Common use of Investors Representations Clause in Contracts

Investors Representations. In connection with the Investor's purchase of the shares, the Investor makes the following representations and warranties on which the Company and the Company's counsel are entitled to rely. If in any respect such representations shall not be true and accurate prior to the sale of the share, the Investor shall give immediate notice of such fact to the Company, specifying which representations and warranties are not true and accurate and the reasons therefor. (a) The Investor is acquiring the shares solely for its own account for investment and not with a view to distribution or resale. The Investor will not sell, hypothecate, pledge or otherwise dispose of the shares in whole or in part unless the shares either have been registered under the 1933 Act and any applicable state securities law, or are exempt from the registration requirements of the 1933 Act and any such state securities law. (b) The Investor has sufficient knowledge and experience in business and financial matters to evaluate the Company, its proposed activities and the risks and merits of this investment. The Investor has the ability to accept the high risk and lack of liquidity inherent in this type of investing. (c) The Investor has had the opportunity to ask questions of and receive answers from the Company concerning the terms, conditions and proposed activities of the Company and to obtain any additional information necessary to verify the accuracy of the information provided. (d) The Investor has been advised to consult with its own attorney regarding legal matters concerning the Company and to consult with an independent tax adviser regarding the tax consequences of participating in the Company. (e) The Investor understands that the shares have not been registered under the 1933 Act (and that no such registration is contemplated) and are being sold in reliance upon the exemption from the registration requirements under that Act provided in Regulation D and/or Section 4(2). The Investor further understands that it is not anticipated that there will be any market for its shares in the Company and the Investor must therefore bear the economic risk of this investment for the term of the Company. (f) Accredited Investor Representation. The Investor makes one of the following representations regarding its status as an "accredited investor" and certain related matters. [Please check the applicable subparagraph.] ___ 1. The Investor is a trust with total assets in excess of $5,000,000 whose purchase is directed by a person with such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment. ___ 2. The Investor is a bank, insurance company, investment company registered under the Investment Company Act of 1940, a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, a business development company, a Small Business Investment Company licensed by the U.S. Small Business Administration, a plan with total assets in excess of $5,000,000 established and maintained by a state for the benefit of its employees, or a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940. ___ 3. The Investor is an employee benefit plan and either all investment decisions are made by a bank, savings and loan association, insurance company, or registered investment advisor, or the Investor has total assets in excess of $5,000,000 or, if such plan is a self-directed plan, investment decisions are made solely by persons who are accredited investors. ___ 4. The Investor is (A) a corporation, (B) partnership, (C) business trust, or (D) an organization described in section 501(c)(3) of the Internal Revenue Code and has total assets in excess of $5,000,000. ___ 5. If the Investor is not an entity described in paragraphs (g)(1) through (g)(4), the Investor represents that each of its equity owners is either (i) an entity described in paragraphs (g)(2) through (g)(4); or (ii) an individual who (A) has an individual net worth, or a joint net worth with such individual's spouse, in excess of $1,000,000, or (B) has had an individual income in excess of $200,000 in each of the two most recent years, or a joint income with one's spouse in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year, or (C) is a director or executive officer of the Company.

