EXHIBIT 1
STOCK PURCHASE AGREEMENT
with Schedules and Exhibits
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made this 1st day of
May, 1998 by and between POSITRON CORPORATION, a Texas corporation with
principal offices located at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxx 00000
("SELLER") and IMATRON INC., a New Jersey corporation with principal offices
located at 000 Xxxxxx Xxxxx Xxxx., Xx. Xxx Xxxxxxxxx, XX 00000 ("BUYER").
WHEREAS, Seller wishes to issue and sell to Buyer certain shares of its
common stock ("Shares") in exchange for certain consideration; and
WHEREAS, Buyer wishes to purchase such certain shares of common stock
issued by and from Seller pursuant to certain terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements, the Seller and Buyer hereby agree as follows:
AGREEMENT
1. Sale and Purchase of Shares. On the closing date as set forth in
Section 3 ("Closing Date"), Seller shall deliver to Buyer, for the consideration
set forth in Section 2 hereof, the greater of Nine Million (9,000,000) shares of
Seller's common stock or whatever number of common shares in excess of 9,000,000
common shares constitutes fifty-one percent (51%) of Seller's outstanding voting
securities on a fully diluted basis, exclusive of out of the money warrants,
and/or options, and/or convertible securities, calculated as of the Closing
Date. For this purpose, "out of the money" shall mean warrants and/or options
and /or convertible securities in which the purchase price of the underlying
common stock for which the warrant or the option may be exercised or the
security converted exceeds the fair market value of the underlying common stock
by more than 10%, as determined by averaging the bid and asked prices of the
common stock during the last ten (10) trading days immediately prior to the
Closing Date.
2. Consideration. In consideration of the purchase of the Shares on the
Closing Date, Buyer hereby agrees to pay the following consideration:
(a) The affirmative covenants of Buyer as described in
Section 10 herein.
(b) Payment of One Hundred U.S. Dollars ($100.00), payable at
Closing.
3. Closing. The closing of the sale to, and purchase by, Buyer of the
Shares shall take place at the offices of Imatron Inc. at the hour of 10:00
a.m., on the first business day after all conditions precedent shall have been
met or waived, or on such other day or at such other time or place as the Seller
and Buyer shall agree.
At the Closing, Seller will deliver to Buyer certificates representing
the Shares being purchased by Buyer, registered in its name.
4. Restriction on Transfer of Securities.
4.1. Restrictions. The Shares are transferable only pursuant
to (a) a public offering registered under the Securities Act of 1933, as amended
(the "Securities Act"), (b) Rule 144 (or any similar rule then in effect)
adopted under the Securities Act, if such rule is available, and (c) subject to
the conditions elsewhere specified in this Section 4, any other legally
available means of transfer.
4.2. Each certificate representing Shares will be endorsed
with the following legend:
(a) Legend
"The securities evidenced hereby may not be
transferred without (i) the opinion of counsel satisfactory to
the Company that such transfer may be lawfully made without
registration under the Securities Act of 1933 and all
applicable state securities laws or (ii) such registration."
(b) Stop Transfer Order. A stop transfer order shall be
placed with the Seller's transfer agent preventing transfer of any of the
securities referred to in paragraph (a) above pending compliance with the
conditions set forth in any such legend.
4.3. Removal of Legend. Any legend endorsed on a certificate
or instrument evidencing a security pursuant to Section 4.2 hereof shall be
removed, and Seller shall issue a certificate or instrument without such legend
to the holder of such security, (a) in accordance with Section 4.2(a) hereof,
(b) if such security is being disposed of pursuant to registration under the
Securities Act and any applicable state acts or pursuant to Rule 144 or any
similar rule then in effect, or (c) if such holder provides Seller with an
opinion of counsel satisfactory to it to the effect that a sale, transfer,
assignment, offer, pledge or distribution for value of such security may be made
without registration and that such legend is not required to satisfy the
applicable exemption from registration.
