EXHIBIT 1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of June
26, 1998 is by and among ASD GROUP, INC., a Delaware corporation (the
"Company"); the parties listed on SCHEDULE 1 to this Agreement (individually, a
"Purchaser" and collectively, the "Purchasers"); and XXXX X. XXXXX ("Xxxxx").
R E C I T A L S:
A. The Company is effecting a financial restructuring (the
"Restructuring"). In connection therewith, the Company desires to sell shares of
the Company's Series A Convertible Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), Series B Convertible Preferred Stock, par
value $.01 per share (the "Series B Preferred Stock") and Common Stock, par
value $.01 per share (the "Common Stock," and together with the Series A
Preferred Stock and Series B Preferred Stock, the "Shares"), to the Purchasers
pursuant to this Agreement on the terms and conditions set forth herein.
B. The Purchasers desire to purchase Shares pursuant to this Agreement
on the terms and subject to the conditions set forth herein.
C. Automated Systems Developers, Inc., a New York corporation ("ASD"),
and High Technology Computers, Inc., a New York corporation ("HTC"), are both
wholly owned subsidiaries of the Company. Unless the context otherwise requires,
all references to the Company include the Company, ASD and HTC.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:
1. PURCHASE OF SHARES. The Company hereby sells, conveys and transfers
to the Purchasers and the Purchasers hereby purchase from the Company the number
of shares of Series A Preferred Stock, Series B Preferred Stock and/or Common
Stock set forth beside their respective names on Schedule I hereto at the prices
described on Schedule 1. The terms of the Series A Preferred Stock and Series B
Preferred Stock are as set forth in the Certificates of Designations,
Preferences, Rights and Limitations (the "Certificates of Designation"), the
forms of Certificates of Designation are attached as Exhibit A hereto. The
purchase price for the Series A Preferred Stock, the Series B Preferred Stock
and the Common Stock (the "Purchase Price") is as set forth on Schedule I
hereof.
2. CLOSING. Subject to the terms of this Agreement, an initial closing
shall occur simultaneously with the execution of this Agreement, at the offices
of Xxxx & Xxxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at which
time the Purchasers will purchase $1,500,000 in Shares (the "Initial Closing").
A subsequent closing shall occur 30 days after the Initial Closing at such
location as shall be mutually agreed upon between the parties, at which time the
Purchasers will purchase an additional $400,000 in Shares (the "Second
Closing" and, with the Initial Closing, the "Closings"). Notwithstanding
anything contained herein to the contrary, if the Second Closing does not occur
30 days after the Initial Closing, the purchase price for the additional
$400,000 in Shares shall increase by 10%.
3. DELIVERIES BY THE PARTIES. At the Closing:
(a) DELIVERIES BY THE COMPANY: The Company will deliver the
following documents in form and substance reasonably acceptable to counsel for
the Purchasers;
(i) Certificates evidencing the Shares;
(ii) Good Standing Certificate for the Company and
each of its subsidiaries issued by the Secretary of State of their
respective jurisdictions of incorporation;
(iii) Certified copy of resolutions of the Board of
Directors authorizing, among other things, the execution and delivery
of this Agreement, consummation of the transactions contemplated hereby
and the Restructuring;
(iv) Legal opinion of Broad and Xxxxxx, counsel to
the Company, in form and substance reasonably satisfactory to the
Purchaser and Purchaser's counsel;
(v) Executed copies of the following additional
documents to be entered into in connection with the Restructuring
(collectively, the "Restructuring Documents"):
(A) Option and Forbearance Agreement (the
"Option") between the Company and Bankers Trust Company
("BT");
(B) Amendments to Employment Agreements
between the Company and each of Xxxxx and Xxxxxxx X. Xxx
("Xxx");
(C) Agreements of Horne, Zuk, Xxxxxxx Xxxxx
and Xxxxxx X. Xxxxx Turcot to vote in favor of the
Restructuring;
(D) Financial Consulting Agreement (the
"Catalyst Agreement") between the Company and Catalyst
Financial Corp. ("Catalyst");
(E) Warrant to be issued to Catalyst and/or
its assigns pursuant to the Catalyst Agreement (the Catalyst
Warrant");
(F) Letter Agreement between the Company and
a group of investors restructuring the Company's debt to such
investor group (the "Xxxxxx Agreement");
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(G) Certificate of Designation, Preferences,
Rights and Limitations of Series C Convertible Preferred Stock
(the "Series C Preferred Stock") to be issued pursuant to the
Xxxxxx Agreement;
(H) Warrants to be issued pursuant to the
Xxxxxx Agreement (the "Xxxxxx Warrants");
(I) Letter Agreement with a group of
investors modifying the terms of their existing warrants (the
"BlueStone Agreement");
(J) Warrants to be issued pursuant to the
BlueStone Agreement (the "BlueStone Warrants");
(K) Letter Agreement (the "Xxxxxx
Agreement") with X.X. Xxxxxx & Co., Inc. ("Xxxxxx");
(L) Warrant to be issued pursuant to the
Xxxxxx Agreement (the "Xxxxxx Warrant");
(M) Warrant to be issued to Cameron
Worldwide Ltd. (the "Cameron Warrant");
(N) Warrant to be issued to Xxxxx Xxxxxxxxx
(the "Zachariou Warrant");
(O) Forbearance Agreement (the "PNC
Agreement") with PNC Bank, National Association ("PNC"); and
(P) Warrant to be issued to PNC pursuant to
the PNC Agreement (the "PNC Warrant")
(vi) Disbursement Authorization Letter; and
(vii) Such other documents as shall be reasonably
requested by the Purchasers and their counsel.
(b) DELIVERIES BY THE PURCHASERS: The Purchasers will deliver
to the Company the following:
(i) Payment by wire transfer, of the Purchase Price;
(ii) Disbursement Authorization Letter; and
(iii) Such other documents as shall be reasonably
requested by the Company and its counsel.
