EXHIBIT 10(h)
SUBSCRIPTION AGREEMENT
COMPUTERIZED THERMAL IMAGING, INC.
Computerized Thermal Imaging, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxx 00000
Ladies and Gentlemen:
The undersigned, Cameron Capital Ltd. (the "Subscriber"), understands
that Computerized Thermal Imaging Inc., a Nevada corporation (the "Company"),
is offering for sale one or more of its 8% Senior Convertible Debentures, in
the form attached hereto as EXHIBIT A, in the aggregate original principal
amount of One Hundred Twenty Five Thousand ($125,000) Dollars (the
"Debentures"). The Subscriber further understands that the offering is being
made without registration of the Debentures and shares of Common Stock
issuable upon conversion thereof under the Securities Act of 1933, as amended
(the "Securities Act"), and is being made only to "accredited investors" (as
defined in Rule 501 of Regulation D under the Securities Act).
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
Company agrees to sell, issue and deliver, and Subscriber hereby offers to
purchase and subscribes for (i) Debentures in the aggregate original
principal amount of $125,000 for a purchase price equal to the aggregate
original principal amount of the Debentures so to be purchased (the "Purchase
Price").
2. THE CLOSING. The closing of the transactions contemplated hereby
shall take place on March 11, 1997 at the offices of Xxxxxxxx & Xxxxxx, 000
00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, at 9:30 a.m. or at such other time and
place as shall be agreed to by the Company and the Subscriber (the "Closing
Date"). At the closing of the transactions contemplated hereby (the
"Closing"), payment shall be made by wire transfer against delivery of the
Debentures. In addition, the Company shall deliver to the Subscriber an
opinion of Company counsel in the form attached hereto as EXHIBIT B.
3. SECURITIES ACT REGISTRATION.
3.1. The Company shall register under the Securities Act, at the
Company's expense, all of the shares of Common Stock issuable upon (i) the
conversion of the Debentures and upon exercise of the warrant of even date
herewith, in the form attached hereto as EXHIBIT C (the "Warrant") issued to
Cameron Capital Management Ltd. ("CCM") and (ii) the conversion of the 6%
Convertible Debentures and the Warrant issued to the Subscriber and CCM,
respectively, pursuant to that certain Subscription Agreement dated August
15, 1996 (the "Prior Subscription Agreement") (the "Registrable Shares") by
July 15, 1997 and in that connection shall file with the Securities and
Exchange Commission (the "SEC") a registration statement with respect to the
Registrable Shares (the "Registration Statement") on or before May 15, 1997.
Notice of effectiveness of the Registration Statement shall be furnished
promptly to the Subscriber. The Company shall maintain the effectiveness of
the Registration Statement and from time to time will amend or supplement
such Registration Statement and the prospectus contained therein as and to
the extent necessary to comply with the Securities Act. The effectiveness of
the Registration Statement shall be maintained with respect to the
Registrable Shares until the later to occur of the second anniversary of the
Closing Date of the Prior Subscription Agreement or such date as all of the
Registrable Shares may be sold during any one period of three (3) consecutive
months pursuant to Rule 144 under the Securities Act or otherwise without
registration.
3.2. In the event that the Company registers under the Securities
Act any of the Registrable Shares held by the Subscriber, the Company shall
indemnify and hold harmless the Subscriber and each underwriter of such
shares (including any broker or dealer through whom such of the shares may be
sold) and each person, if any,
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who controls the Subscriber or any such underwriter within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") from and against any and all
losses, claims, damages, expenses or liabilities, joint or several, to which
they or any of them become subject under the Securities Act or the Exchange
Act or otherwise, and, except as hereinafter provided, shall reimburse the
Subscriber and each of the underwriters and each such controlling person, if
any, for any legal or other expenses reasonably incurred by them or any of
them in connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or in the prospectus (or the Registration Statement
or prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, unless such untrue statement
or omission was made in such Registration Statement or prospectus in reliance
upon and in conformity with information furnished in writing to the Company
in connection therewith by the Subscriber (insofar as indemnification of the
Subscriber is concerned) or any underwriter (insofar as indemnification of
any such underwriter is concerned) relating thereto expressly for use
therein. Promptly after receipt by the Subscriber or any underwriter or any
person controlling any of them, as the case may be, of notice of a claim to
which the foregoing indemnification applies, the Subscriber or such other
person shall notify the Company in writing of the commencement thereof, and,
subject to the provisions hereinafter stated, the Company shall assume the
defense of such action (including the employment of counsel, who shall be
counsel satisfactory to the Subscriber or such underwriter or controlling
person, as the case may be, and the payment of expenses) insofar as such
action shall relate to any alleged liability in respect of which indemnity
may be sought against the Company. The Subscriber or any underwriter or any
such controlling person shall have the right to employ separate counsel in
any such action and to participate in the defense thereof but the fees and
expenses of such counsel shall not be at the expense of the Company unless:
(i) the employment of such counsel has been specifically authorized by the
Company, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties of any such action, suit or proceeding
(including any impleaded parties) include both the person or persons seeking
indemnification (the "indemnified person") and the Company and such
indemnified person shall have been advised by its counsel that representation
of the indemnified person and the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual
or potential differing interests between them (in which case the Company
shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such indemnified person). The Company shall not be
liable to indemnify any person for any settlement by such person of any such
action effected without the Company's consent.
3.3. The Subscriber shall indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, against all losses, claims, damages, expenses or liabilities or actions
to which they or any of them become subject under the Securities Act or the
Exchange Act or otherwise, and shall reimburse the Company, its officers and
directors and each such controlling person, if any, for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims damages, expenses, liabilities or
actions arise out of or are based upon any information relating to the
Subscriber furnished by or on behalf of the Subscriber in writing
specifically for inclusion in such Registration Statement. Notwithstanding
the above, the liability of the Subscriber under this Section 3.3 shall not
exceed the proceeds (net of underwriting discounts or commissions) received
by the Subscriber upon the sale of the Registrable Shares.
3.4. Any losses, claims, damages, liabilities and reasonable
expenses for which an indemnified party is entitled to indemnification under
Sections 3.2 and 3.3 of this Agreement shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages, liabilities
and expenses are incurred.
3.5. The Company shall prepare and file with the SEC such
amendments and supplements to the Registration Statement, and the prospectus
used in connection with such Registration Statement as, in the opinion of the
counsel to the Company, may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement.
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3.6. The Company shall furnish to the Subscriber such number of
copies of a prospectus in conformity with the requirements of the Securities
Act, and such other documents as may reasonably be requested in order to
facilitate the disposition of the Registrable Shares owned by the Subscriber.
3.7. The Company shall use its best efforts to register and qualify
the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Subscriber; provided, however, that the Company shall not be
required in connection therewith, or as a condition thereto, to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act.
3.8. The Company shall notify each holder of Registrable Shares
covered by such Registration Statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act and of the
happening of any event as a result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the circumstances then existing.
3.9. The Company shall provide a transfer agent and registrar for
all Registrable Shares to be registered hereunder and a CUSIP number of all
Registrable Shares, in each case not later than the effective date of such
registration.
