STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of August 23, 2000, among HEALTHCARE INTEGRATED SERVICES,
INC. (the "Company"), and HUNTINGTON STREET COMPANY ("Huntington") and
VENTURETEK L.P. ("Venture" and together with Huntington, the "Purchasers").
For and in consideration of the mutual promises and covenants herein
contained, the parties hereto agree as follows:
1. Purchase and Sale. Subject to and in accordance with the terms and
conditions of this Agreement, the Company shall sell to the Purchasers, and the
Purchasers shall purchase from the Company, 226,004 shares (the "Common Shares")
of common stock, par value $.01 per share, of the Company (the "Common Stock")
for an aggregate purchase price of $500,000 (the "Purchase Price").
The number of Common Shares to be issued to and acquired by each of the
Purchasers and the consideration for such shares to be paid by the Purchasers is
set forth opposite the name of the Purchasers on Schedule 1 hereto.
2. Closing. The closing of the purchase and sale of the Common Shares
under this Agreement shall be held at the office of Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP, The Chrysler Building, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, as soon as practicable (but in any event within two
business days) after the conditions in Section 6 hereof have been satisfied or
waived, or at such other location or on such other date as the Purchasers and
the Company shall agree (the "Closing"). At the Closing, the Company shall
deliver to each Purchaser the certificate representing the Common Shares to be
issued to and acquired by such Purchaser, free and clear of all liens and
encumbrances (except (i) under the provisions of applicable federal and foreign
and state securities law and (ii) as a result of acts of the Purchasers), and
the Purchasers shall deliver to the Company the Purchase Price, in accordance
with the wire transfer instructions attached hereto as Schedule 2.
3. Transfer Restrictions.
a. Restricted Shares. Each Purchaser understands and agrees
that the Common Shares have not been (nor will the Reset Shares, as defined in
Section 10 below, be) registered under the Securities Act of 1933, as amended
(the "Securities Act"), or any foreign or state securities laws and that,
accordingly, they will not be transferable except as permitted under various
exemptions contained in the Securities Act, foreign or state securities laws, or
upon satisfaction of the registration and prospectus delivery requirements of
the Securities Act. Each Purchaser acknowledges and agrees that it must bear the
economic risk of the Common Shares and the Reset Shares, if any, for an
indefinite period of time since they have not been registered under the
Securities Act and therefore cannot be transferred unless they are subsequently
registered or an exemption from registration is available.
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b. Legend. Each Purchaser agrees with the Company that the certificates
evidencing the Common Shares and the Reset Shares, if any, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION
THEREFROM UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW."
c. Removal of Legend. The legend endorsed on the certificates
pursuant to Section 3(b) hereof shall be removed and the Company shall issue a
certificate without such legend to the holder thereof at such time as the
securities evidenced thereby cease to be restricted securities upon the earliest
to occur of (i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (ii) the securities shall have been sold to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act, or (iii) such
securities may be sold by the holder without restriction or registration under
Rule 144(k) under the Securities Act (or any successor provision).
d. Stop Transfer Notations. The Company and any transfer agent acting on
its behalf may maintain on the Company's register for the Common Stock
appropriate "stop transfer" notations with respect to the Common Shares and the
Reset Shares, if any.
4. Representations and Warranties of the Company. The Company represents
and warrants to the Purchasers that:
a. Organization of the Company and its Subsidiaries. Each of
the Company and its Subsidiaries (as defined below) (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership or limited liability
company power and authority to carry on its business as now being conducted and
(ii) is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing would not have a material adverse effect on (1) the business,
properties, condition (financial or otherwise), or results of operations of the
Company and its Subsidiaries, taken as a whole, or (2) the ability of the
Company to consummate the transactions contemplated hereby (a "Material Adverse
Effect"). As used in this Agreement, the word "Subsidiary" means, with respect
to any party, any corporation or other organization,
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whether incorporated or unincorporated, of which (x) such party or any other
Subsidiary of such party is a general partner or (y) at least 50% of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
b. Valid Offering of Shares.
i. Upon issuance of the Common Shares pursuant to this Agreement,
the Common Shares will be duly and validly issued, fully paid and
non-assessable, and the Purchasers will receive good title thereto, free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever and free of any other restriction
(including any restriction on the right to use, vote, sell or otherwise dispose
of such capital stock or other ownership interests) (collectively, "Liens"),
except (1) under the provisions of applicable federal and foreign and state
securities law and (2) as a result of acts of the Purchasers. Upon issuance of
the Reset Shares pursuant to this Agreement, if any, the Reset Shares will be
duly and validly issued, fully paid and non-assessable, and the Purchasers will
receive good title thereto, free and clear of all Liens, except (1) under the
provisions of applicable federal and foreign and state securities law and (2) as
a result of acts of the Purchasers.
ii. Neither the Company nor its Subsidiaries has taken any action that
would result in the offering and sale of the Common Shares and the Reset Shares
pursuant to this Agreement being treated as a public offering and not a valid
private offering under the law.
c. Authority; No Conflict; Required Filings and Consents.
