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EXHIBIT 10.36
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of the date of
acceptance set forth below, by and between JTS CORPORATION, a Delaware
corporation, with headquarters located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and the undersigned (the "Buyer"), a British
Virgin Islands corporation.
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 of Regulation D as promulgated by the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
WHEREAS, the Buyer wishes to purchase, upon the terms and
subject to the conditions of this Agreement, shares of non-voting, convertible
preferred stock of the Company which will be convertible into units consisting
of (1) shares of Common Stock, $.001 par value (the "Common Stock"), of the
Company and (2) warrants to purchase shares of Common Stock (the "Warrants"),
subject to acceptance of this Agreement by the Company; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the Company and Genesee Fund Limited-Portfolio B are executing
and delivering a Subscription Agreement (the "Portfolio B Subscription
Agreement") providing for the purchase and sale, upon the terms and subject to
the conditions provided therein, of shares of non-voting, convertible preferred
stock for an aggregate purchase price of $2,500,000.00; and
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) SUBSCRIPTION. The undersigned hereby agrees to purchase
from the Company the number of shares (the "Preferred Shares") of Series B
Convertible Preferred Stock, $.001 par value (the "Preferred Stock"), of the
Company set forth on the signature page of this Agreement, having the terms and
conditions as set forth in the form of Certificate of Designations attached
hereto as ANNEX I (the "Certificate of Designations") at the price per share and
for the aggregate purchase price set forth on the signature page of this
Agreement. The purchase price for the Preferred Shares shall be payable in
United States Dollars. The shares of
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Common Stock issuable upon conversion of the Preferred Stock are referred to
herein as the "Conversion Shares." The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares." The
Conversion Shares and the Warrant Shares are referred to herein as the "Common
Shares." The Common Shares and the Preferred Shares are referred to herein
collectively as the "Shares." The Shares and the Warrants are referred to herein
collectively as the "Securities."
(b) FORM OF PAYMENT. The Buyer shall pay the purchase price
for the Preferred Shares by delivering good funds in United States Dollars to
the escrow agent (the "Escrow Agent") identified in the Joint Escrow
Instructions attached hereto as ANNEX II (the "Joint Escrow Instructions"). Such
delivery of funds shall be made against delivery by the Company of the
certificates for the Preferred Shares registered in the name of the Buyer.
Promptly following payment by the Buyer to the Escrow Agent of the purchase
price of the Preferred Shares, but in no event later than the two New York Stock
Exchange trading days after such payment, the Company shall deliver certificates
for the Preferred Shares, registered in the name of the Buyer, to the Escrow
Agent. By signing this Agreement, the Buyer and the Company each agrees to all
of the terms and conditions of, and becomes a party to, the Joint Escrow
Instructions, all of the provisions of which are incorporated herein by this
reference as if set forth in full.
(c) METHOD OF PAYMENT. Payment of the purchase price for the
Preferred Shares shall be made by wire transfer of funds to:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA#▇▇▇▇▇▇▇▇▇
For Further Credit to A/C#37179446
for credit to the account of ▇▇▇▇▇ ▇. ▇▇▇▇▇ Attorney Escrow Account
Reference: Advantage/JTS
Not later than 4:00 p.m., New York City time, on the date which is one New York
Stock Exchange trading day after the Company shall have accepted this Agreement
and returned a signed counterpart of this Agreement to the Buyer or its legal
counsel, the Buyer shall deposit with the Escrow Agent the aggregate purchase
price for the Preferred Shares.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
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The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:
(a) PURCHASE FOR INVESTMENT. The Buyer is purchasing the
Preferred Shares for its own account for investment only and not with a view
towards the public sale or distribution thereof other than in connection with
the registration thereof under the 1933 Act;
(b) ACCREDITED INVESTOR. The Buyer is an "accredited investor"
as that term is defined in Rule 501 of the General Rules and Regulations under
the 1933 Act by reason of Rule 501(a)(3);
(c) REOFFERS AND RESALES. All subsequent offers and sales of
the Securities by the Buyer shall be made pursuant to registration of the Shares
being offered and sold under the 1933 Act or pursuant to an exemption from
registration;
(d) COMPANY RELIANCE. The Buyer understands that the Preferred
Shares are being offered and sold, and the Common Shares and the Warrants are
