EXHIBIT 1
06/27/97 3:01 PM
PRIVATE PLACEMENT PURCHASE AGREEMENT
Scangraphics, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxx XX 00000
re: Purchase of Units
Gentlemen:
1. The undersigned ("Subscriber") has reviewed the filings which Scangraphics,
Inc. (the "Company") has made with the Securities Exchange Commission during the
past 12 months. The Company represents and warrants to the Subscriber that all
such filings are correct and accurate in all material respects and in all
material respects state all facts necessary to make such filings not misleading.
Subscriber has had the opportunity to discuss the Company's affairs with the
Company's officers.
2. Sale of Units.
(a) The Company hereby sells to Subscriber, and Subscriber hereby purchases
from the Company, the number of Units set forth opposite Subscriber's name
below. The purchase price of each Unit is $100,000, and is payable in cash
concurrently with the execution and delivery hereof.
(b) Each Unit consists of one Convertible Note in the principal amount of
$100,000 (a "Note"), and one warrant (a "Warrant") to purchase 17,308
shares of common stock of the Company ("Common Stock") at an exercise price
of $4 per share. The Note and the Warrant are in the forms of Exhibits A
and B annexed hereto.
(c) The term "Purchasers" as used herein means subscribers who in the
aggregate are on this day purchasing Notes in the aggregate principal
amount of 52 Units under agreements of the same tenor as this Agreement.
The date as of which all Units have been sold is referred to herein as the
"Completion Date."
3. So long as Subscriber owns any Notes or Warrants, Subscriber will not
directly or indirectly (whether through affiliates or otherwise) engage in any
short sale of Common Stock other than any sales of shares which Subscriber
expects to receive upon conversion of the Note within the five business day
period after such sale.
4. Registration.
(a) The Company will utilize its diligent efforts to file, on or before the
30th day after the Completion Date, or as soon thereafter as is possible
with such diligent efforts, a registration statement on Form S-3 (the
"Registration Statement") for the public sale by Subscriber of the shares
which are issuable on conversion of the Notes and on exercise of the
Warrants. The shares to be covered by the Registration Statement are
collectively referred to as the "registered shares."
(b) The Company shall use its diligent efforts to cause the Registration
Statement to become effective not later than 90 days after the date of
filing, and to remain effective for two years. The registration shall be
accompanied by blue sky clearances in such states as Subscriber may
reasonably request. The Company will not issue or commit to issue any
shares of capital stock or securities convertible into capital stock
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(other than upon exercise of options or warrants issued heretofore), or
borrow any money in public or private financings, until the close of
business on the 45th business day after the date on which the Registration
Statement is first declared effective.
(c) The Company shall pay all expenses of the registration hereunder, other
than Subscriber's underwriting discounts.
(d) The Company shall supply to Subscriber a reasonable number of copies of
all registration materials and prospectuses. The Company and Subscriber
shall execute and deliver to each other indemnity agreements which are
conventional in registered offerings of this type. The Subscriber shall
reasonably cooperate with the Company in the preparation and filing of the
Registration Statement and appropriate amendments thereto.
(e) Subscriber may transfer a proportionate part of its registration rights
to a limited number of permitted transferees of the Units or portions
thereof.
5. Securities Representations.
(a) Subscriber represents and warrants that it is purchasing the Units
solely for investment solely for its own account and not with a view to or
for the resale or distribution thereof except as permitted under the
Registration Statement.
(b) Subscriber understands that it may sell or otherwise transfer the Units
or the shares issuable on conversion of the Notes or the Warrants only if
such transaction is duly registered under the Securities Act of 1933, as
amended, under the Registration Statement or otherwise, or if Subscriber
shall have received the favorable opinion of counsel to the holder, which
opinion shall be reasonably satisfactory to counsel to the Company, to the
effect that such sale or other transfer may be made in the absence of
registration under the Securities Act of 1933, as amended, and registration
or qualification in every applicable state. The certificates representing
the aforesaid securities will be legended to reflect these restrictions,
and stop transfer instructions will apply. Subscriber realizes that the
Units are not a liquid investment.