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4. USE OF PROCEEDS. The Company agrees that the net proceeds to the
Company from the sale of the Shares hereunder will be used to pay the following:
$110,000.00 to the Xxxxxx Group pursuant to the Xxxxxx Agreement; $250,000 to BT
pursuant to the Option; $121,282.26 to Catalyst pursuant to the Catalyst
Agreement; $25,000 to Xxxxxx pursuant to the Xxxxxx Agreement; $65,000 to Broad
and Xxxxxx for the Company's legal fees; $35,000.00 to Xxxx and Xxxxxxxx for the
Purchasers' legal fees; and $7,500 to PNC pursuant to the PNC Agreement. The
balance of such net proceeds will generally be used to pay other expenses of the
Reorganization and as described on SCHEDULE 3 attached hereto, subject to Board
approval and right to modify. However, the attached Schedule represents the
Company's estimate of the allocation of the net proceeds based upon the current
status of its operations and anticipated business needs. It is possible,
however, that the application of funds will differ considerably from the
estimates set forth herein due to changes in the economic climate and/or the
Company's business operations or unanticipated complications, delays and
expenses.
5. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser, severally and not
jointly, acknowledges, represents and warrants as of each Closing Date:
(a) RECEIPT OF CORPORATE INFORMATION. All requested documents,
records and books pertaining to the Company and the offer and sale hereby of the
Shares and the Common Stock into which the Series A Preferred Stock and Series B
Preferred Stock are convertible (the "Conversion Shares" and, together with the
Shares, the "Securities"), including, without limitation, the Restructuring
Documents and the Company's Annual Report on Form 10-KSB for the year ended June
30, 1997, as amended (the "Form 10-KSB"), and Quarterly Reports on Form 10-QSB
for the quarters ended September 30, 1997, December 31, 1997 and March 31, 1998,
as amended (the "Form 10-QSBs"; the Form 10-KSB and the Form 10-QSBs are
collectively referred to herein as the "SEC Documents"), have been delivered to
the Purchaser and/or the Purchaser's advisors, and all of the Purchaser's
questions and requests for information have been answered to the Purchaser's
satisfaction. Moreover, over the course of the several weeks leading up to the
consummation of this transaction, the Purchaser has received additional
information regarding the Company's financial situation and, particularly, the
existing defaults on lines of credit, lack of cash flow to meet current
obligations without infusion of capital which may result in the Company being
characterized as insolvent and the terms of the Restructuring.
(b) RISKS. The Purchaser acknowledges and understands that the
purchase of the Securities involves a high degree of risk and is suitable only
for persons of adequate financial means who have no need for liquidity in this
investment in that (i) the Purchaser may not be able to liquidate the investment
in the event of an emergency; (ii) transferability is extremely limited; and
(iii) in the event of a disposition, the Purchaser could sustain a complete loss
of its entire investment. The Purchaser is sufficiently experienced in financial
and business matters to be capable of evaluating the merits and risks of an
investment in the Company; has evaluated such merits and risks, including risks
particular to the Purchaser's situation; and the Purchaser has determined that
this investment is suitable for the Purchaser.
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The Purchaser has adequate financial resources and can bear a complete loss of
the Purchaser's investment.
(c) ACCREDITED INVESTOR STATUS. The Purchaser is an
"accredited investor" as defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
(d) INVESTMENT INTENT. The Purchaser hereby represents that
the Securities being purchased hereunder are being acquired for the Purchaser's
own account with no intention of distributing such securities to others. The
Purchaser has no contract, undertaking, agreement or arrangement with any person
to sell, transfer or otherwise distribute to any person or to have any person
sell, transfer or otherwise distribute for the Purchaser the Securities being
purchased hereunder or any interest therein. The Purchaser is presently not
engaged, nor does the Purchaser plan to engage within the presently foreseeable
future, in any discussion with any person regarding such a sale, transfer or
other distribution of the securities being purchased hereunder or any interest
therein.
(e) COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. The
Purchaser understands that the Securities being offered and sold hereunder have
not been registered under the Securities Act. The Purchaser understands that the
Securities being offered and sold hereunder must be held indefinitely unless the
sale or other transfer thereof is subsequently registered under the Securities
Act or an exemption from such registration is available. Moreover, the Purchaser
understands that its right to transfer the Securities being purchased hereunder
will be subject to certain restrictions, which include restrictions against
transfer under the Securities Act and applicable state securities laws. In
addition to such restrictions, the Purchaser realizes that it may not be able to
sell or dispose of the Securities being purchased hereunder, as there may be no
public or other market for them. The Purchaser understands that certificates
evidencing the Securities being purchased hereunder shall bear a legend
substantially as follows:
The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or any applicable state law. They may not be
offered for sale, sold, transferred or pledged
without (1) registration under the Securities Act of
1933, as amended, and any applicable state law, or
(2) an opinion (reasonably satisfactory to the
Company) of counsel that registration is not
required.
(f) AUTHORITY; ENFORCEABILITY. The Purchaser has the full
right, power, and authority (corporate or otherwise) to execute and deliver this
Agreement and perform its obligations hereunder.
(g) NONCONTRAVENTION. This Agreement constitutes a valid and
legally binding obligation of the Purchaser and neither the execution of this
Agreement, nor the consummation of the transactions contemplated hereby, will
constitute a violation of or default
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under, or conflict with, any judgment, decree, statute or regulation of any
governmental authority applicable to the Purchaser or any contract, commitment,
agreement or restriction of any kind to which the Purchaser is a party or by
which its assets are bound. The execution and delivery of this Agreement does
not, and the consummation of the transactions described herein will not, violate
applicable law, or any mortgage, lien, agreement, indenture, lease or
understanding (whether oral or written) of any kind outstanding relative to the
Purchaser.
(h) APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery of this Agreement by the Purchaser or the
consummation of the transactions described herein.
(i) CONSULTANT'S COMPENSATION. The Purchaser acknowledges that
Catalyst will receive, as compensation for its having acted as financial advisor
to the Purchasers, (i) a fee of $110,500; (ii) $5,782.26 for reimbursement of
expenses; (iii) $5,000 for financial consulting services for one month; and (iv)
the Catalyst Warrants to purchase 141,360 shares of the Company's Common Stock,
at a price of $.27 per share.
