EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of October
31, 1997, is entered into by and between CompuMed, Inc., a
Delaware corporation, with headquarters located at Suite 1000,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the
"Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon exemptions from
securities registration afforded under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as
amended (the "1933 Act") and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms
and subject to the conditions of this Agreement, Class C 7%
Convertible Preferred Stock, $.10 par value per share, of the
Company which will be convertible into shares of Common Stock,
$.01 par value per share (the "Common Stock"), of the Company
upon the terms and subject to the conditions of such Preferred
Stock, and subject to acceptance of this Agreement by the
Company;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
A. PURCHASE; CERTAIN DEFINITIONS. (i) The
undersigned hereby agrees to initially purchase from the Company
Class C 7% Convertible Preferred Stock of the Company, in the
amount set forth on the signature page of this Agreement (the
"Initial Preferred Stock"), out of a total offering of
$3,500,000.00 in liquidation value of such Preferred Stock, and
having the terms and conditions set forth in the Certificate of
Designations to the Certificate of Incorporation of the Company
attached hereto as ANNEX I (the "Certificate of Designations").
The purchase price for the Initial Preferred Stock shall be as
set forth on the signature page hereto and shall be payable in
United States Dollars.
(ii) As used herein, the term "Preferred Stock" means,
unless the context otherwise requires, (a) the Initial Preferred
Stock and, subject to the provisions of Section 4(g) hereof, the
Additional Preferred Stock (as defined below), together with (b)
all shares, if any, of 7% Convertible Preferred Stock issued as
dividends thereon.
(iii) As used herein, the term "Securities" means
the Preferred Stock and the Common Stock issuable upon conversion
of the Preferred Stock.
B. FORM OF PAYMENT. The Buyer shall pay the purchase
price for the Initial Preferred Stock by delivering immediately
available good funds in United States Dollars to the escrow agent
(the "Escrow Agent") identified in the Joint Escrow Instructions
attached hereto as ANNEX II (the "Joint Escrow Instructions").
Promptly following payment by the Buyer to the Escrow Agent of
the purchase price for the Initial Preferred Stock, the Company
shall deliver a Certificate representing the Initial Preferred
Stock duly executed on behalf of the Company, to the Escrow
Agent. By signing this Agreement, each of the Buyer and the
Company, subject to acceptance by the Escrow Agent, agrees to all
of the terms and conditions of, and becomes a party to, the Joint
Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as if set forth herein in
full.
C. METHOD OF PAYMENT. Payment into escrow of the
purchase price for the Preferred Stock shall be made by wire
transfer of funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx
& Prager, Esqs.
Account No. 637-0000000
Not later than 1:00 p.m., New York time, on the date which is two
(2) New York Stock Exchange trading days after the Company shall
have accepted this Agreement and returned a signed counterpart of
this Agreement to the Escrow Agent by facsimile, the Buyer shall
deposit with the Escrow Agent the aggregate purchase price for
the Initial Preferred Stock, in immediately available funds.
Time is of the essence with respect to such payment, and failure
by the Buyer to make such payment shall allow the Company to
cancel this Agreement.
D. ESCROW PROPERTY. The purchase price and the
certificate(s) representing the Initial Preferred Stock delivered
to the Escrow Agent as contemplated by Sections 1(b) and (c)
hereof are referred to as the "Escrow Property."
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and
agrees with, the Company as follows:
A. Without limiting the Buyer's right to sell the
Common Stock pursuant to the Registration Statement (as that term
is defined in the Registration Rights Agreement defined below),
the Buyer is purchasing the Preferred Stock and will be acquiring
the shares of Common Stock issuable upon conversion of the
Preferred Stock (the "Converted Shares") for its own account for
investment only and not with a view towards the resale, public
sale or distribution thereof and not with a view to or for sale
in connection with any distribution thereof.
B. The Buyer is (i) an "accredited investor" as that
term is defined in Rule 501 of the General Rules and Regulations
under the 1933 Act by reason of Rule 501(a)(3), (ii) experienced
in making investments of the kind described in this Agreement and
the related documents, (iii) able, by reason of the business and
financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated
in any way by the Company or any of its affiliates or selling
agents), to protect its own interests in connection with the
transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its
investment in the Securities.
