EXHIBIT 10.2
COMMON STOCK SUBSCRIPTION AGREEMENT
W I T N E S S E T H:
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WHEREAS, Xxxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx as Trustees of the
Xxxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx Trust, (jointly, the "Subscriber"),
Computerized Thermal Imaging, Inc., a Nevada corporation (the "Company") and
Xxxxx Scientific, Inc., a California corporation ("BSI"), have entered into
that certain Memorandum of Agreement (the "MOA") dated April 4, 2000 between
the Company, Subscriber and BSI;
WHEREAS, there are 200 outstanding shares of the common stock of BSI (the
"Target Shares");
WHEREAS, the acquisition of the Target Shares by the Company as
contemplated by the MOA (the "Acquisition") occurred on April 18, 2000 (the
"Acquisition Date");
WHEREAS, consideration paid to the Subscriber in exchange for the 180
Target Shares owned by the Subscriber ("Subscriber's Target Shares") consists
of $4,510,000 cash and so many shares of the Company's common stock (the
"Exchange Shares") the number of which is equal to $4,700,000 divided by the
closing bid price per share of the Exchange Shares as quoted on the OTC
Bulletin Board of the NASD on the business day prior to the Acquisition Date;
WHEREAS, the closing bid price per share of the Exchange Shares as
quoted on the OTC Bulletin Board of the NASD on the business day prior to the
Acquisition Date was US$7.75; and
WHEREAS, it is contemplated by all parties hereto (but not as a
condition precedent to) that the Acquisition qualify as a statutory merger
under Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1) Subscription to Exchange Shares. The Subscriber hereby subscribes to
606,452 Exchange Shares upon the Subscriber's delivery of this Subscription
Agreement and the Subscriber's tender of Subscriber's Target Shares as
contemplated by the MOA.
2) Allocation of Consideration to Exchange Shares. The Subscriber Target
Shares tendered hereunder represents 51.03 percent of the Subscribers total
common stock ownership of BSI immediately prior to the Acquisition Date. The
remaining 48.97 percent of the Subscriber Target Shares prior to the
Acquisition is tendered in exchange for the cash consideration of $4,510,000
noted above.
3) Exchange Shares not Registered. The Subscriber acknowledges and
understands that the Exchange Shares subscribed herein are not registered
under the Securities Act of 1933, as amended (the "Act"), or any securities
"blue sky" or other similar laws of any state ("State Securities Laws"). The
Company shall have no obligation to issue the Exchange Shares to any person to
whom the issuance of such shares would constitute a violation of the Act or
any State Securities Laws. The Company will cause the Secretary of the
Company to deliver the Exchange Shares subscribed to by the Subscriber to the
Subscriber promptly after the Company has accepted this Subscription Agreement
(the "Closing").
4) Registration Rights.
(a) Piggyback Registration. The Company shall include the Exchange
Shares in the registration of the Company securities that the Company shall
file with the United States Securities and Exchange Commission on or before
July 1, 2000.
(b) Period of Effectiveness. The Company shall use its best effort
to maintain the effectiveness of any registration statement pursuant to this
section 4 for a period in excess of the shorter of (i) the period during which
the Subscriber shall hold any Exchange Shares or (ii) three years after the
Acquisition Date.
(c) Expenses. All fees, disbursements and expenses incurred by the
Company in connection with any registration pursuant to this section 4 shall
be borne by the Company, excluding legal fees and disbursements of counsel for
the Option holder.
5) Representations and Warranties. The Subscriber hereby represents and
warrants to and covenants with the Company, as well as each officer, director
and agent of the Company as follows:
(a) General
(i) The Subscriber has all requisite authority to enter into this
Subscription Agreement and to perform all the obligations required to be
performed by the Subscriber hereunder.
(ii) The Subscriber is the sole party in interest and is not
acquiring the Exchange Shares as an agent or otherwise for any other person
and the Subscriber is a resident of the state set forth opposite its name on
the signature page hereto.
(iii) The Subscriber recognizes that the total amount of value
tendered to purchase the Exchange Shares is immediately placed at the risk of
the business and may be completely lost. The purchase of the Exchange Shares
of the Company as an investment involves extreme risk.
(iv) The Subscriber realizes that the Exchange Shares cannot
readily be sold as the shares of Exchange Shares are restricted securities,
that it may not be possible to sell or dispose of the Exchange Shares and
therefore the Exchange Shares must not be purchased unless the Subscriber has
liquid assets sufficient to assure that such purchase will cause no undue
financial difficulties and the Subscriber can provide for current needs and
personal contingencies.