5. Representations and Warranties by Seller. Except as disclosed and
described in Schedule 5 hereto, Seller represents and warrants to Buyer that:
5.1. Organization, Standing, Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas, and has the requisite corporate power and authority to own its
properties and to carry on its business in all material respects as it is now
being conducted. Seller has, or at the Closing Date will have, the requisite
corporate power and authority to issue the Common Shares, and to otherwise
perform its obligations under this Agreement. The copies of the Articles of
Incorporation and Bylaws of the Company delivered to Buyer or its agents prior
to the execution of this Agreement are true and complete copies of the duly
and legally adopted Articles of Incorporation and Bylaws of Seller in effect
as of the date of this Agreement.
5.2. Qualification. Seller is duly qualified or licensed as a
foreign corporation in good standing in each jurisdiction wherein the nature
of its activities or of its properties owned or leased makes such
qualification or licensing necessary and failure to be so qualified or
licensed would have a material adverse impact on its business.
5.3. Financial Statements. Attached hereto as Exhibit A are:
(a) a balance sheet at September 30, 1997, together with the related
statements of operations and cash flow, and changes to shareholders' equity
for the 9 month period then ended, and (b) a draft of a balance sheet at
December 31, 1997 (the "Balance Sheet Date"), and the related statements of
operations and cash flow for the quarter then ended, prepared by Seller. Such
financial statements (i) are true and correct and in accordance with the books
and records of Seller, (ii) present fairly the financial condition of Seller
at the balance sheet dates and the results of its operations for the periods
therein specified, and (iii) have, in all material respects, been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior accounting periods, except that the balance sheet at
December 31, 1997 and related statements of operations and cash flow is in
draft form and does not contain footnotes. Specifically, but not by way of
limitation, the balance sheets or notes thereto disclose all of the debts,
liabilities and obligations of any nature (whether absolute, accrued or
contingent and whether due or to become due) of Seller at December 31, 1997
and at the Balance Sheet Date which, individually or in the aggregate, are
material and which in accordance with generally accepted accounting principles
would be required to be disclosed in such balance sheets, and the omission of
which would, in the aggregate, have a material adverse impact on Seller. The
balance sheets include appropriate reserves for all taxes and other
liabilities accrued at such date but not yet payable.
5.4. Tax Returns and Audits. Except as disclosed and
described on Schedule 5.4 hereto, all required federal, state and local tax
returns or appropriate extension requests of Seller have been filed, and all
federal, state and local taxes required to be paid with respect to such
returns have been paid or due provision for the payment thereof has been made.
Except as disclosed and described on Schedule 5.4, Seller is not delinquent in
the payment of any such tax or in the payment of any assessment or
governmental charge, Seller has not received notice of any tax deficiency
proposed or assessed against it, and Seller has not executed any waiver of any
statute of limitations on the assessment or collection of any tax. None of
Seller's tax returns has been audited by governmental authorities in a manner
to bring such audits to the Seller's attention. Seller does not have any tax
liabilities except those reflected in Schedule 5.4 hereto and those incurred
in the ordinary course of business since the Balance Sheet Date.
5.5. Litigation; Governmental Proceedings. Except as
disclosed and described on Schedule 5.5 hereto: there are no legal actions,
suits, arbitrations or other legal, administrative or governmental proceedings
or investigations pending or, to the knowledge of Seller, threatened against
Seller, its properties, assets or business; Seller is not aware of any facts
which are likely to result in or form the basis for any such action, suit or
other proceeding; Seller is not in default with respect to any judgment, order
or decree of any court or any governmental agency or instrumentality; Seller
has not been threatened with any action or proceeding under any business or
zoning ordinance, law or regulation.
