EXHIBIT 10.2
ACCESS RADIOLOGY CORPORATION
SERIES J PREFERRED STOCK PURCHASE AGREEMENT
SEPTEMBER 30, 1997
TABLE OF CONTENTS
1. Purchase And Sale Of Stock....................................................... -1-
1.1 Sale And Issuance Of Series J Preferred Stock..................... -1-
1.2 Closing........................................................... -1-
2. REPRESENTATIONS AND WARRANTEES OF THE COMPANY.................................... -2-
2.1 Organization; Good Standing; Qualification........................ -2-
2.2 Authorization..................................................... -3-
2.3 Valid Issuance Of Preferred And Common Stock...................... -3-
2.4 Governmental Consents............................................. -3-
2.5 Capitalization And Voting Rights.................................. -3-
2.6 Subsidiaries...................................................... -4-
2.7 Contracts And Other Commitments................................... -5-
2.8 Related Party Transactions........................................ -5-
2.9 Registration Rights............................................... -5-
2.10 Clearances, Approvals, Etc........................................ -6-
2.11 Compliance With Other Instruments................................. -6-
2.12 Litigation........................................................ -6-
2.13 Disclosure........................................................ -6-
2.14 Offering.......................................................... -7-
2.15 Title To Property And Assets; Leases.............................. -7-
2.16 Financial Statements.............................................. -7-
2.17 Changes........................................................... -8-
2.18 Intangibles....................................................... -9-
2.19 Employees; Employee Compensation.................................. -9-
2.20 Tax Returns, Payments, And Elections.............................. -10-
2.21 Insurance......................................................... -10-
2.22 Environmental And Safety Laws..................................... -11-
2.23 Minute Books...................................................... -11-
3. Representations And Warranties of The Investors.................................. -11-
3.1 Authorization..................................................... -11-
3.2 Purchase Entirely For Own Account................................. -11-
3.3 Reliance Upon Investors' Representations.......................... -11-
3.4 Receipt Of Information............................................ -12-
3.5 Investment Experience............................................. -12-
3.6 Accredited Investor............................................... -12-
3.7 Restricted Securities............................................. -12-
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4. Conditions Of Investors' Obligations At Closing.................................. -12-
4.1 Representations And Warranties.................................... -12-
4.2 Performance....................................................... -13-
4.3 Qualifications.................................................... -13-
4.4 Proceedings And Documents......................................... -13-
4.5 Board Of Directors................................................ -13-
4.6 Opinions Of Counsel............................................... -13-
4.7 Investors Rights Agreement........................................ -13-
4.8 Officer's Certificate............................................. -13-
4.9 Good Standing Certificates........................................ -13-
5. Conditions of the Company's Obligations at Closing............................... -14-
5.1 Representations And Warranties.................................... -14-
5.2 Performance....................................................... -14-
5.3 Qualifications.................................................... -14-
5.4 Proceedings And Documents......................................... -14-
5.5 Investors Rights Agreement........................................ -14-
6. Miscellaneous.................................................................... -14-
6.1 Governing Law..................................................... -14-
6.2 Survival.......................................................... -14-
6.3 Successors And Assigns............................................ -15-
6.4 Severability...................................................... -15-
6.5 Amendment And Waiver.............................................. -15-
6.6 Delays Or Omissions............................................... -15-
6.7 Notices........................................................... -15-
6.8 Attorneys' Fees................................................... -16-
6.9 Titles And Subtitles.............................................. -16-
6.10 Counterparts...................................................... -16-
6.11 Entire Agreement.................................................. -16-
6.12 Finder's Fees..................................................... -16-
6.13 Expenses.......................................................... -16-
Exhibits:
A Schedule of Investors
B Restated Certificate
C Schedule of Exceptions
D Investors Rights Agreement
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ACCESS RADIOLOGY CORPORATION
SERIES J PREFERRED STOCK PURCHASE AGREEMENT
This Series J Preferred Stock Purchase Agreement (this "Agreement") is made
as of September 30, 1997 by and between Access Radiology Corporation, a Delaware
corporation (the "Company"), and each of the persons and entities listed on
Exhibit A (individually, an "Investor" and collectively, the "Investors").
The parties agree as follows:
1. Purchase And Sale Of Stock.
1.1 Sale And Issuance Of Series J Preferred Stock.
(a) The Company will adopt and file with the Secretary of State of
the State of Delaware on or before the Initial Closing (as defined in Section
1.2(a)) an Amended and Restated Certificate of Incorporation in the form
attached hereto as Exhibit B (the "Restated Certificate").
(b) On the terms and subject to the conditions of this Agreement,
each Investor will purchase and the Company will sell and issue to each Investor
that number of shares of the Company's Series J Preferred Stock set forth
opposite each Investor's name on Exhibit A at a purchase price of $1.10 per
share. The Series J Preferred Stock will have the rights, preferences,
privileges and restrictions set forth in the Restated Certificate. The
obligations of the Investors under this Agreement are several and not joint.
1.2 Closing.
(a) The purchase and sale of the Series J Preferred Stock, by the
Investors listed on Exhibit A as of the date hereof, will take place at the
offices of Xxxxxx Godward LLP, Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx at 10:00 a.m. on the date hereof or at such other time and place as
the Company and Bedrock Capital Partners I, L.P. mutually agree, either orally
or in writing (which time and place are designated as the "Initial Closing"). In
addition, the purchase and sale of the Series J Preferred Stock by and to the
Additional Investors (as defined in Section 1.3) in accordance with Section 1.3
will take place at the offices of the Company or at such other places and at
such times as the Company and Additional Investors mutually agree, either orally
or in writing (together with the Initial Closing, each such time and place is
designated as a "Closing").
(b) At each Closing, the Company will deliver to each Investor a
certificate representing the shares of Series J Preferred Stock that such
Investor is purchasing at such
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Closing against payment of the purchase price therefor by check, wire transfer
or as otherwise set forth on Exhibit A.
1.3 Subsequent Sale of Series J Preferred Stock.
If less than all of the authorized number of shares of Series J Preferred
Stock are sold at the Initial Closing, then, subject to the terms and conditions
of this Agreement, the Company may sell, on or before the 45th day after the
date hereof, up to the balance of the authorized but unissued Series J Preferred
Stock to such persons as the Board of Directors of the Company may determine at
the same price per share as the Series J Preferred Stock purchased and sold at
the Initial Closing. Any such sale shall be made upon the same terms and
conditions as those contained herein, and such persons or entities ("Additional
Investors") shall become parties to this Agreement and the Investors Rights
Agreement (as defined in Section 2.1), and will be an Investor for all purposes
hereunder and thereunder.
2. REPRESENTATIONS AND WARRANTEES OF THE COMPANY.
The Company hereby represents and warrants to each Investor that, except as
set forth on the schedule of exceptions attached as Exhibit C (the "Schedule of
Exceptions"):
2.1 Organization; Good Standing; Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified and authorized to transact
business and is in good standing as a foreign corporation in each jurisdiction
in which the failure so to qualify would have a material adverse effect on the
business, properties or financial condition of the Company and its Subsidiaries
(as defined in Section 2.6) taken as a whole (a "Material Adverse Effect"). The
Company has no material assets or properties owned or leased by it situated in,
or employees or representatives authorized to bind it by contract resident in
jurisdictions other than Massachusetts, Georgia and Texas. The Company's sales
are made F.O.B. at the Company's principal offices in Massachusetts. Each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, and is duly qualified and
authorized to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect. Each of the Company and its Subsidiaries has all requisite
corporate power and authority to own and operate its properties and assets and
to carry on its business as now conducted and as presently proposed to be
conducted. The Company has all requisite corporate power and authority to
execute and deliver this Agreement and at each Closing will have all requisite
corporate power and authority to execute and deliver the Investors Rights
Agreement attached hereto as Exhibit D (the "Investors Rights Agreement"), to
issue and sell the Series J Preferred Stock pursuant to this Agreement and the
Common Stock (as defined in Section 2.5) issuable upon conversion thereof and to
carry out the provisions of this Agreement, the Investors Rights Agreement and
the Restated Certificate.
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2.2 Authorization. All corporate action on the part of the Company and its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the Investors Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Series J Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion thereof has been taken or will be taken prior to the Initial Closing.
This Agreement and the Investors Rights Agreement, when executed and delivered,
will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except as limited by
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity.
2.3 Valid Issuance Of Preferred And Common Stock. The Series J Preferred
Stock that is being purchased by the investors hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and the Investors Rights Agreement and under applicable
state and federal securities laws. The Common Stock issuable upon conversion of
the Series J Preferred Stock being purchased under this Agreement at each
Closing will have been duly and validly reserved for issuance and, upon issuance
in accordance with the terms of the Restated Certificate, will be duly and
validly issued, fully paid and nonassessable and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Investors Rights Agreement and under applicable state and federal securities
laws.
2.4 Governmental Consents. No consent, approval, qualification, order or
authorization of or filing with any local, state or federal governmental
authority is required on the part of the Company or any of its Subsidiaries in
connection with the Company's execution, delivery or performance of this
Agreement or the Investors Rights Agreement, the offer, sale or issuance of the
Series J Preferred Stock by the Company or the issuance of Common Stock upon
conversion of the Series J Preferred Stock, except (a) the filing of the
Restated Certificate with the Secretary of State of the State of Delaware and
(b) such filings as have been made prior to the Initial Closing, except any
notices of sale required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "Securities
Act"), and such post-closing filings as may be required under applicable state
securities laws, all of which will be timely filed within the applicable periods
therefor.
2.5 Capitalization And Voting Rights. The authorized capital of the
Company will consist immediately prior to the Initial Closing of:
(a) 35,000,000 shares of common stock, par value $0.01 per share
("Common Stock"), of which 1,081,834 shares are issued and outstanding.
(b) 15,000,000 shares of Preferred Stock, par value $0.01 per share
("Preferred Stock"): (1) 716 of which have been designated as Series B Preferred
Stock (all of
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which are issued and outstanding); (2) 450 of which have been designated as
Series C Preferred Stock (all of which are issued and outstanding); (3) 345 of
which have been designated as Series E Preferred Stock (344.39 of which are
issued and outstanding); (4) 1,000 of which have been designated as Series F
Preferred Stock (all of which are issued and outstanding); (5) 816 of which have
been designated as Series G Preferred Stock (815.87 of which are issued and
outstanding); (6) 400 of which have been designated as Series H Preferred Stock
(all of which are issued and outstanding); and (7) 7,230,000 of which have been
designated as Series J Preferred Stock (none of which will be issued or
outstanding immediately prior to the Initial Closing and up to 6,820,909 of
which will be sold pursuant to this Agreement).
(c) The outstanding shares of Common Stock and Preferred Stock are owned
by the stockholders and in the numbers specified in Section 2.5 of the Schedule
of Exceptions.
(d) The outstanding shares of Common Stock and Preferred Stock have been
duly authorized and validly issued, are fully paid and nonassessable and were
issued in accordance with the registration or qualification provisions of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(e) Except for (1) the conversion privileges of the Preferred Stock, (2)
the rights provided in the Investors Rights Agreement and (3) currently
outstanding options to purchase 1,267,657 shares of Common Stock granted to
employees pursuant to the Company's 1994 Stock Plan (the "Option Plan") and
currently outstanding options to purchase 59,228 shares of Common Stock granted
to employees outside of the Option Plan, there are not outstanding any options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. In addition
to the aforementioned options, the Company has reserved an additional 1,582,343
shares of its Common Stock for purchase upon exercise of options to be granted
in the future under the Option Plan. The Company is not a party or subject to
any agreement or understanding, and to the Company's knowledge there is no
agreement or understanding between any other persons, that affects or relates to
the voting or giving of written consents with respect to any security of the
Company or the voting by a director of the Company.
2.6 Subsidiaries. Set forth in Section 2.6 of the Schedule of Exceptions
is a description of each corporation owned by the Company (collectively, the
"Subsidiaries") and the security ownership thereof. The Company does not own or
control, directly or indirectly, any interest in any other corporation,
partnership, limited liability company, association or other business entity.
