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EXHIBIT 2(k)(v)
INVESTMENT AGREEMENT BY AND
AMONG
SOUTHEAST INTERACTIVE TECHNOLOGY FUND I, LLC
AND
ONE ROOM SYSTEMS, INC.
November 2, 1995
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INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (the "Agreement") is made and entered into
as of this 2nd day of November, 1995 by and among ONE ROOM SYSTEMS, INC., a
North Carolina corporation (the "Company"); and SOUTHEAST INTERACTIVE
TECHNOLOGY FUND, LLC, a North Carolina limited liability company (the
"Investor").
WITNESSETH:
WHEREAS, the Company develops multimedia educational and entertainment
products; and
WHEREAS, the Company and the Investor have reached certain agreements
with regard to the loan of funds to the Company and purchase of certain
securities of the Company by the Investor, all upon the terms and conditions
more particularly described herein.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the receipt and sufficiency of which are
acknowledged by all parties, the parties hereto agree as follows:
I. SECURED CONVERTIBLE LOAN AND WARRANTS
A. Loan Against Receivables and Approved Contracts. The Investor
will make a loan to the Company of up to $250,000 at any one time outstanding
(the "Loan") which will be secured by all of the receivables of the Company and
an assignment of contract rights for certain contracts. The amount outstanding
from time to time shall not be greater than the "Borrowing Base."
For purposes hereof, the Borrowing Base shall be equal to (i)
the amount calculated by multiplying the appropriate percentage set forth below
by the amount of Qualified Receivables plus (ii) the amount that will be
generated under Approved Contracts.
For purposes hereof, "Qualified Receivables" shall be the net
amount of bona fide receivables (net of any credits or discounts, including
discounts for early payment, or similar offsets) due from non-affiliates of the
Company for the provision of goods and services. The appropriate percentages
shall be as follows:
100% for Qualified Receivables of 0-60 days;
75% for Qualified Receivables of 60-90 days;
0% for Qualified Receivables of more than 90 days.
For purposes hereof, "Approved Contracts" shall be bona fide
written contracts with non-affiliates of the Company for the provision of goods
and services which have been approved by Investor. The amount that will be
generated under an Approved contract will be any amounts that will become due
and owing to the
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Company for performance under the Approved Contract (other than amounts that
are indeterminate or contingent such as royalties that depend on sales) but
which have not yet been earned. Once an amount is earned and becomes due and
payable, it may qualify as a Qualified Receivable, but no amount shall be
double counted as an amount due under an Approved Contract and as a Qualified
Receivable in determining the Borrowing Base.
The Company agrees to provide to Investor a Qualified
Receivables list and aging report in a format approved by Investor at or prior
to Closing and on a monthly basis thereafter by the fifth day of each month
(for the previous calendar month), such report to be certified by the Company.
Attached to such report shall be copies of the contracts that the Company
wishes to include on the Approved Contracts list and such other reasonable
documentation as Investor may request. The Company's certification shall
include the following representations and warranties with respect to both
Qualified Receivables or Approved Contracts:
(a) Each of the accounts assigned as collateral security
is genuine, valid, and represents an existing claim arising out of
products sold or services rendered by the Company to the stated
account debtor;
(b) The amounts of the accounts assigned as collateral
security are true amounts now due and owing, the Company has performed
all of its duties and has met all of its obligations pertaining to the
accounts, and the accounts are not subject to any defense, setoff,
counterclaim, or claim of any substance or nature;
(c) The Company is the true and sole owner of the
accounts, the accounts are not subject to any prior security interest
and are free and clear of all liens and encumbrances of any nature;
(d) The Company will not, until such time as the Loan is
paid in full and no longer outstanding, subject the accounts to any
security interest or other lien or encumbrance.
The Company grants Investor a security interest in all
existing or future Qualified Receivables and Approved Contracts (the
"Collateral"), and the proceeds of the Collateral, including, without
limitation, all proceeds of fire, credit or insurance. The security interest
is to secure payment and performance of all of the Company's debts, liabilities
and obligations to the Investor pursuant to the Loan, now existing or hereafter
arising. The Company shall execute and file appropriate UCC financing
statements (the "Financing Statements") to perfect the security interest of
Investor in the Collateral.
The Loan will bear interest at the rate of 10% per annum, with
interest payable monthly. Repayments of principal that are required because of
a change in the Borrowing Base shall be made monthly. Advances on the Loan
will be made no more often than
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monthly. Loan documents evidencing and securing the Loan shall permit Investor
at its option after an Event of Default (as defined herein or in any Loan
documents), to notify the obligors on receivables and Approved Contracts to pay
such funds either directly to Investor or to a lock box or intermediary or
escrow agent selected by Investor.
All obligations of the Company shall, notwithstanding any time
allowed by any instrument evidencing a liability, become immediately due and
payable, without notice and demand, if any of the following Events of Default
("Events of Default") occurs:
(a) Default in the payments or performance of any
obligation or liability contained or referenced in this Agreement or
any note or loan document evidencing the same;
(b) Any warranty, representation or statement made or
furnished to Investor by Company proves to have been false in any
material respect when made or furnished;
(c) Any event which results in the acceleration of the
maturity of the Company's indebtedness to others under any indenture,
agreement, undertaking or otherwise;
(d) The placing of an encumbrance on any of the
Collateral, or the making of any levy, seizure or attachment against
the Collateral; or
(e) The Company's dissolution, insolvency or business
failure, or the appointment of a receiver of any part of the Company's
property, or the Company's assignment for the benefit of creditors,
the recording or existence of any lien for unpaid taxes against the
Company, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against the Company.
In the event any Event of Default listed above occurs, the
Investor shall immediately have all rights and remedies as a secured party
under the Uniform Commercial Code in force in the State of North Carolina, in
addition to the rights and remedies provided herein or in any other agreement
executed by the Company. In the Event of Default, the outstanding balance of
the Loan will bear interest at the rate of 16.5% per annum, until paid. In the
event the Investor has to exercise any rights or remedies or enforce any
collection proceedings against the Company, the Company shall be obligated to
pay the reasonable costs therefore, including reasonable attorneys' fees.
