Exhibit 10.25
LOAN, INVESTMENT AND SECURITY AGREEMENT
THIS LOAN, INVESTMENT AND SECURITY AGREEMENT (this "Agreement") is made
and entered into as of May 19, 2008, by and among Private Access, Inc., a
California corporation (the "Company"), and VirtualHealth Technologies, Inc. a
Delaware corporation (the "Investor"). The Company and Investor are sometimes
referred to herein collectively as the "Parties" and each individually as a
"Party".
RECITALS:
A. The Company is the successor in interest by way of conversion to
Private Access, LLC, and all of the rights, assets, obligations and liabilities
of such predecessor entity.
B. The Company has requested that Investor provide certain loans and
other financial accommodations to the Company, and Investor has agreed to
provide such loans and financial accommodations to the Company upon the terms
and conditions set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement, including the recitals, except as
otherwise expressly provided or unless the context otherwise requires:
"Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by or is under common control with the first mentioned Person. A Person
shall be deemed to control another Person if such first Person
possesses directly or indirectly the power to direct, or cause the
direction of, the management and policies of the second Person, whether
through the ownership of voting securities, by contract or otherwise.
"Articles" means the Company's Articles of Incorporation, as
filed with the Secretary of State of California on April 3, 2008.
"Business Day" means a day that is not a Saturday or a Sunday
or any other day on which banks in Dallas, Texas, are required or
permitted by applicable law to close.
"Collateral" means all of Company's right, title, and interest
in and to all current and future patents and patent applications of the
Company (which currently consist of U.S. Patent Numbers 7,028,049 and
6,345,260, and U.S. Patent Application Numbers 11/231,561 and
12/031,987), and all continuations thereto and derivatives thereof, and
all source codes developed by or for the Company and pertaining or
relating to the above patents and patent applications (the "Source
Codes").
"Customer" means any and all person or entities that are in
privity with the Company to purchase, lease, license or otherwise use
any of the Company's systems, devices, software, inventions,
components, products, services or processes.
"Governmental Authority" means any nation or government, any
state, county, municipality or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
government authority, agency, department, board, commission or
instrumentality of the United States, any State of the United States or
any political subdivision thereof, any court, tribunal or arbitrator(s)
of competent jurisdiction, any self-regulatory organization or any
Indian tribal authority.
"Loan Documents" means, collectively, this Agreement, the
Promissory Note, and any other instruments, documents, or agreements
entered into, now or in the future by Company in connection therewith.
"Obligations" means the Loan (as defined below), including all
principal and interest accrued thereon, and all related fees, expenses,
costs and other amounts, if any, owed to Investor by the Company
pursuant to this Agreement or any other Loan Documents.
"Person" means any individual, corporation, limited liability
company, partnership (general or limited), syndicate, joint venture,
society, association, trust, unincorporated organization or
Governmental Authority, or any trustee, executor, administrator or
other legal representative thereof.
"UCC" means the California Uniform Commercial Code, as amended
or supplemented from time to time. Any and all terms used in the
Agreement which are defined in the UCC shall be construed and defined
in accordance with the meaning and definition ascribed to such terms
under the UCC, unless otherwise defined herein.
ARTICLE 2
LOAN AND INVESTMENT OPPORTUNITIES
2.1 Loan. Subject to the terms and conditions of this Agreement, on the
Closing Date (as hereinafter defined), the Company hereby agrees to borrow, and
Investor hereby agrees to loan to the Company, up to an aggregate of One Million
Five Hundred and No/100 ($1,500,000) (the "Loan"). The Loan shall be evidenced
by a Secured Promissory Note, in substantially the form of Exhibit A attached
hereto (the "Promissory Note"). The Parties acknowledge and agree that: (i)
pursuant to that certain Promissory Note, dated March 1, 2008, of the Company
payable to Investor, Investor previously loaned the Company $150,000 (the "First
Previous Note"); (ii) the principal amount of, and accrued but unpaid interest
of $2,035 on the First Previous Note were rolled-into that certain Amended and
Restated Promissory Note, dated April 25, 2008, of the Company payable to
Investor (the "Second Previous Note"), with the interest being rolled-into the
Second Previous Note as accrued but unpaid interest, and Investor made an
additional advance of $150,000 to the Company under the Second Previous Note;
(iii) the principal amount of $300,000 and accrued but unpaid interest to date
of $3,823, including the accrued but unpaid interest under the First Previous
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Note and an additional $1,788 under the Second Previous Note (from April 25,
2008 to May 19, 2008, are hereby rolled-into this Promissory Note (with the
interest being rolled-into the Promissory Note as accrued but unpaid interest);
and (iv) at the Closing, Investor shall deliver the Second Previous Note to the
Company for cancellation, and Investor shall make the first $150,000 of Advance
(as defined in the Promissory Note) under the Promissory Note.
2.2 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall be deemed to have occurred on May 19, 2008 (the "Closing
Date").
2.3 Equity Interest. In the event that Investor makes all timely
Advances (as defined in the Promissory Note) under the Promissory Note for the
period from the Closing Date to the earlier of: (i) the last day of the month in
which the Company receives $10,000,000 or more of additional funding (or such
lesser amount as determined by the Company in its sole and absolute discretion)
("Adequate Third-Party Funding"); or (ii) December 10, 2008 (the "Timely Payment
Condition"), then on or prior to December 15, 2008, the Company shall issue and
deliver to Investor a certificate for 105,625 shares of common stock, no par
value per share, of the Company (the "Common Stock"), which represents five
percent (5%) of the Fully-Diluted Capital Stock of the Company (as defined
below) as of the date of this Agreement except for the contingent warrants being
held for X. Xxxx as of the Closing Date.
2.4 Option to Purchase Shares of Common Stock.
(a) In the event that Investor has timely made all Advances
under the Promissory Note, and the Company has delivered the Repayment
Notice (as defined in the Promissory Note), then for a period of ten
(10) days following Investor's receipt of the Repayment Notice,
Investor shall have the option (the "Purchase Option"), in Investor's
sole discretion, to purchase from the Company, the number of shares of
Common Stock of the Company equal to five percent (5%) of the
Fully-Diluted Capital Stock of the Company as of the date of Repayment
Notice (the "Investment Shares"), for an aggregate purchase price of
$1,500,000 (the "Option Price"). Investor's exercise of the Purchase
Option shall be in writing and shall be irrevocable (the "Election
Notice").