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i. The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary and
appropriate corporate action on the part of the Company. This Agreement has been
duly executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by or subject to
any bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and subject to general principles
of equity.
ii. Except as set forth on Schedule 4, the execution and delivery of this
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Agreement by the Company do not, and the consummation of the transactions
contemplated hereby will not, (1) conflict with, or result in any violation or
breach of, any provision of the Certificate of Incorporation or By-laws of the
Company, (2) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond,
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mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (3)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries or any of its or their properties or assets,
except in the case of clauses (2) and (3) for any such violations, breaches,
defaults, terminations, cancellations, accelerations or conflicts which are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.
iii. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except applications to list the Common
Shares and the Reset Shares, if any, on The American Stock Exchange ("AMEX")).
d. Public Filings; Financial Statements.
i. Since November 12, 1991, the Company has filed with the
Securities and Exchange Commission (the "SEC") all reports, schedules, forms,
registration statements and other documents required to be filed by it as a
registrant under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Except for matters otherwise corrected by the
subsequent filing with the SEC of an appropriate amendment prior to the date of
this Agreement, such reports, forms, and documents filed by the Company with the
SEC prior to the date of this Agreement and since November 12, 1991 (the
"Company SEC Reports") (including any financial statements filed as a part
thereof or incorporated by reference therein) did not, at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing), contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Company SEC Reports or necessary in order to make the statements in such Company
SEC Reports, in the light of the circumstances under which they were made, not
misleading.
ii. Each of the consolidated financial statements (including, in each
case, any related notes) of the Company contained in the Company SEC Reports was
prepared in accordance with the books of account and other financial records of
the Company and in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q under the Exchange Act), and fairly
presented the consolidated financial position of the Company and its
Subsidiaries as of the dates, and the consolidated results of its operations and
cash flows for the periods, indicated, except that the unaudited interim
financial statements were subject to normal and recurring year-end adjustments
which were not material in amount.
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e. Brokers. None of the Company or any of its officers, directors or
employees have employed any broker or finder, or incurred any liability for any
brokerage fees, commissions, finder's or other similar fees or expenses in
connection with the transactions contemplated by this Agreement.
f. No Material Adverse Change. Since March 31, 2000, there has been no
material adverse change in the business, properties, condition (financial or
otherwise), or results of operations of the Company and its Subsidiaries, taken
as a whole.
g. No Default. The Company is not in default or violation (and
no event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of (i)
its Certificate of Incorporation and By-laws, (ii) any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them or any
of their properties or assets may be bound or (iii) any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries or any of its or
their properties or assets, except in the case of clauses (ii) and (iii) for any
such defaults or violations which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect.
h. Litigation. There are no material suits, claims or proceedings which are
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any of its subsidiaries or any of their respective assets and
properties.
i. Taxes. The Company (i) has filed all federal and all material state,
local and foreign returns, declarations, reports, estimates, information returns
and statements that were required to be filed by it on or prior to the Closing
(the "Returns"), (ii) all such Returns were, when filed, and continue to be,
correct and complete in all material respects, and (iii) all taxes, charges,
fees, levies or other assessments shown by the Returns to be owed by the Company
have been timely paid in all material respects (except to the extent that
liability therefor is reserved for in the Company's most recent audited
financial statements).
5. Representations and Warranties of the Purchasers. Each of the
Purchasers, severally and not jointly, represents and warrants to the Company
that:
a. Organization of the Purchaser. Such Purchaser (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate or partnership
power and authority to carry on its business as now being conducted and (ii) is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such licensing necessary, except where the
failure to be so qualified, licensed or in good standing would not have a
material adverse effect on (1) the business, properties, condition (financial or
otherwise) or results of operation of such Purchaser and its
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Subsidiaries, taken as a whole, or (2) the ability of the Purchasers to
consummate the transactions contemplated hereby (a "Purchasers Material Adverse
Effect").
b. Authority; No Conflict; Required Filings and Consents.
