EXHIBIT 10(d)
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "AGREEMENT") dated as of January ____, 1998
between Bristol Asset Management LLC, a limited liability company organized and
existing under the laws of Delaware (the "INVESTOR"), and Computerized Thermal
Imaging, Inc., a corporation organized and existing under the laws of the State
of Nevada (the "COMPANY").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investor shall invest up to $7,000,000 in the
Company's Common Stock, par value $.0001 per share (the "COMMON STOCK").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK; ISSUANCE OF WARRANTS
Section 1.1 Purchase and Sale of Common Stock. Upon the terms and
subject to the conditions set forth herein, the Company shall issue and sell to
the Investor, and the Investor shall purchase from the Company, up to $7,000,000
of Common Stock, such stock to be valued as provided in Section 1.3(b) herein.
Section 1.2 Delivery of Put Notices.
(a) At any time prior to the earlier of (i) the date which is three
years from the effective date of the Registration Statement (as defined below)
or (ii) termination of this Agreement in accordance with Article 5 herein, the
Company may deliver written notices to the Investor (each such notice
hereinafter referred to as a "PUT NOTICE") in the form of the Put Notice annexed
to this Agreement as Exhibit A stating a dollar amount (the "DOLLAR AMOUNT") of
Common Stock which the Company intends to sell to the Investor five business
days following the date (the "PUT NOTICE DATE") on which the Put Notice is given
to the Investor by the Company in accordance with Section 6.4 herein, provided
that each Put Notice Date and Dollar Amount shall be subject to Section 1.3(a)
below. "BUSINESS DAY(S)" shall mean any day on which the New York Stock
Exchange is open for trading. The Dollar Amount designated by the Company in
any given Put Notice shall be an amount equal to at least $50,000, which may be
increased by the Company in increments of $25,000, provided that the Investor,
in its sole discretion, may refuse to invest a portion of a Dollar Amount
designated by the Company in a Put Notice to the extent that such portion of the
Dollar Amount would result in the Investor beneficially owning more than 4.9% of
the Common Stock outstanding on the Put Notice Date (including without
limitation Common Stock deemed beneficially owned by the Investor pursuant to
the Warrants (as defined below)), as determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
regulations promulgated thereunder. The Put Notice shall include a
representation of the Company as to the Common Stock outstanding on the Put
Notice Date as determined in accordance with Section 13(d) of the Exchange Act.
In the event that the amount of Common Stock outstanding as determined in
accordance with Section 13(d) of the Exchange Act and the regulations
promulgated thereunder is different on a Closing Date (as defined below) than on
the Put Notice Date associated with such Closing Date, the amount of Common
Stock outstanding on such Closing Date shall govern for purposes of determining
whether the Investor would own more than 4.9% of the Common Stock as of such
Closing Date.
(b) Notwithstanding any of the foregoing, the Company may not deliver
a Put Notice if (i) trading of the Common Stock on the principal market on which
it is then traded (the "PRINCIPAL MARKET") is then suspended or the Common Stock
is then delisted from the Principal Market, (ii) the closing price of the Common
Stock on the Principal market is less than $.15 per share (appropriately
adjusted for any stock splits, reverse splits or combinations, stock dividends
and similar events) and, (iii) the Registration Statement is not effective or is
subject to a stop order or is otherwise suspended, (iv) the Dow Xxxxx Industrial
Average has dropped more than 5% within the preceding five business days, or (v)
the Common Stock is not then registered under the Exchange Act. If any of the
events described in clauses (i), (ii), (iii), (iv) or (v) above occurs after a
Put Notice is delivered but prior to the Closing
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associated with such Put Notice, such Put Notice shall be null, void and of
no force and effect and a new Put Notice shall be required following the
termination of any such event.
Section 1.3 Determination of Share Number; Valuation Period
(a) Within ten days after the end of each calendar month at the
option of the Company it may require a purchase of Common Stock by the Investor,
subject to the procedures set forth in Section 1.2(a), in a maximum amount not
to exceed the lesser of (i) $7,000,000 less all amounts previously paid by the
Investor pursuant to this Section 1.3(a) and (ii) the product of (x) the number
of shares of Common Stock of the Company traded on the Principal Exchange on
which the Common Stock traded for the preceding calendar month, multiplied by
(y) the average of the closing bid prices noted in Bloomberg (or other
appropriate published source) for the Common Stock during the prior calendar
month, multiplied by (z) 14%.