being offered, to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer=s compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Preferred Shares and to receive an offer of the Common Shares and the Warrants;
(e) INFORMATION PROVIDED. The Buyer and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Preferred Shares and the offer of the Common Shares which have been requested by
the Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the
Company's (1) Joint Proxy Statement/Prospectus, dated July 15, 1996, of the
Company, (2) Form 8-A, dated July 25, 1996, (3) Final Prospectus pursuant to
Rule 424(b)(3), dated July 17, 1996, (4) Current Reports on Form 8-K, dated July
28, 1996, September 26, 1996 and September 27, 1996, (5) the Company's
Registration Statement on Form S-8, dated July 31, 1996 and (6) the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996
(collectively, the "SEC Reports"). The Buyer understands that its investment in
the Securities involves a high degree of risk;
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(f) ABSENCE OF APPROVALS. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities; and
(g) SUBSCRIPTION AGREEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Buyer and is a valid
and binding agreement of the Buyer enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and
agrees with, the Buyer that:
(a) ORGANIZATION AND AUTHORITY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority to (i)
own, lease and operate its properties and to carry on its business as now being
conducted, and (ii) to execute, deliver and perform its obligations under this
Agreement, the Registration Rights Agreement, the form of which is attached
hereto as ANNEX III (the "Registration Rights Agreement"), the Certificate of
Designations, the Warrants, and the other agreements to be executed and
delivered by the Company in connection herewith, and to consummate the
transactions contemplated hereby. The Company is duly qualified to do business
as a foreign corporation and is in good standing in all jurisdictions wherein
such qualification is necessary and where failure so to qualify could have a
material adverse effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company.
(b) CAPITALIZATION. The authorized capital stock of the
Company currently consists of (a) 150,000,000 shares of Common Stock, $.001 par
value, of which 104,732,381 shares were outstanding as of October 31, 1996, all
of which are fully paid and nonassessable, and on the Closing Date (as defined
herein) there will be no material increase from October 31, 1996 in the number
of shares of Common Stock outstanding; and (b) 10,000,000 shares of Preferred
Stock, $.001 par value, and of which 15,000 shares will be designated as Series
B Convertible Preferred Stock. As of October 31, 1996, the Company had
outstanding options to purchase 5,034,853 shares of Common Stock. The Company
does not have outstanding any material amount of securities (or obligations to
issue any such securities) convertible into, exchangeable for or otherwise
entitling the holders thereof to acquire shares of Common
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Stock, except as disclosed in the SEC Reports. The outstanding shares of Common
Stock and outstanding options, warrants and other securities to purchase Common
Stock have been duly authorized and validly issued. None of such outstanding
shares of Common Stock, options, warrants and other securities has been issued
in violation of the preemptive rights of any securityholder of the Company.
(c) CONCERNING THE SECURITIES. The Shares have been duly
authorized and the Preferred Shares, when issued and paid for in accordance with
this Agreement, and the Common Shares, when issued upon conversion of the
Preferred Shares, or exercise of the Warrants, as the case may be, will be duly
and validly issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such holder. There are
no preemptive or similar rights of any stockholder of the Company, as such, to
acquire any of the Securities. The Common Stock has been listed for trading on
the American Stock Exchange, Inc. ("AMEX") since July 30, 1996, is currently
listed for trading thereon and (1) the Company and the Common Stock meet the
criteria for continued listing and trading on AMEX; (2) the Company has not been
notified since July 30, 1996 by AMEX of any failure or potential failure to meet
the criteria for continued listing and trading on AMEX and (3) no suspension of
trading in the Common Stock is in effect. Subject to the following sentence, the
Company knows of no reason that the Common Shares will not be eligible for
listing on AMEX. The Company has informed the Buyer that as of the date hereof,
the Company does not satisfy the numerical listing criterion set forth in
Section 101(a) of the AMEX Company Guide, and the Company has informed the Buyer
that AMEX may determine in the future that the Company's Common Stock is no
longer eligible for listing and trading on AMEX as a result of the Company's
failure to satisfy such numerical listing criterion; provided, however, that
nothing contained in this representation shall affect the Company's obligations
under the Certificate of Designations including, without limitation, Section 10
thereof.