The Company is not a participant in any joint venture, partnership or similar
arrangement. All of the outstanding equity securities (including securities or
instruments exercisable for or convertible into equity securities) of each of
the Subsidiaries are owned by the Company beneficially and of record and are not
subject to any mortgages, liens, claims or encumbrances. There are not
outstanding any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements or
agreements of
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any kind for the purchase or acquisition from the Company or any of the
Subsidiaries of any securities of any of the Subsidiaries.
2.7 Contracts And Other Commitments. Neither the Company nor any of its
Subsidiaries has or is bound by any contract, agreement, lease or commitment,
written or oral, absolute or contingent, other than (a) contracts for the
purchase of supplies and services that were entered into in the ordinary course
of business, do not involve more than $50,000 and do not extend for more than
one year beyond the date hereof, (b) sales contracts entered into in the
ordinary course of business and (c) contracts terminable at will by the Company
on no more than 30 days' notice without cost or liability to the Company or one
of its Subsidiaries that are not material to the conduct of the business of the
Company and its Subsidiaries. For the purpose of this Section 2.7, employment
and consulting contracts, contracts with labor unions, license agreements and
any other agreements relating to the acquisition or disposition of Intangibles
(as defined in Section 2.18) other than standard end-user license agreements
will not be considered to be contracts entered into in the ordinary course of
business.
2.8 Related Party Transactions. No employee, officer, consultant,
stockholder or director of the Company or any of its Subsidiaries or member of
his or her immediate family is indebted to the Company, nor is the Company or
any of its Subsidiaries indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than for (a) payment of salary for
services rendered, (b) reimbursement for reasonable expenses incurred on behalf
of the Company or any of its Subsidiaries and (c) other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under the Option Plan). To the Company's knowledge
(without making an investigation as to persons who are not officers or
directors), none of such persons has any direct or indirect ownership interest
in any firm or corporation with which the Company or any of its Subsidiaries is
affiliated or with which the Company or any of its Subsidiaries has a business
relationship, or any firm or corporation that competes with the Company or any
of its Subsidiaries, except that employees, stockholders, consultants, officers
or directors of the Company or any of its Subsidiaries and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company or any of its Subsidiaries. To the Company's knowledge, no
officer, director, consultant, employee or stockholder of the Company or any of
its Subsidiaries or any member of his or her immediate family is, directly or
indirectly, interested in any material contract with the Company or any of its
Subsidiaries (other than such contracts as relate to any such person's
employment with the Company or one of its Subsidiaries or ownership of capital
stock or other securities of the Company).
2.9 Registration Rights. Except as provided in the Investors Rights
Agreement, the Company is presently not under any obligation and has not granted
any rights to register under the Securities Act any of its presently outstanding
securities or any of its securities that may subsequently be issued.
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2.10 Clearances, Approvals, Etc. The Company and its Subsidiaries have all
clearances, approvals, franchises, permits, licenses and any similar authority
including, without limitation, all approvals and clearances from the U.S. Food
and Drug Administration necessary for the conduct of their business as now being
conducted, and the Company believes they can obtain, without undue burden or
expense, any similar authority for the conduct of the business of the Company
and its Subsidiaries as presently proposed to be conducted. Neither the Company
nor any of its Subsidiaries is in default in any material respect under any of
such franchises, permits, licenses or other similar authority.
2.11 Compliance With Other Instruments. Neither the Company nor any of its
Subsidiaries is in violation or default of (a) any provision of its certificate
of incorporation or bylaws, (b) any provision of any mortgage, indenture,
agreement, instrument or contract to which it is a party or by which it is bound
or (c) to the best of the Company's knowledge, any judgment, order, writ,
decree, statute, rule, regulation or restriction applicable to it including,
without limitation, the U.S. Federal Food, Drug and Cosmetic Act, as amended,
and regulations promulgated thereunder, which default or violation has had or
could reasonably be expected to have a Material Adverse Effect. The execution,
delivery and performance by the Company of this Agreement and the Investors
Rights Agreement and the consummation of the transactions contemplated hereby
and thereby will not result in any such violation or be in material conflict
with or constitute, with or without the passage of time or giving of notice,
either a material default under any such provision or an event that results in
the creation of any material lien, charge or encumbrance upon any assets of the
Company or any of its Subsidiaries or the suspension, revocation, impairment,
forfeiture or nonrenewal of any material franchise, permit, license or similar
authority applicable to the Company or any of its Subsidiaries, any of their
business or operations or any of their assets or properties.
2.12 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
or any of its Subsidiaries that questions the validity of this Agreement or the
Investors Rights Agreement or the right of the Company to enter into such
agreements, or to consummate the transactions contemplated hereby or thereby, or
that might result, either individually or in the aggregate, in a Material
Adverse Effect or in any change in the current equity ownership of the Company.
Neither the Company nor any of its Subsidiaries is a party to or, to the best of
its knowledge, named in or subject to any order, writ, injunction, judgment or
decree of any court, government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company currently intends to initiate.
2.13 Disclosure. The Company has provided each Investor with all
information reasonably available to it without undue expense that such Investor
has requested in writing for deciding whether to purchase the Series J Preferred
Stock. To the best of the Company's knowledge after reasonable investigation,
neither this Agreement nor the Investors Rights Agreement nor the other written
materials made or delivered in connection with the transactions contemplated
hereby, taken as a whole, contain any untrue statement of a material fact or
omit to
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state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made or otherwise, not
misleading.
2.14 Offering. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Series J Preferred Stock as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.15 Title To Property And Assets; Leases. Except for (a) liens reflected
in the Financial Statements (as defined in Section 2.16), (b) liens for current
taxes not yet due or payable, (c) liens imposed by law and incurred in the
ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (d) liens in respect of
pledges or deposits under workers' compensation laws or similar legislation or
(e) minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company and its
Subsidiaries have good and marketable title to their property and assets free
and clear of all mortgages, liens, claims and encumbrances. With respect to the
property and assets they lease, the Company and its Subsidiaries are in
compliance with such leases and, to the best of the Company's knowledge, hold a
valid leasehold interest free of any mortgages, liens, claims or encumbrances,
subject to clauses (a)-(d) above.
2.16 Financial Statements. The Company has delivered to each Investor its
audited consolidated financial statements (balance sheet and profit and loss
statement, statement of stockholders' equity and statement of cash flows
including notes thereto) at December 31, 1996 and for the fiscal years then
ended and its unaudited financial statements (balance sheet and profit and loss
statement and statement of cash flows) at June 30, 1997 and for the six months
then ended (the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except that the unaudited
Financial Statements omit notes thereto required by generally accepted
accounting principles. The Financial Statements fairly present the financial
condition and operating results of the Company and each of the Subsidiaries on a
consolidated basis as of the dates and for the periods indicated therein
(subject in the case of unaudited financial statements to normal year end
adjustments). Except as set forth in the Financial Statements, neither the
Company nor any of its Subsidiaries has any material liabilities, contingent or
otherwise, other than (a) liabilities incurred in the ordinary course of
business subsequent to June 30, 1997 and (b) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements that in both cases, individually or in the aggregate, are not
material to the business, properties or financial condition of the Company and
its Subsidiaries, taken as a whole. Except as disclosed in the Financial
Statements, neither the Company nor any of its Subsidiaries is a guarantor or
indemnitor of any indebtedness of any other person or entity. Each of the
Company and its Subsidiaries maintains and will continue to
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maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.17 Changes. Since June 30, 1997 there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company or any of its Subsidiaries from that reflected
in the Financial Statements, except changes in the ordinary course of business
that have not had a Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance, that could reasonably be expected to have a Material Adverse Effect;
(c) any waiver or compromise by the Company or any of its
Subsidiaries of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company or any of its Subsidiaries, except
to the extent such satisfaction or discharge will not have a Material Adverse
Effect;
(e) any material change to a material contract or arrangement by
which the Company or any of its Subsidiaries or any of their assets is bound or
subject;
(f) any material change in any compensation arrangement or agreement
with any employee, officer, consultant, director or stockholder of the Company
or any of its Subsidiaries;
(g) any sale, assignment or transfer of any material Intangibles of
the Company or any of its Subsidiaries;
(h) any resignation or termination of employment of any key employee
or key consultant of the Company or any of its Subsidiaries;
(i) any receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company or any of its
Subsidiaries;
(j) any mortgage, lien, claim, encumbrance, pledge or security
interest created by the Company or any of its Subsidiaries with respect to any
of its material properties or assets, except liens for taxes not yet due or
payable;
(k) any declaration, setting aside or payment of any dividend or
other distribution of the Company's assets in respect of any of the Company's
capital stock, or any direct or indirect redemption, purchase or other
acquisition of any of such stock by the Company;
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(l) to the Company's knowledge, any other event or condition of any
character that could reasonably be expected to have a Material Adverse Effect;
or
(m) any agreement or commitment by the Company or any of its
Subsidiaries to do any of the things described in this Section 2.17.
2.18 Intangibles. To the best of its knowledge, the Company and its
Subsidiaries own or possess sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
proprietary rights and processes (collectively, "Intangibles") necessary for
their business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. Except for standard end-
user license agreements and licenses set forth in Section 2.18 of the Schedule
of Exceptions (the "Material Licenses"), there are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
or any of its Subsidiaries bound by or a party to any options, licenses or
agreements of any kind with respect to the Intangibles of any other person or
entity. To the Company's knowledge, each Material License is valid and in full
force and effect, and is enforceable by the Company or one of its Subsidiaries
in accordance with its terms. To the Company's knowledge, no person or entity
has violated or breached, or declared or committed any default under, any
Material License. To the Company's knowledge, no event has occurred, and no
circumstance or condition exists, that might (with or without notice or lapse of
time) (a) result in a violation or breach of any of the provisions of any
Material License, (b) give any person or entity the right to declare a default
or exercise any remedy under any Material License, (c) give any person or entity
the right to accelerate the maturity or performance of any Material License or
(d) give any person or entity the right to cancel, terminate or modify any
Material License. Neither the Company nor any of its Subsidiaries has received
any communications alleging that the Company or any of its Subsidiaries has
violated or breached any provision of a Material License or misappropriated or
by conducting its business as proposed would misappropriate any of the
Intangibles of any other person or entity.
2.19 Employees; Employee Compensation. To the best of the Company's
knowledge, there is no strike, labor dispute or union organization activities
pending or threatened between the Company or any of its Subsidiaries and any of
their employees. None of the employees of the Company or any of its Subsidiaries
belongs to any union or collective bargaining unit. To the best of the Company's
knowledge, the Company and its Subsidiaries have complied in all material
respects with all applicable state and federal equal opportunity and other laws
related to employment. To the best of the Company's knowledge, no employee of
the Company or any of its Subsidiaries is or will be in violation of any
judgment, decree or order, or any term of any employment contract, patent
disclosure agreement or other contract or agreement relating to the relationship
of any such employee with the Company or any of its Subsidiaries, or any other
party because of the nature of the business conducted or presently proposed to
be conducted by the Company or any of its Subsidiaries or to the use by the
employee of his or her best efforts with respect to such business. Neither the
execution nor delivery of this Agreement or the Investor Rights Agreement nor
the carrying on of the business of the Company and its
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Subsidiaries by their employees nor the conduct of such business as proposed
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated.
Neither the Company nor any of its Subsidiaries is a party to or bound by any
currently effective employment contract, deferred compensation agreement, bonus
plan, incentive plan (other than the Option Plan), profit sharing plan,
retirement agreement or other employee compensation agreement. The Company is
not aware that any officer or key employee or consultant, or that any group of
key employees or consultants, of the Company or any of its Subsidiaries intends
to terminate their employment or service with the Company or any of its
Subsidiaries, nor does the Company or any of its Subsidiaries have a present
intention to terminate the employment or service of any of the foregoing.
Subject to general principles related to wrongful termination of employees, the
employment of each employee of the Company or any of its Subsidiaries is
terminable at the will of the employer.
2.20 Tax Returns, Payments, And Elections. The Company and each of its
Subsidiaries have timely filed all tax returns and reports (federal, foreign,
state and local) as required by law. These returns and reports are true and
correct in all material respects. The Company and each of its Subsidiaries have
paid all takes and other assessments due, except those contested in good faith.