C. All subsequent offers and sales of the Preferred
Stock and Common Stock representing the Converted Shares (such
Common Stock sometimes referred to as the "Shares") by the Buyer
shall be made pursuant to registration of the Shares under the
1933 Act or pursuant to an exemption from registration.
D. The Buyer understands that the Preferred Stock is
being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility
of the Buyer to acquire the Preferred Stock.
E. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer
and sale of the Preferred Stock and the offer of the Shares which
have been requested by the Buyer, including ANNEX V hereto. The
Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Buyer has also had
the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-K for the fiscal year ended September 30,
1996, (2) Quarterly Reports on Form 10-Q for the fiscal quarters
ended December 31, 1996, March 31, 1997 and June 30, 1997, (3)
and Proxy Statement dated February 20, 1997 (collectively, the
"Company's SEC Documents").
F. The Buyer understands that the Buyer's investment
in the Securities involves a high degree of risk.
G. The Buyer understands that no United States
federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of
the Securities.
H. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is
a valid and binding agreement of the Buyer enforceable in
accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
I. (i) The Buyer is aware of obligations of 5%
beneficial owners to file SEC reports and he will be responsible
for his own compliance; and (ii) he acknowledges that a 4% cash
commission is being paid in connection with the offering.
3. COMPANY REPRESENTATIONS, ETC.
Except as disclosed in ANNEX V or in the Company's SEC
Documents, the Company represents and warrants to the Buyer that:
A. CONCERNING THE PREFERRED STOCK. The Preferred
Stock has been duly authorized and, when issued, will be duly and
validly issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of
being such holder. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Preferred
Stock.
B. REPORTING COMPANY STATUS. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite
corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing
in each jurisdiction where the nature of the business conducted
or property owned by it makes such qualification necessary other
than those jurisdictions in which the failure to so qualify would
not have a material and adverse effect on the business,
operations, properties, prospects or condition (financial or
otherwise) of the Company. The Company has registered its Common
Stock pursuant to Section 12 of the 1934 Act, and the Common
Stock is listed and traded on The NASDAQ/Small Cap Market. The
Company has received notice with respect to the continued
eligibility of the Common Stock for such listing, after
correspondence the Company demonstrated compliance for the
continuation of such listing.
C. AUTHORIZED SHARES. The Company has sufficient
authorized and unissued shares of Common Stock as may be
reasonably necessary to effect the conversion of the Preferred
Stock based upon current market price. The Converted Shares have
been duly authorized and, when issued upon conversion of, or as
interest on, the Preferred Stock in accordance with its terms,
will be duly and validly issued, fully paid and non-assessable
and will not subject the holder thereof to personal liability by
reason of being such holder.
D. SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS
AGREEMENT AND STOCK. This Agreement and the Registration Rights
Agreement, and the transactions contemplated hereby and thereby,
have been duly and validly authorized by the Company, this
Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Registration Rights Agreement, when
executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general
principles of equity, and to bankruptcy, insolvency, moratorium,
and other similar laws affecting the enforcement of creditors'
rights generally.
E. NON-CONTRAVENTION. The execution and delivery of
this Agreement and the Registration Rights Agreement by the
Company, the issuance of the Securities, and the consummation by
the Company of the other transactions contemplated by this
Agreement and the Registration Rights Agreement do not and will
not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under, the
(i) certificate of incorporation or by-laws of the Company, each
as currently in effect, (ii) any indenture, mortgage, deed of
trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or
assets are bound, (iii) any existing applicable law, rule, or
regulation or any applicable decree, judgment, or order of any
court, United States federal or state regulatory body,
administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets,
or (iv) the Company's listing agreement for its Common Stock,
except such conflict, breach or default which would not have a
material adverse effect on the transactions contemplated herein.