5.6. Compliance with Applicable Laws and Other Instruments.
The business and operations of Seller have been and are being conducted in
accordance with all applicable laws, rules and regulations of all governmental
authorities. Subject to shareholder approval of appropriate amendments to the
Articles of Incorporation as contemplated by this Agreement, and except with
respect to existing registration rights of holders of certain securities
issued by Seller, as disclosed and described on Schedule 5.6, neither the
execution nor delivery of, nor the performance of or compliance with, this
Agreement nor the consummation of the transactions contemplated hereby will
conflict with, or, with or without the giving of notice or passage of time,
result in any breach of, or constitute a default under, or result in the
imposition of any lien or encumbrance upon any asset or property of Seller
pursuant to, any applicable law, administrative regulation or judgment, order
or decree of any court or governmental body, any agreement or other instrument
to which Seller is a party or by which it or any of its properties, assets or
rights is bound or affected, and will not violate the Articles of
Incorporation or Bylaws of Seller. Seller is not in violation of its Articles
of Incorporation or its Bylaws.
5.7. Common Shares. The Common Shares, when issued and paid
for pursuant to the terms of this Agreement, will be duly authorized, validly
issued and outstanding, fully paid, nonassessable and free and clear of all
pledges, liens, encumbrances and restrictions. The Common Shares, when issued,
will contain no undisclosed interest, present or future, and Seller does not
know, and at Closing will not know, of any assertion of such an interest. The
Common Shares will be genuine, and Seller has no knowledge of any fact which
would impair the validity thereof.
5.8. Capital Stock. The currently authorized capital
stock of Seller is as follows:
SECURITY AUTHORIZED ISSUED COMMON SHARE EQUIVALENT RESERVED
Common 15,000,000 5,128,990 5,128,990
Series A Preferred 5,450,000 1,595,005 1,614,705
Series B Preferred 35,000 25,000 632,721
All of the outstanding shares of capital stock of Seller have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
disclosed and described in Schedule 5.8, neither the offer nor the issuance or
sale of the Common Shares as contemplated by this Agreement constitutes an
event, under any anti-dilution provisions of any securities issued or issuable
by Seller or any agreements with respect to the issuance of securities by
Seller, which will either increase the number of shares issuable pursuant to
such provisions or decrease the consideration per share to be received by Seller
pursuant to such provisions. All outstanding securities of Seller have been
issued in full compliance with an exemption or exemptions from the registration
and prospectus delivery requirements of the Securities Act and from the
registration and qualification requirements of all applicable state securities
laws. Seller is not a party or subject to any agreement or understanding, and to
Seller's knowledge, there is no agreement or understanding between any persons
or entities or by a director of Seller, which affects or relates to the voting
or giving of written consents with respect to any security of Seller.
5.9. Warrants, Options, Exchange Rights and Conversion
Rights. Except as otherwise disclosed and described in Schedule 5.9 hereto or as
contemplated by this Agreement, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, calls, contracts, demands,
commitments, Convertible Securities (as hereinafter defined) or other agreements
or arrangements of any character or nature whatever, under which Seller is or
may be obligated to issue capital stock or other securities of any kind
representing an ownership interest or contingent ownership interest in Seller.
Except as otherwise disclosed and described in Schedule 5.9 hereto or as
contemplated by this Agreement, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Seller.
5.10. No Brokers or Finders. No person, firm or corporation
has or will have, as a result of any act or omission of Seller, any right,
interest or valid claim against or upon the Seller or Buyer for any commission,
fee or other compensation as a finder or broker, or in any similar capacity, in
connection with the transactions contemplated by this Agreement. Seller will
indemnify and hold Buyer harmless against any and all liability with respect to
any such commission, fee or other compensation which may be payable or
determined to be payable in connection with the transactions contemplated by
this Agreement.
5.11. Composition of the Board of Directors. As of the
Execution Date, the complete Board of Directors of Seller consists of those
persons, including vacant positions, as set forth on Schedule 5.11.
6. Representations and Warranties of Buyer. Buyer represents and
warrants that:
6.1. Investment Intent. The Common Shares being acquired
hereunder are being purchased for Buyer's own account and not with the view to,
or for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act. Buyer understands that the Common
Shares have not been registered under the Securities Act or any applicable state
laws by reason of their issuance or contemplated issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act and such laws, and that the reliance of Seller and others upon
this exemption is predicated in part upon this representation and warranty.