The provision for taxes as shown in the Financial Statements is adequate for
taxes due or accrued as of the dates thereof. Neither the Company nor any of its
Subsidiaries has elected pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as an S corporation or a collapsible
corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has
it made any other elections pursuant to the Code (other than elections that
relate solely to methods of accounting, depreciation, or amortization) that
would have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has had any tax deficiency proposed or assessed against it or has
executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge. None of the income tax returns of
the Company or any of its Subsidiaries and none of their state income or
franchise tax or sales or use tax returns has ever been audited by governmental
authorities . Since the end of the Company's last fiscal year, the Company and
its Subsidiaries have made adequate provisions on its books of account for all
taxes, assessments and governmental charges with respect to their business,
properties and operations. The Company and its Subsidiaries have withheld or
collected from each payment made to each of its employees the amount of all
taxes including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositaries.
2.21 Insurance. The Company and its Subsidiaries have in full force and
effect fire and casualty insurance policies sufficient in amount (subject to
reasonable deductibles) to allow them to replace any properties that might be
damaged or destroyed, the loss of which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries have in full force and effect products liability and errors and
omissions insurance in amounts customary for companies similarly situated.
-10-
2.22 Environmental And Safety Laws. To the Company's knowledge, neither
the Company nor any of its Subsidiaries is in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, which violation has had or could reasonably be expected to have a
Material Adverse Effect. To the Company's knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law,
or regulation.
2.23 Minute Books. The copy of the minute books of the Company provided to
Xxxxxx Godward LLP contains minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the
directors and stockholders since the date of incorporation and accurately
reflects all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such minutes in all
material respects.
3. Representations And Warranties Of The Investors.
Each Investor hereby represents and warrants to the Company that:
3.1 Authorization. Such Investor has full power and authority to enter
into this Agreement and the Investors Rights Agreement, and this Agreement and
the Investors Rights Agreement, when executed and delivered, will constitute
valid and legally binding obligations of such Investor.
3.2 Purchase Entirely For Own Account. The Series J Preferred Stock to be
purchased by such Investor and the Common Stock issuable upon conversion thereof
(collectively, the "Securities") will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. Such Investor does not have any contract, undertaking,
agreement or arrangement with any person or entity to sell, transfer or grant
participations to such person or to any third party with respect to any of the
Securities.
3.3 Reliance Upon Investors' Representations. Such Investor understands
that the Series J Preferred Stock is not, and any Common Stock acquired on
conversion thereof at the time of issuance may not be, registered under the
Securities Act on the ground that the sale provided for in this Agreement and
the issuance of securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and that the Company's reliance
on such exemption is predicated on the Investors' representations set forth
herein. Such Investor realizes that the basis for the exemption may not be
present if, notwithstanding such representations, the Investor has in mind
merely acquiring shares of the Series J Preferred Stock for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. Such Investor has no such intention.
-11-
3.4 Receipt Of Information. Such Investor believes it has received all
the information such Investor considers necessary or appropriate for deciding
whether to purchase the Series J Preferred Stock. Such Investor has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Series J Preferred Stock and the
business, properties, prospects and financial condition of the Company and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such Investor
or to which such Investor had access. The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of this
Agreement or the right of the Investors to rely thereon.
3.5 Investment Experience. Such Investor is experienced in evaluating and
investing in private placement transactions of securities of companies in a
similar stage of development and acknowledges that such Investor is able to fend
for itself, can bear the economic risk of such Investor's investment and has
such knowledge and experience in financial and business matters that such
Investor is capable of evaluating the merits and risks of the investment in the
Series J Preferred Stock. If other than an individual, such Investor has not
been organized for the purpose of acquiring the Series J Preferred Stock.
3.6 Accredited Investor. Such Investor is an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.
3.7 Restricted Securities. Such Investor understands that the Securities
may not be sold, transferred or otherwise disposed of without registration under
the Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, such Investor is aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that rule are met. Among the conditions for use of Rule 144
may be the availability of current information to the public about the Company.
Such information is not now available and the Company has no present plans to
make such information available.
4. Conditions Of Investors' Obligations At Closing.
The obligations of each Investor under Section 1.1(b) of this Agreement are
subject to the fulfillment on or before the Closing of such Investor's purchase
of each of the following conditions, the waiver of which will not be effective
against any Investor who does not consent in writing thereto:
4.1 Representations And Warranties. The representations and warranties of
the Company contained in Section 2 will be true on and as of such Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
-12-
4.2 Performance. The Company will have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before such Closing.
4.3 Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Series J Preferred Stock pursuant to this Agreement will be duly obtained and
effective as of such Closing, except for the filing of a Form D pursuant to
Regulation D promulgated under the Securities Act and for the filing of any
required state securities or blue sky filings.
4.4 Proceedings And Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Initial Closing and all
documents incident thereto will be reasonably satisfactory in form and substance
to Xxxxxx Godward LLP, which will have received all such counterpart original
and certified or other copies of such documents as it may reasonably request.
4.5 Board Of Directors. Effective as of the Initial Closing, the
directors of the Company will be Xxxxx Xxxxxxxxxx, Xxxxxx Xxxx, Xxxxxx Xxxx,
Xxxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xx. Xxxxx Xxxxxxxxxx.
4.6 Opinions Of Counsel. Each Investor purchasing on the date hereof will
have received from Ropes & Xxxx, corporate counsel for the Company, an opinion,
dated the date of the Initial Closing, in form and substance satisfactory to
Xxxxxx Godward LLP.
4.7 Investors Rights Agreement. The Company and each Investor will have
entered into the Investors Rights Agreement.
4.8 Officer's Certificate. The President of the Company will have
delivered to each Investor purchasing on the date hereof a certificate, dated as
of the Initial Closing, to the effect that the conditions specified in Sections
4.1, 4.2, 4.3 and 4.5 have been fulfilled with respect to the Initial Closing.
4.9 Good Standing Certificates. The Company will have delivered to Xxxxxx
Godward LLP good standing certificates, dated as of the Initial Closing, from
each jurisdiction in the United States in which the ownership of its property or
the conduct of its business requires qualification as a foreign corporation and
where the failure to so qualify would have a Material Adverse Effect.
-13-
5. Conditions Of The Company's Obligations At Closing.
The obligations of the Company to each Investor under Section 1.1(a) of
this Agreement are subject to the fulfillment on or before the Closing of such
Investor's purchase of each of the following conditions by that Investor:
5.1 Representations And Warranties. The representations and warranties of
each Investor contained in Section 3 will be true on and as of such Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
5.2 Performance. The Investors will have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by them on or before such Closing.
5.3 Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Series J Preferred Stock pursuant to this Agreement will be duly obtained and
effective as of such Closing.
5.4 Proceedings And Documents. All corporate and other proceedings in
connection with the transactions completed at such Closing and all documents
incident thereto will be reasonably satisfactory in form and substance to Ropes
& Xxxx, which will have received all such counterpart original and certified or
other copies of such documents as it may reasonably request.
5.5 Investors Rights Agreement. The Company and each Investor will have
entered into the Investors Rights Agreement.
6. Miscellaneous.
6.1 Governing Law. This Agreement will be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
6.2 Survival. The representations, warranties, covenants and agreements
made herein will survive any investigation made by any Investor and for two
years after the closing of the transactions contemplated hereby. All statements
as to factual matters contained in any certificate delivered by or on behalf of
the Company pursuant hereto at the Initial Closing in connection with the
transactions contemplated hereby will be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate or
instrument.
-14-
6.3 Successors And Assigns. Except as otherwise expressly provided herein,
the provisions hereof will inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto.
6.4 Severability. In case any provision of this Agreement is invalid,
illegal, or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.
6.5 Amendment And Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least 66 2/3% of the Series J Preferred Stock sold hereunder.
(b) Except as otherwise expressly provided, (1) the obligations of
the Company and the rights of the Investors under this Agreement may be waived
by any Investor only in writing and for all Investors only with the written
consent of the holders of at least 66 2/3% of the Series J Preferred Stock sold
hereunder, and (2) the obligations of the Investors and the rights of the
Company under this Agreement may be waived only with the written consent of the
Company.
6.6 Delays Or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party hereto upon any breach, default or noncompliance
of any other party under this Agreement will impair any such right, power or
remedy, nor will it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. Any waiver, permit, consent, or approval of
any kind or character on the part of any party hereto of any breach, default or
noncompliance under the Agreement or any waiver on such Investor's part of any
provisions or conditions of this Agreement must be in writing and will be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law or otherwise afforded to the
parties hereto, will be cumulative and not alternative.
6.7 Notices. All notices required or permitted hereunder will be in
writing and will be deemed effectively given: (1) upon personal delivery to the
party to be notified, (2) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (3) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (4) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications will be sent to the party to
be notified at the address as set forth on the signature pages hereof or at such
other address as such party may designate by 10 days' advance written notice to
the other parties hereto.
-15-
6.8 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
will be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement including, without limitation, reasonable fees and expenses of
attorneys and accountants, which will include, without limitation, all fees,
costs and expenses of appeals.
6.9 Titles And Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original, but all of which together will
constitute one instrument.
6.11 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party will be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
6.12 Finder's Fees. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. Each Investor will indemnify and hold harmless the Company from any
liability for any commission or compensation in the nature of a finder's fee
(and the cost and expenses of defending against such liability or asserted
liability) for which the Investor or any of its officers, partners, employees,
or representatives is responsible. The Company will indemnify and hold harmless
each Investor from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees, or representatives is responsible.
6.13 Expenses. Irrespective of whether the Initial Closing is effected,
the Company will pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Initial Closing is effected, the Company will, at the Initial Closing, reimburse
the reasonable fees of Xxxxxx Godward LLP and will, upon receipt of a reasonably
detailed xxxx therefor, reimburse the reasonable out-of-pocket expenses of such
counsel.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-16-
The parties have executed this Agreement as of the date first above written.
Access Radiology Corporation
Signature:
_________________________
Printed Name:
_____________________
Title:
____________________________
Address:
__________________________
__________________________
Bedrock Capital Partners I, L.P.
By: Xxxxx Xxxxx Xxxxxx & Company, LLC,
Its General Partner
Signature:
_________________________
Printed Name:
_____________________
Title:
____________________________
Address:
__________________________
__________________________
Bedrock Capital Partners Side-By-Side, L.P.
By: Xxxxx Xxxxx Xxxxxx & Company, LLC,
Its General Partner
Signature:
_________________________
Printed Name:
_____________________
Title:
____________________________
Address:
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
VBW Partners, L.P.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Seaflower Health and Technology
Fund, LLC
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
J&L Xxxxxxxx Family, LLC
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Privat Kredit Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Pictet Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Pictet Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
ICD, Ltd.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Guadamur LTD.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Privat Kredir Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Rigel Investment Corp.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Rigel Investment Corp. #2
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Privat Kredir Bank
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Gole Inc. A
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
SIGNATURE PAGE TO SERIES J PREFERRED STOCK PURCHASE AGREEMENT
Pacific Venture Group, L.P.
By: PVG Equity Partners, L.L.C
Its General Partner
Signature: _______________________
Printed Name:
Title: Member
Address: __________________________
__________________________
__________________________
PVG Associates, L.P.
By: PVG Equity Partners, L.L.C.
Its General Partner
Signature: _______________________
Printed Name:
Title: Member
Address: __________________________
__________________________
__________________________
Delphi Ventures III, L.P.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Address: __________________________
__________________________
__________________________
Delphi BioInvestments III, L.P.