F. APPROVALS. No authorization, approval or consent
of any court, governmental body, regulatory agency, self-
regulatory organization, or stock exchange or market or the
stockholders of the Company is required to be obtained by the
Company for the issuance and sale of the Securities to the Buyer
as contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained.
G. SEC FILINGS. None of the Company's SEC Documents
contained, at the time they were filed, any untrue statement of a
material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were
made, not misleading. Except as set forth on ANNEX V hereto, the
Company has since September 1, 1996 timely filed all requisite
forms, reports and exhibits thereto with the Securities and
Exchange Commission.
H. ABSENCE OF CERTAIN CHANGES. Since January 1,
1997, there has been no material adverse change and no material
adverse development in the business, properties, operations,
financial condition, or results of operations of the Company,
except as disclosed in ANNEX V or in the Company's SEC Documents.
I. FULL DISCLOSURE. There is no fact known to the
Company (other than general economic conditions known to the
public generally, and other than facts disclosed in the documents
referred to in Section 2(e) hereof), that has not been disclosed
in writing to the Buyer that (i) would reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs, properties or assets of
the Company or (ii) would reasonably be expected to materially
and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement or any of the documents
and agreements contemplated hereby (collectively, including this
Agreement, the "Transaction Agreements").
J. ABSENCE OF LITIGATION. Except to the extent
disclosed in the Company's SEC documents, there is no action,
suit, proceeding, inquiry or investigation before or by any
court, public board or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or
affecting the Company or any of its subsidiaries, wherein an
unfavorable decision, ruling or finding would have a material
adverse effect on the properties, business, condition (financial
or otherwise), results of operations or prospects of the Company
and its subsidiaries taken as a whole or the transactions
contemplated by any of the Transaction Agreements or which would
adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations
under, any of the Transaction Agreements.
K. ABSENCE OF EVENTS OF DEFAULT. Except as set forth
in Section 3(e) hereof, no Event of Default (or its equivalent
term), as defined in the respective agreement to which the
Company is a party, and no event which, with the giving of notice
or the passage of time or both, would become an Event of Default
(or its equivalent term) (as so defined in such agreement), has
occurred and is continuing, which would have a material adverse
effect on the Company's financial condition or results of
operations.
L. NO DEFAULT. The Company is not in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed
of trust or other material instrument or agreement to which it is
a party or by which it or its property is bound.
M. PRIOR ISSUES. Except as set forth in ANNEX V,
during the twelve (12) months preceding the date hereof, the
Company has not issued any securities. The presently outstanding
unconverted shares of each such issuance as at September 30, 1997
are set forth in ANNEX V.
N. DILUTION. The number of Shares issuable upon
conversion of the Preferred Stock may increase substantially in
certain circumstances, including, but not necessarily limited to,
the circumstance wherein the trading price of the Common Stock
declines prior to the conversion. The Company's executive
officers and directors have analyzed the nature of the
securities being sold hereby and recognize that they have a
potential dilutive effect. The board of directors of the Company
has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Shares
upon conversion of the Preferred Stock is binding upon the
Company and enforceable regardless of the dilution such issuance
may have on the ownership interests of other shareholders of the
Company.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. TRANSFER RESTRICTIONS. The Buyer acknowledges
that (1) the Preferred Stock has not been and is not being
registered under the provisions of the 1933 Act and, except as
provided in the Registration Rights Agreement, the Shares have
not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder
or (B) the Buyer shall have delivered to the Company an opinion
of counsel, reasonably satisfactory in form, scope and substance
to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption
from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any resale of the Securities under
circumstances in which the seller, or the person through whom the
sale is made, may be deemed to be an underwriter, as that term is
used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (3) neither the Company nor any other person
is under any obligation to register the Securities (other than
pursuant to the Registration Rights Agreement) under the 1933 Act
or to comply with the terms and conditions of any exemption
thereunder.
