EXHIBIT 10.2
ACCESS RADIOLOGY CORPORATION
SERIES J PREFERRED STOCK PURCHASE AGREEMENT
SEPTEMBER 30, 1997
TABLE OF CONTENTS
1. Purchase And Sale Of Stock....................................................... -1-
1.1 Sale And Issuance Of Series J Preferred Stock..................... -1-
1.2 Closing........................................................... -1-
2. REPRESENTATIONS AND WARRANTEES OF THE COMPANY.................................... -2-
2.1 Organization; Good Standing; Qualification........................ -2-
2.2 Authorization..................................................... -3-
2.3 Valid Issuance Of Preferred And Common Stock...................... -3-
2.4 Governmental Consents............................................. -3-
2.5 Capitalization And Voting Rights.................................. -3-
2.6 Subsidiaries...................................................... -4-
2.7 Contracts And Other Commitments................................... -5-
2.8 Related Party Transactions........................................ -5-
2.9 Registration Rights............................................... -5-
2.10 Clearances, Approvals, Etc........................................ -6-
2.11 Compliance With Other Instruments................................. -6-
2.12 Litigation........................................................ -6-
2.13 Disclosure........................................................ -6-
2.14 Offering.......................................................... -7-
2.15 Title To Property And Assets; Leases.............................. -7-
2.16 Financial Statements.............................................. -7-
2.17 Changes........................................................... -8-
2.18 Intangibles....................................................... -9-
2.19 Employees; Employee Compensation.................................. -9-
2.20 Tax Returns, Payments, And Elections.............................. -10-
2.21 Insurance......................................................... -10-
2.22 Environmental And Safety Laws..................................... -11-
2.23 Minute Books...................................................... -11-
3. Representations And Warranties of The Investors.................................. -11-
3.1 Authorization..................................................... -11-
3.2 Purchase Entirely For Own Account................................. -11-
3.3 Reliance Upon Investors' Representations.......................... -11-
3.4 Receipt Of Information............................................ -12-
3.5 Investment Experience............................................. -12-
3.6 Accredited Investor............................................... -12-
3.7 Restricted Securities............................................. -12-
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4. Conditions Of Investors' Obligations At Closing.................................. -12-
4.1 Representations And Warranties.................................... -12-
4.2 Performance....................................................... -13-
4.3 Qualifications.................................................... -13-
4.4 Proceedings And Documents......................................... -13-
4.5 Board Of Directors................................................ -13-
4.6 Opinions Of Counsel............................................... -13-
4.7 Investors Rights Agreement........................................ -13-
4.8 Officer's Certificate............................................. -13-
4.9 Good Standing Certificates........................................ -13-
5. Conditions of the Company's Obligations at Closing............................... -14-
5.1 Representations And Warranties.................................... -14-
5.2 Performance....................................................... -14-
5.3 Qualifications.................................................... -14-
5.4 Proceedings And Documents......................................... -14-
5.5 Investors Rights Agreement........................................ -14-
6. Miscellaneous.................................................................... -14-
6.1 Governing Law..................................................... -14-
6.2 Survival.......................................................... -14-
6.3 Successors And Assigns............................................ -15-
6.4 Severability...................................................... -15-
6.5 Amendment And Waiver.............................................. -15-
6.6 Delays Or Omissions............................................... -15-
6.7 Notices........................................................... -15-
6.8 Attorneys' Fees................................................... -16-
6.9 Titles And Subtitles.............................................. -16-
6.10 Counterparts...................................................... -16-
6.11 Entire Agreement.................................................. -16-
6.12 Finder's Fees..................................................... -16-
6.13 Expenses.......................................................... -16-
Exhibits:
A Schedule of Investors
B Restated Certificate
C Schedule of Exceptions
D Investors Rights Agreement
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ACCESS RADIOLOGY CORPORATION
SERIES J PREFERRED STOCK PURCHASE AGREEMENT
This Series J Preferred Stock Purchase Agreement (this "Agreement") is made
as of September 30, 1997 by and between Access Radiology Corporation, a Delaware
corporation (the "Company"), and each of the persons and entities listed on
Exhibit A (individually, an "Investor" and collectively, the "Investors").
The parties agree as follows:
1. Purchase And Sale Of Stock.
1.1 Sale And Issuance Of Series J Preferred Stock.
(a) The Company will adopt and file with the Secretary of State of
the State of Delaware on or before the Initial Closing (as defined in Section
1.2(a)) an Amended and Restated Certificate of Incorporation in the form
attached hereto as Exhibit B (the "Restated Certificate").
(b) On the terms and subject to the conditions of this Agreement,
each Investor will purchase and the Company will sell and issue to each Investor
that number of shares of the Company's Series J Preferred Stock set forth
opposite each Investor's name on Exhibit A at a purchase price of $1.10 per
share. The Series J Preferred Stock will have the rights, preferences,
privileges and restrictions set forth in the Restated Certificate. The
obligations of the Investors under this Agreement are several and not joint.
1.2 Closing.
(a) The purchase and sale of the Series J Preferred Stock, by the
Investors listed on Exhibit A as of the date hereof, will take place at the
offices of Xxxxxx Godward LLP, Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx at 10:00 a.m. on the date hereof or at such other time and place as
the Company and Bedrock Capital Partners I, L.P. mutually agree, either orally
or in writing (which time and place are designated as the "Initial Closing"). In
addition, the purchase and sale of the Series J Preferred Stock by and to the
Additional Investors (as defined in Section 1.3) in accordance with Section 1.3
will take place at the offices of the Company or at such other places and at
such times as the Company and Additional Investors mutually agree, either orally
or in writing (together with the Initial Closing, each such time and place is
designated as a "Closing").
(b) At each Closing, the Company will deliver to each Investor a
certificate representing the shares of Series J Preferred Stock that such
Investor is purchasing at such
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Closing against payment of the purchase price therefor by check, wire transfer
or as otherwise set forth on Exhibit A.
1.3 Subsequent Sale of Series J Preferred Stock.
If less than all of the authorized number of shares of Series J Preferred
Stock are sold at the Initial Closing, then, subject to the terms and conditions
of this Agreement, the Company may sell, on or before the 45th day after the
date hereof, up to the balance of the authorized but unissued Series J Preferred
Stock to such persons as the Board of Directors of the Company may determine at
the same price per share as the Series J Preferred Stock purchased and sold at
the Initial Closing. Any such sale shall be made upon the same terms and
conditions as those contained herein, and such persons or entities ("Additional
Investors") shall become parties to this Agreement and the Investors Rights
Agreement (as defined in Section 2.1), and will be an Investor for all purposes
hereunder and thereunder.
2. REPRESENTATIONS AND WARRANTEES OF THE COMPANY.
The Company hereby represents and warrants to each Investor that, except as
set forth on the schedule of exceptions attached as Exhibit C (the "Schedule of
Exceptions"):
2.1 Organization; Good Standing; Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified and authorized to transact
business and is in good standing as a foreign corporation in each jurisdiction
in which the failure so to qualify would have a material adverse effect on the
business, properties or financial condition of the Company and its Subsidiaries
(as defined in Section 2.6) taken as a whole (a "Material Adverse Effect"). The
Company has no material assets or properties owned or leased by it situated in,
or employees or representatives authorized to bind it by contract resident in
jurisdictions other than Massachusetts, Georgia and Texas. The Company's sales
are made F.O.B. at the Company's principal offices in Massachusetts. Each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, and is duly qualified and
authorized to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect. Each of the Company and its Subsidiaries has all requisite
corporate power and authority to own and operate its properties and assets and
to carry on its business as now conducted and as presently proposed to be
conducted. The Company has all requisite corporate power and authority to
execute and deliver this Agreement and at each Closing will have all requisite
corporate power and authority to execute and deliver the Investors Rights
Agreement attached hereto as Exhibit D (the "Investors Rights Agreement"), to
issue and sell the Series J Preferred Stock pursuant to this Agreement and the
Common Stock (as defined in Section 2.5) issuable upon conversion thereof and to
carry out the provisions of this Agreement, the Investors Rights Agreement and
the Restated Certificate.
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2.2 Authorization. All corporate action on the part of the Company and its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the Investors Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Series J Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion thereof has been taken or will be taken prior to the Initial Closing.
This Agreement and the Investors Rights Agreement, when executed and delivered,
will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except as limited by
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity.
2.3 Valid Issuance Of Preferred And Common Stock. The Series J Preferred
Stock that is being purchased by the investors hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and the Investors Rights Agreement and under applicable
state and federal securities laws. The Common Stock issuable upon conversion of
the Series J Preferred Stock being purchased under this Agreement at each
Closing will have been duly and validly reserved for issuance and, upon issuance
in accordance with the terms of the Restated Certificate, will be duly and
validly issued, fully paid and nonassessable and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Investors Rights Agreement and under applicable state and federal securities
laws.
2.4 Governmental Consents. No consent, approval, qualification, order or
authorization of or filing with any local, state or federal governmental
authority is required on the part of the Company or any of its Subsidiaries in
connection with the Company's execution, delivery or performance of this
Agreement or the Investors Rights Agreement, the offer, sale or issuance of the
Series J Preferred Stock by the Company or the issuance of Common Stock upon
conversion of the Series J Preferred Stock, except (a) the filing of the
Restated Certificate with the Secretary of State of the State of Delaware and
(b) such filings as have been made prior to the Initial Closing, except any
notices of sale required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "Securities
Act"), and such post-closing filings as may be required under applicable state
securities laws, all of which will be timely filed within the applicable periods
therefor.
2.5 Capitalization And Voting Rights. The authorized capital of the
Company will consist immediately prior to the Initial Closing of:
(a) 35,000,000 shares of common stock, par value $0.01 per share
("Common Stock"), of which 1,081,834 shares are issued and outstanding.
(b) 15,000,000 shares of Preferred Stock, par value $0.01 per share
("Preferred Stock"): (1) 716 of which have been designated as Series B Preferred
Stock (all of
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which are issued and outstanding); (2) 450 of which have been designated as
Series C Preferred Stock (all of which are issued and outstanding); (3) 345 of
which have been designated as Series E Preferred Stock (344.39 of which are
issued and outstanding); (4) 1,000 of which have been designated as Series F
Preferred Stock (all of which are issued and outstanding); (5) 816 of which have
been designated as Series G Preferred Stock (815.87 of which are issued and
outstanding); (6) 400 of which have been designated as Series H Preferred Stock
(all of which are issued and outstanding); and (7) 7,230,000 of which have been
designated as Series J Preferred Stock (none of which will be issued or
outstanding immediately prior to the Initial Closing and up to 6,820,909 of
which will be sold pursuant to this Agreement).
(c) The outstanding shares of Common Stock and Preferred Stock are owned
by the stockholders and in the numbers specified in Section 2.5 of the Schedule
of Exceptions.
(d) The outstanding shares of Common Stock and Preferred Stock have been
duly authorized and validly issued, are fully paid and nonassessable and were
issued in accordance with the registration or qualification provisions of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(e) Except for (1) the conversion privileges of the Preferred Stock, (2)
the rights provided in the Investors Rights Agreement and (3) currently
outstanding options to purchase 1,267,657 shares of Common Stock granted to
employees pursuant to the Company's 1994 Stock Plan (the "Option Plan") and
currently outstanding options to purchase 59,228 shares of Common Stock granted
to employees outside of the Option Plan, there are not outstanding any options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. In addition
to the aforementioned options, the Company has reserved an additional 1,582,343
shares of its Common Stock for purchase upon exercise of options to be granted
in the future under the Option Plan. The Company is not a party or subject to
any agreement or understanding, and to the Company's knowledge there is no
agreement or understanding between any other persons, that affects or relates to
the voting or giving of written consents with respect to any security of the
Company or the voting by a director of the Company.
2.6 Subsidiaries. Set forth in Section 2.6 of the Schedule of Exceptions
is a description of each corporation owned by the Company (collectively, the
"Subsidiaries") and the security ownership thereof. The Company does not own or
control, directly or indirectly, any interest in any other corporation,
partnership, limited liability company, association or other business entity.
The Company is not a participant in any joint venture, partnership or similar
arrangement. All of the outstanding equity securities (including securities or
instruments exercisable for or convertible into equity securities) of each of
the Subsidiaries are owned by the Company beneficially and of record and are not
subject to any mortgages, liens, claims or encumbrances. There are not
outstanding any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements or
agreements of
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any kind for the purchase or acquisition from the Company or any of the
Subsidiaries of any securities of any of the Subsidiaries.
2.7 Contracts And Other Commitments. Neither the Company nor any of its
Subsidiaries has or is bound by any contract, agreement, lease or commitment,
written or oral, absolute or contingent, other than (a) contracts for the
purchase of supplies and services that were entered into in the ordinary course
of business, do not involve more than $50,000 and do not extend for more than
one year beyond the date hereof, (b) sales contracts entered into in the
ordinary course of business and (c) contracts terminable at will by the Company
on no more than 30 days' notice without cost or liability to the Company or one
of its Subsidiaries that are not material to the conduct of the business of the
Company and its Subsidiaries. For the purpose of this Section 2.7, employment
and consulting contracts, contracts with labor unions, license agreements and
any other agreements relating to the acquisition or disposition of Intangibles
(as defined in Section 2.18) other than standard end-user license agreements
will not be considered to be contracts entered into in the ordinary course of
business.
2.8 Related Party Transactions. No employee, officer, consultant,
stockholder or director of the Company or any of its Subsidiaries or member of
his or her immediate family is indebted to the Company, nor is the Company or
any of its Subsidiaries indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than for (a) payment of salary for
services rendered, (b) reimbursement for reasonable expenses incurred on behalf
of the Company or any of its Subsidiaries and (c) other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under the Option Plan). To the Company's knowledge
(without making an investigation as to persons who are not officers or
directors), none of such persons has any direct or indirect ownership interest
in any firm or corporation with which the Company or any of its Subsidiaries is
affiliated or with which the Company or any of its Subsidiaries has a business
relationship, or any firm or corporation that competes with the Company or any
of its Subsidiaries, except that employees, stockholders, consultants, officers
or directors of the Company or any of its Subsidiaries and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company or any of its Subsidiaries. To the Company's knowledge, no
officer, director, consultant, employee or stockholder of the Company or any of
its Subsidiaries or any member of his or her immediate family is, directly or
indirectly, interested in any material contract with the Company or any of its
Subsidiaries (other than such contracts as relate to any such person's
employment with the Company or one of its Subsidiaries or ownership of capital
stock or other securities of the Company).
2.9 Registration Rights. Except as provided in the Investors Rights
Agreement, the Company is presently not under any obligation and has not granted
any rights to register under the Securities Act any of its presently outstanding
securities or any of its securities that may subsequently be issued.
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2.10 Clearances, Approvals, Etc. The Company and its Subsidiaries have all
clearances, approvals, franchises, permits, licenses and any similar authority
including, without limitation, all approvals and clearances from the U.S. Food
and Drug Administration necessary for the conduct of their business as now being
conducted, and the Company believes they can obtain, without undue burden or
expense, any similar authority for the conduct of the business of the Company
and its Subsidiaries as presently proposed to be conducted. Neither the Company
nor any of its Subsidiaries is in default in any material respect under any of
such franchises, permits, licenses or other similar authority.
2.11 Compliance With Other Instruments. Neither the Company nor any of its
Subsidiaries is in violation or default of (a) any provision of its certificate
of incorporation or bylaws, (b) any provision of any mortgage, indenture,
agreement, instrument or contract to which it is a party or by which it is bound
or (c) to the best of the Company's knowledge, any judgment, order, writ,
decree, statute, rule, regulation or restriction applicable to it including,
without limitation, the U.S. Federal Food, Drug and Cosmetic Act, as amended,
and regulations promulgated thereunder, which default or violation has had or
could reasonably be expected to have a Material Adverse Effect. The execution,
delivery and performance by the Company of this Agreement and the Investors
Rights Agreement and the consummation of the transactions contemplated hereby
and thereby will not result in any such violation or be in material conflict
with or constitute, with or without the passage of time or giving of notice,
either a material default under any such provision or an event that results in
the creation of any material lien, charge or encumbrance upon any assets of the
Company or any of its Subsidiaries or the suspension, revocation, impairment,
forfeiture or nonrenewal of any material franchise, permit, license or similar
authority applicable to the Company or any of its Subsidiaries, any of their
business or operations or any of their assets or properties.
2.12 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
or any of its Subsidiaries that questions the validity of this Agreement or the
Investors Rights Agreement or the right of the Company to enter into such
agreements, or to consummate the transactions contemplated hereby or thereby, or
that might result, either individually or in the aggregate, in a Material
Adverse Effect or in any change in the current equity ownership of the Company.
Neither the Company nor any of its Subsidiaries is a party to or, to the best of
its knowledge, named in or subject to any order, writ, injunction, judgment or
decree of any court, government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company currently intends to initiate.
2.13 Disclosure. The Company has provided each Investor with all
information reasonably available to it without undue expense that such Investor
has requested in writing for deciding whether to purchase the Series J Preferred
Stock. To the best of the Company's knowledge after reasonable investigation,
neither this Agreement nor the Investors Rights Agreement nor the other written
materials made or delivered in connection with the transactions contemplated
hereby, taken as a whole, contain any untrue statement of a material fact or
omit to
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state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made or otherwise, not
misleading.
2.14 Offering. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Series J Preferred Stock as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.15 Title To Property And Assets; Leases. Except for (a) liens reflected
in the Financial Statements (as defined in Section 2.16), (b) liens for current
taxes not yet due or payable, (c) liens imposed by law and incurred in the
ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (d) liens in respect of
pledges or deposits under workers' compensation laws or similar legislation or
(e) minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company and its
Subsidiaries have good and marketable title to their property and assets free
and clear of all mortgages, liens, claims and encumbrances. With respect to the
property and assets they lease, the Company and its Subsidiaries are in
compliance with such leases and, to the best of the Company's knowledge, hold a
valid leasehold interest free of any mortgages, liens, claims or encumbrances,
subject to clauses (a)-(d) above.
2.16 Financial Statements. The Company has delivered to each Investor its
audited consolidated financial statements (balance sheet and profit and loss
statement, statement of stockholders' equity and statement of cash flows
including notes thereto) at December 31, 1996 and for the fiscal years then
ended and its unaudited financial statements (balance sheet and profit and loss
statement and statement of cash flows) at June 30, 1997 and for the six months
then ended (the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except that the unaudited
Financial Statements omit notes thereto required by generally accepted
accounting principles. The Financial Statements fairly present the financial
condition and operating results of the Company and each of the Subsidiaries on a
consolidated basis as of the dates and for the periods indicated therein
(subject in the case of unaudited financial statements to normal year end
adjustments). Except as set forth in the Financial Statements, neither the
Company nor any of its Subsidiaries has any material liabilities, contingent or
otherwise, other than (a) liabilities incurred in the ordinary course of
business subsequent to June 30, 1997 and (b) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements that in both cases, individually or in the aggregate, are not
material to the business, properties or financial condition of the Company and
its Subsidiaries, taken as a whole. Except as disclosed in the Financial
Statements, neither the Company nor any of its Subsidiaries is a guarantor or
indemnitor of any indebtedness of any other person or entity. Each of the
Company and its Subsidiaries maintains and will continue to
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maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.17 Changes. Since June 30, 1997 there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company or any of its Subsidiaries from that reflected
in the Financial Statements, except changes in the ordinary course of business
that have not had a Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance, that could reasonably be expected to have a Material Adverse Effect;
(c) any waiver or compromise by the Company or any of its
Subsidiaries of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company or any of its Subsidiaries, except
to the extent such satisfaction or discharge will not have a Material Adverse
Effect;
(e) any material change to a material contract or arrangement by
which the Company or any of its Subsidiaries or any of their assets is bound or
subject;
(f) any material change in any compensation arrangement or agreement
with any employee, officer, consultant, director or stockholder of the Company
or any of its Subsidiaries;
(g) any sale, assignment or transfer of any material Intangibles of
the Company or any of its Subsidiaries;
(h) any resignation or termination of employment of any key employee
or key consultant of the Company or any of its Subsidiaries;
(i) any receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company or any of its
Subsidiaries;
(j) any mortgage, lien, claim, encumbrance, pledge or security
interest created by the Company or any of its Subsidiaries with respect to any
of its material properties or assets, except liens for taxes not yet due or
payable;
(k) any declaration, setting aside or payment of any dividend or
other distribution of the Company's assets in respect of any of the Company's
capital stock, or any direct or indirect redemption, purchase or other
acquisition of any of such stock by the Company;
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(l) to the Company's knowledge, any other event or condition of any
character that could reasonably be expected to have a Material Adverse Effect;
or
(m) any agreement or commitment by the Company or any of its
Subsidiaries to do any of the things described in this Section 2.17.
2.18 Intangibles. To the best of its knowledge, the Company and its
Subsidiaries own or possess sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
proprietary rights and processes (collectively, "Intangibles") necessary for
their business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. Except for standard end-
user license agreements and licenses set forth in Section 2.18 of the Schedule
of Exceptions (the "Material Licenses"), there are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
or any of its Subsidiaries bound by or a party to any options, licenses or
agreements of any kind with respect to the Intangibles of any other person or
entity. To the Company's knowledge, each Material License is valid and in full
force and effect, and is enforceable by the Company or one of its Subsidiaries
in accordance with its terms. To the Company's knowledge, no person or entity
has violated or breached, or declared or committed any default under, any
Material License. To the Company's knowledge, no event has occurred, and no
circumstance or condition exists, that might (with or without notice or lapse of
time) (a) result in a violation or breach of any of the provisions of any
Material License, (b) give any person or entity the right to declare a default
or exercise any remedy under any Material License, (c) give any person or entity
the right to accelerate the maturity or performance of any Material License or
(d) give any person or entity the right to cancel, terminate or modify any
Material License. Neither the Company nor any of its Subsidiaries has received
any communications alleging that the Company or any of its Subsidiaries has
violated or breached any provision of a Material License or misappropriated or
by conducting its business as proposed would misappropriate any of the
Intangibles of any other person or entity.
2.19 Employees; Employee Compensation. To the best of the Company's
knowledge, there is no strike, labor dispute or union organization activities
pending or threatened between the Company or any of its Subsidiaries and any of
their employees. None of the employees of the Company or any of its Subsidiaries
belongs to any union or collective bargaining unit. To the best of the Company's
knowledge, the Company and its Subsidiaries have complied in all material
respects with all applicable state and federal equal opportunity and other laws
related to employment. To the best of the Company's knowledge, no employee of
the Company or any of its Subsidiaries is or will be in violation of any
judgment, decree or order, or any term of any employment contract, patent
disclosure agreement or other contract or agreement relating to the relationship
of any such employee with the Company or any of its Subsidiaries, or any other
party because of the nature of the business conducted or presently proposed to
be conducted by the Company or any of its Subsidiaries or to the use by the
employee of his or her best efforts with respect to such business. Neither the
execution nor delivery of this Agreement or the Investor Rights Agreement nor
the carrying on of the business of the Company and its
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Subsidiaries by their employees nor the conduct of such business as proposed
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated.
Neither the Company nor any of its Subsidiaries is a party to or bound by any
currently effective employment contract, deferred compensation agreement, bonus
plan, incentive plan (other than the Option Plan), profit sharing plan,
retirement agreement or other employee compensation agreement. The Company is
not aware that any officer or key employee or consultant, or that any group of
key employees or consultants, of the Company or any of its Subsidiaries intends
to terminate their employment or service with the Company or any of its
Subsidiaries, nor does the Company or any of its Subsidiaries have a present
intention to terminate the employment or service of any of the foregoing.
Subject to general principles related to wrongful termination of employees, the
employment of each employee of the Company or any of its Subsidiaries is
terminable at the will of the employer.
2.20 Tax Returns, Payments, And Elections. The Company and each of its
Subsidiaries have timely filed all tax returns and reports (federal, foreign,
state and local) as required by law. These returns and reports are true and
correct in all material respects. The Company and each of its Subsidiaries have
paid all takes and other assessments due, except those contested in good faith.