(v) The Subscriber confirms and represents that it is able (a) to
bear the economic risk of its investment, (b) to hold the securities for an
indefinite period of time, and (c) to afford a complete loss of its
investment. The Subscriber also represents that it has adequate means of
providing for its current needs and personal contingencies, and has no need
for liquidity in this particular investment.
(vi) The Subscriber has not become aware of the offering of
Exchange Shares of the Company by any form of general solicitation or
advertising, including, but not limited to advertisements, articles, notices
or other communications published in any newspaper, magazine or other similar
media or broadcast over television or radio or any seminar or meeting where
those individuals that have attended have been invited by any such or similar
means of general solicitation or advertising.
(b) Information Concerning the Company.
(i) The Subscriber acknowledges that it has received all current
information about the Company including the Company's (A) Form 10-KSB for the
fiscal year ended June 30, 1999, as amended and (B) Forms 10-QSB for the
quarters ended September and December 31, 1999.
(ii) The Subscriber or its representative is familiar with the
business and financial condition, properties, operations and prospects of the
Company, and, at a reasonable time prior to the execution of this Subscription
Agreement, that it and its representative have been afforded the opportunity
to ask questions of and receive satisfactory answers from the Company's
officers and directors, or other persons acting on the Company's behalf,
concerning the business and financial condition, properties, operations and
prospects of the Company and concerning the terms and conditions of the
offering of the Exchange Shares and has asked such questions as it or its
representative desires to ask and all such questions have been answered to the
full satisfaction of the Subscriber.
(iii) The Subscriber understands that, unless the Subscriber
notifies the Company in writing to the contrary before the Closing, all the
representations and warranties contained in this Subscription Agreement will
be deemed to have been reaffirmed and confirmed as of the Closing, taking into
account all information received by the Subscriber.
(iv) The Subscriber understands that the purchase of the Exchange
Shares involves various risks, including, but not limited to, those outlined
in this Subscription Agreement.
(v) The Subscriber acknowledges that no representations or
warranties have been made to the Subscriber by the Company as to the tax
consequences of this investment, or as to profits, losses or cash flow which
may be received or sustained as a result of this investment.
(vi) All documents, records and books pertaining to a proposed
investment in the Exchange Shares which the Subscriber or its representative
has requested have been made available to the Subscriber.
(vii) The Subscriber or its representative has been provided
access to all information requested in evaluating its purchase of the Exchange
Shares.
(viii) The Subscriber agrees to furnish any additional
information requested to assure compliance with applicable Federal and State
Securities Laws in connection with the purchase and sale of the Exchange
Shares.
(c) Restrictions on Transfer or Sale of the Exchange Shares
(i) The Subscriber is acquiring the Exchange Shares subscribed
solely for the Subscriber's own beneficial account, for investment purposes,
and not with view to, or for resale in connection with, any distribution of
the Exchange Shares. The Subscriber understands that the offer and the sale
of the Exchange Shares has not been registered under the Act or any State
Securities Laws by reason of specific exemptions under the provisions thereof
which depend in part upon the investment intent of the Subscriber and of the
other representations made by the Subscriber in this Subscription Agreement.
The Subscriber understands that the Company is relying upon the
representations, covenants and agreements contained in this Subscription
Agreement (and any supplemental information) for the purposes of determining
whether this transaction meets the requirements for such exemptions.
(ii) The Subscriber understands that the Exchange Shares are
"restricted securities" under applicable federal securities laws and that the
Act and the rules of the Securities and Exchange Commission (the "Commission")
provide in substance that the Subscriber may dispose of the Exchange Shares
only pursuant to an effective registration statement under the Act or an
exemption therefrom. The certificates evidencing the shares of Common stock
offered hereby will bear a legend that clearly sets forth this restriction.
While the Company has granted certain piggy-back registration rights to the
Subscriber, no assurance can be given as to when or if any registration
statement will become effective. The Subscriber understands that the
Subscriber may not at any time demand the purchase by the Company of the
Subscriber's Exchange Shares.
