EXHIBIT 10(mm)
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of ___________,
1997 (the "Agreement"), is executed in reliance upon the exemption from
registration afforded by Regulation S ("Regulation S") as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities Act of 1933,
as amended. Capitalized terms used herein and not defined shall have the
meanings given to them in Regulation S.
This Agreement has been executed by the undersigned "Buyer" in
connection with the private placement of 12% Series A Senior Subordinated
Convertible Redeemable Debentures of Computerized Thermal Imaging, Inc., a
corporation organized under the laws of Nevada, with its principal executive
offices located at 0000 Xxxxxxx, Xxxxxxxx, XX 00000 (hereinafter referred to
as "Seller"). Buyer hereby represents and warrants to, and agrees with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN
REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (AS DEFINED IN REGULATION S OF THE 1933 ACT) EXCEPT
PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT.
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) SUBSCRIPTION. The undersigned Buyer hereby subscribes for
and agrees to purchase a portion of the Seller's 12% Series A Senior
Subordinated Convertible Redeemable Debentures substantially in the form of
the Debentures attached as Exhibit A hereto and having an aggregate original
principal face amount of up to U.S. $1,875,000 (singly, a "Debenture," and
collectively, the "Debentures"), at an aggregate purchase price of 80% of the
face amount of such Debentures as set forth in subsection (b) herein.
(b) PAYMENT. The aggregate Purchase Price for the portion of the
Debentures purchased by the Buyer shall be __________________________ United
States Dollars (U.S. $___________) which represents a discount of 20% of the
face amount of the Debenture purchased by the Buyer (the "Purchase Price"),
which shall be payable pursuant to paragraph C herein by delivering
immediately available funds in United States Dollars by wire transfer to the
designated depository Xxxxx X. Xxxxxxxxx, Esq., as Escrow Agent ("Escrow
Agent") for closing by delivery of securities versus payment.
(c) CLOSING. Subject to the satisfaction of the conditions set
forth in Sections 7 and 8 hereof, payments of the Purchase Price may be made
from time to time in denominations of not less than $10,000 but all payments
hereunder, in any event must be completed on or before April 15, 1997, or
such earlier or later date as is mutually agreed to in writing by Buyer and
Seller.
2. BUYER REPRESENTATIONS AND COVENANTS; ACCESS TO INFORMATION.
OFFSHORE TRANSACTION. In connection with the purchase and sale of
the Debentures, Buyer represents and warrants to, and covenants and agrees
with Seller as follows:
(i) Buyer is not a natural person and is not organized under
the laws of any jurisdiction within the United States, was not formed
by a U.S. Person (as defined in Section 902(o) of Regulation S) for
the purpose of investing in Regulation S securities and is not
otherwise a U.S. Person. Buyer is not, and on the closing date will
not be, an affiliate of Seller;
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(ii) At the time the buy order was originated, Buyer was
outside the United States and is outside of the United States as of
the date of the execution and delivery of this Agreement;
(iii) No offer to purchase the Debentures or the common stock
of Seller issuable upon conversion of the Debentures (collectively,
the "Securities"), was made by Buyer in the United States;
(iv) Buyer is purchasing the Securities for its own account
and Buyer is qualified to purchase the Securities under the laws of
its jurisdiction of residence, and the offer and sale of the
Securities will not violate the securities or other laws of such
jurisdiction;
(v) All offers and sales of any of the Securities by
Buyer prior to the end of the Restricted Period (as hereinafter
defined) shall be made in compliance with any applicable securities
laws of any applicable jurisdiction and in accordance with Rule 903
and 904, as applicable, of Regulation S or pursuant to registration of
securities under the 1933 Act or pursuant to an exemption from
registration. In any case, none of the Securities have been or will
be encumbered, offered, sold or otherwise transferred by Buyer to, or
for the account or benefit of, a U.S. Person or within the United
States until after the end of the one year period commencing on the
later of (x) the date of closing of the offering of the Securities or
(y) the date of the first offer of the Securities to persons other
than distributors (the "Restricted Period"), as calculated pursuant
to Regulation S and certified by Buyer to Seller and thereafter only
pursuant to a Registration Statement or an applicable exemption from
the registration provisions of the 1933 Act;
(vi) The transactions contemplated by this Agreement
(a) have not been and will not be pre-arranged by Buyer with a
purchaser located in the United States or a purchaser which is a