Investors Representations. In connection with the Investor's purchase of the shares, the Section 3.1 The Investor makes the following representations represents and warranties on which warrants to the Company and the Company's counsel are entitled to rely. If in any respect such representations shall not be true and accurate prior to the sale of the share, the Investor shall give immediate notice of such fact to the Company, specifying which representations and warranties are not true and accurate and the reasons therefor.as follows: (a) The Investor is acquiring has carefully read this Agreement, including certain risk factors and the shares solely Company's audited financial statements for its own account for investment the year ended December 31, 1997 (attached hereto as Exhibit A) and not with a view the forms of Registration Rights Agreement, Warrants, Guaranty, Pledge Agreement, Escrow Agreement, and Promissory Notes (collectively, the "Disclosure Materials"), all of which the Investor acknowledges have been provided to distribution or resalethe Investor. The Investor will not sellhas been given the opportunity to ask questions, hypothecateand receive answers, pledge or otherwise dispose concerning the terms and conditions of the shares sale of the Promissory Notes and Warrants and the Disclosure Materials and to obtain such additional written information, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of same as the Investor desires in whole order to evaluate the investment. The Investor further acknowledges that he or in part unless she fully understands the shares either have been registered under Disclosure Materials. The Investor acknowledges that the 1933 Act and any applicable state securities law, Investor has received no representations or are exempt warranties from the registration requirements Company or its employees or agents in making this investment decision except as set forth in this Agreement. The Investor has been informed of all facts pertaining to the Company as it may have required or believed desirable in connection with its investment (including access to the Certificate of Incorporation and By-Laws of the 1933 Act Company) and is not relying on any such state securities lawinformation concerning them not contained in the Disclosure Materials. (b) The Investor has sufficient knowledge is aware that the purchase of the Promissory Notes and experience in business Warrants is a speculative investment involving a high degree of risk and financial matters to evaluate that there is no guarantee that the Company, its proposed activities and the risks and merits of Investor will realize any gain from this investment. The , and that the Investor has could lose the ability to accept total amount of the high Investor's investment and that the Investor can bear the economic risk and lack of liquidity inherent in this type of investingsuch investment. (c) The Investor understands that no federal or state agency has had made any finding or determination regarding the opportunity to ask questions fairness of and receive answers from the Company concerning the terms, conditions and proposed activities this Offering of the Company Promissory Notes and to obtain Warrants for investment, or any additional information necessary to verify the accuracy recommendation or endorsement of this Offering of the information providedPromissory Notes and Warrants. Any representation to the contrary is a criminal offense. (d) Without limiting the Investor's right to transfer, sell or assign the Promissory Notes, Warrants and Underlying Shares and Warrant Shares (provided such transfer, sale or assignment is in compliance with applicable law), the Investor is purchasing the Promissory Notes and Warrants for the Investor's own account, with the intention of holding the Promissory Notes and Warrants, with no present intention of dividing or allowing others to participate in this investment or of reselling or otherwise participating, directly or indirectly, in a distribution of the Promissory Notes and Warrants. The Investor has been advised understands that the Promissory Notes and Warrants are unregistered and may be required to consult with its own attorney regarding legal matters concerning be held until such time as they are registered under the Company Securities Act and to consult with any applicable state securities laws, or until such time as an independent tax adviser regarding exemption from such registration is available. The Investor agrees that (a) it will not offer, sell, pledge, hypothecate, or otherwise dispose of the tax consequences of participating in Promissory Notes and Warrants unless such offer, sale, pledge, hypothecation or other disposition is (i) registered under the CompanySecurities Act, or (ii) such offer, sale, pledge, hypothecation or other disposition thereof does not violate the Securities Act. (e) The Investor understands agrees to the imprinting, so long as is required by this Section, of the following legend (or such substantially similar legend as is acceptable to the Investor and their counsel, the parties agreeing that any unacceptable legended securities shall be replaced promptly by and at the Company's cost) on the securities: Legend [FOR PROMISSORY NOTES AND WARRANTS] NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. [ONLY FOR UNDERLYING SHARES AND WARRANT SHARES