3.10. In the event the Registration Statement is not filed on or
before May 15, 1997, or the Registration Statement is not declared effective
by the SEC on or before July 15, 1997, the Company shall, for each month or
portion thereof that said Registration Statement is not filed or declared
effective, as the case may be, in addition to the eight percent (8%) interest
otherwise payable pursuant to the terms of the Debentures, pay the Subscriber
a premium equal to two percent (2%) of the outstanding principal amount of
the Debentures, payable monthly, commencing May 16, 1997 or July 16, 1997, as
the case may be. The premium to be paid, if any, shall constitute liquidated
damages for the Company's failure to timely file the Registration Statement
with the SEC or failure to cause such Registration Statement to become
effective, as the case may be. The parties agree that the foregoing damages
are reasonable and that the anticipated damages for the failure of the
Company to effect such registration are uncertain in amount and difficult to
be proved. The premium shall be payable in coin or currency or, in lieu of a
cash premium payment, the Subscriber may require the Company to issue shares
of its Common Stock or a combination of Common Stock and cash as payment of
the premium then due and payable, until such time as the Subscriber receives
notification of the filing or effectiveness. If the Subscriber elects to
receive all or a portion of the premium in Common Stock, the Company shall
issue to the Subscriber such number of fully paid and non-assessable shares
of Common Stock as shall have an aggregate Market Value (as defined in the
Debentures and determined as of the date such premium is payable) equal in
amount to the premium which the Subscriber has elected to receive in kind.
Subscriber hereby waives the premiums on the 6% Convertible Debenture issued
pursuant to the Prior Subscription Agreement to the extent such premiums
would have accrued through March 31, 1997. After March 31, 1997, such
premiums shall commence accruing in accordance with the terms of the Prior
Subscription Agreement.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents and warrants to the Subscriber as follows, such
representations and warranties to be true and correct as of the Closing Date.
4.1 The Common Stock issuable upon the conversion of the
Debentures and exercise of the Warrant has been duly authorized and, when
issued and delivered to the Subscriber in accordance with the terms of said
Debentures and Warrant, will be validly issued, fully paid and nonassessable
(the Debentures, Warrant and shares of Common Stock issuable upon conversion
or exercise thereof are hereinafter sometimes referred to as the
"Securities").
4.2 The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Nevada with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of
its business requires such
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registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial
or other), business, properties, net worth or results of operations of the
Company.
4.3 Neither the issuance and sale of the Securities, the
execution, delivery or performance of this Agreement, nor the consummation by
the Company of the transactions contemplated hereby (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body,
agency or official or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or by-laws, or other organizational documents, of the Company
or any of its subsidiaries or (ii) conflicts or will conflict with, or
constitutes or will constitute a material breach of, or default under, any
material agreement, indenture, lease or other instrument to which the Company
or any of its subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate any statute,
law, or any of its subsidiaries or any of their respective properties, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to the terms of any agreement or instrument to which any of them is
a party or by which any of them may be bound or to which any of the property
or assets of any of them is subject.
4.4 The execution and delivery of, and the performance by the
Company of its obligations under this Agreement has been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, and the Company has full corporate and legal power to enter into
this Agreement and perform all of its obligations hereunder.
4.5 As of February 28, 1997, the Company has authorized One
Hundred Million (100,000,000) shares of Common Stock, no par value, of which
37,068,009 shares are issued and outstanding, and 97,000 shares of preferred
stock, par value of $.01, of which 30,000 are issued and outstanding. All
such shares have been duly and validly issued and are fully paid and
nonassessable. The Company has outstanding no other shares of any class of
capital stock. Except as set forth in Schedule 4.5 attached hereto, there
are no subscriptions, options, warrants, scrip, rights, calls, convertible
securities, or any other similar agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock, or other
securities of the Company obligating, or which may obligate the Company to
issue, deliver or sell or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating or which may obligate the Company
to grant, extend or enter into any such subscription, option, warrant, scrip,
right, call, convertible security, or other similar agreement, arrangement,
or similar commitment.
4.6 Except as set forth in Schedule 4.6 attached hereto, there are
no legal or administrative proceedings or investigation of any kind or nature
now pending or to the knowledge of the Company, threatened before any court
or administrative body against the Company nor is the Company subject to any
unsatisfied judgment, order or decree of any court of law, administrative
board, regulatory agency, arbitrator or arbitration panel.
4.7 Since January 1, 1997, the business of the Company has been
operated only in the ordinary and normal course, and there has not been,
after such date, any material adverse change in the earnings, assets,
liabilities, financial condition or in the operation of its businesses.
4.8 Provided that the Company meets the qualification requirements
established by the National Association of Securities Dealers, the Company
will use its best efforts to cause its Common Stock, including the
Registrable Shares, to be duly approved for listing on The Nasdaq SmallCap
Market on or before the effective date of the Registration Statement.
4.9 The Company will use its best efforts to maintain the listing
of its Common Stock on The Nasdaq SmallCap Market, for a thirty-six (36)
month period commencing on the date said Common Stock is duly approved for
listing.
4.10 The Company will make and keep public information regarding
the Company available as those terms are understood and defined in Rule 144
under the Securities Act, at all times from and after ninety (90) days
following the effective date of the initial registration statement filed by
the Company under the Securities Act; and
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4.11 The Company will file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Securities Exchange Act of 1934, as amended.
4.12 Until the Debentures are no longer outstanding, except for (i)
the secured bond placement described in paragraphs (2) and (3) of the
commitment letter dated March 6, 1997 from Select Capital Advisors, Inc. to
the Company (the "Select Advisors Commitment Letter"), and (ii) security
interests in equipment securing indebtedness for the purchase price of such
equipment, the Company will not, and will not permit any subsidiary of the
Company to, create or suffer to exist any mortgage, pledge, lien, security
interest, assignment or transfer upon, or of, any of its property or assets,
now owned or hereafter acquired, to secure any indebtedness in excess of Two
Hundred Fifty Thousand Dollars ($250,000) without making effective provision
whereby the Debentures shall be directly secured equally and ratably with the
indebtedness secured by such mortgage, pledge, lien, security interest,
assignment or transfer.
4.13 The Purchase Price to be paid by the Subscriber shall be
disbursed as follows:
(i) Payment of One Hundred Thousand Dollars ($100,000) for
fees and expenses incurred in connection with the Registration Statement
shall be made by wire transfer to the client trust account so designated by
Looper, Reed, Xxxx & XxXxxx, or such other law firm retained to represent the
Company in fulfilling its registration obligations under Section 3 and shall
be held in trust by such firm, to be applied against its invoices for
services related to the filing of the Registration Statement.
(ii) Payment of Twenty Thousand Dollars ($20,000) for fees
and expenses incurred in connection with the Registration Statement shall be
made by wire transfer to the client trust account so designated by King
Xxxxxxx & Xxxxxxx P.C.
(iii) Payment of Five Thousand Dollars ($5,000) for fees and
expenses incurred in connection with this Agreement shall be made by wire
transfer to an account so designated by Xxxxxxxx & Xxxxxx.
5. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
hereby represents and warrants to the Company as follows, such
representations and warranties to be true and correct as of the Closing Date:
5.1 The Subscriber is aware that no federal or state agency has
passed upon the Common Stock or made any finding or determination concerning
the fairness of this investment.
5.2 The Subscriber has had an opportunity to ask questions of and
receive answers from representatives of the Company, concerning the terms and
conditions of this investment.
5.3 The Securities for which the Subscriber hereby subscribes will
be acquired for the Subscriber's own account, for investment only and not
with a view toward resale or distribution in a manner which would require
registration under the Securities Act.
5.4 The Subscriber is an "accredited investor" as defined in Rule
501(a) under the Securities Act. The Subscriber is an organization described
in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and is
a corporation, Massachusetts or similar business trust or partnership not
formed for the specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000. The Subscriber agrees to furnish any
additional information requested to assure compliance with applicable federal
and state securities laws in connection with the purchase and sale of the
Securities.