The provision for taxes as shown in the Financial Statements is adequate for
taxes due or accrued as of the dates thereof. Neither the Company nor any of its
Subsidiaries has elected pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as an S corporation or a collapsible
corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has
it made any other elections pursuant to the Code (other than elections that
relate solely to methods of accounting, depreciation, or amortization) that
would have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has had any tax deficiency proposed or assessed against it or has
executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge. None of the income tax returns of
the Company or any of its Subsidiaries and none of their state income or
franchise tax or sales or use tax returns has ever been audited by governmental
authorities . Since the end of the Company's last fiscal year, the Company and
its Subsidiaries have made adequate provisions on its books of account for all
taxes, assessments and governmental charges with respect to their business,
properties and operations. The Company and its Subsidiaries have withheld or
collected from each payment made to each of its employees the amount of all
taxes including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositaries.
2.21 Insurance. The Company and its Subsidiaries have in full force and
effect fire and casualty insurance policies sufficient in amount (subject to
reasonable deductibles) to allow them to replace any properties that might be
damaged or destroyed, the loss of which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries have in full force and effect products liability and errors and
omissions insurance in amounts customary for companies similarly situated.
-10-
2.22 Environmental And Safety Laws. To the Company's knowledge, neither
the Company nor any of its Subsidiaries is in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, which violation has had or could reasonably be expected to have a
Material Adverse Effect. To the Company's knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law,
or regulation.
2.23 Minute Books. The copy of the minute books of the Company provided to
Xxxxxx Godward LLP contains minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the
directors and stockholders since the date of incorporation and accurately
reflects all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such minutes in all
material respects.
3. Representations And Warranties Of The Investors.
Each Investor hereby represents and warrants to the Company that:
3.1 Authorization. Such Investor has full power and authority to enter
into this Agreement and the Investors Rights Agreement, and this Agreement and
the Investors Rights Agreement, when executed and delivered, will constitute
valid and legally binding obligations of such Investor.
3.2 Purchase Entirely For Own Account. The Series J Preferred Stock to be
purchased by such Investor and the Common Stock issuable upon conversion thereof
(collectively, the "Securities") will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. Such Investor does not have any contract, undertaking,
agreement or arrangement with any person or entity to sell, transfer or grant
participations to such person or to any third party with respect to any of the
Securities.
3.3 Reliance Upon Investors' Representations. Such Investor understands
that the Series J Preferred Stock is not, and any Common Stock acquired on
conversion thereof at the time of issuance may not be, registered under the
Securities Act on the ground that the sale provided for in this Agreement and
the issuance of securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and that the Company's reliance
on such exemption is predicated on the Investors' representations set forth
herein. Such Investor realizes that the basis for the exemption may not be
present if, notwithstanding such representations, the Investor has in mind
merely acquiring shares of the Series J Preferred Stock for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. Such Investor has no such intention.
-11-
3.4 Receipt Of Information. Such Investor believes it has received all
the information such Investor considers necessary or appropriate for deciding
whether to purchase the Series J Preferred Stock. Such Investor has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Series J Preferred Stock and the
business, properties, prospects and financial condition of the Company and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such Investor
or to which such Investor had access. The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of this
Agreement or the right of the Investors to rely thereon.
3.5 Investment Experience. Such Investor is experienced in evaluating and
investing in private placement transactions of securities of companies in a
similar stage of development and acknowledges that such Investor is able to fend
for itself, can bear the economic risk of such Investor's investment and has
such knowledge and experience in financial and business matters that such
Investor is capable of evaluating the merits and risks of the investment in the
Series J Preferred Stock. If other than an individual, such Investor has not
been organized for the purpose of acquiring the Series J Preferred Stock.
3.6 Accredited Investor. Such Investor is an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.
3.7 Restricted Securities. Such Investor understands that the Securities
may not be sold, transferred or otherwise disposed of without registration under
the Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, such Investor is aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that rule are met. Among the conditions for use of Rule 144
may be the availability of current information to the public about the Company.
Such information is not now available and the Company has no present plans to
make such information available.
4. Conditions Of Investors' Obligations At Closing.
The obligations of each Investor under Section 1.1(b) of this Agreement are
subject to the fulfillment on or before the Closing of such Investor's purchase
of each of the following conditions, the waiver of which will not be effective
against any Investor who does not consent in writing thereto:
4.1 Representations And Warranties. The representations and warranties of
the Company contained in Section 2 will be true on and as of such Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
-12-
4.2 Performance. The Company will have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before such Closing.
4.3 Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Series J Preferred Stock pursuant to this Agreement will be duly obtained and
effective as of such Closing, except for the filing of a Form D pursuant to
Regulation D promulgated under the Securities Act and for the filing of any
required state securities or blue sky filings.
4.4 Proceedings And Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Initial Closing and all
documents incident thereto will be reasonably satisfactory in form and substance
to Xxxxxx Godward LLP, which will have received all such counterpart original
and certified or other copies of such documents as it may reasonably request.
4.5 Board Of Directors. Effective as of the Initial Closing, the
directors of the Company will be Xxxxx Xxxxxxxxxx, Xxxxxx Xxxx, Xxxxxx Xxxx,
Xxxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xx. Xxxxx Xxxxxxxxxx.
4.6 Opinions Of Counsel. Each Investor purchasing on the date hereof will
have received from Ropes & Xxxx, corporate counsel for the Company, an opinion,
dated the date of the Initial Closing, in form and substance satisfactory to
Xxxxxx Godward LLP.
4.7 Investors Rights Agreement. The Company and each Investor will have
entered into the Investors Rights Agreement.
4.8 Officer's Certificate. The President of the Company will have
delivered to each Investor purchasing on the date hereof a certificate, dated as
of the Initial Closing, to the effect that the conditions specified in Sections
4.1, 4.2, 4.3 and 4.5 have been fulfilled with respect to the Initial Closing.
4.9 Good Standing Certificates. The Company will have delivered to Xxxxxx
Godward LLP good standing certificates, dated as of the Initial Closing, from
each jurisdiction in the United States in which the ownership of its property or
the conduct of its business requires qualification as a foreign corporation and
where the failure to so qualify would have a Material Adverse Effect.
-13-
5. Conditions Of The Company's Obligations At Closing.
The obligations of the Company to each Investor under Section 1.1(a) of
this Agreement are subject to the fulfillment on or before the Closing of such
Investor's purchase of each of the following conditions by that Investor:
5.1 Representations And Warranties. The representations and warranties of
each Investor contained in Section 3 will be true on and as of such Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
5.2 Performance. The Investors will have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by them on or before such Closing.
5.3 Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Series J Preferred Stock pursuant to this Agreement will be duly obtained and
effective as of such Closing.
5.4 Proceedings And Documents. All corporate and other proceedings in
connection with the transactions completed at such Closing and all documents
incident thereto will be reasonably satisfactory in form and substance to Ropes
& Xxxx, which will have received all such counterpart original and certified or
other copies of such documents as it may reasonably request.
5.5 Investors Rights Agreement. The Company and each Investor will have
entered into the Investors Rights Agreement.
6. Miscellaneous.
6.1 Governing Law. This Agreement will be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
6.2 Survival. The representations, warranties, covenants and agreements
made herein will survive any investigation made by any Investor and for two
years after the closing of the transactions contemplated hereby. All statements
as to factual matters contained in any certificate delivered by or on behalf of
the Company pursuant hereto at the Initial Closing in connection with the
transactions contemplated hereby will be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate or
instrument.
-14-
6.3 Successors And Assigns. Except as otherwise expressly provided herein,
the provisions hereof will inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto.
6.4 Severability. In case any provision of this Agreement is invalid,
illegal, or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.
6.5 Amendment And Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least 66 2/3% of the Series J Preferred Stock sold hereunder.
(b) Except as otherwise expressly provided, (1) the obligations of
the Company and the rights of the Investors under this Agreement may be waived
by any Investor only in writing and for all Investors only with the written
consent of the holders of at least 66 2/3% of the Series J Preferred Stock sold
hereunder, and (2) the obligations of the Investors and the rights of the
Company under this Agreement may be waived only with the written consent of the
Company.
6.6 Delays Or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party hereto upon any breach, default or noncompliance
of any other party under this Agreement will impair any such right, power or
remedy, nor will it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. Any waiver, permit, consent, or approval of
any kind or character on the part of any party hereto of any breach, default or
noncompliance under the Agreement or any waiver on such Investor's part of any
provisions or conditions of this Agreement must be in writing and will be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law or otherwise afforded to the
parties hereto, will be cumulative and not alternative.
6.7 Notices. All notices required or permitted hereunder will be in
writing and will be deemed effectively given: (1) upon personal delivery to the
party to be notified, (2) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (3) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (4) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications will be sent to the party to
be notified at the address as set forth on the signature pages hereof or at such
other address as such party may designate by 10 days' advance written notice to
the other parties hereto.
-15-
6.8 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
will be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement including, without limitation, reasonable fees and expenses of
attorneys and accountants, which will include, without limitation, all fees,
costs and expenses of appeals.
6.9 Titles And Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original, but all of which together will
constitute one instrument.
6.11 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party will be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
6.12 Finder's Fees. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. Each Investor will indemnify and hold harmless the Company from any
liability for any commission or compensation in the nature of a finder's fee
(and the cost and expenses of defending against such liability or asserted
liability) for which the Investor or any of its officers, partners, employees,
or representatives is responsible. The Company will indemnify and hold harmless
each Investor from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees, or representatives is responsible.
6.13 Expenses. Irrespective of whether the Initial Closing is effected,
the Company will pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Initial Closing is effected, the Company will, at the Initial Closing, reimburse
the reasonable fees of Xxxxxx Godward LLP and will, upon receipt of a reasonably
detailed xxxx therefor, reimburse the reasonable out-of-pocket expenses of such
counsel.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-16-
The parties have executed this Agreement as of the date first above written.
Access Radiology Corporation
Signature:
_________________________
Printed Name:
_____________________
Title:
____________________________
Address:
__________________________
__________________________
Bedrock Capital Partners I, L.P.
By: Xxxxx Xxxxx Xxxxxx & Company, LLC,
Its General Partner
Signature:
_________________________
Printed Name:
_____________________
Title:
____________________________
Address:
__________________________
__________________________
Bedrock Capital Partners Side-By-Side, L.P.
By: Xxxxx Xxxxx Xxxxxx & Company, LLC,
Its General Partner
Signature:
_________________________
Printed Name:
_____________________
Title:
____________________________
Address:
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
VBW Partners, L.P.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Seaflower Health and Technology
Fund, LLC
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
J&L Xxxxxxxx Family, LLC
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Privat Kredit Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Pictet Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Pictet Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
ICD, Ltd.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Guadamur LTD.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Privat Kredir Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Rigel Investment Corp.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Rigel Investment Corp. #2
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Privat Kredir Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Gole Inc. A
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Pacific Venture Group, L.P.
By: PVG Equity Partners, L.L.C
Its General Partner
Signature: _______________________
Printed Name:
Title: Member
Address: __________________________
__________________________
__________________________
PVG Associates, L.P.
By: PVG Equity Partners, L.L.C.
Its General Partner
Signature: _______________________
Printed Name:
Title: Member
Address: __________________________
__________________________
__________________________
Delphi Ventures III, L.P.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Delphi BioInvestments III, L.P.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Exhibit A
Schedule of Investors
----------------------------------------------------------------------------------------------------------------
Number of Shares of
Series J Preferred
Total Stock Purchased
Investor Name Investment*
----------------------------------------------------------------------------------------------------------------
Bedrock Capital Partners I, L.P. $1,800,000.40 1,636,364
----------------------------------------------------------------------------------------------------------------
Bedrock Capital Partners Side-By-Side, L.P. 199,999.80 181,818
----------------------------------------------------------------------------------------------------------------
Pacific Venture Group, L.P. 2,865,660.60 2,605,146
----------------------------------------------------------------------------------------------------------------
PVG Associates, L.P. 134,339.70 122,127
----------------------------------------------------------------------------------------------------------------
Delphi BioInvestments III, L.P. 9,440.10 8,582
----------------------------------------------------------------------------------------------------------------
Delphi Ventures III, L.P. 524,255.48 476,596
----------------------------------------------------------------------------------------------------------------
J&L Xxxxxxxx Family, LLC 76,282.19 69,347
----------------------------------------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
----------------------------------------------------------------------------------------------------------------
Pictet Bank 101,479.45 92,254
----------------------------------------------------------------------------------------------------------------
Pictet Bank 101,512.33 92,284
----------------------------------------------------------------------------------------------------------------
ICD, Ltd. 50,608.22 46,007
----------------------------------------------------------------------------------------------------------------
Guadamur Ltd. 101,594.52 92,359
----------------------------------------------------------------------------------------------------------------
Privat Kredir Bank 50,904.11 46,276
----------------------------------------------------------------------------------------------------------------
Rigel Investment Corp. 50,180.82 45,619
----------------------------------------------------------------------------------------------------------------
Rigel Investment Corp. #2 50,180.82 45,619
----------------------------------------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
----------------------------------------------------------------------------------------------------------------
Gole Inc. A 50,780.82 46,164
----------------------------------------------------------------------------------------------------------------
TOTALS 6,522,907.04 5,929,915
----------------------------------------------------------------------------------------------------------------
* Assumes conversion of certain convertible notes on September 30, 1997.
