EXHIBIT 1
INVESTMENT AGREEMENT
DATED AS OF NOVEMBER 28, 2000
AMONG
SELWAY PARTNERS, LLC AND CIP CAPITAL L.P.
AND
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇.▇▇▇, CORP.
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of November 28,
2000, by and among Selway Partners, LLC, a Delaware limited liability company
(the "Selway") and CIP Capital L.P., a Delaware limited partnership ("CIP" and
with Selway, the "Investors") and ▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇.▇▇▇, corp. a Delaware
corporation (the "Company").
RECITALS
A. The Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended;
▇. ▇▇▇▇▇▇ has previously loaned $500,000 to the Company, which loan is
evidenced by a Promissory Note dated November 3, 2000 (the "Bridge Loan").
C. The Investors wish to purchase, and the Company wishes to sell and
issue to the Investors, upon the terms and conditions stated in this Agreement,
an aggregate of $2,000,000 of its Convertible Debentures (the "Debentures"), a
portion of the proceeds of which shall be used to repay the Bridge Loan. In
addition, in connection with the purchase of the Debentures, the Company wishes
to issue to the Investors, on the terms and conditions stated in this Agreement,
warrants to purchase shares of convertible preferred stock of the Company, and
has granted an option to the Investors (or their transferees) to purchase an
additional $3,000,000 of Debentures; and
D. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as EXHIBIT E (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder, and applicable state securities laws;
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. In addition to those terms defined above and
elsewhere in this Agreement, for the purposes of this Agreement, the following
terms shall have the meanings hereinafter set forth:
"Additional Investment" has the meaning set forth in Article VIII.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person.
"Bridge Loan" has the meaning set forth in Recital B hereto.
"CIP Fee Agreement" has the meaning set forth in Section 7.11.
"Closing" and "Closing Date" shall have the meanings set forth in
Section 2.2.
"Certificate of Designation" means the Certificate of Designations, in
the form attached hereto as Exhibit A, setting forth the rights, preferences and
privileges of the Preferred Shares.
"Common Shares" or "Common Stock" means shares of common Stock, $.01
par value, of the Company, that may be issued by the Company upon the conversion
of the Preferred Shares.
"Common Warrant" means the Warrant to be issued at the Initial Closing
to Selway Management, in the form attached hereto as Exhibit B.
"Control" means the possession , direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Debentures" means the Company's Convertible Subordinated Debentures in
the forms attached as Exhibit C1 and C2, respectively, to be issued to the
Investors in accordance with the terms and conditions of this Agreement, as the
same may be modified, amended supplemented from time to time.
"Initial Closing" has the meaning set forth in Section 2.2
"Investment Agreements" means this Agreement the Debentures, the
Warrants the Registration Rights Agreement, the Management Agreement, the CIP
Fee Agreement, the Security Agreement and such other agreements executed and
delivered by the parties hereto pursuant to this Agreement.
"Investors' Counsel" means Cole, Schotz, Meisel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
"Management Agreement" means the Management Agreement between the
Company and Selway Management in the form attached hereto as Exhibits D.
"Market Price" means the average of the closing bid prices of the
Company's Common Stock over the five (5) trading days immediately preceding the
applicable date.
"Material Adverse Effect" means an effect which, either alone or in
conjunction with other effects, constitutes a material adverse effect on the (i)
condition (financial or otherwise), business, assets, or results of operations
of the Company and its subsidiaries, taken as a whole; (ii) ability of the
Company to perform any of its material obligations under the terms of this
Agreement; or (iii) rights and remedies of an Investor under the terms of this
Agreement.
"Person" means an individual, corporation, partnership, trust, business
trust, association, joint stock company, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Preferred Shares" or "Preferred Stock" means the shares of Series A
Convertible Preferred Stock, $.01 par value, of the Company, the terms of which
are set forth in the Certificate of Designations, that may be issued upon the
conversion of the Debentures or the exercise of the Preferred Warrants.
"Preferred Warrant" means the Preferred Stock Warrant in the form
attached hereto as Exhibit E.
"Registration Rights Agreement" means the Registration Rights Agreement
to be dated as of the Initial Closing Date between the Company and the Investors
in form attached hereto as Exhibit F.
"SEC Filings" has the meaning set forth in Section 3.4.
"Second Closing" has the meaning set forth in Section 2.2
"Securities" means the Debentures, Preferred Shares, Common Shares and
Warrant Shares.
"Security Agreement" means the Security Agreement granted in favor of
the Investors by the Company dated as of the Initial Closing Date in the form
attached hereto as Exhibit G.
"Selway Management" means Selway Management, Inc, a Delaware
corporation.
"Shares" means the Preferred Shares and the Common Shares.
"Special Meeting" has the meaning set forth in Section 6.3.
"Warrants" means collectively the Preferred Warrants and the Common
Warrants.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
ARTICLE II.
PURCHASE AND SALE OF DEBENTURES
Section 2.1 Subject to the terms and conditions set forth herein and in
reliance on the representations, warranties and covenants set forth herein, on
each Closing Date (as further described below) the Company shall issue and sell
to the Investors the Debentures as follows:
(a) At the Initial Closing, each of the Investors shall
purchase and the Company shall issue to each Investor, a Debenture in a
principal amount of $750,000, for an aggregate purchase price of $1,500,000, and
(b) At the Second Closing, the Investors shall purchase and
the Company shall issue to each Investor, a Debenture in a principal amount of
$250,000, for an aggregate purchase price of $500,000.
Section 2.2 Closings.
(a) The initial purchase and sale of the Debentures (the
"Initial Closing") will take place on or before November 29, 2000 (the "Initial
Closing Date") at the offices of Investors' counsel or at such other location as
the Company and the Investors shall agree.