Buyer further understands that the Common Shares may not be transferred or
resold without (a) registration under the Securities Act and any applicable
state securities laws, or (b) an exemption from the requirements of the
Securities Act and applicable state securities laws.
6.2. Accredited Investor. The state in which Buyer's
principal office is located is set forth in Buyer's address as set forth in this
Agreement. Buyer qualifies as an accredited investor within the meaning of Rule
501 under the Securities Act. Buyer has such knowledge and experience in
financial and business matters that Buyer is capable of evaluating the merits
and risks of the investment to be made hereunder by Buyer.
6.3. Acts and Proceedings. This Agreement has been duly
authorized by all necessary action on the part of Buyer, has been duly executed
and delivered by Buyer, and is a valid and binding agreement upon the part of
Buyer.
6.4. No Brokers or Finders. No person, firm or corporation
has or will have, as a result of any act or omission by Buyer, any right,
interest or valid claim against Seller for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement. Buyer will indemnify and
hold Seller harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be
payable as a result of the actions of Buyer in connection with the transactions
contemplated by this Agreement.
7. Conditions of Buyer's Obligation. Buyer's obligation to purchase and
pay for the Common Shares on the Closing Date is subject to the fulfillment
prior to or on the Closing Date of the conditions set forth below. In the event
that any such condition is not satisfied to Buyer's satisfaction, then Buyer
shall not be obligated to proceed with the purchase of such Common Shares nor
otherwise with any further of its obligations pursuant to this Agreement.
7.1. No Errors. etc. The representations and
warranties of Seller under this Agreement shall be true in all material
respects as of the Closing Date with the same effect as though made on and as
of the Closing Date.
7.2. Compliance with Agreement. Seller shall have performed
and complied in all material respects with all agreements or conditions required
by this Agreement to be performed and complied with by it prior to or as of the
Closing Date.
7.3. Qualification Under State Securities Laws. All
registrations, qualifications, permits and approvals required under applicable
state securities laws for the lawful execution and delivery of this Agreement
and the offer, sale, issuance and delivery of the Common Shares shall have been
obtained.
7.4. Proceedings and Documents. All corporate and other
proceedings and actions taken in connection with the transactions contemplated
hereby and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transaction shall be satisfactory in
form and substance to Buyer and its counsel.
7.5. Resignation of Officers and Appointment of Chief
Executive Officer. Seller will obtain and deliver to Buyer the resignations of
each of the officers of Seller, including but not limited to its chief executive
officer, effective as of the Closing Date, and simultaneously therewith shall
cause the appointment of a chief executive officer and such other officers as
are designated by Buyer. Seller acknowledges that the officers' resignations
pursuant to this Section 7.5 will not constitute resignation by any such
employee from employment by Seller, unless specifically so indicated, and
further that such resignation pursuant to this Section 7.5 will not be deemed a
breach of any employment agreement which might be in effect between Seller and
such employee. Seller further acknowledges that delivery and acceptance of such
resignation does not otherwise modify the terms of any employment agreement
which may be in effect, nor is it intended to effect Seller's ability to
negotiate mutually acceptable changes in future to any employment agreement
which may be currently in effect.
7.6. Special Shareholders' Meeting. Promptly following
execution of this Agreement, Seller shall take, with the assistance of Buyer as
set forth in this Agreement, all such actions as may be necessary and shall
cause the convening of a Special Meeting of Shareholders as promptly as possible
to amend the Articles of Incorporation to authorize an increase in its
authorized common stock in such an amount as to fully effectuate the provisions
of this Agreement, taking into account such obligations as Seller may currently
have or may be expected to have in the foreseeable future in light of its
business plan. It is the reasonable expectation of the parties that the
appropriate number of authorized shares resulting from such amendment will be
not less than 100,000,000 common shares.