Signature: _______________________
Printed Name: ____________________
Title: ___________________________
Exhibit A
Schedule of Investors
----------------------------------------------------------------------------------------------------------------
Number of Shares of
Series J Preferred
Total Stock Purchased
Investor Name Investment*
----------------------------------------------------------------------------------------------------------------
Bedrock Capital Partners I, L.P. $1,800,000.40 1,636,364
----------------------------------------------------------------------------------------------------------------
Bedrock Capital Partners Side-By-Side, L.P. 199,999.80 181,818
----------------------------------------------------------------------------------------------------------------
Pacific Venture Group, L.P. 2,865,660.60 2,605,146
----------------------------------------------------------------------------------------------------------------
PVG Associates, L.P. 134,339.70 122,127
----------------------------------------------------------------------------------------------------------------
Delphi BioInvestments III, L.P. 9,440.10 8,582
----------------------------------------------------------------------------------------------------------------
Delphi Ventures III, L.P. 524,255.48 476,596
----------------------------------------------------------------------------------------------------------------
J&L Xxxxxxxx Family, LLC 76,282.19 69,347
----------------------------------------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
----------------------------------------------------------------------------------------------------------------
Pictet Bank 101,479.45 92,254
----------------------------------------------------------------------------------------------------------------
Pictet Bank 101,512.33 92,284
----------------------------------------------------------------------------------------------------------------
ICD, Ltd. 50,608.22 46,007
----------------------------------------------------------------------------------------------------------------
Guadamur Ltd. 101,594.52 92,359
----------------------------------------------------------------------------------------------------------------
Privat Kredir Bank 50,904.11 46,276
----------------------------------------------------------------------------------------------------------------
Rigel Investment Corp. 50,180.82 45,619
----------------------------------------------------------------------------------------------------------------
Rigel Investment Corp. #2 50,180.82 45,619
----------------------------------------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
----------------------------------------------------------------------------------------------------------------
Gole Inc. A 50,780.82 46,164
----------------------------------------------------------------------------------------------------------------
TOTALS 6,522,907.04 5,929,915
----------------------------------------------------------------------------------------------------------------
* Assumes conversion of certain convertible notes on September 30, 1997.
A-1
Exhibit A
Schedule of Investors
---------------------------------------------------------------------------------
Number of Shares of
Series J Preferred
Investor Name Total Stock Purchased
Investment*
---------------------------------------------------------------------------------
Bedrock Capital Partners I, L.P. $1,800,000.40 1,636,364
---------------------------------------------------------------------------------
Bedrock Capital Partners Side-By-Side, L.P. 199,999.80 181,818
---------------------------------------------------------------------------------
Pacific Venture Group, L.P. 2,865,660.60 2,605,146
---------------------------------------------------------------------------------
PVG Associates, L.P. 134,339.70 122,127
---------------------------------------------------------------------------------
Delphi BioInvestments III, L.P. 9,440.10 8,582
---------------------------------------------------------------------------------
Delphi Ventures III, L.P. 524,255.48 476,596
---------------------------------------------------------------------------------
J&L Xxxxxxxx Family, LLC 76,282.19 69,347
---------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
---------------------------------------------------------------------------------
Pictet Bank 101,479.45 92,254
---------------------------------------------------------------------------------
ICD, Ltd. 50,608.22 46,007
---------------------------------------------------------------------------------
Guadamur Ltd. 101,594.52 92,359
---------------------------------------------------------------------------------
Privat Kredir Bank 50,904.11 46,276
---------------------------------------------------------------------------------
Rigel Investment Corp. 50,180.82 45,619
---------------------------------------------------------------------------------
Rigel Investment Corp. #2 50,180.82 45,619
---------------------------------------------------------------------------------
Privat Kredir Bank 101,561.64 92,329
---------------------------------------------------------------------------------
Gole Inc. A 50,780.82 46,164
---------------------------------------------------------------------------------
TOTALS 6,522,907.04 5,929,915
---------------------------------------------------------------------------------
* Assumes conversion of certain convertible notes on September 30, 1997.
EXHIBIT B
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ACCESS
RADIOLOGY CORPORATION
Xxxxx X. Xxxxxxx and Xxxxxxxxx Xxxxx hereby certify that:
A. They are the duly elected and acting President and Secretary, respectively,
of ACCESS Radiology Corporation, a Delaware corporation.
B. The original name of this corporation is Teleradiology Services
Incorporated and the date of filing the original Certificate of Incorporation of
this corporation with the Secretary of State of the State of Delaware is March
17, 1992.
C. The Certificate of Incorporation of this corporation is hereby amended and
restated to read as follows:
"1. CORPORATE NAME.
The name of the corporation is ACCESS Radiology Corporation (the
"Company").
2. REGISTERED AGENT.
The address of the registered office of the Company in the State of
Delaware is 1013 Center Road, in the City of Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx,
Xxxxxxxx 00000. The name of the Company's registered agent at said address is
The Corporation Service Company.
3. CORPORATE PURPOSE.
The purpose of the Company is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of the
State of Delaware.
4. CAPITAL STOCK.
4.1 Authorized Stock. This Company is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock". The
total number of shares that the Company is authorized to issue is 50,000,000
shares, 35,000,000 shares of which will be Common Stock (the "Common Stock") and
15,000,000 shares of which will be Preferred Stock. The Preferred Stock will
have a par value of $0.01 per share and the Common Stock will have a par value
of $0.01 per share.
4.2 Undesignated Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series. The Board of Directors is hereby authorized,
within the limitations and restrictions stated in this Restated Certificate of
Incorporation, to fix or alter the dividend
rights, dividend rate, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), the redemption price or prices,
the liquidation preferences of any wholly unissued series of Preferred Stock,
and the number of shares constituting any such series and the designation
thereof, or any of them; and to increase or decrease the number of shares of any
series subsequent to the issue of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of shares
of any series will be so decreased, the shares constituting such decrease will
resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
4.3 Preferred Stock. The rights, preferences, privileges, restrictions and
other matters relating to the Preferred Stock are as follows:
(a) Designation. 716 of the authorized shares of Preferred Stock are
hereby designated "Series B Preferred Stock" (the "Series B Preferred"). 450 of
the authorized shares of Preferred Stock are hereby designated "Series C
Preferred Stock" (the "Series C Preferred"). 345 of the authorized shares of
Preferred Stock are hereby designated "Series E Preferred Stock" (the "Series E
Preferred"). 1,000 of the authorized shares of Preferred Stock are hereby
designated "Series F Preferred Stock" (the "Series F Preferred"). 816 of the
authorized shares of Preferred Stock are hereby designated "Series G Preferred
Stock" (the "Series G Preferred"). 400 of the authorized shares of Preferred
Stock are hereby designated "Series H Preferred Stock" (the "Series H
Preferred"). 7,230,000 of the authorized shares of Preferred Stock are hereby
designated "Series J Preferred Stock" (the "Series J Preferred"). References
hereinafter to the "Series Preferred" means the Series B Preferred, the Series C
Preferred, the Series E Preferred, the Series F Preferred, the Series G
Preferred, the Series H Preferred and any future series so designated.
(b) Dividend Rights.
(1) Holders of Series J Preferred, in preference to the holders
of Series Preferred or Common Stock, will be entitled to receive, when and as
declared by the Board of Directors, but only out of funds that are legally
available therefor, cash dividends at the rate of 10% of the Original Issue
Price (as defined below) per annum on each outstanding share of Series J
Preferred (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares). The Original Issue
Price of the Series J Preferred will be $1.10. Such dividends will be payable
only when, as and if declared by the Board of Directors and will be non-
cumulative.
(2) So long as any shares of Series J Preferred are outstanding,
no dividend, whether in cash or property, will be paid or declared, nor will any
other distribution be made, on any Series Preferred or Common Stock, nor will
any shares of any Series Preferred or Common Stock be purchased, redeemed or
otherwise acquired for value by the Company until all dividends on the Series J
Preferred set forth in Section 4.3(b)(1) above have been paid or declared and
set apart. In addition, in the event dividends are paid on any share of Series
Preferred or Common Stock, an additional dividend will be paid with respect to
all
-2-
outstanding shares of Series J Preferred in an amount equal per share (on an as-
if-converted to Common Stock basis) to the amount paid or set aside for each
such share (on an as if-converted to Common Stock basis). The provisions of this
Section 4.3(b)(2) will not apply to (A) a dividend payable in Common Stock or
(B) any repurchase of any outstanding securities of the Company that is
unanimously approved by the Board of Directors.
(3) Whenever the Company declares a dividend on its Common
Stock, the holders of Series Preferred will be entitled to receive dividends in
an amount equal per share (on an as-if converted to Common Stock basis) to the
amount paid or set aside for each share of Common Stock. The provisions of this
Section 4.3(b)(3) will not apply to (A) a dividend payable in Common Stock or
(B) any repurchase of any outstanding securities of the Company that is
unanimously approved by the Board of Directors.
(c) Voting Rights.
(1) Except as otherwise provided herein or as required by law,
the Series Preferred and Series J Preferred will be voted equally with the
shares of the Common Stock of the Company and not as a separate class at any
annual or special meeting of stockholders of the Company, and may act by written
consent in the same manner as the Common Stock. In either case, each holder of
shares of Series Preferred and Series J Preferred will be entitled to such
number of votes as is equal to the whole number of shares of Common Stock into
which such holder's aggregate number of shares of Series Preferred and Series J
Preferred are convertible pursuant to Section 4.3(d) immediately after the close
of business on the record date fixed for such meeting or the effective date of
such written consent.
(2) In addition to any other vote or consent required herein or
by law, the vote or written consent of the holders of 2/3 of the outstanding
series of each respective Series Preferred will be necessary for effecting or
validating the following actions with respect to such series:
(A) Creation or authorization of any additional class or
series of shares of stock unless the same ranks junior to, or pari passu with,
such Series Preferred as to the distribution of assets on the liquidation,
dissolution or winding up of the Company, or an increase in the authorized
amount of any additional class or series of shares of stock unless the same
ranks junior to, or pari passu with, such Series Preferred as to the
distribution of assets on the liquidation, dissolution or winding up of the
Company, or creation or authorization of any obligation or security convertible
into shares of any class or series of stock unless the same ranks junior to, or
pari passu with, such Series Preferred as to the distribution of assets on the
liquidation, dissolution or winding up of the Company, whether any such
creation, authorization or increase will be by means of amendment to the
Certificate of Incorporation or by merger, consolidation or otherwise;
-3-
(B) Amendment, alteration or repeal of the Certificate of
Incorporation if the effect would be materially detrimental or adverse in any
manner with respect to the rights of the holders of such Series Preferred; or
(C) Redemption or other acquisition of any shares of such
Series Preferred except pursuant to a purchase offer made pro rata to all
holders of the shares of such Series Preferred on the basis of the aggregate
number of outstanding shares of such Series Preferred then held by each such
holder.
(3) In addition to any other vote or consent required herein or
by law, the vote or written consent of the holders of 2/3 of the outstanding
Series J Preferred will be necessary for effecting or validating the following
actions:
(A) Any amendment, alteration or repeal of any provision of
the Certificate of Incorporation or Bylaws of the Company that adversely affects
the voting powers, preferences or other special rights or privileges,
qualifications, limitations or restrictions of the Series J Preferred;
(B) Any increase or decrease (other than by conversion) in
the authorized number of shares of Common Stock or Series J Preferred;
(C) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Company ranking senior to
the Series J Preferred in right of redemption, liquidation preference, voting or
dividends or any increase in the authorized or designated number of any such new
class or series;
(4) In addition to any other vote or consent required herein or
by law, the vote or written consent of the holders of a majority of the
outstanding Series Preferred and Series J Preferred, voting together as a single
class on an as-if-converted to Common Stock basis, will be necessary for
effecting or validating the following actions:
(A) Any redemption, repurchase, payment of dividends or
other distribution with respect to Preferred Stock or Common Stock, except for
acquisitions of Preferred Stock or Common Stock by the Company pursuant to and
in compliance with agreements that permit the Company to repurchase such shares
upon termination of services to the Company;
(B) Any agreement by the Company or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section
4.3(d)(6);
(C) Any amendment, modification or waiver of the
Certificate of Incorporation or Bylaws of the Company relative to the rights,
preferences, privileges, restrictions or other matters relating to any series of
Preferred Stock;
-4-
(D) Any voluntary dissolution or liquidation of the
Company; or
(E) Any issuance of equity securities as compensation to
employees, officers, directors or consultants of the Company other than under
the Option Plan (as defined in Section 4.3(f)(9)(D).