(b) The second purchase and sale of the Debentures (the
"Second Closing") will take place on or before sixty (60) days after the Initial
Closing at the offices of Investors' counsel or at such other location as the
Company and the Investors shall agree. The date of the Second Closing (the
"Second Closing Date") shall be set by the Investors on not less than two (2)
business days prior written notice to the Company. The purchase and sale of any
Debentures with respect to any Additional Investment (an "Additional Closing")
will take place at the offices of the Investor's counsel or at such other
location as the Company and the Investor shall agree. The date of any Additional
Closing (the "Additional Closing Date") shall be set by the Investors on the
date that it give notice to the Company of their intent to make an Addition
Investment pursuant to Article VIII.
(c) At the Initial Closing:
(i) (A) Each Investor shall deliver by wire transfer of
same day funds, to such account of the Company as the Company shall designate at
least one business day before the Closing Date, $750,000;
(B) the Company shall deliver to each Investor:
(x) a Debenture in a principal amount of $750,000;
and
(y) a Preferred Warrant to purchase 346,154
Preferred Shares with an exercise price of $.72 per share being the closing
price of a share of Common Stock on the NASDAQ Small Cap Market on November
27, 2000;
(C) the Company and each Investor shall execute and
deliver a cross-receipt acknowledging such purchase and sale; and
(ii) the Company shall issue to Selway Management, as
a finder's fee, with respect to the investment being made by the Investors
pursuant hereto, the Common Warrant.
(d) At the Second Closing:
(i) Each Investor shall deliver by wire transfer of same
day funds, to such account of the Company as the Company shall designate at
least one business day before the Second Closing Date, $250,000;
(ii) the Company shall deliver to each Investor:
(A) a Debenture in a principal amount of $250,000; and
(B) a Preferred Warrant to purchase 115,385 Preferred
Shares with an exercise price of $.72 per share; and
(C) the Company and each Investor shall execute and
deliver a cross-receipt acknowledging such purchase and sale.
(e) At any Additional Closing:
(i) each Investor shall deliver by wire transfer of same
day funds, to such Account of the Company as the Company shall designate at
least one (1) business day before such Additional Closing Date, the purchase
price for the principal amount of Debentures being acquired at such Additional
Closing;
(ii) The Company shall deliver to each Investor:
(A) a Debenture in a principal amount of the amount
of the Investor's Additional Investment; and
(B) a Preferred Warrant to purchase a number of
Preferred Shares equal to thirty percent (30%) of the number of Preferred Shares
into which the Debentures being issued at the Additional Closing are convertible
into with an exercise price of $.72 per share.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as follows:
Section 3.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
organization. The Company and each of its subsidiaries has all requisite power
and authority to own, operate and lease its properties and to conduct its
business as currently conducted. The Company and each of its subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such licensing or qualification, except to the extent that the
failure to be so qualified or licensed is not reasonably likely to have a
Material Adverse Effect.
Section 3.2 Authorization. The Company has all requisite corporate
power and authority to execute and deliver this Agreement and the other
Investment Agreements and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the other Investment Agreements
and the performance by the Company of its obligations hereunder and thereunder,
have been duly authorized by the Company (except for the approval of the
Company's shareholders as contemplated by Section 6.3), no other corporate
proceeding therefor on the part of the Company or its stockholders is required.
This Agreement and the other Investment Agreements are the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to the enforcement of creditors' rights and remedies or by other
equitable principles of general application.
Section 3.3 Capitalization .
(a) Set forth on Schedule 3.3 hereto is (a) the authorized
capital stock of the Company on the date hereof; (b) the number of shares of
capital stock issued and outstanding; (c) the number of shares of capital stock
issuable pursuant to the Company's stock plans; and (d) the number of shares of
capital stock issuable and reserved for issuance pursuant to securities (other
than the Securities) exercisable for, or convertible into or exchangeable for
any shares of capital stock. All of the issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights. Except as described in
the SEC Filing, no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company. Except as set
forth on Schedule 3.3, there are no outstanding warrants, options, convertible
securities or other rights, agreements or arrangements of any character under
which the Company is or may be obligated to issue any equity securities of any
kind, or to transfer any equity securities of any kind. Except as described in
the SEC Filing, the Company does not know of any voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among any of the security holders of the Company relating to the
securities held by them. Except as set forth on Schedule 4.3, the Company has
not granted any Person the right to require the Company to register any
securities of the Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own
account or for the account of any other Person.
(b) All of the outstanding shares of capital stock of the
Company are, and as of the Closing, will be, duly authorized, validly issued,
fully paid and nonassessable and none of such securities are or were at the time
of issuance subject to any preemptive rights (statutory or otherwise), except
such rights as have lapsed or been validly waived. The Preferred Shares issuable
upon exercise of the Preferred Warrants have been duly authorized and reserved
for issuance and, when issued upon exercise of the Preferred Warrants, will be
validly issued, fully paid and nonassessable, and will not be subject to any
preemptive rights (statutory or otherwise), except such rights that have lapsed
or been validly waived and except that if the Additional Investment is made in
full the Corporation will need to amend its Certificate of Incorporation to
increase the number of authorized Shares of preferred stock. The Common Shares
issuable upon conversion of the Preferred Shares have been duly authorized and
reserved for issuance and, when issued upon conversion of the Preferred Shares,
will be validly issued, fully paid and nonassessable, and will not be subject to
any preemptive rights (statutory or otherwise), except such rights that have
lapsed or been validly waived.
Section 3.4 Delivery of SEC Filings; Business. The Company has
provided the Investors with copies of the Company's most recent Annual Report on
Form 10-KSB for the fiscal year ended March 31, 2000, and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the Annual
Report on Form 10-KSB (collectively, the "SEC Filings"). The Company and its
subsidiaries are engaged only in the business described in the SEC Filings and
the SEC Filings contain a complete and accurate description of the business of
the Company and its subsidiaries as presently conducted.