(b) If Investor elects to exercise the Purchase Option, the
delivery of the Election Notice to the Company shall serve as an
instruction to the Company to apply the proceeds of the repayment of
the Promissory Note (the "Repayment Proceeds"), first, to the accrued
but unpaid interest on the Promissory Note, and second, to the
outstanding principal balance of the Note. If:
(i) the Repayment Proceeds are greater than
$1,500,000, then on the Repayment Date (as defined in the
Promissory Note), the Company shall: (1) retain $1,500,000;
(2) issue to Investor a certificate evidencing the Investment
Shares; and (3) pay to Investor, by wire transfer of
immediately available funds, any Repayment Proceeds in excess
of $1,500,000; or
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(ii) in the event the Repayment Proceeds are less
than or equal to $1,500,000, then on the Repayment Date, the
Company shall (1) retain all of the Repayment Proceeds; (2)
issue to Investor that portion of the Investment Shares equal
to (5%) of the Fully-Diluted Capital Stock of the Company as
of the date of Repayment Notice multiplied by a fraction, the
numerator of which is the amount of the Repayment Proceeds,
and the denominator of which is $1,500,000; and (3) be deemed
to have granted to Investor an option (the "Second Option") to
purchase the remainder of the Investment Shares not issued
pursuant to subsection (2) above, at an aggregate purchase
price equal to the difference between $1,500,000 and the
amount of the Repayment Proceeds. [e.g., in the event the
Payoff Proceeds are $1,200,000, then on the Repayment Date the
Company will retain $1,200,000 and, in return, issue to
Investor four percent (4%) of the Fully-Diluted Capital Stock
of in the Company, together with an option to purchase the
remaining one percent (1%) of the Fully-Diluted Capital Stock
of the Company for $300,000.] The term of the Second Option
shall commence on the date of the Election Notice and shall
continue until the earlier of: (1) ninety (90) days following
the Repayment Date; or (2) December 10, 2008.
2.5 Certain Definitions. As used herein, (i) "Fully-Diluted Capital
Stock of the Company" means the then outstanding capital stock of the Company
(including shares of preferred stock of the Company, and if such shares are
convertible, on an "as converted" basis) plus all shares of capital stock of the
Company issuable, whether at such time, upon the passage of time or upon the
occurrence of some future event, upon the exercise, conversion or exchange of
all then outstanding Capital Stock Equivalents plus the number of shares of
Common Stock issuable under the Section of this Agreement to which such
definition applies (i.e., either Section 2.3 or Section 2.4 above); and (ii)
"Capital Stock Equivalents" means all rights, warrants, options (including,
without limitation, any options or other securities issued under any plan of the
Company), convertible securities or indebtedness, exchangeable securities or
indebtedness, or other rights, exercisable for or convertible into, directly or
indirectly, capital stock of the Company and securities convertible for or
exchangeable into equity interests of the Company, whether at the time of
issuance, upon the passage of time or upon the occurrence of some future event.
2.6 Right of First Offer.
(a) Prior to the Repayment Date, the Company agrees that it
will not issue any capital stock of the Company or any Common Stock
Equivalents (excluding: (i) any sales of securities pursuant to an
effective registration statement under the Securities Act of 1933, as
amended; (ii) any sale of securities to a non-profit entity or industry
partner pursuant to a debt funding, grant funding or research and
development project by any such non-profit entity or industry partner;
and (iii) a pool of up to fifteen percent (15%) of the then currently
issued and outstanding shares of Common Stock and Preferred Stock,
which pool may be used only for the issuance of capital stock of the
Company and Capital Stock Equivalents to employees, consultants,
directors and advisory board members of the Company) (the "New
Securities"), without first offering to sell all of such New Securities
to Investor on the terms and conditions specified by the Company (the
"Offering Terms"), subject to subsection (b) below. In the event that
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the Company desires to issue or sell any New Securities (each, an
"Offering"), it shall provide Investor with written notice of the
Offering, including the Offering Terms (the "Offer Notice").
(b) Investor shall have ten (10) days following its receipt of
the Offer Notice (the "Election Period") to elect in writing to
purchase all or any portion of the New Securities offered in the
Offering (the "Election Notice"). If Investor delivers an Election
Notice to the Company within the Election Period, then: (a) such
purchase by Investor shall close and fund within thirty (30) days after
delivery by Investor or the Election Notice; and (b) the purchase price
paid by Investor shall reflect a ten percent (10%) discount in the
price per share stated in the Offering Terms.
(c) If the offer set forth in the Offer Notice is not accepted
by Investor, then the Company may sell such New Securities, or a
ratable portion thereof, to any third-party purchaser (the "Purchaser")
at any time within one hundred eighty (180) days after the last day of
the Election Period, provided that such sale shall be made on terms no
more favorable to the Purchaser than the terms contained in the Offer
Notice. In the event that the New Securities are not sold in accordance
with the terms of the preceding sentence, then they cannot be sold
without again going through the procedures set forth in this Section
2.6
2.7 Events of Default. The occurrence of any Event of Default (as
defined in the Promissory Note) shall constitute an Event of Default under this
Agreement. Upon the occurrence of an Event of Default, Investor may, at its
option, accelerate and make immediately payable all sums of principal and
interest outstanding and unpaid under the Promissory Note, without demand,
presentment or notice, all of which are hereby expressly waived by Company.
2.8 Investor's Rights and Remedies. Upon the occurrence and during the
continuation of an Event of Default, Investor may, at its sole election, without
notice of such election and without demand, exercise any one or more of the
rights or remedies available to Investor at law or in equity, including the
rights of a secured party under the UCC.
2.9 Board Seat. So long as there remains any money owed by Company to
Investor under the Obligations, Investor shall have the right to designate one
member (the "Investor Designee") to the Company's Advisory Board and the
Company's Board of Directors, and in each case, all committees thereof
(collectively, the "Company Boards"), and the Company and stockholders executing
the signature page to this Agreement hereby agree to cause such Investor
Designee to be elected to the Company Boards. The Investor Designee shall serve
until the first to occur of his/her death, resignation or removal from office by
Investor; it being agreed and understood that only Investor may remove an
Investor Designee; it being further agreed and understood that upon the
occurrence of any removal, Investor Designee shall have the right to designate a
new Investor Designee and the Company and stockholders executing the signature
page to this Agreement hereby agree to cause such Investor Designee to be
elected to the Company Boards. The initial Investor Designee shall be Xxxxxxx X.