(c) Subscriber has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities Act) in
evaluating the risks and merits of this investment. Subscriber has the
knowledge and experience to evaluate the Company and the risks and merits
relating thereto.
(d) Subscriber represents and warrants that Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated
pursuant to the Securities Act of 1933, as amended, and shall be such on
the date any shares are issued to the holder; Subscriber acknowledges that
Subscriber is able to bear the economic risk of losing Subscriber's entire
investment in the shares and understands that an investment in the Company
involves substantial risks; Subscriber has the power and authority to enter
into this agreement, and the execution and delivery of, and performance
under this agreement shall not conflict with any rule, regulation, judgment
or agreement applicable to the Subscriber; and Subscriber has invested in
previous transactions involving restricted securities.
6. Miscellaneous.
This Agreement may not be changed or terminated except by written
agreement. It shall be binding on the parties and on their personal
representatives and permitted assigns. It sets forth all agreements of the
parties. It shall be enforceable by decrees of specific performance
(without posting bond or other security) as well as by other available
remedies. This Agreement shall be governed by, and construed in accordance
with, the laws of Pennsylvania. The federal and state courts sitting in the
City of Philadelphia shall have exclusive jurisdiction over all matters
relating to this Agreement. Trial by jury is expressly waived.
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All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and shall be deemed
to have been delivered (i) on the date personally delivered or (ii) one day
after properly sent by Federal Express, addressed to the respective parties
at their address set forth in this Agreement or (iii) on the day
transmitted by facsimile so long as a confirmation copy is simultaneously
forwarded by Federal Express, in each case addressed to the respective
parties at their address set forth in this Agreement. Either party hereto
may designate a different address by providing written notice of such new
address to the other party hereto as provided above.
7. Each party hereto shall be responsible for its own expenses with regard to
the negotiation and execution of this Agreement.
Dated:
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SUBSCRIBER:
signature:
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type or print name:
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Address:
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Fax No.
Social Security No:
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Number of Units:
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AGREED:
SCANGRAPHICS, INC.
BY
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EXHIBIT A
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SCANGRAPHICS, INC.,
THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
$
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CONVERTIBLE NOTE
(the "Note")
SCANGRAPHICS, INC.
SCANGRAPHICS, INC., a Pennsylvania corporation (hereinafter called the
"Corporation"), hereby promises to pay to the order of _____________________
(hereinafter the "Holder") the principal sum of $ ______ on May 31, 1999. This
Note shall accrue interest at the rate of 7% per annum payable quarterly on the
first day of each calendar quarter commencing October 1, 1997 and on maturity.
1. This Note is being issued under a Private Placement Purchase Agreement
between the Company and the Holder (the "Subscription Agreement"). The term
"Registration Statement" shall have the meaning attributed thereto in the
Subscription Agreement, and the term "Effective Date" means the date on which
the Registration Statement shall be declared to be effective. "Completion Date"
shall have the meaning ascribed thereto in the Subscription Agreement.
2. Conversion Rights and Optional Redemption.
(a) The principal and accrued interest on this Note is convertible by
Subscriber from time to time after the 90th day after the Completion Date,
in whole or in part, into shares of common stock of the Company ("Common
Stock") at the lesser (the "Conversion Price") of $7.00 per share (the
"Cap") or the Applicable Percentage (as hereinafter defined) of the average
closing bid price (the "Average Price") of the Common Stock during the last
five trading days prior to conversion.
(b) The Applicable Percentage for any conversion is 90%, minus 1% for each
full $.20 by which the Conversion Price for such conversion is greater than
$4.00.
(c) In the event that the Holder elects to exercise its conversion rights
hereunder, such conversion shall be effective when Holder shall give to the
Company written notice of such election (which may be effected by
facsimile). Holder shall thereafter promptly surrender this Note to the
Company for cancellation against payment of interest accrued through the
date of conversion. The Company shall within five business days after
conversion deliver to Holder a certificate for the Common Stock acquired by
Holder upon such conversion.
