SECURITIES PURCHASE AGREEMENT
Exhibit
4.1
SECURITIES PURCHASE AGREEMENT
(this “Agreement”), dated as
of May 2, 2008, by and among XXXXXX XXXXXX IRREVOCABLE TRUST, U/T/A (the “Purchaser”), and
FIRSTWAY ENTERPRISES, INC., a Delaware corporation (the "Company").
W
I T N E S S E T H:
WHEREAS, the Company has
acquired 100% of the outstanding membership interests of U.S. Imaging Holdings,
LLC, a Nevada limited liability company ("U.S. Imaging"); and
WHEREAS, as a consequence of
its acquisition of U.S. Imaging, the Company will be engaged in the diagnostic
imaging business through the operations of three wholly owned subsidiaries of
U.S. Imaging; and
WHEREAS, the Company requires
additional capital to operate its diagnostic imaging business; and
WHEREAS, Purchaser wishes to
purchase from the Company, and the Company wishes to sell and issue to
Purchaser, certain securities of the Company, upon the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in
consideration of the foregoing premises, which are true and correct and are
incorporated herein, and the mutual covenants and agreements hereinafter
contained, the Parties hereby agree as follows:
1. SALE AND PURCHASE OF
SECURITIES.
1.1. Transaction. Upon the
terms and subject to the conditions contained herein, at the Closing, as
provided in Section 4 below, the Company shall sell, issue and deliver to the
Purchaser, and the Purchaser shall purchase from the Company, free and clear of
all liens, claims, charges, restrictions or encumbrances of any kind or nature
(“Liens”), the
following authorized but unissued securities of the Company: i) a
convertible debenture, in the face amount of $1,000,000, bearing interest at 12%
per annum; such debenture (the "Debenture") shall be in substantially the form
of Exhibit A
attached hereto; and ii) Series A Stock Purchase Warrants to purchase up to
5,555,555 shares of the common stock of the Company, at a price of $.24 per
share and Series B Stock Purchase Warrants to purchase up to 5,555,555 shares of
common stock at a price of $.30 per share; such warrants (the "Warrants") shall
be in substantially the form of Exhibit B attached
hereto. The Debenture and the Warrants are collectively referred to
herein as the "Purchased Securities."
1.2. Purchase
Price. The aggregate cash purchase price for the Purchased
Securities (the “Purchase Price”)
shall be One Million Dollars ($1,000,000). The Purchase Price shall
be payable in immediately available funds at Closing.
2. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY. In order to induce the Purchaser to
purchase the Purchased Securities, the Company hereby represents and warrants to
Purchaser as follows:
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2.1. Corporate Organization and
Authority. The Company is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite power and authority to own its properties, and carry on its business
as now being conducted.
2.2. Capitalization.
2.2.1. The
authorized capital stock of the Company consists of 270,000,000 shares
consisting of 250,000,000 shares of common stock, $.0001 par value per share, of
which 50,000,000 shares are issued and outstanding and 20,000,000
shares of Preferred Xxxxx, x.0000 par value per share, none of which are issued
and outstanding. All of the outstanding shares were duly authorized
for issuance and are validly issued, fully paid and non-assessable.
2.2.2. Excepting
only the Debenture and the Warrants to be issued to Purchaser at Closing, there
are no existing options, warrants, calls, rights, commitments, subscriptions,
voting trusts or other agreements or arrangements of any character to which the
Company is a party requiring, and there are no securities of the Company
outstanding which upon conversion or exchange would require, the issuance, sale
or transfer of any shares of capital stock of the Company or other securities
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase shares of capital stock of the Company.
2.2.3. The
outstanding shares of common stock of the Company have not been issued in
violation of, and are not subject to, any purchase option, call, right of first
refusal, preemptive, subscription or similar rights under any applicable law,
the certificate of incorporation or by-laws of the Company, any written or oral
contract or understanding to which the Company is subject, bound or a
party, or otherwise. There are no voting trusts or other contracts,
agreements or understandings to which the Company is a party with respect to the
voting of the capital stock of the Company.
2.2.4. Excepting
only shares of common stock reserved for issuance upon conversion of the
Debenture or exercise of the Warrants, there is no capital stock of the Company
reserved for issuance for any purpose. There are no outstanding contractual
obligations of the Company to provide funds or to make any investment (in the
form of a loan, capital contribution or otherwise) in any other person or entity
(a “Person”). The
Company (a) does not own or hold the right to acquire any capital stock or
other equity securities of any Person, (b) does not have any direct or indirect
equity or ownership interest in any other Person, and (c) is not a member of or
participant in any partnership, joint venture, franchise agreement, licensee
agreement or similar arrangement.