For example, if a total of 1,000,000 shares of Common Stock traded
during January of a particular year on the Principal Exchange and the average of
the closing bid prices was $2.00, on or before February 10 the Company could
request a draw down not to exceed 14% of the $2,000,000 or $280,000, so long as
such amount was available under this Agreement.
(b) Simultaneously with the receipt of the funds from the Investor in
the amount of the draw down the Company shall issue and sell to the Investor and
the Investor shall be deemed to have purchased, in consideration of the funds so
drawn down, the number of shares of Common Stock equal to the draw down divided
by 74% of the lowest sales price for the Common Stock on the Principal Exchange
and as noted in Bloomberg (or other appropriate published source) (the "LOWEST
SALE PRICE" during the ten trading days prior to the Put Notice Date (the "LOOK
BACK PERIOD"). For example, if the Lowest Sale Price for the Look Back Period
was $2.00 and the draw down was $500,000, the number of shares of Common Stock
to be issued would be 337,837 shares.
(c) Notwithstanding the foregoing, in the event that the Lowest Sale
Price during the twenty trading days after a particular Closing (as defined
below) is less than 95% of the Lowest Sale Price applicable to such Closing,
then the Company shall promptly issue to the Investor an additional number of
shares of Common Stock with respect to such Closing such that the number of
shares of Common Stock issued to the Investor at such Closing plus such
additional number of shares are equal to the funds drawn down at such Closing
divided by 74% of the Lowest Sale Price during such twenty trading day period.
The Investor shall also be issued additional Warrants equal to 12% of the number
of additional shares so issued and the exercise price of such additional
Warrants and the Warrants issued at such Closing shall be adjusted to 100% of
the Lowest Sale Price during such twenty trading day period.
(d) The Company shall not be required to issue fractions of shares of
Common Stock and instead shall refund to the Investor an amount equal to the
fraction which would otherwise have been issued times 74% of the lowest sales
price for the Common Stock during the Look Back Period determined as provided in
Section 1.3(b) above.
Section 1.4 Closing.
(a) Each Closing of a purchase and sale of Common Stock (a "CLOSING")
shall take place at the offices of the Company, at 10:00 a.m., local time on the
fifth business day following the Put Notice Date to which such Closing relates
or the earliest date thereafter on which all conditions to Closing have been
satisfied. Each date on which a Closing occurs is referred to herein as a
"CLOSING DATE."
(b) On each Closing Date, the Investor shall deliver to the Company
the Dollar Amount with respect to such Closing by cashier's check or wire
transfer to such account as shall be designated in writing by the Company. On
each Closing Date, the Company shall deliver to the Investor certificates
representing the number of shares to be issued and sold to the Investor on such
date and registered in the name of the Investor. In addition, each of the
Company and the Investor shall deliver all documents, instruments and writings
required to be delivered by either of them pursuant to this Agreement at or
prior to each Closing.
(c) On each Closing Date, except as provided in Section 1.4(d) below,
the Company shall also deliver to the Investor warrants in the form annexed to
this Agreement as Exhibit B ("WARRANTS") to purchase shares
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of Common Stock (the "WARRANT SHARES"), which Warrants shall expire on the
fifth anniversary of the date of issuance thereof. The Warrants issuable at
any Closing shall entitle the holder thereof to purchase a number of Warrant
Shares equal to 12% of the number of shares of Common Stock purchased at the
Closing in question at an initial exercise price, subject to the provisions
of Section 1.3(c) above, equal to 100% of the average closing sales price for
the Common Stock on the Principal Exchange and as noted by Bloomberg (or
other appropriate published source) during the Look Back Period in question.
(d) (i) To the extent that the Company has not delivered Put
Notices to the Investor on or before one year from the date of this Agreement
in an aggregate Dollar Amount equal to the lesser of (a) $2,333,333 and (b)
the maximum Dollar Amount with respect to which Put Notices could have been
delivered prior to such date, then any Warrants which have not theretofore
been delivered to the Investor which would have been issued had such Put
Notices been delivered shall promptly be issued to the Investor.
(ii) To the extent that the Company has not delivered Put
Notices to the Investor on or before two years from the date of this
Agreement in an aggregate Dollar Amount equal to the lesser of (a) $4,666,667
and (b) the maximum Dollar Amount with respect to which Put Notices could
have been delivered prior to such date, then any Warrants which have not
theretofore been delivered to the Investor which would have been issued had
such Put Notices been delivered shall promptly be issued to the Investor.