(d) If the Effective Date has not occurred by the 121st day after the
Completion Date, then, in
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addition to the Holder's other remedies:
(i) the interest rate under the Note shall be increased to 12% per annum
(or, if less, the highest rate permitted by law) until the Effective
Date, and
(ii) at Holder's option, the Note shall not be repaid by the Company and
shall remain convertible and accrue interest, until such date as is
designated by Holder but not later than 180 days after the Effective
Date.
(e) If the Effective Date has not occurred by the 180th day after the
Completion Date, then, in addition to the Holder's other remedies, the interest
rate under the Note shall be further increased to 18% per annum (or, if less,
the highest rate permitted by law) until the Effective Date.
(f) The Company shall reserve for issuance on conversion and exercise of this
Note and the Warrant (as defined in the Subscription Agreement) 8,500,000 shares
of Common Stock. The Company shall use its best efforts promptly to list on
NASDAQ all shares of Common Stock which are issued upon conversion of this Note.
(g) Conversion of the Note is subject to the following restrictions:
(i) If the Effective Date shall have occurred on or before the 90th day
after the Completion Date, no more than 10% of the initial principal
amount of this Note shall be convertible in any calendar month (with
the unconverted portion of each month's installment being carried
forward to later months), provided that the restriction in this clause
(i) shall no longer apply if:
(A) the closing bid price of a share of Common Stock from and after
any day on which the closing bid price of the Common Stock was $7
or more on NASDAQ (or such other securities exchange where the
common stock may then be listed); or
(B) if L. L. Osterwise for any reason is no longer the CEO of the
Company.
(ii) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such exercise beneficially own more
that 4.99% of the then outstanding Common Stock. Beneficial ownership
shall be defined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934. The opinion of counsel to Holder shall prevail
in the event of any dispute on the calculation of Holder's beneficial
ownership.
(h) Adjustments to Conversion Rights.
(i) If any capital reorganization or reclassification of the common stock,
or consolidation, or merger of the Company with or into another
corporation, or the sale or conveyance of all or substantially all of
its assets to another corporation shall be effected, then, as a
condition precedent of such reorganization or sale, the following
provision shall be made: The Holder of the Note shall from and after
the date of such reorganization or sale have the right to receive (in
lieu of the shares of common stock of the Company immediately
theretofore receivable with respect to the Note, upon the exercise of
conversion rights), such shares of stock, securities or assets as
would have been issued or payable with respect to or in exchange for
the number of outstanding shares of such common stock immediately
theretofore receivable with respect to the Note (assuming the Note
were then convertible). In any such case, appropriate provision shall
be made with
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respect to the rights and interests of the Holders to the end that
such conversion rights (including, without limitation, provisions for
appropriate adjustments) shall thereafter be applicable, as nearly as
may be practicable in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise thereof.
3. Redemption Rights. In the event that the Holder proposes to convert all or
any portion of the principal or interest of this Note at a conversion price of
less than $3, the Company shall at its option be entitled to redeem all or any
portion of the Note proposed to be converted. Such option shall be exercisable
by paying to the Holder, within three business days after the date of such
proposed conversion, 110% of the amount of principal and interest proposed to be
converted.
4. The Company covenants and agrees that all shares of Common Stock which may
be issued upon conversion of this Note will, upon issuance, be duly and validly
issued, fully paid and non-assessable and no personal liability will attach to
the holder thereof.
5. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible) has not
been registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding this Note (and the Common Stock into which the Note
is convertible) for investment purposes and not with a view to, or for sale in
connection with, a distribution thereof and that this Note (and the Common Stock
into which the Note is convertible) may not be assigned, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Company, to the effect that such disposition is
in compliance with the Act, and represents and warrants that such Holder is an
"accredited investor" that such Holder has, or with its representative has, such
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks in respect of this Note (and the Common Stock
into which the Note is convertible) and is able to bear the economic risk of
such investment.
6. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any of
the following shall occur, if:
(i) The Company shall breach or fail to comply with any provision of
this Note and such breach or failure shall continue for 15 days
after written notice by any Holder of any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by court
order and such order shall remain in effect for more than 15
days; or the Company shall be adjudicated bankrupt or insolvent;
or a substantial part of the property of the Company shall be
sequestered by court order and such order shall remain in effect
for more than 15 days; or a petition to reorganize the Company
under any bankruptcy, reorganization or insolvency law shall be
filed against the Company and shall not be dismissed within 45
days after such filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy,
reorganization or insolvency law, or shall consent to the filing
of any petition against it under any such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts
generally as they become due, or consent to the appointment of a
receiver, trustee or liquidator of the Company, or of all or any
substantial part of its properties.