Xxxxxxx; it being agreed and understood that Xx. Xxxxxxx shall be elected to the
Company Boards at the Closing. Each Investor Designee shall be entitled to
receive from the Company for his/her services whatever compensation or
remuneration paid to other directors of the Company, including the right to
receive warrants commensurate with all members of Company Boards. Any and all
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rights to designate members to any of the Company Boards pursuant to the terms
of this Section 2.9 shall be extinguished upon repayment or satisfaction by the
Company of the Obligations.
2.10 Strategic and Technology Synergies. Investor and the Company
acknowledge that there appears to be a number of strategic and technological
synergies in the products and services being offered and/or developed by each
Party and its Affiliates, including without limitation the Convoii and Envoii
digital content management and security technology. The Parties agree to exert
reasonable commercial efforts to explore these mutually-beneficial prospects and
synergies. Without limiting the foregoing, Investor agrees to make (or cause its
Affiliates to make) the Convoii and Envoii digital content management and
security technology available for inclusion in the Company's products and
services under a cost formula to be mutually agreed to by the Parties, which
cost formula shall be subject to a favored nations provision so that the cost
paid by the Company for such technologies shall not exceed the price paid by any
other client, purchaser or user of the Convoii and Envoii technology,
respectively.
2.11 Cancellation of Rights. If, for any reason other than the Company
having received Adequate Third-Party Funding (which in turn extinguishes
Investor's obligation to fund any further installments under the Promissory
Note), Investor does not timely fund an Advance as provided in the Promissory
Note, Investor shall forfeit the following rights: (a) the right of Investor to
receive securities of the Company pursuant to Sections 2.3; (b) the rights of
Investor to purchase securities of the Company pursuant to Sections 2.4 and 2.6;
and (c) the right of Investor to designate a person to the Company Boards
pursuant to Section 2.9.
ARTICLE 3
SECURITY
3.1 Grant of Security Interest. In order to secure the Company's prompt
repayment of any and all Obligations and its prompt performance of each of its
covenants and duties under this Agreement and the other Loan Documents, the
Company hereby grants to Investor a continuing security interest in the
Collateral. Investor's security interests in the Collateral shall attach to all
Collateral without further action on the part of Investor or the Company. Such
security interest constitutes a valid security interest in the presently
existing Collateral, and shall constitute a valid security interest in
Collateral acquired after the date hereof.
3.2 Relinquishment of Security Interest. Upon the Company's repayment
of the Obligations, and without further action on the part of the Company or
Investor, any security interest created pursuant to Section 3.1 hereof shall
immediately be released and/or deemed released, including without limitation
Investor's interests in the Collateral.
3.3 License Created in the Event of Default. Upon the occurrence of any
Event of Default that results in Company's loss of the Collateral pursuant to
any Security Interest granted under this Agreement, including but not limited to
under Section 3.1 hereof, Investor hereby grants to Company and its Customers a
non-exclusive, non-sublicensable, non-transferable, fully paid-up license under
the patents and source codes comprising the Collateral to make, have made, use,
offer for sale, sell, import, distribute, lease, service, or otherwise dispose
of any product or process offered for sale, made, distributed, sold, or used by
or on behalf of Company covered by a claim of any of the patents or source code
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comprising the Collateral ("License"). The License shall run to the end of the
life of the last to expire of the patents comprising the Collateral, including
any extensions thereto that may occur during the life of any such patent. The
License shall be "AS IS, WHERE IS" and Investor shall have no obligations to the
Company or any of its Customers under the License (including, without
limitation, any obligation for patent infringement claims of others).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company hereby represents and warrants to Investor that, as of the
date of execution of this Agreement by both Parties hereto (which shall occur
after the Closing Date) (the "Execution Date"):
4.1 Organization, Qualification, and Corporate Power. The Company is a
duly organized and validly existing corporation and is in good standing under
the laws of the state of California and has all requisite corporate power and
corporate authority for the ownership and operation of its properties and for
the carrying on of its business as now conducted and as now proposed to be
conducted. The Company is duly qualified and is in good standing as a foreign
corporation and authorized to do business in all jurisdictions wherein the
character of the property owned or leased, or the nature of the activities
conducted by it, makes such qualification or authorization necessary, except
where the failure to so qualify or be so authorized would not have a material
adverse effect on the Company's business, assets (including intangible assets),
liabilities, property, financial condition, or results of operations (a
"Material Adverse Effect"). The Company has all requisite power and corporate
authority to (i) execute and deliver the Loan Documents; (ii) to perform all its
obligations under the Loan Documents; and (iii) to issue and deliver the shares
of capital stock which may be issuable under this Agreement ("collectively, the
"Shares").
4.2 Authorization of Agreements. The execution and delivery by the
Company of the Loan Documents, the performance by the Company of its obligations
thereunder and the reservation of and the issuance and delivery of the Shares
have been duly authorized by all requisite action and will not (i) violate (A)
any provision of any applicable law, or any order of any court or other agency
of government applicable to the Company, (B) the Articles, (C) the Bylaws of the
Company, or (D) any provision of any mortgage, lease, indenture, agreement, or
other instrument to which the Company or any of its properties or assets is
bound, or (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement,
or other instrument, or result in the creation or imposition of any lien,
charge, or encumbrance of any nature whatsoever upon any of the properties or
assets of the Company, except in the case of clauses (i)(D) and (ii), where such
violation, conflict, breach, default, or lien would not have a Material Adverse
Effect. The Shares have been duly reserved for issuance under this Agreement
and, when so issued, will be duly authorized, validly issued, fully paid, and
nonassessable shares with no personal liability attaching to the ownership
thereof and will be free and clear of all liens, charges, and encumbrances of
any nature whatsoever except for restrictions on transfer under applicable
federal and state securities laws, and except for restrictions imposed by that
certain Shareholders Agreement of the Company, shown in Schedule 4.2, to be
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separately delivered to Investor by Company in accordance with Section 7.1(b)
hereof. Neither the issuance nor delivery of the Shares is subject to any
preemptive rights of stockholders of the Company, or to any right of first
refusal or other right in favor of any Person.
