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Exhibit 10.37
INVESTOR SUBSCRIPTION AGREEMENT
OF VENTURI TECHNOLOGY ENTERPRISES, INC.
THIS INVESTOR SUBSCRIPTION AGREEMENT (the "Agreement") is made and
entered into as of this 31st day of December, 1997, by and between VENTURI
TECHNOLOGY ENTERPRISES, INC., a Nevada corporation ("Seller"), with offices at
0000 X. Xxxxx Xxxxxx, Xxxx, Xxxx 00000 and ENTREPRENEURIAL INVESTORS, LTD., a
Bahamas company ("Buyer"), with offices at Xxxxxxxx Xxxxxxxx, 0xx Xxxxx, Xxxx
Xxxx Xxxxx, Xxxxxxxx, Xxxxxxx, providing for the purchase and sale of Two
Hundred Thousand (200,000) shares (the "Shares") of Series B 6% Cumulative
Convertible Preferred Stock of Seller (the "Series B Preferred Stock"),
convertible into shares of the common stock, par value $0.001 per share (the
"Common Stock"), of Seller. Seller and Buyer (collectively, the "Parties")
hereby represent and agree as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Buyer hereby subscribes for Two Hundred Thousand (200,000) Shares
of Series B Preferred Stock in exchange for One Million and no/100 Dollars
($1,000,000.00) in cash (the "Purchase Price"). Buyer shall pay the Purchase
Price for the Shares by wire transfer of immediately available, federal funds in
United States dollars against counter-delivery of the Shares by Seller. The
closing of the purchase and sale of the Shares (the "Closing") shall take place
on or about December 31, 1997, at 10:00 a.m. at the offices of Cardinal
International Bank & Trust Co., Ltd., Norfolk House, 3rd Floor, Nassau, Bahamas
(the "Escrow Agent").
(ii) The rights, privileges and preferences of the Series B Preferred
Stock, shall be as set forth in the Certificate of Designation attached as
Exhibit "A" to this Agreement.
2. BUYER'S REPRESENTATIONS AND COVENANTS.
Buyer represents, warrants and covenants to Seller as follows:
(i) This Agreement has been duly authorized, validly executed and
delivered on behalf of Buyer and is a valid and binding agreement of Buyer
enforceable in accordance with its terms, subject to general principles of
equity and of bankruptcy or other laws affecting the enforcement of creditors'
rights;
(ii) Buyer is purchasing the Shares for its own account for investment
purposes only and not with a view towards distribution. Buyer understands and
agrees that it must bear the economic risks of investments for an indefinite
period of time. Buyer has received and carefully reviewed copies of the
Disclosure Documents (as defined in Section 3). Buyer understands that the offer
and sale of the Shares are being made only by means of this Agreement. No
representations or warranties have been made to Buyer by Seller, the officers or
directors of Seller, or any agent, employee or affiliate of any of them, except
as specifically set forth herein or in the placement agent's agreement between
the Seller and Equity Services, Ltd (the "Placement Agreement"). Buyer shall be
a third party beneficiary of the representations, warranties and covenants made
by Seller in the Placement Agreement. Buyer is aware that the purchase of the
Shares involves a high degree of risk and that it may sustain, and has the
financial ability to sustain,
INVESTOR SUBSCRIPTION AGREEMENT OF
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the loss of its entire investment. Buyer has had the opportunity to ask
questions of, and receive answers satisfactory to it from, Seller's management
regarding Seller. Buyer understands that no federal or state governmental
authority has made any finding or determination relating to the fairness of an
investment in the Shares and that no federal or state governmental authority has
recommended or endorsed, or will recommend or endorse, the investment herein.