(iii) The Subscriber agrees: (A) that the Subscriber will not
sell, assign, pledge, give, transfer or otherwise dispose of the Exchange
Shares or any interest therein, or make any offer or attempt to do any of the
foregoing, except pursuant to a registration of the Exchange Shares under the
Act and all applicable State Securities Laws or in a transaction which is
exempt from the registration provisions of the Act and all applicable State
Securities Laws; (B) that the Company and any transfer agent for the Exchange
Shares shall not be required to give effect to any purported transfer of any
of the Exchange Shares except upon compliance with the foregoing restrictions;
and (C) that a restrictive legend will be placed on the certificates
representing the Exchange Shares.
(iv) The Subscriber has not offered or sold any portion of the
subscribed for Exchange Shares and has no present intention of dividing such
Exchange Shares with others or of reselling or otherwise disposing of any
portion of such Exchange Shares either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or nonoccurrence
of any predetermined event or circumstance.
6) Survival and Indemnification. All representations, warranties and
covenants contained in this Agreement and the indemnification contained in
this Paragraph 6 shall survive (i) the acceptance of the Subscription
Agreement by the Company and (ii) the death or disability of the Subscriber.
The Subscriber acknowledges the meaning and legal consequences of the
representations, warranties and covenants in Paragraph 5 hereof and that the
Company has relied upon such representations, warranties and covenants in
determining the Subscriber's qualification and suitability to purchase the
Exchange Shares. The Subscriber hereby agrees to indemnify, defend and hold
harmless the Company, and its officers, directors, employees, agents and
controlling persons, from and against any and all losses, claims, damages,
liabilities, expenses (including attorneys' fees and disbursements), judgment
or amounts paid in settlement of actions arising out of or resulting from the
untruth of any representation herein or the breach of any warranty or covenant
herein. Notwithstanding the foregoing, however, no representation, warranty,
covenant or acknowledgment made herein by the Subscriber shall in any manner
be deemed to constitute a waiver of any rights granted to it under the
Securities or State Securities laws.
7) Notices. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid, or overnight air courier guaranteeing next day delivery:
(a) if to the Company, to it at the following address:
Computerized Thermal Imaging, Inc.
Attention: Xx. Xxxxx Xxxxxxx, Chief Financial Officer
000 Xxxxxxxx Xxxx Xxxx.
Xxxxxx, XX 00000
(b) if to the Subscriber, at the address set forth on the last page
hereof or directly to the Subscriber at the address set forth on the signature
page hereto, or at such other address as either party shall have specified by
notice in writing to the other.
All notice and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; two days after being
deposited in the mail, postage prepaid, if mailed; and the next day after
timely delivery to the courier, if sent by overnight air courier guaranteeing
next day delivery.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
8) No Assignment. This Subscription Agreement is not assignable by the
Subscriber, and may not be modified, waived or terminated except by an
instrument in writing signed by each of the parties hereto.
9) Binding Effect. Except as otherwise provided herein, this Subscription
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns, and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by and be binding upon such heirs,
executors, administrators, successors, legal representatives and assigns. If
the Subscriber is more than one person, the obligation of the Subscriber shall
be joint and several and the agreements, representations, warranties and
acknowledgments contained herein shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.
10) Entire Agreement. This Subscription Agreement constitutes the entire
agreement of the Subscriber and the Company relating to the matters contained
herein, superseding all prior contracts or agreements, whether oral or
written.
11) Governing Law. This Subscription Agreement shall be governed and
controlled as to the validity, enforcement, interpretations, construction and
effect and in all other aspects by the substantive laws of the State of Utah.
12) Severability. If any provision of this Subscription Agreement or the
application thereof to any Subscriber or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Subscription Agreement and
the application of such provision to other subscriptions or circumstances
shall not be affected thereby and shall be enforced to the greatest extent
permitted by law.
13) Headings. The headings in this Subscription Agreement are inserted
for convenience and identification only and are not intended to describe,
interpret, define, or limit the scope, extent or intent of this Subscription
Agreement or any provision hereof.
IN WITNESS WHEREOF, the undersigned Subscriber has executed this Subscription
Agreement as of this 18th day of April, 2000.
Xxxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx as Trustees of
the Xxxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx Trust
/s/ Xxxxxxx X. Xxxxx, Trustee
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Xxxxxxx X. Xxxxx, Trustee
/s/ Xxxxxxxx X. Xxxxx, Trustee
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Xxxxxxxx X. Xxxxx, Trustee
______________________________
Street Address
______________________________
City State Zip
ACCEPTED by the Company as of the 18th day of April, 2000
Computerized Thermal Imaging, Inc.
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx, Chief Financial Officer