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(b) If an event of default referred to in clause (i) shall occur, the
Holder may, in addition to such Holder's other remedies, by written notice
to the Company, declare the principal amount of this Note, together with
all interest accrued thereon, to be due and payable immediately. Upon any
such declaration, such amount shall become immediately due and payable and
the Holder shall have all such rights and remedies provided for under the
terms of this Note and the Subscription Agreement. If an event of default
referred to in clauses (ii), (iii) or (iv) shall occur, the principal
amount of this Note, together with all interest accrued thereon, shall
become immediately due and payable and the Holder shall have all such
rights and remedies provided for under the terms of this Note and the
Subscription Agreement.
7. Miscellaneous.
(a) All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telegram, by
facsimile, recognized overnight mail carrier, telex or other standard form
of telecommunications, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows: (a) if to the Holder, to
such address as such Holder shall furnish to the Company in accordance with
this Section, or (b) if to the Company, to it at its headquarters office,
or to such other address as the Company shall furnish to the Holder in
accordance with this Section.
(b) This note shall be governed and construed in accordance with the laws
of the Commonwealth of Pennsylvania applicable to agreements made and to be
performed entirely within such state.
(c) The Company waives protest, notice of protest, presentment, dishonor,
notice of dishonor and demand.
(d) If any provision of this Note shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
(e) The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be
deemed a waiver of any subsequent event of default or of the Holder's right
to exercise that or any other right or remedy to which the Holder is
entitled.
(f) The Holder of this Note shall be entitled to recover its legal and
other costs of collecting on this Note, and such costs shall be deemed
added to the principal amount of this Note.
(g) In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on the
date set forth below
Dated :
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SCANGRAPHICS, INC.
By:
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Exhibit B
Neither this Warrant nor the shares of Common Stock issuable on exercise of this
Warrant have been registered under the Securities Act of 1933. None of such
securities may be transferred in the absence of registration under such Act or
an opinion of counsel to the effect that such registration is not required.
SCANGRAPHICS, INC.
WARRANT
DATED:
Number of Shares:
Holder:
Address:
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1. THIS CERTIFIES THAT the Holder is entitled to purchase from SCANGRAPHICS,
INC., a Pennsylvania corporation (hereinafter called the "Company"), at $4 per
share the number of shares of the Company's common stock ("Common Stock") set
forth above.
2. All rights granted under this Warrant shall expire on June 1, 2001, subject
to earlier termination as set forth in Section 3.
3. Early Expiration.
(a) The following terms shall have the following definitions:
(i) Effective Date means the date of the effectiveness of the
registration statement (the "Registration Statement") referred to
in a Subscription Agreement dated as of the date of this Warrant
(the "Subscription Agreement").
(ii) The "30-day Price" means the closing bid price (on NASDAQ or such
other securities exchange where the common stock may then be
listed) of the Common Stock on not less than 30 days in any
consecutive 45-day period (the "Test Period") which begins after
the Effective Date and through which the Registration Statement
continues to be effective.
(b) If any 30-day Price is not less than $8 per share in any Test Period,
then, as of the end of such Test Period, this Warrant shall expire as to
1/3 of the shares of Common Stock initially purchasable thereunder.
(c) If any 30-day Price is not less than $10 per share in any Test Period,
then, as of the end of such Test Period, this Warrant shall expire as to
2/3 of the shares of Common Stock initially purchasable thereunder on a
basis which is cumulative with any expiration theretofore occurring under
Section (b).
(d) If any 30-day Price is not less than $12 per share in any Test Period,
then, as of the end of such
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Test Period, then as of the last day of the Test Period, this Warrant shall
expire in full.