4.3 Validity. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid, and binding obligation of the
Company, enforceable in accordance with its terms except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(b) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies. The Loan Documents constitute
the legal, valid, and binding obligations of the Company, enforceable in
accordance with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
4.4 Capital Stock. The authorized capital of the Company consists of:
(i) 15,000,000 shares of Common Stock, 2,025,000 shares of which are issued and
outstanding immediately prior to the Closing (10,000 shares of which are based
on fully vested warrants); and (ii) (A) 10,000,000 shares of preferred stock, no
par value ("Preferred Stock"), and (B) up to 241,000 warrants to purchase shares
of Common Stock that are fully contingent on future contributions to the
Company, none of which shares have been earned, issued or are presently
outstanding. All of the outstanding shares of Common Stock have been duly
authorized, are fully paid and nonassessable, and were issued in compliance with
all applicable federal and state securities laws. The issued and outstanding
shares of the Company's capital stock are owned by the stockholders and in the
numbers set forth on Schedule 4.4, to be separately delivered to Investor by
Company in accordance with Section 7.1(b) hereof. Except as set forth in
Schedule 4.4, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, to purchase or acquire from the Company any
shares of Common Stock or Preferred Stock, or any securities convertible into or
exchangeable for shares of Common Stock or Preferred Stock.
4.5 Financial Statements. The financial position of the Company is
reflected in Schedule 4.5 ("Financial Statements"), to be separately delivered
to Investor by Company in accordance with Section 7.1(b) hereof. The Financial
Statements present fairly the financial position of the Company as at February
29, 2008 and the Company's results of operations for the period from inception
to February 29, 2008, except as set forth therein, and were prepared in the
ordinary course of business. Since the last date covered by the Financial
Statement, the Company has not suffered a Material Adverse Effect.
4.6 Litigation and Compliance with Law.
(a) There is no: (i) action, suit, claim, proceeding,
arbitration, complaint, charge, or investigation pending or, to the
Company's knowledge, threatened (A) against or affecting the Company,
or any officer, director, or key employee of the Company at law or in
equity, or before or by any federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign; or (B) that questions the
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validity of the Loan Documents or the right of the Company to enter
into them, or to consummate the transactions contemplated by the Loan
Documents; (ii) arbitration proceeding relating to the Company or any
officer, director, or key employee of the Company pending under
collective bargaining agreements or otherwise; or (iii) governmental
inquiry pending or, to the Company's knowledge, threatened against or
affecting the Company or any officer, director, or key employee of the
Company.
(b) The Company is not in default with respect to any
governmental order, writ, judgment, injunction, or decree known to or
served upon the Company of any court or of any federal, state,
municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign. There is no material
action or suit by the Company pending or threatened against others.
(c) The Company is not in violation or default (i) of any
provisions of its Articles or Bylaws, (ii) of any instrument, judgment,
order, writ, or decree, (iii) under any note, indenture, or mortgage,
or (iv) under any lease, agreement, contract, or purchase order to
which it is a party or by which it is bound that is required to be
listed on the schedules attached hereto, or (v) of any provision of
federal or state statute, rule, or regulation applicable to the
Company, the violation of which (in each case for (i) - (v)) would
have, individually or in the aggregate, a Material Adverse Effect.
(d) There is no action, suit, proceeding, or investigation by
the Company pending or which the Company intends to initiate.
4.7 No Outstanding Indebtedness. Other than the Previous Note, there
are no outstanding notes, indentures, mortgages, or any other similar forms of
financing to which the Company is a party. The Company is not a guarantor or
indemnitor of any indebtedness of any other Person.
4.8 Title to Assets. The Company has valid and marketable title to all
of its assets now carried on its books including those reflected in the most
recent balance sheet of the Company which forms a part of Schedule 4.5, or
acquired since the last date of the periods covered thereby, free of any liens,
charges, or encumbrances of any kind whatsoever, except such encumbrances and
liens that arise in the ordinary course of business and do not materially impair
the Company's ownership or use of such assets. The Company does not own any real
property. The Company is in compliance in all material respects under all leases
for property and assets under which it is operating, and all such leases are
valid and subsisting and are in full force and effect.
4.9 Taxes. The Company has accurately prepared and timely filed all
federal, state, and other tax returns required by law to be filed by it, and all
taxes (including all withholding taxes) shown to be due and all additional
assessments have been paid or provisions made therefor. The Company knows of no
additional assessments or adjustments pending or threatened against the Company
for any period, nor of any basis for any such assessment or adjustment.
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4.10 Intellectual Property Assets. The Company owns or possesses adequate
licenses or other rights to use all software, patents, patent applications,
trademarks, trademark applications, service marks, service xxxx applications,
trade names, copyrights, manufacturing processes, formulae, trade secrets, and
know how (collectively, "Intellectual Property") necessary or material to the
conduct of its business as conducted, without any conflict with or infringement
of the rights of others, and no claim is pending or, to the Company's knowledge,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other Person under any Intellectual
Property, and, to the Company's knowledge, there is no basis for any such claim
(whether or not pending or threatened). Set forth in Schedule 4.10, to be
separately delivered to Investor by Company in accordance with Section 7.1(b)
hereof, is a list of the patents and patent applications constituting the
Collateral that are owned by or registered in the name of the Company. No claim
is pending or, to the Company's knowledge, threatened to the effect that any
such Collateral owned or licensed by the Company, or which the Company otherwise
has the right to use, is invalid or unenforceable by the Company, and, to the
best of Company's knowledge and belief, there is no basis for any such claim
(whether or not pending or threatened). Except as provided in Schedule 4.10, the
Company has not granted or assigned to any other person or entity any right to
manufacture, have manufactured, or assemble the products or proposed products or
to provide the services or proposed services of the Company. The Company has no
material obligation to compensate any Person for the use of any Intellectual
Property nor has the Company granted to any Person any license or other rights
to use in any manner any Intellectual Property of the Company. If the Company
files any further patent applications with the proper authorities following the
Execution Date, the Company agrees within five (5) days after such patent
application is filed, to provide to Investor written notice of such filing and a
Patent Recordation Form suitable for being filed with the United States Patent
and Trademark Office with respect to each such subsequent patent application
filing, if any.
