STOCK PURCHASE AGREEMENT
COMPANY:
NORTH AMERICAN SCIENTIFIC, INC.,
a Delaware corporation
INVESTOR:
MENTOR CORPORATION,
a Minnesota corporation
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated for reference
purposes as June 16, 1997, is between NORTH AMERICAN SCIENTIFIC, INC., a
Delaware corporation (the "Company"), and MENTOR CORPORATION, a Minnesota
corporation (the "Investor), with respect to the following facts.
A. Simultaneously with the execution of this Agreement, the Company and
the Investor are entering into an Exclusive Marketing and Distribution Agreement
(the "Distribution Agreement") pursuant to which Investor will acquire the right
to market and distribute on an exclusive basis for use in the Field of Use
identified in the Distribution Agreement certain radioactive sources proposed to
be manufactured by the Company.
B. In connection with their execution of the Distribution Agreement, the
Company desires to sell and issue to the Investor and the Investor desires to
purchase from the Company, shares of Common Stock and Preferred Stock of the
Company on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth below and
intending to be legally bound, the parties hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms set forth below shall be used as
they are defined in this Section.
1.1 Annual Report. The term "Annual Report" means the Company's Annual
Report on Form 10-KSB for the fiscal year ended October 31, 1996 and filed with
the Securities and Exchange Commission (the "Commission") on January 21, 1997.
1.2 Certificate of Designation. The term "Certificate of Designation"
means the Certificate of Designation of the Rights, Preferences and Privileges
of the Company's Series A Preferred Stock to be issued to the Investor under
this Agreement. A copy of the Certificate of Designation is set forth in
Exhibit A hereto.
1.3 Closing Date. The date of the closing of the purchase of the Common
Stock, or the date of the closing of the purchase of the Series A Preferred
Stock, as the case may be.
1.4 Company Documents. The term "Company Documents" means and includes
the Distribution Agreement and any other contract or agreement being entered
into or delivered pursuant to or in connection with this Agreement.
1.5 Distribution Agreement. The term "Distribution
Agreement" means the Exclusive Marketing and Distribution Agreement between the
Company and the Investor referred to in Recital A, above, a copy of which is
attached as EXHIBIT B to this Agreement.
1.6 First Closing. The term "First Closing" means the closing of the
purchase by the Investor of 250,000 shares of the Common Stock of the Company.
1.7 Intellectual Property. The term "Intellectual Property" means and
includes all inventions, patents, patent applications, copyrights and copyright
rights, trademarks, service marks, trade secrets, and other proprietary rights,
and all foreign, domestic, federal and state registrations and applications
applicable to or covering any or all of the foregoing.
1.8 Material Agreement. Any contract or agreement to which the Company
is a party or by which the Company or its assets are bound, a breach of which
could reasonably be expected to have a material adverse effect on the Company's
business, operations or financial condition.
1.9 Quarterly Report. The term "Quarterly Report" means the Company's
Quarterly Report on Form 10-QSB for the fiscal quarter ended January 31, 1997
and filed with the Commission on or about March 15, 1997.
1.10 SEC Filings. All forms, reports, schedules, statements and other
documents required to be filed by either party since October 31, 1996 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the
Securities Act (as such documents have been amended since the time of their
filing to the date of this Agreement.
1.11 Second Closing. The term "Second Closing" means the closing of the
purchase by the Investor of 333,334 shares of Series A Preferred Stock of the
Company.
1.12 Series A Preferred Stock. The term "Series A Preferred Stock" means
those shares of Series A Convertible Preferred Stock of the Company to be issued
pursuant to and having the rights, preferences and privileges set forth in the
Certificate of Designation attached as EXHIBIT A to this Agreement.
1.13 Shares. The term "Shares" means and includes the shares of Common
Stock and Series A Preferred Stock issuable by the Company to the Investor
pursuant to this Agreement.
1.14 Taxes. The term "Taxes" means and includes all federal, state, local
and foreign income, franchise, gross receipts, business license, sales, use,
withholding, employment, property and other taxes imposed on the Company or any
of its property for any taxable period or portion thereof that ends on or
before the Closing Date, and all interest, penalties and additions to tax
attributable thereto.
1.15 Tax Returns. The term "Tax Returns" means and includes all tax and
information returns, reports and other filings required to be made by the
Company with any federal, state, local or foreign governmental agency with
respect to any Taxes applicable to or imposed upon the Company with respect to
any period ending on or before the Closing Date.
2. AGREEMENT TO SELL AND PURCHASE SHARES
Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties contained herein, the Company hereby agrees
to issue and sell to the Investor and the Investor agrees to purchase from the
Company:
2.1 Sale of Common Stock. At the First Closing: Two Hundred Fifty
Thousand (250,000) shares of its Common Stock at a purchase price of Four
Dollars ($4.00) per share for a total purchase price of One Million Dollars
($1,000,000); and
2.2 Sale of Series A Preferred Stock. At the Second Closing: Three
Hundred Thirty-Three Thousand Three Hundred Thirty-Four (333,334) shares of
Series A Preferred Stock at a purchase price of Six Dollars ($6.00) per share
for a total purchase price of Two Million Dollars ($2,000,004).
