January, 2002 among Tech
Laboratories, Inc., a New Jersey corporation (the "Company") and the Holders
identified on Schedule A hereto ("Holder" or "Holders"):
WITNESSETH:
WHEREAS, the Company and Holders have entered into Subscription
Agreements at or about October 13, 2000 ("Subscription Agreement") pursuant to
which the Company sold to the Holders Notes of the Company in the aggregate
principal amounts set forth on Schedule A hereto; and
WHEREAS, as of December 31, 2001, the Holders will own the amount of
Note principal and interest designated on Schedule A hereto in connection with
previously unconverted portions of the Notes; and
WHEREAS, it is in the best interests of the Company to redeem the
amount of Note principal and interest designated on Schedule A hereto, and to
convert the amount of Note principal and interest designated on Schedule A
hereto into Company Shares (as defined in the Subscription Agreement).
NOW THEREFORE, the parties agree as follows:
1. On January 25, 2002 and April 25, 2002 (each a "Date of
Redemption"), the Company will redeem and convert the amounts of Note principal
and interest designated on Schedule B hereto. On or before each of the Dates of
Redemption, the Company will pay the designated redemption funds ("Redemption
Funds") and deliver the designated Company Shares, as applicable, issued in the
names of the respective Holders ("Conversion Shares") to an escrow agent to be
designated by the Holders, to be held and distributed pursuant to an escrow
agreement.
2. Provided the Company has complied with its material obligations
described in this Agreement and there has not occurred an Event of Default (as
defined in the Note), the Company may elect to pay the amount designated on
Schedule B hereto as "Election Amount", by conversion of the Election Amount
into Company Shares employing the Conversion Price (as defined in the Note) that
is the closing price of the Company's common stock as reported for the Principal
Market (as defined in the Note) for April 18, 2002. The Company must notify the
Holders and escrow agent of such election in writing ("Notice of Election") no
later than April 19, 2002.
3. Provided the Company has complied with its material obligations set
forth in this Agreement and an Event of Default has not occurred, then (i)
interest on the Notes shall cease to accrue on the Notes from and after January
25, 2002 and (ii) the Holder shall not exercise its conversion rights from and
after the date hereof.
4. A failure by the Company to comply with its material obligations
hereunder will be deemed an Event of Default under such Notes as are outstanding
and will allow each Holder to elect to cancel any unfulfilled or future
redemption and conversion as to such Holder and accrual of interest shall be
reinstated as of January 25, 2002. Timely compliance by the Company hereunder is
a material obligation.
5. Upon timely delivery of the Redemption Funds and Conversion Shares,
as applicable, to the escrow agent the corresponding aggregate Note principal
and interest will be deemed satisfied whether or not an original or reissued
Note is surrendered to the Company. In the event a Holder does not surrender the
Note on or after receipt of the Redemption Funds and Conversion Shares, as
applicable, then such Holder hereby indemnifies the Company against any and all
loss or damage attributable to such non-surrender arising from a third party
claim.
6. Except as described in the Agreement, the terms of the Subscription
Agreement and other agreements and documents referred to therein and delivered
therewith remain in full force and effect. The provisions of the following
sections of the Subscription Agreement are incorporated herein and made a part
hereof: Sections 13(a), (c), (d), (e) and (f).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TECH LABORATORIES, INC. - the "Company"
By: /s/ Bernard M. Ciongoli
----------------------------------
/s/
--------------------------------------
CELESTE TRUST REG.
"Holder"
/s/
--------------------------------------
ESQUIRE TRADE & FINANCE, INC.
"Holder"
/s/
--------------------------------------
THE ENDEAVOUR CAPITAL INVESTMENT
FUND, S.A. - "Holder"
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SCHEDULE A
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- ------------------------------------------------ -------------------- -------------------- ----------------
HOLDERS NOTE PRINCIPAL INTEREST ACCRUED AGGREGATE
THROUGH PRINCIPAL
JANUARY 24, 2002 AND INTEREST
- ------------------------------------------------ -------------------- -------------------- ----------------
CELESTE TRUST REG. $374,860.00 $32,868.57 $407,728.57
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
- ------------------------------------------------ -------------------- -------------------- ----------------
ESQUIRE TRADE & FINANCE, INC. $374,860.00 $32,868.57 $407,728.57
Trident Chambers
P.O. Box 146
Road Town, Tortola, B.V.I.
Fax: 011-41-41-760-1031
- ------------------------------------------------ -------------------- -------------------- ----------------
THE ENDEAVOUR CAPITAL INVESTMENT FUND, S.A. $371,270.00 $31,372.32 $402,642.32
Cumberland House
27 Cumberland Street, Nassau
New Providence, The Bahamas
Fax: 1-284-494-3917
- ------------------------------------------------ -------------------- -------------------- ----------------
TOTALS
- ------------------------------------------------ -------------------- -------------------- ----------------
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SCHEDULE B
JANUARY 14, 2002 REDEMPTION DATE
- ------------------------------------------------ -------------------- --------------------- ---------------
HOLDERS REDEEMED REDEMPTION CONVERSION
PRINCIPAL AND FUNDS SHARES
INTEREST
- ------------------------------------------------ -------------------- --------------------- ---------------
CELESTE TRUST REG. $254,830.36 $251,044.00 100,418
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
- ------------------------------------------------ -------------------- --------------------- ---------------
ESQUIRE TRADE & FINANCE, INC. $254,830.36 $251,044.00 100,418
Trident Chambers
P.O. Box 146
Road Town, Tortola, B.V.I.
Fax: 011-41-41-760-1031
- ------------------------------------------------ -------------------- --------------------- ---------------
THE ENDEAVOUR CAPITAL INVESTMENT FUND, S.A. $251,651.45 $247,912.00 99,164
Cumberland House
27 Cumberland Street, Nassau
New Providence, The Bahamas
Fax: 1-284-494-3917
- ------------------------------------------------ -------------------- --------------------- ---------------
TOTALS $761,312.17 $750,000.00 300,000
- ------------------------------------------------ -------------------- --------------------- ---------------
SCHEDULE B
APRIL 15, 2002 REDEMPTION DATE
- --------------------------------------------------- -------------------- --------------------- ----------------
HOLDERS REDEEMED REDEMPTION ELECTION
PRINCIPAL AND FUNDS AMOUNT
INTEREST
- --------------------------------------------------- -------------------- --------------------- ----------------
CELESTE TRUST REG. $152,898.21 $150,626.33 $30,125.27
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
- --------------------------------------------------- -------------------- --------------------- ----------------
ESQUIRE TRADE & FINANCE, INC. $152,898.21 $150,626.33 $30,125.27
Trident Chambers
P.O. Box 146
Road Town, Tortola, B.V.I.
Fax: 011-41-41-760-1031
- --------------------------------------------------- -------------------- --------------------- ----------------
THE ENDEAVOUR CAPITAL INVESTMENT FUND, S.A. $150,990.87 $148,747.34 $29,749.46
Cumberland House
27 Cumberland Street, Nassau
New Providence, The Bahamas
Fax: 1-284-494-3917
- --------------------------------------------------- -------------------- --------------------- ----------------
TOTALS $456,787.29 $450,000.00 $90,000.00
- --------------------------------------------------- -------------------- --------------------- ----------------
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