5.5 The Subscriber acknowledges that, until the Registration
Statement is declared effective by the SEC, there are substantial
restrictions on the transferability of shares of Common Stock as required
pursuant to federal and state securities laws. The Subscriber further agrees
to be responsible for compliance with all conditions on transfer imposed by
any state blue sky or securities law. The Subscriber acknowledges that each
certificate representing the Registrable Shares shall be stamped with a
restrictive legend substantially similar to the following:
"The securities evidenced by this certificate may not be offered or
sold, transferred, pledged, hypothecated or otherwise disposed of
except (i) pursuant to an effective registration statement
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under the Securities Act of 1933, as amended (the "Act"), (ii) to the
extent applicable, Rule 144 under the Act (or any similar rule under the
Act relating to the disposition of securities) or (iii) If an exemption
from registration under such Act is available.
Notwithstanding the foregoing, the securities evidenced by this
certificate are also subject to the registration rights set forth in
that certain Subscription Agreement by and between the Holder hereof
and the Company, a copy of which is on file at the Company's principal
executive office."
5.6 The Subscriber agrees to cooperate with the Company's listing
of Common Stock on the Nasdaq Stock Market and registration of the
Registrable Shares, by responding to any reasonable requests for information
required in connection with such listing and registration. If a condition to
such listing is imposed that would require the Subscriber's consent, and if
the Subscriber is unwilling so to consent, the Company shall have the right
to redeem, in whole but not in part, the Debentures and the debentures issued
pursuant to the Prior Subscription Agreement for a price equal to 120% of the
then outstanding principal amount plus accrued interest.
6. CONDITIONS PRECEDENT TO SUBSCRIBER'S OBLIGATION TO CLOSE.
Subscriber's obligation to make payment of the Purchase Price is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Subscriber, in whole or in
part):
6.1 The Company shall have retained the services of a well
qualified independent certified public accounting firm for the purposes of
examining the financial statements of the Company and its subsidiaries in
connection with the filing of the Registration Statement. Such independent
certified public accounting firm shall have substantial experience with
public company reporting and registration statements, shall meet the SEC's
requirements for an independent certified public accountant as set forth in
Article 2 of Regulation S-X, shall be a member of the SEC Practice Section of
the AICPA and shall have adequate insurance coverage; and
6.2 The Company shall have retained Looper, Reed, Xxxx & McGraw,
or another well qualified law firm to represent the Company in fulfilling its
registration obligations under Section 3. Such law firm shall have prepared
and delivered to Subscriber a reasonably detailed time and responsibility
checklist relating to the filing of the Registration Statement.
6.3 The Company shall have acquired eighty percent (80%) or more
of the outstanding shares of common stock of Thermal Medical Imaging, Inc.
7. BROKERS. Each of the Company and Subscriber hereby indemnifies and
holds the other harmless from any liability for any brokers' or finders' fee
with respect to this Agreement or the transactions contemplated hereby for
which the Company or the Subscriber, as the case may be, is responsible.
8. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought.
9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, their respective successors and
assigns, and no other person shall have any right or obligation hereunder.
Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by either the Company or
the Subscriber without the prior written consent of other party and any
assignment in violation hereof shall be void.
10. CERTAIN AGREEMENTS. The Company represents, warrants and covenants
as follows:
10.1 Except for (i) any securities offering registered under the
Securities Act or (ii) any securities offering contemplated by the Select
Advisors Commitment Letter, the Company shall not agree to enter, enter into,
or consummate any subsequent securities offering ("Future Offering") from the
period commencing with Closing Date and terminating on September 30, 1997,
without first offering the Subscriber the opportunity (which shall remain
open for a period of five (5) business days from the date the Subscriber
receives notice thereof) to purchase up to all of such
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additional securities (in the discretion of the Subscriber) on the terms and
provisions which the Company proposes to offer such additional securities to
such third parties. Any proposed sale of securities on terms and conditions
different from those offered to the Subscriber, as well as any subsequent
proposed sale of any such additional securities by the Company, shall again
be subject to the first refusal rights of the Subscriber and shall require
compliance by the Company with the procedures described in this Agreement.
The Company further covenants and agrees to provide the Subscriber with
prompt notice (in any event not later than two (2) business days after the
fact) of the date of closing and the substantive terms and provisions of any
such offering with any third party which was the subject of the right of
first offer described in this Section 10.
10.2 Should the Company consummate any Future Offering providing
for the registration and resale of the Company's securities prior to the
effectiveness of the Registration Statement, the Company shall so notify the
Subscriber, whereupon the Subscriber shall have the right, exercisable upon
10 days' written notice at any time prior to the effectiveness of the
Registration Statement, to require the Company to redeem the Debentures and
the 6% Convertible Debentures issued pursuant to the Prior Subscription
Agreement for a price equal to 120% of the then outstanding principal amount
plus accrued interest, such redemption to be effected within five business
days of such notice.
11. CHOICE OF LAW; CONFLICT OF LAW; JURISDICTION AND VENUE. Except as
otherwise expressly provided herein, the terms, conditions and enforceability
of this Agreement shall be governed by and interpreted under the laws of the
State of Illinois. Any claim, dispute or disagreement relating to the terms
and conditions of this Agreement, or arising from this Agreement or the
subject matter of this Agreement, may be brought only in the Circuit Courts
of Xxxx or DuPage Counties in the State of Illinois or in the United States
District Court for the Northern District of Illinois, which shall have
exclusive jurisdiction thereof. The parties to this Agreement consent to
such jurisdiction and venue and hereby knowingly and voluntarily waive all
objections thereto on the basis of lack of personal jurisdiction, venue or
convenience.
12. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
13. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original but all of
which will constitute one and the same instrument. However, in enforcing any
party's rights under this Agreement it will be necessary to produce only one
copy of this Agreement signed by the party to be charged.
14. NOTICE. Any notice to be given or to be served upon any party in
connection with this Agreement must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two
(2) days after it has been submitted for delivery by Federal Express or an
equivalent carrier, charges prepaid and addressed to the following addresses
with a confirmation of delivery:
If to the Company, to:
Computerized Thermal Imaging Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxx 00000
Attn.: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Subscriber, to:
Cameron Capital Ltd.
00 Xxxxxxxxx Xxxx
Xxxxxxxx XX 00
Xxxxxxx
Xxxx.: Nic Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, at any time by giving notice to the other party, designate any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
15. FEES AND EXPENSES. Except as set forth in Section 4.14 each of
Subscriber and the Company agrees to pay its own expenses incident to the
performance of its obligations hereunder including, but not limited to, the
fees and disbursements of such party's legal counsel; provided, however, that
the prevailing party in any action, suit or proceeding brought before or by
any court or governmental agency or body, domestic or foreign arising out of
the transactions contemplated hereby shall be entitled to be reimbursed for
its reasonable legal fees and expenses.
16. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns.
[SIGNATURE PAGE FOLLOWS]
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The undersigned acknowledges that this Agreement shall not be effective
unless and until accepted by the Company as indicated below.
Dated this 13th day of March, 1997.
CAMERON CAPITAL LTD.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 13TH DAY OF MARCH,
1997.
COMPUTERIZED THERMAL
IMAGING, INC.
By:
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Name:
---------------------------------------
Title:
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR
TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER
APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT,
OR IN THE OPINION OF COUNSEL, SUCH REGISTRATION UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED. THE SECURITIES REPRESENTED
HEREBY ARE ALSO SUBJECT TO AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION OF CERTAIN TERMS
AND CONDITIONS SET FORTH IN A CERTAIN SUBSCRIPTION AGREEMENT DATED AS OF
MARCH 13, 1997 BETWEEN THE COMPANY AND THE SUBSCRIBER NAMED THEREIN.