7.7. Board Resignations. (a) Upon request of Buyer at any
time between execution of this Agreement and the Closing Date, to be effective
upon the Closing Date, Seller will obtain and deliver to Buyer the resignations
of at least three of the four members of its Board of Directors, as reflected on
Schedule 5.11 to this Agreement. (b) Immediately upon Closing, Seller will cause
a sufficient number of directors' resignations to be effective and thereupon
will cause the nominees of Buyer to be elected as directors of Seller in place
of the resigned directors or otherwise to fill vacancies on the Board, so that,
following such action, the nominees of Buyer will constitute a majority of the
members of the Board then in office.
8. Conditions of Seller's Obligation. Seller's obligation to sell the
Common Shares to Buyer on the Closing Date is subject to the fulfillment prior
to or on the Closing Date of the conditions set forth below. In the event that
any such condition is not satisfied, Seller shall not be obligated to proceed
with the sale of such Common Shares.
8.1. Shareholder Authorization. The shareholders shall have
authorized an increase in the number of authorized shares of common stock
sufficient to fully effectuate the purposes of this Agreement.
8.2. No Errors, etc. The representations and warranties of
Buyer under this Agreement shall be true in all material respects as of the
Closing Date with the same effect as though made on and as of the Closing Date.
8.3. Compliance with Conditions. Buyer shall have performed
and complied with all agreements or conditions required by this Agreement to be
performed and complied with by it prior to or as of the Closing Date.
9. Seller Affirmative Covenants. Seller covenants and agrees that:
9.1. Corporate Existence. Seller will maintain and cause each
Subsidiary (as hereinafter defined) to maintain its corporate existence in good
standing and comply with all applicable laws and regulations of the United
States or of any state or states thereof or of any political subdivision thereof
and of any governmental authority where failure to so comply would have a
material adverse impact on Seller or its business or operations.
9.2. Books of Account and Reserves. Seller will, and will
cause each of its Subsidiaries to, keep books of record and account in which
full, true and correct entries are made of all of its and their respective
dealings, business and affairs, in accordance with generally accepted accounting
principles. Seller will employ certified public accountants selected by the
Board who are "independent" within the meaning of the accounting regulations of
the Commission, and have annual audits made by such independent public
accountants in the course of which such accountants shall make such
examinations, in accordance with generally accepted auditing standards, as will
enable them to give such reports or opinions with respect to the financial
statements of Seller and its Subsidiaries as will satisfy the requirements of
the Commission in effect at such time with respect to certificates and opinions
of accountants.
9.3. Furnishing of Financial Statements and Information.
Seller will deliver to Buyer:
(a) as soon as practicable, but in any event within 45 days after the close
of each quarterly period, unaudited consolidated balance sheets of Seller and
its Subsidiaries as of the end of such period, together with the related
consolidated statements of operations and cash flow for such period, setting
forth the budgeted figures for such period prepared and submitted in connection
with Seller's annual business plan and in comparative form figures for the
corresponding quarterly period of the previous fiscal year, all in reasonable
detail and certified by an authorized accounting officer of Seller, subject to
year-end adjustments;
(b) as soon as practicable, but in any event within 90 days after the end
of each fiscal year, a consolidated balance sheet of Seller and its
Subsidiaries, as of the end of such fiscal year, together with the related
consolidated statements of operations, shareholders' equity and cash flow for
such fiscal year, setting forth in comparative form figures for the previous
fiscal year, all in reasonable detail and duly certified by Seller's independent
public accountants (except for the fiscal year ended 1997, for which certified
materials will be supplied as soon as practicable following Closing), which
accountants shall have given Seller an opinion, unqualified as to the scope of
the audit, regarding such statements;
(c) with reasonable promptness, such other financial data relating to the
business, affairs and financial condition of Seller and any Subsidiaries as is
available to Seller and as from time to time Buyer may reasonably request; and
(d) at least 20 days prior to the earlier of (i) the execution of any
agreement relating to any merger or consolidation of Seller or any of its
Subsidiaries with another corporation, or a plan of exchange involving the
outstanding capital stock of Seller or any of its Subsidiaries, or the sale,
transfer or other disposition of all or substantially all of the property,
assets or business of Seller or any of its Subsidiaries to another corporation,
or (ii) the holding of any meeting of the shareholders of Seller for the purpose
of approving such action, written notice of the terms and conditions of such
proposed merger, consolidation, plan of exchange, sale, transfer or other
disposition.