A-1
Exhibit A
Schedule of Investors
---------------------------------------------------------------------------------
Number of Shares of
Series J Preferred
Investor Name Total Stock Purchased
Investment*
---------------------------------------------------------------------------------
Bedrock Capital Partners I, L.P. $1,800,000.40 1,636,364
---------------------------------------------------------------------------------
Bedrock Capital Partners Side-By-Side, L.P. 199,999.80 181,818
---------------------------------------------------------------------------------
Pacific Venture Group, L.P. 2,865,660.60 2,605,146
---------------------------------------------------------------------------------
PVG Associates, L.P. 134,339.70 122,127
---------------------------------------------------------------------------------
Delphi BioInvestments III, L.P. 9,440.10 8,582
---------------------------------------------------------------------------------
Delphi Ventures III, L.P. 524,255.48 476,596
---------------------------------------------------------------------------------
J&L Xxxxxxxx Family, LLC 76,282.19 69,347
---------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
---------------------------------------------------------------------------------
Pictet Bank 101,479.45 92,254
---------------------------------------------------------------------------------
ICD, Ltd. 50,608.22 46,007
---------------------------------------------------------------------------------
Guadamur Ltd. 101,594.52 92,359
---------------------------------------------------------------------------------
Privat Kredir Bank 50,904.11 46,276
---------------------------------------------------------------------------------
Rigel Investment Corp. 50,180.82 45,619
---------------------------------------------------------------------------------
Rigel Investment Corp. #2 50,180.82 45,619
---------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
---------------------------------------------------------------------------------
Gole Inc. A 50,780.82 46,164
---------------------------------------------------------------------------------
TOTALS 6,522,907.04 5,929,915
---------------------------------------------------------------------------------
* Assumes conversion of certain convertible notes on September 30, 1997.
Exhibit C
SCHEDULE OF EXCEPTIONS
Capitalized terms used herein and not otherwise defined have the meanings
set forth in the Series J Preferred Stock Purchase Agreement, dated September
30, 1997, to which this Schedule of Exceptions is attached as Exhibit C.
Disclosure of any matter in any item of this Schedule is deemed to be disclosure
of such matter for purposes of all items with respect to which such matter is
required to be disclosed. Disclosure of any matter in this Schedule does not,
by implication or otherwise, indicate that such matter is material. Copies or
forms of all of the documents listed or described below have been provided to
Xxxxxx Godward LLP and any summary below is qualified by reference to such
documents.
2.5(c) A list of the Company's shareholders has been provided to Xxxxxx
Godward LLP.
2.5(d) The Company has issued a certificate for five shares of Series C
Preferred Stock to Xxxxxx Xxxxxxxxx, a holder who in fact subscribed and paid
for four shares. The Company is in the process of contacting Xx. Xxxxxxxxx to
correct this error.
2.5(e) The Company has outstanding warrants to purchase 255,482 shares of
Common Stock under various warrants issued in connection with private
placements of the Company's equity securities. The Company also has outstanding
an aggregate principal amount of $1,500,000 of Convertible Subordinated Notes
(the "Notes") that are expected to be converted into Series J Preferred Stock on
a dollar for dollar basis simultaneously with the Closing, and warrants to
purchase an additional 409,091 shares of Series J Preferred Stock at an exercise
price of $1.10 per share (the "Bridge Warrants"). The Bridge Warrants entitle
the holders of the Bridge Warrants, until June 30, 2002, to purchase from the
Company that amount of securities of the type issued in the Equity Financing
having an aggregate purchase price in the Equity Financing of $450,000. 10 for
an aggregate exercise price of $450,000.10.
The Notes bear interest at the rate of 6% per annum, from the date of
issuance. If at any time prior to October 31, 1997, the Company completes an
Equity Financing (which for purposes of the Notes will be the sale of the
Company's Series J Preferred Stock pursuant to the Purchase Agreement), each
Note, effective on the closing of the Equity Financing, automatically converts
into the amount of securities that a purchaser in the Equity Financing would
receive upon payment of a purchase price equal to the outstanding principal and
accrued interest of such Note.
Attached hereto as Exhibit C-1 are Post-Closing Capitalization Tables of
the Company which show the fully diluted Common Stock equivalent holdings of its
stockholders, assuming a $7,500,000 Series J Preferred Stock financing.
2.7 Contracts:
1. Vendor Program Agreement, dated as of September 5, 1996, between
the Company and DVI Financial Services, Inc.
2. Master Lease Agreement, dated as of January 19, 1996 (renewed as
of August 18, 1997), between the Company and LTI Ventures Leasing Corp.
3. Loan Agreement, dated as of May 16, 1997, between the Company and
Fleet National Bank, and related documentation.
4. OEM Development Software Agreement, dated as of November 9, 1995
and amended May 20, 1997, between the Company and Mitra Imaging Incorporated.
5. Software Development and Licensing Agreement, dated as of May 30,
1997, between the Company and AWARE, Inc.
6. Amended and Restated Reseller Agreement, dated as of May 30,
1997, between the Company and ISG Technologies, Inc.
7. Sublease Agreement, dated as of April 1, 1996, between the
Company and The Future Now, Inc. (principal office and manufacturing facility).
8. Purchase Agreement, dated as of September 1, 1996, between the
Company and Lockheed Xxxxxx Medical Imaging Systems, Inc. (Note: The business
of Lockheed Xxxxxx Medical Imaging Systems, Inc. was recently acquired by
general Electric. The counterparty is now GE Medical Systems.)
9. Employment Agreement, dated as of August 28, 1997, between the
Company and Xxxxx Xxxxxxx.
10. Employment Agreement, dated as of August 28, 1997, between the
Company and Xxxxxx Xxxxxxxxx.
11. Employment Agreement, dated as of August 28, 1997, between the
Company and Xxxxxx Xxxxxx.
12. Employment Agreement, dated as of August 28, 1997, between the
Company and Diagnostic Imaging, Inc.
13. Various confidentiality agreements with industry participants,
the form of which has been provided to Xxxxxx Godward UP.
14. Stock option agreements with directors, employees and members of
the Medical and Technical Advisory Board.
-2-
2.8 Xx. Xxxx Xxxxx, a member of the Company's Medical and Technical
Advisory Board to whom stock options ha ve been granted, is an officer of
Sterling Diagnostic Imaging, Inc. ("Sterling"). The Company and Sterling have
entered into a letter of intent regarding the resale by Sterling of ACCESS
products. Xx. Xxxxx participated in the negotiation of definitive contractual
documentation.
The Company was not in compliance with certain of the financial covenants
contained in the Fleet Loan documentation as of June 30, 1997. The Company has
obtained a written waiver from Fleet Bank. The Company expects that the
conditions giving rise to this non-compliance will be cured by the closing of
the financial contemplated by the Series J Preferred Stock Purchase Agreement
referenced above.
2.12 The Company received a letter dated June 19, 1996 from counsel to
American Telemedicine International ("ATI"), written on behalf of ATI and
Massachusetts General Hospital ("MGH"). This letter states that ATI is
"associated . . . through merger" with RSTAR, Inc. ("RSTAR"), which is a former
employer of Xxxxxx Xxxxxx, an executive of the Company. The June 19th letter
asserts that U.S. Patent No. 5,469,353, issued to Xx. Xxxxxx and others and
assigned to the Company, is derived from proprietary information and trade
secrets of NIGH and RSTAR, has been improperly assigned and is currently
unenforceable due to incorrect ownership. The letter demands assignment of the
patent to ATI and the addition of a current ATI employee as an inventor. The
June 19th letter asserts that Xx. Xxxxxx had misappropriated proprietary
information and trade secrets relevant to the patent that were provided to him
while working for RSTAR. Counsel to ATI also made claims against Xx. Xxxxxx in a
separate letter addressed to Xx. Xxxxxx personally. The Company has agreed to
indemnify Xx. Xxxxxx against claims made against him in connection with this
dispute.
The June 19th letter contained an offer to make documentation supporting
the claims of RSTAR and NIGH available to the Company. In a responsive letter
dated July 3, 1996, patent counsel to the Company (Lahive & Xxxxxxxxx) stated
that a preliminary investigation indicated that the assertions of the June 19th
letter were incorrect, and requested copies of the offered documentation. In a
subsequent letter dated July 31, counsel to ATI stated that deliver of such
documentation would be conditioned on execution by the Company of an enclosed
"Confidential disclosure Agreement", the terms of which are unacceptable to the
Company. The July 31 letter also requested that ATI receive documentation
relevant to the patent from the Company. In a further response dated August 21,
counsel to the Company stated that the agreement proposed by ATI was not
acceptable, that in any event no confidentiality agreement should be required
for disclosure of material now included in an issued patent, and that the
Company was not prepared to deliver any material to ATI prior to receiving some
substantiation of ATI's claims. The August 21 letter further stated the belief
of ACCESS that the claims of ATI and MGH are without merit.
Subsequent to August 21, 1996, counsel to the Company and counsel to ATI
exchanged further letters and telephone calls regarding the terms on which ATI
would be willing to make
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material supporting ATI's claims available to the Company. No resolution to this
matter was reached, and ATI and its counsel have not communicated with the
Company or its counsel since December 19, 1996, the date of the last letter that
counsel to the Company sent to counsel to ATI on this matter.
The Company believes that the claims of ATI and NIGH are without merit and
intends to contest them vigorously.
2.15 Fleet National Bank has a security interest in substantially all of
the Company's assets to secure loans outstanding under the Loan Agreement
referred to in Item 2.7.3.
2.16 Reference is made to the matters disclosed in items 2.7 and 2.12.
2.17(a) The Company issued $1,500,000 in principal amount of Convertible
Subordinated Notes, together with warrants to purchase 409,091 shares of Series
J Preferred Stock, in June 1997.
The Company entered into a lease with Xxxxxxxx Group LLC for 25,404 square
feet in Lexington, Massachusetts on September 26, 1997.
Reference is made to all other matters disclosed in response to Section
2.17.
2.17(b) The Company is a party to a Vendor Program Agreement with DVI
Financial Services, Inc. ("DVI"), under which DVI had committed to provide
financing to qualified customers for the purchase of ACCESS products. The
Company has recently been informed that the business unit of DVI that provided
this financing has been discontinued, and that DVI is therefore no longer in a
position to continue the arrangements contemplated by the Vendor Program
Agreement. The Company does not plan to take any action with respect to this
matter.
GE Medical Systems is a business unit of General Electric that succeeded
through an asset purchase to the business of Lockheed Xxxxxx Medical Imaging
("LMMIS") and the Purchase Agreement between the Company and LMMIS. GE Medical
Systems has informed the Company that, as a matter of policy, GE Medical Systems
will not honor certain provisions of the LMMIS contract calling for rebates of
discounts granted by the Company if volume purchase targets are not met. The
Company and GE Medical Systems are in the process of amending the LMMIS contract
to, among other things, eliminate these rebates.
The Company has forgiven a loan of $10,000 to Xxx Xxxxx (Vice President of
Sales and Marketing).
2.17(f) The Company has entered into employment contracts with Xxxxx
Xxxxxxx and Xxxxxx Xxxxxxxxx since June 30, 1997 (see item 2.7).
2.18(h) Xxxxxxx Xxxxxxxxxxx resigned as Chairman of the Board in July 1997.
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2.19 Reference is made to Item 2.7.
2.20 The Company believes it is late in filing some of its state sales
tax returns. The Company does not believe that these filings will have a
Material Adverse Effect.
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Exhibit D
See Exhibit 10.3 filed with this Registration Statement.
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