(d) SUBSCRIPTION AGREEMENT; REGISTRATION RIGHTS AGREEMENT;
WARRANTS. This Agreement, the Registration Rights Agreement and the Warrants
have been duly and validly authorized by the Company, this Agreement has been
duly executed and delivered on behalf of the Company and this Agreement is, the
Registration Rights Agreement, when executed and delivered by the Company, will
be, and the Warrants, when executed and delivered by the Company and issued from
time to time upon conversion of the Preferred Stock, will be valid and binding
obligations of the Company enforceable in accordance with their respective
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and limits upon rights to indemnity.
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(e) NON-CONTRAVENTION. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the issuance of
the Preferred Shares and the other transactions contemplated by this Agreement,
the Registration Rights Agreement and the terms of the Preferred Stock and the
Warrants do not and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under, the
certificate of incorporation or by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound
which would have a material adverse effect on the Company or any applicable law,
rule or regulation or any applicable decree, judgment or order of any court,
United States federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any of its properties
or assets which would have a material adverse effect on the Company.
(f) APPROVALS. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required to be
obtained by the Company for (1) the issuance and sale of the Preferred Shares as
contemplated by this Agreement, (2) the issuance of Common Shares and Warrants
on exercise of the Preferred Shares and (3) the issuance of Common Shares on
exercise of the Warrants.
(g) INFORMATION PROVIDED. The information provided by or on
behalf of the Company to the Buyer in connection with the transactions
contemplated by the Agreement, including, without limitation, the information
referred to in Section 2(e) of this Agreement and the information concerning the
manufacture, sale and marketing of the Company's 1 gigabyte 3-inch internal hard
drive for notebook computers, does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are made,
not misleading.
(h) ABSENCE OF CERTAIN CHANGES. Since July 17, 1996, there has
been no material adverse change and no material adverse development in the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company, except as disclosed in the SEC Reports.
(i) ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against the Company or any of its subsidiaries, wherein an
unfavorable decision, ruling or finding
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would have a material adverse effect on the properties, business, condition
(financial or other), results of operations or prospects of the Company and its
subsidiaries taken as a whole or the transactions contemplated by this Agreement
or any of the documents contemplated hereby or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of such other documents.
The Company has informed the Buyer that the Company has entered into a
settlement with Venture Lending & Leasing, Inc. ("VLLI") concerning VLLI's
action against the Company relating to the relocation of certain leased
equipment from its initial location to Madras, India, in alleged violation of
the lease agreement. The Company has informed the Buyer that VLLI's complaint
concerning such action has not yet been dismissed. The Company does not believe
that the outcome of such litigation will have a material adverse effect on the
Company.
(j) PROPERTIES. The Company and its subsidiaries have good
title to all property real and personal (tangible and intangible) and other
assets owned by it, free and clear of all security interests, charges,
mortgages, liens or other encumbrances, except such as are described in the SEC
Reports or such as do not materially interfere with the use of such property
made, or proposed to be made, by the Company or its subsidiaries. The leases,
licenses or other contracts or instruments under which the Company and its
subsidiaries lease, hold or are entitled to use any property, real or personal,
are valid, subsisting and enforceable with only such exceptions as do not
materially interfere with the use of such property made, or proposed to be made,
by the Company or its subsidiaries. Neither the Company nor any of its
subsidiaries has received notice of any material violation of any applicable
law, ordinance, regulation, order or requirement relating to its owned or leased
properties.
(k) LABOR RELATIONS. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company or any of its subsidiaries.
(l) SEC FILINGS. The Company has timely filed all required
forms, reports and other documents with the SEC, except that the Company failed
to file in a timely manner its Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996. All of such forms, reports and other documents
complied, when filed, in all material respects, with all applicable requirements
of the 1933 Act and the Securities Exchange Act of 1934, as amended (the "1934
Act").
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
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(a) TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the
Preferred Shares and the Warrants have not been and are not being registered
under the provisions of the 1933 Act and, except as provided in the Registration
Rights Agreement, the Common Shares have not been and are not being registered
under the 1933 Act, and may not be transferred unless (A) subsequently
registered thereunder or (B) the Buyer shall have delivered to the Company an
opinion of counsel, reasonably satisfactory in form, scope and substance to the
Company, to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration; (2) any sale of
the Securities made in reliance on Rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any such resale of Securities under circumstances in which
the seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder (other than pursuant to Section 4(d) hereof and
pursuant to the Registration Rights Agreement).
(b) RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that
the certificates for the Preferred Shares and the Warrants and, until such time
as the Common Shares have been registered under the 1933 Act as contemplated by
the Registration Rights Agreement, the certificates for the Common Shares, may
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for the
Securities):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under the Securities
Act of 1933, as amended, or an opinion of counsel that
registration is not required under said Act.
(c) REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to
enter into the Registration Rights Agreement on or before the Closing Date.
(d) FORM D; BLUE SKY LAWS. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to the Buyer promptly
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after such filing. The Buyer agrees to cooperate with the Company in connection
with such filing and, upon request of the Company, to provide all information
relating to the Buyer reasonably required for such filing.
(e) AUTHORIZATION FOR TRADING; REPORTING STATUS. On or before
the Closing Date, the Company shall file a listing application for the Common
Shares with AMEX and shall provide evidence of such filing to the Buyer. The
Company shall use its best efforts to obtain approval by AMEX of the listing of
the Common Shares, subject to official notice of issuance, as promptly as
possible after the Closing Date. The Company shall inform the Buyer of such
approval promptly after the same is given. So long as the Buyer beneficially
owns any of the Preferred Shares, the Warrants or the Common Shares, the Company
shall file all reports required to be filed with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and the Company shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination.
(f) USE OF PROCEEDS. The Company will use the proceeds from
the sale of the Preferred Shares for the Company's internal working capital
purposes and not for the purpose of any investment in or loan to any other
person.
(g) BLUE SKY LAWS. On or before the Closing Date, the Company
shall take such action as shall be necessary to qualify, or to obtain an
exemption for, the Preferred Shares for sale to the Buyer pursuant to this
Agreement, the Common Shares and Warrants for issuance to the Buyer on
conversion of the Preferred Shares and the Common Shares for issuance to the
Buyer upon exercise of the Warrants under such of the securities or "blue sky"
laws of jurisdictions in the United States as shall be applicable to the sale of
the Preferred Shares pursuant to this Agreement, the issuance of Common Shares
and Warrants on conversion of the Preferred Shares and the issuance of Common
Shares on exercise of the Warrants. The Company shall furnish copies of all
filings, applications, orders and grants or confirmations of exemptions relating
to such securities or "blue sky" laws on or prior to the Closing Date.
(h) CERTAIN EXPENSES. Whether or not the closing occurs, the
Company shall pay or reimburse the Buyer for all reasonable legal fees and
expenses of counsel to the Buyer for the preparation and negotiation of, and
closing under, this Agreement (but not to exceed $10,000).
(i) CERTAIN ISSUANCES OF SECURITIES. Unless the Company
obtains Shareholder Approval (as defined in the Certificate
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of Designations) or a waiver thereof from the AMEX, the Company will not issue
any shares of Common Stock or shares of any other series of preferred stock or
other securities convertible into, exchangeable for or otherwise entitling the
holder to acquire shares of Common Stock which would be subject to Section 713
of the rules of AMEX (or any successor or replacement provision thereof) and
which would be integrated with the sale of the Preferred Shares to the Buyer and
the conversion thereof into Common Shares for purposes of Section 713 of the
rules of the AMEX (or any successor or replacement provision thereof).