2.3. Proper Authorization and
Execution. The execution, delivery and performance of this
Agreement and the agreements, documents and other instruments to be executed,
delivered and performed in connection with or simultaneously with the
transactions contemplated hereby (the “Related Agreements”)
by the Company, and consummation of the transactions contemplated hereby and
thereby, have been approved by the Company. The Company has obtained
all necessary approvals and consents to the transactions contemplated hereby and
by the Related Agreements. The Company has all power and authority
required to enter into and perform this Agreement and the Related
Agreements. The issuance of the Debenture and the Warrants have been
authorized and approved by the Company, and upon issuance of such Purchased
Securities to Purchaser, Purchaser will have good and valid title to such
securities, free and clear of any and all Liens.
2.4. Subsidiary. U.S.
Imaging is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Nevada. As of the
Closing of the transactions contemplated by this Agreement, all of the issued
and outstanding membership interests of U.S. Imaging are owned by the Company,
free and clear of any and all Liens.
All
subsequent representations and warranties by the Company set forth in this
Section 2 shall be applicable to the Company and U.S. Imaging, separately and as
a consolidated entity, and assumes the acquisition of U.S. Imaging.
2.5. No Breach Caused by
Agreement. The execution, delivery and performance of this
Agreement and all the Related Agreements will not conflict with, violate or
result in a breach of the provisions of, or constitute a default or result in
the acceleration of any obligations under, or permit termination of, any
agreement or instrument to which the Company is a party or by which any such
party is bound, nor will it conflict with or violate the provisions of the
Articles of Incorporation or Bylaws of the Company (or similar governing
document), or of any law, judgment, decree, order, regulation or rule of any
court or governmental authority or any covenant or restriction binding upon the
Company, nor will it result in the imposition of any Lien upon any asset of the
Company.
2.6. Securities
Filings. The Company is current in its reporting obligations
with the Securities and Exchange Commission ("SEC") under Section 13 of the
Securities Exchange Act of 1934, as amended, and all reports filed with the SEC
comply with applicable requirements except for the Form 8-K Current Report to be
filed in connection with the acquisition of US Imaging Holding LLC.
2.7. Title to
Assets. Except as set forth on Schedule 2.7, the Company has
good, valid and insurable title to, or a valid leasehold interest in, all
tangible and intangible assets of the Company, including all assets reflected on
the Company's balance sheet as of December 31, 2007, free and clear of all
Liens. The assets of the Company are sufficient to conduct the business of the
Company as presently conducted. Excepting only the premises in which
U.S. Imaging's diagnostic imaging centers are located (which are owned by
affiliates of the Company and leased to the Company), no assets owned or used by
the Company are (a) owned by, used by, or leased or licensed to or from any
affiliate of the Company, or (b) in the possession of any Person other than the
Company.
2.8. Condition of
Assets. The Company's assets are presently, and will at the
Closing be, in good order, condition and repair in all material respects,
subject only to ordinary wear and tear, and are reasonably suitable for the
purposes for which they are used.
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2.9. Operation of the
Business. Since December 31, 2007, the Company has:
(a) maintained its assets in good order, condition and repair, reasonable
wear and tear excepted; (b) carried on its business diligently and in
substantially the same manner as it previously has been carried on; and
(c) preserved its relationships with all customers, suppliers, vendors,
dealers, distributors, manufacturers and sales representatives, referral sources
and other persons or entities with whom the Company has business relationships
and are material with respect to its business. The Company has
not: (i) entered into or otherwise altered, modified or changed
in any material respect, or terminated, any contract, commitment, or transaction
not in the usual and ordinary course of the business and material to its
business; (ii) sold or disposed of any assets other than in the ordinary
course of business; (iii) purchased any equipment, or other items
requiring the expenditure of in excess of $10,000; or (iv) entered into or
otherwise altered, modified or changed in any material respect, any personal or
real property leases.
2.10. Absence of Material
Changes. Since December 31, 2007, there has not
been: (a) any material change in the business, financial
condition, working capital or net worth of the Company, or in the operation of
the business taken as a whole; (b) any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting the Company's
assets and/or properties and/or its business; (c) any entry into,
modification of or termination of any material commitment or transaction,
including, without limitation, any borrowing or capital expenditure; or
(d) any material change by the Company in accounting methods or
principles.
2.11. Real
Property.
2.11.1. The
Company does not own any real property or any interests in real property.
Schedule 2.11.1 sets forth a complete list of all real property and
interests in real property leased by the Company (individually, a “Leased Real Property”
and collectively the “Leased Real
Properties”), and the material terms of each lease for the Leased Real
Properties.