4.11 Investments in Other Persons. The Company has not made any loan or
advance to any Person which is outstanding on the date of this Agreement, nor is
the Company obligated or committed to make any such loan or advance, nor does
the Company own any equity interest in, or assets comprising the business of,
obligations of, or any interest in, any Person.
4.12 Governmental Approvals. Except as otherwise contemplated by this
Agreement, no authorization, consent, approval, license, filing, or registration
with any court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, is or will be necessary for the valid
execution, delivery, and performance by the Company of the Loan Documents, and
the issuance and delivery of the Note, other than filings pursuant to federal
and state securities laws (the failure of which to file will not adversely
impact the exemption from registration or qualification of the issuance of the
securities contemplated by this Agreement) in connection herewith.
4.13 No Brokers or Finders. No person has or will have, as a result of
actions taken by the Company in connection with the transactions contemplated by
this Agreement, any right, interest, or valid claim against or upon Investor or
the Company for any commission, fee, or other compensation as a finder or broker
arising out of the transactions contemplated by this Agreement.
10
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to the Company that, as of the
Execution Date:
5.1 Organization, Qualification, and Corporate Power. Investor is a
duly organized and validly existing corporation and is in good standing under
the laws of the state of Delaware and has all requisite corporate power and
corporate authority for the ownership and operation of its properties and for
the carrying on of its business as now conducted and as now proposed to be
conducted.
5.2 Authorization of Agreements. The execution and delivery by Investor
of the Loan Documents, the performance by Investor of its obligations thereunder
have been duly authorized by all requisite corporate action and will not (i)
violate (A) any provision of any applicable law, or any order of any court or
other agency of government applicable to Investor, (B) the Certificate of
Incorporation or Bylaws of Investor, or (C) any provision of any mortgage,
lease, indenture, agreement, or other instrument to which Investor or any of its
properties or assets is bound, or (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, or encumbrance of any nature whatsoever upon any
of the properties or assets of Investor.
5.3 Validity This Agreement has been duly executed and delivered by
Investor and constitutes the legal, valid, and binding obligation of Investor,
enforceable in accordance with its terms except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (b) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies. The Loan Documents constitute the legal,
valid, and binding obligations of Investor, enforceable in accordance with their
respective terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
5.4 No Brokers or Finders. No person has or will have, as a result of
actions taken by Investor in connection with the transactions contemplated by
this Agreement, any right, interest, or valid claim against or upon the Company
for any commission, fee, or other compensation as a finder or broker arising out
of the transactions contemplated by this Agreement.
5.5 Accredited Investor. Investor is not an accredited investor as that
term is defined in Rule 501 promulgated by the Securities Exchange Commission
and is acquiring the securities issued pursuant to this Agreement for its own
account and not with a view to distribution.
ARTICLE 6
COVENANTS
6.1 Covenants of the Company. The Company covenants and agrees with
Investor that, from and after the date of this Agreement until the Obligations
are paid in full:
11
(a) At any time at the request of Investor, the Company shall
execute and deliver to Investor all documents, instruments and
agreements that Investor may reasonably request in order for Investor
to perfect and continue perfection of Investor's security interest in
the Collateral and in order to fully consummate all of the transactions
contemplated under the Loan Documents; and
(b) Investor shall have the right, upon reasonable prior
notice, from time to time during the Company's usual business hours (or
at any time and without notice required if an Event of Default has
occurred and is continuing), to inspect the Company's books and records
and to make copies thereof; provided that any information contained
therein and deemed by the Company in writing to be proprietary or
confidential may not be divulged by the Investor to any third party
except as required by law or applicable statute or regulation.
6.2 Escrow of Source Codes. Upon development of any Source Codes, the
Company agrees to escrow such source code with an escrow agent mutually
acceptable to the Company and Investor, pursuant to an Escrow Agreement, in form
and substance mutually acceptable to the Company and Investor. If the Company
and Investor are unable to agree to any of above within thirty days following
the development of any Source Code, then the Source Code shall be interpleaded
to a court of competent jurisdiction until such time as they are able to agree.
ARTICLE 7
CLOSING OBLIGATIONS
7.1 Closing Obligations. In addition to anything else set forth in this
Agreement, at the Closing:
(a) the Parties (as applicable) shall have executed and
delivered to each other this Agreement, the Note, and all other Loan
Documents required by Investor;
(b) the Company shall have delivered to Investor each of Schedules 4.2, 4.4;
4.5; 4.10 (collectively, the "Disclosure Schedules"). Except as required by law
or applicable governmental authority, Investor agrees not to publicly disclose
any of the contents of the Disclosure Statements without the express written
consent of the Company; and
(c) the Company shall have executed and delivered to Investor
a copy of a Patent Recordation Form in a form suitable for filing by
Investor with the United States Patent and Trademark Office with
respect to the Collateral.
ARTICLE 8
MISCELLANEOUS
8.1 Expenses and Attorney's Fees. If suit is brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and court costs in addition to any other remedy
or recovery awarded by the court. At the Closing, the Company shall pay the
12
legal fees and costs of Xxxxxxx Xxxxxx L.L.P., counsel to Investor, in the
amount of $12,000.00.
8.2 Demand; Protest. The Company hereby waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, and guarantees at any
time held by Investor on which the Company may in any way be liable.
8.3 Notices. All notices, requests, demands, claims and other
communications permitted or required to be given hereunder must be in writing
and shall be deemed duly given and received (i) if personally delivered, when so
delivered, (ii) if mailed, three (3) Business Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if sent by
electronic facsimile, once transmitted to the fax number specified below and
once the appropriate facsimile confirmation is received, provided that a copy of
such notice, request, demand, claim or other communication is promptly
thereafter sent in accordance with the provisions of clause (ii) or (iv) hereof,
or (iv) if sent through an overnight delivery service in circumstances to which
such service guarantees next day delivery, the day following being so sent:
If to Investor: VirtualHealth Technologies, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to the Company: Private Access, Inc.
00 Xxxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other written means (including ordinary mail or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any Party may change the address to
which notices, requests, demands, claims and other communications hereunder are
to be delivered to it by giving each other Party notice in the manner herein set
forth.
8.4 Governing Law. THIS AGREEMENT, THE ENTIRE RELATIONSHIP OF THE
PARTIES HERETO, AND ANY LITIGATION BETWEEN THE PARTIES (WHETHER GROUNDED IN
CONTRACT, TORT, STATUTE, LAW OR EQUITY) SHALL BE INTERPRETED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
ITS CHOICE OF LAW PRINCIPLES.