The Loan shall be payable in full on the date one year from
the date the first advance is made on the Loan or such earlier date as the Loan
may become due because Investor elects to accelerate the Loan because of an
event of default under the Loan documents. After thirty (30) day written
notice to Investor, the Loan may be prepaid in whole; provided, however, at
such time that
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the Company wishes to prepay the Loan, Investor shall have the option to
convert the Loan pursuant to I.B. below.
The Loan shall be personally guaranteed by E. Xxx Xxxxx
pursuant to a Guaranty delivered at Closing in the form attached to as Exhibit
E.
B. Conversion Feature. Investor shall have the option at any
time to convert the outstanding principal balance of the Loan to common stock
of the Company ("Common Stock") at the Conversion Price described below. Any
conversion must be of the entire outstanding principal balance at the time of
conversion and, after conversion, Investor will have no obligation to advance
additional funds to the Company. In the event the Investor desires to convert
at a time when the outstanding principal balance of the Loan is less than
$250,000, the Investor shall have the option to convert the entire $250,000,
upon payment to the Company of the difference between $250,000 and the then
outstanding balance of the Loan.
The conversion price (the "Conversion Price") shall initially
be $1.00 per share. This Conversion Price is based upon the Company currently
having 5,552,302 shares of Common Stock issued and outstanding. So long as the
Loan is outstanding, the Company agrees not to issue any stock with dividends
or liquidation preferences superior to the rights of the Common Stock into
which the Loan may be converted without the prior written consent of Investor,
except as provided below in the Section D. titled "Equity Infusion." The
Conversion Price will adjust proportionately upon any stock splits, stock
combinations, stock dividend or similar changes to the capital structure. In
addition, in the event that any Common Stock is issued at a price per share
less than the Conversion Price then in effect, the Conversion Price shall
immediately adjust to be equal to such lower price; provided, this provision
shall not apply to existing employee stock options disclosed by the Company to
Investor.
C. Warrants. Investor shall be issued a warrant (the "Warrant")
to purchase additional shares of Common Stock of the Company. The purchase
price per share for Common Stock under the Warrant shall be equal to the
Conversion Price ($1.00 per share, adjusted for changes to capital structure as
set forth above). The number of shares of Common Stock which may be purchased
pursuant to the Warrant shall be equal to $50,000 divided by the Conversion
Price in effect at the time of exercise of the Warrant. The Warrant will be
exercisable at any time from the date of its issuance through the date seven
(7)years after its issuance. The Warrant may be exercised only once, i.e., if
the Warrant is exercised while the Loan is outstanding, the number of shares
that may be purchased shall not be affected by any subsequent increases in the
principal balance of the Loan.
D. Equity Infusion. In the event the Company plans to sell stock
or otherwise obtain a capital infusion of at least $2,000,000 either by private
placement or public offering at a price per share of common stock of at least
twice the Conversion Price (the "Equity
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Infusion"), the Company will be obligated to notify Investor at least
forty-five (45) days prior to the anticipated closing and to provide Investor
with copies of any information provided to the potential investors in
connection with the Equity Infusion or such other information as may be
reasonably requested by Investor in order to allow it to evaluate the merits of
converting to Common Stock. On or before the closing of the Equity Infusion,
Investor may elect to convert its Loan to Common Stock. If Investor does not
so elect, the Company will repay the Loan out of the proceeds of the Equity
Infusion. However, in either event, Investor shall retain its rights to
purchase Common Stock pursuant to the Warrant in accordance with the terms of
the Warrant.
E. Public Offerings. In the event that the Company registers
securities under the Securities Act of 1933, as amended, Southeast shall have
"piggyback" registration rights (at the expense of the Company) in accordance
with the Registration Rights Agreement attached hereto as Exhibit A to enable
it to sell its shares of Common Stock (whether acquired by conversion of the
Loan or exercise of the Warrant) pro rata with the shares of any other selling
shareholders, with the number of shares of all selling shareholders subject to
the approval of the Company's underwriter.
II. THE CLOSING
The closing ("Closing") of the Loan under this Agreement shall take
place at the offices of Xxxxx & Xxx Xxxxx, at 0000 Xxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx Xxxxxxxx 00000, on or before February 28, 1996, or at such other
time, date and place as are mutually agreeable to the Company and the Investor.
At the Closing, the Company will deliver to the Investor the Registration
Rights Agreement (Exhibit A), the Convertible Debenture (Exhibit B), the
Warrant (Exhibit C), the Financing Statements (Exhibit D) in the forms attached
hereto, a Qualified Receivables list and aging report and such other
certificates and documents as specified herein. In addition, E. Xxx Xxxxx will
deliver the Personal Guaranty (Exhibit E) and the Company's counsel will
deliver an opinion in the form attached hereto as Exhibit F. The date of the
Closing is hereinafter referred to as the "Closing Date." If at the Closing any
of the conditions specified in this Agreement have not been fulfilled, Investor
shall, at its election, be relieved of all of its obligations under this
Agreement without thereby waiving any other rights it may have by reason of
such failure or such nonfulfillment.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Any disclosures contained in any schedule of this Agreement shall be
deemed to be included in all schedules to this Agreement whether or not any
other schedules are specifically referenced therein and such disclosures
contained in any such schedule shall qualify the representations and warranties
made by the Company whether any such representation or warranty contains any
express
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qualification. (All schedules hereto are collectively referred to herein as the
"Disclosure Schedule"). Subject to the foregoing, the Company represents and
warrants to the Investor that:
A. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of North Carolina and has full corporate power and authority to
conduct its business as presently conducted and as proposed to be
conducted by it. In addition, the Company has full corporate power
and authority to enter into and perform this Agreement and to carry
out the transactions contemplated by this Agreement. The Company is
duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction where the nature of its properties or
its business requires such qualification, other than jurisdictions
where the failure to so qualify would not have a material adverse
effect on the operations or financial condition of the Company taken
as a whole.