Buyer has significant assets and upon consummation of the purchase of the Shares
will continue to have significant assets exclusive of the Shares. Buyer has not
been organized for the sole purpose of acquiring the Shares;
(iii) Buyer (a) is not a citizen or resident of the United States of
America, (b) is not an entity organized under any laws of any state of the
United States of America, and (c) does not have offices in the United States of
America;
(iv) Buyer is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act");
(v) Buyer understands that the Shares are being offered and sold to
it in reliance on specific provisions of federal and state securities laws and
that Seller is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings of Buyer set forth
herein in order to determine the applicability of such provisions;
(vi) Buyer is capable of evaluating the risks and merits of this
investment by virtue of its experience as an investor and its knowledge,
experience, and sophistication in financial and business matters;
(vii) Buyer shall execute the Registration Rights Agreement in the
form attached hereto as Exhibit "B";
(viii) Buyer has not employed any investment banker, broker or finder
or incurred any liability for any brokerage fees, commissions or finder's fees
in connection with the transactions contemplated by this Agreement; and
(ix) Buyer understands that neither the Shares nor the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock have been
registered under the Securities Act and therefore it cannot dispose of any or
all of the Shares or Common Stock unless and until such Shares or Common Stock,
as the case may be, are subsequently registered under the Securities Act or
exemptions from such registration are available. Buyer acknowledges that a
legend substantially as follows will be placed on the certificates representing
the Shares and/or Common Stock:
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THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED SECURITIES WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. THE ISSUER OF THESE SECURITIES WILL NOT TRANSFER SUCH
SECURITIES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE ISSUER THAT THE
REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH
REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
3. SELLER'S REPRESENTATIONS AND COVENANTS.
Seller represents, warrants and covenants to Buyer as follows:
(i) The Seller has been duly incorporated and is validly existing
and 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
registration or qualification.
(ii) The Seller is in full compliance with all reporting requirements
of the National Association of Securities Dealers ("NASD"), and the Common Stock
is quoted on the NASDAQ Over-the-Counter Bulletin Board (trading symbol: VTIX).
(iii) The Seller has furnished Equity Services, Ltd. ("ESL") with
copies of the Seller's Business Plan dated August, 1997, and all documents filed
with the Securities and Exchange Commission (the "Commission") and the NASD
(collectively, the "Disclosure Documents"). Except as disclosed in Seller's
Business Plan, immediately prior to Closing there shall be no other capital
stock issued and outstanding, nor shall there be outstanding any rights to
acquire, commitments to issue or securities convertible into capital stock other
than as disclosed in the Disclosure Documents or as previously disclosed in
writing to ESL. The Disclosure Documents at the time of their filing did not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made not misleading.
(iv) Except as shown on the Seller's most recent audited financial
statements dated 12/31/96, prepared by Childs & Co., the Seller's independent
certified public accountants, the Seller has no other indebtedness outstanding
immediately prior to the Closing. (09/30/97 Interim.)
(v) Upon issuance at the Closing in accordance with this Agreement,
the Shares will be duly and validly authorized and issued, fully paid and
nonassessable, free from all encumbrances and restrictions other than
restrictions on transfer imposed by applicable securities laws and/or this
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Agreement, and will not subject the holders thereof to personal liability by
reason of being such holders. The shares of Common Stock, when issued and
delivered upon conversion of the Series B Preferred Stock, will be duly and
validly authorized and issued, fully paid and nonassessable, free from all
encumbrances and restrictions other than restrictions on transfer imposed by
applicable securities laws and/or this Agreement, and will not subject the
holders thereof to personal liability by reason of being such holders.
(vi) This Agreement has been duly authorized, validly executed and
delivered on behalf of the Seller and is a valid and binding agreement of the
Seller enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and the Seller has full power and authority to
execute and deliver this Agreement and the other agreements and documents
contemplated hereby and to perform its obligations hereunder and thereunder.