U.S. $125,000
COMPUTERIZED THERMAL IMAGING, INC.
8% SENIOR CONVERTIBLE DEBENTURE DUE MARCH 10, 2000
THIS DEBENTURE is one of a duly authorized issue of Debentures of
Computerized Thermal Imaging, Inc., a Nevada corporation (the "Company"),
designated as its 8% Secured Convertible Debentures due March 12, 2000, in an
aggregate principal amount not exceeding One Hundred Twenty Five Thousand
($125,000) Dollars (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to Cameron Capital
Ltd., registered holder hereof (the "Holder"), the principal sum of One
Hundred Twenty Five Thousand ( $125,000) Dollars on March 13, 2000 (the
"Maturity Date") and to pay interest on the principal sum outstanding from
time to time in arrears at the rate of eight percent (8%) per annum,
compounded annually and payable on a semi-annual basis commencing six months
after the date of this Debenture, computed on the basis of the actual number
of days elapsed in a 365-day year. Any accrued and unpaid interest shall be
payable in full on the Maturity Date and on each Conversion Date (hereinafter
defined). Accrual of interest shall commence on the date hereof until
payment in full of the principal sum has been made or duly provided for. All
accrued and unpaid interest shall bear interest at the same rate from and
after the due date of the interest payment until so paid. The interest so
payable, less any amounts required by law to be deducted or withheld, will be
paid to the person in whose name this Debenture is registered on the records
of the Company regarding registration and transfers of the Debentures (the
"Debenture Register"); provided, however, that the Company's obligation to a
transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the
Subscription Agreement of even date herewith executed by the original Holder
and the Company in connection with the purchase of this Debenture (the
"Subscription Agreement"). The principal of, and interest on, this Debenture
is payable in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts, at
the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder from time to time. In lieu of a cash
interest payment, the Holder may require the Company to issue shares of its
Common Stock (hereinafter defined) or a combination of Common Stock and cash
as payment of the interest then due and payable. If the Holder elects to
receive all or a portion of the interest in Common Stock, the Company shall
issue to the Holder such number of fully paid and non-assessable shares of
Common Stock as shall have an aggregate Market Value (as hereinafter defined)
equal in amount to the interest which the Holder has elected to receive in
kind. For these purposes, Market Value shall mean the average closing bid
price (as reported on the OTC Bulletin Board or The Nasdaq Stock Market, as
the case may be) of the Company's Common Stock for the five consecutive
trading days ending on the trading day preceding the date on which such
interest is payable.
This Debenture is subject to the following additional provisions:
1. This Debenture is issued pursuant to and shall have the benefit of
the Subscription Agreement dated as of the same date hereof by and between
the Company and the Holder.
1
2. The Company shall register all of the shares of Common Stock
issuable upon the conversion of the Debentures, in accordance with the
provisions of Section 3 of the Subscription Agreement, by July 15, 1997. In
the event the Company fails to register all of the shares of Common Stock
issued or issuable upon conversion of the Debentures (the "Registrable
Shares") pursuant to Section 3 of the Subscription Agreement, the Company
shall, in addition to the eight percent (8%) interest otherwise payable
pursuant to the terms of the Debentures, pay the Holder the premium set forth
in Section 3.10 of the Subscription Agreement.
3. The Debentures are issuable in denominations of Twenty Five
Thousand Dollars ($25,000) and integral multiples thereof. The Debentures
are exchangeable for an equal aggregate principal amount of Debentures of
different authorized denominations, as requested by the Holders surrendering
the same. No service charge will be made for such registration or transfer
or exchange.
4. The Company shall be entitled to withhold from all payments of
interest on this Debenture any amounts required to be withheld under the
applicable provisions of the United States income tax laws or any other
applicable laws at the time of such payments.
5. This Debenture has been issued subject to certain investment
representations of the original Holder hereof (set forth in Section 5 of the
Subscription Agreement) and may be offered, sold, transferred or exchanged
only in compliance with the Securities Act. Prior to due presentment for
transfer of this Debenture, the Company and any agent of the Company may
treat the person in whose name this Debenture is duly registered on the
Debenture Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Debenture
be overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
6. (a) Subject to the provisions of Section 7 hereof, from and after
the effective date of the Registration Statement, the Holder of this
Debenture shall have the option to convert up to One Hundred percent (100%)
of the of the principal amount of the Debentures originally issued to the
Holder at any time and from time to time into shares of the Company's Common
Stock, no par value (the "Common Stock"), at a conversion price for each
share of Common Stock equal to the lesser of: (i) the average closing bid
price (as reported on the OTC Bulletin Board or The Nasdaq Stock Market, as
the case may be) of the Company's Common Stock for the five (5) consecutive
trading days ending on the trading day immediately preceding to the date of
the Debentures (the "Fixed Conversion Price") or, (ii) Seventy-seven percent
(77%) of the average closing bid price (as reported on the OTC Bulletin Board
or The Nasdaq Stock Market, as the case may be) of the Company's Common Stock
for the five (5) consecutive trading days ending on the trading day
immediately preceding the Conversion Date (hereinafter defined) (such lesser
value is hereinafter referred to as the "Conversion Price").
(b) Conversion of the Debentures shall be effectuated by
surrendering the Debentures to be converted to the Company with the form of
Notice of Conversion attached hereto as SCHEDULE 1, executed by the Holder of
this Debenture evidencing such Holder's intention to convert this Debenture
or a specified portion (as provided for above) hereof. The amount of accrued
but unpaid interest as of the Conversion Date shall be subject to conversion
and paid in shares of Common Stock valued at the Conversion Price. No
fractional shares of the Common Stock or scrip representing fractional shares
will be issued on conversion, but the number of shares of Common Stock
issuable shall be rounded to the nearest whole share. The date on which
Notice of Conversion is given shall be deemed to be the date on which the
Holder has delivered this Debenture, with the Notice of Conversion duly
executed, to the Company, or if earlier, the date such Notice of Conversion
is delivered to the Company, provided the Debenture is received by the
Company within five (5) trading days thereafter. Such date is referred to
herein as the "Conversion Date." Facsimile delivery of the Notice of
Conversion shall be accepted by the Company.
(c) In lieu of physical delivery of certificates representing the
shares of Common Stock issuable upon the conversion of the Debenture(s) to
the Holder, the Company shall issue and register, within three (3) trading
days after delivery to the Company of such Notice of Conversion, if the
Company has received the original Notice of Conversion and Debenture(s) being
so converted by such date, the number of shares of Common Stock to which the
Holder shall be entitled, in such street or nominee name as may be directed
by the Holder in the Notice of Conversion. The Company shall ensure that the
shares of Common Stock are at all times Depository Trust Corporation
eligible. In the event that the Company fails for any reason to effect
delivery of such shares of Common Stock within such three
2
(3) trading day period; (i) the Company shall pay the Holder a premium equal
to one percent (1%) of the aggregate principal amount of the Debentures then
outstanding and held by the Holder, payable daily, commencing on the fourth
(4th) trading day after delivery to the Company of such Notice of Conversion
or (ii) the Holder may, in its sole discretion, revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company whereupon the
Company and the Holder shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion. The parties
agree that the foregoing damages are reasonable and that the anticipated
damages for the failure of the Company to effect such delivery are uncertain
in amount and difficult to be proved.
7. The Conversion Price and number of shares of Common Stock
issuable upon conversion shall be subject to adjustment from time to time as
provided in this Section 7.