B. Capitalization. The authorized capital stock of the Company
(immediately prior to the Closing) will consist of 20,000,000 shares
of common stock, 1c. par value per share (the "Common Stock"), of
which 5,552,302 shares are issued and outstanding. All of the issued
and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set
forth in the Disclosure Schedule hereto or provided in this Agreement,
(i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) there
is not any commitment of the Company to issue any subscription,
warrant, option, convertible security or other such right to acquire
any material amount of shares of capital stock of the Company or to
issue or distribute to holders of any shares of its capital stock any
evidences of indebtedness in a material amount or assets of a material
nature of the Company, and (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any
shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Except as
provided in this Agreement, no person or entity is entitled to (i) any
preemptive or similar right with respect to the issuance of any
capital stock of the Company, or (ii) any rights with respect to the
registration of any capital stock of the Company under the Securities
Act. To the best of the Company's knowledge, all of the issued and
outstanding shares of Common Stock have been offered, issued and sold
by the Company in compliance with the applicable Federal and state
securities laws.
C. Affiliations. The Company has no Subsidiaries, and does not
own or control any shares of stock or any other investments in any
other person or entity.
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D. Consent of Third Parties, etc. (i) All consents and waivers
required in connection with the consummation of the transactions
contemplated hereby have been obtained, (ii) the transactions
contemplated hereby do not violate, or constitute or trigger the
occurrence of an event of default with respect to, any lease,
promissory note, loan agreement or any other material agreement or
understanding with respect to which the company is a party, and (iii)
the Company is not in default under or with respect to any lease,
promissory note, loan agreement or any other material agreement or
understanding with respect to which it is a party.
E. Issuance of Common Stock. The issuance and delivery of the
shares of Common Stock issuable upon conversion of the Loan, and the
issuance and delivery of the shares of Common Stock issuable pursuant
to the Warrant, have been, or will be on or prior to the Closing, duly
authorized and reserved for issuance, as the case may be, by all
necessary corporate action on the part of the Company, and the Common
Stock issuable upon conversion of the Loan and upon exercise of the
Warrant, when issued will be duly and validly issued, fully paid and
nonassessable.
F. Financial Statements. The Company has furnished to the
Investor a complete and correct copy of a balance sheet of the Company
(the "Balance Sheet") as of December 31, 1994 (the "Balance Sheet
Date"), and the related statements of income and retained earnings and
changes in financial position for the fiscal year then ended, which
have been reviewed and are audited (the "Annual Financial
Statements"). The Company has also furnished to the Investor the
unaudited monthly financial statements of the Company prepared by the
Company for each of the monthly periods from December 31, 1994 through
September 30, 1995, consisting of balance sheets and related
statements of income and retained earnings and changes in financial
position for the respective months then ended (the "Monthly Financial
Statements"; the Annual Financial Statements and the Monthly Financial
Statements are sometimes collectively referred to as the "Financial
Statements"). The Financial Statements are complete and correct, are
in accordance with the books and records of the Company and present
fairly the financial conditions and results of operations of the
Company, as of the dates and for the periods indicated, and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis except that, with respect to the Monthly
Financial Statements, which have not been prepared in accordance with
generally accepted accounting principles due to the absence of
relevant notes and applicable periodic adjustments and accruals, there
may be audit adjustments which will not, in the aggregate, be
material. None of the Financial Statements contain any untrue or
misleading statement of material fact or omit to state a fact material
to the business of the Company, or necessary to make the statements
contained therein not misleading. The Company had no material
liabilities of any nature (matured or
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unmatured, fixed or contingent) which were not provided for in the
Financial Statements; and all reserves established by the Company and
set forth in the Financial Statements were adequate for the purposes
indicated herein.
G. Absence of Changes. Except as provided in this Agreement or
as disclosed herein, since the Balance Sheet Date, there has been no
material adverse change in the condition, financial or otherwise, net
worth or results of operations of the Company, other than changes in
the ordinary course of business which changes have not individually or
in the aggregate, had a materially adverse effect on the business,
prospects, properties or condition, financial or otherwise, of the
Company.
H. Property and Assets. The Company has good title to all of its
material properties and assets, including all properties and assets
reflected in the Balance Sheet, except those disposed of since the
date thereof in the ordinary course of business, and none of such
properties or assets is subject to any mortgage, pledge, lien,
security interest, lease, charge or encumbrance other than those the
material terms of which are described in the Balance Sheet or in the
Disclosure Schedule, except for (i) liens for current taxes not yet
due, (ii) mechanic's, materialman's and similar liens which may have
arisen in the ordinary course of business and which, in the aggregate,
are not material, (iii) security interests securing indebtedness not
in default for the purchase price of property purchased or leased in
the ordinary course of business and which, in the aggregate, are not
material, and (iv) minor imperfections of title, if any, not material
in amount and not materially detracting from the value or impairing
the use of the property subject thereto or impairing the current or
proposed operations of the Company; and except as otherwise disclosed
to the Investor in writing, prior to the Closing Date.
I. Insurance. The Company maintains valid policies of workers'
compensation insurance and of insurance with respect to its properties
and business of the kinds and in the amounts not less than is
customarily obtained by corporations of established reputation engaged
in the same or similar business and similarly situated, including,
without limitation, insurance against loss, damage, fire, theft,
product liability and other risks. Schedule III-I contains a list of
all insurance policies maintained by the Company and indicates the
coverage provided under each policy.
J. Taxes. The Company has filed all federal, state and other tax
returns that were required to be filed, and has paid all taxes,
assessments and other such governmental charges as shown on such
returns, and all such assessments and charges received by the Company,
to the extent due, have been paid, except those being contested in
good faith and with respect to which adequate reserves have been
established. The Company
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has, to the best of its knowledge, established on its books reserves
adequate for the payment of all federal, state and other tax
liabilities.
K. Litigation. There is no litigation, proceeding or
governmental investigation, administrative or judicial, pending or, to
the Company's knowledge, threatened against the Company which, if
decided adversely to the Company might have a materially adverse
effect on the business, properties or condition (whether financial or
otherwise) of the Company, or on the ability of the Company to perform
its obligations hereunder or under any other agreement or document
contemplated hereby.
L. Shareholder List. Schedule III-L contains a complete and
correct list of the stockholders of the company, showing the number of
shares of stock held by each such stockholder as of the date of
Closing. Except as otherwise contemplated by this Agreement, there
are no agreements, oral or written, between the Company and any holder
of its stock, or, to the best knowledge of the Company after due
inquiry, among any holders of its stock, relating to the acquisition,
disposition or voting of the stock of the Company.