(5) For so long as any shares of Series J Preferred remain
outstanding, the authorized number of directors of the Company will be seven and
(A) the holders of Series J Preferred, voting as a separate class, will be
entitled to elect one member of the Board of Directors at each meeting or
pursuant to each consent of the Company's stockholders for the election of
directors, and to remove from office such director and to fill any vacancy
caused by the resignation, death or removal of such director and (B) the holders
of Common Stock, Series Preferred and Series J Preferred, voting together as a
class on an as-if-converted to Common Stock basis, will be entitled to elect all
remaining members of the Board of Directors at each meeting or pursuant to each
consent of the Company's stockholders for the election of directors, and to
remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors.
(d) Liquidation Preference.
(1) Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, with respect to which the Total
Company Valuation (as defined below) is less than $26,000,000, before any
distribution or payment is made to the holders of Series Preferred or Common
Stock, the holders of Series J Preferred will be entitled to be paid out of the
assets of the Company, for each share of Series J Preferred held by them, an
amount per share of Series J Preferred equal to the Original Issue Price (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to the Series J Preferred) plus all declared but unpaid
dividends on the Series J Preferred.
(2) If, upon any liquidation, distribution or winding up to
which Section 4.3(d)(1) applies, the assets of the Company are insufficient to
make payment in full to all holders of Series J Preferred of the liquidation
preference set forth in Section 4.3(d)(1), then such assets will be distributed
among the holders of Series J Preferred at the time outstanding ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled.
(3) After the payment of the full liquidation preference of the
Series J Preferred as set forth in Section 4.3(d)(1) (if applicable), the assets
of the Company legally available for distribution, if any, will be distributed
to the holders of Series Preferred (and any other series of Preferred Stock
designated by the Board of Directors as sharing with the Series Preferred on a
pari passu basis in the event of a liquidation) on a pari passu basis as
follows:
-5-
(A) $1,000 for each of share of Series B Preferred held by
them;
(B) $5,000 for each of share of Series C Preferred held by
them;
(C) $5,000 for each of share of Series E Preferred held by
them;
(D) $1,000 for each of share of Series F Preferred held by
them;
(E) $5,000 for each of share of Series G Preferred held by
them;
(F) $5,000 for each of share of Series H Preferred held by
them; and
(G) Any amount designated by the Board of Directors with
respect to any other series of Preferred Stock designated by the Board of
Directors as sharing with the Series Preferred on a pari passu basis in the
event of a liquidation.
(4) If the assets to be distributed among the holders of the
Series Preferred (and any other series of Preferred Stock designated by the
Board of Directors as sharing with the Series Preferred on a pari passu basis in
the event of a liquidation) are insufficient to permit payment in full to such
holders of the amounts distributable pursuant to Section 4.3(d)(3), then such
assets will be distributed ratably among such holders of outstanding shares of
Series Preferred (and any other series of Preferred Stock designated by the
Board of Directors as sharing with the Series Preferred on pari passu basis in
the event of a liquidation).
(5) After the payment of the full liquidation preference of the
Series Preferred as set forth in Section 4.3(d)(3), the remaining assets of the
Company legally available for distribution, if any, will be distributed ratably
to the holders of the Common Stock and Series J Preferred on an as-if-converted
to Common Stock basis.
(6) The following definitions will apply under this Section
4.3(d):
(A) a "liquidation" of the Company will include (without
limitation):
1) any consolidation or merger of the Company with or
into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or
-6-
reorganization own 50% or less of the Company's voting power immediately after
such consolidation, merger or reorganization, or any transaction or series of
related transactions to which the Company is a party in which 50% or more of the
Company's voting power is transferred unless within ten days after receipt of
notice that the event will occur, holders of a majority of the outstanding
Series Preferred, voting together as a single class on an as-if-converted to
Common Stock basis, and holders of a majority of the outstanding Series J
Preferred elect in writing not to treat such event as a liquidation of the
Company (an "Acquisition"); or
2) a sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer").
(B) "Total Company Valuation" means the aggregate Fair
Market Value of the consideration received or to be received by all holders of
capital stock of the Company in any liquidation, dissolution or winding up of
the Company (including consideration received or to be received through the
operation of this Section 4.3(d)). In the event of an Acquisition involving the
transfer of less than all of the capital stock of the Company, the Total Company
Valuation will be computed by multiplying the Fair Market Value of the
consideration received or to be received by all holders of capital stock of the
Company in such transaction by a fraction, the numerator of which is the total
number of shares of capital stock of the Company then outstanding (on an as-if-
converted to Common Stock basis and assuming the exercise of all outstanding
stock options and warrants) and the denominator of which is the number of shares
of the Company's capital stock (on an as-if-converted to Common Stock basis and
assuming the exercise of all outstanding stock options and warrants) actually
transferred.
(C) "Fair Market Value" means (1) with respect to
consideration consisting of cash, the amount of such cash, (2) with respect to
securities that are publicly traded, the average Current Market Price of such
securities over the 20 consecutive trading days ending with and including the
date prior to the date as of which Fair Market Value is to be determined, and
(3) with respect to any other property, the value determined in good faith by
the Board of Directors of the Company.
(D) "Current Market Price" of a security means, for any
day, the last reported sales price, or if no sale takes place on such day, the
average of the reported closing bid and asked prices, in either case as reported
on the New York Stock Exchange Composite Tape or, if such security is not listed
or admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which such security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on the Nasdaq National
Market, as reported by Nasdaq in the over the counter market or, if not reported
by Nasdaq, the average of the bid and asked prices as furnished by any New York
Stock Exchange member firm regularly making a market in such security selected
for the purpose by the
-7-
Company's Board of Directors or, if there is no such firm, as determined in good
faith by the Company's Board of Directors.
(e) Conversion Rights Of Series Preferred. The holders of each series
of Series Preferred will have the following conversion rights:
(1) Right To Convert Series B Preferred. On the terms and
subject to the conditions of this Section 4.3(e), the holder of any share or
shares of Series B Preferred will have the right, at the holder's option at any
time, to convert any such shares of Series B Preferred (except that upon any
liquidation of the Company the right of conversion will terminate at the close
of business on the business day fixed for payment of the amount distributable on
the Series B Preferred) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (A) multiplying the number of shares of Series
B Preferred to be converted by $1,000 and (B) dividing the result by the
conversion price of $4.16667 per share or, in case an adjustment of such price
has taken place pursuant to the further provisions of this Section 4.3(e), then
by the conversion price as last adjusted and in effect at the date any share or
shares of Series B Preferred are surrendered for conversion (such price, or such
price as last adjusted, being referred to as the "Series B Conversion Price").
(2) Right To Convert Series C Preferred. On the terms and
subject to the conditions of this Section 4.3(e), the holder of any share or
shares of Series C Preferred will have the right, at the holder's option at any
time, to convert any such shares of Series C Preferred (except that upon any
liquidation of the Company the right of conversion will terminate at the close
of business on the business day fixed for payment of the amount distributable on
the Series C Preferred) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (A) multiplying the number of shares of Series
C Preferred to be converted by $5,000 and (B) dividing the result by the
conversion price of $5.25 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this Section 4.3(e), then by
the conversion price as last adjusted and in effect at the date any share or
shares of Series C Preferred are surrendered for conversion (such price, or such
price as last adjusted, being referred to as the "Series C Conversion Price").
(3) Right To Convert Series E Preferred. On the terms and
subject to the conditions of this Section 4.3(e), the holder of any share or
shares of Series E Preferred will have the right, at the holder's option at any
time, to convert any such shares of Series E Preferred (except that upon any
liquidation of the Company the right of conversion will terminate at the close
of business on the business day fixed for payment of the amount distributable on
the Series E Preferred) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (A) multiplying the number of shares of Series
E Preferred to be converted by $5,000 and (B) dividing the result by the
conversion price of $5.25 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this Section 4.3(e), then by
the conversion price as last adjusted and in effect at
-8-
the date any share or shares of Series E Preferred are surrendered for
conversion (such price, or such price as last adjusted, being referred to as the
"Series E Conversion Price").
(4) Right To Convert Series F Preferred. On the terms and
subject to the conditions of this Section 4.3(e), the holder of any share or
shares of Series F Preferred will have the right, at the holder's option at any
time, to convert any such shares of Series F Preferred (except that upon any
liquidation of the Company the right of conversion will terminate at the close
of business on the business day fixed for payment of the amount distributable on
the Series F Preferred) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (A) multiplying the number of shares of Series
F Preferred to be converted by $1,000 and (B) dividing the result by the
conversion price of $0.50 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this Section 4.3(e), then by
the conversion price as last adjusted and in effect at the date any share or
shares of Series F Preferred are surrendered for conversion (such price, or such
price as last adjusted, being referred to as the "Series F Conversion Price").
(5) Right To Convert Series G Preferred. On the terms and
subject to the conditions of this Section 4.3(e), the holder of any share or
shares of Series G Preferred will have the right, at the holder's option at any
time, to convert any such shares of Series G Preferred (except that upon any
liquidation of the Company the right of conversion will terminate at the close
of business on the business day fixed for payment of the amount distributable on
the Series G Preferred) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (A) multiplying the number of shares of Series
G Preferred to be converted by $5,000 and (B) dividing the result by the
conversion price of $1.50 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this Section 4.3(e), then by
the conversion price as last adjusted and in effect at the date any share or
shares of Series G Preferred are surrendered for conversion (such price, or such
price as last adjusted, being referred to as the "Series G Conversion Price").
(6) Right To Convert Series H Preferred. On the terms and
subject to the conditions of this Section 4.3(e), the holder of any share or
shares of Series H Preferred will have the right, at the holder's option at any
time, to convert any such shares of Series H Preferred (except that upon any
liquidation of the Company the right of conversion will terminate at the close
of business on the business day fixed for payment of the amount distributable on
the Series H Preferred) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (A) multiplying the number of shares of Series
H Preferred to be converted by $5,000 and (B) dividing the result by the
conversion price of $1.50 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this Section 4.3(e), then by
the conversion price as last adjusted and in effect at the date any share or
shares of Series H Preferred are surrendered for conversion (such price, or such
price as last adjusted, being referred to as the "Series H Conversion Price").
Each of the Series B Conversion Price, the Series C Conversion Price, the Series
E Conversion Price, the Series F Conversion Price, the Series G Conversion Price
and the Series H Conversion Price will hereinafter be referred to as the
"Applicable Conversion Price".
-9-
(7) Issuance Of Certificates; Time Conversion Effected. Such
rights of conversion set forth in Sections 4.3(e)(1) through 4.3(e)(6) will be
exercised by a holder of Series Preferred by giving written notice that such
holder elects to convert a stated number of shares of Series Preferred into
Common Stock and by surrender of a certificate or certificates for the shares so
to be converted to the Company at its principal office (or such other office or
agency of the Company as the Company may designate by notice in writing to the
holders of Series Preferred) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock will be issued. Promptly after the receipt of such written notice and
surrender of the certificate or certificates for the share or shares of Series
Preferred to be converted, the Company will issue and deliver, or cause to be
issued and delivered, to the holder, registered in such name or names as such
holder may direct, a certificate or certificates for the number of whole shares
of Common Stock issuable upon the conversion of such share or shares of Series
Preferred. To the extent permitted by law, such conversion will be deemed to
have been effected and the Applicable Conversion Price will be determined as of
the close of business on the date on which such written notice has been received
by the Company and the certificate or certificates for such share or shares have
been surrendered as aforesaid, and at such time the rights of the holder of such
share or shares of Series Preferred will cease, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
will be issuable upon such conversion will be deemed to have become the holder
or holders of record of the shares represented thereby.
(8) Fractional Shares; Dividends; Partial Conversion. At the
time of each conversion, the Company will pay in cash an amount equal to all
dividends declared but unpaid on the shares of such Series Preferred surrendered
for conversion on the date upon which the conversion is deemed to take place as
provided in Section 4.3(e)(7). In case the number of shares of Series Preferred
represented by the certificate or certificates surrendered pursuant to Sections
4.3(e)(1) through 4.3(e)(6) exceeds the number of shares converted, the Company
will, upon such conversion, execute and deliver to the holder, at the expense of
the Company, a new certificate or certificates for the number of shares of such
Series Preferred represented by the certificate or certificates surrendered that
are not to be converted. If any fractional share of Common Stock would be
delivered upon such conversion, the Company will pay to the holder surrendering
such Series Preferred for conversion an amount in cash equal to the fair market
value of such fractional share as determined in good faith by the Board of
Directors of the Company.