(a) In the event the Company should at any time or from time to
time after the date of this Debenture fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock
(hereinafter referred to as "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date
(or the date of such dividend, distribution, split or subdivision if no
record date is fixed), the Fixed Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion
of the Debentures shall be increased in proportion to such increase in the
aggregate number of shares of Common Stock outstanding and those issuable
with respect to such Common Stock Equivalents.
(b) If the number of shares of Common Stock outstanding at any
time after the date of the Debentures is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Fixed Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of the
Debentures shall be decreased in proportion to such decrease in outstanding
shares.
8. The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Debentures, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the
conversion of all of the outstanding principal amount and accrued interest
thereon; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of the
Debentures, in addition to such other remedies as shall be available to the
Holder, the Company will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, using its best efforts to obtain the
requisite stockholder approval necessary to increase the Company's authorized
Common Stock.
9. In no event shall the holder of this Debenture be entitled to
convert the outstanding principal of this Debenture to the extent such
conversion would result in such holder's beneficially owning more than five
percent (5%) of the outstanding shares of the Company's Common Stock. For
these purposes, beneficial ownership shall be defined and calculated in
accordance with Rule 13d-3, promulgated under the Securities Exchange Act of
1934, as amended.
10. Any of the following shall constitute an "Event of Default":
a. The Company shall fail to make any payment (whether principal,
interest or otherwise) on the Debentures as and when the same
shall be due and payable and such default shall continue for five
(5) business days after the due date thereof;
b. Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of the Debentures or the Subscription
Agreement shall be false or misleading in any material respect as
of the date made;
3
c. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under the Debentures or
the Subscription Agreement and such failure shall continue
uncured for a period of five (5) business days after the first
date on which such failure arises (it being understood that in
the case of defaults which can not reasonably be cured within a 5
day period, no grace period shall be necessary as a precondition
to the failure to perform such covenant constituting an Event of
Default);
d. The Company shall (1) make an assignment for the benefit of its
creditors or commence proceedings for its dissolution; or (2)
apply for or consent to the appointment of a trustee, liquidator,
custodian or receiver thereof, or for a substantial part of its
property or business;
e. A trustee, liquidator, custodian or receiver shall be appointed
for the Company or for a substantial part of its property or
business without its consent and shall not be discharged within
sixty (60) days after such appointment;
f. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (60) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceeding or admit the material
allegations of, or default in answering a petition filed in any
such proceeding;
g. The Company shall default on the payment of any debts in excess
of $100,000 beyond any applicable grace period;
h. Any judgments, levies or attachments shall be rendered against
the Company or any of its assets or properties in an aggregate
amount in excess of $100,000 and such judgments, levies or
attachments shall not be dismissed, stayed, bonded or discharged
within thirty (30) days of the date of entry thereof;
i. The Company shall be a party to any merger or consolidation or
shall dispose of all or substantially all of its assets in one or
more transactions or shall redeem more than a DE MINIMIS amount
of its outstanding shares of capital stock;
j. The Company's Common Stock shall be suspended from trading on the
OTC Electronic Bulletin Board, and the Company shall not have its
Common Stock relisted or have such suspension lifted, as the case
may be, within five (5) business days;
k. The Company does not make and keep public information regarding
the Company available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times from and after
ninety (90) days following the effective date of the initial
registration statement filed by the Company under the Securities
Act; and
l. The Company does not file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as
amended.
Upon the occurrence of any Event of Default or at any time thereafter, and in
each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of
any subsequent Event of Default) at the option of the Holder in the Holder's
sole discretion, the Holder may, upon written notice to the Company,
accelerate the maturity hereof, whereupon all principal and interest
hereunder shall be immediately due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and
4
the Holder may immediately, and without expiration of any period of grace,
enforce any and all of the Holder's rights or remedies afforded by law.
11. The Company, should an Event of Default occur, expressly waives
demand and presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of
all sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.
12. No provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin
or currency, herein prescribed. This Debenture and all other Debentures now
or hereafter issued of similar terms are direct obligations of the Company.
This Debenture ranks equally with all other Debentures now or hereafter
issued under the terms set forth herein.
13. Any notice to be given or to be served upon any party in connection
with the Debentures must be in writing and will be deemed to have been given
and received upon confirmed receipt, if sent by facsimile, or two (2) days
after it has been submitted for delivery by Federal Express or an equivalent
carrier, charges prepaid and addressed to the following addresses with a
confirmation of delivery:
If to the Company, to:
Computerized Thermal Imaging Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxx 00000
Attn.: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder, to:
Cameron Capital Ltd.
00 Xxxxxxxxx Xxxx
Xxxxxxxx XX 00
Xxxxxxx
Xxxx.: Nic Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, at any time by giving notice to the other party, designate any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
14. Except as otherwise expressly provided herein, the terms,
conditions and enforceability of the Debentures shall be governed by and
interpreted under the laws of the State of Illinois. Any claim, dispute or
disagreement relating to the terms and conditions of the Debentures, or
arising from the Debentures or the subject matter of the Debentures, may be
brought only in the Circuit Courts of Xxxx or DuPage Counties in the State of
Illinois or in the United States District Court for the Northern District of
Illinois, which shall have exclusive jurisdiction thereof. The parties to
the Debentures consent to such jurisdiction and venue and hereby knowingly
and voluntarily waive all objections thereto on the basis of lack of personal
jurisdiction, venue or convenience.
[SIGNATURE PAGE FOLLOWS]
5
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized
Dated: March 13, 1997 COMPUTERIZED THERMAL IMAGING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
6
SCHEDULE 1
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert the above
Debenture No. ______ into shares of Common Stock of Computerized Thermal
Imaging, Inc. (the "Company") according to the conditions hereof, as of the
date written below.
-----------------------------------------
Date of Notice
-----------------------------------------
Signature
-----------------------------------------
Name
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
* The original Debenture and a manually signed original of this Notice of
Conversion must be received by the Company by the third business day
following the date of delivery of this Notice of Conversion by facsimile.
7
EXHIBIT B
March 11, 1997
Cameron Capital Ltd.
00 Xxxxxxxxx Xxxx
Xxxxxxxx XX 00
Xxxxxxx
RE: COMPUTERIZED THERMAL IMAGING, INC.
Ladies and Gentlemen:
We have acted as counsel for Computerized Thermal Imaging, Inc., a
Nevada corporation (the "Company"), in connection with the private placement
of the Company's 8% Convertible Debentures due March 10, 2000 (the
"Debentures") and a warrant, issued to Cameron Capital Management Ltd.
("CCM") as payment of fees incurred by CCM in connection with Agreement
(hereinafter defined) (the "Warrant"), to purchase shares of common stock,
$.01 par value (the "Common Stock"). The private placement has been made
without registration under the Securities Act of 1933, as amended (the
"Securities Act") pursuant to the exemption from registration set forth in
Rules 501 to 508, inclusive, promulgated under the Securities Act
("Regulation D"). Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Subscription Agreement dated
as of March 11, 1997 (the "Agreement") by and between the Company and Cameron
Capital Ltd. (the "Purchaser"). The Agreement, the Warrant, and the
Debentures are sometimes hereinafter referred to collectively as the
"Documents".
In connection with the opinions expressed herein, we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the
opinions expressed herein, we have relied upon the representations and
warranties as to factual matters contained in and made by the Company
pursuant to the Documents and upon certificates and statements of certain
government officials and of officers of the Company. We have also examined
originals or copies of such corporate documents or records of the Company as
we have considered appropriate for the opinions expressed herein.