(j) CONCURRENT ISSUANCES OF SECURITIES. The Purchaser
acknowledges that, with the purchase of the Shares contemplated hereby, the
Company will also be issuing the Series C Preferred Stock, the Catalyst
Warrants, the Xxxxxx Warrants, the BlueStone Warrants, the Xxxxxx Warrants, the
PNC Warrant, the Cameron Warrant and the Zachariou Warrant in connection with
the Restructuring (collectively, the "Restructuring Securities"). Moreover, the
Company may from time to time raise additional capital, which may include, but
not be limited to, subsequent offers and sales by the Company ("Subsequent
Sales") of additional shares of Preferred Stock with the same or different
terms. Nothing herein shall prohibit the Company from effecting the Subsequent
Sales; provided, however, that such shares shall rank junior to the Series A
Preferred Stock and the Series B Preferred Stock with respect to payment of
dividends and liquidation rights, unless otherwise consented to by the holders
of such shares of Preferred Stock as provided in the Certificates of
Designation. Until the Series A Preferred Stock and the Series B Preferred Stock
become convertible, the Company agrees to afford the Purchasers a right of first
refusal with respect to any future sales of Common Stock or Preferred Stock by
the Company (other than pursuant to outstanding options and warrants or under
the Company's employee benefit plans).
(k) RESTRICTIONS ON CONVERSION. The Purchaser acknowledges
that the Series A Preferred Stock and the Series B Preferred Stock will not be
convertible into Common Stock until such time as the Company obtains stockholder
approval of (a) the Restructuring in accordance with Rule 4310(c)(H) of the
Rules of The National Association of Securities Dealers, Inc., and (b) an
amendment to the Company's Certificate of Incorporation increasing the
authorized number of shares of Common Stock (the "Capital Amendment"), at which
time the Series A Preferred Stock and the Series B Preferred Stock will
automatically convert into shares of Common Stock.
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6. REPRESENTATIONS OF THE COMPANY. The Company acknowledges, represents
and warrants that except as set forth in the SEC Documents or as disclosed on
the Schedules hereto:
(a) CORPORATE ORGANIZATION. Each of the Company, HTC and ASD
is duly organized, validly existing and in good standing under the laws of the
state of its incorporation, and has full corporate power, authority and legal
right to own its properties and to conduct the businesses in which it is now
engaged. The Company is duly licensed or qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction where the
ownership or lease of its assets or the operation of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, operations, property or financial or
other condition of the Company (a "Material Adverse Effect"). The Company owns
100% of the issued and outstanding capital stock of each of HTC and ASD.
(b) AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement, all agreements and documents
referred to herein or contemplated hereby, including, without limitation, the
Restructuring Documents (the "Ancillary Documents") and to perform all of its
covenants and agreements hereunder. The execution and delivery of this Agreement
and the Ancillary Documents by the Company, the performance by the Company of
its covenants and agreements hereunder and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action.
(c) ENFORCEABILITY. This Agreement has been duly executed and
delivered and constitutes the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms except as
such enforceability may be limited by (i) bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by the
principles governing the availability of specific performance, injunctive relief
and other equitable remedies (regardless of whether such enforceability is
considered in equity or at law), including requirements of reasonableness and
good faith in the exercise of rights and remedies thereunder; (ii) applicable
laws and court decisions which may limit or render unenforceable certain terms
and provisions contained therein, but which in our opinion do not substantially
interfere with the practical realization of the benefits thereof, except for the
economic consequences of any procedural delay which may be imposed by, relate to
or result from such laws and court decisions; and (iii) the limitations on the
enforceability of the securities indemnification provisions set forth herein by
reason of matters of public policy.
(d) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement by the Company, nor the consummation of the transactions
contemplated hereby, nor the performance by the Company of its covenants and
agreements hereunder (i) violates any provision of the Certificate of
Incorporation or Bylaws of the Company; (ii) violates any existing law, statute,
ordinance, regulation, or any order, judgment or decree of any court or
governmental agency to which the Company is a party or by which the Company or
any of its
7
assets is bound; or (iii) conflicts with or will result in any breach of any of
the terms of or constitute a default under or result in the termination of or
the creation of any lien pursuant to the terms of any indenture, mortgage, real
property lease, securities purchase agreement, credit or loan agreement or other
material agreement to which the Company is a party or by which the Company or
any of its assets is bound, to the extent such violation thereof, conflict
therewith, breach thereof, default thereunder or termination thereof has been
waived in writing or would have a Material Adverse Effect.
(e) CAPITALIZATION. The authorized capital stock of the
Company consists of (i) 1,000,000 shares of Preferred Stock, $.01 par value,
none of which are issued and outstanding, and (ii) 10,000,000 shares of Common
Stock, $.01 par value, of which 1,577,917 shares are issued and outstanding.
Such outstanding shares do not give effect to the issuance of the Shares
hereunder or the Restructuring Securities. Attached as SCHEDULE 5(E) is a list
of all outstanding options and warrants. The holders of outstanding capital
stock of the Company have no preemptive rights. The Certificate of Designation
has been approved by the Board of Directors of the Company.
(f) THE SHARES. The Shares being offered and sold pursuant to
this Agreement have been duly and validly authorized and, when issued for the
consideration herein provided, will be duly and validly issued, fully paid and
nonassessable.
(g) CONVERSION SHARES. The Conversion Shares have been duly
authorized and reserved for issuance and, when issued upon conversion of the
Series A Preferred Stock and the Series B Preferred Stock in accordance with the
terms thereof, will be duly and validly authorized and issued, fully paid and
nonassessable. Notwithstanding the foregoing, the Company does not currently
have sufficient shares of authorized but unissued Common Stock to issue all of
the shares of Common Stock required to be delivered upon conversion of the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock and exercise of all outstanding options and warrants and the other
Restructuring Securities.