8.5 Venue for Disputes. THE COURTS OF THE NORTHERN DISTRICT OF TEXAS,
LOCATED IN DALLAS, TEXAS, FEDERAL OR STATE, SHALL HAVE EXCLUSIVE JURISDICTION OF
ALL LEGAL ACTIONS ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
13
8.6 Waiver; Remedies Cumulative. The rights and remedies of the Parties
hereunder are cumulative and not alternative. Neither any failure nor any delay
by any Party in exercising any right, power or privilege under this Agreement
shall operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege shall preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted by applicable
law, (i) no claim or right arising out of this Agreement can be discharged by
one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless made in writing and signed by each other Party; (ii) no waiver that
may be given by a Party shall be applicable except in the specific instance for
which it is given; and (iii) no notice to or demand on one Party shall be deemed
to be a waiver of any obligation of that Party or of the right of the Party
giving such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
8.7 Severability. If any provision of this Agreement, or the
application of any such provision to any person, entity or circumstance, is held
to be unenforceable or invalid by any court of competent jurisdiction or under
any applicable law, the validity and enforceability of the remaining provisions
of this Agreement shall not be affected thereby. Without limiting the foregoing,
the covenants and obligations contained in this Agreement shall be construed as
separate covenants and obligations, covering their respective subject matters.
Each breach of a covenant or obligation set forth in this Agreement shall give
rise to a separate and independent cause of action.
8.8 Specific Performance. Each party hereto agrees that money damages
would not be a sufficient remedy for any breach of the provisions of this
Agreement by the any other party hereto, and that each party hereto shall be
entitled to injunctive relief or specific performance as a remedy for any breach
hereof, in addition to all other remedies available at law or in equity to any
party hereto.
8.9 Entire Agreement; Modification. This Agreement and the other Loan
Documents collectively constitute the entire and final agreement among the
Parties with respect to the subject matter hereof, and supersede and replace all
prior agreements, understandings, commitments, communications and
representations made between the Parties, whether written or oral, with respect
to the subject matter hereof. This Agreement may not be amended, supplemented,
or otherwise modified except by a written agreement executed by both Parties.
8.10 No Assignment; Successors and Assigns; No Third-Party Rights. No
Party may assign any or all of his/its rights under this Agreement to any Person
without the prior written consent of the other Party. Any attempted assignment
or assumption without such written consent shall be null and void and without
legal effect. Subject to the foregoing, this Agreement shall apply to, be
binding in all respects upon and inure to the benefit of the heirs, executors,
personal representatives, successors and assigns of the Parties. Nothing
expressed or referred to in this Agreement shall be construed to give any Person
other than the Parties any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision of this Agreement.
14
8.11 Publicity. Neither Investor nor the Company shall make any public
announcements concerning this transaction without first securing the prior
written approval of the other party, provided that neither party shall
unreasonably withhold or delay their approval except to assure that such
announcement is factually correct and does not disclose confidential
information; provided, further, however, that the Parties acknowledge and agree
that this is a material contract to Investor, which is a publicly-traded company
that files reports under the Securities Exchange Act of 1934, and as such,
Investor must file the Loan Agreements with the Securities and Exchange
Commission, and such filing will not require the consent of the Company.
8.12 Execution of Agreement. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original copy and all
of which, when taken together, shall be deemed to constitute one and the same
agreement. The exchange of copies of this Agreement and of signature pages by
facsimile transmission shall constitute effective execution and delivery of this
Agreement as to the Parties and may be used in lieu of the original Agreement
for all purposes. Signatures of the Parties transmitted by facsimile shall be
deemed to be their original signatures for all purposes.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
PRIVATE ACCESS, INC
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Xxxxxx X. Xxxxxxx,
President and Chief Executive Officer
VIRTUAL HEALTH TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------
Xxxxx X. Xxxxx,
Chief Executive Officer
Each of the undersigned stockholders of the Company, owning the number and type
of shares of capital stock set forth below their respective names below (and in
the aggregate, owning on the Execution Date approximately 59% of the issued and
outstanding shares of Common Stock), hereby executes this Agreement for the sole
purpose of being bound by and subject to the provisions of Section 2.9 of the
Agreement.
15
/s/ W. Xxxxxx Xxxxxx
----------------------------------------------------
Printed: W. Xxxxxx Xxxxxx
Type of Securities Owned: Common Stock
Number of Shares Owned: 378,000
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------------------
Printed: Xxxxxx X. Xxxxxxx
Type of Securities Owned: Common Stock
Number of Shares Owned: 360,000
ALLCARE HEALTH MANAGEMENT SYSTEM, INC.