In rendering this opinion, we have assumed that the signatures on
documents and instruments examined by us are authentic, and that all
documents submitted to us as copies conform with the originals, which facts
we have not independently verified. We have also assumed: (A) that the
Documents have been duly and validly executed and delivered by you or on your
behalf and constitute your valid, binding and enforceable obligation; and
(B) that the representations and warranties made in the Documents by you are
true and correct.
As used in this opinion, the expression "we are not aware" or the phrase
"to our knowledge" means as to matters of fact, based on the actual knowledge
of individual attorneys within the firm principally responsible for handling
matters for the Company and after an examination of documents referred to
herein and after inquiries of certain officers of the Company and
governmental authorities, we find no reason to believe the opinions expressed
are factually incorrect; but beyond that we have made no factual
investigation for the purpose of rendering this opinion.
This opinion relates solely to the laws of the State of Nevada and
applicable federal laws of the United States, and we express no opinion with
respect to the effect or application of any other laws. Special rulings of
authorities administering such laws or opinions of other counsel have not
been sought or obtained by us in connection with rendering the opinions
expressed herein.
Based upon our examination of and reliance upon the foregoing and
subject to the limitations, exceptions, qualifications and assumptions set
forth below, we are of the opinion that as of the date hereof:
1
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Nevada, and has all
requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted.
2. The Company has all requisite corporate power and authority to
execute and deliver the Documents and to perform its respective obligations
under the terms of the Documents. The Documents have been duly authorized,
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable against it in accordance with
their terms.
3. Neither the issuance and sale of the Securities, the execution,
delivery or performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby (A)
requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or by-laws, or other
organizational documents, of the Company or any of its subsidiaries or (B)
conflicts or will conflict with, or constitutes or will constitute a material
breach of, or default under, any material agreement, indenture, lease or
other instrument to which the Company or any of its subsidiaries is a party
or by which any of them or any of their respective properties may be bound,
or violates or will violate any statute, law, or any of its subsidiaries or
any of their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to the terms of any agreement
or instrument to which any of them is a party or by which any of them may be
bound or to which any of the property or assets of any of them is subject.
4. As of February 28, 1997, the Company has authorized One Hundred
Million (100,000,000) shares of Common Stock, no par value, of which
37,068,009 shares are issued and outstanding, and 97,000 shares of preferred
stock, par value of $.01, of which 30,000 are issued and outstanding. All
such shares have been duly and validly issued and are fully paid and
nonassessable. The Company has outstanding no other shares of any class of
capital stock. Except for options issued to General Xxxxxxx Xxxxxx,
President of the Company entitling him to purchase two million (2,000,000)
shares of Common Stock of the Company at a price of $1.25 per share. There
are no subscriptions, options, warrants, scrip, rights, calls, convertible
securities, or any other similar agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock, or other
securities of the Company obligating, or which may obligate the Company to
issue, deliver or sell or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating or which may obligate the Company
to grant, extend or enter into any such subscription, option, warrant, scrip,
right, call, convertible security, or other similar agreement, arrangement,
or similar commitment.
5. Upon receipt by the Company of the purchase price for the
Debentures pursuant to the Agreement, and upon issuance and delivery of the
Debentures to the Purchaser pursuant to the terms and conditions of the
Agreement, the Debentures so issued and delivered will be duly authorized and
validly issued. The Company has reserved, solely for the purpose of effecting
the conversion of the Debentures, such number of shares of its Common Stock
sufficient to effect the conversion of all of the principal amount of the
Debentures.
6. Upon the issuance and delivery of the Warrant pursuant to the terms
and conditions of the Agreement, the Warrant so issued and delivered will be
duly authorized and validly issued. The Company has reserved, solely for the
purpose of issuance upon exercise of the Warrant, such number of shares of
its Common Stock sufficient to effect the exercise of the Warrant.
7. The payment of all interest, premiums and other amounts payable
under and pursuant to the Documents is not usurious under applicable law.
8. Assuming and relying upon the truth and accuracy of the
representations and warranties contained in the Agreement, the offer,
issuance, sale and delivery of the Debentures and the Warrant in accordance
with the terms of the Agreement are exempt from the registration requirements
of the Securities Act pursuant to Regulation D.
Our opinions expressed above are specifically subject to the following
limitations, exceptions, qualifications and assumptions:
2
A. The effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting the relief of debtors or the
rights and remedies of creditors generally, including without limitation the
effect of statutory or other law regarding fraudulent conveyances and
preferential transfers.
B. Limitations imposed by state law, federal law or general equitable
principles upon the specific enforceability of any of the remedies, covenants
or other provisions of any applicable agreement and upon the availability of
injunctive relief or other equitable remedies, regardless of whether
enforcement of any such agreement is considered in a proceeding in equity or
at law.
This opinion is rendered as of the date first written above solely for
the benefit in connection with the Agreement and may not be delivered to,
quoted or relied upon by any person other than you, or for any other purpose,
without our prior written consent. We assume no obligation to advise you of
facts, circumstances, events or developments which hereafter may be brought
to our attention and which may alter, affect or modify the opinions expressed
herein.
Very truly yours,
3
EXHIBIT C
THIS WARRANT AND THE SHARES OF COMMON STOCK OF COMPUTERIZED THERMAL
TECHNOLOGIES, INC. TO BE ISSUED UPON ANY EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISTRIBUTION OF SECURITIES) OR (III) IF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
WARRANT
TO PURCHASE SHARES
OF
COMMON STOCK
OF
COMPUTERIZED THERMAL IMAGING, INC.
MARCH 13, 1997
This certifies that, for value received, Cameron Capital Management Ltd.
("CCM") and any subsequent transferee pursuant to the terms of the Agreement
(as defined below) of even date and this Warrant (each, a "Holder") is
entitled to purchase, subject to the provisions of this Warrant, from
Computerized Thermal Imaging, Inc., a Nevada corporation (the "Issuer"), at
any time or from time to time on or after the date hereof and on or before
March 13, 2002 (the "Expiration Date"), Fifty Thousand (50,000) fully paid
and nonassessable shares of common stock (the "Common Stock"), of the Issuer
at an exercise price of One Dollar Fifty Cents ($1.50) per share, subject to
adjustment pursuant to the terms hereunder (the "Exercise Price")(such shares
of Common Stock and other securities issued and issuable upon exercise of
this Warrant, the "Warrant Shares").
Section 1. DEFINITIONS. This Warrant is issued pursuant to, and
shall have the benefit of, Section 3 of the Subscription Agreement of even
date herewith by and between Cameron Capital Ltd., and the Issuer (the
"Agreement"). Except as otherwise specified herein, terms defined herein
shall have the meanings assigned to them in the Agreement.
Section 2. EXERCISE OF WARRANT. Subject to the provisions hereof,
this Warrant may be exercised, in whole or in part, but not as to a
fractional share, at any time or from time to time on or after the date
hereof and on or before the Expiration Date, by presentation and surrender
hereof to the Issuer at the address which, in accordance with the provisions
of Section 10 hereof, is then effective for notices to the Issuer, with the
Election to Purchase Form annexed hereto as SCHEDULE ONE, duly executed and
accompanied by payment to the Issuer as further set forth below in this
Section 2, for the account of the Issuer, of the Exercise Price for the
number of Warrant Shares specified in such form. If this Warrant should be
exercised in part only, the Issuer shall, upon surrender of this Warrant,
execute and deliver a new Warrant evidencing the rights of the Holder hereof
to purchase the balance of the Warrant Shares purchasable hereunder. The
Issuer shall maintain at its principal place of business a register for the
registration of this Warrant and registration of transfer of this Warrant.