(h) APPROVALS. Except as may be required under federal and
state securities laws (which have been or, in the case of compliance required on
a post-sale basis, will be complied with) and except for stockholder approval of
the Restructuring and the Capital Amendment as contemplated hereby, the
execution, delivery and performance of this Agreement by the Company does not
require the consent, waiver, approval, license or authorization of or any filing
with any person or any governmental authority. The issuance of the Shares
pursuant to this Agreement is not subject to the registration or prospectus
delivery requirements of Section 5 of the Securities Act.
(i) LEGAL PROCEEDINGS. Except as described on SCHEDULE 5(I),
there are no (i) actions, suits, claims, investigations or legal or
administrative or arbitration proceedings pending or, to the best knowledge of
the Company, threatened against or affecting the Company, whether at law or in
equity, or before or by any governmental authority; nor (ii) judgments, decrees,
injunctions or orders of any governmental authority or arbitrator against the
Company, which, in either case, could have a Material Adverse Effect.
8
(j) ASSETS. To the best of its knowledge, after due diligence,
except as described on SCHEDULE 5(J), the Company has good and marketable title
to its assets, free and clear of any mortgage, pledge, security interest,
encumbrance, charge, or other lien.
(k) SEC FILINGS, ETC. The Company has heretofore delivered to
each Purchaser correct and complete copies of the SEC Documents. The SEC
Documents were true and correct in all material respects at the time filed with
respect to the periods covered thereby; and such reports, as amended,
supplemented, or updated by subsequent filings, are true and correct as of the
date so amended, supplemented or updated in all material respects, do not
contain any misstatement of a material fact and do not omit to state a material
fact or any fact required to be stated therein or necessary to make the
statements contained therein not materially misleading with respect to the
periods covered thereby; and all amendments or supplements thereto required to
be filed under the federal securities laws have been so filed. The consolidated
financial statements of the Company included in the SEC Documents complied, when
filed, with the then-applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may have been indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form 10-QSB
promulgated by the SEC) and fairly presented (subject in the case of the
unaudited statements, to normal audit adjustments) the financial position of the
Company at the dates thereof and the consolidated results of the operations and
statement of changes in financial position for the periods then ended. The
Company has filed all documents and agreements that were required to be filed as
exhibits to the SEC Documents and all such documents and agreements when filed
were correct and complete in all material respects. Notwithstanding the
foregoing, the Company's financial situation has changed since the Company filed
the SEC Documents.
(l) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
the financial statements (the "Financial Statements") included in the SEC
Documents, or on SCHEDULE 5(L), or as incurred in the ordinary course of
business subsequent to March 31, 1998, as of the date hereof (i) the Company has
no liability of any nature (matured or unmatured, fixed or contingent) that was
not provided for or disclosed in the Financial Statements, and (ii) to the best
knowledge of the Company after due diligence, all liability reserves established
by the Company and set forth in the Financial Statements were adequate in all
material respects for the purposes indicated therein.
(m) ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The accounts
receivable and accounts payable of the Company as of June 18, 1998, attached
hereto as EXHIBIT 5(M) are (a) bona fide; (b) in accordance with the books and
records of the Company, (c) fairly, completely and accurately present the
accounts receivable and accounts payable of the Company as of such date and (d)
prepared in conformity with generally accepted accounting principals
consistently applied as of the period covered thereby.
(n) INVENTORY. The Company has previously provided or made
available to the Purchasers a list of the Company's inventory, including raw
materials and work in
9
progress. The Company's inventory is valued at $3,400,000.00 as of June 19,
1998. The inventories of the Company are in usable and saleable condition and
each item of such inventory is saleable at least at the value at which it is
carried on the books. To the best of the Company's knowledge, once completed and
converted to inventory, the Company's work in progress will be in useable and
saleable condition.
(o) MATERIAL CHANGES. Except as disclosed in or contemplated
by the SEC Documents or described on SCHEDULE 5(O) attached hereto, since March
31, 1998, there has not been any adverse material change in the assets,
liabilities, operations or financial condition of the Company.
(p) CUSTOMERS AND CONTRACTS. Except as disclosed in the SEC
Documents or described on SCHEDULE 5(P) attached hereto, to its knowledge, since
March 31, 1998, the Company has not lost any material customers and no material
contracts have been cancelled.
(q) TAXES. The Company has accurately prepared and timely
filed or has had accurately prepared and timely filed on its behalf all tax
returns which, to the knowledge of the Company, are required to be filed by it,
and has paid all taxes shown to be due and payable on said returns including but
not limited to all employment and payroll taxes or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (other than those the amount or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with generally accepted accounting principles have
been provided on the books of the Company) including but not limited to all
employment and payroll taxes; and no tax liens have been filed and, to the
knowledge of the Company, no claims are being asserted with respect to any such
taxes, fees or other charges.
(r) O.S.H.A. AND ENVIRONMENTAL COMPLIANCE. The Company has
duly complied with, and its facilities, business, assets, property, leaseholds
and equipment are in compliance in all material respects with, the provisions of
the Federal Occupational Safety and Health Act, the Environmental Protection
Act, and all other environmental laws; there have been not outstanding
citations, notices or orders of non-compliance issued to the Company or relating
to its business, assets, property, leaseholders or equipment under such laws,
rules or regulations.
The Company has been issued all required federal,
state and local licenses, certificates or permits relating to all applicable
environmental laws. There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively, referred to as "Releases") of hazardous
substances at, upon, under or within the real property owned by the Company.
There are no underground storage tanks or polychlorinated biphenyl on the real
property. To the best of the Company's knowledge, the real property has never
been used as a treatment, storage or disposal facility of hazardous waste. To
the Company's knowledge, no hazardous substances are present on the real
property or any premises leased by the Company,
10
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and governmental regulations and in proper storage
containers and as are necessary for the operation of the commercial business of
the Company.