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i. Such Purchaser has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by such Purchaser have been duly authorized by
all necessary action on the part of such Purchaser. This Agreement has been duly
executed and delivered by such Purchaser and constitutes the legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as such enforceability may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and subject to
general principles of equity.
ii. The execution and delivery of this Agreement by such Purchaser
does not, and the consummation of the transactions contemplated hereby will not,
(1) conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or By-laws or other operative organizational
documents of such Purchaser, (2) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, or require a consent or waiver under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
such Purchasers or any of its Subsidiaries is a party, or (3) conflict with or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to such Purchasers or any
of its Subsidiaries or any its or their properties or assets, except in the case
of clauses (2) and (3) for any such violations, breaches, defaults,
terminations, cancellations, accelerations or conflicts which are not,
individually or in the aggregate, reasonably likely to have a Purchasers
Material Adverse Effect.
iii. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to such Purchaser (or any of its Subsidiaries) in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except any such consents, approvals, orders,
authorizations, registrations, declarations and filings the absence of which is
not, individually or in the aggregate, reasonably likely to have a Purchasers
Material Adverse Effect.
c. Knowledge and Experience. Such Purchaser has sufficient knowledge and
experience in financial and business matters to be capable of evaluating the
merits and risks of an unregistered, non-liquid investment such as an investment
in the Company and has evaluated the merits and risks of such an investment.
Such Purchaser is not relying on the Company with respect to the corporate tax,
legal and economic considerations involved in this investment. Such
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Purchaser understands that the offer and sale of the Common Shares and the Reset
Shares, if any, have not been approved or disapproved by the SEC or any other
Governmental Entity.
d. No other Representations or Warranties. No representations
or warranties have been made to such Purchaser by the Company or any director,
officer, employee, agent or affiliate of the Company, other than the
representations of the Company set forth herein, and the decision of such
Purchaser to purchase the Common Shares it is acquiring is based on the
information contained in this Agreement, the Company SEC Reports and such
Purchaser's own independent investigation of the Company.
e. Ability to Withstand Loss of Investment. The overall
commitment of such Purchaser to investments which are not readily marketable is
not disproportionate to the net worth of such Purchaser, and such Purchaser's
acquisition of the Common Shares and the Reset Shares, if any, it is acquiring
will not cause such overall commitment to become excessive. Such Purchaser
understands that a total loss of capital is possible. Such Purchaser
acknowledges that it is capable of bearing a complete loss of its investment in
the Company.
f. No Public Solicitation. Such Purchaser acknowledges that
neither the Company nor any person or entity acting on its behalf has offered to
sell any of the Common Shares and the Reset Shares, if any, to such Purchaser by
means of any form of general solicitation or advertising, including without
limitation (1) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media, or broadcast over
television or radio, and (2) any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
g. Accredited Investor Status. Such Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
h. Acquiring for Investment Purposes. Such Purchaser is acquiring the
Common Shares (and the Reset Shares, if any) solely for its own account, for
investment purposes only, and not with a view towards their resale or
distribution.
i. No Brokers, Finders, etc. Such Purchaser has not employed any broker,
financial advisor or finder, or incurred any liability for any brokerage fees,
commissions, finder's or other similar fees or expenses in connection with the
transactions contemplated by this Agreement.
j. No Action Taken to Invalidate Private Placement. Such
Purchaser has not taken any action that would result in the offering of the
Common Shares and the Reset Shares, if any, pursuant to this Agreement being
treated as a public offering and not a valid private offering under the law.
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6. Conditions to Closing.
a. Conditions applicable to Each Party. The respective
obligations of each party to this Agreement set forth herein to purchase and
sell the Common Shares and the Reset Shares, if any, shall be subject to the
satisfaction (or waiver by each party) of the following condition on and as of
the Closing (and, in respect to the purchase and sale of the Reset Shares, on
and as of the issue date of the Reset Shares):
No litigation, investigation, inquiry, proceeding,
statute, rule, regulation, order, decree, ruling or
injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or
any self-regulatory organization having authority
over the matters contemplated hereby which has the
effect of making the transactions contemplated by
this Agreement illegal or otherwise prohibiting the
consummation of any of the transactions contemplated
by this Agreement.
b. Conditions to Obligations of the Company. The obligations
of the Company set forth herein to issue and sell the Common Shares and the
Reset Shares, if any, also shall be subject to the satisfaction (or waiver by
the Company) of each of the following conditions on and as of the Closing (and,
in respect to the purchase and sale of the Reset Shares, on and as of the issue
date of the Reset Shares):
i. The representations and warranties of the
Purchasers made herein shall have been true
and correct in all material respects as of
the date when made and as of the Closing
(and, in respect to the purchase and sale of
the Reset Shares, as of the issue date of
the Reset Shares) as though made at that
time (except for any such representations
and warranties that speak as of a specific
date).
ii. The Purchasers shall have performed,
satisfied and complied in all material
respects with the covenants, agreements and
conditions required thereby to be performed,
satisfied or complied with by the Purchasers
at or prior to the Closing, including
payment of the Purchase Price, (and, in
respect to the purchase and sale of the
Reset Shares, at or prior to the issue date
of the Reset Shares).