M. Employment Contracts; Certain Transactions. Except as set
forth in the Schedule III-M, (i) the Company does not have any
employment contracts, deferred compensation agreements or bonus,
incentive or profit-sharing plans currently in force and effect, and
(ii) there are no existing arrangements or proposed arrangements
between the Company and any officer or director or holder of more than
10% of the stock of the Company.
N. Authorization. The execution and delivery of this Agreement,
the Registration Rights Agreement, the Convertible Debenture, the
Warrant and the Financing Statements have been duly authorized by all
necessary corporate action of the Company so that this Agreement, the
Registration Rights Agreement, the Convertible Debenture, the Warrant
and the Financing Statements will constitute the legal, valid and
binding agreements of the Company, enforceable in accordance with
their respective terms, and that neither the execution and delivery of
this Agreement, the Registration Rights Agreement, the Convertible
Debenture, the Warrant and the Financing Statements nor the issuance
of the shares of Common Stock to be issued upon exercise of the
conversion rights or exercise of the Warrant, will be in contravention
of law or of any order, rule or regulation applicable to the Company
or of its Articles of Incorporation, Bylaws or any other contract,
agreement or instrument to which the Company may be a party.
0. Governmental Approvals. No consent or approval of any
governmental agency or authority is required in the making or
performance of this Agreement by the Company which has not
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been or will not be obtained prior to Closing. All such consents and
approvals are listed in Schedule III-0.
P. Other Contracts. The Company has furnished to Investor copies
(or descriptions, in the case of oral arrangements) and set forth on
Schedule III-P is a list of all its material leases, franchise and
managerial contracts and agreements, and any and all other material
contracts and agreements, used or to be used in connection with the
conduct of its business.
The Company is not a party to any other contract or agreement which in
the judgment and opinion of the Company may materially or adversely
affect the business, properties, assets or condition of the Company.
The Company is not in material default of any such material contracts
and agreements.
Q. Articles of Incorporation and Bylaws. The Company's Articles
of Incorporation and Bylaws, copies of which have been furnished to
the Investor, are in full force and effect, without further changes,
amendments or modifications.
R. Untrue Statements. Neither this Agreement nor any other
agreements, reports, certificates, or any other documents furnished to
the Investor by the Company on its behalf in connection herewith
contain any untrue statement of a material fact, or omit to state a
fact which would be material in light of the circumstances pertaining
thereto.
S. Patents, Licenses, Trademarks, etc. Except as set forth on
the Schedule III:
1. The Company owns or licenses all patents, licenses,
trademarks, trade names, trademark rights or copyrights which
are necessary to conduct the Company's business, as now
conducted or as contemplated to be conducted, without conflict
with any patent, license, trademark, trade name or copyright
of any other person or entity, and all such patents, licenses,
trademarks, trade names, trademark rights or copyrights are
listed in the Disclosure Schedule, along with information on
ownership or licensing of such patents, licenses, trademarks,
trade names, trademark rights or copyrights;
2. No royalties, honorariums or fees are payable by the
Company to other persons by reason of the ownership or use of
the Intellectual Property Rights (as defined below) of the
Company; and
3. No product manufactured, marketed or sold by the
Company will, to the best knowledge of the Company, violate
any license or infringe any Intellectual Property Rights or
assumed name of another. There is no pending or threatened
claim or litigation against the Company
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(nor, to the best knowledge of the Company, does there exist
any basis therefor) contesting the validity or right to use of
any of the foregoing. The Company has not received any notice
that any of the Intellectual Property Rights of the Company or
the operation or proposed operation of the Company conflicts,
or will conflict, with the asserted rights of others, nor, to
the best knowledge of the Company, does there exist any basis
for any such conflict, it being understood however, that the
Company had not conducted patent or similar searches.
"Intellectual Property Rights" shall mean all industrial,
commercial and intellectual property rights, including,
without limitation, patents, patent applications, patent
rights, trademarks, trade names, service marks, copyrights,
computer programs, certificates of public convenience and
necessity, franchises, licenses, trade secrets, proprietary
processes and formulae.
T. Compliance with Law. The company is not in material violation
of any law, regulation, authorization or order of any public authority
relevant to the ownership of its properties or the carrying on of its
present or contemplated businesses. Without limiting the generality
of the foregoing, and except as set forth above, the Company is not,
and has not heretofore been, in material violation of any laws,
statutes, regulations, rules and other governmental requirements
relating to the protection of the environment, disposal of waste
materials and similar matters. The Company has all governmental
permits and licenses necessary to operate its business in the manner
currently operated and contemplated to be operated. With respect to
all inspections by the Occupational Safety and Health Administration,
no violations have been cited or indicated.
U. Brokerage Fees. There are no claims against the Company or
any of its officers, directors or shareholders, for brokerage
commissions, finders' fees or other similar compensation in connection
with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Company or such
officer, director or shareholder. Neither the Company nor any of its
officers, directors, employees or shareholders has employed any broker
or finder in connection with the transactions contemplated by this
Agreement.
V. Leased Real Property. Schedule III-V attached hereto and by
reference made a part hereof sets forth a list of all leases or
subleases of all real property or interests therein currently leased
by the Company (the "Real Property Leases"). Complete and correct
copies of all such Real Property Leases have been delivered to the
Investor. Each Real Property Lease is legal, valid and binding as
between the Company which is the lessee thereunder and, to the best
knowledge of the Company, the other party or parties thereto, and the
Company which is the lessee thereunder is a tenant or possessor in
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good standing, free of any default or breach whatsoever and quietly
enjoys the premises provided for therein. To the best knowledge of
the Company, all real property covered by the Real Property Leases is
zoned for the purposes for which each of such properties is currently
being used. None of the real property covered by the Real Property
Leases has been condemned or otherwise taken by any public authority,
and, to the best knowledge of the Company, no condemnation or taking
is threatened or contemplated. None of the real property is subject
to any claim, contract or law which might affect its use or value for
the purposes now made of it during the terms of the respective Real
Property Leases.
Company shall be deemed to have reaffirmed the representations and warranties
contained in this Article III on the Closing; provided however, that the
Company will update any schedules, financial statements and other information
necessary to reflect any material changes that have occurred since the date of
this Agreement.