Section 3.5 Use of Proceeds. The proceeds of the sale of the
Securities hereunder shall be used by the Company to repay the Bridge Loan and
for working capital and general corporate purposes.
Section 3.6 No Material Adverse Change. (a) Since the filing of the
Company's most recent Quarterly Report on Form 10-QSB or as otherwise identified
and described in subsequent reports filed by the Company pursuant to the 1934
Act, there has not been:
(i) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company except
quarterly dividends paid on preferred stock of the Company as described
generally in the Company's Form 10-KSB;
(ii) any material damage, destruction or loss, whether
or not covered by insurance to any assets or properties of the Company or any of
its subsidiaries;
(iii) any waiver by the Company or any of its
subsidiaries of a valuable right or of a material debt owed to it;
(iv) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company or any of its
subsidiaries, except in the ordinary course of business and which is not
material to the assets, properties, financial condition, operating results or
business of the Company and its subsidiaries taken as a whole (as such business
is presently conducted and as it is proposed to be conducted);
(v) except with respect to the cessation of the
operations of its wholly owned subsidiary ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, and the severance
agreements with E. ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, any material change or amendment
to a material contract or arrangement by which the Company or any of their
subsidiaries or any of its assets or properties is bound or subject;
(vi) any labor difficulties or labor union organizing
activities with respect to employees of the Company or any of its subsidiaries;
or
(vii) any transaction entered into by the Company or
any of its subsidiaries other than in the ordinary course of business.
(b) The Investors acknowledge that the financial condition
and results of operation of the Company has materially deteriorated from that
set forth in the financial statements contained in the Company's Quarterly
Report on Form 10-QSB for the period ended September 30, 2000.
Section 3.7 SEC Filings; Material Contracts .
(a) As of its filing date, each report filed by the
Company with the SEC pursuant to the 1934 Act, complied as to form in all
material respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each registration statement and any amendment thereto
filed by the Company pursuant to the 1933 Act, as of the date such statement or
amendment became effective, complied as to form in all material respects with
the 1933 Act and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; and each prospectus filed pursuant to
Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of
any sale of securities pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
(c) Except as described in the Company's SEC Filings,
there are no agreements or instruments currently in force and effect that
constitute a warrant, option, convertible security or other right, agreement or
arrangement of any character under which the Company is or may be obligated to
issue any material amounts of any equity security of any kind, or to transfer
any material amounts of any equity security of any kind.
Section 3.8 Form S-3 Eligibility. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form S-3
under the 1933 Act.
Section 3.9 No Violation; Conflicting Agreements. Except as otherwise
disclosed to the Investors in writing, the execution and delivery of this
Agreement by the Company or the other Investment Agreements nor the performance
by the Company of its obligations hereunder or thereunder will (a) conflict with
or result in any breach of any provision of the Company's Certificate of
Incorporation or Bylaws; (b) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default or give rise to
any lien or encumbrance on the Company's properties or assets or any right of
termination, cancellation or acceleration under any of the terms or conditions
of any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation to which the Company is a party or by which its properties or
assets may be bound, or (c) violate any statute, law, rule, regulation, writ,
injunction, judgment, order or decree of any court, administrative agency or
governmental authority binding on the Company or any of its properties or
assets.
Section 3.10 Compliance with Applicable Law. The Company is currently
in compliance with all applicable laws (whether statutory or otherwise), rules,
regulations, orders, ordinances, judgments, decrees, writs, requirements and
injunctions of all governmental authorities, except for such noncompliance that,
individually and in the aggregate, is not reasonably likely to have a Material
Adverse Effect.
Section 3.11 Licenses and Permits. The Company possesses all
franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities, and all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights
free from material restrictions, that are necessary for the ownership,
maintenance and operation of their respective properties and assets, and neither
is in violation of any thereof except for such violations that, individually and
in the aggregate, are not reasonably likely to have a Material Adverse Effect.
Section 3.12 Consents. Except for the consent of Silicon Valley Bank
and for the approval of the Company's stockholders as contemplated under Section
6.3 hereof, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or other party is
required to be made or obtained by the Company in connection with the execution
and delivery of this Agreement or the other Investment Agreements or the
performance by the Company of its obligations hereunder.
Section 3.13 Litigation, Orders. Except as set forth on Schedule 3.13,
there are no claims, actions, suits, proceedings, or, to the best knowledge of
the Company, investigations or inquiries pending before any court, arbitrator or
governmental or regulatory official or office, or, to the knowledge of the
Company, threatened, against or affecting the Company or questioning the
validity of this Agreement, the other Investment Agreements or the transactions
contemplated hereby, thereby or under the Certificate of Incorporation or any
action taken or to be taken by the Company pursuant to this Agreement, the other
Investment Agreements, at law or in equity; nor, to the knowledge of the
Company, is there any valid basis for any such claim, action, suit, proceeding,
inquiry or investigation. The Company is not subject to any judgment, order or
decree entered in any lawsuit or proceeding that is reasonably likely to have a
Material Adverse Effect.
Section 3.14 Title to Properties; Encumbrances. The Company has good
title to all of its properties and assets, including any vehicles, free and
clear of all liens, charges and encumbrances, except liens for taxes not yet due
and payable and such liens or other imperfections of title, if any, that do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which are not reasonably likely to have a Material
Adverse Effect. All leases pursuant to which the Company leases personal
property, including any vehicles, are in good standing, valid and effective in
accordance with their respective terms, and there is no existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default and in respect of which the Company has not
taken adequate steps to prevent such a default from occurring) thereunder.
