EXHIBIT 1
FORM OF INVESTOR'S AGREEMENT
THIS INVESTOR'S AGREEMENT dated as of the 12th day of
September, 2001 (the "Agreement") by and between ▇▇▇▇▇▇, INC., a Delaware
corporation having an address of ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (the "Company") and NTS INVESTORS, LLC, a Delaware limited liability
company having an address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Investor").
W I T N E S S E T H:
WHEREAS, the Investor, pursuant to the terms of the Secured
Note Agreement dated January 9, 2001 (the "Note"), by and between the Investor
and ▇▇▇▇▇▇ Traffic Systems, Inc., a Delaware corporation ("NTS"), agreed to
invest up to $8,000,000 in NTS, subject to, among other things, the consummation
of a merger of NTS and the Company (the "Merger");
WHEREAS, the Merger is being consummated on the date hereof;
WHEREAS, the Investor and the Company desire to set forth
their agreement with respect to certain matters relating to the operations of
the Company; and
WHEREAS, capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Note.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
1. GRANT OF NONQUALIFIED STOCK OPTION
(a) CONFIRMATION OF GRANT. The Company hereby evidences and confirms its
grant of a nonqualified stock option (the "Option") to purchase all or
any part of an aggregate of One Million (1,000,000) shares (the
"Shares") of the common stock of the Company, par value $.01 per share
(the "Common Stock") to the Investor as of the date of this Agreement.
The Option is a nonqualified stock option which is not intended to be an
"incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
1.2 Number of Shares. This Option shall be for an aggregate of One Million
(1,000,000) Shares.
1.3 Exercise Price. The exercise price shall be $1.28 per share (the
"Exercise Price"). The total exercise price for all Shares subject to
the Option is $1,280,000.
1.4 Term and Exercisability of the Option. The Option shall expire three (3)
years from the date of this Agreement, and may be exercised prior to its
expiration at such times and for such number of whole Shares as the
Investor may determine, up to 100% of the Shares subject to the Option.
Notwithstanding the foregoing, no exercise shall be effective to the
extent it would require the delivery of fractional Shares.
1.5 Exercise of Option. On or after the date hereof, but prior to the
expiration of the Option in accordance with Paragraph 1.4 above, the
Option may be exercised in whole or in part by the Investor upon
delivery of the following to the Company:
(a) a written notice of exercise which identifies this Agreement and states
the number of Shares then being purchased;
(b) cash (or other consideration acceptable to the Company, in its sole
discretion) in an amount (or, in the case of other consideration, having
a combined value) equal to the aggregate Exercise Price of the Shares
then being purchased;
(c) additional cash or, if acceptable to the Company, in its sole
discretion, shares of Common Stock previously owned by the Investor (or,
if acceptable to the Company, in a combination of both) in an amount or
having a combined value equal to the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income,
if any, recognized by the Investor in connection with the exercise of
this Option (unless the Company and the Investor shall have made other
arrangements for deductions or withholding, including by the withholding
of Shares issuable upon exercise of this Option, provided such
arrangements satisfy the requirements of applicable law); and
(d) a letter, if requested by the Company, in such form and substance as the
Company may require, in its sole discretion, setting forth the
investment intent of the Investor.
Notwithstanding the foregoing, the Investor shall take
whatever additional actions, including, without limitation, the furnishing of an
opinion of counsel, and execute whatever additional documents the Company may,
in its sole discretion, deem necessary or advisable in order to carry out or
effect this Agreement or applicable law.
Upon satisfaction of the conditions and requirements of
Paragraph 1.5 hereof, the Company shall deliver to Investor a certificate or
certificates for the number of Shares in respect of which the Option shall have
been exercised (less any Shares withheld pursuant to clause (c) of this
Paragraph 1.5).