IV. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants to the Company as follows:
A. Investment Purposes. In making the loans and investments
contemplated herein, it is specifically understood and agreed that the
Investor is acquiring the Loan,(and, in the event the conversion
rights or Warrant are exercised, its shares of Common Stock) for its
own account, for the purpose of investment and not with a view towards
the sale or distribution thereof within the meaning of the Securities
Act; provided, however, that the disposition of each of the Investor's
property shall at all times be and remain within its control.
B. No Registration. The Investor is aware that (i) the shares of
Common Stock to be issued upon exercise of conversion rights and upon
exercise of the Warrant will not be registered under the Securities
Act by reason of their issuance by the Company in a transaction exempt
from the registration requirements of the Securities Act; (ii) that
the Investor must hold the Common Stock indefinitely unless a
subsequent disposition thereof is registered under the Securities Act
and applicable state securities laws or is exempt from registration
(pursuant to Rule 144 or otherwise); and (iii) the Common Stock shall
bear a legend to that effect and the Company will make a notation on
its transfer books to such effect.
C. No Broker. The Investor has not employed any broker or finder
in connection with the transactions contemplated by this Agreement.
The Investor shall be deemed to have reaffirmed the representations and
warranties contained in this Article IV on the Closing.
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V. CONDITIONS TO CLOSING OF THE INVESTOR.
A. In addition to any requirements set forth elsewhere in this
Agreement, the Investor's obligation to fund the Loan shall be subject
to the fulfillment on or prior to the Closing Date of the following
conditions:
1. Representation and Warranties Correct. The
representations and warranties made by the Company in Section
III hereof shall be true and correct when made, and shall be
true and correct on the Closing Date, with the same force and
effect as if they had been made on and as of such date, and
there shall have been no default or breach of the terms of
this Agreement by the Company.
2. Agreements. The following agreements, documents or
certificates, in form and substance satisfactory to the
Investor and their counsel, shall have been entered into
and/or delivered by the appropriate parties and shall be in
full force and effect:
a. Registration Rights Agreement among the
Company and the Investors in the form of Exhibit A
hereto (the "Registration Rights Agreement");
b. Convertible Debenture in the form attached
hereto as Exhibit B (the "Convertible Debenture");
and
c. Warrant in the form attached hereto as
Exhibit C (the "Warrant"); and
d. Financing Statements in the form attached
hereto as Exhibit D (the "Financing Statements") and
e. Personal Guarantee of E. Xxx Xxxxx in the
form attached hereto as Exhibit E (the "Personal
Guarantee"); and
f. A certificate, as of the most recent
practicable date, as to the corporate good standing
of the Company issued by the Secretary of State of
North Carolina.
g. Bylaws of the Company, certified by the
Company's Secretary or Assistant Secretary as of the
Closing Date.
h. Resolutions of the Board of Directors of the
Company and, if necessary, of the shareholders of the
Company, authorizing and approving all matters in
connection with this Agreement and the transactions
contemplated hereby, certified by the
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Secretary or Assistant Secretary of the Company as of
the Closing Date.
i. Evidence that the insurance provided for in
Section VIII. I. is in full force and effect.
j. Opinion of the company's counsel in the form
attached hereto as Exhibit F.
k. A budget for one year and use of proceeds.
l. A Qualified Receivables list and aging
report.
m. A compliance certificate executed by the
President of the Company and certifying that all
conditions to this Agreement have been fulfilled.
3. SEC Approval. The SEC shall have issued an order
exempting the transactions contemplated by this Agreement and
the related documents from the provisions of Section 17 of the
Investment Company Act.
4. Blue Sky Law. The Company shall have obtained all
necessary Blue Sky law permits and qualifications, or secured
an exemption therefrom, required by any state for the offer
and sale of the Common Stock issuable upon exercise of the
conversion Rights or exercise of the Warrant.
VI. CONDITIONS TO CLOSING OF THE COMPANY.
The Company's obligation to close the Loan, issue the Convertible
Debenture and Warrant is, at the option of the Company, subject to the
representations made by the Investor in Section IV hereof being true and
correct when made and shall be true and correct on the Closing Date.
VII. RELEASE FROM OBLIGATION TO CLOSE ON THE LOAN.
Because of the SEC approval required in V.A.3 above, it is anticipated
that it may take up to one hundred twenty (120) days to close on the Loan. If,
for whatever reason, the Company decides prior to the Closing that it does not
wish to procure the Loan from the Investor, the Company shall give the Investor
written notice that it does not wish to close on the Loan. The Company shall
not be obligated to close on the Loan provided the following two (2) conditions
are met:
1. The Company immediately executes the Warrant in the
form attached hereto as Exhibit C; and
2. The Company agrees to reimburse the Investor for all
reasonable attorney's fees and expenses incurred in
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connection with the preparation, execution, and delivery of
this Agreement, and other related documentation, including the
documentation necessary to gain approval of the SEC; provided,
however, such obligation to reimburse the Investor shall, in
no event, exceed the sum of Sixteen Thousand Dollars
($16,000). All payments to be made by the Company shall be
made no later than thirty (30) days following presentation to
the Company of a statement for such expenses, reimbursable
hereunder and substantiated to the satisfaction of the
Company.
VIII. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that so long as the Loan is
outstanding, or the Investor owns Common Stock pursuant to the Loan conversion
or exercise of the Warrant, the Company will do the following:
A. Taxes and Liens. The Company will pay and promptly discharge
when due, all lawful claims, including taxes, assessments,
governmental charges and claims for labor, materials and supplies
incurred in the ordinary course of business, except in those instances
where the validity or amount thereof is being contested in good faith
and by appropriate legal or administrative proceedings, and an
adequate reserve therefor has been established on its books.
B. Insurance. The Company will maintain adequate public
liability insurance, casualty insurance on its personal property, and,
in the event the Company presently owns or in the future acquires real
property, fire, wind, water, flood (in the event any of its business
facilities are located in a designated federal flood area) and
earthquake insurance, and business interruption insurance, fidelity
bonds, director's and officer's liability insurance, and product
liability insurance to protect adequately the interests of the Company
against loss from the hazards ordinarily covered by such insurance and
in such amounts as similar businesses ordinarily obtain, and shall
maintain such other insurance, including worker's compensation
coverage, as is customarily maintained by businesses similarly
situated and engaged in operations similar to those of the Company.