Section 3.15 Intellectual Property. The Company and its subsidiaries
own or possess adequate trademarks and trade names and have all other rights to
inventions, know-how, patents, copyrights, trademarks, trade names, confidential
information and other intellectual property (collectively, "Intellectual
Property Rights"), free and clear of all liens, security interests, charges,
encumbrances, equities and other adverse claims (except the security interest of
Silicon Valley Bank granted by the Company in connection with the working
capital credit line extended to the Company by Silicon Valley Bank), necessary
to conduct the business now operated by them, or presently employed by them, and
presently contemplated to be operated by them, and have not received any notice
of infringement of or conflict with asserted rights of others with respect to
any Intellectual Property Rights. No proprietary technology of any Person was
used in the design or development by the Company of (or otherwise with respect
to) any of the Intellectual Property Rights, which technology was not properly
acquired by the Company from such Person.
Section 3.16 Environmental Matters. Neither the Company nor any of its
subsidiaries is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "Environmental Laws"), owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.
Section 3.17 Transactions with Affiliates. Other than pursuant to the
Company's option plans and any employment agreements, there are no loans,
leases, agreements, understandings, commitments or other continuing transactions
between the Company and any officer, director or five percent or greater
stockholder of the Company, or any family member or any person or entity that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control of any of the foregoing persons.
Section 3.18 Financial Statements. The financial statements included
in each SEC Filing present fairly and accurately the consolidated financial
position of the Company and its subsidiaries as of the dates shown and their
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis. Except as set
forth on Schedule 3.18 or in the financial statements of the Company included in
the SEC Filings filed prior to the date hereof, the Company has no liabilities,
contingent or otherwise, except those which individually or in the aggregate are
not material to the financial condition or operating results of the Company.
Section 3.19 Insurance Coverage. The Company and its subsidiaries
maintain in full force and effect insurance coverage that is customary for
comparably situated companies for the business being conducted, and properties
owned or leased, by the Company and its subsidiaries, and the Company reasonably
believes such insurance coverage to be adequate against all liabilities, claims
and risks against which it is customary for comparably situated companies to
insure.
Section 3.20 Compliance with Nasdaq Continued Listing Requirements .
The shares of Common Stock are duly listed for trading on the Nasdaq SmallCap
Market. Except as set forth on Schedule 3.13 there are no proceedings pending or
to the Company's knowledge threatened against the Company relating to the
continued listing of the Company's Common Stock on the Nasdaq SmallCap Market.
Section 3.21 Acknowledgment of Dilution. The number of shares of
Common Stock issuable pursuant to this Agreement may increase substantially. The
Company's executive officers and directors have studied and fully understand the
nature of the transactions being contemplated hereunder and recognize that they
have a potential dilutive effect.
Section 3.22 Investment Banking, Brokerage. Except for the Common
Warrant, there are no claims for investment banking fees, brokerage commissions,
finder's fees or similar compensation (exclusive of professional fees to
lawyers, accountants and other consultants) in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Company or any Affiliate. The Company shall indemnify the
Investors against any claims for any such fees, commissions or compensation
payable to any broker or finder claiming through the Company or any Affiliate
thereof in connection with the transactions contemplated by this Agreement or
the other Investment Agreements and shall pay all expenses incurred by the
Investors in connection with the defense of any action brought against the
Investors to collect any such fees, commissions or compensation by any broker or
finder claiming through the Company or any Affiliate.
Section 3.23 Disclosure. The representations and warranties made or
contained in this Agreement, the schedules and exhibits hereto and the
certificates delivered pursuant to the terms hereof, and the written current
information concerning the business of the Company delivered to the Investors in
connection with or pursuant to this Agreement, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make such representations, warranties or
other material not misleading. No event has occurred and nothing material has
come to the attention of the Company that would indicate that any of such
information (together with any written updates thereof furnished by them) is not
true and correct in all material respects as of the date hereof.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors represents and warrants to the Company as to
itself as follows:
Section 4.1 Organization and Existence. The Investor is a validly
existing limited liability company or limited partnership and has all requisite
limited liability company or limited partnership power and authority to invest
in the Securities pursuant to this Agreement.
Section 4.2 Authorization. The execution, delivery and performance by
the Investor of the Investment Agreements have been duly authorized and each of
the Investment Agreements will each constitute the valid and legally binding
obligation of the Investor, enforceable against the Investor in accordance with
their terms.
Section 4.3 Investment Representations .
(a) It is purchasing the Debentures and the other
Securities to be acquired pursuant to this Agreement for the Investor's own
account, for investment only and not with a view to or for sale in connection
with the distribution thereof except for sales contemplated by the Registration
Rights Agreement.
(b) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment contemplated by this Agreement and making an informed investment
decision with respect thereto.
(c) It is an "accredited investor" as such term is defined
in Rule 501 promulgated under the Securities Act.
(d) It has reviewed and acknowledges the Risk Factors set
forth on Schedule 4.3 and acknowledges that the financial condition and results
of operation of the Company have materially deteriorated from that set forth in
the Company's financial statements contained in its Quarterly Report on Form
10-QSB for the period ended September 30, 2000.
(e) It has had the opportunity to ask questions and
receive and has received answers concerning the terms and conditions of the
offering of securities purchased hereunder, as well as the opportunity to obtain
additional information necessary to verify the accuracy of information furnished
in connection with such offering that the Company possesses or can acquire
without unreasonable effort or expense; provided, however, such Investor has
relied upon the representations and warranties of the Company set forth in this
Agreement, and this Section 4.3 shall not be interpreted to limit that reliance.
(f) It understands that none of the Securities have been
registered under the 1933 Act or any state or foreign securities laws, and may
not be transferred unless subsequently registered thereunder or pursuant to an
exemption from registration, and that a legend indicating such restrictions will
be placed on the certificates representing such Securities.