(9) Subdivision Or Combination Of Common Stock. In case the
Company at any time after the date of this certificate subdivides (whether
before or after the issuance of any Series Preferred and whether by any stock
split, stock dividend or otherwise) its outstanding shares of Common Stock into
a greater number of shares, the Applicable Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced and,
conversely, in case the outstanding shares of Common Stock are combined into a
-10-
smaller number of shares, the Applicable Conversion Price in effect immediately
prior to such combination will be proportionately increased.
(10) Reorganization Or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Company is
effected in such a way that holders of Common Stock will be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such reorganization or reclassification, lawful and
adequate provision will be made whereby each holder of a share or shares of
Series Preferred will thereupon have the right to receive, upon the basis and
upon the terms and subject to the conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series Preferred, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any such case
appropriate provisions will be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without limitation
provisions for adjustment of the Applicable Conversion Price) will thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of such conversion rights.
(11) Notice Of Adjustment. Upon any adjustment of the Applicable
Conversion Price, then and in each such case the Company will give written
notice thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares of
Series Preferred at the address of such holder as shown on the books of the
Company, which notice will state the Applicable Conversion Price resulting from
such adjustment, setting forth in reasonable detail the method upon which such
calculation is based.
(12) Other Notices. In case at any time:
(A) the Company declares any dividend upon its Common Stock
payable in cash or stock or makes any other distribution to the holders of its
Common Stock;
(B) the Company offers for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(C) there is any capital reorganization or reclassification
of the capital stock of the Company, or a consolidation or merger of the Company
with or into another entity or entities, or a sale, lease, abandonment, transfer
or other disposition of all or substantially all of the assets of the Company;
or
(D) there is a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
-11-
then, in any one or more of said cases, the Company will give, by delivery in
person, certified or registered mail, return receipt requested, telecopier or
telex. addressed to each holder of any shares of Series Preferred at the address
of such holder as shown on the books of the Company, (a) at least 20 days' prior
written notice of the date on which the books of the Company will close or a
record will be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding up and (b) in the case of such reorganization, reclassification,
consolidation, merger, disposition, dissolution, liquidation or winding up, at
least 20 days' prior written notice of the date when the same will take place.
Such notice in accordance with the foregoing clause (a) will also specify, in
the case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock will be entitled thereto and such notice in
accordance with the foregoing clause (b) will also specify the date on which the
holders of Common Stock will be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding up, as the case may be.
(13) Stock To Be Reserved. The Company will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series Preferred as herein provided, such number
of shares of Common Stock as are then issuable upon the conversion of
outstanding shares of Series Preferred. The Company covenants that all shares of
Common Stock that will be so issued will be duly and validly issued and fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, and, without limiting the generality of the foregoing, the
Company covenants that it will from time to time take all such action as may be
requisite to assure that the par value per share of the Common Stock is at all
times equal to or less than the Applicable Conversion Price in effect at the
time. The Company will take all such action as may be necessary to assure that
all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed. The Company will not take
any action that results in any adjustment of the Applicable Conversion Price if
the total number of shares of Common Stock issued -and issuable after such
action upon conversion of the Series Preferred would exceed the total number of
shares of Common Stock then authorized by the Certificate of Incorporation.
(14) No Reissuance Of Series Preferred. Shares of Series
Preferred that are converted into shares of Common Stock as provided herein will
not be reissued.
(15) Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series Preferred will be made without charge to the
holders thereof for any such issuance tax in respect thereof, provided that the
Company will not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the holder of such Series Preferred that is being converted.
-12-
(16) Closing Of Books. The Company will at no time close its
transfer books against the transfer of any Series Preferred or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Series
Preferred in any manner that interferes with the timely conversion of such
Series Preferred, except as may otherwise be required to comply with applicable
securities law.
(17) Definition Of Common Stock. As used in this Section 4.3(e),
the term "Common Stock" means the Company's authorized Common Stock, par value
$.01 per share, as constituted on the date of the filing of this Amended and
Restated Certificate of Incorporation, and will also include any capital stock
of any class of the Company thereafter authorized that will neither be limited
to a fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends nor entitled to a preference in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Company; provided that the shares of Common Stock receivable upon
conversion of the shares of Series Preferred will include only shares designated
as Common Stock of the Company on the date of the filing of this instrument, or
in case of any reorganization or reclassification of the outstanding shares
thereof, the stock, securities or assets provided for in Section 4.3(e)(10).
(18) Mandatory Conversion Of Series Preferred. If at any time the
Company effects a firm commitment underwritten public offering of shares of
Common Stock, then effective upon the closing of the sale of such shares by the
Company pursuant to such public offering, all outstanding shares of Series
Preferred, except shares of Series H Preferred, will automatically convert to
shares of Common Stock on the basis so forth in this Section 4.3(e). Holders of
such shares of Series Preferred so converted may deliver to the Company at its
principal office (or such other office or agency of the Company as the Company
may designate by notice in writing to such holders) during its usual business
hours, the certificate or certificates for the shares so converted. As promptly
as practicable thereafter, the Company will issue and deliver to such holder a
certificate or certificates for the number of whole shares of Common Stock to
which such holder is entitled, together with any cash dividends and payment in
lieu of fractional shares to which such holder may be entitled pursuant to
Section 4.3(e)(8). Until such time as a holder of shares of Series Preferred
surrenders his, her or its certificates, therefor as provided above, such
certificates will be deemed to represent the shares of Common Stock to which
such holder will be entitled upon the surrender thereof.
(19) Mandatory Conversion Of Series H Preferred. If at any time
the Company effects a firm commitment underwritten public offering of shares of
Common Stock at a price of at least $3.00 per share (subject to adjustment in
the same manner as the Series H Conversion Price is subject to adjustment
pursuant to Section 4.3(e)(9)) for gross proceeds of at least $15,000,000, then
effective upon the closing of the sale of such shares by the Company pursuant to
such public offering, all outstanding shares of Series H Preferred will
automatically convert to shares of Common Stock on the basis set forth in this
Section 4.3(e). If the Company effects a firm commitment underwritten public
offering that does not meet the price and gross proceeds criteria set forth in
the preceding sentence, and thereafter the Company
-13-
effects, in a transaction approved by the holders of a majority of the voting
power of all shares of capital stock entitled to vote thereon voting together as
a single class, a consolidation or merger of the Company into or with any other
entity or entities that results in the exchange of outstanding shares of the
Company for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or an affiliate thereof (other than a merger
to reincorporate the Company in a different jurisdiction), or the sale, lease or
other disposition by the Company of all or substantially all of its assets, then
upon the closing of such transaction all outstanding shares of Series H
Preferred will automatically convert to shares of Common Stock on the basis set
forth in this Section 4.3(e) and the provisions of Section 4.3(d)(3) will not
apply to the Series H Preferred with respect to such transaction. Holders of
shares of Series H Preferred converted pursuant to this Section 4.3(e)(19) may
deliver to the Company at its principal office (or such other office or agency
of the Company as the Company may designate by notice in writing to such
holders) during its usual business hours, the certificate or certificates for
the shares so converted. As promptly as practicable thereafter, the Company will
issue and deliver to such holder a certificate or certificates of the number of
whole shares of Common Stock to which such holder is entitled, together with any
cash dividends and payment in lieu of fractional shares to which such holder may
be entitled pursuant to Section 4.3(e)(8). Until such time as a holder of shares
of Series H Preferred surrenders his, her or its certificates therefor as
provided above, such certificates will be deemed to represent the shares of
Common Stock to which such holder will be entitled upon the surrender thereof.
(f) Conversion Rights Of Series J Preferred. The holders of the
Series J Preferred will have the following rights with respect to the conversion
of the Series J Preferred into shares of Common Stock:
(1) Conversion Rate. The conversion rate in effect at any time
for conversion of the Series J Preferred will be the quotient obtained by
dividing the Original Issue Price by the Series J Conversion Price (as defined
below). The conversion price for the Series J Preferred (the "Series J
Conversion Price") will initially be the Original Issue Price. The Series J
Conversion Price will be adjusted from time to time in accordance with this
Section 4.3(f). All references to the Series J Conversion Price herein mean the
Series J Conversion Price as so adjusted. The number of shares of Common Stock
to which a holder of Series J Preferred will be entitled upon conversion will be
the product obtained by multiplying the Series J Conversion Rate then in effect
by the number of shares of Series J Preferred being converted.
(2) Optional Conversion.
(A) Subject to and in compliance with the provisions of
this Section 4.3(f), any shares of Series J Preferred may, at the option of the
holder, be converted at any time into fully-paid and nonassessable shares of
Common Stock.
(B) Each holder of Series J Preferred who desires to
convert the same into shares of Common Stock pursuant to this Section 4.3(f)(2)
will surrender the
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certificate or certificates therefor, duly endorsed, at the office of the
Company or any transfer agent for the Series J Preferred, and will give written
notice to the Company at such office that such holder elects to convert the
same. Such notice will state the number of shares of Series J Preferred being
converted. Thereupon, the Company will promptly issue and deliver at such office
to such holder a certificate or certificates for the number of shares of Common
Stock to which such holder is entitled and will promptly pay in cash or, to the
extent sufficient funds are not then legally available therefor, in Common Stock
(at the Common Stock's fair market value determined by the Board of Directors as
of the date of such conversion), any declared and unpaid dividends on the shares
of Series J Preferred being converted. Such conversion will be deemed to have
been made at the close of business on the date of such surrender of the
certificates representing the shares of Series J Preferred to be converted, and
the person entitled to receive the shares of Common Stock issuable upon such
conversion will be treated for all purposes as the record holder of such shares
of Common Stock on such date.
(3) Automatic Conversion.
(A) Each share of Series J Preferred will automatically be
converted into shares of Common Stock (1) at any time upon the affirmative
election of the holders of a majority of the then-outstanding shares of the
Series J Preferred or (2) immediately upon the closing of a firmly underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Company in which (A) the per share price to the public is
at least $3.00 (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like) and (B) the aggregate cash proceeds to the
Company (after deduction of underwriters' commissions and expenses) are at least
$15,000,000 (a "Qualified IPO").
(B) Upon the first occurrence of an event specified in
Section 4.3(f)(3)(A), the outstanding shares of Series I Preferred will be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Company or its transfer agent; provided, however, that the Company will not
be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless the certificates evidencing such shares of
Series J Preferred are either delivered to the Company or its transfer agent as
provided below, or the holder notifies the Company or its transfer agent that
such certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such certificates (and, if reasonably requested by the
Company, obtains a bond therefor). Upon the occurrence of such automatic
conversion of the Series J Preferred, the holders of Series J Preferred will
surrender the certificates representing such shares at the office of the Company
or any transfer agent for the Series J Preferred. Thereupon, there will be
issued and delivered to such holder promptly at such office and in its name as
shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Series J Preferred surrendered were convertible on the date on which such
automatic conversion
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occurred, and any declared and unpaid dividends will be paid in accordance with
the provisions of Section 4.3(f)(2)(B).
(4) Adjustment For Stock Splits And Combinations. If the Company
at any time or from time to time after the date that the first share of Series J
Preferred is issued (the "Original Issue Date") effects a subdivision of the
outstanding Common Stock without a corresponding subdivision of the Preferred
Stock, the Series J Conversion Price in effect immediately before that
subdivision will be proportionately decreased. Conversely, if the Company at any
time or from time to time after the Original Issue Date combines the outstanding
shares of Common Stock into a smaller number of shares without a corresponding
combination of the Preferred Stock, the Series J Conversion Price in effect
immediately before the combination will be proportionately increased. Any
adjustment under this Section 4.3(f)(4) will become effective at the close of
business on the date the subdivision or combination becomes effective.