U.S. Person, and (b) are not and will not be part of a plan or scheme
by Buyer, to evade the registration provisions of the 1933 Act;
(vii) Buyer understands that the Securities are not registered
under the 1933 Act and are being offered and sold to it in
reliance on specific exclusions from the registration requirements
of Federal and State securities laws, and that Seller is relying
upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of Buyer set forth
herein in order to determine the applicability of such exclusions
and the suitability of Buyer and any purchaser from Buyer to
acquire the Securities;
(viii) Buyer shall take all reasonable steps to ensure its
compliance with Regulation S and shall promptly send to each purchaser
who acts as a distributor, dealer or a person receiving a selling
concession, fee or other remuneration in respect of any of the
Securities, who purchases prior to the expiration of the Restricted
Period referred to in subparagraph (v) above, a confirmation or other
notice to the purchaser stating that the purchaser is subject to the
same restrictions on offers and sales as Buyer pursuant to
Section 109(c)(2)(iv) of Regulation S;
(ix) Buyer has not conducted or permitted and shall not
conduct or permit on its behalf any "directed selling efforts" as that
term is defined in Rule 902(b) of Regulation S; nor has Buyer
conducted any general solicitation relating to the offer and sale of
any of the Securities in the United States or elsewhere;
(x) Buyer has the full right, power and authority to enter
into this Agreement and to consummate the transaction contemplated
herein. This Agreement has been duly authorized, validly executed and
delivered on behalf of Buyer and is a valid and binding agreement in
accordance with its terms, subject to general principles of equity and
to bankruptcy or other laws affecting the enforcement of creditors'
rights generally;
(xi) The execution and delivery of this Agreement and the
consummation of the purchase of the Securities, and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by Buyer of any of the terms of provisions of, or
constitute a default under, the articles of incorporation or by-laws
(or similar constitutive documents) of Buyer or any
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indenture, mortgage, deed of trust, or other material agreement or
instrument to which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable law,
rule or regulation of the United States or any State thereof or
any applicable decree, judgment or order of any Federal or State
court, Federal or State regulatory body, administrative agency or
other United States governmental body having jurisdiction over
Buyer or any of its properties or assets;
(xii) All invitation, offers and sales of or in respect of,
any of the Securities, by Buyer and any distribution by Buyer of any
documents relating to any offer by it of any of the Securities will be
in compliance with applicable laws and regulations and will be made in
such a manner that no prospectus need be filed and no other filing
need be made by Seller with any regulatory authority or stock exchange
in any country or any political sub-division of any country;
(xiii) Buyer will not make any offer or sale of the Securities
by any means which would not comply with the laws and regulations of
the territory in which such offer or sale takes place or to which such
offer or sale is subject or which would in connection with any such
offer or sale impose upon Seller any obligation to satisfy any public
filing or registration requirement or provide or publish any
information of any kind whatsoever or otherwise undertake or become
obligated to do any act; and
(xiv) Neither the Buyer nor any of its affiliates has
entered, has the intention of entering, or will during the Restricted
Period enter into any put option, short position or other similar
instrument or position with respect to any of the Securities or
securities of the same class as the Securities.
(xv) the Buyer (or others for whom it is contracting
hereunder) has been advised to consult its own legal and tax advisors
with respect to applicable resale restrictions and applicable tax
considerations and it (or others for whom it is contracting hereunder)
is solely responsible (and the Company is not in any way responsible)
for compliance with applicable resale restrictions and applicable tax
legislation.
(xvi) NO GOVERNMENT RECOMMENDATION OR APPROVAL. Buyer
understands that no Federal or State or foreign government agency has
passed on or made any recommendation or endorsement of the Securities.
(xvii) CURRENT PUBLIC INFORMATION. Buyer acknowledges that it
and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of Seller and all
materials relating to the offer and sale of the Securities which have
been requested by Buyer, all of which contain a legend as required
under Section 10 hereof. Buyer further acknowledges that it and its
advisors, if any, have received complete and satisfactory answers to
such inquiries.