By: /s/ W. Xxxxxx Xxxxxx
------------------------
W. Xxxxxx Xxxxxx, President
Type of Securities Owned: Common Stock
Number of Shares Owned: 180,000
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------------
Printed: Xxxxxx X. Xxxxxxxx
Type of Securities Owned: Common Stock
Number of Shares Owned: 166,320
KEYSTONE EQUITY PARTNERS, LLC
By: /s/ Xxxxxx Xxxxxxx
----------------------
Xxxxxx Xxxxxxx, President
Type of Securities Owned: Common Stock
Number of Shares Owned: 113,400
16
EXHIBIT A
---------
Form of Promissory Note
17
SCHEDULE 4.2
Form of Shareholders' Agreement
18
SCHEDULE 4.4
Issued and Outstanding Company ownership
LLC Units Post-Trigger (C Corp)
------------------------------
Shareholder Name by Class % Interest # of Shares
------------- ----------- -------------
Class A
Allcare Health Management System, Inc. 9,000 8.89% 180,000
------------- ----------- -------------
Total Class A Shareholders (1) 9,000 8.89% 180,000
Class B
Allcare Health Management System, Inc. (Bonus Pool) 45 0.40% 8,100
Alter, Xxxxxx 4 0.04% 720
Xxxxx, Xxxxxx X. 53 0.47% 9,540
Xxxxxxx, Xxxxxxx 36 0.32% 6,480
Xxxxxxxxxx, Xxxxxxx 25 0.22% 4,500
Boehner, Xxxxxxx X. 18 0.16% 3,240
Xxxxxxx, Xxxx X 7 0.06% 1,260
Xxxxxx, Xxxx X. 90 0.80% 16,200
Xxxxxxx, Xxxxxxxx 2 0.02% 360
Xxxxxx, Xxxxx 71 0.63% 12,780
Xxxxxx, Xxxxxxx 71 0.63% 12,780
Xxxxxx, X. Xxxxxx 2,100 18.67% 378,000
Cornish, Sloan 71 0.63% 12,780
Xxxxxxxx, Xxxxxxx X. 360 3.20% 64,800
Xxxxxxxx, Xxxxxxx 36 0.32% 6,480
Xxxxx, Xxxxx 14 0.12% 2,520
Xxxxx, Xxxxxxx 7 0.06% 1,260
Xxxxx, Xxxxxxx X. 7 0.06% 1,260
Xxxxxx, Xxxxxx D 5 0.04% 900
French, Xxxx X. Trustee 71 0.63% 12,780
Xxxxxx, Xxxx X., XX 39 0.35% 7,020
French, Xxxx X. 5 0.04% 900
Xxx, Xxxxx A 2 0.02% 360
Xxxxx, Xxxx X. Revocable Trust 18 0.16% 3,240
Xxxxxxxxx, Xxxxxx III 7 0.06% 1,260
Xxxxxxxxx, Xxxxxx 4 0.04% 720
Xxxxxx, Thes 36 0.32% 6,480
Xxxxxx, Xxxxxx 50 0.44% 9,000
Xxxx, Xxxxxx X. 53 0.47% 9,540
Xxxxxxx, Xxxxxx X. 221 1.96% 39,780
Xxxxx, Xxxxxxx X. 90 0.80% 16,200
Xxxxxxxx, Xxxxx 7 0.06% 1,260
Xxxxxxxx, Xxxxxx P 18 0.16% 3,240
Xxxxxxxx, Xxxxxx I 18 0.16% 3,240
Keystone Equity Partners, LLC
c/o Xxxxxx Xxxxxxx, President 630 5.60% 113,400
Xxxx, Xxxx X. 16 0.14% 2,880
Xxxx, Xx. Xxxxx X. 107 0.95% 19,260
19
Xxxxx, Xxxxx C.B. 18 0.16% 3,240
Xxxx, Xxx 113 1.00% 20,340
XxXxxxx, Xxxxxx M 7 0.06% 1,260
Xxxxxx, Xxxxxx X. 18 0.16% 3,240
Xxxx, Xxxxxx 1 0.01% 180
Xx, Xxxxx 36 0.32% 6,480
Niro, Xxxxxxx X. 228 2.03% 41,040
Xxxxxx, Xxxxxxx & Xxxxx 71 0.63% 12,780
Xxxxx, Xxxxxxx 29 0.26% 5,220
Xxxxx, Xxxxxxx X. 43 0.38% 7,740
Xxxxxxxx, Xxxxxx 7 0.06% 1,260
Xxxxxxxx, Xxxxxx X. 924 8.21% 166,320
Xxxxxx, Xxxxx X. 14 0.12% 2,520
Xxxxxxxx, Xxxxx 18 0.16% 3,240
Xxxx, Xxxxxxxxx X. 71 0.63% 12,780
Xxxxxxx, Xxxxxx X. 2,000 17.78% 360,000
Xxxxxxx, Xxxx X. 315 2.80% 56,700
Xxxxxx, Xxxxxxx 450 4.00% 81,000
Xxxx, Xxxxxx 4 0.04% 720
Xxxxxxxxxxx, Xxxx 45 0.40% 8,100
Xxxxxxx, Xxxx 7 0.06% 1,260
Xxxxxxx, Xxxx 4 0.04% 720
Xxxxxxxx, Xxxxx 1 0.01% 000
Xxxxxxx, X. X. 18 0.16% 3,240
Xxxxxx, Xxxxxx X. 18 0.16% 3,240
Van Dine, Xxxxx 7 0.06% 1,260
Xxxxxxxx, Xxxxx X. 4 0.04% 720
Xxxxxx, Xxxxxxx 7 0.06% 1,260
Xxxxx, Xxxx 14 0.12% 2,520
Xxxxxxx, Xxxxxxx 7 0.06% 1,260
Xxxxxxx, Xxxxxx. & Xxxxx 36 0.32% 6,480
White, Guy 21 0.19% 3,780
Xxxxxxxxxxxx, Xxxxx X. 5 0.04% 000
Xxxx, Xxxxx 25 0.22% 4,500
------------- ----------- -------------
Total Class B Shareholders (71) 80.00% 1,620,000
9,000
Class C
Xxxxx, Xxxxxx X.