(iii) To the extent that the Company has not delivered Put
Notices to the Investor on or before the termination of this Agreement in an
aggregate Dollar Amount equal to the lesser of (a) $7,000,000 and (b) the
maximum Dollar Amount with respect to which Put Notices could have been
delivered prior to such date, then any Warrants which have not theretofore been
delivered to the Investor which would have been issued had such Put Notices been
delivered shall promptly be issued to the Investor.
On each Closing Date subsequent to the issuance of Warrants pursuant to
this Section 1.4(d), notwithstanding the provisions of Section 1.4(b) above, the
Company shall only be obligated to issue Warrants pursuant to Section 1.4(b) at
such times as and to the extent that the total Dollar Amount of Put Notices
delivered to the Investor exceeds the Dollar Amount set forth in the clause
pursuant to which the Warrants were issued. For example, if Warrants are issued
pursuant to clause (i) above, then no Warrants shall thereafter be issuable
pursuant to Section 1.4(b) until such time as the aggregate Dollar Amount of Put
Notices delivered to the Investor pursuant to this Agreement exceeds $2,333,333.
Section 1.5. Registration.
(a) The Company agrees that all shares of Common Stock issued to the
Investor pursuant to this Agreement shall, at the time of such issuance and for
so long thereafter as is required by this Agreement, be subject to an effective
registration statement on Form S-1 or an equivalent thereof, covering both the
issuance of such shares by the Company to the Investor hereunder and the resale
or other disposition thereof by the Investor at any time and from time to time
after each such issuance and, with respect to the Warrant Shares, covering both
the issuance of the Warrant Shares and the resale or other disposition by the
holders thereof at any time and from time to time after each such issuance. The
shares of Common Stock to be issued to the Investor pursuant to this Agreement
and any Warrant Shares are collectively referred to as the "SHARES." The
Company agrees that the Registration Statement described in this Section 1.5(a)
(together with all amendments and supplements thereto, the "REGISTRATION
STATEMENT") shall, in accordance with Section 1.5(c) below, remain effective
pursuant to the provisions of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or otherwise, (x) in the case of any Registration Statement
covering Shares issued pursuant to this Agreement at all times during the term
of this Agreement and for a period of 90 days after termination of this
Agreement and (y) in the case of any Registration Statement covering the Warrant
Shares at all times during the term of the Warrant and for a period of three
years thereafter (as applicable, the "REGISTRATION PERIOD").
(b) The Company shall use its best efforts in order that the
Registration Statement may become effective within 90 days of the date of this
Agreement.
(c) The Company shall, as expeditiously as reasonably possible and in
accordance with Section 1.5(a) herein:
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(i) Prepare and file with the Securities and Exchange Commission
(the "SEC") such amendments and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to comply with
this Agreement and the provisions of the Securities Act with respect to the
issuance and disposition of all securities covered by such Registration
Statement.
(ii) Furnish to the Investor and any Warrant Holders, as the case
may be, such numbers of copies of a prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the Investor and
Warrant Holders, as the case may be, may reasonably require in order to
facilitate the disposition of shares sold pursuant to this Agreement or issued
pursuant to the Warrant.
(iii) Insure that all Shares subject to the Registration
Statement shall at all times during the applicable Registration Period be
registered and qualified under such other securities or "Blue Sky" laws of such
jurisdictions as shall be reasonably requested by the Investor and/or the
Warrant Holders, as the case may be, provided that the Company shall not be
required in connection herewith or as a condition hereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(iv) Notify the Investor and/or any Warrant Holders of the
happening of any event or the existence of any circumstance as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and as soon as may be
practicable prepare and file with the SEC such amendments and supplements to
such Registration Statement and prospectus used in connection therewith as may
be necessary to eliminate or correct such untrue statement or omission and
otherwise to cause such Registration Statement and prospectus to remain current
and useable for the purposes intended hereunder.
(v) Make available for inspection by the Investor's designated
representatives upon request from time to time, all documents filed by the
Company with the SEC (including any documents which may be filed pursuant to the
Exchange Act), require the Company's officers and, to the extent reasonably
necessary to enable the Investor's designated representatives to conduct
reasonably appropriate due diligence with respect to each Put Notice, the
Company's employees to supply all information reasonably required by the
Investor's designated representatives in connection with the Registration
Statement, require the Company's officers and, to the extent reasonably
necessary to enable the Investor's designated representatives to conduct
reasonably appropriate due diligence, the Company's employees to meet with
representatives of the Investor's designated representatives during normal
business hours and on such basis as the Investor's designated representatives
may reasonably request, and make available to the Investor's designated
representatives, contemporaneously with the provision of such information, any
and all information about the Company provided by the Company to securities
analysts. In addition, the Company will permit Investor's designated
representatives access to the Company's premises and personnel, consultants,
agents, attorneys, accountants, customers, suppliers, bankers and others who
have significant relationships or agreements with the Company and the Company's
assets, books and records and the Company will provide Investor's designated
representatives with information (financial and otherwise) concerning the
Company to enable the Investor's designated representatives to conduct
reasonably appropriate ongoing due diligence review of the Company. The Company
will disseminate to the Investor's designated representatives all press releases
and public information disseminated by the Company at the same time it
disseminates such releases and information to others.