c. Conditions to Obligations of the Purchasers. The
obligations of the Purchasers set forth herein to purchase the Common Shares
also shall be subject to the satisfaction (or waiver by the Purchasers) of each
of the following conditions on and as of the Closing:
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i. The representations and warranties of the
Company set forth in this Agreement shall be
true and correct in all material respects as
of the date when made and as of the Closing
as though made at that time (except for any
such representations and warranties that
speak as of a specific date).
ii. The Company shall have performed, satisfied
and complied in all material respects with
the covenants, agreements and conditions
required thereby to be performed, satisfied
and complied with by them at or prior to the
Closing, including delivery of the executed
certificates for the Common Shares.
iii. The Company shall have obtained those
consents required for the consummation of
the transactions contemplated by this
Agreement set forth on Schedule 4.
7. Indemnification.
a. Agreement to Indemnify.
i. The Company agrees to indemnify, defend and hold harmless the
Purchasers (and their respective officers, directors, affiliates and permitted
assigns) from and against any and all losses, claims, liabilities, damages,
deficiencies, costs or expenses (including interest, penalties and reasonable
attorneys' fees, disbursements and related charges) (collectively, "Losses")
based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representations or warranties made by the Company contained in
this Agreement or the failure of the Company to perform any of its agreements or
covenants contained herein, except to the extent such Losses are based upon,
arise out of or are otherwise in respect of any inaccuracy in or breach of any
representations or warranties made by the Purchasers contained in this Agreement
or the failure of the Purchasers to perform any of their agreements or covenants
contained herein.
ii. Each Purchaser, severally and not jointly, agrees to indemnify,
defend and hold harmless the Company (and its officers, directors, affiliates
and permitted assigns) from and against any and all Losses based upon, arising
out of or otherwise in respect of (1) any inaccuracy in or breach of any
representations or warranties made by such Purchaser contained in this Agreement
or any action taken by the Company or its affiliates in reliance upon the
accuracy of such representations or warranties or (2) the failure of such
Purchaser to perform any of its agreements or covenants contained herein, except
to the extent such Losses are based upon, arise out of or are otherwise in
respect of any inaccuracy in or breach of any representations or warranties made
by the Company contained in this Agreement or the failure of the Company to
perform any of its agreements or covenants contained herein. Notwithstanding the
foregoing, each Purchaser's indemnification obligations hereunder shall be
limited to such Purchaser's proportionate share of the Purchase Price.
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b. Indemnification Procedure.
i. A party entitled to indemnification pursuant to this Section 7 (an
"Indemnified Party") shall provide written notice to the indemnifying party (the
"Indemnifying Party") of any claim of such Indemnified Party for indemnification
under this Agreement promptly after the date on which such Indemnified Party has
actual knowledge of the existence of such claim. Such notice shall specify the
nature of such claim in reasonable detail and the Indemnifying Party shall be
given reasonable access to any documents or properties within the control of the
Indemnified Party as may be useful or necessary in the investigation of the
basis for such claim. The failure to so notify the Indemnifying Party shall not
constitute a waiver of such claim except to the extent that the Indemnifying
Party is materially prejudiced by such failure.
ii. If any Indemnified Party seeks indemnification hereunder based
upon a claim asserted by a third party, then the Indemnifying Party shall have
the right (without prejudice to the right of any Indemnified Party to
participate at its expense through counsel of its own choosing) to defend such
claim at its expense and through counsel of its own choosing (and reasonably
acceptable to the Indemnified Party) if it gives written notice of its intention
to do so no later than 20 days following notice thereof by an Indemnified Party;
provided, however, that, if, in the reasonable opinion of counsel to the
Indemnified Party, separate counsel is required because a conflict of interest
would otherwise exist, the Indemnified Party shall have the right to select
separate counsel to participate in the defense of such action on its behalf, at
the expense of the Indemnifying Party; provided further, however, that the
Indemnified Party shall always have the right to select separate counsel to
participate in the defense of such action on its behalf, at its own expense. If
the Indemnifying Party does not so choose to defend any such claim asserted by a
third party for which any Indemnified Party would be entitled to indemnification
hereunder, then the Indemnified Party shall be entitled to recover from the
Indemnifying Party all of the reasonable attorney's fees and other costs and
expenses of litigation incurred in the defense of such claim. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, in any case be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Parties. Notwithstanding the assumption of the defense of
any claim by an Indemnifying Party, the Indemnified Party shall have the right
to approve the terms of any settlement of a claim (which approval shall not be
unreasonably withheld or delayed) if such settlement (1) does not include as an
unconditional term the giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect to such claim or (2)
requires anything from the Indemnified Party other than the payment of money
damages which the Indemnifying Party has agreed to pay in full. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without
its prior written consent (not to be unreasonably withheld or delayed).