The Company shall provide the Investors with copies of all such
policies upon request, which policies shall be issued by financially
sound and reputable insurers acceptable to the Investors in their
reasonable discretion.
C. Financial Statements. While the Loan is outstanding, the
Company will deliver to the Investor the following information:
1. Within ninety (90) days of the Company's year end,
the annual Financial Statements, which will have been
certified by and contain an unqualified report thereon,
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satisfactory to the Investor, of a firm of independent
certified public accountants which financial statements shall
have been prepared in accordance with generally accepted
accounting principles, consistently applied.
2. Within fifteen (15) days after the end of each month,
a balance sheet of the Company as of the end of such month,
and statements of income and cash flows of the Company for the
current month just ended and for the period from the beginning
of the current fiscal year to the end of such month, all in
reasonable detail and reasonably satisfactory in form and
scope to the Investor, and prepared in accordance with
generally accepted accounting principles, consistently
applied;
3. Within thirty (30) days after the end of each
quarter, quarterly narrative reports describing important
operation activities during the prior quarter, indicating
whether the Company is in compliance with this Agreement and
other major agreements and discussing any material variances
from the Budget (as defined herein), accompanied with an
updated Budget as provided herein;
4. As soon as available and to the extent requested by the
Investor, copies of all statements, reports and other
documents relating to the financial condition of the Company
and its business operations as required to be furnished to any
other lender of the company pursuant to the terms of any loan
documentation, as the same may be amended, supplemented or
modified from time to time;
5. Promptly upon transmission thereof, and in any event
no later than ten (10) days after the date of such
transmission, copies of all financial statements, reports and
returns as the Company shall send to its stockholders and any
governmental department, bureau, commission or agency having
regulatory authority over the Company and including, but not
limited to, all communications to and from applicable
regulatory authorities regarding notice of enforcement
proceedings, complaints, inspections and related matters;
5. Promptly upon the effectiveness thereof, certified
copies of all amendments to the Articles of Incorporation and
Bylaws of the Company;
6. Promptly, communications with any persons or
companies interested in acquiring the Company or forming
potential strategic relationships;
7. Promptly, notice of any material events affecting the
Company or its prospects; and
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8. With reasonable promptness, such additional financial
or other data as the Investors may reasonably request.
D. Other Information; Examination. The Company will furnish to
such Investor from time to time and with reasonable promptness: (i)
detailed information with respect to proposed material events relating
to the operations of the Company (including, without limitation,
matters relating to any public offering of securities, financing
arrangements, material litigation, either filed against or on behalf
of the Company, and contracts for substantial amounts of the Company's
products and contracts for any related services) and (ii) copies of
all material documents filed with any court with respect to any
material litigation in which the Company is a party. The Company will
further permit representatives of the Investor to visit and inspect
the premises of the Company and to examine its insurance certificates
and records, books of account and other records at such reasonable
times and as often as the Investor may reasonably request, but only
under circumstances as would not unreasonably interfere with the
conduct of the Company's business. The Company will also permit
representatives of the Investor to visit with the Company's certified
public accountants, and this Agreement shall constitute the Company's
authorization to said accountants to discuss with such representatives
the Company's affairs, finances and accounts. The Investor shall treat
as confidential all information obtained by it hereunder or in
connection herewith not otherwise known to it or in the public domain.
Notwithstanding the foregoing, the Company shall have no
obligation to deliver or disclose to any Investor any document or
information which (i) the Company is prohibited by contract from
delivering or disclosing or (ii) is subject to governmental security
classifications restricting such disclosure (unless a representative
of such Investor holds the appropriate security clearance).
E. Corporate Existence. The Company will do all things necessary
to preserve and to keep in full force and effect its corporate
existence, rights and franchises granted by law or otherwise.
F. Comply with Laws. The Company will comply in all material
respects with all laws of the United States and each state and
subdivision thereof which may be applicable to it, and all other
applicable laws of any country in which the Company is engaged in
business, and with all rules and regulations promulgated by agencies,
commissions and other instrumentalities of the United States and such
other countries, and any state or subdivision thereof having
rule-making or regulatory authority over the Company.
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19
G. Maintain Property. The Company will take all reasonable steps
to maintain its property in good order and repair.
H. Notice of Default. The Company will, within five (5) days of
its discovery of any breach under this Agreement, or any default under
any agreement executed in connection herewith, or under any other loan
or material lease pursuant to which the Company is obligated to any
third party, furnish with a copy of any notification of breach or
default, as the case may be (in the case such notification is received
with respect to obligations owing to third parties) and an officer I
Certification providing a written explanation of the circumstances
involved.
I. Key Man Life Insurance. The Company will keep in force and
maintain in the name of the Company key man life insurance on the life
of Mr. E. Xxx Xxxxx in the amount of Two Hundred Fifty Thousand
Dollars ($250,000), payable to Investor to the extent of the
outstanding balance of the Loan on terms reasonably satisfactory to
the Investor.
IX. NEGATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that so long as any portion of the
Loan is outstanding, the Company shall not, without the written consent of
Investor:
A. Dividends and Redemption of Stock. Authorize, declare or pay
any dividend, whether in cash, properties or securities, or make any
distribution upon any class of its capital stock, or redeem, purchase
or otherwise acquire for value any shares of its stock.
B. Change in Capital Structure. Change the capital structure of
the Company in any manner so as to not keep reserved sufficient Common
Stock for issuance to Investor upon exercise of the Warrant and
conversion of the Loan.
C. Loans to, Investments in, and Liabilities of Others. Make or
permit to remain outstanding any loan or advance to, or pledge or
encumber its assets for the benefit of, or assume or guarantee the
payment or performance of any liability or obligations of, or own,
purchase or acquire any stock or securities of, or guarantee, endorse
or otherwise be or become contingently or absolutely liable in
connection with the obligations, stock or dividends of, any other
person.