B. RESTRICTIVE LEGEND. The Buyer acknowledges and
agrees that the Preferred Stock and the Warrants have not been
registered under the 1933 Act, and, until such time as the Shares
have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement and sold in accordance with such
Registration Statement, certificates and other instruments
representing any of the Securities shall bear a restrictive
legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any of the Securities):
THE SECURITIES REPRESENTED HEREBY (THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED.
C. REGISTRATION RIGHTS AGREEMENT. The parties hereto
agree to enter into the Registration Rights Agreement, in
substantially the form attached hereto as ANNEX IV (the
"Registration Rights Agreement"), on or before the Closing Date
(as defined below).
D. FILINGS. The Company undertakes and agrees to
make all necessary filings in connection with the sale of the
Preferred Stock to the Buyer under any United States federal,
state and local laws and regulations, or by any domestic
securities exchange or trading market, and to provide a copy
thereof to the Buyer promptly after such filing.
E. REPORTING STATUS. So long as the Buyer
beneficially owns any of the Preferred Stock, the Company shall
file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination. The Company will take
all reasonable action under its control to continue the listing
and trading of its Common Stock on The NASDAQ/Small Cap Market
and will comply in all respects with the Company's reporting,
filing and other obligations under the by-laws or rules of the
National Association of Securities Dealers, Inc. ("NASD") or the
NASDAQ/Small Cap Market.
F. USE OF PROCEEDS. The Company will use the
proceeds from the sale of the Preferred Stock (excluding amounts
paid by the Company for legal fees and distributor fees in
connection with the sale of the Preferred Stock) for working
capital purposes , and shall not, directly or indirectly, use
such proceeds for any loan or other payment to any officer,
director or principal shareholder of the Company or any of their
respective affiliates.
G. (i) FUTURE PURCHASES. The Buyer unconditionally
and irrevocably agrees to purchase up to an additional amount
equal to the Purchase Price for the Initial Preferred Stock, in
liquidation value of Preferred Stock (the "Additional Preferred
Stock") in one or more tranches (the "Additional Tranches"),
subject to the satisfaction of the conditions provided in this
Agreement relating to the Buyer's purchase of the Additional
Preferred Stock. The closing for $875,000 of Additional Tranche
shall occur no later than December 31, 1997, and the balance by
February 15, 1998 if the average closing bid price of the
Company's Common Stock for the ten (10) consecutive trading days
ending the fifth day prior to the requested closing date is not
less than $1.50 per share; otherwise the closing date would be
not later than thirty (30) trading days after the effective date
of the Company's registration statement, upon the same terms and
conditions as those applicable to the Initial Preferred Stock
issued pursuant to this Agreement, except as set forth below.
The Buyer's obligation to purchase the Additional Preferred Stock
on each Additional Closing Date (as defined below) shall be
contingent upon the satisfaction of the following conditions: On
such Additional Closing Date (i) the representations and
warranties of the Company contained in Section 3 hereof shall be
true and correct in all material respects (and the Company's
issuance of the Additional Preferred Stock shall constitute the
Company's making each such representation and warranty as of such
date), and (ii) the average closing bid price (as defined in the
Certificate of Designations) on the Additional Closing Date shall
exceed $1.00 per share, (iii) the average dollar volume for the
twenty (20) trading days preceding such Additional Closing Date
shall have equaled or exceeded $_____________, and (iv) there
shall have been no material adverse changes (financial or
otherwise) in the business or conditions of the Company from the
Closing Date through and including the Additional Closing Date
(and the Company's issuance of the Additional Preferred Stock
shall constitute the Company's making each such representation
and warranty as of such date). Each share of Additional
Preferred Stock shall (x) have terms similar to those of the
Initial Preferred Stock, except that the Conversion Price formula
will use eighty (80%) percent of the average closing bid price
for the ten (10) trading days prior to the conversion for any
amount that closes after December 31, 1997, and 77.5% of the
average closing bid price for all other amounts raised in the
second tranche, and (y) be convertible until December 31, 1999,
and shall be deemed automatically converted, to the extent not
previously converted, on December 31, 1999.