1.6 Restriction On Transfer. This Option and all rights granted hereunder
shall not be transferred by the Investor, shall not be assigned, pledged
or hypothecated in any way, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer this Option,
or to assign, pledge or hypothecate or otherwise dispose of this Option
or of any rights granted hereunder contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon this Option or
such rights, this Option and such rights shall immediately become null
and void. The restrictions described in this Section 1.6 shall not apply
in the event of a distribution of Common Stock or securities convertible
into or exchangeable for Common Stock to members of the Investor,
provided that the distributees thereof agree in writing to be bound by
the terms of this Agreement.
1.7 No Limitation on Rights of the Company.
(a) The grant of this Option shall not in any way affect the right or power
of the Company to make adjustments, reclassifications, or changes in its
capital or business structure or to merge, consolidate, dissolve,
liquidate, sell, or transfer all or any part of its business or assets.
(b) (i) Upon changes in the outstanding Common Stock by reason of a stock
dividend, stock split, reverse stock split, subdivision,
recapitalization, reclassification, merger, consolidation (where the
Company is a surviving corporation), combination or exchange of shares
of Common Stock, separation, or reorganization, or in the event of an
extraordinary dividend, "spin-off," liquidation, other substantial
distribution of assets of the Company or acquisition of property or
stock or other change in capital of the Company, or the issuance by the
Company of shares of its capital stock without receipt of full
consideration therefor, or rights or securities exercisable, convertible
or exchangeable for shares of such capital stock, or any similar change
affecting the Company's capital structure, the aggregate number, class
and kind of shares of stock under this Option and the exercise price per
share applicable to this Option shall be appropriately adjusted by the
Company in its discretion to preserve the benefits or potential benefits
intended to be made available under the Option or otherwise necessary to
reflect any such change.
(ii) Fractional shares of Common Stock resulting from any adjustment in the
Option pursuant to Section 1.7(b)(i) shall be aggregated until, and
eliminated at, the time of exercise of the Option. Notice of any
adjustment shall be given by the Company to the Investor and such
adjustment (whether or not such notice is given) shall be effective and
binding.
(iii) In the event of (A) a stock sale, merger, consolidation, combination,
reorganization or other transaction (other than through a public
offering of Common Stock) resulting in less than fifty percent (50%) of
the combined voting power of the surviving or resulting entity being
owned by the stockholders of the Company immediately prior to such
transaction, or (B) the liquidation or dissolution of the Company in
connection with the sale or other disposition of all or substantially
all of the assets or business of the Company (other than in the case of
Section 1.7(b)(i) above) (in each case a "Change in Control"):
(1) In its discretion, and on such terms and conditions as it deems
appropriate, the Company may provide by resolution adopted prior to the
occurrence of the Change in Control, that the Option shall be adjusted
by substituting for Common Stock subject to the Option, stock or other
securities of the surviving corporation or any successor corporation to
the Company, or a parent or subsidiary thereof, or that may be issuable
by another corporation that is a party to the transaction resulting in
the Change in Control, whether or not such stock or other securities are
publicly traded, in which event the aggregate exercise price shall
remain the same and the amount of shares or other securities subject to
the Option shall be the amount of shares or other securities which could
have been purchased on the closing date or expiration date of such
transaction with the proceeds which would have been received by the
Investor if the Option had been exercised in full (or with respect to a
portion of such Option, as determined by the Committee, in its
discretion) prior to such transaction or expiration date and the
Investor exchanged all of such shares in the transaction.
(2) In its discretion, and on such terms and conditions as it deems
appropriate, the Company may provide by resolution adopted prior to the
occurrence of the Change in Control, that the Option shall be converted
into a right to receive cash on or following the closing date or
expiration date of the transaction resulting in the Change in Control in
an amount equal to the highest value of the consideration to be received
in connection with such transaction for one share of Common Stock, or,
if higher, the highest fair market value of the Common Stock during the
thirty (30) consecutive business days immediately prior to the closing
date or expiration date of such transaction, less the per share exercise
price of the Option, multiplied by the number of shares of Common Stock
subject to the Option, or a portion thereof.