2.11.2. The
Company has a valid and enforceable leasehold interest under each of the leases
for the Leased Real Properties to which it is a party, and no event has occurred
or circumstance exists that constitutes a default or, with notice or lapse of
time, or both, would constitute a default by the Company under any lease for the
Leased Real Properties. The rental rates for each of the Leased Real
Properties is the fair market rental rate for each such property.
2.11.3. All of
the land, buildings, structures and other improvements used by the Company in
the conduct of its business are included in the Leased Real Properties. The
Company is not a lessor or sublessor of, nor or does it make available for use
to any Person, any Leased Real Property or any portion thereof.
2.12. Technology and Intellectual
Property.
2.12.1. Schedule
2.12.1 lists all copyrights, trademarks, trade names, brand names, logos,
service marks, patents, software and domain names, technology and any other
proprietary rights owned or used by the Company, in all cases both domestic and
foreign, and registered or unregistered, and applications for any and all of the
foregoing (all items included or required to be included on such schedule, the
“Intellectual
Property”), and indicates whether the same is owned or licensed. With
respect to registered Intellectual Property or applications therefor, Schedule
2.12.1 sets forth a list of all jurisdictions in which such items are registered
or applied for. The Company is the owner of record of any
application, registration or grant for each item of Intellectual
Property. The Company has filed all documents and paid all taxes,
fees, and other financial obligations required to maintain in force and effect
all Intellectual Property. To the best knowledge of the Company, the
Intellectual Property does not infringe upon the intellectual property or other
proprietary rights of any Person.
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2.12.2. The
Company is the sole and exclusive owner of the Intellectual Property or has
exclusive rights to use such Intellectual Property pursuant to a valid
license. The Company has not previously assigned, transferred,
conveyed or otherwise encumbered its right, title and interest in the
Intellectual Property. The Company owns or otherwise possesses valid
and enforceable rights to use all Intellectual Property currently used in its
business as presently conducted.
2.12.3. The
Company is not under any obligation to pay any royalties or similar payments in
connection with any intellectual property or technology.
2.12.4. Except as
otherwise disclosed on Schedule 2.12.1, the Company has not granted any options,
licenses or agreements of any kind relating to the Intellectual
Property.
2.12.5. To the
best knowledge of the Company, there has been no misappropriation of the
Company's material trade secrets or other material Intellectual Property by any
Person.
2.13. Material
Contracts.
2.13.1. Schedule
2.13 sets forth all of the following written or oral contracts, agreements or
understandings to which the Company is a party or by which it is bound
(collectively, the “Material Contracts”),
including any:
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Consulting,
employment, or medical director agreements (including agreements by
employees, consultants or medical directors with respect to
confidentiality, severance, non-competition and/or
nonsolicitation);
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Contracts
with any physicians or other Persons who refer patients to the
Company;
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Contracts
relating to leasing the Company's facilities to or otherwise providing
imaging services on behalf of any other
person;
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Contracts
relating to payments to the Company for health care services by any
third-party payer, including commercial payers, Medicare, Medicaid,
Tri-Care, or other governmental
payers;
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Covenants
of the Company (or its employees or independent contractors) not to
compete or solicit or other covenant restricting the development,
marketing or distribution and delivery of the products and services of the
Company or the engagement in any
activity;
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Contracts
under which the Company has borrowed any money from, established a line of
credit with, or issued any note, bond, debenture or other evidence of
indebtedness to, any Person or any other note, bond, debenture or other
evidence of indebtedness issued to any
person;
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Contracts
under which (a) any Person has directly or indirectly guaranteed
indebtedness, liabilities or obligations of the Company, or (b) the
Company has directly or indirectly guaranteed indebtedness, liabilities or
obligations of any Person;
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Contracts
for any joint venture, partnership, investment or similar
arrangement;
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Contracts
providing for indemnification, or any power of
attorney;
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Contracts
(including a purchase order) involving payment by the Company of more than
$50,000, or extending for a term of more than 180 days from the date of
this Agreement (unless terminable without payment or penalty upon no more
than 60 days’ notice);
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Contracts
with any governmental entity;
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Contracts
providing for the services of any dealer, distributor, sales
representative, franchisee or similar
representative;
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Any
other contract to which the Company is a party or by or to which the
Company or any of its property or assets or business is bound or subject
to that has an aggregate future liability to any Person in excess of
$50,000 and is not terminable by the Company by notice of not more than 60
days without payment or penalty;
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Any
leases, other than those listed in Schedule
2.9.1;
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Any
franchise agreement, license agreement or any similar contract;
or
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Any
contract other than as set forth above to which the Company is a party or
by which the Company's property or assets or business is bound or subject
to that is material to the Company.
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2.13.2. All
Material Contracts are valid, binding and in full force and effect and are
enforceable by the Company in accordance with their respective terms. The
Company has performed all obligations required to be performed by it to date
under all Material Contracts, and the Company is not (with or without the lapse
of time or the giving of notice, or both) in breach or default thereunder, and,
to the best knowledge of the Company, no other party to any Material Contract is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder. The Company has not received any
written notice of the intention of any party to terminate any Material Contract,
nor does the Company have knowledge of any basis for such a termination.
Complete and correct copies of all Material Contracts, together with all
modifications and amendments thereto, have been delivered to the
Purchaser.
2.14. Compliance With
Laws. The Company has complied in all material respects with,
and is not in violation of, any applicable Federal, State, or local statute,
law, or regulation (including, without limitation, any applicable building,
zoning, environmental protection or other law, ordinance or
regulation). The Company has no liabilities relating to contamination
of or remediation of the environment. To the best knowledge of
Seller, (i) there are no underground storage tanks located on the real
property underlying any of such locations at which the Company conducts
Business, (ii) there has not been any spill, disposal, discharge, storage
or release of any Hazardous Material into, upon, from, or over such real
property or into or upon ground or surface water on such real property,
(iii) there are no asbestos-containing materials incorporated into any of
the buildings or interior improvements that are part of any such real property,
or into other assets of the Company, and there is no electrical transformer,
fluorescent light fixture with ballasts, or other equipment containing PCBs on
such real property. As used in this paragraph, “Hazardous Material”
means any hazardous or toxic substance, material, or waste that is regulated by
any federal authority or by any state or local governmental authority where the
substance, material, or waste is located.
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2.15. Governmental Program
Participation; Regulatory Issues.
2.15.1. The
Company is eligible to receive payment without restriction under Title XVIII of
the Social Security Act (“Medicare”), and Title XIX of the Social Security Act
("Medicaid"), and is a provider with a valid and current provider agreement and
a valid provider number with the federal Medicare Program and the Medicaid
Program (the “Government Programs”), through authorized
intermediaries. The Company is in compliance with the conditions of
participation for the Government Programs in all material
respects. There is not pending or, to the best knowledge of the
Company, threatened any complaint, medical review, audit, overpayment,
proceeding or investigation under the Government Programs involving the
Company. The Company's diagnostic imaging centers are in compliance
with all Medicare statutes, rules and conditions of participation, including but
limited to the federal Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b), the
federal Xxxxx Law, 42 U.S.C. § 1395nn, and the regulations applicable to
independent diagnostic testing facilities, and there are no outstanding
statement or deficiencies of plans of correction that have not been accepted by
or on behalf of Medicare. The Company's diagnostic imaging centers
are in compliance with all applicable state statutes, rules and regulations,
including but not limited to the Patient Self-Referral Act, §456-053, Fla. Stat.
and the Patient Brokering Act, §817.505, Fla. Stat.
2.15.2. The
Company has filed and caused to be filed all material reports that are required
to have been filed or made with respect to the payment for the Company's
services by third party payors, including Government Programs and other
insurance carriers. The Company has maintained all records required
of it under law.
2.15.3. (i) Neither
any current or former employee of the Company or any affiliate of the Company
has been excluded from participating in any federal health care program (as
defined in 42 U.S.C. §1320a-7b(f)), and (ii) none of the Company’s current
officers, managers or directors (or holders of equivalent positions) have been
excluded from Medicare or any federal health care program (as defined in 42
U.S.C. §1320a-7b(f)) or been subject to sanction pursuant to 42 U.S.C. §1320a-7a
or 1320a-8, or been convicted of a crime described at 42
U.S.C. §1320a-7b.
2.15.4. To the
best knowledge of the Company, there is no action or event that will cause a
material decrease in the number of patients served by the Company's diagnostic
imaging centers after the Closing Date.
2.15.5. There
exists no event, condition or other circumstances which, immediately or with a
lapse of time, would materially adversely affect the Company's business, would
constitute a violation of the conditions of participation in federal or state
programs, or would be a violation of any statute or regulation concerning
operation of such business.
2.15.6. The
Company has all permits and licenses that are necessary to enable it to own and
to carry on the diagnostic imaging business as presently conducted and to
receive private and government payment for furnishing imaging
services. Section 2.15.6 of the Disclosure Schedule lists all of the
permits, licenses, provider numbers and governmental contracts held by the
Company relating to the business. The permits, licenses, provider
numbers and governmental contracts listed on Schedule 2.15.6 are valid and in
full force and effect, and no violations of any such permits, licenses, provider
numbers or governmental contracts have occurred or, to the best knowledge of the
Company, have been threatened or alleged to have
occurred. Furthermore, no actions or proceedings are pending or, to
the best knowledge of the Company, threatened, that would have the effect of
terminating, revoking, limiting, suspending, restricting, impairing or otherwise
affecting the use or renewal of any of the permits, licenses, provider numbers
or governmental contracts.
2.15.7. No
consent, approval, waiver or authorization from any third party is
necessary or required in connection with the transaction contemplated hereby or
for the Company to continue operation as an outpatient rehabilitation facility
following the Closing.
2.15.8. Except as
disclosed on Schedule 2.15.8, the Company has not been notified of any injury or
harm to a patient, allegedly caused by an act or omission of the
Company.
2.15.9. The
Company has not submitted any false or fraudulent claim to any third party, nor
has the Company received any notice from any third party regarding any
allegation of a billing mistake, overpayment claim, false claim or
fraud. All billing practices of the Company are in compliance with
all applicable federal and state laws and regulations, and the Company has not
billed for or received any payment or reimbursement in excess of amounts
permitted by applicable federal and state laws and regulations. The Company has
maintained all records required by law or regulation. The Company has
not solicited, received, paid or offered to pay any remuneration, directly or
indirectly, overtly or covertly, in cash or in kind, for the purpose of making
or receiving any referral which violated any applicable anti-kickback law
(including without limitation 42 U.S.C. § 1320a-7b(b)). The Company
has complied with all applicable security and privacy standards regarding
protected health information under the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) and all applicable state privacy laws with
respect to the Business.
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2.15.10. In
connection with the Company's business, the Company has complied with all of the
laws, rules and regulations of the Medicare programs and other governmental
health care programs, and has filed all claims, invoices, returns and other
forms in the manner prescribed. All claims, invoices, returns and
other forms made or submitted by the Company to Medicare or any other
governmental health or welfare related entity since the inception of the
Business are true, complete, correct and accurate. No deficiency in
any such claims, returns and other filings, including claims for overpayments or
deficiencies for late filings, has been asserted or threatened by any federal or
state agency or instrumentality or other provider reimbursement entities
relating to Medicare claims. The Company has not been subject to
audit relating to fraudulent Medicare procedures or practices. There
is no basis for any claim or request for recoupment or reimbursement from the
Company by any federal or state agency or instrumentality or other provider
reimbursement entities relating to Medicare or Medicaid claims in connection
with the Business.
2.16. Financial
Statements.
2.16.1. Schedule
2.16.1 contains the unaudited balance sheet of the Company as of December 31,
2007, and the unaudited statement of income of the Company for the year ended
December 31, 2007, (the financial statements described in this
Section 2.16.1 are collectively referred to herein as the “Financial
Statements”). On or before June 1, 2008, the Company will
provide Purchaser with audited Financial Statements. The audited
Financial Statements will show the Company's EBITDA for the fiscal year ended
December 31, 2007 was not less than $1,305,343. For purposes of this
Agreement, EBITDA means earnings before interest payments, taxes, depreciation
and amortization.
2.16.2. Each
balance sheet included in the Financial Statements presents fairly the financial
position of the Company as of the date thereof, and each income statement and
cash flow statement included in the Financial Statements presents fairly the
results of operations and cash flow of the Company for the period set forth
therein, subject to the lack of footnotes. Each of the Financial Statements has
been prepared in accordance with GAAP in all material respects applied on a
consistent basis. The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, all transactions and all items of income
and expense, assets and liabilities and accruals relating to the
Company.
2.17. Accounts
Receivable.
All
accounts receivable shown on the Financial Statements and all accounts
receivable created thereafter arose from valid, arm’s length transactions in the
ordinary course of business with non-affiliates, constitute valid claims of the
Company, free and clear of all Liens, and are not and will not be subject to any
valid claims or set off or other defense or counterclaims. Reserves
for amounts potentially uncollectible have been calculated in accordance with
GAAP, applied consistently with prior periods, and are adequate in all material
respects.
2.18. No Undisclosed
Liabilities. The Company has no liabilities, except for liabilities set
forth on the balance sheet contained in the Financial Statements (including
any notes thereto). Such liabilities arose solely in connection with
the business of the Company.
2.19. Litigation. Schedule
2.19 contains a listing of any and all suits, actions or proceedings pending,
or, to the best knowledge of the Company, threatened against the Company and any
and all judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against the Company (or any of the Company's directors and/or
officers).
2.20. Employment and ERISA
Matters. Except as described on Schedule 2.20, neither the
Company nor any controlled corporation or affiliated service group (within the
meaning of Sections 414(b), (c) and (m) of the Internal Revenue Code of
1986, as amended, maintains or has maintained any employee benefit pension plan
(as defined in Section 3(37) of ERISA) since the effective date of
ERISA. There is no suit, action or proceeding pending, or to the best
knowledge of Company, threatened against the Company relating to ERISA matters
which, if adversely determined, would materially and adversely affect the
business, operations, or properties or the condition, financial or otherwise, of
the Company. The Company has no liabilities pursuant to
ERISA.
2.21. Licenses, Permits,
Etc. The Company possesses all material licenses, permits
and/or other authorizations and approvals (each, a “Permit”) necessary to
conduct its business. All such Permits are valid and in full force
and effect. No violations are or have been recorded in respect of any Permit, no
event has occurred or set of facts exist that would allow revocation or
termination or that would result in the impairment of the Company's rights with
respect to any such Permit, and no proceeding is pending or, to the best
knowledge of the Company, threatened, to revoke, limit or enforce any
Permit.
2.22. Taxes and Related
Matters. All returns and/or reports required by any taxing
authority from the Company have been or will be timely filed, and all taxes
required to have been paid (regardless of whether shown as due on such returns
or reports) have been paid or adequately accrued for in the financial
statements. Further, with respect to any payment to a third party, in
addition to the foregoing, the Company has withheld from such payment and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over.
2.23. Full
Disclosure. No representation or warranty by the Company
contained in this Agreement, and no written statement, certificate, or document
furnished by or on behalf of Company to Purchaser in connection with this
Agreement, any Related Agreement or any transaction contemplated hereby or
thereby, contains, as of the date on which made or reaffirmed, any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which such statements were made, not misleading or necessary
in order to provide a prospective purchaser of the Debenture and Warrants with
full information as to the Company's business. Neither this
Agreement, any Related Agreement, any financial statements and/or other
financial information, or any schedule, exhibit or certificate delivered in
accordance with the terms hereof, or any document or statement in writing which
has been supplied by or on behalf of the Company, or by any of Company's
directors or officers, in connection with the transactions contemplated hereby,
contain, any untrue statement of a material fact, or omits, or will omit, any
statement of a material fact necessary in order to make the statements contained
herein or therein not misleading.
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2.24. Survival. The
representations and warranties of the Company set forth in this Section 2 shall
survive the Closing for the periods set forth in Section 5.1 below.
3. REPRESENTATIONS AND
WARRANTIES OF PURCHASER. In order to induce the Company to
issue the Purchased Securities to Purchaser, Purchaser represents and warrants
to the Company that it is acquiring the Purchased Securities solely for its own
account for the purpose of investment and not with a view to resale or
distribution thereof. The Purchaser will not sell, pledge or otherwise transfer
any of the Purchased Securities unless the Purchased Securities have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and applicable state securities laws or unless it shall have delivered to the
Company an opinion of counsel, in form and substance reasonably satisfactory to
the Company, to the effect that exemptions from the registration requirements of
the Securities Act and such state laws are available for the proposed
transaction.
3.1. Proper Authorization and
Execution. The execution, delivery and performance of this
Agreement and the Related Agreements, and consummation of the transactions
contemplated hereby have been duly authorized and approved by
Purchaser.
3.2. Accredited Invetor
Status. The Purchaser is
an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D.
3.3. Reliance on
Exemptions. The Purchaser understands that the Purchased
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Purhased Securities.
3.4. Survival. The
representations and warranties of Purchaser set forth in this Section 3 shall
survive the Closing for the period set forth in Section 5.2 below.
4. CLOSING. The
transactions contemplated by this Agreement shall be consummated (the “Closing”)
simultaneously with the execution of this Agreement. At the
Closing:
The
Company shall deliver or cause to be delivered to Purchaser:
i) the
Debenture, free and clear of any and all Liens;
ii) a
certificate or certificates representing the Warrants, free and clear of any and
all Liens;
iii) certificates
of good standing from the Secretary of State of Nevada and Florida, to the
effect that each of the Company and U.S. Imaging (including its subsidiaries) is
in good standing;
iv) copies
of resolutions of the Board of Directors of the Company authorizing this
Agreement and the issuance of the Debenture and the Warrants, certified by the
Secretary of the Company; and
v) such
other documents as Purchaser may reasonably require to give effect to the
transactions contemplated hereby.
The
Purchaser shall deliver to the Company the Purchase Price.
5. INDEMNIFICATION AND
ADJUSTMENTS.
5.1. Company’s
Indemnification. The Company hereby agrees to indemnify
Purchaser against all Claims (as defined below) and all costs, expenses and
attorney’s fees incurred by any of them in the defense of any such Claims or any
action or proceeding brought on any of such Claims. For purposes of
this paragraph, “Claims” shall mean
all liabilities, damages, losses, costs, expenses, out-of-pocket attorney’s fees
and claims incurred by Purchaser arising from (i) any breach or default in the
performance of any obligation to be performed by the Company under this
Agreement; or (ii) any breach of any representation, warranty or covenant
of the Company set forth in this Agreement. Notwithstanding the foregoing,
Purchaser shall not be entitled to indemnification for any Claims asserted after
the Expiration Date. “Expiration Date”
means the end of the 24th month
following the Closing.
5.2. Purchaser’s
Indemnification. Purchaser hereby indemnifies the Company
against all Company Claims (as defined below) and all costs, expenses and
attorney’s fees incurred by it in the defense of any such Company Claims or any
action or proceeding brought on any of such Seller Claims. For
purposes of this paragraph, “Company Claims” shall
mean all liabilities, damages, losses, costs, expenses, attorney’s fees and
claims incurred by Company to the extent arising solely from (i) any breach or
default in the performance of any obligation to be performed by Purchaser under
this Agreement; or (ii) any breach of any representation, warranty or
covenant of Purchaser set forth in this Agreement. Notwithstanding
the foregoing, Company shall not be entitled to indemnification for any Company
Claims asserted after the 24th month
following the Closing Date.
5.3. EBITDA
ADJUSTMENT. In the event that
the audited Financial Statements of U.S. Imaging reflect EBITDA of
less than $1,305,343 for the year ended December 31, 2007 (the "Actual EBITDA"),
the conversion price and exercise price of the Debenture and Warrants will be
reduced by a percentage equal to the Actual EBITDA divided by
$1,305,343.
6. PIGGY-BACK REGISTRATIONS/USE
OF PROCEEDS.
6.1. If at any
time while the Warrants are outstanding (the “Piggy-Back Period”) the Company
proposes to file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the Securities Act of 1933,
as amended, of any of its securities (other than a Registration Statement on
Form S-4 or Form S-8 (or their equivalents at such time) relating to securities
to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with stock option or other employee
benefit plans), the Company shall promptly send to the Purchaser written notice
of the Company’s intention to file a Registration Statement (which notice shall
specify the securities intended to be disposed of and the intended method of
distribution thereof) and of such Purchaser’s rights under this Section and, if
within five (5) business days after receipt of such notice, such Purchaser shall
so request in writing, the Company shall include in such Registration Statement
all or any part of the Shares of Common Stock of the Company issuable upon
exercise of the Warrants or conversion of the Debenture that such Purchaser
requests to be registered; provided, however, in the event that the SEC limits
the number of share registerable as a result of Rule 415, then the Company may
reduce the number of shares that may be registered pro rata with other selling
shareholders holding derivative securities. If the offering in connection
with which the Purchaser is entitled to registration under this Section is an
underwritten offering, then the Purchaser shall, unless otherwise agreed to by
the Company, offer and sell such its securities in such underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common Stock
(if any) included in such underwritten offering. If a registration
pursuant to this Section is to be an underwritten public offering and the
managing underwriter(s) advise the Company in writing that, in their reasonable
good faith opinion, marketing or other factors dictate that a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the proposed
offering, then the Company shall include in such registration: (1) first, all
securities the Company proposes to sell for its own account and (2) up to the
full number of shares held by the Purchaser subject to restrictions set by
the Company or the underwriter applied pro rata with other selling
shareholders.
7
6.2. The
proceeds form the sale of the Debenture shall be utilized substantially as
follows:
| Cypress Advisors Fee | $ | 100,000 | ||
| Audit & Legal Fees | $ | 150,000 | ||
| Equipment Maintenance Fees | $ | 250,000 | ||
| Working Capital | $ | 500,000 |
7. General
Provisions.
7.1. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained herein and
supersedes all prior and contemporaneous agreements, representations and
understandings of the parties with respect to such subject matter.
7.2. Amendment. No
supplement, amendment, modification discharge or change of this Agreement shall
be binding unless executed in writing by all of the parties.
7.3. Waiver. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No failure to enforce any
right or provision hereunder shall preclude or affect the later enforcement of
such right or provision. No waiver shall be binding unless executed
in writing by the party making the waiver.
7.4. Assignment; Successors and
Assigns. Neither party may assign this Agreement nor any of
its rights, liabilities and obligations hereunder without the prior written
consent of the other party; provided, however, Purchaser may transfer any of the
Purchased Securities, provided any such transfer is in compliance with
applicable law. All terms of this Agreement shall be binding on and shall inure
to the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, and permitted successors and assigns.
7.5. Further
Assurances. Each party to this Agreement agrees to perform any
further acts and execute and deliver any further documents that may be
reasonably necessary to effectuate the provisions of this Agreement and as may
be reasonably requested by the other party after the Closing.
7.6. Captions; Gender;
Exhibits. Captions in this Agreement are included for
convenience of reference only and shall not affect the construction or
interpretation of any of the provisions of this Agreement. The use of
the singular in this Agreement includes the plural and the use of one gender
includes the others whenever the context thereof so requires. All
exhibits and schedules referred to herein and attached hereto are incorporated
as a part hereof.
7.7. Severability. If
any of the provisions, or portions thereof, of this Agreement or the application
thereof are held to be unenforceable or invalid by any court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby and
to this end only the provisions of this Agreement are declared
severable.
7.8. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
7.9. Notices. All
notices, requests, demands or other communications which a party shall be
required or may elect to provide to another party pursuant to this Agreement
shall be in writing unless otherwise so provided. Any written notice
or communication shall be personally delivered or sent by facsimile or mailed
certified mail, return receipt requested to the other party at the applicable
address set forth on the signature page hereto or at such other address as a
party shall designate in accordance with the provisions of this
paragraph. Delivery or service of any written notice or communication
shall be deemed completed (i) if personally delivered, upon such delivery;
(ii) if sent by facsimile, upon acknowledgment thereof; or (iii) if
mailed, upon receipt by the other party, but in any event within 72 hours after
transmission or deposit.
7.10. Governing Law
Venue. This Agreement, having been drafted and negotiated in
Florida, shall be governed by, construed and enforced in accordance with the
laws of the State of Florida. Any disputes shall be resolved in the
Florida State courts in Dade County, Florida
7.11. Attorneys’
Fees. In the event any attorney is employed by either party to
this Agreement with regard to any legal action, or other proceeding brought by
either party for the enforcement or interpretation of this Agreement, or because
of any alleged dispute, breach, default or misrepresentation with any provisions
of this Agreement, the party prevailing in any such proceeding shall be entitled
to recover reasonable out-of-pocket attorneys’ fees and other costs and expenses
incurred, in addition to any other relief to which it may be
entitled.
8
7.12. Survival of Representations
and Warranties. All representations, warranties, covenants and
agreements of the parties contained in this Agreement and the exhibits shall
survive the Closing.
7.13. Remedies. The rights
and remedies provided by this Agreement are cumulative, and the use of any one
right or remedy by any party hereto shall not preclude or constitute a waiver of
its right to use any or other remedies. Such rights and remedies are given in
addition to any other rights and remedies a party may have by law, statute or
otherwise.
IN WITNESS WHEREOF, the
Parties hereto have executed this Agreement as of the day and year first above
written.
|
PURCHASER:
XXXXXX
XXXXXX IRREVOCABLE TRUST, U/T/A
By:/s/
Xxxxxx Xxxxxx
Xxxxxx
Xxxxxx, Trustee
|
||
|
Address
for Notices:
|
||
|
With
a copy to:
Xxxxxxx
X. Xxxxx, Esq.
Akerman
Senterfitt
Xxx
Xxxxxxxxx Xxxxx Xxxxxx, 00xx
Xxxxx
Xxxxx,
XX 00000
|
||
| COMPANY: | ||
|
By:/s/
Xx. Xxxxxxx Xxxxx
Name: Xx.
Xxxxxxx Xxxxx
Title: CEO
|
||
| Address for Notices: | ||
| 000 Xxxxx Xxxxxxxxx Xxxx | ||
| Xxxxxxxx, Xxxxxxx 00000 | ||
| With a copy to: | ||
| Law Offices of Xxxxxxx X. Xxxxxxx PLLC | ||
| 000 Xxxxxxx Xxxxxx, 0xx Xxxxx | ||
| Xxxx Xxxxxx, Xxx Xxxx 00000 | ||
9
SCHEDULES
| 2.7 | Title to Assets |
| 2.11.1 | Leased Real Properties |
| 2.12.1 | Intellectual Property |
| 2.13 | Material Contracts |
| 2.15.6 | Required Permits, Licenses, etc. |
| 2.15.8 | Harm to Patients |
| 2.16.1 | Financial Statements |
| 2.19 | Litigation |
| 2.20 | Employee Benefit Pension Plans |
10
EXHIBITS
| A | DEBENTURE |
| B | WARRANTS |
11