3. CLOSING DATES; DELIVERIES BY THE PARTIES
3.1 Closing Dates. Each closing shall be consummated through telephone
conference calls, the execution of closing documents in counterparts and their
delivery by facsimile transmission, and a wire transfer of funds, followed by
the delivery of manually signed original documents and certificates through an
overnight courier or delivery service, without the need for the parties or their
counsel to be present at the same location.
3.1.1 The First Closing shall take place concurrently with the
delivery to the Investor of the opinion of patent counsel called for by Section
4.1.7 of this Agreement.
3.1.2 The Second Closing shall take place within three (3)
business days after the date on which NAMS has secured the approvals from the
United States Food and Drug Administration necessary to market and sell its
I-125 radioactive sources in interstate commerce in the United States.
3.2 Deliveries by the Company. On the applicable Closing Date, the
Company shall make the following deliveries to or for the benefit of the
Investor:
3.2.1 At the First Closing, the Company shall
deliver the following documents and instruments:
A. The Distribution Agreement, duly executed by the Company;
B. An opinion of the Company's patent counsel as called for by
Section 4.1.7, below, in content satisfactory to the Company and its counsel;
C. Stock Certificates evidencing the Shares of Common Stock
purchased by the Investor; and
D. Such other agreements, documents and certificates as the
Investor reasonably may request for purposes of effecting the transactions
contemplated in this Agreement and the other Company Documents.
3.2.2 At the Second Closing, the Company shall deliver the
following documents and instruments:
A. A copy of the 510(K) premarketing approval issued by the
Food and Drug Administration authorizing the manufacture, sale and use of the
Model MED 36-31-A Brachytherodine I-125 Sources proposed to be manufactured by
the Company.
B. Stock Certificates evidencing the Shares of Preferred Stock
being purchased by the Investor;
C. A certificate executed by the Chief Executive Officer of the
Company stating in effect that (1) the representations and warranties made by
the Company in SECTION 6 of this Agreement continue to be true and correct in
all material respects and (2) all covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Second
Closing Date, or which are a condition precedent to the obligation of Investor
to purchase the Series A Preferred Stock, have been performed, complied with or
satisfied in all material respects; and
D. Such other agreements, documents and certificates as the
Investor reasonably may request for purposes of effecting the transactions
contemplated in this Agreement and the other Company Documents.
3.3 Deliveries by the Investor. On the applicable Closing Date, the
Investor shall make the following deliveries to or for the benefit of the
Company:
3.3.1 The following documents and instruments shall be delivered
at the First Closing:
A. The Distribution Agreement, duly executed by Investor;
B. Payment by wire transfer of the purchase price for the
Shares of Common Stock to be purchased by the Investor under this Agreement; and
C. Such other agreements, documents and certificates as the
Company reasonably may request for purposes of effecting the transactions
contemplated in this Agreement or any of the other agreements contemplated in
this Agreement and to which the Investor is a party.
3.3.2 At the Second Closing, the Investor shall make payment for
the Shares of Preferred Stock by wire transfer and shall deliver:
A. A certificate executed by the Chief Executive Officer or the
President of Investor stating in effect that (1) the representations and
warranties made by the Investor in SECTION 7 of this Agreement continue to be
true and correct in all material respects and (2) all covenants, agreements and
conditions contained in this Agreement to be performed by the Investor on or
prior to the Second Closing Date, or which are a condition precedent to the
obligation of the Company to sell the Series A Preferred Stock, have been
performed, complied with or satisfied in all material respects; and
B.. Such other agreements, documents and certificates as the
Company reasonably may request for purposes of effecting the transactions
contemplated in this Agreement or any of the other agreements contemplated in
this Agreement and to which the Investor is a party.
3.4 Simultaneous Delivery. The execution and delivery of the agreements
and documents described in this SECTION 3 and to be delivered at the respective
Closings, and the consummation of all of the transactions to be consummated at
each Closing shall, as to each such Closing, be deemed to have been executed and
delivered and to have taken place simultaneously, and no execution, delivery,
payment or transaction scheduled to occur at a Closing shall be deemed to have
occurred until all such executions, deliveries, payments and transactions
scheduled to occur with respect to that Closing have in fact occurred.
4. CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR
4.1 Conditions to the First Closing. The obligation of the Investor to
purchase the Shares of Common Stock is subject to the fulfillment, or the waiver
by the Investor, of each of the following conditions on or before the First
Closing Date:
4.1.1 Company's Representations. The representations and
warranties made by the Company in SECTION 6 hereof shall be true and correct in
all material respects when made, and shall be deemed repeated at and as of the
Closing Date and shall be true and correct in all material respects at and as of
the
Closing Date.
4.1.2 Company's Performance. All covenants, agreements and
conditions contained in this Agreement to be performed by the Company on or
prior to the Closing Date shall have been performed or complied with in all
material respects.
4.1.3 Issuance of Shares. On the Closing Date, the purchase of
the Shares by the Investor hereunder shall be legally permitted by all laws and
regulations to which the Investor and the Company are subject.