(3) The Company may, in its discretion, provide that the Option cannot be
exercised after such a Change in Control.
1.8 Rights as a Shareholder. The Investor shall have the rights of a
shareholder with respect to the Shares covered by the Option only upon
becoming the holder of record of those Shares.
1.9 Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or
delivered any certificates for Shares pursuant to the exercise of the
Option, unless and until the Company is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority, and the
requirements of any exchange upon which Shares are traded. The Company
shall in no event be obligated to register any securities pursuant to
the Securities Act of 1933 (as now in effect or as hereafter amended)
(the "1933 Act") or to take any other action in order to cause the
issuance and delivery of such certificates to comply with any such law,
regulation or requirement. The Company may require, as a condition of
the issuance and delivery of such certificates and in order to ensure
compliance with such laws, regulations, and requirements, that the
Investor make such covenants, agreements, and representations as the
Company, in its sole discretion, considers necessary or desirable.
1.10 No Obligation to Exercise Option. The granting of the Option shall
impose no obligation upon the Investor to exercise the Option.
1.11 Investment Representation. The Investor is acquiring the Option for its
own account and not with a present intention to make any sale,
disposition, distribution or other transfer of the Option or the Common
Stock underlying the Option in a manner that will violate any applicable
securities laws and understands that neither the Option nor the Common
Stock underlying the Option has been registered under the 1933 Act or
under the securities laws of any state. The granting of the Option was
directly communicated to the Investor in such a manner that it had the
opportunity to ask questions and receive answers concerning the Company
that it has deemed necessary and advisable for purposes of determining
whether or not to acquire the Option which it is being granted
hereunder. The Investor is sophisticated in financial matters and is
able to evaluate the risks and benefits of its investment in the Company
and is able to bear the economic risk of its investment in the Company.
The Investor acknowledges that it has evaluated the risks and merits of
its investment in the Company solely with respect to its own interests.
2. INTERPRETATION OF THIS AGREEMENT
2.1 Governing Law. Except to the extent preempted by Federal law, this
Agreement shall be governed by and construed in accordance with the laws
of the State of California applicable to contracts made and to be
performed entirely within such State (without giving effect to the
principle of conflicts of laws).
2.2 Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
3. MISCELLANEOUS
3.1 Notices.
(a) All communications under this Agreement shall be in writing and shall be
delivered by hand or facsimile or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(i) if to the Company, to:
▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or facsimile number as it may have furnished in writing
to the Investor;
(ii) if to the Investor, to:
NTS Investors, LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (___) __________
with a copy to:
Weinstein, Boldt, Halhide & Camel
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Camel, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or facsimile number as may have been furnished to the
Company in writing;
(iii) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile (with confirmation of
transmission), on the date of such delivery; if mailed by
courier, when received; and if mailed by registered or
certified mail, when received.
(iv) Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, any
consents, waivers and modifications which may hereafter be
executed may be reproduced by the Investor and the Company
by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and the
Investor may destroy any original document so reproduced.
The parties hereto agree and stipulate that any such
reproduction shall be admissible in evidence as the
original itself in any judicial or administrative
proceeding (whether or not the original is in existence and
whether or not such reproduction was made by the Investor
in the regular course of business) and that any
enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
3.2 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of
each of the parties.
3.3 Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto and
supersedes all prior understanding among such parties with
respect to the subject matter herein. This Agreement may be
amended, and the observance of any term of this Agreement may be
waived, with (and only with) the written consent of each of the
parties hereto.
3.4 Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or
administrative body of competent jurisdiction, such
determination shall not effect the remaining provisions of this
Agreement which shall remain in full force and effect.
3.5 Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original and all of which together shall be considered
one and the same agreement. Delivery of an executed counterpart
of this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart
thereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
COMPANY: INVESTOR:
▇▇▇▇▇▇, INC. NTS INVESTORS, LLC
By: _______________________ By: ________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager