OF THE DIRECTOR DESIGNEES IDENTIFIED IN SECTION 3(MM) (I) IS NOT AND HAS NOT
BEEN SUBJECT TO ANY PROCEEDING OR EVENT THAT CONSTITUTES A "BAD ACTOR"
DISQUALIFICATION AS SET FORTH IN RULE 506(D)(1) PROMULGATED UNDER REGULATION D
OF THE SECURITIES ACT AND (II) MAINTAINS REASONABLY SUFFICIENT PROFESSIONAL
EXPERIENCE AND SOPHISTICATION TO SERVE ON THE BOARD OF DIRECTORS OF A
PUBLICLY-HELD CORPORATION OF LIKE KIND AND TYPE AS THE COMPANY.
(N)
PRINCIPAL PLACE OF BUSINESS. THE BUYER'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED IN THE STATE OF NEW YORK.
(O)
INVESTMENT COMPANY STATUS.
THE BUYER IS NOT, AND IMMEDIATELY
FOLLOWING THE CLOSING WILL NOT BE, AN "INVESTMENT COMPANY" WITHIN THE MEANING OF
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND THE BUYER IS NOT A COMPANY
CONTROLLED BY AN "INVESTMENT COMPANY" OR A "PROMOTER" OR "PRINCIPAL UNDERWRITER"
FOR AN "INVESTMENT COMPANY" AS SUCH TERMS ARE DEFINED IN THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED.
(P)
NO GENERAL SOLICITATION. THE BUYER ACKNOWLEDGES THAT THE
COMMON SHARES WERE NOT OFFERED TO IT BY MEANS OF ANY FORM OF GENERAL OR PUBLIC
SOLICITATION OR GENERAL ADVERTISING, OR PUBLICLY DISSEMINATED ADVERTISEMENTS OR
SALES LITERATURE, INCLUDING (I) ANY ADVERTISEMENT, ARTICLE, NOTICE OR OTHER
COMMUNICATION PUBLISHED IN ANY NEWSPAPER, MAGAZINE, OR SIMILAR MEDIA, OR
BROADCAST OVER TELEVISION OR RADIO OR (II) ANY SEMINAR OR MEETING TO WHICH THE
BUYER OR ANY PERSON ASSOCIATED WITH THE BUYER WAS INVITED BY ANY OF THE
FOREGOING MEANS OF COMMUNICATIONS.
6
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that:
(A)
ORGANIZATION AND QUALIFICATION. EACH OF THE COMPANY AND ITS
"SUBSIDIARIES" (WHICH DEFINED TERM, FOR PURPOSES OF THIS AGREEMENT, MEANS ANY
ENTITY IN WHICH THE COMPANY, DIRECTLY OR INDIRECTLY, OWNS AT LEAST A MAJORITY OF
THE CAPITAL STOCK, EQUITY OR SIMILAR INTEREST) ARE ENTITIES DULY ORGANIZED AND
VALIDLY EXISTING, AND HAVE THE REQUISITE POWER AND AUTHORIZATION TO OWN THEIR
PROPERTIES AND TO CARRY ON THEIR BUSINESS AS NOW BEING CONDUCTED.
THE COMPANY,
MTI INSTRUMENTS (AS DEFINED BELOW) AND TURBONETICS (AS DEFINED BELOW) ARE IN
GOOD STANDING UNDER THE LAWS OF THE JURISDICTION IN WHICH THEY ARE FORMED.
EACH
OF THE COMPANY AND ITS SUBSIDIARIES IS DULY QUALIFIED AS A FOREIGN ENTITY TO DO
BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION IN WHICH ITS OWNERSHIP OF
PROPERTY OR THE NATURE OF THE BUSINESS CONDUCTED BY IT MAKES SUCH QUALIFICATION
NECESSARY, EXCEPT TO THE EXTENT THAT THE FAILURE TO BE SO QUALIFIED OR BE IN
GOOD STANDING WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.
AS USED IN THIS AGREEMENT, "MATERIAL ADVERSE EFFECT" MEANS ANY MATERIAL
ADVERSE EFFECT ON THE BUSINESS, PROPERTIES, ASSETS, OPERATIONS, RESULTS OF
OPERATIONS, FINANCIAL CONDITION OR PROSPECTS OF THE COMPANY AND ITS
SUBSIDIARIES, TAKEN AS A WHOLE, OR THEIR ABILITY TO SATISFY THEIR OBLIGATIONS
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY HAS NO
SUBSIDIARIES, EXCEPT FOR (I) MTI INSTRUMENTS, INC., A NEW YORK CORPORATION ("MTI
INSTRUMENTS") WHOLLY-OWNED BY THE COMPANY, AND (II)