(vii) The execution and delivery of this Agreement, the issuance of
the Shares, the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, and the consummation of the transactions contemplated by this
Agreement, will not conflict with or result in a breach of or a default under
any of the terms or provisions of, the Seller's articles of incorporation or
By-laws, or of any material provision of any indenture, mortgage, deed of trust
or other material agreement or instrument to which the Seller is a party or by
which it or any of its properties or assets is bound, any material provision of
any law, statute, rule, regulation, or any existing applicable decree, judgment
or order by any court, federal or state regulatory body, administrative agency,
or other governmental body having jurisdiction over the Seller, or any of its
properties or assets and will not result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of the Seller
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 their property or any of them is subject.
(viii) No authorization, approval, filing with or consent of any
governmental body is required for the issuance and sale of the Shares.
(ix) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or threatened
against or affecting the Seller, or any of its properties, which would
reasonably be anticipated to result in any material adverse change in the
condition (financial or otherwise) or in the earnings, business affairs,
business prospects, properties or assets of the Seller.
(x) Subsequent to the dates as of which information is given in the
Disclosure Documents, except as contemplated herein, the Seller has not incurred
any material liabilities or material obligations, direct or contingent, or
entered into any material transactions not in the ordinary course of business,
and there has not been any change in its capitalization or any material adverse
change in its condition (financial or otherwise) net worth, results of
operations or prospects.
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(xi) The Seller has conducted, is conducting and will conduct its
business so as to comply in all material respects with all applicable statutes
and regulations, and the Seller is not charged with and, to the knowledge of the
Seller, is not under investigation with respect to any violation of any statutes
or regulations nor is it the subject of any pending or threatened adverse
proceedings by any regulatory authority having jurisdiction over its business or
operations.
(xii) Except as set forth in the Disclosure Documents, the Seller has
good and marketable title to all properties and assets described therein as
owned by it, free and clear of all liens, charges, encumbrances, or
restrictions.
(xiii) The Seller has filed all necessary federal and state income and
franchise tax returns and has paid all taxes shown as due thereon.
(xiv) The Seller has no knowledge of any tax deficiency that might be
asserted against it that might materially and adversely affect its business or
properties.
(xv) The Seller maintains insurance of the types and in amounts
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies and businesses, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Seller against theft, damage, destruction, acts of vandalism, products
liability and all other risks customarily insured against, all of which
insurance is in full force and effect.
(xvi) No labor disturbance by the employees of the Seller exists or
is imminent that could reasonably be expected to have a material adverse affect
on the conduct of the business, operations, financial condition, or income of
the Seller.
(xvii) Neither the Seller nor any employee or agent of the Seller has
made any payment of funds of the Seller or received or retained any funds in
violation of law.
(xviii) Subject in part to the truth and accuracy of Buyer's
representations set forth in this Agreement, the offer, sale and issuance of the
Shares are exempt from registration requirements of the 1933 Act, and neither
the Seller nor any authorized agent acting on its behalf will take any action
hereafter that will cause the loss of such exemption.
(xix) The Seller has sufficient title and ownership of all
trademarks, service marks, trade names, copyrights, patents, trade secrets and
other proprietary rights necessary for its business as now conducted and as
proposed to be conducted as described in the Disclosure Documents without any
conflict with or infringement of the rights of others. Except as set forth in
the Disclosure Documents, there are no material outstanding options, licenses or
agreements of any kind relating to the foregoing, nor is the Seller bound by or
party to any material options, licenses or agreements of any kind with respect
to the trademarks, service marks, trade names, copyrights, patents, trade
secrets, licenses and other proprietary rights of any other person or entity.
The Seller is not aware that any of its executive officers is obligated under
any contract (including licenses, covenants or
INVESTOR SUBSCRIPTION AGREEMENT OF
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commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency that would interfere with
the use of his or her best efforts to promote the interest of the Seller or that
would conflict with the Seller's business as proposed to be conducted.
(xx) Except for agreements explicitly contemplated hereby or set
forth in the Disclosure Documents, there are no agreements between the Seller
and any of its officers, directors, affiliates or any affiliate thereof.