As a condition to the Company's obligations under this subparagraph (v),
Investor's designated representatives shall enter into a confidentiality
agreement with the Company in form and substance reasonably satisfactory to the
Company.
(vi) Except as required, in the opinion of the Company's counsel,
by law or consented to in advance by the Investor (which consent shall not be
unreasonably withheld), refrain from using the name of the Investor in the
Registration Statement or other regulatory filings.
(d) (i) The Company shall indemnify, defend and hold harmless
the Investor and Warrant Holders and each of their respective officers,
directors, partners, employees, agents and counsel and each person, if any, who
control any such person within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act
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(each, an "INDEMNIFIED PARTY") from and against, and shall reimburse the
Indemnified Parties with respect to, any and all claims, suits, demands,
causes of action, losses, damages, liabilities, costs or expenses
("LIABILITIES") to which such Indemnified Parties may become subject under
the Securities Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any prospectus contained therein, or (B) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however,
that the Company shall not be liable in any such case to the extent that any
such Liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by the Investor or any Warrant Holder in writing
specifically for use in the preparation thereof.
(ii) The Investor and/or the Warrant Holder, as the case may be,
shall indemnify, defend and hold harmless the Company and each of its respective
officers, directors, partners, employees, agents and counsel and each person, if
any, who control any such person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, an "INDEMNIFIED PARTY")
from and against, and shall reimburse the Indemnified Parties with respect to,
any and all Liabilities to which such Indemnified Parties may become subject
under the Securities Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or any prospectus contained therein, or (B) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent and only to the extent that any such Liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by the Investor or the
Warrant Holder, as the case may be, in writing specifically for use in the
preparation thereof.
(iii) Promptly after receipt by the an Indemnified Party of
notice of the commencement of any action, the Indemnified Party shall, if a
claim in respect thereof is to be made against the other party (the
"Indemnifying Party") hereunder, notify the Indemnifying Party in writing
thereof, but the omission so to notify the Indemnifying Party shall not relieve
the Indemnifying Party from any Liability which it may have to any Indemnified
Party other than under this section and shall only relieve it from any Liability
which it may have to the Indemnified Party under this section if and to the
extent the Indemnifying Party is materially prejudiced by such omission. In
case any such action shall be brought against an Indemnified Party and the
Indemnified Party shall notify the Indemnifying Party of the commencement
thereof, the Indemnifying Party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to the Indemnified Parties and, after notice from the
Indemnifying Party to the Indemnified Parties of its election so to assume and
undertake the defense thereof, the Indemnifying Party shall not be liable to the
Indemnified Parties under this section for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that if the defendants in any such action include both the
Indemnifying Party and an Indemnified Party and the Indemnified Party shall have
reasonably concluded that there may be reasonable defenses available to it which
are different from or additional to those available to the Indemnifying Party
if the interests of an Indemnified Party reasonably may be deemed to conflict
with the interests of the Indemnifying Party, the Indemnified Parties, shall
have the right to select a separate counsel and to assume such legal defenses
and otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the Indemnifying Party as incurred. If the
Investor is a defendant in such action, the Investor shall select such separate
counsel to represent the Investor and all Indemnified Parties; however, if the
Investor is not a defendant, such separate counsel shall be selected by the
majority of the Indemnified Parties named as defendants. The legal fees and
expenses of any Indemnified Party choosing not to be represented by such
separate counsel selected by the Investor or the majority of the Indemnified
Parties , as the case may be, shall be borne by such Indemnified Party.
(e) If the indemnification provided for in Section 1.5(c) above is
unavailable to an Indemnified Party in respect of any Liabilities, then the
Indemnifying Party, in lieu of indemnifying the Indemnified Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Liabilities, such proportion of such Liabilities as is appropriate to
reflect the relative fault of the Indemnifying Party and of the Indemnified
Party in connection with such statements or omissions described in Section
1.5(d)(i) or (ii) above, as well as any other relevant equitable considerations.