The Exercise Price for the number of Warrant Shares specified in the Election
to Purchase Form shall be payable in United States Dollars by certified or
official bank check payable to the order of the Issuer or by wire transfer of
immediately available funds to an account specified by the Issuer for that
purpose.
1
Section 3. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. The Holder
hereby represents and warrants to the Issuer as follows, such representations
and warranties to be true and correct as of the date of Exercise:
(a) The Holder is aware that no federal or state agency has passed
upon the Warrant Shares or made any finding or determination concerning the
fairness of this investment
(b) The Holder has had an opportunity to ask questions of and
receive answers from representatives of the Issuer, concerning the terms and
conditions of this investment.
(c) The Warrant Shares will be acquired for the Holder's own
account, for investment only and not with a view toward resale or
distribution in a manner which would require registration under the
Securities Act.
(d) The Holder is an "accredited investor" as defined in Rule
501(a) under the Securities Act. The Holder is an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and is a
corporation, Massachusetts or similar business trust or partnership not
formed for the specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000. The Holder agrees to furnish any
additional information requested to assure compliance with applicable federal
and state securities laws in connection with the purchase and sale of the
Warrant Shares.
(e) The Holder acknowledges that there are substantial
restrictions on the transferability of the Warrant Shares as required
pursuant to federal and state securities laws. The Holder further agrees to
be responsible for compliance with all conditions on transfer imposed by any
state blue sky or securities law. The Holder acknowledges that each
certificate representing the Warrant Shares shall be stamped with a
restrictive legend substantially similar to the following:
"The securities evidenced by this certificate may not be offered or
sold, transferred, pledged, hypothecated or otherwise disposed of
except (i) pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Act"), (ii) to the extent
applicable, Rule 144 under the Act (or any similar rule under the Act
relating to the disposition of securities) or (iii) If an exemption
from registration under such Act is available.
Notwithstanding the foregoing, the securities evidenced by this
certificate are also subject to the registration rights set forth in
that certain Subscription Agreement by and between the Holder hereof
and the Issuer, a copy of which is on file at the Issuer's principal
executive office."
Section 4. RESERVATION OF SHARES; PRESERVATION OF RIGHTS OF HOLDER.
The Issuer hereby agrees that there shall be reserved for issuance and/or
delivery upon exercise of this Warrant, such number of Warrant Shares as
shall be required for issuance or delivery upon exercise of this Warrant.
The Warrant surrendered upon exercise shall be canceled by the Issuer. After
the Expiration Date, no shares of Common Stock shall be subject to
reservation in respect of this Warrant. The Issuer further agrees (i) that
it will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the observation or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by the Issuer, (ii) promptly to take such
action as may be required of the Issuer to permit the Holder to exercise this
Warrant and the Issuer duly and effectively to issue shares of its Common
Stock or other securities as provided herein upon the exercise hereof, and
(iii) promptly to take all action required or provided herein to protect the
rights of the Holder granted hereunder against dilution. Without limiting
the generality of the foregoing, should the Warrant Shares at any time
consist in whole or in part of shares of capital stock having a par value,
the Issuer agrees that before taking any action which would cause an
adjustment of the Exercise Price so that the same would be less than the then
par value of such Warrant Shares, the Issuer shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Issuer may validly and legally issue fully paid and nonassessable shares of
such Common Stock at the Exercise Price as so adjusted. The Issuer further
agrees that it will not establish a par value for its Common Stock while this
Warrant is outstanding in an amount greater than the Exercise Price.
Section 5. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. Any
attempted transfer of this Warrant, the Warrant Shares or any new Warrant not
in accordance with this Section shall be null and void, and the
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Issuer shall not in any way be required to give effect to such transfer. No
transfer of this Warrant shall be effective for any purpose hereunder until
(i) written notice of such transfer and of the name and address of the
transferee has been received by the Issuer, and (ii) the transferee shall
first agree in a writing deposited with the Secretary of the Issuer to be
bound by all the provisions of this Warrant and the Agreement. Upon
surrender of this Warrant to the Issuer by any transferee authorized under
the provisions of this Section 5, the Issuer shall, without charge, execute
and deliver a new Warrant registered in the name of such transferee at the
address specified by such transferee, and this Warrant shall promptly be
canceled. The Issuer may deem and treat the registered holder of any Warrant
as the absolute owner thereof for all purposes, and the Issuer shall not be
affected by any notice to the contrary. Any Warrant, if presented by an
authorized transferee, may be exercised by such transferee without prior
delivery of a new Warrant issued in the name of the transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the Issuer
will execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute a separate contractual
obligation on the part of the Issuer, whether or not the Warrant so lost,
stolen, destroyed or mutilated shall be at any time enforceable by anyone.
Section 6. RIGHTS OF HOLDER. Neither a Holder nor his transferee by
devise or the laws of descent and distribution or otherwise shall be, or have
any rights or privileges of, a shareholder of the Issuer with respect to any
Warrant Shares, unless and until certificates representing such Warrant
Shares shall have been issued and delivered thereto.
Section 7. ADJUSTMENTS IN EXERCISE PRICE AND WARRANT SHARES. The
Exercise Price and Warrant Shares shall be subject to adjustment from time to
time as provided in this Section 7.
(a) If the Issuer is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or
smaller number of shares, the number of shares of Common Stock for which
this Warrant may be exercised shall be increased or reduced, as of the
record date for such recapitalization, in the same proportion as the
increase or decrease in the outstanding shares of Common Stock, and the
Exercise Price shall be adjusted so that the aggregate amount payable for
the purchase of all Warrant Shares issuable hereunder immediately after the
record date for such recapitalization shall equal the aggregate amount so
payable immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or makes a
distribution to holders of Common Stock, and such dividend or distribution
is payable or made in Common Stock or securities convertible into or
exchangeable for Common Stock, or rights to purchase Common Stock or
securities convertible into or exchangeable for Common Stock, the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common
Stock shall be entitled to receive such dividend or distribution, in
proportion to the increase in the number of outstanding shares (and shares
of Common Stock issuable upon conversion of all such securities convertible
into Common Stock) of Common Stock as a result of such dividend or
distribution, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date for such dividend or
distribution shall equal the aggregate amount so payable immediately before
such record date.
(c) If the Issuer declares a dividend on Common Stock (other than a
dividend covered by subsection (b) above) or distributes to holders of its
Common Stock, other than as part of its dissolution or liquidation or the
winding up of its affairs, any shares of its capital stock, any evidence of
indebtedness or any cash or other of its assets (other than Common Stock or
securities convertible into or exchangeable for Common Stock), the Holder
shall receive notice of such event as set forth in Section 9 below.
(d) In case of any consolidation of the Issuer with, or merger of the
Issuer into, any other corporation (other than a consolidation or merger in
which the Issuer is the continuing corporation and in which no change
occurs in its outstanding Common Stock), or in case of any sale or transfer
of all or
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substantially all of the assets of the Issuer, or in the case of any
statutory exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation into
the Issuer, except where the Issuer is the surviving entity and no change
occurs in its outstanding Common Stock), the corporation formed by such
consolidation or the corporation resulting from such merger or the
corporation which shall have acquired such assets or securities of the
Issuer, as the case may be, shall execute and deliver to the Holder
simultaneously therewith a new Warrant, satisfactory in form and substance
to the Holder, together with such other documents as the Holder may
reasonably request, entitling the Holder thereof to receive upon exercise
of such Warrant the kind and amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale, transfer, or
exchange of securities, or upon the dissolution following such sale or
other transfer, by a holder of the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior to such
consolidation, merger, sale, transfer, or exchange. Such new Warrant shall
contain the same basic other terms and conditions as this Warrant and shall
provide for adjustments which, for events subsequent to the effective date
of such written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 6. The above
provisions of this paragraph (d) shall similarly apply to successive
consolidations, mergers, exchanges, sales or other transfers covered
hereby.