9.4. Indemnification Rights. For a period of not less than
six (6) years from the Closing Date, unless otherwise required by law, Seller
will maintain provisions in its articles of incorporation and by-laws with
respect to indemnification of directors and officers, whether then current or
former, that are no less favorable than as currently set forth in its articles
of incorporation and by-laws. Further, for a period of not less than six (6)
years from the Closing Date, unless otherwise required by law, Seller will
continue to provide indemnification of its directors and officers, whether then
current or former, to the fullest extent permissible under Texas law.
10. Buyer's Affirmative Covenants. Upon execution of this Agreement,
Buyer agrees as follows:
10.1. Special Shareholders' Meeting. In connection with
Special Shareholders' Meeting to be called pursuant to Section 7.6 herein, Buyer
agrees to assist Seller as reasonably requested and agreed in preparing
materials and soliciting proxies in connection with obtaining approval of its
shareholders to increase its authorization to issue common stock in connection
with the transaction contemplated by this Agreement. As part of Buyer's
obligations hereunder, Buyer agrees reimburse Seller for expenses incurred in
preparing materials and soliciting proxies, not in excess of the amounts set
forth in Schedule 10.1, and further to furnish Seller, within reasonably
sufficient time to be reviewed and included in the materials to be mailed to
shareholders in connection with the Special Shareholders' Meeting, the names of
Buyer's nominees for election to the Board, together with information with
respect to each nominee equivalent to the information required to be disclosed
to stockholders with respect to director nominees pursuant to Regulation 14A of
the Securities and Exchange Act and such other similar information that Seller
may thereafter reasonably request. It is understood that Seller may refuse to
cause the nomination and election as a director of Seller of any nominee
proposed by Buyer if (i) the information described above is not timely furnished
by Buyer or (ii) if, having been furnished, it is the reasonable judgment of
Seller and its counsel that the election of such nominee would not be in the
best interests of Seller or might tend to subject Seller to liability therefor.
The foregoing notwithstanding, Buyer and Seller agree to cooperate and use their
mutual best efforts for the purpose of preparing for and conducting the Special
Shareholders' Meeting as promptly as possible following the Execution Date.
10.2. Orders for Product. As soon as practicable following
the Closing Date, but not later than eight (8) months from the Execution Date,
Buyer will take all reasonable efforts to cause the placement of ten (10)
product orders, in the aggregate including any orders currently under
discussion, from Buyer's affiliate in Japan over a period of thirty-six (36)
months from the placement of the first order.
10.3. Additional Equity. As soon as practicable following the
Closing Date, Buyer will use its best efforts to arrange for additional third
party equity financing for Seller, to be contributed to Seller over a period of
no greater than eighteen (18) months from the Closing Date, and in an aggregate
amount not less than Eight Million U.S. Dollars ($8,000,000) ("Equity
Financing"). The parties specifically acknowledge and anticipate that this
Equity Financing will involve and/or cause a substantial dilution of existing
shareholders, including but not limited to Buyer.
11. Negative Covenants. Seller will not, without the prior approval of
a majority of all of the members of the Board of Directors: (a) guarantee,
endorse or otherwise be or become contingently liable, or permit any Subsidiary
to guarantee, endorse or otherwise become contingently liable, in connection
with the obligations, securities or dividends of any person, firm, association
or corporation, other than Seller or any of its Subsidiaries, except that Seller
and any Subsidiary may endorse negotiable instruments for collection in the
ordinary course of business; or (b) make or permit any Subsidiary to make loans
or advances to any person (including without limitation to any officer, director
or shareholder of Seller or any Subsidiary), firm, association or corporation,
except loans and advances to Seller and its wholly-owned Subsidiaries and
advances to suppliers and employees made in the ordinary course of business; or
(c) purchase or invest, or permit any Subsidiary to purchase or invest, in the
stock or obligations of any other person, firm or corporation, other than a
wholly-owned Subsidiary; or (d) pay, or permit any Subsidiary to pay,
compensation, whether by way of salaries, bonuses, participations in pension or
profit sharing plans, fees under management contracts or for professional
services or fringe benefits to any officer in excess of amounts fixed by the
Board of Directors prior to any payment to such officer.