The relative fault of the Indemnifying Party and of the Indemnified Party shall
be
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determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Indemnifying
Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. "Liabilities" pursuant to this Section 1.5(e) and
Section 1.5(d) shall be deemed to include without limitation any legal or
other expenses reasonably incurred by the Indemnified Parties in connection
with investigating or defending any action or claim by a third party and in
connection with any enforcement of this Section 1.5(e) and Section 1.5(d).
(f) (i) All legal, accounting and other fees, costs and expenses of
and incidental to the Registration Statement (including without limitation the
fees, costs and expenses of the designated representatives as provided in
Section 1.5(c)(v) and the fees, costs and expenses of the Investor's counsel)
shall be borne by the Company (other than such fees, costs and expenses as are
in the nature of commissions incurred in connection with the sale of Shares by
the Investor or any Warrant Holder).
(ii) The fees, costs and expenses or registration to be borne by
the Company as provided in this subsection (e) shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company and all legal fees and
disbursements and other expenses of complying with state securities or "Blue
Sky" laws of any jurisdiction or jurisdictions in which securities to be offered
are to be registered and qualified.
Section 1.6 Distributions. In the event the Company delivers a Put
Notice, the Company shall not make any distributions to its shareholders
(including without limitation any rights to purchase securities or properties)
from the beginning of the Look Back Period to the Closing.
Section 1.7 Delisting and Registration Statement Suspension. If within
30 days after a Closing the Common Stock is delisted from the Principal Market
or the Common Stock is not registered under the Exchange Act, the Investor shall
have the right, at its option in its sole discretion, which right shall be
exercised within 30 days of such delisting or deregistration, to sell to the
Company, and the Company agrees to buy, promptly upon the exercise of such right
by Investor, all or any part of the Shares purchased by the Investor at such
Closing at a price equal to the purchase price therefor. In addition if at any
time during the Registration Period the Registration Statement is not effective
for a 30-day period or if the Investor and/or the Warrant Holders are not
otherwise able to sell their Shares pursuant to the Registration Statement for a
30-day period, then the Investor and/or the Warrant Holder, as the case may be,
shall have the right, at their option in their sole discretion, which right
shall be exercised within 90 days after such 30-day period, to sell to the
Company, and the Company agrees to buy, promptly upon the exercise of such
right, all or any part of the Shares then held by the Investor and/or the
Warrant Holder, as the case may be and/or the Warrants held by the Warrant
Holder at a price equal to the average closing sales prices for the Common Stock
on the Principal Market and as noted by Bloomberg (or other appropriate
published source) for the ten trading days prior to the exercise of such right
(less any applicable exercise price for unexercised Warrants).
Section 1.8 Right to Verify Information. The Investor shall have the
right, at the Company's expense, on a quarterly basis to have an accounting firm
selected by the Investor verify such financial and numeric information
concerning the Company as the Investor may reasonably request, including without
limitation any such information which is included in and/or incorporated by
reference in the Registration Statement. The Company shall give such accounting
firm full access to its officers, directors, personnel and records and to such
other parties as the accounting firm may reasonably request. Such verification
shall be conducted during the Company's normal business hours and upon
reasonable notice, and may not be conducted more than once during any calendar
quarter during the term of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. The Company
makes the following representations and warranties to the Investor as of the
date hereof and as of each Closing Date:
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(a) Organization and Qualification. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Nevada and has the requisite corporate power to own its properties and to carry
on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary and where
the failure to so qualify would have a Material Adverse Effect. "MATERIAL
ADVERSE EFFECT" means any adverse effect on the operations, properties,
prospects or financial condition of the Company and its subsidiaries which is
material to the Company and its subsidiaries taken as a whole.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue all Shares and Warrants in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the Warrants by the Company and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholder is
required. This Agreement has been and the Warrants will be duly executed and
delivered by the Company. This Agreement constitutes and the Warrants will
constitute a valid and binding obligation of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(c) Capitalization. As of January __, 1998 the authorized capital
stock of the Company and the shares thereof currently issued and outstanding
(and shares subject to issuance upon outstanding options, warrants and/or
convertible securities) are as follows: _____________________________________
____________________. All of the outstanding shares of Common Stock have been
validly issued and are fully paid and non-assessable.
(d) Issuance of Shares. The issuance of all Shares and Warrants to
be issued hereunder has been duly authorized and all such Shares, when paid for
and issued in accordance with the terms hereof and the Warrants, shall be
validly issued, fully paid and non-assessable. The Company has authorized and
reserved for issuance the requisite number of shares of Common Stock to be
issued pursuant to the Warrants.