(xviii) BUYER'S SOPHISTICATION. Buyer acknowledges that the
purchase of the Securities involves a high degree of risk, including
the total loss of Buyer's investment. Buyer has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Securities. Buyer
understands that the Securities are not being registered under the
1933 Act, and therefore Buyer must bear the economic risk of this
investment for an indefinite period of time.
(xix) TAX STATUS. Buyer is not a "10-percent Shareholder"
(as defined in Section 871(h)(3)(B) of the U.S. Internal Revenue Code)
of Seller.
3. SELLER REPRESENTATIONS AND COVENANTS.
(a) REPORTING COMPANY STATUS. Seller is not a "Reporting Issuer"
as defined by Rule 902 of Regulation S. Seller's Common Stock $0.001 par
value per share (the "Common Stock"), is listed and trades on NASD Electronic
Bulletin Board. However, Seller is taking all necessary steps to become a
reporting company in the next 90 days.
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(b) CURRENT PUBLIC INFORMATION. Seller has furnished Buyer with
copies of such documents as requested by Seller as referred to in
Section 2(xvii) above, and any other publicly available documents requested by
Buyer.
(c) OFFSHORE TRANSACTION. Seller has not offered any of the
Securities to any person in the United States, any identifiable groups of U.S.
citizens abroad, or to any U.S. Person, as such terms are used in Regulation S.
(i) At the time the buy order was originated, Seller and/or
its agents reasonably believe the Buyer was outside of the United
States and was not a U.S. person, based on the representations of
Buyer.
(ii) Seller and/or its agents reasonably believe that the
transaction has not been pre-arranged with a buyer in the United
States, based on the representations of Buyer.
(iii) No offer to buy or sell the Securities was or will be
made by Seller to any person in the United States.
(iv) The sale of the Securities by Seller pursuant to this
Agreement will be made in accordance with the provisions and
requirements of Regulation S provided that the representations and
warranties of Buyer in Section 2 hereof are true and correct.
(v) The transactions contemplated by this Agreement (a) have
not been and will not be pre-arranged by Seller with a purchaser
located in the United States or a purchaser which is a U.S. Person,
and (b) are not and will not be part of a plan or scheme by Seller to
evade the registration provisions of the 1933 Act.
(d) NO DIRECTED SELLING EFFORTS. In regard to this transaction,
Seller has not conducted any "directed selling efforts" as that term is
defined in Rule 902 of Regulation S nor has Seller conducted any general
solicitation relating to the offer and sale of any of the Securities in the
United States or elsewhere.
(e) CONCERNING THE SECURITIES. The issuance, sale and delivery of
the Debentures have been duly authorized by all required corporate action on
the part of Seller, and when issued, sold and delivered in accordance with
the terms hereof and thereof for the consideration expressed herein and
therein, will be duly and validly issued, fully paid and non-assessable. The
Common Stock issuable upon conversion of the Debenture has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms
of the Debentures, shall be duly and validly issued, fully paid, and
non-assessable and will not subject the holders thereof, if such persons are
non-U.S. persons, to personal liability by reason of being such holders.
There are no pre-emptive rights of any shareholder of Seller.
(f) SUBSCRIPTION AGREEMENT. This Agreement has been duly
authorized, validly executed and delivered on behalf of Seller and is a valid
and binding agreement in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
(g) NON-CONTRAVENTION. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities and the
transactions contemplated by this Agreement do not and will not conflict with
or result in a breach by Seller of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws of
Seller, or any indenture, mortgage, deed of trust, or other material
agreement or instrument to which Seller is a party or by which it or any of
its properties or assets are bound, or any existing applicable law, rule or
regulation of the United States or any State thereof or any applicable
decree, judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States governmental
body having jurisdiction over Seller or any of its properties or assets.
(h) APPROVALS. Seller is not aware of any authorization, approval
or consent of any U.S. governmental body which is legally required for the
issuance and sale of the Debentures and the Common Stock
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issuable upon conversion thereof to persons who are non-U.S. Persons, as
contemplated by this Agreement. Seller is relying entirely upon Buyer and
Distributor with respect to foreign consents and approvals.
4. EXEMPTION; RELIANCE ON REPRESENTATIONS. Buyer understands that the
offer and sale of the Securities are not being registered under the 1933 Act.