4.1.4 Material Adverse Change. From January 31, 1997 to the
Closing Date, there shall not have occurred any material adverse change in the
Company's business, operations or financial condition.
4.1.5 Series A Preferences. The Board of Directors of the Company
shall have adopted the recitals and resolutions set forth in the Certificate of
Designation.
4.1.6 Opinion of Counsel. Investor shall have received the
opinion of counsel of the Company with respect to (a) its organization, good
standing, and qualification to do business, (b) the due authorization and valid
issuance of the Shares of the Common Stock and their status as fully paid,
non-assessable shares, and (c) such other matters as counsel to the Investor may
reasonably request.
4.1.7 Opinion of Patent Counsel. There shall have been delivered
to the Investor by the Company an opinion of the Company's patent counsel in
content satisfactory to Investor and its counsel stating in substance that such
patent counsel is generally knowledgeable with respect to the patent rights of
Third Parties relating to radioactive sources, that such counsel has conducted
such inquiry and investigation as it deemed reasonably necessary for the purpose
of determining whether the presently intended manufacture, sale and/or use of
the I-125 Sources manufactured by NAMS infringes any patent or intellectual
property rights of any Third Party, and that nothing has come to the attention
of such counsel during the course of its inquiries and investigations that would
lead it to believe that the presently intended manufacture, sale and/or use of
the I-125 Sources manufactured by NAMS infringes any patent or intellectual
property rights of any Third Party.
4.1.8 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the other
Company Documents and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Investor and its counsel, and the Investor and its counsel shall have received
all such counterpart originals or certified or other copies of such documents as
they may reasonably request.
4.2 Conditions to the Second Closing. The obligation of the Investor to
purchase the Shares of Preferred Stock is subject to the fulfillment, or the
waiver by the Investor, of each of the following conditions on or before the
First Closing Date:
4.2.1 NAMS shall have provided MENTOR with a copy of the 510K
premarketing approval obtained from the United States Food and Drug
Administration necessary to market and sell its I-125 radioactive sources in
interstate commerce in the United States; and
4.2.2 The Certificate of Designation shall have been filed with
the Secretary of State of the State of Delaware and shall be in full force and
effect.
4.2.3 There have been no material adverse change in the business,
financial condition or the properties of the Company between the date of the
First Closing and the date of the Second Closing.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to issue and sell the Shares to the Investor
at the Closing under this Agreement are subject to fulfillment, or the waiver,
of each of the following conditions on or before the Closing at which such
purchase and sale is to occur:
5.1 Investor's Representations. The representations and warranties made
by the Investor in SECTION 7 hereto shall be true and correct in all material
respects when made, and shall be deemed repeated at and as of the Closing Date
and shall be true and correct in all material respects at and as of the Closing
Date.
5.2 Investor Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by the Investor on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
5.3 Payment of Purchase Price. The Investor shall have paid to the
Company the purchase price for the Shares.
5.4 Company Consents. The Company shall have obtained all consents,
permits and waivers necessary or appropriate for consummation of the
transactions to be effected at the Closing.
5.5 Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the other Company
Documents and all documents and instruments incident to such transactions shall
be reasonably satisfactory in substance and form to the Company and its counsel,
and the Company and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may
reasonably request.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement for the Investor to enter into and perform its
obligations under this Agreement, the Company hereby represents and warrants to
the Investor that all of the following are true and correct as of the date of
this Agreement:
6.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation; has all requisite power to own, lease, license
and operate its assets, properties and business and to carry on its business as
conducted during the 12-month period prior to the date hereof, as now conducted
and as proposed to be conducted; and is duly qualified or licensed to do
business as a foreign corporation and is in good standing in every jurisdiction
in which the nature of its business or the location of its properties requires
such qualification or licensing.
6.2 Due Authorization: Enforceability. The Company has taken all actions
necessary to authorize it to enter into and perform fully its obligations under
this Agreement and all of the other Company Documents and to consummate the
transactions contemplated herein and therein. This Agreement and the other
Company Documents are the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles.
6.3 Authorization of Shares. The Company has duly authorized the sale
and issuance pursuant to this Agreement of 250,000 shares of its Common Stock
and 333,334 shares of its Series A Preferred Stock.
6.4 Validity of This Agreement. The Company has full power and authority
to execute and deliver this Agreement and each of the other Company Documents,
to issue the Shares to the Investor pursuant to this Agreement, and to perform
its obligations under and to consummate the transactions contemplated by this
Agreement and each of the other Company Documents. The execution, delivery, and
performance by the Company of this Agreement and each of the other Company
Documents, the issuance and sale of the Shares pursuant to this Agreement, and
the consummation of the transactions contemplated by this Agreement and each of
the other Company Documents, (a) have been duly authorized and approved by all
necessary corporate action on the part of the Company, its officers, directors
and shareholders, and (b) will not violate any provision of law and will not
conflict with, or result in a breach of, any of the terms of, or constitute
a default under, the Company's Certificate of Incorporation, Bylaws, or any
contract or agreement, whether written or oral, judgment, decree, order, or
other restriction to which the Company is a party or by which it or any of its
properties is bound, and (c) will not result in the creation of any mortgage,
lien, charge or encumbrance upon any of the properties or assets of the Company
pursuant to the terms of its Certificate of Incorporation, Bylaws or any
Material Agreement, instrument, judgment, decree or order applicable to it.