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
(a) TRANSFER AGENT INSTRUCTIONS. Promptly following the
delivery by the Buyer of the aggregate purchase price for the Preferred Shares
in accordance with Section 1(c) hereof, and prior to the Closing Date, the
Company will irrevocably instruct its transfer agent for the Common Stock (the
"Transfer Agent") to issue certificates for the Common Shares from time to time
(i) upon conversion of the Preferred Shares in such amounts as specified from
time to time to the Transfer Agent in the Notices of Conversion surrendered in
connection with such conversions and referred to in Section 5(b) of this
Agreement, and (2) upon exercise of the Warrants in such amounts as specified
from time to time to the Transfer Agent in the Form of Subscription to be
attached to the Warrants and surrendered in connection with such exercises, in
each case such certificates to bear the restrictive legend specified in Section
4(b) of this Agreement prior to registration of the Common Shares under the 1933
Act, registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer in connection with each conversion of
Preferred Shares or exercise of Warrants, as the case may be. The Company
warrants that no instruction other than (x) such instructions referred to in
this Section 5, (y) stop transfer instructions to give effect to Section 4(a)
hereof prior to registration of the Common Shares under the 1933 Act and (z) the
instructions required by Section 3(m) of the Registration Rights Agreement will
be given by the Company to the Transfer Agent and that the Common Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section 5(a) shall
limit in any way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If the Buyer provides
the Company with an opinion of counsel reasonably satisfactory in form, scope
and substance to the Company that registration of a resale by the Buyer of any
of the Securities in accordance with clause (1)(B) of Section 4(a) of this
Agreement is not required under the 1933 Act, the Company shall permit the
transfer of such Securities and, in the case of the Common Shares,
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promptly, but in no event later than three days after receipt of such opinion,
instruct the Company's transfer agent to issue upon transfer one or more share
certificates in such name and in such denominations as specified by the Buyer.
The provisions of Section 3(n) of the Registration Rights Agreement shall
supersede this Section 5(a) once said Section 3(n) becomes applicable.
(b) CONVERSION PROCEDURE. In connection with the exercise of
conversion rights relating to the Preferred Shares, the Buyer or any subsequent
holder of the Preferred Shares shall complete, sign and furnish to the Company a
Notice of Conversion in the form attached hereto as ANNEX IV, which shall be
deemed to satisfy all requirements of the Certificate of Designations.
6. STOCK DELIVERY INSTRUCTIONS.
The certificates for the Preferred Shares shall be delivered
by the Company to the Escrow Agent pursuant to Section 1(b) hereof on a delivery
against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Preferred
Shares (the "Closing Date") shall be 12:00 noon, New York City time, on the date
which is two New York Stock Exchange trading days after the date on which the
Buyer has deposited the purchase price for the Preferred Shares with the Escrow
Agent in accordance with Section 1(c) hereof, or such other mutually agreed to
time. The closing shall occur on the Closing Date at the offices of the Escrow
Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell
the Preferred Shares to the Buyer pursuant to this Agreement is conditioned
upon:
(a) The receipt and acceptance by the Company of this
Agreement as evidenced by execution of this Agreement by the Company and
delivery of an executed counterpart of this Agreement to the Buyer or its legal
counsel;
(b) Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the purchase price for the Preferred
Shares in accordance with Section 1(c) hereof;
(c) The accuracy on the Closing Date of the representations
and warranties of the Buyer contained in this Agreement as if made on the
Closing Date and the performance by the
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Buyer on or before the Closing Date of all covenants and agreements of the Buyer
required to be performed on or before the Closing Date; and
(d) The closing under the Portfolio B Subscription Agreement
shall have occurred.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Shares on the Closing Date is conditioned upon:
(a) Delivery by the Company to the Escrow Agent of the
certificates for the Preferred Shares in accordance with this Agreement;
(b) The accuracy on the Closing Date of the representations
and warranties of the Company contained in this Agreement as if made on the
Closing Date and the performance by the Company on or before the Closing Date of
all covenants and agreements of the Company required to be performed on or
before such Closing Date and receipt by the Buyer of a certificate, dated the
Closing Date, of an officer of the Company confirming such matters;
(c) The receipt by the Buyer of confirmation of the filing
with the Secretary of State of the State of Delaware of the Certificate of
Designations in the form attached hereto as ANNEX I;
(d) Receipt by the Buyer on the Closing Date of an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, to the effect set forth in ANNEX V
attached hereto; and
(e) The closing under the Portfolio B Subscription Agreement
shall have occurred.