(ii) If the Buyer does not honor its commitment to
purchase the Additional Preferred Stock on the Additional Closing
Date, and no other buyer of the securities being issued
simultaneous herewith elects to purchase the Additional Preferred
Stock, the Buyer shall waive his rights to exercise one-half
(1/2) of the Warrants issued pursuant to paragraph 4.i. below.
Accordingly, one-half (1/2) of the initial warrants would be
issued into escrow subject to the Buyer's or such other buyer's
closing of the purchase of the Additional Tranche. Such escrowed
Warrants will be (a) returned to the Company in the event of such
waiver contemplated by the first sentence of this subparagraph
(ii), and (b) released to the Buyer upon the closing or the sale
of the Additional Preferred Stock to the Buyer or such other
buyer, but not later than thirty (30) trading days after the
Effective Date.
(iii) The Company agrees that, if the
Additional Closing Date occurs as contemplated by Paragraph (i)
above, then, upon the subsequent conversion of the Additional
Preferred Stock, the Company will issue to the Buyer converting
such Additional Preferred Stock warrants (the "Additional
Warrants") to purchase the same number of shares of Common Stock
as are being issued upon such conversion at the conversion price
applicable to such conversion. Such Additional Warrants shall be
exercisable for a period of five (5) years from the date of issue
and shall, (i) except to the extent inconsistent with the
foregoing provisions of this Paragraph (iii), have the same terms
as the Warrants, and (ii) be deemed to be included in the term
"Warrants" herein.
H. CERTAIN AGREEMENTS. (i) The Company covenants
and agrees that it will not, without the prior written consent of
80% in interest of all the Buyers, enter into any subsequent or
further offer or sale of Common Stock or securities convertible
into Common Stock with any third party until the expiration of
one hundred (100) days after the effective date of the
Registration Statement (the "Effective Date"), unless the full
second tranche is funded subsequent to February 15, 1998, in
which event the above date shall be reduced to sixty (60) days.
(ii) The provisions of subparagraph (h)(i) will not
apply to (w) the issuance of securities (other than for cash) in
connection with a merger, consolidation, sale of assets,
disposition or acquisition of a business, product or license by
the Company, strategic alliance, bank loan or other credit
facility agreement, (x) the exchange of the capital stock for
assets, stock or other joint venture interests, (y) as
compensation to employees and consultants, or (z) the exercise of
outstanding warrants or options or settlement of class actions.
(iii) Any action contemplated under subparagraph
(h)(ii) is subject to the condition that registration rights, if
any, in connection with such action shall not require the filing
of a Registration Statement in respect of such stock prior to
thirty (30) days after the Effective Date.
I. WARRANTS. Each Buyer, simultaneous with the
conversion of the Preferred Stock and the Additional Preferred
Stock, shall receive transferable divisible Warrants equal with
respect to the Preferred Stock to the number of shares issued
upon such conversion, and exercisable at the Conversion Price of
such conversion, and with respect to the Additional Preferred
Stock equal to the number of shares issued upon such conversion,
and exercisable at the Conversion Price at the time of
conversion. The shares underlying such Warrants shall be
included in the Registration Statement under the Registration
Rights Agreement, and shall be exercisable commencing ninety (90)
days after issuance and for a period of thirty-six (36) months
thereafter.
J. AVAILABLE SHARES. The Company shall have at all
times authorized and reserved for issuance, free from preemptive
rights, shares of Common Stock sufficient to yield the number of
shares of Common Stock issuable at conversion and upon exercise
of the Warrants as may be required to satisfy the conversion
rights of the Buyer pursuant to the terms and conditions of the
Preferred Stock.
K. HEDGING TRANSACTIONS. The Company understands
that the Buyer may be a so-called "hedge" fund, and the Company
hereby expressly agrees that except during the ten (10) business
days prior to delivery of a Conversion Notice, or the closing of
the Additional Shares, the Buyer shall not in any way be
prohibited or restricted from any purchases or sales of any
securities or other instruments of, or related to, the Company or
any of its securities, including, but not necessarily limited to,
puts, calls, futures contracts, short sales and hedging and
arbitrage transactions. The Buyer acknowledges that such
purchases, sales and other transactions may be subject to various
federal and state securities laws and agrees to comply with all
such applicable securities laws.