(g) ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ have only
recently joined the Company's Board of Directors and are not familiar with the
past operations of the Company. In that regard, the Investors agree that while
such directors have voted to approve this Agreement and the transactions
contemplated hereby, nothing contained herein or therein shall constitute any
such director's personal certification of the accuracy or completeness of any of
the Company's representations or warranties contained herein or therein.
Section 4.4 Brokerage. Except for the issuance of the Common Warrant
to Selway Management, there are no claims for investment banking fees, brokerage
commissions, finder's fees or similar compensation (other than professional fees
to lawyers, accountants and other consultants) in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of such Investor or any of its affiliates. The
Investors shall indemnify the Company against any claims for any such fees,
commissions or compensation payable to any broker or finder claiming through the
Investors or any affiliate thereof in connection with the transactions
contemplated by this Agreement and shall pay all expenses incurred by the
Company in connection with the defense of any action brought against the Company
to collect any such fees, commissions or compensation by any broker or finder
claiming through the Investor or any Affiliate.
Section 4.5 Authority; Binding Effect. The execution, delivery and
performance of the obligations of the Investor hereunder have been duly
authorized by all necessary company or partnership action. The execution,
delivery and performance of this Agreement and the other Investment Agreements,
will not violate any provision of the corporate documents of the Investor, or of
any instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound or, of any provision of law, rule or regulation
applicable to the Investor. This Agreement and the other Investment Agreements
have been duly executed and delivered by the Investor, and each such agreement
is a valid and binding obligation of the Investor, enforceable against the
Investor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to the enforcement of creditors' rights and
remedies or by other equitable principles of general application.
ARTICLE V.
COVENANTS PENDING THE CLOSING
During the period from the date of this Agreement and continuing until
the Initial Closing, the Company covenants and agrees, unless otherwise
specifically provided in this Agreement, or unless the Investors shall otherwise
agree in writing, to do the following:
Section 5.1 Access to Information and Records. The Company shall permit
the Investors to continue to make such reasonable investigation of the
operations and properties of the Company, including providing access to the
Company's officers and its books and records and other documents, as the
Investors deems necessary or advisable in connection with the transactions
contemplated hereby.
Section 5.2 Consents; Approvals; Efforts to Close. The Company shall
use its best efforts to obtain, prior to the Initial Closing, all consents
necessary for the consummation of the transactions contemplated hereby. All such
consents shall be in writing and in form and substance reasonably satisfactory
to the Investors, and executed counterparts thereof shall be delivered to the
Investors promptly after receipt thereof by the Company, but in no event later
than the Initial Closing.
Section 5.3 Increase in Board Size. The Company shall increase the
size of its Board of Directors to ten (10) persons and the Board shall have
elected the following four (4) persons to fill four of the five vacancies
created by such increase: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇.
ARTICLE VI.
AFFIRMATIVE COVENANTS OF THE COMPANY
So long as any of the Debentures or Preferred Shares remain
outstanding, the Company shall comply with the following covenants:
Section 6.1 Proceeds. The Company shall use the proceeds from the
issuance and sale of the Debentures to repay the Bridge Loan and for working
capital purposes only and shall not, directly or indirectly, use such proceeds
or any portion thereof to make any payments or pay any dividends to stockholders
or other Affiliates of the Company or to repay any indebtedness other than in
the ordinary course of business.
Section 6.2 Reports. The Company will furnish to the Investors the
following reports, each of which shall be provided to the Investor by next day
overnight courier.
Section 6.3 Shareholder Approval. Promptly after the Initial Closing,
the Company shall prepare a Proxy Statement and call a special meeting of its
stockholders (the "Special Meeting") seeking the approval of the stockholders
for the issuance of Warrant Shares upon the exercise of the Warrants and the
issuance of Preferred Shares upon conversion of any Debentures which may be
issued in connection with the Additional Investment or in payment of any
dividends on any of the Preferred Shares. The Proxy Statement shall be prepared
in accordance with Schedule 14A of the SEC's rules and regulations. The
Company's counsel shall consult and cooperate with Investor's counsel in the
preparation of such proxy material and provide copies of all drafts of any proxy
materials to counsel for the Investors for its review prior to filing with the
SEC. At the request of the Investors, the Company will seek an exemption from
the NASD pursuant to Rule 4310(c)(25)(G)(ii) of the NASD Rules of Governance
requiring shareholder approval of the above-referenced issuances and if such
exemption is obtained, the Company will not be required to hold the Special
Meeting.
Section 6.4 Directors' Indemnification and Insurance. The Certificate
of Incorporation or Bylaws of the Company shall at all times provide for
indemnification of the directors and limitations on the liability of the
directors to the fullest extent permitted under applicable state law. The
Company shall maintain on reasonable business terms directors' and officers'
liability insurance coverage.
Section 6.5 Insurance. The Company shall keep its insurable properties
insured, upon reasonable business terms, by financially sound and reputable
insurers against liability and the perils of casualty and fire and other hazards
and risks and liability to persons and property in amounts of coverage as are
sufficient in nature and amount to allow the Company to replace any of its
material properties or assets which might be damaged or destroyed and sufficient
to cover liabilities to which the Company could reasonably be expected to become
subject.
Section 6.6 Conduct of Business. The Company shall continue to engage
principally in the business now conducted by the Company or a business or
businesses similar thereto. The Company shall keep in full force and effect its
corporate existence and all Intellectual Property rights and licenses necessary
or useful in its business.
Section 6.7 Payment of Taxes, Compliance with Laws, etc. The Company
shall pay and discharge all lawful taxes, assessments and governmental charges
or levies imposed upon it or its income or property before the occurrence of any
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; provided, however, that the Company shall not be required to pay
and discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof is being contested by the Company in good faith by appropriate
proceedings and an adequate reserve therefor has been established on its books.