Seller and Buyer are relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S.
5. TRANSFER AGENT INSTRUCTIONS.
(a) DEBENTURES. Upon the conversion of the Debentures, the holder
thereof shall submit such Debenture together with a notice of conversion to
the Seller and the Seller shall instruct its transfer agent to issue one or
more Certificates representing that number of shares of Common Stock into
which the Debenture or Debentures are convertible in accordance with the
provisions regarding conversion set forth in Exhibit A hereto. The Seller
shall act as Debenture Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Debenture.
(b) COMMON STOCK TO BE ISSUED WITHOUT RESTRICTIVE LEGEND. Upon
the conversion of any Debenture up to the total of the "Conversion Amount"
(as defined in the Debenture) and one year after the issuance of such
Conversion Shares and any "Interest Shares" (as defined in the Debenture) by
a person who is a non-U.S. Person, Seller shall instruct Seller's transfer
agent to issue Stock Certificates up to the total of the "Conversion Amount"
(as defined in the Debenture) and one year after the "Interest Shares" (as
defined in the Debenture) without restrictive legend in the name of Buyer (or
its nominee (being a non-U.S. Person) or such non-U.S. Persons as may be
designated by Buyer prior to the closing) and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion, as applicable. Seller warrants that no
instructions other than these instructions and instructions to impose a "stop
transfer" instruction with respect to the certificates until the end of the
respective Restricted Period of the Conversion Shares and Interest Shares, if
any, have been given or will be given to the transfer agent and that the
Common Stock shall otherwise be freely transferable on the books and records
of Seller. Nothing in this Section 5, however, shall affect in any way
Buyer's or such nominee's obligations and agreements to comply with all
applicable securities laws upon resale of the Securities. Furthermore,
nothing shall prohibit the Company in borrowing the non-restricted shares
from shareholders in order to comply with this provision.
6. REGISTRATION. If upon conversion of the Debentures effected by the
Buyer pursuant to the terms of this Agreement or payment of interest pursuant
to the Debenture the Company fails to issue certificates for shares of Common
Stock issuable upon such conversion (the "Underlying Shares") or the Interest
Shares to the Buyer bearing no restrictive legend (after the applicable
Restrictive Period of the Conversion Shares or Interest Shares) for any
reason other than the Company's reasonable good faith belief that the
representations and warranties made by the Buyer in this Agreement or the
Notice of Conversion were untrue when made, or if the restricted period under
Regulation S is extended, then the Company shall be required, at the request
of the Buyer and at the Company's expense, to effect the registration of the
Underlying Shares and/or Interest Shares issuable upon conversion of the
Debentures and payment of interest under the Act and relevant Blue Sky laws
as promptly as is practicable. The Company and the Buyer shall cooperate in
good faith in connection with the furnishing of information required for such
registration and the taking of such other actions as may be legally or
commercially necessary in order to effect such registration. The Company
shall file such a registration statement within 30 days of Buyer's demand
therefor and shall use its best efforts to cause such registration statement
to become effective as soon as practicable thereafter. Such best efforts
shall include, but not be limited to, promptly responding to all comments
received from the staff of the Securities and Exchange Commission, providing
Buyer's counsel with a contemporaneous copy of all written communications
from and to the staff of the Securities and Exchange Commission with respect
to such registration statement and promptly preparing and filing amendments
to such registration statement which are responsive to the comments received
from the staff of the Securities and Exchange Commission. Once declared
effective by the Securities and Exchange Commission, the Company shall cause
such registration statement to remain effective until the earlier of (i) the
sale by the Buyer of all Underlying Shares registered or (ii) 120 days after
the effective date of such registration statement. In the event the Company
undertakes to file a Registration Statement on Form S-3 in connection with
the Common Stock, upon the effectiveness of such Registration, Buyer shall
have the option to sell the Common Stock pursuant thereto. The foregoing
shall not in any way limit Buyer's rights in connection with the Common Stock
pursuant to Regulation S.
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7. DELIVERY INSTRUCTIONS. The Debentures being purchased hereunder
shall be delivered to the Escrow Agent at such time and place as shall be
mutually agreed by Seller and Buyer.
8. CONDITIONS TO SELLER'S OBLIGATION TO SELL. Seller's obligation to
sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
executed by Buyer.