(e) Agreements. There has been no breach or default by the Company
or by any other party thereto of any provisions of any material agreements to
which the Company is a party which would result in a Material Adverse Effect,
and nothing has occurred which, with lapse of time or the giving of notice of
both, would constitute such a breach or default by the Company by any other
party thereto.
(f) Brokers. The Investor shall not be responsible for any fees of
any broker, finder, commission agent or other person employed by the Company in
connection with this Agreement and the transactions contemplated hereby.
(g) No Conflicts. The execution, delivery and performance of this
Agreement and the Warrants by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not (i) result
in a violation of the Company's charter documents or by-laws or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or result in a violation of any
Federal, state, local or foreign law, rule, regulation, order, judgment or
decree (including Federal and state securities laws and regulations) applicable
to the Company, or by which any property or asset of the Company is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). The business of the Company is not
being conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations which either singly or in the
aggregate do not have a Material Adverse Effect. The Company is not required
under law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell any shares in accordance with the terms hereof
(other than the filing and effectiveness of the Registration Statement and
compliance with applicable state securities or "Blue Sky" laws).
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(h) SEC Documents, Financial Statements. Upon the effectiveness of
the Registration Statement and at all times thereafter the Common Stock will be
registered pursuant to Section 12(g) of the Exchange Act, and the Company will
timely file all reports, schedules, forms, statements and other documents,
together with all exhibits, financial statements and schedules thereto, required
to be filed by it with the SEC pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or 15(d) (all
of the foregoing, including materials hereafter filed with the SEC, and the
Registration Statement, when declared effective, being hereinafter referred to
herein as the "SEC DOCUMENTS"). As of their respective dates, the SEC Documents
will comply in all material respects with the requirements of the Exchange Act
or the Securities Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder and other Federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. As of the date of delivery by the Investor and/or a holder of
Warrant Shares of the prospectus contained in the Registration Statement in
connection with sales of Shares by the Investor and/or holder of Warrant Shares,
such prospectus will comply in all material respects with the requirements of
the Securities Act and the rules and regulations of the SEC promulgated
thereunder, and other Federal, state and local laws, rules and regulations
applicable to such prospectus. The financial statements of the Company included
in the SEC Documents will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements will have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except (x) as may be otherwise indicated in such financial statements
or the notes thereto or (y) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary statements)
and will fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(i) The SEC has not issued an order preventing or suspending the use
of any prospectus relating to the offering of any Shares nor instituted
proceedings for that purpose.
(j) No Material Adverse Change. No Material Adverse Effect has
occurred since the date of this Agreement or exists with respect to the Company.
(j) No Undisclosed Events or Circumstances. No material event or
circumstance has occurred or exists with respect to the Company or its business,
properties, prospects, operations or financial condition, which would be
required to be disclosed by the Company under the Exchange Act or other
applicable law but which has not been so publicly announced or disclosed.
Section 2.2 Representations and Warranties of the Investor. The
Investor makes the following representations and warranties to the Company as of
the date hereof and as of each Closing Date (or such later date as the Investor
makes the deliveries referred to in Section 3.1(d)):
(a) Authorization; Enforcement. The Investor is duly organized and
validly existing under the laws of Delaware. The Investor has the requisite
power and authority to enter into and perform this Agreement and to purchase the
Shares to be sold hereunder. The execution and delivery of this Agreement by
the Investor and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate or other action, and no
further consent or authorization of the Investor is required. This Agreement
has been duly authorized, executed and delivered by the Investor. This
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(b) No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by the Investor of the transactions contemplated
hereby or relating hereto do not and will not (i) result in a violation of the
Investor's charter documents or (ii) conflict with, or constitute a default (or
an event which with notice of lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Investor is
a party, or result in
8
a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Investor or any of its
properties (except for such conflicts, defaults and violations as would not
individually or in the aggregate have a material adverse effect on the
Investor or a Material Adverse Effect on the Company or the transactions
contemplated hereunder). The Investor is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under this Agreement or purchase securities in accordance
with the terms hereof.
(c) Opportunity for Review. The Investor has been afforded, to the
satisfaction of the Investor, the opportunity to review the SEC Documents and
obtain such additional information concerning the Company and its business, and
to ask such questions and receive such answers, as the Investor deems necessary
to make an informed investment decision and to evaluate the merits and risks of
an investment in shares of Common Stock and the Warrants.