L. LIMITATION ON ISSUANCE OF SHARES. The Company may
be limited in the number of shares of Common Stock it may issued
in respect of the Additional Preferred Stock by the applicable
rules and regulations of the principal securities market on which
the Common Stock is listed or traded ("Cap Regulations").
Without limiting the other provisions thereof, (i) the placement
proceeds from that part of Additional Preferred Stock closed
after February 15, 1998 would be held in escrow pending a
stockholder vote at the Company's 1998 stockholders meeting on
approval of the placement at the agreed terms, (ii) the Company
will at its next annual meeting, take all steps reasonably
necessary under the Cap Regulations to be in a position to issue
shares of Common Stock on conversion of the Additional Preferred
Stock without violating the Cap Regulations, and (iii) if,
despite taking such steps, or prior thereto, the Company still
cannot issue such shares of Common Stock without violating the
Cap Regulations, the holder of Additional Preferred Stock which
cannot be converted as a result of the Cap Regulations shall have
the option, exercisable in such holder's sole and absolute
discretion, to elect, within thirty (30) days after the
shareholder's meeting, to require the Company to issue shares of
Common Stock in accordance with such holder's notice of
conversion at a conversion purchase price equal to the average of
the closing bid price per share of Common Stock for any five (5)
consecutive trading days (subject to certain equitable
adjustments for certain events occurring during such period)
during the sixty (60) trading days immediately preceding the date
of notice of conversion, assuming same is permitted without
violation of Cap Regulations. Upon shareholder approval or
NASDAQ consent, the escrow shall be released to the Company.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of
the aggregate purchase price for the Initial Preferred Stock in
accordance with Section 1(c) hereof, the Company will irrevocably
instruct its transfer agent to issue Common Stock from time to
time upon conversion of the Preferred Stock in such amounts as
specified from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act,
registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer in connection with
each conversion of the Preferred Stock. The Company warrants
that no instruction other than such instructions referred to in
this Section 5 and stop transfer instructions to give effect to
Section 4(a) hereof prior to registration and sale of the Shares
under the 1933 Act will be given by the Company to the transfer
agent and that the Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement,
and applicable law. Nothing in this Section shall affect in any
way the Buyer's obligations and agreement to comply with all
applicable securities laws with respect to the sale of any of the
Securities. If the Buyer provides the Company with an opinion of
counsel reasonably satisfactory to the Company that registration
of a resale by the Buyer of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not
required under the 1933 Act, the Company shall (except as
provided in clause (2) of Section 4(a) of this Agreement) permit
the transfer of the Securities and, in the case of the Converted
Shares, promptly instruct the Company's transfer agent to issue
one or more certificates for Common Stock without legend in such
name and in such denominations as specified by the Buyer.
b. Subject to the completeness and accuracy of the
Buyer's representations and warranties herein, upon the
conversion of any Preferred Stock by a person who is a non-U.S.
Person, and following the expiration of any applicable Restricted
Period (as those terms are defined in Regulation S), the Company,
shall, at its expense, take all necessary action (including the
issuance of an opinion of counsel) to assure that the Company's
transfer agent shall issue stock certificates without restrictive
legend or stop orders in the name of Buyer (or its nominee (being
a non-U.S. Person) or such non-U.S. Persons as may be designated
by Buyer) and in such denominations to be specified at conversion
representing the number of shares of Common Stock issuable upon
such conversion, as applicable, with opinion of counsel
satisfactory to Company of the exemption. Nothing in this
Section 5, however, shall affect in any way Buyer's or such
nominee's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities.