D. Merger or Substantial Disposition. Merge or consolidate with
or into any other corporation or effect or enter into any agreement to
effect a reorganization or similar transaction with any other person,
or acquire in any manner any other person, or sell, lease or transfer
or otherwise dispose of all or a substantial part of its assets in a
single or series of related transactions or any of its licenses,
trademarks, trade
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20
names and copyrights, or change the control of ownership of the
Company, except in connection with an Initial Public Offering.
E. Disposal of Assets. Sell, exchange, convey, assign, transfer,
lease or otherwise dispose of all or any portion of its assets other
than for adequate value and in the normal course of their respective
business operations.
F. Subsidiary Corporation. Create or acquire in any manner a
subsidiary corporation, or acquire any equity interest in any other
person.
G. Character of Business. Change the general character of the
business of the Company as conducted at the date hereof, or engage in
any type of business not reasonably related to the business of the
Company as presently conducted or contemplated to be conducted.
H. Sale and Leaseback. Enter into any arrangement, directly or
indirectly, whereby the Company shall sell or transfer any real or
personal property, whether now or hereafter acquired, used or useful
in the business of the Company and thereafter rent or lease such
property, or other property which the Company shall intend to use for
substantially the same purpose as the property sold or transferred.
I. Transactions With Related Persons. Enter into any transaction
with a Related Person (as defined below) of the Company, or modify any
current transaction or arrangement with a Related Person in any manner
that would be materially adverse to the Company. For purposes of this
Agreement, a "Related Person" shall consist of an employee, a
shareholder, director or officer of the Company, or a relative of any
such individual.
J. No Amendments to Articles of Incorporation or Bylaws. Make
any amendments to its Articles of Incorporation or Bylaws. With
respect to this covenant, the Investor agrees not to withhold their
consent unreasonably.
K. Budget Expenditures. Make or incur an expenditure more than
10% in excess of the amounts provided for in the Budget.
L. Incur Secured Indebtedness. Except for the indebtedness
described on Schedule VIII-L hereto and except as provided in Section
H of Article III relating to permissible liens on property and assets,
incur, create, assume or permit to exist any liability for borrowed
money, or any other liability evidenced by notes, bonds, debentures or
similar obligations secured by Qualified Receivables or Approved
Contracts of the Company, or which would be superior in payment rights
to the Loan.
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21
M. Salary Limitations. Pay a salary to E. Xxx Xxxxx, except out
of net earnings the Company, and in any event not in excess of Ten
Thousand Dollars ($10,000) per month.
X. INDEMNIFICATION
In addition to the indemnities included elsewhere in this
Agreement, the parties hereto agree to indemnify and hold each other
harmless as follows:
A. Indemnification by the Company. The Company agrees to
indemnify and hold the Investor harmless at all times after the date
of this Agreement from and against any and all loss, liability, damage
or deficiency resulting from any misrepresentation, breach of warranty
or nonfulfillment of any covenants or agreements on the part of the
Company contained herein or in any certificate or document furnished
by the Company pursuant hereto and any loss or damage resulting from
any claims, litigation, actions, suits, proceedings, judgments,
counsel fees, costs and expenses incident to such misrepresentation,
breach or nonfulfillment.
B. Indemnification by the Investor. The Investor agrees to
indemnify and hold the Company harmless at all times after the date of
this Agreement from and against any and all loss, liability, damage or
deficiency resulting from any misrepresentation, breach of warranty or
nonfulfillment of any covenants or agreements on the part of Investor
contained herein or in any certificate or document furnished by such
Investor pursuant hereto and any loss or damage resulting from any
claims, litigations actions, suit proceedings, judgments, counsel
fees, costs and expenses incident to such misrepresentation, breach or
nonfulfillment.
C. Third Party Claims. Should any claim be made by a person not a
party to this Agreement with respect to any matter to which the
foregoing indemnity relates, the party against whom such claim is
asserted (the "Indemnified Party"), within a reasonable period of
time, shall give written notice to the other party (the "Indemnifying
Party") of any such claim, and the Indemnifying Party shall thereafter
defend or settle any such claim, at its sole expense, on its own
behalf and with counsel of its selection. In such defense or
settlement of any claims, the Indemnified Party shall cooperate with
the Indemnifying Party to the maximum extent reasonably possible. Any
payment resulting from such defense or settlement, together with the
total expense thereof, shall be binding on the Company and the
Investor for the purpose of this Article.
D. Settlement. Notwithstanding the foregoing, should any claim
be made by a person not a party to this Agreement with respect to any
matter to which the foregoing indemnity relates, the Indemnified
Party, on not less than thirty (30) days' notice to the Indemnifying
Party, may make settlement of such claim, and such settlement shall be
binding on the
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Indemnifying Party and the Indemnified Party for the purposes of this
Article IX; provided, however, that if within said thirty (30) day
period the Indemnifying Party shall have requested the Indemnified
Party not to settle such claim and to deny such claim at the expense
of the Indemnifying Party, the Indemnified Party will promptly comply
and the Indemnifying Party shall have the right to defend on its own
behalf with counsel of its selection. Any payment or settlement
resulting from such contest, together with the total expense thereof,
shall be binding on the Company and the Investor for the purposes of
this Article.
E. Restrictions on Liability. Notwithstanding the indemnities
contained in this Agreement, the Company and the Investor agree that
neither shall have any obligation to indemnify the other for amounts
for which indemnity is sought under this Article until such amounts
exceed individually or in the aggregate the sum of Ten Thousand
Dollars ($10,000.00).
XI. BUDGET; USE OF PROCEEDS.
The Company covenants and agrees that so long as the Loan is
outstanding it will do the following:
1. At the time this Agreement is executed, the Company will submit a
budget which shall be approved by Investor (the "Budget") setting forth a pro
forma balance sheet of the Company, a pro forma statement of income and
retained earnings, and a cash flow statement of the Company for each month of
the upcoming fiscal year, all in reasonable detail, which projections will be
revised and revisions provided to the Investor on a quarterly basis. The
initial Budget shall indicate the company's use of the Loan proceeds and the
Loan proceeds shall be used only for payment of expenses and costs in
accordance with the Budget. Should the Company receive additional equity from
outside sources, it may immediately submit a revised Budget to Investor showing
the intended use of such capital and Investor shall, in its discretion, approve
such revised Budget, such approval not to be unreasonably withheld.