(xxi) No representation or warranty of the Seller contained in this
Section 3, and no statement contained in any exhibit, schedule, certificate,
list, summary or other disclosure document provided or to be provided to Buyer
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact which is necessary in order to make
statements contained therein not misleading.
(xxii) Seller has not employed any investment banker, broker or finder
or incurred any liability for any brokerage fees, commissions or finder's fees
in connection with the transactions contemplated by this Agreement except that
Seller has retained, directly or indirectly, Equity Services, Ltd. ("ESL") and
Capital Solutions, Inc. ("CSI") ESL is entitled to receive a fee consisting of
an amount equal to seven percent (7%) of the aggregate purchase price of the
Shares, Five Thousand (5,000) shares of Series B Preferred Stock, reimbursement
of expenses and options to purchase shares of Common Stock. CSI is entitled to
receive a fee consisting of an amount equal to two percent (2%) of the aggregate
purchase price of the Shares and reimbursement of expenses.
4. INDEMNIFICATION BY SELLER.
Seller hereby agrees to indemnify and hold harmless Buyer and its
officers, directors, shareholders, employees, agents and attorneys against any
and all losses, claims, damages, liabilities and expenses incurred by each such
person in connection with defending or investigating any such claims or
liabilities, including any costs or expenses incurred, to which any such
indemnified party may become subject under the Securities' Act, or under any
other statute, at common law or otherwise, insofar as such losses, claims,
demands, liabilities and expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact made by the Company,
(ii) any omission or alleged omission of a material fact with respect to the
Company, or (iii) any breach of any representation, warranty or agreement made
by the Company in this Agreement.
5. CONDITIONS PRECEDENT TO CLOSING.
(i) Buyer shall (a) deliver payment of the Purchase Price to the
Escrow Agent; and (b) execute and deliver the Registration Rights Agreement.
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(ii) Seller shall (a) deliver to the Escrow Agent certificates for
the Series B Preferred Stock in the name of the Buyer, (b) execute and deliver
the Registration Rights Agreement and (c) deliver to Buyer an opinion from
Xxxxxx, Price & Xxxxxxxx satisfactory to Equity Services, Ltd. and the Buyer, as
to the matters described in the Placement Agreement.
6. MISCELLANEOUS.
(i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Nevada without giving effect to the
rules governing the conflicts of laws.
(ii) This Agreement may be executed by facsimile signature and in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(iii) Each of the parties agrees to pay its own expenses incident to
this Agreement and the performance of its obligations hereunder, including, but
not limited to, the fees and expenses of each such party's legal counsel.
(iv) All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, express overnight courier,
registered first class mail, overnight courier, or telecopied, initially to the
address set forth below, and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 6.
if to Seller:
Venturi Technology Enterprises, Inc.
0000 X. Xxxxx Xxxxxx
Xxxx, Xxxx 00000
Attn: Xxxxxxx Xxxxxx, President & CEO
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx, Price & Xxxxxxxx
000 Xxxxx Xxxxxxxxxx Xxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attn: Xxxxx X Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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if to Buyer:
Entrepreneurial Investors, Ltd.
Xxxxxxxx Xxxxxxxx, 0xx Xxxxx
Xxxx Xxxx Xxxxx
X.X. Xxx 00000
Freeport, Bahamas
Attn: Xxxxxx X. Xxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with a nationally
recognized, overnight courier service; when receipt is acknowledged, if
telecopied.
(v) This Agreement together with the Exhibits hereto constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior oral or written proposals or agreements relating thereto.
This Agreement may not be amended or any provision hereof waived in whole or in
part, except by a written amendment signed by both of the parties.
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IN WITNESS OF, this Agreement was duly executed on the date first
written above.
VENTURI TECHNOLOGY ENTERPRISES, INC.
By: /s/ Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX, Chairman & CEO
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX, Director
INVESTOR SUBSCRIPTION AGREEMENT OF
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