4. Notwithstanding anything to the contrary contained herein, Holder shall not
have the right to exercise this Warrant so long as and to the extent that at the
time of such exercise, such exercise would cause the Holder then to be the
"beneficial owner' of five percent (5%) or more of the Company's then
outstanding Common Stock. For purposes hereof, the term "beneficial owner" shall
have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act
of 1934. The opinion of legal counsel to Holder, in form and substance
satisfactory to the Company and the Company's counsel, shall prevail in all
matters relating to the amount of Holder's beneficial ownership.
5. This Warrant and the Common Stock issuable on exercise of this Warrant (the
"Underlying Shares") may be transferred, sold, assigned or hypothecated, only if
registered by the Company under the Securities Act of 1933 (the "Act") or if the
Company has received from counsel to the Company a written opinion to the effect
that registration of the Warrant or the Underlying Shares is not necessary in
connection with such transfer, sale, assignment or hypothecation. The Warrant
and the Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall through
its counsel provide such information as is reasonably necessary in connection
with such opinion.
6. The holder of this warrant is entitled to certain registration rights under
the Subscription Agreement.
7. Any permitted assignment of this Warrant shall be effected by the Holder by
(i) executing the form of assignment at the end hereof, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale of
this Warrant and or the shares underlying the Warrant, delivery to the Company
of a statement by the transferee (in a form acceptable to the Company and its
counsel) that such Warrant is being acquired by the Holder for investment and
not with a view to its distribution or resale; whereupon the Company shall
issue, in the name or names specified by the Holder (including the Holder) new
Warrants representing in the aggregate rights to purchase the same number of
Shares as are purchasable under the Warrant surrendered. Such Warrants shall be
exercisable immediately upon any such assignment of the number of Warrants
assigned. The transferor will pay all relevant transfer taxes. Replacement
warrants shall bear the same legend as is borne by this Warrant.
8. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
9. The Company covenants and agrees that all shares of Common Stock which may
be issued upon exercise hereof will, upon issuance, be duly and validly issued,
fully paid and non-assessable and no personal liability will attach to the
holder thereof. The Company further covenants and agrees that, during the
periods within which this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
for issuance upon exercise of this Warrant and all other Warrants.
10. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
11. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or stock
dividends payable with respect to such Common Stock, the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security of
the Company or of another corporation, then appropriate adjustments in the
number and kind of such securities then subject to this Warrant shall be made
effective as of the date of such occurrence so that the position of the Holder
upon exercise will be the same as it would have been had it owned immediately
prior to the occurrence of such events the Common Stock subject to this Warrant.
Such adjustment shall be made successively whenever any event listed above shall
occur and the Company will notify the Holder of the Warrant of each such
adjustment. Any fraction of a share resulting from any adjustment shall be
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eliminated and the price per share of the remaining shares subject to this
Warrant adjusted accordingly.
12. The rights represented by this Warrant may be exercised at any time within
the period above specified by (i) surrender of this Warrant (with the purchase
form at the end hereof properly executed) at the principal executive office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); (ii) payment to the Company of the exercise price for the
number of Shares specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) unless in connection with an
effective registration statement which covers the sale of the shares underlying
the Warrant, the delivery to the Company of a statement by the Holder (in a form
acceptable to the Company and its counsel) that such Shares are being acquired
by the Holder for investment and not with a view to their distribution or
resale.
13. The certificates for the Common Stock so purchased shall be delivered to
the Holder within a reasonable time, not exceeding five business days after all
requisite documentation has been provided, after the rights represented by this
Warrant shall have been so exercised, and shall bear a restrictive legend with
respect to any applicable securities laws.
14. This Warrant shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania. The federal and state courts in the city of
Philadelphia shall have exclusive jurisdiction over this instrument and the
enforcement thereof. Service of process shall be effective if by certified mail,
return receipt requested. All notices shall be in writing and shall be deemed
given upon receipt by the parry to whom addressed. This instrument shall be
enforceable by decrees of specific performances well as other remedies.
IN WITNESS WHEREOF, Scangraphics, Inc. has caused this Warrant to be signed
by its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
SCANGRAPHICS, INC.