(s) RELATED PARTY TRANSACTIONS. Except to the extent described
in the SEC Documents or as described on SCHEDULE 5(S), no current principal
stockholder or current or former director, officer or employee of the Company
nor any "affiliate" (as defined in the rules and regulations promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), of any
such person, is currently, or since March 31, 1998 has been, directly or
indirectly through his affiliation with any other person or entity, a party to
any transaction (other than as an employee, consultant or stockholder) with the
Company providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring cash payments from or to any such
person.
(t) GUARANTEES. Except with respect to the obligations of its
subsidiaries to PNC and BT, the Company is not a guarantor of any liability or
obligation (including indebtedness) of any other person.
(u) DISCLOSURE. The representations and warranties made by the
Company in this Agreement or, except to the extent modified or amended by
subsequent written disclosure to each of the Purchasers through the date hereof,
in any other document or certificate furnished in connection herewith did not
contain at the time made or, if set forth herein, does not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements herein or therein, in light of the circumstances under which
they are made, not misleading in any material respect. There is no fact known to
the Company that materially adversely affects or, other than general economic
conditions in the industry in which the Company operates, that the Company
reasonably believes will in the future materially adversely affect the business,
operations, affairs or condition, financial or otherwise, of the Company, which
has not been set forth in this Agreement, the Schedules thereto or in the SEC
Documents.
7. COVENANTS OF THE COMPANY. So long as the Purchasers hold Securities
that in the aggregate represent at least 20% of the outstanding capital stock of
the Company, the Company shall:
(a) REPORTS AND INFORMATION. Furnish to the Purchasers and
Xxxxx X. Xxxx, promptly after mailing to stockholders, copies of each Annual or
Quarterly Report to the Company's stockholders and proxy or information
statement relating to a meeting of the Company's stockholders.
(b) CORPORATE EXISTENCE. Preserve and keep in full force and
effect its corporate existence, its qualification to do business and its good
standing in every state where it is or is required to be qualified to do
business, except where the failure to be so qualified would not have a Material
Adverse Effect; provided that nothing herein shall prevent the Company or any
subsidiary of the Company from changing their state of incorporation.
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(c) LICENSES, PERMITS AND FRANCHISES. Maintain, preserve and
protect at all times all of its corporate and operational licenses, permits and
franchises, and comply with each and all of the terms, conditions and
requirements of such licenses, permits and franchises, except to the extent
management of the Company determines it is not in the best interest of the
Company to do so.
(d) PROPERTIES. Preserve all of its assets and properties that
are used in the conduct of its business and maintain and keep these assets and
properties in good repair, working order and condition, and from time to time
make or cause to be made all needed and proper repairs, renewals, replacements,
betterments and improvements to these assets and properties to preserve and
maintain their value (including, but not limited to, by further encumbrance of
the assets or properties), normal wear and tear excepted, so that the business
carried on in connection with these assets and properties may be properly
conducted at all times, except to the extent management of the Company
determines it is not in the best interest of the Company to do so.
(e) BOOKS AND RECORDS. Keep at all times complete books of
record and accounts, in conformity with generally accepted accounting principles
as revised from time to time, with full, true and correct entries of all
dealings and transactions in relation to the Company's business and affairs, and
reasonably protect such books and accounts against loss or damage.
(f) STATUTORY COMPLIANCE. At all times, conduct its business
in accordance with, and comply in all material respects with, all applicable
statutes, regulations, judgments, decrees, resolutions and orders of, and all
applicable restrictions imposed by, any and all governmental entities and/or
authorities, federal, state, local and non-U.S., judicial or administrative,
applicable to the conduct of the Company's businesses and activities (including
environmental and other regulatory requirements) or the ownership or operation
of its properties, licenses, permits and/or franchises, particularly those
pertaining to the business it currently operates.
(g) CONDUCT OF BUSINESS. Carry on its business and activities
diligently and consistent with prudent business practice for a company of the
size and character of the Company and will use its best efforts to preserve its
present relationship with suppliers, customers and others having business
relationships with it, except to the extent that management of the Company
determines it is not in the best interest of the Company to do so.
(h) BOARD REPRESENTATION. Simultaneously with the Closing
Date, Xxxxxxx X. Xxx and Xxxxxxx Xxxxx will resign from their positions as
members of the Board of Directors. The remaining members of the Board of
Directors shall cause three individuals designated by the Purchasers to be
nominated for election to the Board of Directors of the Company, and shall use
their best efforts to cause the election to the Board of Directors of such
nominees, to serve until the conclusion of the next annual general meeting of
stockholders of the Company in accordance with the Bylaws of the Company. The
members of the Board of Directors shall also adopt a corporate resolution fixing
the size of the Board at six members
12
and agreeing not to increase the size until after the annual meeting of
stockholders. The Company shall pay the reasonable amount of out-of-pocket
expenses of the Purchasers' designees in attending such board or committee
meetings in accordance with its ordinary and usual policies for the
reimbursement of the expenses of non-employee directors. Notwithstanding
anything to the contrary contained in this section, a director designated by the
Purchasers shall be subject to the approval of the Company's management, which
shall not unreasonably be withheld. Promptly after first proposing a candidate,
the Purchasers shall furnish to the Company such information as may be requested
by the Company about such designee (i) that is required to be included in a
Registration Statement under the Securities Act or a Proxy Statement under the
Exchange Act and (ii) that would be required to be included in a Schedule 13D
under the Exchange Act by Item 2 thereof if filed by the candidate with respect
to ownership of the Company's securities.
(i) STOCKHOLDER APPROVAL. The Company agrees to prepare and
file, within 45 days of the date of this Agreement, a proxy statement with
respect to a meeting of stockholders to approve the terms of the Restructuring,
including, without limitation, this Agreement and the transactions contemplated
hereby and the Capital Amendment, that require stockholder approval, including
but not limited to the conversion of the Preferred Stock. The Board of Directors
will take all reasonable steps necessary to hold this meeting within 120 days of
the date of this Agreement. The Board of Directors of the Company has determined
by unanimous vote that this transaction is advisable and in the best interests
of the Company's stockholders and, to the extent consistent with their fiduciary
obligations, will recommend to the Company's stockholders the approval of this
Agreement and the transactions contemplated hereby and cause the Company to use
its best efforts to solicit from its stockholders proxies in favor of approving
this Agreement.