12. Registration of Stock. Subject to the provisions of the several
registration rights agreements and /or other agreements containing registration
rights provisions, to which Seller is a party, all as disclosed and described on
Schedule 12 hereto, Seller agrees as follows:
12.1. Rights to Registration. (a) If, at any time during the
period commencing on the effective date of this Agreement and ending ten (10)
years thereafter, Seller shall determine to register under the Securities Act of
1933, as amended, any shares of Stock to be offered for cash by it or others,
pursuant to a registration statement on Form S-1 (or its equivalent), Seller
will (i) promptly give written notice to Buyer of its intention to file such
registration statement and (ii) at Seller's expense (which shall include,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent accountants for Seller, and fees
and expenses incident to compliance with state securities law, but shall not
include fees and disbursements of counsel for Buyer) include among the
securities covered by the registration statement such portions of the Shares
then held by Buyer as shall be specified in a written request to Seller within
thirty (30) days after the date on which Seller gave the notice described in
(a)(i) above. (b) Upon receipt of such written request and of the shares of
Stock specified in the request (any shareholder requesting registration being
individually called a "Selling Shareholder"), Seller shall: (i) use its
reasonable best efforts to effect the registration, qualification or compliance
of the Shares under the Securities Act and under any other applicable federal
law and any applicable securities or blue sky laws of jurisdictions within the
United States; (ii) furnish each Selling Shareholder such number of copies of
the prospectus contained in the registration statement filed under the
Securities Act (including preliminary prospectus) in conformity with the
requirements of the Securities Act, and such other documents as the Selling
Shareholder may reasonably request in order to facilitate the disposition of the
Stock covered by the registration statement; and (iii) notify each Selling
Shareholders, at any time when a prospectus relating to the Stock covered by
such registration statement is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus forming a
part of such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
at the request of the Selling Shareholders prepare and furnish to the Selling
Shareholders any reasonable number of copies of any supplement to or amendment
of such prospectus as may be necessary so that, as thereafter delivered to
purchasers of the Stock, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
12.2. Registration of Underwritten Offering. If the offering
of securities to be registered by Seller is underwritten, each Selling
shareholder shall sell the Stock to or through the underwriter(s) of the
securities being registered for the account of Seller or others upon the same
terms applicable to Seller or others, and if the managing underwriter(s)
reasonably determine that all or any portion of the shares of Stock held by the
Selling Shareholders should not be included in the registration statement, then
notwithstanding anything to the contrary in this Section, the determination of
such underwriter(s) shall be conclusive; provided however that if such
underwriter(s) determine that some but not all of the Stock of the Selling
Shareholders shall be included in the registration statement, the number of
shares of Stock owned by each Selling Shareholder to be included in the
registration statement will be proportionately reduced in accordance with the
respective written requests given as provided above.
12.3. Indemnification. In the event that Shares purchased
pursuant to this Agreement are included in a registration statement under this
Section 11, Seller will indemnify and hold harmless each Selling Shareholder and
each other person, if any, who controls such Selling shareholder within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Selling Shareholder or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement pursuant to which the Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arise out
of or are based upon the failure by Seller to file any amendment or supplement
thereto that was required to be filed under the Securities Act, and will
reimburse such Selling Shareholder and each such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, Seller will not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon an untrue statement or omission made in such registration statement,
preliminary prospectus, final prospectus or amendment or supplement in reliance
upon and in conformity with written information furnished to Seller through an
instrument duly executed by or on behalf of any Selling Shareholder specifically
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, or amendment or supplement.