6.5 Capital Structure. The authorized capital stock of the Company
consists of (a) 2,000,000 shares of Preferred Stock, without par value, of which
333,334 shares have been designated Series A Preferred Stock and (b) 10,000,000
shares of Common Stock having a par value of $.01 per share. As of the date of
this Agreement, 3,073,201 shares of the Common Stock of the Company are issued
and outstanding and there are no shares of the Series A Preferred Stock issued
and outstanding. There are no outstanding preemptive rights, and there are no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating the Company to issue or to transfer
from treasury any shares of its capital stock of any class or kind whatsoever,
other than the rights, options and warrants described in the Company's SEC
Filings. The outstanding shares of Common Stock and Preferred Stock of the
Company are duly and validly issued, fully paid and nonassessable, and were
issued in compliance with all applicable federal and state securities laws.
6.6 Consents. Assuming the accuracy of the warranties and
representations of, and the performance of this Agreement by, the Investor, no
consent, approval, or authorization of or registration, qualification,
designation, declaration, or filing with any governmental authority on the part
of the Company is required in connection with the valid execution, delivery, or
performance of this Agreement and each of the other Company Documents, or the
offer, sale, or issuance of the Shares pursuant to this Agreement, or the
consummation of any other transaction contemplated in this Agreement and each of
the other Company Documents, except for the filing of notices with federal and
state securities agencies with respect to the sale and issuance of the Shares
and such consents, approvals, and authorizations as have already been obtained
by the Company.
6.7 Authority to Issue Stock. The Shares to be issued under this
Agreement have been duly authorized and are not subject to any preemptive or
protective rights on the part of the holders of any class of securities of the
Company. The issuance, sale, and delivery of the Shares pursuant to this
Agreement have been duly authorized by all necessary corporate action, and when
issued, sold, and delivered in accordance with the provisions of this Agreement
and upon the Company's receipt of the full purchase price therefor, will be duly
and validly issued, fully paid, and nonassessable and will be issued in
compliance with all applicable
federal and state securities laws.
6.8 Securities Laws. Assuming the accuracy of the warranties and
representations of, and the performance of this Agreement by, the Investor, the
offer, issuance, and sale of the Shares pursuant to this Agreement are, and at
the time of issuance of the Shares, will be, exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the qualification requirements of applicable state
securities laws.
6.9 Compliance with Laws; Governmental Matters. The Company has in all
material respects complied with, and is now in all material respects in
compliance with, all laws and orders known to the Company to be applicable to
it. Except to the extent, if any, disclosed to the Investor in writing, the
Company holds all business licenses, permits, franchises, orders and government
approvals material to or necessary for the conduct of the Company's business as
previously conducted during the 12-month period prior to the date hereof, as
presently conducted or, except for FDA premarketing approval with respect to the
Company's I-125 sources, as proposed to be conducted, other than those permits,
if any, the absence of which would not have an adverse effect on the Company's
business, operations or financial condition. Each license and permit is in full
force and effect; the Company is now and has at all times in the past been in
all material respects in full compliance with each thereof; no violations are or
have in the last five years been recorded by any governmental authority in
respect of any thereof; and no proceeding is pending or, to the best of the
Company's knowledge, threatened, to revoke, amend or limit any thereof. There
are no pending or, to the best of the Company's knowledge, threatened
proceedings by or before any governmental authority which involve new special
assessments, assessment districts, bonds, Taxes, condemnation actions, laws or
orders or similar matters which, if instituted, could reasonably be expected to
have a material adverse effect upon the condition (financial or otherwise),
assets, liabilities, business or prospects of the Company.
6.10 Intellectual Property. The Company has good and marketable title to,
or a valid license interest in, all Intellectual Property used in and material
to the Company's business. To the best of the Company's knowledge, no person
has asserted any right or interest adverse to the Company in respect of any of
the Company's Intellectual Property rights which would have a material adverse
effect on the Company and its business other than those rights, if any, that
have been disclosed to Investor by the Company in writing. To the best of the
Company's knowledge, the conduct by the Company of its business does not
infringe upon or violate the Intellectual Property rights of any other person or
entity, nor has there been any claim to such effect.
6.11 Financial Statements and Reports. The Company has filed with the
Commission, and has heretofore made available to
the Investor true, correct and complete copies of its SEC Filings. The
Company's SEC Filings, including without limitation the Annual Report, the
Quarterly Report and any financial statements or schedules included in any of
such Filings, at the time filed, complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the Commission thereunder.
The financial statements with the notes thereto, contained in the Company's SEC
Filings are in accordance with the respective books and records of the Company
and its consolidated subsidiaries, have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved, except as otherwise indicated therein, and
present fairly (subject, in the case of unaudited statements, to normal
recurring audit adjustments) the consolidated financial position of the Company
and its consolidated subsidiaries as of the respective dates, and the
consolidated results of operations and retained earnings and cash flows (or
changes in financial position) of the Company and its consolidated subsidiaries
for the respective periods indicated thereby.