(j) ACCOUNTS PAYABLE. For a period of six months from the date
of this Agreement, the Company will submit to Xxxxx Xxxxxxxxx a schedule for the
payment of accounts payable. The schedule of payments of accounts payable must
be approved by Xxxxx Xxxxxxxxx, provided, however, if Xxxxx Xxxxxxxxx does not
respond to such schedule within five (5) business days of the date of receipt,
the Company can pay such accounts payable according to the schedule. In
addition, the Company shall not be required to submit for approval payments for
salaries processed through ADP and payments of less than $25,000 in the
aggregate per month.
8. PUT OPTION. Notwithstanding anything contained herein to the
contrary, in the event stockholder approval of the matters set forth in Section
6(i) is not obtained within one year of the date of this Agreement, Purchasers
shall have the option, for a period of 90 days thereafter, to require the
Company to re-purchase their shares of Series A Preferred Stock and/or Series B
Preferred Stock purchased by them at a price equivalent to the Purchase Price
plus 12% per annum (prorated over the period such shares are outstanding) by
tendering a written request thereafter to the Company accompanied by the
certificates evidencing such shares duly endorsed for transfer with medallion
signature guarantees affixed thereon.
13
9. REGISTRATION RIGHTS.
(a) REGISTRATION STATEMENT. The Company shall file with the
U.S. Securities and Exchange Commission (the "Commission") a registration
statement registering the re-sale of the Securities within 30 days of the date
of the Company's special or annual meeting of stockholders and use its best
efforts to cause such registration statement to become effective as soon as
practicable. In the event the Company has not filed such registration statement
by March 31, 1999, the Purchasers may, by written notice to the Company, demand
the registration of the resale of such Securities. Upon the written request of
the Purchasers, the Company shall use its best efforts to effect the
registration under the Securities Act of the Securities which is has been so
requested to register.
(b) PIGGY-BACK REGISTRATION RIGHTS. In addition, if at any
time during the two years from the date of this Agreement the Company shall
prepare and file one or more registration statements under the Securities Act
(other than a registration statement in Form S-4 (or with regard to any
transaction contemplated by Rule 145 promulgated under the Securities Act) or
Form S-8 or any successor form of limited purpose and other than a
post-effective amendment to any such registration statement), with respect to a
public offering of equity or debt securities of the Company, or of any such
securities of the Company held by its security holders, the Company will include
in any such registration statement such information as is required, and such
number of shares of Common Stock purchased hereunder and Conversion Shares
(collectively, the "Registrable Securities") held by the Purchasers thereof or
their respective designees or transferees as may be requested by them (the
"Holders"), to permit a public offering of the Registrable Securities so
requested; PROVIDED, HOWEVER, that if, in the written opinion of the Company's
managing underwriter, if any, for such offering, the inclusion of the
Registrable Securities requested to be registered, when added to the securities
being registered by the Company or the selling security holder(s), would exceed
the maximum amount of the Company's securities that can be marketed without
otherwise materially and adversely affecting the entire offering, then the
Company may exclude from such offering all or that portion of the Registrable
Securities requested to be so registered, so that the total number of securities
to be registered is within the maximum number of shares that, in the opinion of
the managing underwriter, may be marketed without otherwise materially and
adversely affecting the offering, provided that at least a pro rata amount of
the securities that otherwise were requested to be registered for other
stockholders is also excluded. In the event of such a requested registration,
the Company shall furnish the then Purchasers of the Registrable Securities with
not less than 20 days' written notice prior to the proposed date of filing of
such registration statement. Further notice shall be given by the Company to
Holders, with respect to subsequent registration statements or post-effective
amendments filed by the Company, at such time as all of the Registrable
Securities have been registered or may be sold without registration under the
Securities Act or applicable state securities laws and regulations pursuant to
Rule 144 of the Securities Act. The holders of the Registrable Securities shall
exercise the rights provided for in this Section 8 by giving written notice to
the Company, within ten days of receipt of the Company's notice of its intention
to file a registration statement. Notwithstanding anything contained herein to
the contrary, the Company may delay the effectiveness of such registration
statement or withdraw such registration statement;
14
PROVIDED, HOWEVER, the Company will provide the Holders with notice of such
delay or withdrawal.
(c) RULE 144. Notwithstanding anything contained herein to the
contrary, the Holders shall not be permitted to exercise the registration rights
provided for herein with respect to all such portion of the Registrable
Securities as may be sold without registration under the Securities Act or
applicable state securities laws and regulations under Rule 144 of the
Securities Act.
(d) EXPENSES. The Company shall bear all expenses, incurred in
the preparation and filing of such registration statements or post-effective
amendment (and related state registrations, to the extent permitted by
applicable law) and the furnishing of copies of the preliminary and final
prospectus thereof to the Holders, other than expenses of the Holders' counsel,
and other than sales commissions or transfer taxes incurred by the then holders
with respect to the sale of such securities.
(e) DELAY OF REGISTRATION STATEMENT. Notwithstanding the
provisions of this Section 8, if at any time during which the Company is
obligated to maintain the effectiveness of a registration statement pursuant to
such Section, counsel to the Company (which counsel shall be experienced in
securities matters) has determined in good faith that the filing of such
registration statement or the compliance by the Company with its disclosure
obligations thereunder would require the disclosure of material information
which the Company has a bona fide business purpose for preserving as
confidential, then the Company may delay the filing or the effectiveness of such
registration statement (if not then filed or effective, as appropriate) and
shall not be required to maintain the effectiveness thereof (if previously
declared effective) for a period expiring upon the earlier to occur of (i) the
date on which such information is disclosed to the public or ceases to be
material or the Company is so able to comply with its disclosure obligations, or
(i) 30 days after counsel to the Company makes such good faith determination.