(e) If the Issuer shall, at any time before the expiration of this
Warrant, dissolve, liquidate or wind up its affairs, the Holder shall, upon
exercise of this Warrant have the right to receive, in lieu of the shares
of Common Stock of the Issuer that the Holder otherwise would have been
entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such shares of Common Stock of
the Issuer had the Holder been the holder of record of such shares of
Common Stock receivable upon exercise of this Warrant on the date for
determining those entitled to receive any such distribution. If any such
dissolution, liquidation or winding up results in any cash distribution in
excess of the Exercise Price provided by this Warrant for the shares of
Common Stock receivable upon exercise of this Warrant, the Holder may, at
the Holder's option, exercise this Warrant without making payment of the
Exercise Price and, in such case, the Issuer shall, upon distribution to
the Holder, consider the Exercise Price to have been paid in full and, in
making settlement to the Holder, shall obtain receipt of the Exercise Price
by deducting an amount equal to the Exercise Price for the shares of Common
Stock receivable upon exercise of this Warrant from the amount payable to
the Holder. For purposes of this paragraph, the sale of all or
substantially all of the assets of the Issuer and distribution of the
proceeds thereof to the Issuer's shareholders shall be deemed a
liquidation.
(f) If an event occurs which is similar in nature to the events
described in this Section 7, but is not expressly covered hereby, the Board
of Directors of the Issuer shall make or arrange for an equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock of the
Issuer as the same exists at the Closing Date or as such stock may be
constituted from time to time, except that for the purpose of this Section
7, the term "Common Stock" shall include any stock of any class of the
Issuer which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Issuer and which is not subject to
redemption by the Issuer.
(h) The Issuer shall retain a firm of independent public accountants
of recognized standing (who may be any such firm regularly employed by the
Issuer) to make any computation required under this Section 7, and a
certificate signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 7.
(i) Whenever the number of Warrant Shares or the Exercise Price shall
be adjusted as required by the provisions of this Section 7, the Issuer
forthwith shall file in the custody of its secretary or an assistant
secretary, at its principal office, and furnish to each Holder hereof,
showing the adjusted number of Warrant Shares and the Exercise Price and
setting forth in reasonable detail the circumstances requiring the
adjustments.
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(j) Notwithstanding any other provision, this Warrant shall be
binding upon and inure to the benefit of any successors and assigns of the
Issuer.
(k) No adjustment in the Exercise Price in accordance with the
provisions of this Section 7 need be made if such adjustment would amount
to a change in such Exercise Price of less than $.01; PROVIDED HOWEVER,
that the amount by which any adjustment is not made by reason of the
provisions of this paragraph (k) shall be carried forward and taken into
account at the time of any subsequent adjustment in the Exercise Price.
(l) If an adjustment is made under this Section 7 and the event to
which the adjustment relates does not occur, then any adjustments in
accordance with this Section 7 shall be readjusted to the Exercise Price
and the number of Warrant Shares which would be in effect had the earlier
adjustment not been made.
Section 8. TAXES ON ISSUE OR TRANSFER OF COMMON STOCK AND WARRANT.
The Issuer shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities on the exercise of this Warrant. The Issuer
shall not be required to pay any tax which may be payable in respect of any
transfer of this Warrant or in respect of any transfers involved in the issue
or delivery of shares or the exercise of this Warrant in a name other than
that of the Holder and the person requesting such transfer, issue or delivery
shall be responsible for the payment of any such tax (and the Issuer shall
not be required to issue or deliver said shares until such tax has been paid
or provided for).
Section 9. NOTICE OF ADJUSTMENT. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer
generally to the holders of Common Stock the right to subscribe to or
purchase any shares of any class of Common Stock or securities convertible
into Common Stock or any other similar rights, or (c) if there shall be any
proposed capital reorganization of the Issuer in which the Issuer is not the
surviving entity, recapitalization of the capital stock of the Issuer,
consolidation or merger of the Issuer with or into another corporation, sale,
lease or other transfer of all or substantially all of the property and
assets of the Issuer, or voluntary or involuntary dissolution, liquidation or
winding up of the Issuer, or (d) if the Issuer shall give to its stockholders
any notice, report or other communication respecting any significant or
special action or event, then in such event, the Issuer shall give to the
Holder, at least thirty (30) days prior to the relevant date described below
(or such shorter period as is reasonably possible if thirty days is not
reasonably possible), a notice containing a description of the proposed
action or event and stating the date or expected date on which a record of
the Issuer's stockholders is to be taken for any of the foregoing purposes,
and the date or expected date on which any such dividend, distribution,
subscription, reclassification, reorganization, consolidation, combination,
merger, conveyance, sale, lease or transfer, dissolution, liquidation or
winding up is to take place and the date or expected date, if any is to be
fixed, as of which the holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such event.
Section 10. NOTICE. Any notice to be given or to be served upon any
party in connection with the Debentures must be in writing and will be deemed
to have been given and received upon confirmed receipt, if sent by facsimile,
or two (2) days after it has been submitted for delivery by Federal Express
or an equivalent carrier, charges prepaid and addressed to the following
addresses with a confirmation of delivery:
If to the Issuer, to:
Computerized Thermal Imaging Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxx 00000
Attn.: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Holder, to:
Cameron Capital Management Ltd.
00 Xxxxxxxxx Xxxx
Xxxxxxxx XX 00
Xxxxxxx
Xxxx.: Nic Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, at any time by giving notice to the other party, designate any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
Section 11. CHOICE OF LAW; CONFLICT OF LAW; JURISDICTION AND VENUE.
Except as otherwise expressly provided herein, the terms, conditions and
enforceability of the Debentures shall be governed by and interpreted under
the laws of the State of Illinois. Any claim, dispute or disagreement
relating to the terms and conditions of the Debentures, or arising from the
Debentures or the subject matter of the Debentures, may be brought only in
the Circuit Courts of Xxxx or DuPage Counties in the State of Illinois or in
the United States District Court for the Northern District of Illinois, which
shall have exclusive jurisdiction thereof. The parties to the Debentures
consent to such jurisdiction and venue and hereby knowingly and voluntarily
waive all objections thereto on the basis of lack of personal jurisdiction,
venue or convenience.
[SIGNATURE PAGE FOLLOWS]
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Dated: March 13, 1997
COMPUTERIZED THERMAL
IMAGING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ATTEST:
----------------------------------------------
, Secretary
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SCHEDULE ONE
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and
to purchase ______ shares of Computerized Thermal Imaging, Inc. Common Stock
issuable upon the exercise of this Warrant, and requests that certificates
for such shares be issued in the name of:
--------------------------------------------------------------------------------
(Name)
--------------------------------------------------------------------------------
(Xxxxxxx)
--------------------------------------------------------------------------------
(Xxxxxx Xxxxxx Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
--------------------------------------------------------------------------------
(Name)
--------------------------------------------------------------------------------
(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered
to, the undersigned at the address stated below.
Date: __________ __, _____
Name of Registered Owner:
------------------------------------------------------
--------------------------------------------------------------------------------
Address:
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Signature: ---------------------------------------------------------------------
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