c. The Company will permit the Buyer to exercise its
right to convert the Preferred Stock by telecopying an executed
and completed Conversion Certificte to the Company and
delivering within three (3) business days thereafter, the
original Conversion Certificate and the certificates representing
the Preferred Stock being converted to the Company by express
courier, with a copy to the transfer agent. Each date on which a
Conversion Certificate is telecopied to and received by the
Company in accordance with the provisions hereof shall be deemed
a Conversion Date. The Company will transmit the certificates
representing the Converted Shares (together with the certificates
representing the Preferred Stock not being so converted) to the
Buyer via express courier, by electronic transfer or otherwise,
within five (5) business days after receipt by the Company of the
original Conversion Certificate and the certificate representing
the Preferred Stock being converted (the "Delivery Date").
d. The Company understands that a delay in the
issuance of the Shares of Common Stock beyond the Delivery Date
could result in economic loss to the Buyer. As compensation to
the Buyer for such loss, the Company agrees to pay late payments
to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "No. Business Days
Late" is defined as the number of business days beyond seven (7)
business days from Delivery Date:
Late Payment For Each $10,000
of Liquidation Value of
Preferred
No. Business Days Late Stock Being Converted
---------------------- ------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for
each Business Day
Late beyond 10 days
The Company shall pay any payments incurred under this Section in
immediately available funds upon demand. Nothing herein shall
limit the Buyer's right to pursue actual damages for the
Company's failure to issue and deliver the Common Stock to the
Buyer. Furthermore, in addition to any other remedies which may
be available to the Buyer, in the event that the Company fails
for any reason to effect delivery of such shares of Common Stock
within five (5) business days after the Delivery Date, the Buyer
will be entitled to revoke the relevant Notice of Conversion by
delivering a notice to such effect to the Company whereupon the
Company and the Buyer shall each be restored to their respective
positions immediately prior to delivery of such Notice of
Conversion.
e. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided
the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program,
upon request of the Buyer, so long as the certificates therefor
do not bear a legend and the Buyer thereof is not obligated to
return such certificate for the placement of a legend thereon,
the Company shall use its best efforts to cause its transfer
agent to electronically transmit the Common Stock issuable upon
conversion to the Buyer by crediting the account of Buyer's Prime
Broker with DTC through its Deposit Withdrawal Agent Commission
system.
6. DELIVERY INSTRUCTIONS.
The Preferred Stock shall be delivered by the Company
to the Escrow Agent pursuant to Section 1(b) hereof, on a
delivery against payment basis, on the Closing Date and on the
Additional Closing Date, respectively.
7. CLOSING DATE.
The date and time of the issuance and sale of the
Initial Preferred Stock (the "Closing Date") shall occur no
later than 12:00 Noon, New York time on the first NYSE trading
day after the fulfillment or waiver of all closing conditions
pursuant to Sections 8 and 9 hereof, or such other time as is
mutually agreed upon by the Company and the Buyer. The date and
time of the issuance and sale of any Additional Preferred Stock
(the "Additional Closing Date") shall occur on the date specified
by either party upon at least fifteen (15) business days advance
notice to the other party; provided, however, that it shall be a
-------- -------
condition of the Additional Closing Date that each of the
conditions contemplated by Sections 8 and 9 hereof shall have
been satisfied or waived on or before such date. Each closing of
the purchase and issuance of Preferred Stock shall occur on the
Closing Date or Additional Closing Date, as the case may be, at
the offices of the Escrow Agent.