(d) Investment Representation. The Investor is an "accredited
investor" as that term is defined by the Securities Act. The Investor is
purchasing the shares of Common Stock and the Warrants for its own account.
The Investor has no present intention to sell any such securities (or shares
of Common Stock issuable upon exercise of the Warrants) except in compliance
with the Securities Act, and the Investor has no present arrangement (whether
or not legally binding) at any time to sell any such securities (or shares of
Common Stock issuable upon exercise of the Warrants) to or through any person
or entity except in compliance with the Securities Act.
ARTICLE 3
COVENANTS
Section 3.1 Securities Compliance.
(a) The Company shall notify the SEC and the Principal Market and any
other applicable market in accordance with their requirements, if any, of the
transactions contemplated by this Agreement and shall take all other necessary
action and proceedings as may be required by applicable law, rule and regulation
for the legal and valid issuance of all securities to be issued to the Investor
hereunder.
(b) The Company will cause its Common Stock to continue to be
registered under Section 12 of the Exchange Act, will comply in all material
respects with its reporting and filing obligations under said act, will comply
in all material respects with its reporting and filing obligations under said
act, will comply with all requirements related to the Registration Statement,
and will not take any action or file any document (whether or not permitted by
said Act or the rules thereunder) to terminate or suspend such Registration
Statement or to terminate or suspend its reporting and filing obligations under
the Exchange Act, expect as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the
Principal Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Principal Market.
Section 3.2 Preliminary Put Notice. The Company shall deliver to the
Investor, at least ten calendar days prior to the delivery of each Put Notice, a
Preliminary Put Notice which notice shall state that the Company is considering
delivery of a Put Notice to the Investor ten or more calendar days following
delivery of the Preliminary Put Notice. In no event shall delivery of a
Preliminary Put Notice to the Investor obligate the Company to deliver any Put
Notice to the Investor.
ARTICLE 4
CONDITIONS
Section 4.1 Conditions Precedent to the Obligation of the Company to
Issue Warrants and Sell Shares. The obligation hereunder of the Company to
issue Warrants and/or sell shares of Common Stock hereunder to the Investor is
further subject to the satisfaction at or before each Closing of each of the
following conditions set forth
9
below. These conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
(a) Accuracy of the Investor Representations and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made and as of the date of each Closing
Date as though made at that time.
(b) Performance by the Investor. The Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
Section 4.2 Conditions Precedent to the Obligation of the Investor to
Purchase any Shares. The obligation of the Investor to purchase any Shares
under this Agreement is subject to the satisfaction, at or before each Closing,
of each of the following conditions set forth below. These conditions are for
the Investor's sole benefit and may be waived by the Investor at any time in its
sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of each Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date or refer to a particular point in time).
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to such Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) No Adverse Change. There shall have been no adverse change in
the business, assets, liabilities or prospects of the Company since the date of
this Agreement which the Investor reasonably believes would have a Material
Adverse Effect.
(e) Principal Market. Trading in the Company's Common Stock shall
not have been suspended by the SEC or the Principal Market, and trading in
securities generally as reported by the Principal Market shall not have been
suspended or limited or minimum prices shall not have been established on
securities whose trades are reported by the Principal Market.
(f) Opinion of Counsel, Etc. At each Closing the Investor shall have
received an opinion of Looper, Reed, Xxxx and XxXxxx, counsel to the Company,
dated the effective date of such Closing concerning such matters as the Investor
shall reasonably require, and such other certificates, opinions of other
counsel, and documents as the Investor or its counsel shall reasonably require
incident to such Closing.
(g) Effectiveness of Registration Statement. The Registration
Statement shall be effective at the time of each Closing and no stop order
suspending the effectiveness of the Registration Statement shall have been
instituted or shall be pending.
(h) Accuracy of Registration Statement. The Registration Statement
(including information or documents incorporated by reference therein) and any
amendments or supplements thereto shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
10
(i) Officer's Certificate. At each Closing the Investor shall have
received a certificate(s) from the CEO and/or CFO of the Company concerning such
matters as the Investor shall reasonably require incident to such Closing.
(j) The Investor shall be satisfied with the verifications
theretofore provided by the accounting firm selected by the Investor in
accordance with Section 1.8 hereof.
(k) The Company shall no longer have pre-emptive rights with respect
to its Common Stock.
ARTICLE 5
TERMINATION
Section 5.1 Optional Termination. This Agreement may be terminated at
any time by the mutual consent of the Company and the Investor, or at any time
upon written notice delivered to the Investor by the Company, provided that the
provisions of Article 6 and the representations, warranties and covenants
contained in this Agreement shall survive its termination for four years or the
period of any applicable statute of limitations, if longer.