10. GOVERNING LAW; MISCELLANEOUS.
(a) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.
(b) This Agreement may be executed in counterparts and by the
parties hereto on separate counterparts, all of which together shall constitute
one and the same instrument. A facsimile transmission of this Agreement bearing
a signature on behalf of a party hereto shall be legal and binding on such
party.
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(c) The headings, captions and footers of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement.
(f) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, or any course of dealings between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
(g) Any notices required or permitted to be given under the
terms of this Agreement shall be sent by mail or delivered personally (which
shall include telephone line facsimile transmission) or by courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally or by courier, in the case of the Company addressed to
the Company at its address shown in the introductory paragraph of this Agreement
(facsimile number (▇▇▇) ▇▇▇-▇▇▇▇) or, in the case of the Buyer, at its address
shown on the signature page of this Agreement, with a copy to Genesee
Investments, ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(facsimile number 206-462-4645) or such other address as a party shall have
provided by notice to the other party in accordance with this provision. The
Buyer hereby designates as its address for any notice required or permitted to
be given to the Buyer pursuant to the Certificate of Designations the address
shown on the signature page of this agreement, with a copy to: GFL Advantage
Fund Limited, ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (facsimile number 206-462-4645), until the Buyer
shall designate another address for such purpose.
(h) The Buyer shall have the right to assign it rights and
obligations under this Agreement with respect to the purchase of all or any
portion of the Preferred Shares to another investment fund, provided such
assignee, by written instrument duly executed by such assignee, assumes all
obligations of the Buyer hereunder with respect to the purchase of the portion
of the Preferred Shares
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so assigned and makes the same representations and warranties with respect
thereto as the Buyer makes in this Agreement, whereupon the Buyer shall be
relieved of any further obligations, responsibilities and liabilities with
respect to the purchase of all or the portion of the Preferred Shares the
obligation for the purchase of which has been so assigned. In the case of any
such assignment, the Company shall agree in writing with such assignee to make
available to such assignee the benefits of the Registration Rights Agreement
with respect to the Common Shares issuable on conversion of the Preferred Shares
with respect to which the purchase under this Agreement has been so assigned.
(i) The respective representations, warranties, covenants and
agreements of the Buyer and the Company contained in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement shall survive the
delivery of payment for the Preferred Shares and shall remain in full force and
effect regardless of any investigation made by or on behalf of them or any
person controlling or advising any of them.
(j) This Agreement and its Annexes set forth the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, whether written or oral,
with respect thereto.
(k) The Buyer shall have the right to terminate this Agreement
by giving notice at any time at or prior to the Closing Date if:
(1) the Company shall have failed, refused, or been unable at
or prior to the date of such termination of this Agreement to perform
any of its obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder
is not fulfilled; or
(3) the closing shall not have occurred on a Closing Date on
or before November 8, 1996, other than by reason of a breach of this
Agreement by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyer or one of its officers thereunto duly authorized as of the date set
forth below.
NUMBER OF SHARES: 12,500
PRICE PER SHARE: $1,000.00
AGGREGATE PURCHASE PRICE: $12,500,000.00
NAME OF BUYER: GFL ADVANTAGE FUND LIMITED
SIGNATURE ____________________________
Title: _______________________________
Date: _______________________________
Address: ▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
This Agreement has been accepted as of the date set forth below.
JTS CORPORATION
By: ________________________
Title: _____________________
Date: _____________________
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Exhibit A--Schedule of Initial Investors
No. of Purchase Total
Name and Address Series B Preferred Shares Price Purchase Price
---------------- ------------------------- -------- --------------
Genesee Fund Limited- 2,500 $1,000 $ 2,500,000
Portfolio B
▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
GFL Advantage Fund Limited 12,500 $1,000 $12,500,000
▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