6.11.1 Except as and to the extent set forth in the Quarterly
Report, as of January 31, 1997 neither the Company nor any of its consolidated
subsidiaries had any known liabilities of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, which would be
required by U.S. GAAP to be reflected on a consolidated balance sheet of the
Company and its consolidated subsidiaries (including the notes thereto).
6.11.2 None of the following events has occurred or arisen since
January 31, 1997:
A. Any material adverse change in the financial condition or
operations of the business of the Company and its consolidated subsidiaries,
considered as a whole, from that shown in the Quarterly Report; or
B. Any damage or destruction in the nature of a casualty loss,
whether or not covered by insurance, materially and adversely affecting any
property or business of the Company or any of its subsidiaries or affiliates
which is material to the financial condition or the operation of the business of
the Company and its subsidiaries considered as a whole; or
C. Other than in the ordinary course of business consistent
with past practice, any increase in the compensation payable currently or in the
future by the Company or any of its subsidiaries under any employment agreement,
whether written or oral, with any officer or salaried employee of the Company or
any of its subsidiaries whose calendar year 1996 compensation exceeded $100,000,
or in any bonus, insurance, pension or other benefit plan made for or with any
of such officers or employees; or
D. Any actual or threatened strike, slowdown, stoppage or other
labor dispute which materially and adversely affects, or which the Company
believes may materially and adversely affect, the business or prospects of the
Company and its subsidiaries considered as a whole; or
E. Any extraordinary loss (as defined in Opinion No. 30 of the
Accounting Principles Board of the American Institute of Certified Public
Accountants ("Opinion No. 30")) suffered by the Company or any of its
subsidiaries which, singly or in the aggregate, is material to the Company and
its subsidiaries considered as a whole.
6.11.3 Since January 31, 1997, neither the Company nor any of its
subsidiaries has engaged in any transaction material to the Company and its
subsidiaries, considered as a whole, not in the ordinary course of its business,
other than the transactions contemplated by this Agreement and the Distribution
Agreement.
6.11.4 No statement contained in any of the Company's SEC Filings,
as of the date of such Filing, contained any untrue statement of a material
fact, or omitted to state a material fact necessary to make the statements
contained therein not misleading in light of the circumstances in which such
statements were made.
6.12 Full Disclosure. All documents and other papers delivered, or to be
delivered, to the Investor by or on behalf of the Company in connection with
this Agreement and the other Company Documents and the transactions contemplated
herein and therein are, and at the time of delivery will be, true, correct and
complete in all material respects. The information furnished to the Investor
by or on behalf of the Company in connection with this Agreement and the other
Company Documents and the transactions contemplated herein and therein does not,
and will not, contain any untrue statement of a material fact and does not, and
will not, omit to state any material fact necessary to make the statements made,
in the context in which they are made, not false or misleading. There is no
fact known to the Company which the Company has not disclosed to the Investor in
writing which could reasonably be expected to have a material adverse effect
upon the condition (financial or otherwise), assets, liabilities, business,
operations, properties or prospects of the Company.
7. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
As a material inducement for the Company to enter into and perform its
obligations under this Agreement, the Investor hereby represents and warrants to
the Company that all of the following are true and correct as of the date of
this Agreement:
7.1 Organization and Good Standing. The Investor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; has all requisite power to own, lease,
license and operate its assets, properties and business and to carry on its
business as conducted during the 12-month period prior to the date hereof, as
now conducted and as proposed to be conducted; and is duly qualified or licensed
to do business as a foreign corporation and is in good standing in every
jurisdiction in which the nature of its business or the location of its
properties requires such qualification or licensing.
7.2 Due Authorization: Enforceability. The Investor has taken all
actions necessary to authorize it to enter into and perform fully its
obligations under this Agreement and all of the other Company Documents and to
consummate the transactions contemplated herein and therein. This Agreement and
the other Company Documents are the legal, valid and binding obligations of the
Investor, enforceable in accordance with their respective terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles.
7.3 Validity of This Agreement. This Agreement and each of the other
Company Documents constitutes a valid and legally binding obligation of the
Investor, enforceable against the Investor in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors' rights
generally and to general equitable principles. The execution, delivery, and
performance by the Investor of this Agreement and each of the other Company
Documents, the purchase of the Shares under this Agreement, and the consummation
of the transactions contemplated by this Agreement and each of the other Company
Documents will not violate any provision of law applicable to the Investor and
will not conflict with, or result in a breach of, any of the terms of, or
constitute a default under, the Investor's Certificate of Incorporation, Bylaws,
or any agreement, instrument, or other restriction to which the Investor is a
party or by which it or any of its properties is bound.
7.4 Consents. No consent, approval or authorization of or registration,
qualification or filing with any governmental authority on the part of the
Investor is required in connection with the valid execution, delivery, or
performance of this Agreement and each of the other Company Documents, the
purchase of the Shares pursuant to this Agreement, or the consummation of any
other transaction contemplated in this Agreement and each of the other Company
Documents.