There shall not be more than one such delay period with respect to any
registration statement after it has been declared effective pursuant to Section
8. Notice of any such delay period and of the termination thereof will be
promptly delivered by the Company to each Purchaser and shall be maintained in
confidence by each such Purchaser. The Purchasers shall not sell any Conversion
Shares during such period as any such registration statement is not current, as
advised by the Company, unless the sale is exempt from registration. The
Purchasers shall furnish to the Company such information regarding such
Purchaser and a written description of the contribution proposed by such
Purchaser as the Company may reasonably request.
(f) UNDERWRITERS' LOCKUP. Each Holder whose Registrable
Securities are included in a registration statement pursuant to an underwritten
public offering shall, if requested by the managing underwriter of the public
offering, enter into an agreement with the underwriter pursuant to which the
Holder will agree not to sell, transfer or otherwise dispose of the Registrable
Securities for such period after consummation of the public offering as may
reasonably be requested by the underwriter; up to a maximum of 120 days, without
the consent of the underwriter.
15
10. NOTICES. All notices, reports and other communications to the
Purchasers of the Company hereunder shall be in writing, shall refer
specifically to this Agreement and shall be hand delivered or sent by facsimile
transmission or by registered mail or certified mail, return receipt requested,
postage prepaid, in each case to the respective persons and addresses specified
below (or to such other persons or addresses as may be specified in writing to
the other party):
If to the Purchaser, to: The respective address as set forth on
SCHEDULE 1 hereto
With a copy to: Xxxx and Xxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esquire
Fax No.: (000) 000-0000
If to the Company, to: ASD Group, Inc.
0 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxx, Chief Executive Officer
Fax No.: (000) 000-0000
With a copy to: Broad and Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, P.A.
Fax No.: (000) 000-0000
Any notice or communication given in conformity with this
Section shall be deemed to be effective when received by the addressee if
delivered by hand or overnight courier and three days after mailing, if mailed.
11. MEDIATION AND ARBITRATION OF DISPUTES.
(a) MEDIATION. If a dispute arises under this Agreement and if
the dispute cannot be settled through direct discussions, the parties agree to
endeavor first to settle the dispute in an amicable manner by nonbinding
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules.
(b) ARBITRATION. Any dispute, unresolved through the mediation
process in Section 11(a), arising under this Agreement shall be submitted by the
parties to binding arbitration, with any such arbitration proceeding being
conducted in accordance with the rules of the American Arbitration Association.
Any arbitration panel presiding over any arbitration proceeding hereunder is
hereby empowered to render a decision in respect of such dispute, to award costs
and expenses (including reasonable attorney fees) as it shall deem equitable and
to
16
enter its award in any court of competent jurisdiction. Each of the parties
submits to the jurisdiction of any state or federal court sitting in New York,
New York for purposes of enforcement of any arbitration award hereunder. Each
party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other party with respect thereto.
12. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of
the Purchasers or the Company to exercise and no delay in exercising any right,
power, remedy or privilege under this Agreement or provided by statute or at law
or in equity or otherwise, including, without limitation, the right or power to
terminate this Agreement, shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a waiver of any breach
of this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
13. AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision(s) intended to be
amended, modified, waived, terminated or discharged and signed by the Purchasers
and the Company, and each amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Purchasers and the Company.
14. POWER OF ATTORNEY. Each of the Purchasers set forth on Schedule 1
constitutes and appoints Xxxxx Xxxxxxxxx as his, her or its true and lawful
attorney in fact and agent with full power of substitution for him, her or it,
and as his, her or its name, place and stead in any capacities to execute in the
name of each such person any and all documents relating to the purchase of the
Shares and grants Xxxxx Xxxxxxxxx full power and authority to do and perform
each and every act and thing required or necessary to be done as such Purchaser
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue thereof.
15. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY AND XXXXX. Subject to the
limitations contained in Section 13(d), the Company and Xxxxx, jointly and
severally, hereby agree to indemnify and hold each Purchaser and their
respective affiliates, directors, officers, employees and agents (collectively,
the "Purchaser Indemnitees") harmless from, and to reimburse each of the
Purchaser Indemnitees for, on an after-tax basis, any loss, damage, deficiency,
claim, liability, obligation, suit, action, fee, cost or expense of any nature
whatsoever (including, but not limited to, reasonable attorney's fees and costs)
(COLLECTIVELY,
17
"LOSSES") arising out of, based upon or resulting from any inaccuracy in or any
breach of any representation or warranty of the Company contained in this
Agreement to the extent such Loss exceeds the Basket (as defined below),
certificate or other written instrument or document delivered by the Company
pursuant hereto.
(b) INDEMNIFICATION BY THE PURCHASER. Each Purchaser,
severally and not jointly, hereby agrees to indemnify and hold the Company and
its subsidiaries, affiliates, directors, officers, employees and agents
(collectively, the "Company Indemnitees") harmless from, and to reimburse each
of the Company Indemnitees for, on an after-tax basis, any Loss from (i) any
inaccuracy in or any breach of any representation or warranty of the Purchaser
contained in this Agreement, certificate or other written instrument or document
delivered by the Purchaser pursuant hereto or (ii) any breach of any of the
covenants, agreements or undertakings of the Purchaser contained in or made
pursuant to this Agreement.
(c) PROCEDURE FOR INDEMNIFICATION. Promptly following the
discovery of any breach of a representation or warranty of the Company or the
Purchasers contained in this Agreement, of any third party claim or of any other
matter which could entitle Purchasers or the Company to indemnification under
this Agreement, the indemnified party shall give notice to the indemnitor. The
indemnitor shall have ten days from receipt of such notice to pay the amount of
damages so specified or challenge the claim. If the indemnitor disputes such
claim for indemnification, the indemnitor shall be given 10 days in which to
meet with the Company's accountants, review the basis for such claim and dispute
the findings, if appropriate.