By
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CONSULTING AGREEMENT
AGREEMENT dated as of April 8, 1997 by and between SCANGRAPHICS, INC., a
Pennsylvania corporation (the "Corporation") and BROAD CAPITAL ASSOCIATES INC.
(hereinafter referred to as the "Consultant").
In consideration of the mutual promises set forth below, the parties hereto
do hereby agree as follows:
1. (a) The Corporation has retained the Consultant to perform the
services hereinafter set forth.
(b) Consultant shall upon reasonable notice advise the Corporation
with respect to all business matters referred by the Corporation to Consultant.
Without limiting the generality of the foregoing, Consultant shall at the
Corporation's request:
(I) review the Corporation's managerial and marketing requirements;
(II) review budget and business plans;
(III) assist the Corporation in finding acquisition candidates and in
consummating acquisitions; and
(iv) assist the Corporation in investor relations.
In addition, at the Corporation's request Consultant shall meet with corporate
officials, confer with employees and business contacts of the Corporation, and
review and comment upon any material the Corporation submits to Consultant.
(c) The Consultant shall not be required to devote its full time and
attention to the performance of its time and attention as it deems at its sole
discretion reasonable or necessary for such purposes.
(d) Consultant shall be available to perform Consultant's services in
New York City or elsewhere, all as designated by Corporation.
2. (a) The term of this Agreement (the "Term") shall commence on this
date and shall terminate on the second anniversary hereof.
(b) The Term shall in all events terminates should Consultant's
services be terminated by the Corporation.
3 (a) As full compensation, the Company has executed and delivered to
the Consultant 2.1 Million warrants in the form of Exhibit B.
(b) Consultant acknowledges that it and its designees are acquiring
the Warrants and the shares which are issuable on exercise of the Warrants (the
"Underlying Securities") for investment and not with a view to or for resale in
connection with any distribution. No warrantholder will sell the Warrants or the
Underlying Securities unless they are registered under the Securities Act of
1933 or an exemption is available under such Act. The Warrants and the
Underlying Securities will be endorsed with a restrictive legend to reflect the
foregoing restrictions. The Warrants provide for registration of the Underlying
Securities on the terms set forth therein.
(c) To the extent permitted by law, there shall be no withholding or
payroll taxes.
(d) Consultant shall be entitled to no other compensation or
reimbursement whatsoever. Without limiting the generality of the foregoing,
Consultant shall not be reimbursed for its expenses.
4. The Consultant covenants that it will not:
(a) during the Term and for one year thereafter, either directly or
indirectly own, manage, operate, control, be employed by, or connected in any
manner with, the ownership, management or control of any business engaged in any
business which competes with the business now conducted by the corporation; or
(b) during and after the Term, (except for the Corporation's benefit
during the Term of the consultancy) use or disclose any confidential or
proprietary information or the Corporation.
5. Any waiver, alternation or modification of any of the provisions of
this agreement or cancellation or replacement of this Agreement shall not be
valid unless in writing and signed by the parties. A waiver of the breach of any
provisions hereof or a default under any provision hereof shall not be deemed a
waiver of such provisions of any subsequent breach or default of any kind or
nature.
6. This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania. The Pennsylvania courts shall have exclusive jurisdiction over
this Agreement and the enforcement thereof. Service of process shall be
effective if by certified mail, return receipt requested. All notices shall be
in writing and shall be deemed given upon receipt by the party to whom
addressed. This Agreement shall be enforceable by decrees of specific
performances well as other remedies.
7. This Agreement shall inure to the benefit of, and bind, the parties
hereto and their respective legal representatives, successors and assigns.
8. Consultant is an independent contractor and cannot bind or be
obliged to bind, or incur any expense or commitment on behalf of the Corporation
or its subsidiaries or affiliates.
9. Consultant has been advised to retain his own counsel in connection
with this Agreement.
IN WITNESS WHEREOF, the Consultant has hereunder set his hand and seal and
the corporation has caused these presents to be duly executed and its corporate
seal to be affixed by an officer hereunto duly authorized as of the day of the
year first above set forth.
SCANGRAPHICS, INC.
BY:
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BROAD CAPITAL ASSOCIATES, INC.
BY:
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