7.5 Securities Laws. Investor satisfies the requirements for an
institutional investor set forth in Section 25102(i) of the California
Corporations Code and is an Accredited Investor within the meaning of Regulation
D under the Securities Act.
7.5.1 The Investor has had an opportunity to discuss the Company's
business, management and financial affairs with its management and has had an
opportunity to review the Company's facilities.
7.5.2 The Investor has had the opportunity to obtain and review
all information about the Company, and to ask such questions of the officers and
directors of the Company, that the Investor deems necessary or appropriate in
connection with the Investor's purchase of the Shares and investment in the
Company. The Investor has had an opportunity to review and obtain copies of all
documents and agreements of the Company referred to in this Agreement or any
Exhibit hereto.
7.6 Purchase for Investment. The Investor is purchasing the Shares for
its own account for investment and not with a view to or for sale in connection
with any distribution of any of the Shares, but without prejudice to the
Investor's right to sell or otherwise dispose of all or any part of the Shares
under a registration under the Securities Act or under an exemption from such
registration. The Investor agrees that upon the request of the Company, it will
execute and deliver to the Company an investment representation letter
reasonably satisfactory to the Company.
7.7 No Registration of Securities. The Investor understands that the
Shares to be issued by the Company under this Agreement will not be registered
under the Securities Act or the applicable securities laws of any state in
reliance on the so-called "private offering" exemption provided by Section 4(2)
of the Securities Act, Regulation D promulgated under the Securities Act, and by
such state securities laws; that the Shares will constitute "restricted
securities" within the meaning of the Securities Act, the rules and regulations
of the Commission thereunder, including Rule 144, and the applicable state
securities laws; and that the certificates and documents representing the Shares
will bear the following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE,
DISTRIBUTION OR RESALE THEREOF, AND MAY NOT BE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT
OF 1933, OR PURSUANT TO RULE 144 UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SKILLED IN SECURITIES MATTERS AND SATISFACTORY TO THE ISSUER, THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
7.7.1 The Company may place on the certificates and documents
representing the Shares such additional legends as may be necessary or advisable
for purposes of compliance with the applicable state securities laws.
7.7.2 The Investor acknowledges that the Shares to be issued to it
under this Agreement must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available.
The Investor is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of securities purchased in a private
placement subject to the satisfaction of certain conditions.
7.8 No Adverse Change in Financial Condition. There has not been any
material adverse change in the financial condition or operations of the business
of the Investor and its consolidated subsidiaries, considered as a whole, from
that shown in its most recent SEC Filing.
8. SURVIVAL OF WARRANTIES
The warranties and representations of each of the parties to this Agreement
contained in or made pursuant to SECTIONS 6 and 7 of this Agreement shall
survive the execution and delivery of this Agreement and the sale and delivery
of the Shares under this Agreement, and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the party to
whom such representation, warranty or covenant is made.
9. FURTHER AGREEMENTS OF THE PARTIES
9.1 Cooperation. The Company and the Investor shall each cooperate with
the other in supplying such information as it may reasonably request in order to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act for the sale of any of the Shares issued under this
Agreement.
9.2 Reservation of Common Stock. The Company shall reserve and maintain
a sufficient number of shares of Common Stock for issuance upon conversion of
all of the outstanding shares of Series A Preferred Stock issued under this
Agreement.
9.3 Termination of Covenants. The covenants of the Company contained in
this SECTION 9 shall terminate, and be of no further force or effect, upon the
date on which the Investor no longer holds at least 100,000 shares of Common
Stock as presently constituted (calculated by assuming full conversion of the
shares of Series A Preferred Stock issued under this Agreement).
10. INDEMNIFICATION
10.1 Indemnification by the Company. The Company shall indemnify, defend
and hold harmless (a) the Investor, (b) each of the Investor's affiliates,
assigns and successors in interest to the Shares, and (c) each of their
respective shareholders, directors, officers, employees, agents, attorneys and
representatives, from and against any and all losses which may be incurred or
suffered by any such person or entity and which may arise out of or result from
any breach of any representation, warranty, covenant or agreement of the Company
contained in this Agreement or in any of the other Company Documents.
10.2 Indemnification by the Investor. The Investor shall indemnify,
defend and hold harmless (a) the Company, (b) each of the affiliates, assigns
and successors in interest to the Company, and (c) each of their respective
shareholders, directors, officers, employees, agents, attorneys and
representatives, from and against any and all losses which may be incurred or
suffered by any such person or entity and which may arise out of or result from
any breach of any representation, warranty, covenant or agreement of the
Investor contained in this Agreement or in any of the other Company Documents.
10.3 Notice to Indemnifying Party. If any party (the "Indemnified Party")
receives notice of any claim or other commencement of any action or proceeding
with respect to which any other party (or parties) (the "Indemnifying Party") is
obligated to provide indemnification pursuant to SECTION 10.1 or SECTION 10.2
hereof or pursuant to any other specific indemnification covenant contained in
this Agreement, the Indemnified Party shall promptly give the Indemnifying Party
written notice thereof, which notice shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The timely delivery
of any such notice shall not be a condition precedent to any liability of the
Indemnifying Party for indemnification hereunder, unless the delay or untimely
delivery of any such notice is materially prejudicial to the right or ability of
the Indemnifying Party to defend against the claim, action or proceeding which
is the subject of the notice. The Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party (which consent shall not be unreasonably withheld or delayed) unless suit
shall have been instituted against it and the Indemnifying Party shall not have
taken control of such suit after notification thereof as provided in Section
10.4 below.
10.4 Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party
delivered within 15 days after receipt by the Indemnifying Party of a notice for
a claim for indemnification, assume the defense of any such claim or legal
proceeding using counsel of its choice (subject to the approval of the
Indemnified Party, which approval shall not be unreasonably withheld or delayed)
if it acknowledges to the Indemnified Party in writing its obligations to
indemnify the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense; provided
that if the Indemnified Party reasonably determines that there exists a conflict
of interest between the Indemnifying Party (or any constituent party thereof)
and the Indemnified Party (or any constituent party thereof), the Indemnified
Party (or any constituent party thereof) shall have the right to engage separate
counsel, the reasonable costs and expenses of which shall be paid by the
Indemnifying Party, but in no event shall the Indemnifying Party be liable for
(a) the costs and expenses of more than one such separate counsel or (b) the
costs and expenses of any such separate counsel which are incurred prior to the
date on which the Indemnified Party delivers to the Indemnifying Party written
notice of the engagement of such separate counsel. If the Indemnifying Party
does not assume the defense of any such claim or litigation resulting therefrom,
the Indemnified Party may defend against such claim or litigation, after giving
notice of the same to the Indemnifying Party, on such terms as the Indemnified
Party may deem appropriate, and the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such action, with its counsel
and at its own expense. If the Indemnifying Party thereafter seeks to question
the manner in which the Indemnified Party defended such third-party claim or the
amount or nature of any such settlement, the Indemnifying Party shall have the
burden to prove by a preponderance of the evidence that the Indemnified Party
did not defend or settle such third-party claim in a reasonably prudent manner.
10.5 Survival of Representations of the Company. Notwithstanding any
right of the Investor to fully investigate the affairs of the Company and
notwithstanding the Investor's knowledge of facts determined or determinable by
the Investor pursuant to such investigation or right of investigation, the
Investor shall have the right to rely fully upon the representations,
warranties, covenants and agreements of the Company contained in this Agreement
or in any other Company Documents. With the sole exception of those covenants
which are to be performed by the Company after the Closing (which shall survive
until a claim thereon is barred by the applicable statute of limitations), each
representation, warranty, covenant and agreement of the Company contained herein
shall survive the execution and delivery of this Agreement and the Closing and
shall thereafter terminate and expire on the first (1st) anniversary of the
Closing Date. No claim or action for indemnity pursuant to Section 10.1 hereof
for breach of any representation, warranty, covenant and agreement of the
Company shall be asserted or
maintained by the Investor after the expiration of such representation,
warranty, covenant and agreement pursuant to the preceding sentence except for
claims made in writing prior to such expiration and actions (whether instituted
before or after such expiration) based on any claim made in writing prior to
such expiration.
10.6 Survival of Representations of the Investor. Each representation,
warranty, covenant and agreement of the Investor contained herein shall survive
the execution and delivery of this Agreement and the Closing and thereafter
shall terminate and expire on the first (1st) anniversary of the Second Closing
Date. No claim or action for indemnity pursuant to SECTION 10.2 hereof for
breach of any representation, warranty, covenant and agreement of the Investor
shall be asserted or maintained by the Company after the expiration of such
representation, warranty, covenant and agreement pursuant to the preceding
sentence except for claims made in writing prior to such expiration and actions
(whether instituted before or after such expiration) based on any claim made in
writing prior to such expiration.
11. TERMINATION OF AGREEMENT
11.1 Termination. This Agreement and the transactions contemplated herein
may be terminated before the Closing Date in the following manner.
11.1.1 Mutual Consent. By the mutual written consent of the
Company and the Investor.
11.1.2 Failure of Conditions to Investor's Performance. By the
Investor if, by the applicable Closing Date, any condition set forth in
SECTION 4 hereof shall not have been satisfied or waived.
11.1.3 Failure of Conditions to Company's Performance. By the
Company if, by the applicable Closing Date, any condition set forth in SECTION 5
hereof shall not have been satisfied or waived.
11.1.4 Material Breach. By either party upon the material breach
by the other party or the inaccuracy of any representation, warranty or covenant
of the other party set forth in this Agreement and which breach is not cured
within ten (10) days after notice thereof by the non-defaulting party.
11.2 Liability Upon Termination. In the event of the termination of this
Agreement pursuant to SECTION 11.1, neither party shall have any liability or
further obligation to the other party except that each party will pay its costs
and expenses incident to the negotiation and preparation of this Agreement and
its performance and compliance with the Agreement, including the fees,
disbursements and expenses of its counsel and advisors. However, the right of
either party to recover damages for the inaccuracy or
breach of any representation, warranty or covenant of the other party contained
herein shall survive any termination.
12. GENERAL PROVISIONS
12.1 Facsimile Signatures. Signatures of the parties on this Agreement,
the other Company Documents or on any document or instrument delivered pursuant
to this Agreement or any of the other Company Documents shall be deemed to be
original signatures and shall be sufficient to bind the parties. Each party
covenants to deposit the original, manually signed document for delivery by
courier or by registered or certified mail to the party to whom such facsimile
signature was transmitted within two business days after the date of any such
facsimile transmission.
12.2 Assignment & Delegation. Neither party to this Agreement shall be
entitled to assign its rights hereunder without the consent of any other party,
and no party to this Agreement shall delegate its duties and obligations
hereunder without the consent in writing of the party to whom such duty or
obligation is owed, and no such assignment or delegation, if so consented to,
shall relieve the assignor of liability under this Agreement.
12.3 Further Assurances. Each party to this Agreement shall take such
additional actions and shall execute such documents and instruments as may be
necessary or proper to cause the occurrence of any conditions precedent or
conditions subsequent to his or her obligation to perform or as may otherwise be
appropriate to effectuate the purposes and intention of this Agreement or to
consummate the transactions contemplated hereunder.
12.4 Counterparts and Execution. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same instrument binding on all the
parties hereto, notwithstanding that all of the parties are not signatories to
the original or the same counterpart.
12.5 Construction. The parties agree that each party and its counsel have
reviewed and revised this Agreement and that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
apply in the interpretation of this Agreement or any amendments of exhibits
thereto.
12.6 Governing Law. This Agreement, the construction and enforcement of
its terms, and the interpretation of the rights and duties of the parties
hereunder shall be governed by the laws of the State of California.
12.7 Partial Invalidity. Each term and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law. If any term or
provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, then the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those to which it is held invalid or unenforceable, shall not be affected
thereby.
12.8 Arbitration. Unless the relief sought requires the exercise of the
equity powers of a court of competent jurisdiction, any dispute arising in
connection with the interpretation or enforcement of the provisions of this
Agreement or any of the other Company Documents, or the application or validity
thereof, shall be submitted to arbitration. Such arbitration proceedings shall
be held in Los Angeles, California, in accordance with the rules then obtaining
of the American Arbitration Association. This agreement to arbitrate shall be
specifically enforceable. Any award rendered in any such arbitration
proceedings shall be final and binding on each of the parties hereto, and
judgment may be entered thereon in any court of competent jurisdiction.
12.9 Attorneys' Fees. Should any action or proceeding be necessary to
construe or enforce the terms or conditions of this Agreement, or the
application or validity thereof, then the party prevailing in such action shall
be entitled to recover its reasonable attorneys' fees and other court costs,
together with any costs and attorneys' fees incurred in enforcing any judgment
entered therein.
12.10 Exhibits. All exhibits or appendices attached or referred to in this
Agreement are incorporated in this Agreement by such reference and are made a
part hereof as though they were fully set forth herein.
12.11 Notices. Any notices permitted or required hereunder shall be in
writing and shall be deemed to have been given (a) on the date of delivery if
delivery of a legible copy was made personally or by facsimile transmission, or
(b) on the second business day after the date on which mailed by registered or
certified mail, return receipt requested, addressed to the party for whom
intended at the address set forth on the signature page of this agreement or
such other address, notice of which is given as provided herein.
12.12 Expenses. Each of the parties shall pay all costs and expenses
incurred by it in negotiating and preparing this Agreement and in carrying out
the transactions contemplated hereby.
12.13 Third Party Benefit. The parties do not intend to confer any benefit
on any person, firm, corporation, entity or individual other than the parties to
this Agreement by reason, directly or indirectly, of the parties' execution and
delivery of this Agreement or any of the other Company Documents, including all
exhibits hereto and thereto, and any related documents, schedules, certificates
and opinions.
12.14 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
12.15 Complete Agreement. This written instrument, together with any
exhibits or appendices referred to herein, constitutes the entire understanding
of the parties with respect to the matters that are the subject of this
Agreement, and no representations, warranties or covenants not included in this
Agreement may be relied upon by any party hereto.
(Signatures appear on the following page)
IN WITNESS WHEREOF, both parties have executed this Stock Purchase
Agreement to be duly executed on the dates set forth below.
NAMS:
NORTH AMERICAN SCIENTIFIC, INC., a Delaware corporation
NAMS: MENTOR:
NORTH AMERICAN SCIENTIFIC, MENTOR CORPORATION, a
INC., a Delaware corporation Minnesota corporation
By By
Xxxxxxx Xxxxxx Xxxxxxxxxxx X. Xxxxxx
President Chief Executive Officer
Address for Notices: Address for Notices:
North American Scientific, Mentor Corporation
Inc. 0000 Xxxxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
91605 PH: (000) 000-0000
PH: (000) 000-0000 FAX: (000) 000-0000
FAX: (000) 000-0000