(Trustee for Xxxxxx X. Xxxxx Living Trust) 100 0.49% 10,000
Alter, Xxxxxx 50 0.25% 5,000
Xxxxxxx, Xxxxx X. (Trustee for Xxxxx X. Xxxxxxx Trust) 100 0.49% 10,000
Xxxxxx, Xxxxxxx X. 100 0.49% 10,000
French II Jr., Xxxx X. (Trustee for Xxxx X. Xxxxxx) 100 0.49% 10,000
Xxxxx, Xxxxxx X. (Trustee for the Xxxxx Family Trust) 100 0.49% 10,000
Xxxx, M. Xxxxxxxxx (Trustee for the Xxxx Family Trust) 100 0.49% 10,000
Xxxxxxx M.D., Xxxxxxx 200 0.99% 20,000
Xxxxxxxxx, J. Xxxx and Xxxxxx X. 100 0.49% 10,000
Xxxxx, Xxxxx 100 0.49% 10,000
XxXxxxxx, Xxxxxxx and Xxxxxxx 100 0.49% 10,000
Xxxxx, Xxxxx and Xxxxx Xxxxxx 200 0.99% 20,000
Xxxxxxx, Xxxxx 100 0.49% 10,000
20
X'Xxxxx, Xxxxx 100 0.49% 10,000
Xxxx, Xxxxx 150 0.74% 15,000
Xxxxxxxx, Xxxxxx 100 0.49% 10,000
Xxxxxxx Jr., Xxxx K. 100 0.49% 10,000
Xxxxxxx, X. X. 50 0.25% 5,000
Xxx Xxxxxx, Xxxxxxx X. 100 0.49% 10,000
Xxxxxxx, Xxxxxx X. 100 0.49% 10,000
------------- ----------- -------------
Total Class C Shareholders (20) 10.62%
2,150 215,000
Vested Warrants
Xxxxxx, Xxxxx 23 0.11% 2,300
Xxxxx, Xxxxxx 8 0.04% 800
Xxxxxxx M.D., Xxxxxxx 53 0.26% 5,300
Xxxxx, Xxxxxx 8 0.04% 800
Xxxxxxxxx, J. Xxxx 8 0.04% 800
------------- ----------- -------------
Total Vested Warrant Holders (5) 100 0.49% 10,000
----------- -------------
All Shareholders and Vested Warrant Holders (97) 20,250 100.00% 2,025,000
============= =========== =============
Contingent Warrants
Xxxxxx, Xxxxx 25 - 2,500
Xxxxx, Xxxxxx 8 - 800
Xxxxx, Xxxxx X. 8 - 800
Xxxxxxx M.D., Xxxxxxx 8 - 800
Xxxxx, Xxxxxx 8 - 800
Xxxxxxxxx, J. Xxxx 8 - 800
Xxxxxx, Xxxxxxx 203 - 20,300
Francisco, Xxxx 112 - 11,200
Xxxxxxxxx, Xxxx 130 - 13,000
Xxxx, M. Xxxxxxxxx 1,540 - 154,000
Xxxxxxxxx, Xxxx 100 - 10,000
Xxxxx, Xxxxx 125 - 12,500
Xxxxx, Xxxxxxx 140 - 14,000
------------- ----------- -------------
Total Contingent Warrant Holders (13) 2,350 - 241,500
------------- ----------- -------------
All Shareholders, Including Contingent Warrants (110) 22,600 - 2,266,500
============= =========== =============
21
SCHEDULE 4.5
Company Financial Statements
Private Access, LLC
Statement of Operations
From Inception (December 1, 2006) - February 29, 2008
Total for
Period
Total Income $--
Total Cost of Goods Sold $--
-----
Gross Profit $--
Operating Expenses
Advertising Expense 100.00
Amortization Expense 2,176.00
Auto Expense 48.75
Bank Service Charges 204.00
Benefits 3,881.74
Consulting Services 390,965.48
Dues and Subscriptions 3,555.15
Marketing 1,269.46
Local Meetings & Meals 158.43
Miscellaneous 1,333.16
Office Equipment 840.49
Office Supplies 2,413.85
Postage & Delivery 668.52
Printing and Reproduction 1,737.35
Professional Development 225.00
Professional Fees 233.33
Legal Fees 28,087.79
Salary Reimbursement 44,451.86
Taxes 200.00
Telephone, Fax & Internet 4,913.23
Car Rental 1,533.34
Entertainment 93.26
Lodging 7,147.83
Meals 3,770.63
Miscellaneous Travel 1,030.19
Airfare & Other Transportation 26,586.33
--------------
Total Operating Expenses $ 527,625.17
Net Operating Income $ (527,625.17
Other Income / (Expense) 160.00
--------------
Net Income $ 527,785.17
==============
22
Private Access, LLC
Balance Sheet
As of February 29, 2008
-------------------
Total
-------------------
ASSETS
Current Assets
Bank Accounts 11,752.06
Other Current Assets (4.23)
--------------
Total Current Assets $ 11,747.83
Fixed Assets
Patents 165,000.00
Amortization - Patents (2,110.00)
--------------
Total Patents 162,890.00
Set Up Costs 5,158.00
Amortization - Set Up Costs (66.00)
--------------
Total Set Up Costs 5,092.00
--------------
Total Fixed Assets $ 167,982.00
--------------
TOTAL ASSETS $ 179,729.83
==============
LIABILITIES AND EQUITY
Liabilities
Current Liabilities
Accounts Payable --
Credit Cards 2,812.24
Other Current Liabilities --
--------------
Total Current Liabilities 2,812.24
Long Term Liabilities --
--------------
Total Liabilities $ 2,812.24
Equity
Initial Capitalization 195,000.00
Seed Round - Class C 537,500.00
--------------
Total Investment 732,500.00
Opening Balance Equity (2,812.24)
Retained Earnings (445,195.67)
Net Income (107,574.50)
--------------
Total Equity $ 176,917.59
--------------
TOTAL LIABILITIES AND EQUITY $ 179,729.83
==============
SCHEDULE 4.10
Collateral Assets of the Company
Issued patents and patent rights -
US Patent Number 6,345,260
US Patent Number 7,028,049
Currently pending patent applications -
US Patent Application Number 11/231,561, filed on September 21, 2005
(Published on June 26, 2006 as US Patent Publication Number
2006/0020622)
US Patent Application Number 12/031,987, filed on February 15, 2008
Non-Exclusive Licensees of the foregoing patents* --
Advance PCS
Argus Health Systems, Inc.
Xxxxxx Healthcare Corporation and Xxxxxx International
Caremark Rx, Inc.
Cerner Corporation
Eclipsys Solutions Corp.
Epic Systems, Inc.
Express Scripts, Inc. and Diversified Pharmaceuticals, Inc.
First Health Group Corp. and First Health Services Corp.
GE Medical Systems, Inc. and General Electric Company
Harvard Pilgrim Health Care, Inc.
IDX Systems Corporation
McKesson HBOC, Inc.
Merck-Medco Managed Care, LLC and Merck & Co.
National Prescription Administrators, Inc. (NPA)
PCS Health Systems, Inc.
WebMD Corporation and its wholly owned subsidiary Envoy Corporation
* Before Private Access was organized, the patents acquired by assignment were
owned by Allcare Health Management Systems, Inc. (herein "Allcare"). Allcare's
primary business was the licensing and enforcement of U.S. Patent 5,301,105 (the
"'105 patent"). Although Private Access has no economic or legal interest in the
'105 patent, and received no financial benefit whatsoever from the '105 patent
or any of Allcare's licensing and/or enforcement activity, between 2000 and
2004, Allcare entered into fully paid-up non-exclusive, non-assignable licenses
with the seventeen (17) companies listed above, the terms of which non-exclusive
licenses convey rights under Allcare's patents, including the patents that
Private Access subsequently acquired from Allcare, and any other U.S. or foreign
patent, utility model or application, divisional, substitution, continuation, or
continuation-in-part application, extension, reissue or reexamination patents,
or any other patent or patent application based on or relying for priority on
these patents.