XII. GENERAL.
As further and special provisions set forth under this Agreement, the
parties hereto further warrant, covenant, contract and agree each with the
other as follows:
A. Entire Agreement. This Agreement, the Exhibits and Schedules
hereto and other documents referred to herein constitute the entire
understanding among the parties. The Exhibits, Schedules and all
certificates delivered at Closing are specifically incorporated into
this Agreement.
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B. Reimbursement of Expenses. The Company agrees to reimburse
the Investor for all reasonable attorneys' fees and expenses incurred
in connection with the preparation, execution and delivery of this
Agreement, and other related documentation, including the
documentation necessary to gain approval of the SEC, or any subsequent
amendments, modifications or supplements thereto; provided, however,
such obligation to reimburse the Investor shall, in no event, exceed
the sum of Sixteen Thousand Dollars ($16,000), and all reasonable
expenses (including reasonable attorneys' fees and expenses) incurred
by the Investor following a breach in enforcing their rights hereunder
or at law or in equity. All payments to be made by the Company shall
be made no later than thirty (30) days following presentation to the
Company of a statement for such expenses, reimbursable hereunder and
substantiated to the satisfaction of the Company.
C. Survival of Agreements and Representations and Warranties.
All agreements and all representations and warranties contained herein
or made in writing by the Company in connection herewith, to the
extent applicable, shall survive the execution and delivery of this
Agreement and other documents referred to herein and shall continue
for so long as any portion of the Loan is outstanding, Investor owns
the Warrant or any shares of Common Stock to be issued upon exercise
of the Loan conversion rights or the Warrant.
D. No Waiver. No delay by or on behalf of the Investor or of the
Company in exercising any of their respective rights conferred
hereunder, and no course of dealing between the Investor and the
Company shall operate as a waiver of any right granted hereunder,
unless expressly waived in writing by the party whose waiver is
alleged.
E. Binding Effect. All covenants, representations, warranties
and other stipulations in this Agreement and other documents referred
to herein, given by or on behalf of any of the parties hereto, shall
bind and inure to the benefit of the respective successors, heirs,
personal representatives and assigns of the parties hereto.
F. Cumulative Powers. No remedy herein conferred upon a party is
intended to be exclusive of any other remedy, and each such remedy
shall be cumulative and in addition to every other remedy given
hereunder or now or hereafter existing at law, or in equity or by
statute or otherwise.
G. Loss of Securities. In the event of the loss, theft, or
destruction of a stock certificate, upon delivery of indemnity in such
form and amount as shall be reasonably satisfactory to the Company, or
in the event of mutilation of a stock certificate, upon surrender and
cancellation of such certificate of stock, the Company will make and
deliver a new certificate of stock, of like tenor, to replace such
lost, stolen, mutilated or destroyed stock certificate. In
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addition, upon request of any holder of stock of the Company now or
hereafter issued by the Company to the Investor, and upon surrender of
such stock to the Company and compliance with any restrictive legends
and the terms of this Agreement, the Company will reissue stock, in
lesser denominations, to parties designated by such holder of stock
certificates.
H. Communications. All communications and notices provided for
hereunder shall be in writing and shall be made by hand delivery,
telecopier, or commercial courier guaranteeing next day service, to:
(i) If to the Company, to:
One Room Systems, Inc.
ATTN: E. Xxx Xxxxx - CEO
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to the Investor, to:
Southeast Interactive Technology Fund I, LLC
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attention: W. Xxxx Xxxxxx
or to such other address with respect to any party as such party shall
notify the other parties hereto in writing. Any notice required to
be given hereunder by one party to another shall be deemed to have
been given when so delivered personally, or if telecopied, when
receipt is acknowledged, or if delivered by commercial courier, the
next business day after timely delivery to the courier. Except as
otherwise provided for herein, to the extent possible, all requests
for disclosure or other provision of information to be made or
otherwise given by the Company shall be completed no later than ten
(10) days following the giving of a written request therefor in the
manner described in this Section.
I. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of North Carolina.
J. Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or
otherwise affect the construction of any provisions hereof.
K. Multiple Originals. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such
counterpart.
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L. Changes. The terms and provisions of this Agreement may not
be modified or amended, except with the written consent of the Company
and the Investor.
M. Conditions Precedent. In the event all of the conditions
precedent to Closing are not met, the Company shall be obligated to
pay expenses as provided in XII B. above, and the Company and Investor
shall have no further obligations to each other.
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26
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers, or
manager, their respective seals to be hereunto affixed, all by authority of
their respective Board of Directors or limited liability company, as of the day
and year first above written.
ONE ROOM SYSTEMS, INC.
By: ________________________________
E. Xxx Xxxxx -- President & CEO
ATTEST:
By:_______________________________
Secretary
[CORPORATE SEAL)
SOUTHEAST INTERACTIVE TECHNOLOGY
FUND I, LLC
BY: ________________________________
Manager
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SCHEDULE III-I INSURANCE POLICIES
1. See attached for copies of all policies.
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28
SCHEDULE III-L SHAREHOLDER LIST
1. See attached for list of shareholders of the Company.
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SCHEDULE III-M EMPLOYMENT AGREEMENTS
1. E. Xxx Xxxxx--See attached
2. Xxxx Xxxxxx--See attached
3. Xxxxxxx Lucky--See attached
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SCHEDULE III-O GOVERNMENTAL APPROVALS
1. SEC approval required as a condition of Closing.
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31
SCHEDULE III-P MATERIAL CONTRACTS
1. Contract with Institute for Academic Technology--see attached
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SCHEDULE III-S PATENTS, LICENSES, TRADEMARKS, ETC.
1. See pages 16 and 17 of the Company's Confidential Private Placement
Memorandum
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SCHEDULE VIII-L PERMITTED INDEBTEDNESS
1. Loan from E. Xxx Xxxxx to the Company -- See attached documents for
details
2. Loan from First Union National Bank of North Carolina to the Company
-- See attached documents for details
3. Loan from First Union National Bank of North Carolina to the Company -
anticipated Closing - November 2, 1995; it is anticipated this loan will be
repaid upon funding under this Investment Agreement.
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SCHEDULE III-V REAL PROPERTY LEASES
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