Notwithstanding anything to the contrary contained herein, the
Escrow Agent will be authorized to release the Escrow Property
only upon satisfaction of the conditions set forth in Sections 8
and 9 hereof.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to
sell the Initial Preferred Stock to the Buyer pursuant to this
Agreement on the Closing Date and on the Additional Closing Date
is conditioned upon:
A. The receipt and acceptance by the Company of this
Agreement (such acceptance to be evidenced by the Company's
execution and delivery of this Agreement) for the sale of at
least One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) in liquidation value of Preferred Stock (or such
lesser amount as the Company, in its sole discretion, shall
determine);
B. Delivery by the Buyer to the Escrow Agent of good
funds as payment in full of an amount equal to the purchase price
for the relevant Preferred Stock in accordance with Section 1(c)
hereof;
C. The accuracy in all material respects on the
Closing Date or the Additional Closing Date, as the case may be,
of the representations and warranties of the Buyer contained in
this Agreement, each as if made on such Closing Date, and the
performance by the Buyer on or before such Closing Date or
Additional Closing Date of all covenants and agreements of the
Buyer required to be performed on or before such Closing Date;
and
D. There shall not be in effect any law, rule or
regulation prohibiting or restricting the transactions
contemplated hereby, or requiring any consent or approval which
shall not have been obtained.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to
purchase the Initial Preferred Stock on the Closing Date and the
Additional Preferred Stock on the Additional Closing Date is
conditioned upon:
A. The receipt and acceptance by the Buyer of this
Agreement (to be evidenced by the Buyer's execution and delivery
of this Agreement);
B. Delivery by the Company to the Escrow Agent of
certificate(s) representing the relevant Preferred Stock in
accordance with this Agreement;
C. The accuracy in all material respects on the
Closing Date or the Additional Closing Date, as the case may be,
of the representations and warranties of the Company contained in
this Agreement, each as if made on such Closing Date or
Additional Closing Date, and the performance by the Company on or
before such Closing Date or Additional Closing Date of all
covenants and agreements of the Company required to be performed
on or before such date; and
D. On the Closing Date or Additional Closing Date, as
the case may be, the Buyer shall have received (i) an opinion of
counsel for the Company, dated the Closing Date or Additional
Date, in form, scope and substance reasonably satisfactory to the
Buyer, to the effect set forth in ANNEX III attached hereto, and
(ii) the Registration Rights Agreement duly executed and
delivered by the Company.
10. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York for
contracts to be wholly performed in such state and without giving
effect to the principles thereof regarding the conflict of laws.
Each of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City
of New York in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by
law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such
jurisdictions.
b. A facsimile transmission of this signed Agreement
shall be legal and binding on all parties hereto.
c. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original.
d. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the
interpretation of, this Agreement.
e. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
f. This Agreement may be amended only by an
instrument in writing signed by the party to be charged with
enforcement thereof.
g. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the
subject matter hereof.
11. NOTICES. Any notice required or permitted
hereunder shall be given in writing (unless otherwise specified
herein) and shall be deemed effectively given on the earliest of
(i) the date delivered, if delivered by personal
delivery as against written receipt therefor, or by
confirmed facsimile transmission,
(ii) the seventh business day after deposit, postage
prepaid, in the United States Postal Service by
registered or certified mail, or
(iii) the third business day after mailing by
international express courier, with delivery costs and
fees prepaid,
in each case, addressed to each of the other parties thereunto
entitled at the following addresses (or at such other addresses
as such party may designate by ten (10) days' advance written
notice similarly given to each of the other parties hereto):
COMPANY: CompuMed, Inc.
Suite 1000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
ATTN: Xxxxx Xxxxxxx, President
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000 x000
with a copy to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopier No.: (000) 000-0000
BUYER: At the address set forth on the signature page of
this Agreement.
ESCROW AGENT: Xxxxxxx & Prager, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
Company's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the
Preferred Stock and the Purchase Price, and shall inure to the
benefit of the Buyer and its successors and assigns for a period
of one (1) year or until the Buyer sells his Securities,
whichever is the earlier.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been duly
executed by the Buyer or one of its officers thereunto duly
authorized as of the date set forth below.
NUMBER OF SHARES OF
INITIAL PREFERRED STOCK TO BE PURCHASED:
AGGREGATE PURCHASE PRICE OF
SUCH INITIAL PREFERRED STOCK: $
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the
foregoing statements are true and correct and that it has caused
this Securities Purchase Agreement to be duly executed on its
behalf this ________ day of ___________________, 1997.
________________________________ ______________________________
Address Printed Name of Subscriber
________________________________
By: _______________________________
Telecopier No. _________________ (Signature of Authorized
Person)
_________________________________
_____________________________ Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts
this Agreement and represents that the foregoing statements are
true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf.
COMPUMED, INC.
By: _________________________________________
Title: ____________________________________
Date: _________________________________________