8. Termination. Notwithstanding anything to the contrary set forth in this
Agreement, this Agreement may be terminated and the transactions contemplated
herein abandoned at any time prior to the Closing:
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a. by mutual written consent of the Company and the
Purchasers;
b. by the Company or the Purchasers if the Closing shall
not have occurred by September 1, 2000; provided,
however, that the right to terminate this Agreement
under this Section 8 shall not be available to any
party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such
date;
c. by the Company or the Purchasers if a court of
competent jurisdiction shall have issued an order,
decree or ruling permanently restraining, enjoining
or otherwise prohibiting the transactions
contemplated by this Agreement, and such order,
decree, ruling or other action shall have become
final and non- appealable;
d. by the Company if (i) the representations or
warranties made by any Purchaser is not true and
correct, in all material respects, when made or at
the Closing (except for any such representations or
warranties that speak as of a specific date, which
must be true and correct in all material respects as
of such specific date), or (ii) any Purchaser fails
to comply in any material respect with any of its
covenants or agreements contained herein; or
e. by the Purchasers if (i) the representations and
warranties made by the Company are not true and
correct, in all material respects, when made or at
the Closing (except for any such representations or
warranties that speak as of a specific date, which
must be true and correct in all material respects as
of such specific date), or (ii) the Company fails to
comply in any material respect with any of its
covenants or agreements contained herein.
The termination of this Agreement pursuant to clauses (b), (c), (d) and (e)
above shall be without prejudice to the right of the non-breaching party to
pursue any and all remedies available to it (including the commencement of any
action or other proceeding or the assertion of any equitable right) as a result
of such breach.
9. Registration. Within 30 days after the Closing, the Company will
file a registration statement (the "Registration Statement") under the
Securities Act to permit the offer and sale by the Purchasers of the Common
Shares. The Company will use its reasonable best efforts to cause the
Registration Statement to be declared effective by the SEC within 75 days after
the initial filing thereof. The fees and expenses related to such filing
(excluding underwriter discounts and commissions and the fees and expenses of
counsel to the Purchasers) will be payable by the Company. The Company may delay
the filing and/or effectiveness of the Registration Statement for a period not
to exceed 90 days if the Company is in possession of material nonpublic
information that the Company would be required pursuant to applicable law, rule
or regulation to disclose in the Registration Statement and that is not, but for
the registration,
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otherwise required to be so disclosed at the time of such registration, the
disclosure of which, in its good faith judgment, is likely to have a material
adverse effect on the business, operations or prospects of the Company. The
Company will use its reasonable best efforts to keep the Registration Statement
continuously effective until the Purchasers have completed the distribution
described therein; provided that, notwithstanding the foregoing, at the
Company's election, the Company may cease to keep the Registration Statement
effective with respect to any shares covered thereby, and the registration
rights of a Purchaser shall expire with respect to such shares, at such time as
such shares may be sold pursuant to Rule 144(k) under the Securities Act (or
other exemption from registration mutually acceptable to the Company and the
Purchasers). In connection with the filing of the Registration Statement, the
Company will indemnify and hold harmless, to the extent permitted by law, the
Purchasers and their respective directors, officers and affiliates (the
"Indemnitees") against any and all losses, claims, damages, liabilities and/or
expenses (collectively, "Claims") to which such Indemnitees may become subject
under the Securities Act, common law or otherwise, insofar as such Claims (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, or incorporated by reference therein, or in any
preliminary, final or summary prospectus contained therein (except where errors
or omissions in such preliminary prospectus are corrected in the final
prospectus and the Purchasers fail to deliver such final prospectus) or any
amendment or supplement thereto, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company will reimburse the
Indemnitees for any legal expenses reasonably incurred by them in connection
with defending any such Claim; provided, however, that the Company shall not be
liable to any Indemnitee in any such case to the extent that any such Claim (or
action or proceeding in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, or incorporated by reference therein, or in
any amendment or supplement thereto or in any such preliminary, final or summary
prospectus in reliance upon and in material conformity with written information
with respect to any Purchaser furnished to the Company by or on behalf of such
Purchaser for use in the preparation thereof. The foregoing indemnity agreement
shall not apply to amounts paid in settlement of claims if such settlement is
effectuated without the consent of the Company (which shall not be unreasonably
withheld). At its expense, the Company shall make available to the Purchasers
such number of copies of the prospectus constituting a part of the Registration
Statement as is reasonably necessary to allow the Purchasers to resell the
Common Shares. In connection with the Company's registration obligations set
forth above, the Company shall use its reasonable efforts to cause the shares
covered by the Registration Statement to be listed or admitted for trading or
otherwise included on each securities exchange, if any, (including, without
limitation, The American Stock Exchange) on which similar securities issued by
the Company are then listed.