TO THE EXTENT THE RESALE THEREOF IS NOT COVERED BY AN EFFECTIVE REGISTRATION STATEMENT AT THE TIME OF CONVERSION, ISSUANCE OR EXERCISE] THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. The Underlying Shares and/or Warrant Shares shall not contain the legend set forth above or any other restrictive legend if the conversion of the Promissory Notes, exercise of Warrants or other issuances of Underlying Shares and/or Warrant Shares, as the case may be, occurs at any time while a Registration Statement is effective under the Securities Act in connection with the resale of the shares have of Common Stock or, in the event there is not been registered an effective Registration Statement at such time, if in the opinion of counsel to the Company such legend is not required under applicable requirements of the 1933 Securities Act (including judicial interpretations and that no such registration is contemplated) pronouncements issued by the staff of the Securities and are being sold in reliance upon Exchange Commission (the exemption from the registration requirements under that Act provided in Regulation D and/or Section 4(2"Commission")). The Investor further understands Company agrees that it will provide the Investor, upon request, with a certificate or certificates representing Underlying Shares and/or Warrant Shares, free from such legend at such time as such legend is no longer required hereunder. The Company may not make any notation on its records or give instructions to any transfer agent of the Company which enlarge the restrictions of transfer set forth in this Section. Upon the execution and delivery hereof, the Company is issuing to the transfer agent for its Common Stock (and to any substitute or replacement transfer agent for its Common Stock upon the Company's appointment of any such substitute or replacement transfer agent) instructions in substantially the form of Exhibit K hereto. Such instructions shall be irrevocable by the Company from and after the date hereof or from and after the issuance thereof to any such substitute or replacement transfer agent, as the case may be, except as otherwise expressly provided in the Registration Rights Agreement. It is the intent and purpose of such instructions, as provided therein, to require the transfer agent for the Common Stock from time to time upon transfer of Registrable Securities by the Investors to issue certificates evidencing such Registrable Securities free of the Legend during the following periods and under the following circumstances and except as provided below, without consultation by the transfer agent with the Company or its counsel and without the need for any further advice or instruction or documentation to the transfer agent by or from the Company or its counsel or the Investors: (i) at any time after the effective date of the Registration Statement (the "Effective Date"), upon surrender of one or more certificates evidencing the Warrants, Promissory Notes, Underlying Shares or Warrant Shares that bear the aforementioned Legend, to the extent accompanied by a notice requesting the issuance of new certificates free of the aforementioned legend to replace those surrendered; provided that: (i) the Registration Statement shall then be effective; (ii) the Investor confirms to the transfer agent in writing (with a copy to the Company) that it has sold, pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer such Common Stock in a bona fide transaction to a third party that is not anticipated an affiliate of the Company; (iii) the Investor confirms to the transfer agent that there will be any market for its shares in the Investor has complied with the prospectus delivery requirement and (iv) with respect to the issuance of the Warrant Shares, the Investor has paid the Company the purchase price for such shares. (ii) at any time upon any surrender of one or more certificates evidencing Registrable Securities, that bear the aforementioned legend, to the extent accompanied by a notice requesting the issuance of new certificates free of such legend to replace those surrendered (and delivered a Form 144 if such form is required) and containing representations that (a) the Investor must therefore bear is permitted to dispose of such Registrable Securities, without limitation as to amount or manner of sale pursuant to Rule 144(k) under the economic risk of this investment Securities Act or some other exemption under the Securities Act, or (b) the Investor has sold, pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer such Registrable Securities, in a manner other than pursuant to an effective registration statement, to a transferee who will upon such transfer be entitled to freely tradeable securities. The Company shall have counsel provide any and all opinions necessary for the term sale under Rule 144. Any of the notices referred to above in this Section may be sent by facsimile to the Company's transfer agent, with a copy to the Company. (f) Accredited Investor Representation. The Investor makes No legend other than the one specified in this Article has been or shall be placed on the share certificates representing the Common Stock, and no instructions or "stop transfer orders," so called, "stock transfer restrictions," or other restrictions have been or shall be given to the Company's transfer agent with respect thereto other than as