(5) Adjustment For Common Stock Dividends And Distributions. If
the Company at any time or from time to time after the Original Issue Date makes
a dividend or other distribution payable in additional shares of Common Stock,
in each such event the Series J Conversion Price that is then in effect will be
decreased as of the time of such issuance by multiplying the Series J Conversion
Price then in effect by a fraction (A) the numerator of which is the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance, and (B) the denominator of which is the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance.
(6) Adjustments For Other Dividends And Distributions. If the
Company at any time or from time to time after the Original Issue Date makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, in each such event provision will be made so
that the holders of the Series J Preferred will receive upon conversion thereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of other securities of the Company that they would have received had
their Series J Preferred been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the conversion date, retained such securities receivable by them
as aforesaid during such period, subject to all other adjustments called for
during such period under this Section 4.3(f) with respect to the rights of the
holders of the Series J Preferred or with respect to such other securities by
their terms.
(7) Adjustment For Reclassification, Exchange And Substitution.
If at any time or from time to time after the Original Issue Date the Common
Stock issuable upon the conversion of the Series J Preferred is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer or a stock dividend, combination, split,
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recapitalization or other transaction for which adjustment to the Series J
Conversion Price is provided elsewhere in this Section 4.3(f)), in any such
event each holder of Series J Preferred will have the right thereafter to
convert such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other change
by holders of the maximum number of shares of Common Stock into which such
shares of Series J Preferred could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.
(8) Reorganizations. If at any time or from time to time after
the Original Issue Date there is a capital reorganization of the Common Stock
(other than an Acquisition or Asset Transfer or a stock dividend, combination,
split, recapitalization or other transaction for which adjustment to the Series
J Conversion Rate is provided elsewhere in this Section 4.3(f)), as a part of
such capital reorganization, provision will be made so that the holders of the
Series J Preferred will thereafter be entitled to receive upon conversion of the
Series J Preferred the number of shares of stock or other securities or property
of the Company to which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment will be made in the
application of the provisions of this Section 4.3(f) with respect to the rights
of the holders of Series J Preferred after the capital reorganization to the end
that the provisions of this Section 4.3(f) (including adjustment of the Series J
Conversion Price then in effect and the number of shares issuable upon
conversion of the Series J Preferred) will be applicable after that event and be
as nearly equivalent as practicable.
(9) Sale Of Shares Below Series J Conversion Price.
(A) If at any time or from time to time after the Original
Issue Date the Company issues or sells, or is deemed by the express provisions
of this Section 4.3(f)(9) to have issued or sold, Additional Shares of Common
Stock (as hereinafter defined), other than as an Acquisition or Asset Transfer
or a stock dividend, combination, split, recapitalization or other transaction
for which adjustment to the Series J Conversion Rate is provided elsewhere in
this Section 4.3(f), for an Effective Price (as hereinafter defined) less than
the then-effective Series J Conversion Price, then and in each such case the
then-existing Series J Conversion Price will be reduced, as of the opening of
business on the date of such issue or sale, to (1) if such issuance occurs on or
prior to the second anniversary of the Original Issue Date, the Effective Price
or (2) if such issuance occurs after the second anniversary of the Original
Issue date, a price determined by multiplying the then-effective Series J
Conversion Price by a fraction (A) the numerator of which will be (i) the number
of shares of Common Stock deemed outstanding (as defined below) immediately
prior to such issue or sale, plus (ii) the number of shares of Common Stock that
the aggregate consideration received (as hereinafter defined) by the Company for
the total number of Additional Shares of Common Stock so issued would purchase
at such Series J Conversion Price, and (B) the denominator of which will be the
number of shares of Common Stock deemed outstanding
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immediately prior to such issue or sale plus the total number of Additional
Shares of Common Stock so issued. For the purposes of the preceding sentence,
the number of shares of Common Stock deemed to be outstanding as of a given date
will be the sum of (1) the number of shares of Common Stock actually outstanding
and (2) the number of shares of Common Stock into which the then-outstanding
shares of Preferred Stock could be converted if fully converted on the day
immediately preceding the given date.
(B) For the purpose of making any adjustment required under
this Section 4.3(f)(9), the consideration received by the Company for any issue
or sale of securities (1) to the extent it consists of cash, will be computed at
the net amount of cash received by the Company after deduction of any
underwriting or similar commissions, compensation or concessions paid or allowed
by the Company in connection with such issue or sale but without deduction of
any expenses payable by the Company, (B) to the extent it consists of property
other than cash, will be computed at the fair value of that property as
determined in good faith by the Board of Directors, and (C) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of the Company for a consideration that covers both, will be computed as
the portion of the consideration so received that may be reasonably determined
in good faith by the Board of Directors to be allocable to such Additional
Shares of Common Stock, Convertible Securities or rights or options.
(C) For the purpose of the adjustment required under this
Section 4.3(f)(9), if the Company issues or sells any rights or options for the
purchase of, or stock or other securities convertible into, Additional Shares of
Common Stock (such convertible stock or securities being herein referred to as
"Convertible Securities") and if the Effective Price of such Additional Shares
of Common Stock is less than the Series J Conversion Price, in each case the
Company will be deemed to have issued at the time of the issuance of such rights
or options or Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise or conversion thereof and to have received
as consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the issuance of
such rights or options or Convertible Securities plus, in the case of such
rights or options, the minimum amounts of consideration, if any, payable to the
Company upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion thereof; provided that if in
the case of Convertible Securities the minimum amounts of such consideration
cannot be ascertained, but are a function of antidilution or similar protective
clauses, the Company will be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided further that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price will be recalculated using the
figure to which such minimum
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amount of consideration is reduced; provided further that if the minimum amount
of consideration payable to the Company upon the exercise or conversion of such
rights, options or Convertible Securities is subsequently increased, the
Effective Price will be again recalculated using the increased minimum amount of
consideration payable to the Company upon the exercise or conversion of such
rights, options or Convertible Securities. No further adjustment of the Series J
Conversion Price, as adjusted upon the issuance of such rights, options or
Convertible Securities, will be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights or options
or the conversion of any such Convertible Securities. If any such rights or
options or the conversion privilege represented by any such Convertible
Securities will expire without having been exercised, the Series J Conversion
Price as adjusted upon the issuance of such rights, options or Convertible
Securities will be readjusted to the Series J Conversion Price that would have
been in effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock, if
any, actually issued or sold on the exercise of such rights or options or rights
of conversion of such Convertible Securities, and such Additional Shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or selling
the Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided that such readjustment will not apply to prior
conversions of Series J Preferred.
(D) "Additional Shares of Common Stock" means all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this
Section 4.3(f)(9), whether or not subsequently reacquired or retired by the
Company other than (1) shares of Common Stock issued upon conversion of the
Preferred Stock; (2) up to 1,582,343 shares of Common Stock and/or options or
other Common Stock purchase rights, and the Common Stock issued pursuant to such
options or other rights (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like) issued after the Original Issue Date to
employees, officers or directors of or consultants or advisors to the Company or
any subsidiary pursuant to a stock option plan that is approved unanimously by
the Board of Directors (the "Option Plan"); (3) shares of Common Stock issued
pursuant to the exercise of options, warrants or convertible securities
outstanding as of the Original Issue Date; and (4) shares of Common Stock and/or
warrants, options or other Common Stock purchase rights, and the Common Stock
issued pursuant to such warrants, options or other rights (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like) issued
after the Original Issue Date pursuant to any equipment leasing arrangement or
debt financing approved by the Board of Directors. The "Effective Price" of
Additional Shares of Common Stock means the quotient determined by dividing the
total number of Additional Shares of Common Stock issued or sold, or deemed to
have been issued or sold by the Company under this Section 4.3(f)(9), into the
aggregate consideration received, or deemed to have been received by the
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Company for such issue under this Section 4.3(f)(9), for such Additional Shares
of Common Stock.
(10) Certificate Of Adjustment. In each case of an adjustment or
readjustment of the Series J Conversion Price for the number of shares of Common
Stock or other securities issuable upon conversion of the Series J Preferred, if
the Series J Preferred is then convertible pursuant to this Section 4.3(f), the
Company, at its expense, will compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and will mail such certificate, by first class mail
postage prepaid, to each registered holder of Series J Preferred at the holder's
address as shown in the Company's books. The certificate will set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (A) the
consideration received or deemed to be received by the Company for any
Additional Shares of Common Stock issued or sold or deemed to have been issued
or sold, (B) the Series J Conversion Price at the time in effect, (C) the number
of Additional Shares of Common Stock and (D) the type and amount, if any, of
other property that at the time would be received upon conversion of the Series
J Preferred.
(11) Notices Of Record Date. Upon (A) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution or (B) any Acquisition or other capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company, any merger or consolidation of the Company with or into any other
corporation, any Asset Transfer or any voluntary or involuntary dissolution,
liquidation or winding up of the Company, the Company will mail to each holder
of Series J Preferred at least 20 days prior to the record date specified
therein a notice specifying (X) the date on which any such record is to be taken
for the purpose of such dividend or distribution and a description of such
dividend or distribution, (Y) the date on which any such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset,
Transfer, dissolution, liquidation or winding up is expected to become
effective, and (Z) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) will be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up.
(12) Fractional Shares. No fractional shares of Common Stock will
be issued upon conversion of Series J Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series J Preferred by a holder thereof will be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Company will, in lieu of
issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
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(13) Reservation Of Stock Issuable Upon Conversion. The Company
will at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series J Preferred, such number of its shares of Common Stock
as from time to time will be sufficient to effect the conversion of all
outstanding shares of the Series J Preferred. If at any time the number of
authorized but unissued shares of Common Stock is not sufficient to effect the
conversion of all then-outstanding shares of the Series J Preferred, the Company
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as will be sufficient for such purpose.
(14) Notices. Any notice required or permitted by the provisions
of this Section 4.3(f) will be in writing and will be deemed effectively given:
(A) upon personal delivery to the party to be notified, (B) when sent by
confirmed telex or facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (C) five days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (D) one day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
notices will be addressed to each holder of record at the address of such holder
appearing on the books of the Company.
(15) Payment Of Taxes. The Company will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series J Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series J Preferred
so converted were registered.
(16) No Dilution Or Impairment. Without the consent of the
holders of then outstanding Series J Preferred as required under Section
43(c)(3), the Company will not amend its Certificate of Incorporation or
participate in any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or take any other voluntary action for
the purpose of avoiding or seeking to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in carrying out all such action as may be
reasonably necessary or appropriate in order to protect the conversion rights of
the holders of the Series J Preferred against dilution or other impairment.
(g) No Reissuance Of Preferred Stock. No share or shares of Preferred
Stock acquired by the Company by reason of redemption, purchase, conversion or
otherwise will be reissued.
(h) No Preemptive Rights. Stockholders will have no preemptive rights
except as granted by the Company pursuant to written agreements.
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5. BYLAWS.
The Board of Directors will have the power to adopt, amend or repeal the
bylaws of the Company, subject to any consent or approval that may be required
by the terms of any Preferred Stock.
6. ELECTIONS.
Election of directors need not be by written ballot unless the bylaws of
the Company so provide.
7. LIMITATION ON LIABILITY; INDEMNITY.
7.1 Liability. A director of the Company will not be liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director to the fullest extent permitted by Delaware law.
7.2 Indemnity.
(a) Each person (and the heirs, executors or administrators of such
person) who was or is a party or is threatened to be made a party to, or is
involved in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Company or is or was
serving at the request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, will be
indemnified and held harmless by the Company to the fullest extent permitted by
Delaware law; provided, however, that the foregoing will not require the Company
to indemnify or advance expenses to any person in connection with any action,
suit, proceeding, claim or counterclaim initiated by or on behalf of such
person. The right to indemnification conferred in this Section 7.2 will include
the right to be paid by the Company the expenses incurred in connection with any
such proceeding in advance of its disposition to the fullest extent permitted by
Delaware law. The right to indemnification conferred in this Section 7.2 will be
a contract right. Any person seeking indemnification under this Section 7.2 will
be deemed to have met the standard of conduct required for indemnification
unless the contrary will be established.