(b) Delivery into the closing depository of good funds by Buyer as
payment in full of the purchase price of the Debentures.
(c) All of the representations and warranties of the Subscriber
contained in this Agreement shall be true and correct on the Payment Date
with the same force and effect as if made on and as of the Payment Date. The
Subscriber shall have performed or complied with all agreements and satisfied
all conditions on its part to be performed, complied with or satisfied at or
prior to the Payment Date.
(d) No order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Act shall have
been issued, and no proceedings for that purpose shall have been commenced or
shall be pending or, to the knowledge of the Company, be contemplated. No
stop order suspending the sale of the Debentures shall have been issued, and
no proceedings for that purpose shall have been commenced or shall be pending
or, to the knowledge of the Company, be contemplated.
(e) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency that would prevent the issuance of the Debentures. No
injunction, restraining order or order of any nature by a federal or state
court of competent jurisdiction shall have been issued that would prevent the
issuance of the Debentures.
9. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE. Buyer's obligation
to purchase the Debentures is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of this
Agreement as evidenced by execution of this Agreement by the duly authorized
officer of Seller.
(b) Delivery of the Debentures to the Escrow Agent.
10. OFFERING MATERIALS. All offering materials and documents used in
connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in Section 2(a)(v) hereof shall include
statements to the effect that the Securities have not been registered under
the 1933 Act or applicable state securities laws, and that neither Buyer, nor
any direct or indirect purchaser of the Securities from Buyer, may directly
or indirectly offer or sell the Securities in the United States or to U.S.
Persons (other than distributors) unless that Securities are registered under
the 1933 Act any applicable state securities laws, or any exemption from the
registration requirements of the 1933 Act or such state securities laws is
available. Such statements shall appear (1) on the cover of any prospectus
or offering circular used in connection with the offer or sale of the
Securities, (2) in the underwriting section of any prospectus or offering
circular used in connection with the offer or sale of the Securities, and
(3) in any advertisement made or issued by Seller, Buyer, any other distributor,
any of their respective affiliates, or any person acting on behalf of any of
the foregoing.
11. NO SHAREHOLDER APPROVAL. Seller hereby agrees that from the
Closing Date until the issuance of Common Stock upon the conversion of the
Debentures, Seller will not take any action which would require Seller to
seek shareholder approval of such issuance unless such shareholder approval
is required by law or regulatory body (including but not limited to the
NASDAQ Stock Market, Inc.) as a result of the issuance of the Securities
hereunder.
12. MISCELLANEOUS.
(a) Except as specifically referenced herein or in the
Distribution Agreement, this Agreement constitutes the entire contract
between the parties, and neither party shall be liable or bound to the other
in any manner
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by any warranties, representations or covenants except as specifically set
forth herein. Any previous agreement among the parties related to the
transactions described herein is superseded hereby. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of
Seller. Buyer is not authorized to bind Seller, or to make any
representations or warranties on behalf of Seller.
(c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Buyer will
advise each purchaser, if any, and potential purchaser of the Securities, of
the foregoing sentence, and that such purchaser is relying on its own
investigation with respect to all such matters, and that such purchaser will
be given access to any and all documents and Seller personnel as it may
reasonably request for such investigation.
(d) All representations and warranties contained in this Agreement
by Seller and Buyer shall survive the closing of the transactions
contemplated by this Agreement.
(e) This Agreement shall be construed in accordance with the laws
of New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of
each party hereto. Buyer hereby waives trial by jury and consents to
exclusive jurisdiction and venue in the State of New York. This Agreement
may be executed in counterparts, and the facsimile transmission of an
executed counterpart to this Agreement shall be effective as an original.
(f) Buyer agrees to indemnify and hold Seller harmless from any
and all claims, damages and liabilities arising from Buyer's breach of its
representations and/or covenants set forth herein.
AMOUNT SUBSCRIBED FOR
$
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first set forth above.
OFFICIAL SIGNATORY OF SELLER:
Computerized Thermal Imaging, Inc.
By:
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Accepted this ____ day of ________, 1997 Title:
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OFFICIAL SIGNATORY OF BUYER:
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By:
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Title:
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Address of Buyer:
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Fax No.:
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Tel No.:
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