10. Reset.
a. The aggregate amount of Common Stock issuable to the Purchasers shall be
redetermined as described herein and, if appropriate, additional shares of
Common Stock (the
12
"Reset Shares") or, if Company stockholder approval of the issuance of the Reset
Shares has not been obtained by the 150th day after the Closing, cash or a
Company promissory note (as more fully described below) (the "Reset Amount" and
together with the Reset Shares, the "Reset Securities") will be issued (as
applicable) and delivered to the Purchasers as provided herein. The Purchase
Price shall be deemed the purchase price of all the securities to be issued
pursuant to this Agreement including the Reset Securities.
b. On the earlier of (i) the 120th day following the Closing
and (ii) the effective date of the Registration Statement (the "Reset Date"),
the Company shall determine the average closing bid price for the Common Stock
as reported by AMEX for the 20 consecutive trading days preceding the Reset Date
(the "Reset Price"). If the Reset Price is less than $2.88 (subject to
appropriate adjustment for stock splits, stock dividends and similar events) for
the Reset Date, then, subject to subsection (d) below, the Company shall
promptly issue to the Purchasers hereunder, without payment of additional
consideration therefor, that number of additional shares of Common Stock
calculated as follows:
A = (B minus C) divided by D
A= The aggregate number of Reset Shares issuable to the
Purchasers
B= X multiplied by Y multiplied by Z, where
X = The aggregate number of Common
Shares issuable hereunder then held
by the Purchasers and not sold or
otherwise transferred (excluding the
Reset Shares)
Y = $500,000 divided by the aggregate number of
Common Shares issuable hereunder (excluding
the Reset Shares)
Z = 130%
C= The product obtained by multiplying the aggregate
number of Common Shares issuable hereunder then held
by the Purchasers and not sold or otherwise
transferred (excluding the Reset Shares) by the Reset
Price
D= The Reset Price
By way of example, if the Reset Price for the Reset Date is $2.50 and
the Purchasers have purchased an aggregate of 226,004 Common Shares for the
Purchase Price of $500,000 and still own all of such shares as of the Reset
Date, then the Company shall issue to the Purchasers 33,720 Reset Shares
following the Reset Date.
13
c. The Reset Shares, if any, issued hereunder shall be subject
to the restrictions, limitations and conditions imposed upon the Common Shares
issued upon the initial subscription under this Agreement. The Reset Securities
shall be allocated among the Purchasers in proportion to the number of Common
Shares acquired by them hereunder.
d. If Company stockholder approval of the issuance of the
Reset Shares is not obtained on or prior to the 150th day after the Closing,
then instead of issuing the Purchasers the Reset Shares to which they otherwise
would be entitled to receive in accordance with subsection (b) above, the
Company shall deliver to the Purchasers a cash amount (the "Reset Payment")
equal to the then fair market value of the Reset Shares (which shall be equal to
the average closing bid price for the Common Stock as reported by AMEX for the
20 consecutive trading days preceding the Reset Date). If the Company is
financially unable to deliver all of the Reset Payment in cash within three days
of the Reset Date, then that portion of the Reset Payment which the Company is
unable to pay shall be payable by delivery by the Company of a promissory note
in such amount bearing interest at the rate of 9% per annum, with principal and
interest payable in full on the first anniversary of the date of delivery.