(b) The Company may, by action of its Board of Directors, provide
indemnification to such of the employees and agents of the Company to such
extent and to such effect as the Board of Directors will determine to be
appropriate and permitted by Delaware law.
(c) The Company will have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any expense,
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liability or loss incurred by such person in any such capacity or arising out of
his or her status as such, whether or not the Company would have the power to
indemnify such person against such liability under Delaware law.
(d) The rights and authority conferred in this Section 7 will not be
exclusive of any other right which any person may otherwise have or hereafter
acquire.
(e) Neither the amendment nor repeal of this Section 7, nor the
adoption of any provision of the Certificate of Incorporation or the bylaws of
the Company, nor, to the fullest extent permitted by Delaware law, any
modification of law, will eliminate or reduce the effect of this Section 7 in
respect of any acts or omissions; occurring prior to such amendment, repeal,
adoption or modification.
8. AMENDMENTS.
The Company reserves the right to amend this Certificate of Incorporation
in any manner permitted by Delaware law.
D. This Amended and Restated Certificate of Incorporation has been duly
approved by the Board of Directors of this Company.
E. This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with the provisions of Sections 228 and 245 of the General
Corporation Law of the State of Delaware by the Board of Directors and the
stockholders of the Company. The total number of outstanding shares entitled to
vote or act by written consent was 1,081,834 shares of Common Stock, 716 shares
of Series B Preferred Stock, 450 shares of Series C Preferred Stock, 344.39
shares of Series E Preferred Stock, 1,000 shares of Series F Preferred Stock,
815.87 shares of Series G Preferred Stock and 400 shares of Series H Preferred
Stock. A majority of the outstanding shares of Common Stock and at least 2/3 of
the outstanding shares of each outstanding series of Preferred Stock approved
this Amended and Restated Certificate of Incorporation by written consent in
accordance with Section 228 of the General Corporation Law of the State of
Delaware and written notice of such was given by the Company in accordance with
said Section 228.
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The Company has caused this Amended and Restated Certificate of
Incorporation to be signed by the President and the Secretary in ____________,
Massachusetts, this __ day of September, 1997.
ACCESS RADIOLOGY CORPORATION
By: _______________________________
Xxxxx X. Xxxxxxx
President
Attest:
By: _____________________________
Xxxxxxxxx Xxxxx
Secretary
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Exhibit C
SCHEDULE OF EXCEPTIONS
Capitalized terms used herein and not otherwise defined have the meanings
set forth in the Series J Preferred Stock Purchase Agreement, dated September
30, 1997, to which this Schedule of Exceptions is attached as Exhibit C.
Disclosure of any matter in any item of this Schedule is deemed to be disclosure
of such matter for purposes of all items with respect to which such matter is
required to be disclosed. Disclosure of any matter in this Schedule does not,
by implication or otherwise, indicate that such matter is material. Copies or
forms of all of the documents listed or described below have been provided to
Xxxxxx Godward LLP and any summary below is qualified by reference to such
documents.
2.5(c) A list of the Company's shareholders has been provided to Xxxxxx
Godward LLP.
2.5(d) The Company has issued a certificate for five shares of Series C
Preferred Stock to Xxxxxx Xxxxxxxxx, a holder who in fact subscribed and paid
for four shares. The Company is in the process of contacting Xx. Xxxxxxxxx to
correct this error.
2.5(e) The Company has outstanding warrants to purchase 255,482 shares of
Common Stock under various warrants issued in connection with private
placements of the Company's equity securities. The Company also has outstanding
an aggregate principal amount of $1,500,000 of Convertible Subordinated Notes
(the "Notes") that are expected to be converted into Series J Preferred Stock on
a dollar for dollar basis simultaneously with the Closing, and warrants to
purchase an additional 409,091 shares of Series J Preferred Stock at an exercise
price of $1.10 per share (the "Bridge Warrants"). The Bridge Warrants entitle
the holders of the Bridge Warrants, until June 30, 2002, to purchase from the
Company that amount of securities of the type issued in the Equity Financing
having an aggregate purchase price in the Equity Financing of $450,000. 10 for
an aggregate exercise price of $450,000.10.
The Notes bear interest at the rate of 6% per annum, from the date of
issuance. If at any time prior to October 31, 1997, the Company completes an
Equity Financing (which for purposes of the Notes will be the sale of the
Company's Series J Preferred Stock pursuant to the Purchase Agreement), each
Note, effective on the closing of the Equity Financing, automatically converts
into the amount of securities that a purchaser in the Equity Financing would
receive upon payment of a purchase price equal to the outstanding principal and
accrued interest of such Note.
Attached hereto as Exhibit C-1 are Post-Closing Capitalization Tables of
the Company which show the fully diluted Common Stock equivalent holdings of its
stockholders, assuming a $7,500,000 Series J Preferred Stock financing.
2.7 Contracts:
1. Vendor Program Agreement, dated as of September 5, 1996, between
the Company and DVI Financial Services, Inc.
2. Master Lease Agreement, dated as of January 19, 1996 (renewed as
of August 18, 1997), between the Company and LTI Ventures Leasing Corp.
3. Loan Agreement, dated as of May 16, 1997, between the Company and
Fleet National Bank, and related documentation.
4. OEM Development Software Agreement, dated as of November 9, 1995
and amended May 20, 1997, between the Company and Mitra Imaging Incorporated.
5. Software Development and Licensing Agreement, dated as of May 30,
1997, between the Company and AWARE, Inc.
6. Amended and Restated Reseller Agreement, dated as of May 30,
1997, between the Company and ISG Technologies, Inc.
7. Sublease Agreement, dated as of April 1, 1996, between the
Company and The Future Now, Inc. (principal office and manufacturing facility).
8. Purchase Agreement, dated as of September 1, 1996, between the
Company and Lockheed Xxxxxx Medical Imaging Systems, Inc. (Note: The business
of Lockheed Xxxxxx Medical Imaging Systems, Inc. was recently acquired by
general Electric. The counterparty is now GE Medical Systems.)
9. Employment Agreement, dated as of August 28, 1997, between the
Company and Xxxxx Xxxxxxx.
10. Employment Agreement, dated as of August 28, 1997, between the
Company and Xxxxxx Xxxxxxxxx.
11. Employment Agreement, dated as of August 28, 1997, between the
Company and Xxxxxx Xxxxxx.
12. Employment Agreement, dated as of August 28, 1997, between the
Company and Diagnostic Imaging, Inc.
13. Various confidentiality agreements with industry participants,
the form of which has been provided to Xxxxxx Godward UP.
14. Stock option agreements with directors, employees and members of
the Medical and Technical Advisory Board.
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2.8 Xx. Xxxx Xxxxx, a member of the Company's Medical and Technical
Advisory Board to whom stock options ha ve been granted, is an officer of
Sterling Diagnostic Imaging, Inc. ("Sterling"). The Company and Sterling have
entered into a letter of intent regarding the resale by Sterling of ACCESS
products. Xx. Xxxxx participated in the negotiation of definitive contractual
documentation.
The Company was not in compliance with certain of the financial covenants
contained in the Fleet Loan documentation as of June 30, 1997. The Company has
obtained a written waiver from Fleet Bank. The Company expects that the
conditions giving rise to this non-compliance will be cured by the closing of
the financial contemplated by the Series J Preferred Stock Purchase Agreement
referenced above.
2.12 The Company received a letter dated June 19, 1996 from counsel to
American Telemedicine International ("ATI"), written on behalf of ATI and
Massachusetts General Hospital ("MGH"). This letter states that ATI is
"associated . . . through merger" with RSTAR, Inc. ("RSTAR"), which is a former
employer of Xxxxxx Xxxxxx, an executive of the Company. The June 19th letter
asserts that U.S. Patent No. 5,469,353, issued to Xx. Xxxxxx and others and
assigned to the Company, is derived from proprietary information and trade
secrets of NIGH and RSTAR, has been improperly assigned and is currently
unenforceable due to incorrect ownership. The letter demands assignment of the
patent to ATI and the addition of a current ATI employee as an inventor. The
June 19th letter asserts that Xx. Xxxxxx had misappropriated proprietary
information and trade secrets relevant to the patent that were provided to him
while working for RSTAR. Counsel to ATI also made claims against Xx. Xxxxxx in a
separate letter addressed to Xx. Xxxxxx personally. The Company has agreed to
indemnify Xx. Xxxxxx against claims made against him in connection with this
dispute.
The June 19th letter contained an offer to make documentation supporting
the claims of RSTAR and NIGH available to the Company. In a responsive letter
dated July 3, 1996, patent counsel to the Company (Lahive & Xxxxxxxxx) stated
that a preliminary investigation indicated that the assertions of the June 19th
letter were incorrect, and requested copies of the offered documentation. In a
subsequent letter dated July 31, counsel to ATI stated that deliver of such
documentation would be conditioned on execution by the Company of an enclosed
"Confidential disclosure Agreement", the terms of which are unacceptable to the
Company. The July 31 letter also requested that ATI receive documentation
relevant to the patent from the Company. In a further response dated August 21,
counsel to the Company stated that the agreement proposed by ATI was not
acceptable, that in any event no confidentiality agreement should be required
for disclosure of material now included in an issued patent, and that the
Company was not prepared to deliver any material to ATI prior to receiving some
substantiation of ATI's claims. The August 21 letter further stated the belief
of ACCESS that the claims of ATI and MGH are without merit.
Subsequent to August 21, 1996, counsel to the Company and counsel to ATI
exchanged further letters and telephone calls regarding the terms on which ATI
would be willing to make
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material supporting ATI's claims available to the Company. No resolution to this
matter was reached, and ATI and its counsel have not communicated with the
Company or its counsel since December 19, 1996, the date of the last letter that
counsel to the Company sent to counsel to ATI on this matter.
The Company believes that the claims of ATI and NIGH are without merit and
intends to contest them vigorously.
2.15 Fleet National Bank has a security interest in substantially all of
the Company's assets to secure loans outstanding under the Loan Agreement
referred to in Item 2.7.3.
2.16 Reference is made to the matters disclosed in items 2.7 and 2.12.
2.17(a) The Company issued $1,500,000 in principal amount of Convertible
Subordinated Notes, together with warrants to purchase 409,091 shares of Series
J Preferred Stock, in June 1997.
The Company entered into a lease with Xxxxxxxx Group LLC for 25,404 square
feet in Lexington, Massachusetts on September 26, 1997.
Reference is made to all other matters disclosed in response to Section
2.17.
2.17(b) The Company is a party to a Vendor Program Agreement with DVI
Financial Services, Inc. ("DVI"), under which DVI had committed to provide
financing to qualified customers for the purchase of ACCESS products. The
Company has recently been informed that the business unit of DVI that provided
this financing has been discontinued, and that DVI is therefore no longer in a
position to continue the arrangements contemplated by the Vendor Program
Agreement. The Company does not plan to take any action with respect to this
matter.
GE Medical Systems is a business unit of General Electric that succeeded
through an asset purchase to the business of Lockheed Xxxxxx Medical Imaging
("LMMIS") and the Purchase Agreement between the Company and LMMIS. GE Medical
Systems has informed the Company that, as a matter of policy, GE Medical Systems
will not honor certain provisions of the LMMIS contract calling for rebates of
discounts granted by the Company if volume purchase targets are not met. The
Company and GE Medical Systems are in the process of amending the LMMIS contract
to, among other things, eliminate these rebates.
The Company has forgiven a loan of $10,000 to Xxx Xxxxx (Vice President of
Sales and Marketing).
2.17(f) The Company has entered into employment contracts with Xxxxx
Xxxxxxx and Xxxxxx Xxxxxxxxx since June 30, 1997 (see item 2.7).
2.18(h) Xxxxxxx Xxxxxxxxxxx resigned as Chairman of the Board in July 1997.
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2.19 Reference is made to Item 2.7.
2.20 The Company believes it is late in filing some of its state sales
tax returns. The Company does not believe that these filings will have a
Material Adverse Effect.
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Exhibit D
See Exhibit 10.3 filed with this Registration Statement.
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