expressly set forth in this Article. (g) Nothing in this Article shall affect in any way any of the following representations regarding its status as an "accredited investor" and certain related matters. [Please check Investor's obligations under any agreement to comply with all applicable securities laws upon resale of the applicable subparagraphCommon Stock.] ___ 1. The (h) Investor is a trust with total assets in excess of $5,000,000 whose purchase is directed by a person with such confirms that the Investor has the financial means to make the proposed investment, that the Investor has sufficient knowledge and experience in financial and business matters that such person is capable of evaluating to evaluate the merits and risks of the prospective investmenttransaction, and that the Investor is relying on advisers (including such attorneys, accountants and financial advisers as the Investor deem appropriate) to evaluate the merits and risks of the transaction on the Investor's behalf. Investor has had access to such professional advisors as the Investor deems necessary in connection with the evaluation, execution and delivery of this Agreement. ___ 2. The (i) If the Investor is a bankpartnership, insurance companycorporation, trust or other entity, (i) the Investor represents and warrants that it was not organized or reorganized for the specific purpose of acquiring Promissory Notes and Warrants, and (ii) the Investor has the full power and authority to execute this Agreement on behalf of such entity and to make the representations and warranties made herein on its behalf, and (iv) this investment company registered in the Company has been affirmatively authorized, if required, by the governing board of such entity and is not prohibited by the governing documents of the entity. (j) The address shown under the Investment Investor's signature at the end of this Agreement is the Investor's principal residence if he or she is an individual or its principal business address if a corporation or other entity. (k) The Investor agrees to hold in strict confidence the information regarding the Company Act of 1940disclosed to Investor in the Disclosure Materials, a broker or dealer registered pursuant to Section 15 shall not use such information for any purpose other than the evaluation of the Securities Exchange Act of 1934Company's business, a business development companyfinances and operations, a Small Business Investment shall not reproduce such information in whole or in part except as the Company licensed by the U.S. Small Business Administrationexpressly authorizes, a plan with total assets in excess of $5,000,000 established and maintained by a state for the benefit of its employeesshall not disclose, divulge, or a private business development company as defined otherwise furnish such information to anyone other than Investor's accountants, legal counsel or consultants, who are involved in Section 202(a)(22) of evaluating or implementing the Investment Advisers Act of 1940proposed transaction. ___ 3. (l) The Investor is an employee benefit plan and either all investment decisions are made by a bank, savings and loan association, insurance company, or registered investment advisor, or the Investor has total assets in excess of $5,000,000 or, if such plan is a self-directed plan, investment decisions are made solely by persons who are "accredited investors. ___ 4. The Investor is (A) a corporation, (B) partnership, (C) business trust, or (D) an organization described investor" as defined in section 501(c)(32(15) of the Internal Revenue Code Securities Act and has total assets in excess of $5,000,000. ___ 5. If Regulation D promulgated by the Investor Securities and Exchange Commission thereunder and is not an entity described "affiliate" of the Company as defined in paragraphs Rule 144 of the Securities Act. (g)(1m) through (g)(4)The Investor has not as of the date hereof, and covenants that on behalf of its affiliates and agents that neither the Investor represents nor any affiliate or agent of Investor will at any time in which the Investor or any affiliate of the Investor owns a Promissory Note which has not been converted into Common Stock or retains the right to exercise a Purchase Option, engage, directly or indirectly, in any short sales of, or hedging or arbitrage transactions with respect to the Common Stock or any other securities of the Company, or sell "put" options or similar instruments with respect to the Common Stock or any other securities of the Company; provided, however, that each the undersigned may maintain a short position with respect to the shares of its equity owners is either Common Stock issuable upon conversion of the Promissory Note and provided that such short position (i) an entity described is not commenced earlier than the date of the delivery of a Conversion Notice (as defined in paragraphs (g)(2the Promissory Note) through (g)(4); or and (ii) an individual who (A) has an individual net worth, or a joint net worth with does not exceed the number of shares subject to such individual's spouse, in excess of $1,000,000, or (B) has had an individual income in excess of $200,000 in each of the two most recent years, or a joint income with one's spouse in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year, or (C) is a director or executive officer of the CompanyConversion Notice.