The Company shall comply with all applicable laws and regulations in the conduct
of its business, including, without limitation, all applicable federal and state
securities laws in connection with the issuance of any securities.
Section 6.8 Right of the Investors to Participate in Future
Transactions. The Investor will have a right to participate in future
non-public capital raising transaction on the terms and conditions set forth in
this Section 6.8. During such period, the Company shall give ten (10) business
days advance written notice to the Investors prior to any non-public offer or
sale of any of the Company's equity securities or any securities convertible
into or exchangeable or exercisable for sch securities by providing to the
Investor a comprehensive term sheet containing all significant business terms of
such a proposed transaction. Each Investor shall have the right (pro rata in
accordance with the Investor's participation in this offering) to purchase all
(but not less than all) of such securities which are the subject of such a
proposed transaction for the same consideration and on the same terms and
conditions as contemplated for such third-party sale. The Investor's rights
hereunder must be exercised in writing by the Investors within five (5) business
days following receipt of the notice from the Company. If, subsequent to the
Company giving notice to the Investors hereunder but prior to the Investors
exercising their right to participate (or the expiration of the five-day period
without response from the Investors), the terms and conditions of the proposed
third-party sale are changed from that disclosed in the comprehensive term sheet
provided to the Investors, the Company shall be required to provide a new notice
to the Investors hereunder and the Investors shall have the right, which must be
exercised within five (5) business days of such new notice, to exercise their
rights to purchase the securities on such changed terms and conditions as
provided hereunder. In the event the Investors do not exercise their rights
hereunder, or affirmatively decline to engage in the proposed transaction with
the Company, then the Company may proceed with such proposed transaction on the
same terms and conditions as noticed to the Investors.
Section 6.9 Reservation of Securities. The Company hereby agrees, at
all times with respect to the conversion of the Debentures, exercise of the
Warrants and conversion of the Preferred Shares to reserve and keep available
out of its authorized but unissued shares of Common Stock and Preferred Stock,
such number of shares of Common Stock and Preferred Stock as shall from time to
time equal the number of Preferred Shares and Common Shares sufficient to permit
the issuance of such Shares upon the exercise or conversion of any such
Securities.
Section 6.10 Agreements. The Company shall not amend, modify or waive
any provisions of any confidentiality and non-disclosure agreement or
non-competition agreement between the Company and any of their respective
employees, officers, directors or agents, or any other party with whom such
agreement may now or hereafter exist.
Section 6.11 Material Adverse Changes. The Company shall promptly
advise the Investors in writing of any event, including without limitation any
suit or proceeding commenced or threatened against the Company, that in the
reasonable judgment of the Company could have a Material Adverse Effect.
Section 6.12 Inspection. The Company shall, upon reasonable prior
notice, permit authorized representatives of the Investor to visit and inspect
any of the properties of the Company, including its books of account (and to
make copies thereof and take extracts therefrom), and to discuss its affairs,
finances and accounts with its officers, administrative employees and
independent accountants, all at such reasonable times and as often as may be
reasonably requested.
Section 6.13 No Conflicting Agreements. The Company will not, and will
not permit its subsidiaries to, take any action, enter into any agreement or
make any commitment that would conflict or interfere in any material respect
with the obligations to the Investor under the Agreements.
Section 6.14 Compliance with Laws. For so long as the Investor
beneficially owns any of the Securities, the Company will use reasonable
efforts, and will cause each of its subsidiaries to use reasonable efforts, to
comply with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities, except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.
Section 6.15 Corporate Existence. So long as the Investors
beneficially own any of the Securities, the Company shall maintain its corporate
existence.
Section 6.16 Remedies. The Investors shall be entitled to a decree of
specific performance to enforce its rights hereunder and the other Investment
Agreements. The Company shall indemnify and hold harmless the Investor from and
against any loss, liability, costs, expenses or fees (including reasonable
attorneys fees) arising out of (i) the entry into and performance of the
Agreements by the Investor, (ii) any breach by the Company of any
representation, warranty, covenant or agreement in any of the Agreements, and/or
(iii) the enforcement of this Section.
Section 6.17 Expenses. Irrespective of any approvals necessary to
consummate the transactions contemplated hereby from the Board of Directors of
the Company or from the Company's stockholders, the Company shall pay at the
Initial Closing, the Second Closing and any Additional Closing (which shall
include any closing with respect to the conversion of the Debentures or
Preferred Shares or exercise of the Warrants, all expenses and disbursements
incurred by the Investors in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement, the other Investment
Agreements and all transactions contemplated herein or therein, including,
without limitation, accounting and attorneys' fees and expenses incurred in
investigating the business and affairs of the Company (including, without
limitation, travel expenses) (the "Investor Expenses"). The Company shall remain
liable for the Investor Expenses notwithstanding any termination of this
Agreement.
Section 6.18 Negative Covenants. (a) So long as the Debentures or any
of the Preferred Shares are outstanding the following matters shall require the
approval of holders of more than fifty percent of the principal amount of the
Debentures and the approval of the holders of a majority of the Preferred Shares
then outstanding, voting as a class:
(i) the authorization and adoption of any amendment to the
Certificate of Incorporation or by-Laws of the Company or any subsidiary, or any
other action which would have the effect of amending the specific rights,
preferences or privileges of the Preferred Shares;
(ii) the authorization or issuance of any equity
securities of any class with rights equal to or superior to those of the
Preferred Shares, or other securities convertible into such securities, and
entering into any contract or granting any option for the issuance of any such
securities;
(iii) the merger or consolidation of the Company or any
subsidiary with and/or into any Company, firm, or entity;
(iv) the sale or other disposal of all or substantially
all of the Company's or any subsidiary's assets;
(v) entering into voluntary liquidation or effecting the
winding up of the Company or any subsidiary;
(vi) entering into any transactions with any officer,
director, stockholder or other interested Party involving payments in excess of
$25,000;
(vii) incurrence of debt, on behalf of either the Company
or any subsidiary which in one transaction, or in a series of related
transactions, in the aggregate, exceeds the amount of US $200,000 in any fiscal
year;
(viii) the investment by the Company with or into any
other corporation, company, partnership or other person, or the lending of any
funds to or issuing the guaranty of the Company for the obligations of any other
Person;
(ix) incurring any capital expenditures which exceed
individually or in the aggregate of $200,000 in any fiscal year;
(x) granting any new liens or encumbrances on any assets
of the Company;
(xi) declaring or paying any dividend or other
distribution of cash, shares, or other assets to the stockholders of the Company
in their capacity as such;
(xii) appointing and setting the compensation of the
Company's and any subsidiary's Chief Executive Officer, Chief Operating Officer
and Chief Financial Officer;
(xiii) increasing or decreasing the number of directors
serving on the Board of Directors of the Company or any subsidiary or changing
the manner of their designation to the Board;
(xiv) effecting a fundamental change in the Line of
Business of the Company or any subsidiary; and
(b) In the event that the Investors have not made the
Additional Investment and provided the Company has complied with the provisions
of Section 6.8 hereof, the Investors agree that the Company shall be permitted
to raise additional capital or incur additional indebtedness without regard to
the negative covenant set forth in Section 6.18(a)(vii) hereof.
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF THE INVESTORS WITH RESPECT TO THE CLOSINGS
The obligations of the Investors under this Agreement are subject to
the satisfaction, at or before each Closing Date, of each of the following
conditions:
Section 7.1 Representations and Warranties of the Company. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the date of each Closing as
though made at that time (except for representations and warranties that
expressly relate to a different date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing. The Investors shall have
received a certificate, executed on behalf of the Company by its Chief Executive
Officer, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Investors.
Section 7.2 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree that (a) restrains or prohibits the consummation of any of
the transactions contemplated hereby or (b) could have a Material Adverse
Effect.
Section 7.3 No Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or other order issued
by a court of competent jurisdiction restraining or prohibiting the consummation
of any of the transactions contemplated hereby.
Section 7.4 Resolutions of the Company. The Company shall have
delivered to the Investors copies of duly adopted resolutions of the Company's
Board of Directors and the stockholders, certified by the Secretary of the
Company as in full force and effect on the Closing Date, authorizing, among
other things, the execution and delivery of this Agreement and the other
Investment Agreements and the consummation of the transactions contemplated
hereby and thereby.
Section 7.5 Material Adverse Change. There shall not have occurred
between the date hereof and each Closing any event or series of related events
that, individually or in the aggregate, have or could reasonably be anticipated
to have a Material Adverse Effect as determined by the Investors in their sole
discretion.
Section 7.6 All Proceedings Satisfactory. All corporate proceedings
taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to the
Investors.
Section 7.7 Investment Agreements. The Company shall have executed and
delivered all of the Investment Agreements to which it is a party.
Section 7.8 Consents. The Company shall have obtained the written
consents of all parties necessary for the execution and delivery by the Company
of this Agreement and the performance by the Company of its obligations
hereunder and the other Investment Agreements all of which written consents
shall be reasonably satisfactory in form, scope and substance to the Investor.
Section 7.9 Director Voting Agreements and Proxies. Each of the
directors of the Company shall have delivered to the Investors their respective
agreement and proxy in the form attached as Exhibit H to vote all shares of
Common Stock of the Company held by them in favor of the items for which
stockholder approval is being sought at the Special Meeting.
Section 7.10 Opinion of Counsel. Counsel to the Company shall issue
and deliver to the Investors an opinion of counsel in form and substance
reasonably satisfactory to the Investors.
Section 7.11 CIP Fee Agreement. The Company shall have executed and
delivered to CIP a Fee Agreement in the form attached hereto as Exhibit I.
Section 7.12 Expenses. The Company shall have paid the Investor Expenses.
Section 7.13 No Default. No default, or event which, but for the lapse
of time or the giving of notice or both, would constitute a default of the
Company's obligations pursuant to this Agreement or the and the other Investment
Agreements shall have occurred and be continuing.
ARTICLE VIII.
OPTIONAL ADDITIONAL INVESTMENT
The Company agrees with the Investors that the Investors shall have the
option to purchase from the Company up to an additional $3,000,000 principal
amount of Debentures (the "Additional Investment") within one hundred twenty
(120) days after the Initial closing Date on the same terms and conditions as
are set forth in this Agreement. The Investors shall have the right to assign
all or a portion of their rights to make the Additional Investment to one or
more other parties.
To exercise the right to make an Additional Investment an Investor
shall provide the Company with no less than three (3) business day prior written
notice setting forth the principal amount of Debentures that the Investor
intends to purchase.
ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF THECOMPANY WITH RESPECT TO THE CLOSINGS
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions:
Section 9.1 Representations and Warranties of the Investors. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made and as of the date of the Closing as
though made at that time (except for representations and warranties that
expressly relate to a different date).
Section 9.2 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree that restrains or prohibits the consummation of any of the
transactions contemplated by this Agreement.
Section 9.3 No Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or other order issued
by a court of competent jurisdiction restraining or prohibiting the consummation
of any of the transactions contemplated hereby.
ARTICLE X. TERMINATION OF AGREEMENT
Section 10.1 Termination of Agreement. This Agreement may be
terminated with respect to any Closing at any time prior to such Closing:
(a) by mutual written consent duly executed by the Company
and the Investors;
(b) by the Company if the Initial Closing shall not have been
consummated, on or before November 29, 2000 or the Company if the Second Closing
shall not have been consummated on or before sixty (60) days after the Initial
closing Date (or such later dates as the Company and the Investor shall agree);
provided, however, that the right to terminate this Agreement under this Section
10.1(b) shall not be available to any party whose failure to fulfill any
covenant or agreement under this Agreement or breach of a representation or
warranty set forth herein has, in full or in material part, been the cause of or
resulted in the failure of the Closing to occur on or before such date.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Amendments, Waivers and Consents. For the purposes of
this Agreement and all agreements executed pursuant hereto, no course of dealing
between the Company and the Investors and no delay on the part of any party
hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof or thereof. No provision hereof may be waived except
by a written instrument signed by the party so waiving such provision. This
Agreement may not be amended except by a written instrument duly executed by the
Company and the Investors. No supplement or modification of this Agreement shall
be binding unless in writing and approved and executed by the requisite parties
in accordance with this Section 11.1. Any amendment or waiver effected in
accordance with this Section 11.1 shall be binding upon each holder of shares of
the Debentures purchased under this Agreement at the time outstanding, each
future holder of all Securities of the Company.
Section 11.2 Indemnification .
(a) The Company shall indemnify each Investor and hold it
harmless from any and all actual damage, liability and reasonable expense
(including reasonable legal fees and costs, but excluding any liability for
consequential damages or loss of profit) sustained or incurred by the Investor
as a result of or in connection with the breach of any representation, warranty,
covenant or agreement contained in this Agreement.
(b) The obligations of the Company under this Section 11.2
shall survive the sale, transfer, redemption or conversion of any of the
Debentures, each Closing and the termination of this Agreement and the
transactions contemplated hereby. The agreements contained in this Section 11.2
shall be in addition to any other rights of the indemnified parties against the
Company or others.
Section 11.3 Survival of Representations, Warranties and Covenants;
Assignability of Rights. All covenants, agreements, representations and
warranties and indemnification obligations of the Company made herein and to be
performed prior to or at the Closing and in the certificates, exhibits,
schedules or other written current and historical information delivered or
furnished to the Investors in connection herewith or therewith (i) shall be
deemed to have been relied upon by the Investors, and shall survive each
delivery of the shares of the Debentures for a period of twelve (12) months and
shall inure to the benefit of each Investor's successors and assigns and to
transferees of the shares of the Debentures or any Preferred Shares.
Section 11.4 Governing Law; Jurisdiction; Venue. This Agreement shall
be governed by the laws of the State of New Jersey without regard to its
conflicts of laws principles. The state and federal courts of the State of New
Jersey shall have exclusive jurisdiction to hear and determine any claims or
disputes between the Investors and the other party or parties hereto pertaining
directly or indirectly to this Agreement and all documents, instruments and
agreements executed pursuant hereto, or to any matter arising therefrom (unless
otherwise expressly provided for therein). To the extent permitted by law, each
party hereby expressly submits and consents in advance to such exclusive
jurisdiction in any action or proceeding commenced by an Investor in any of such
courts, and agrees that service of such summons and complaint or other process
or papers may be made by registered or certified mail addressed to such party at
the address to which notices are to be sent pursuant to this Agreement. To the
extent permitted by law, should any party, after being so served fail to appear
or answer to any summons, complaint, or process or papers so served within 30
days after the mailing thereof, such party shall be deemed in default and an
order and/or judgment may be entered by such Investors against such party as
demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum set forth in this Section 11.4 shall not be deemed to
preclude the enforcement of any judgment obtained in such forum or the taking of
any action to enforce the same in any other appropriate jurisdiction.
Section 11.5 Section Headings. The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction or interpretation of any provision
hereof.
Section 11.6 Counterparts. This Agreement may be executed
simultaneously by facsimile and in any number of counterparts, each of which
when so executed and delivered shall be taken to be an original; but such
counterparts shall together constitute but one and the same document.
Section 11.7 Notices and Demands. Any notice or demand which is
required or provided to be given under this Agreement shall be deemed to have
been sufficiently given and received for all purposes when delivered by hand,
telecopy, or nationally recognized overnight courier, or five days after being
sent by certified or registered mail, postage and charges prepaid, return
receipt requested, to the following addresses:
If to the Company:
▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇, corp.
Two ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
Attention: Chief Executive Officer
If to the Company at the address set forth above. If to the Investor,
at the address set forth on the signature pages hereto,
Section 11.8 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
Section 11.9 Integration. This Agreement, including the exhibits,
documents and instruments referred to herein or therein, constitutes the entire
agreement, and supersedes any other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
Section 11.10 Press Release and Filings. The Company and the Investors
shall use reasonable best efforts to (i) develop a joint press release with
respect to this Agreement and the transactions contemplated hereby, (ii) unless
otherwise required by applicable law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, consult with each other
before issuing any press release, or to the extent practical, otherwise before
making any public statement with respect to this Agreement or the transactions
contemplated hereby or (iii) jointly develop and make any required SEC Filings
with the SEC and any securities exchange on which the Company's securities are
listed. In addition to the foregoing, neither the Company nor the Investors
shall issue any press release or otherwise make any public statement or
disclosure concerning the other party or the other party's business, financial
condition or results of operations without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
counterpart signature page to this Investment Agreement as of the day and year
first above written.
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇.▇▇▇, CORP.
By:
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Name: E. ▇▇▇ ▇▇▇▇▇▇
Title:
SELWAY PARTNERS, LLC
By:
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and COO
CIP CAPITAL L.P.
By: CIP Capital Management Inc.
By:
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Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: President