e. Within 30 days after stockholder approval of the issuance
of the Reset Shares, if any, the Company will file a registration statement (the
"Reset Registration Statement") under the Securities Act to permit the offer and
sale by the Purchasers of the Reset Shares. The Company will use its reasonable
best efforts to cause the Reset Registration Statement to be declared effective
by the SEC within 75 days after the initial filing thereof. The fees and
expenses related to such filing (excluding underwriter discounts and commissions
and the fees and expenses of counsel to the Purchasers) will be payable by the
Company. The Company may delay the filing and/or effectiveness of the Reset
Registration Statement for a period not to exceed 90 days if the Company is in
possession of material nonpublic information that the Company would be required
pursuant to applicable law, rule or regulation to disclose in the Reset
Registration Statement and that is not, but for the registration, otherwise
required to be so disclosed at the time of such registration, the disclosure of
which, in its good faith judgment, is likely to have a material adverse effect
on the business, operations or prospects of the Company. The Company will use
its reasonable best efforts to keep the Reset Registration Statement
continuously effective until the Purchasers have completed the distribution
described therein; provided that, notwithstanding the foregoing, at the
Company's election, the Company may cease to keep the Reset Registration
Statement effective with respect to any shares covered thereby, and the
registration rights of a Purchaser shall expire with respect to such shares, at
such time as such shares may be sold pursuant to Rule 144(k) under the
Securities Act (or other exemption from registration mutually acceptable to the
Company and the Purchasers). In connection with the filing of the Reset
Registration Statement, the Company will indemnify and hold harmless, to the
extent permitted by law, the Purchasers and their respective directors, officers
and affiliates (the "Indemnitees") against any and all losses, claims, damages,
liabilities and/or expenses (collectively, "Claims") to which such Indemnitees
may become subject under the Securities Act, common law or otherwise, insofar as
such Claims (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the
14
Reset Registration Statement, or incorporated by reference therein, or in any
preliminary, final or summary prospectus contained therein (except where errors
or omissions in such preliminary prospectus are corrected in the final
prospectus and the Purchasers fail to deliver such final prospectus) or any
amendment or supplement thereto, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company will reimburse the
Indemnitees for any legal expenses reasonably incurred by them in connection
with defending any such Claim; provided, however, that the Company shall not be
liable to any Indemnitee in any such case to the extent that any such Claim (or
action or proceeding in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Reset Registration Statement, or incorporated by reference therein,
or in any amendment or supplement thereto or in any such preliminary, final or
summary prospectus in reliance upon and in material conformity with written
information with respect to any Purchaser furnished to the Company by or on
behalf of such Purchaser for use in the preparation thereof. The foregoing
indemnity agreement shall not apply to amounts paid in settlement of claims if
such settlement is effectuated without the consent of the Company (which shall
not be unreasonably withheld). At its expense, the Company shall make available
to the Purchasers such number of copies of the prospectus constituting a part of
the Reset Registration Statement as is reasonably necessary to allow the
Purchasers to resell the Reset Shares, if any. In connection with the Company's
registration obligations set forth above, the Company shall use its reasonable
efforts to cause the shares covered by the Reset Registration Statement to be
listed or admitted for trading or otherwise included on each securities
exchange, if any, (including, without limitation, The American Stock Exchange)
on which similar securities issued by the Company are then listed.
11. Stockholders' Meeting. As soon as reasonably practicable after the
Closing, the Company will take all action necessary in accordance with
applicable law and its charter and by-laws to convene a meeting of its
stockholders for the purpose of approving and ratifying the issuance of the
Reset Shares (the "Meeting"). The Company will use its reasonably best efforts
to cause its Board of Directors (subject to its fiduciary obligations) to
recommend to the Company's stockholders approval and ratification of such
issuance and will use all commercially reasonable efforts to obtain stockholder
approval and ratification of such issuance. In connection with the foregoing,
each Purchaser will supply to the Company (and be responsible for) such
information related to such Purchaser as is required to be included in the proxy
statement for the Meeting. The proxy statement for the Meeting will be filed
with the SEC as soon as practicable after the Closing, but in any event within
90 days thereafter. If at any time prior to the Meeting, any event with respect
to a Purchaser or with respect to other information supplied by such Purchasers
for inclusion in such proxy statement shall occur which is required to be
described in an amendment of, or a supplement to, such proxy statement, such
Purchaser will provide written notice thereof to the Company and such event will
be so described, and such amendment or supplement will be promptly filed with
the SEC and, as required by applicable law, disseminated to the Company's
stockholders. Each Purchaser further represents and warrants that all
information provided by such Purchaser for inclusion in such proxy statement
will be true, complete and correct and shall not contain any untrue statement of
material fact or omit to state a material fact required to be
15
stated therein or necessary in order to make the statements therein not false or
misleading in light of the circumstances under which they were made.
12. Use of Proceeds. The Company shall use the Purchase Price received
hereunder for the purposes set forth on Schedule 12 hereto.
13. General.
a. Each Purchaser acknowledges and agrees that any information
or data it has acquired from or about the Company and its Subsidiaries, not
otherwise properly in the public domain, was received in confidence. Each
Purchaser agrees not to divulge, communicate or disclose, except as may be
required by law or for the performance of this Agreement, or use to the
detriment of the Company or for the benefit of any other person or misuse in any
way, any confidential information of the Company and its Subsidiaries, including
any scientific, technical, trade or business secrets of the Company and its
Subsidiaries and any scientific, technical, trade or business materials that are
treated by the Company and its Subsidiaries as confidential or proprietary,
including, but not limited to, ideas, discoveries, inventions, developments and
improvements belonging to the Company and its Subsidiaries and confidential
information obtained by or given to the Company and its Subsidiaries about or
belonging to third parties.