Section 5.2 Automatic Termination. This Agreement shall automatically
terminate without any further action of either party hereto when (a) the
Investor has invested an aggregate of $7,000,000 in the Common Stock pursuant to
this Agreement, provided that the provisions of Article 6 and the
representations, warranties and covenants contained in this Agreement shall
survive its termination for four years or the period of any applicable statute
of limitations, if longer.
Section 5.3 Change in Control. From and after the date hereof, at the
Investor's election upon any Change of Control (as defined below) the Company
shall no longer have the right to deliver any Put Notice to the Investor. A
"CHANGE OF CONTROL" shall mean any transaction or series of transactions which
results in any person or affiliated group of persons gaining control of 50% or
more of the voting stock of the Company or the right to elect 50% or more of the
Company's Board of Directors.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Fees and Expenses. The Company shall pay the fees and
expenses of the Investor incident to the negotiation, preparation, execution and
delivery of this Agreement. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of any Shares issued pursuant
hereto.
Section 6.2 Specific Enforcement; Consent to Jurisdiction.
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) Each of the Company and the Investor (i) hereby irrevocably
submits to the exclusive jurisdiction of the Federal and state courts in Los
Angeles County, California for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that the suit, action
or proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Investor consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect
or limit
11
any right to serve process in any other manner permitted by law. The
prevailing party in any such suit, action or proceeding shall be entitled to
attorney's fees and costs.
Section 6.3 Entire Agreement; Amendments. This Agreement contains the
entire understanding of the parties with respect to the transactions
contemplated hereby and, except as specifically set forth herein, neither the
Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by a written instrument signed by the party against
whom enforcement of any such amendment or waiver is sought.
Section 6.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective upon
hand delivery or delivery by facsimile at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received). The addresses for such communications shall be:
to the Company: Computerized Thermal Imaging, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
with copies to: Xxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx, #000
Xxxxxxxxx Xxxxx, XX 00000
Facsimile No. (000) 000-0000
to the Investor: Bristol Asset Management LLC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Facsimile No. (000) 000-0000
with copies to: Christensen, Miller, Fink, Jacobs,
Xxxxxx, Weil & Xxxxxxx, LLP
2121 Avenue of the Stars, l8th fl.
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No. (000) 000-0000
Either party hereto may from time to time change its address for notices
under this Section 6.4 by giving written notice of such changed address to
the other party hereto.
Section 6.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission
of either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter. The parties hereto
waive any and all rights to a jury trial in connection with any action or
proceeding arising under this Agreement or the transactions contemplated
hereby.
Section 6.6 Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit
or affect any of the provisions hereof.
Section 6.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their permitted successors
and permitted assigns. The parties hereto may amend this Agreement without
notice to or the consent of any third party. Neither the Company nor the
Investor shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other (which consent may be withheld
12
for any reason in the sole discretion of the party from whom consent is
sought); provided, however, that the Company may assign its rights and
obligations hereunder as a result of any merger or to any acquirer of
substantially all of the assets of the Company.
Section 6.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provisions
hereof be enforced by, any other person.
Section 6.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
California, without regard to the principles of conflict of laws.
Section 6.10 Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event any signature is delivered by
facsimile transmission, the party using such means of delivery shall cause
two additional executed signature pages to be physically delivered to the
other party within five days of the execution and delivery hereof.
Section 6.11 Publicity and Confidentiality. The Company and the
Investor shall consult and cooperate with each other in issuing any press
releases or otherwise making public statements with respect to the
transactions contemplated hereby, provided the foregoing shall not interfere
with the legal obligations of either party with respect to public disclosure.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
"The Company"
Computerized Thermal Imaging, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Name:
Title:
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name:
Title: Secretary
"The Investor"
Bristol Asset Management LLC
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: President/Founding Member
13
EXHIBIT A
Computerized Thermal Imaging, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
--------------------, -----
Bristol Asset Management LLC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Gentlemen:
Reference is made to that certain Investment Agreement (the
"Agreement") dated as of January __, 1998 between you and the undersigned.
This is a Put Notice as that term is defined in Section 1.2 of the Agreement.
This is to advise you that the undersigned intends to sell to you
five business days (as that term is defined in the Agreement) following the
date this Put Notice is given to you in accordance with Section 6.4 of the
Agreement $______________ of the undersigned's Common Stock.
Very truly yours,
COMPUTERIZED THERMAL IMAGING, INC.
By
-----------------------------
14