If any claim for indemnification hereunder results
from any claim or Loss by a person who is not a party to this Agreement ("Third
Party Claim"), such notice shall also specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnitee shall
give the other party prompt notice of any such claim and the Indemnitor shall
undertake the defense thereof by representatives of its own choosing, reasonably
satisfactory to the Indemnitee, at the expense of the Indemnitor. The Indemnitee
shall have the right to participate in any such defense of a Third Party Claim
with advisory counsel of its own choosing, at its own expense. If Indemnitor,
within 20 days after notice of any such Third Party Claim, fails to defend, the
Indemnitee shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim on behalf, and for the account of,
Indemnitor, at the expense and risk of Indemnitor.
(d) LIMITS ON INDEMNIFICATION. The Purchasers shall not be
entitled to indemnification pursuant to this Section 13 unless and until the
aggregate amount of the Company Indemnified Losses (generally, the Indemnified
Losses) with respect to losses for specific representations and warranties
exceeds the amounts set forth on SCHEDULE 13(D) with respect to those losses (in
each case, a "Basket"). In no event shall the Company or Xxxxx be liable or
responsible after closing for any Indemnified Losses under this Agreement in
excess of an aggregate amount equal to $1,900,000. Moreover, Xxxxx shall be
liable only to the extent of the principal amount then outstanding under the
Promissory Notes payable by the
18
Company to Xxxxx (the "Xxxxx Notes"), and the 85,718 shares of the Company's
Common Stock owned by Xxxxx (the "Xxxxx Shares").
(e) SET-OFF AND ESCROW. Without limiting any other rights of
the Purchasers pursuant to this Agreement or otherwise, the Purchasers may, upon
written notice to Xxxxx and subject to the provisions of Section 13(c), offset
against the amounts due Xxxxx under the Xxxxx Notes any and all Indemnified
Loses incurred or sustained by it and subject to indemnification under Section
13. To the extent of any offset, the principal amount outstanding under the
Xxxxx Notes shall be reduced, and interest as stated therein shall accrue from
the date of such offset only on the principal balance as so reduced. In
addition, Xxxxx shall enter into an agreement with the Company's transfer agent
in form and substance reasonable acceptable to the Purchasers pursuant to which
Xxxxx shall place into escrow, for a period of one year commencing from the date
of this Agreement, the Xxxxx Shares. Notwithstanding anything contained herein
to the contrary, Purchasers must first exercise their rights to set-off first
with respect to the Xxxxx Notes.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTS. Each of the
representations and warranties made by the Company shall survive for a period of
one year after the date of this Agreement. No claim for the recovery of
Indemnified Losses may be asserted after such representations and warranties
shall thus expire; PROVIDED, however, that claims for Indemnified Losses first
asserted within such period shall not thereafter be barred.
17. INTEGRATION. This Agreement, including the Schedules hereto and the
agreements referred to herein, represents the entire understanding and agreement
of the parties with respect to the subject matter hereof. No other
representations, statements or warranties have been made, other than what is
written herein.
18. ATTORNEYS' FEES. Except as otherwise set forth herein, all costs
and expenses, including reasonable attorneys' fees, incurred in the enforcement
of this Agreement, shall be paid to the prevailing party by the non-prevailing
party, upon demand.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which may be considered one and the same agreement and each
of which shall be deemed an original.
20. GOVERNING LAW. This Agreement shall be enforced, governed and
construed in all respects in accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the State of Delaware. The parties
agree to be subject to the personal jurisdiction of the federal and state courts
in the State of New York, and that any disputes arising from or in relation to
this Agreement may be commenced in Federal or State Court of competent
jurisdiction within the State of New York. The parties consent to service of
process by Certified Mail, Return Receipt Requested, at the addresses set forth
hereinabove.
19
IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Agreement as of the date first written above.
THE COMPANY:
ASD GROUP, INC.
By: /S/ XXXX X. XXXXX
--------------------------------------
Xxxx Xxxxx, Chairman of the Board
and Chief Executive Officer
PURCHASERS:
/S/ XXXXXXXX XXXXXX
------------------------------------------
XXXXXXXX XXXXXX
/S/ XXXXX XXXXXXXX
------------------------------------------
XXXXX XXXXXXXX
/S/ XXXXX XXXXXXXX
------------------------------------------
XXXXX XXXXXXXX
/S/ MARN RABINONCY
------------------------------------------
MARN RABINONCY
/S/ XXXXXXX XXXXXXXXX
------------------------------------------
XXXXXXX XXXXXXXXX
XXXXXX CONSULTING
By: /S/ ILLEGIBLE
---------------------------------------
Name: Illegible
Title: Signatory
20
/S/ XXXXXX XXXXXX
------------------------------------------
XXXXXX XXXXX
/S/ XXXXX XXXXXXXXX
------------------------------------------
XXXXX XXXXXXXXX
CAMERON WORLDWIDE LTD.
By: /S/ XXX X. XXXXXXXX
---------------------------------------
Name: Xxx X. Xxxxxxxx
Title: Director
With respect to Section 5 only:
HIGH TECHNOLOGY COMPUTERS,
INC.
By: /S/ XXXX X. XXXXX
---------------------------------------
Xxxx X. Xxxxx, Chief Executive Officer
AUTOMATED SYSTEMS
DEVELOPERS, INC.
By: /S/ XXXX X. XXXXX
---------------------------------------
Xxxx X. Xxxxx
With respect to the Section 12 only:
/S/ XXXX X. XXXXX
------------------------------------------
XXXX X. XXXXX
21
EXHIBITS
--------
Exhibit A Certificates of Designations, Preferences,
Rights and Limitations for Series A and
Series B Preferred Stock
Exhibit 5(m) Accounts Receivable and Accounts Payable
SCHEDULES
---------
Schedule 1 Purchasers
Schedule 3 Use of Proceeds
Schedule 5(e) List of Outstanding Options and Warrants
Schedule 5(i) Legal Proceedings
Schedule 5(j) Litigation, Outstanding Orders, Judgments, Etc.
Schedule 5(l) Undisclosed Liabilities
Schedule 5(o) Material Changes
Schedule 5(p) Customers and Contracts
Schedule 5(s) Related Party Transactions
Schedule 12(c) Indemnification Limits