b. The parties hereto agree to execute such further
instruments and to take such further action as may reasonably be necessary to
consummate the transactions contemplated by this Agreement. Each party will use
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement as promptly as practicable after the date hereof, including (i)
preparing and filing as promptly as practicable all documentation to effect all
necessary applications, notices, petitions, filings and other documents and to
obtain as promptly as practicable all consents, waivers, licenses, orders,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in order to
consummate the transactions contemplated by this Agreement and (ii) taking all
reasonable steps as may be necessary to obtain all such material consents,
waivers, licenses, registrations, permits, authorizations, tax rulings, orders
and approvals. Nothing in this Agreement shall require any party (or any of its
Subsidiaries or affiliates) to sell, hold separate or otherwise dispose of or
conduct their business in a specified manner, or agree to sell, hold separate or
otherwise dispose of or conduct their business in a specified manner, whether as
a condition to obtaining any approval from a Governmental Entity or for any
other reason.
c. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered personally or sent
by facsimile transmission, overnight courier, or certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or sent by facsimile transmission (provided that a
16
confirmation copy is sent by overnight courier), one day after deposit with an
overnight courier, or if mailed, three days after the date of deposit in the
United States mails, as follows:
If to the Company to:
HealthCare Integrated Services, Inc.
Shrewsbury Executive Center II
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx, Esq.
If to any Purchaser, to the address set forth below its
respective signature.
d. This Agreement and exhibits and schedules hereto contain
the entire agreement between the parties hereto with respect to the matters
contemplated herein and supersedes all prior agreements or understandings among
the parties related to such matters.
e. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
f. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived,
only by a written instrument executed by all of the parties hereto or, in the
case of a waiver, by the party waiving compliance. Except as otherwise
specifically provided in this Agreement, no waiver by any party hereto of any
breach by any other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or at any prior or subsequent
time.
g. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York, without giving effect to the principles of conflicts of
laws thereof. Each party hereto (i) hereby irrevocably and unconditionally
submits to the exclusive jurisdiction of any court of the State of New York or
any federal court sitting in the City of New York, State of New York for
purposes of any suit, action
17
or other proceeding arising out of this Agreement or the subject matter hereof
brought by any party hereto, (ii) hereby waives and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court,
and (iii) hereby waives in any such action, suit, or proceeding any offsets or
counterclaims. Each party hereto hereby consents to service of process by
certified mail at the address set forth in Section 13(c) hereof and agrees that
its submission to jurisdiction and its consent to service of process by mail is
made for the express benefit of the other party hereto. Final judgment against
any party, in any action, suit or proceeding shall be conclusive, and may be
enforced in other jurisdictions (1) by suit, action or proceeding on the
conclusive evidence of the fact and of the amount of any indebtedness or
liability of the party therein described or (2) in any other manner provided by
or pursuant to the laws of such other jurisdiction.
h. Headings to the Sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference
to the heading, of any Section.
i. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same agreement. Delivery of a telecopied version of one
or more signatures to this Agreement shall be deemed adequate delivery for
purposes of this Agreement.
j. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms and provisions of
this Agreement in any other jurisdiction.
k. This Agreement is not transferable or assignable by the Company or the
Purchasers.
18
IN WITNESS WHEREOF, the Company and the Purchasers have
executed this Agreement this 23rd day of August, 2000.
HEALTHCARE INTEGRATED SERVICES, INC.
By:/s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chairman/CEO
HUNTINGTON STREET COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx, M.D.
Address: Paramount Capital Inc.
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
VENTURETEK L.P.
By: Xxxxx Xxxxxxxx
Title: General Partner
Address: 000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
19
EXHIBITS AND SCHEDULES
SCHEDULE 1 - Allocation of Common Shares among the Purchasers
SCHEDULE 2 - Wire Transfer Instructions
SCHEDULE 4 - Company Consents
SCHEDULE 12 - Use of Proceeds
SCHEDULE 1 -- Allocation of Common Shares among the Purchasers
Purchase Common
Name Price Stock
HUNTINGTON STREET COMPANY $350,000 158,203
VENTURETEK L.P. $150,000 67,801
SCHEDULE 2-Wire Transfer Instructions
SCHEDULE 4-Company Consents
1. Consent of DVI Financial Services, Inc.
2. Consent of DVI Business Credit Corporation
3. Consent of holders of Series D Stock (otherwise breach of charter)
5. Listing of Common Shares (and Reset Shares, if any) with AMEX
SCHEDULE 12-Use of Proceeds
Fund $500,000 loan to International Commerce Exchange Systems, Inc. as
contemplated by that certain letter of intent between the Company and
XxxxxxxXxxx.xxx, Inc.