It shall be a condition precedent to the obligation of Seller to take
any action pursuant to this Section that seller shall have received an
undertaking satisfactory to it from each Selling Shareholder to indemnify and
hold harmless Seller (in the same manner and to the same extent as set forth in
this Section), each director of Seller, each officer who shall sign such
registration statement, and any persons who control Seller within the meaning of
the Securities Act, with respect to any statement or omission from such
registration statement, preliminary prospectus, or any final prospectus
contained therein, or any amendment or supplement thereto, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to Seller through an instrument duly executed by the indemnifying
party specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, or amendment or supplement.
Promptly following receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to above in this Section
11.3, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof.
12.4. Binding provisions. The provisions of this Section 11
shall be binding on the successors of Seller. No Shareholder may assign the
provisions of this Section 11 or all or any part of its or their rights or
obligations hereunder, except that in the event of a merger or consolidate in
which the Seller is not the survivor, the Seller shall assign and transfer, and
successor shall assume, the provisions of this Section 11.
12.5. Conflicts. To the extent that Seller's compliance with
the obligations set forth in Sections 12.1 through 12.4 above would conflict
with or otherwise cause a breach of or default under any of its existing
obligations pursuant to the agreements set forth on Schedule 12 attached hereto,
Seller's failure to comply with those obligations shall not be deemed a breach
of this Agreement.
13. Remedies Cumulative, and not Waived. (a) No right, power or remedy
conferred upon any party shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power or
remedy, whether conferred hereby or by any such security or now or hereafter
available at law or in equity or by statute or otherwise. (b) No course of
dealing between the parties or the holder of any Shares purchased pursuant to
this Agreement, and no delay in exercising any right, power or remedy conferred
hereby or by any such security or now or hereafter existing at law or in equity
or by statute or otherwise, shall operate as a waiver of or otherwise prejudice
any such right, power or remedy; provided, however, that this Section 13 shall
not be construed or applied so as to negate the provisions and intent of any
statute which is otherwise applicable.
14. Changes. Waivers. etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
15. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be delivered, or
mailed first-class postage prepaid, registered or certified mail, or via
overnight delivery with by a service providing evidence of receipt to the
addresses below:
If to Buyer: Imatron Inc.
000 Xxxxxx Xxxxx Xxxx.
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attn: Mr. S. Xxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to: Xxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxx, P.C.
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller: Positron Corporation
0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, or, if sent by first class mail, three days after posting, or if
sent via overnight delivery, when received as evidenced by an appropriate
receipt.
16. Survival of Representations and Warranties, etc. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by Buyer or on
its behalf, and the sale and purchase of the Common Shares. All statements
contained in any certificate, instrument or other writing delivered by or on
behalf of Seller pursuant hereto or in connection with or contemplation of the
transactions herein contemplated (other than legal opinions) shall constitute
representations and warranties by Seller hereunder, and not by the individual
officer who signed the certificate, instrument or writing by or on behalf of
Seller.
17. Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, whether so expressed or
not, and, in particular, shall inure to the benefit of and be enforceable by the
holder or holders at the time of any of the Common Shares. The former, current
and hereafter appointed officers and directors referenced in Section 9.4 above
are intended and deemed to be third party beneficiaries of Section 9.4, and are
entitled to enforce its provisions.
18. Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
19. Choice of Law. It is the intention of the parties that the laws of
California shall govern the validity of this Agreement, the construction of its
terms and the interpretation of the rights and duties of the parties.
20. Counterparts. This Agreement may be executed concurrently in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. Severability. In the event that any part of this Agreement is
determined by a court of competent jurisdiction to be unenforceable, the balance
of the Agreement shall remain in full force and effect.
IN WITNESS WHEROF, the parties execute this Agreement as of the date
first written above.
SELLER: BUYER:
POSITRON CORPORATION IMATRON INC.
By: /s/ Xxxx X. Xxxx By: /s/ S. Xxxxx Xxxxx
Its: Chief Executive Officer Its: President/CEO
ATTEST: ATTEST:
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxx
Its: Executive Vice President Its: CFO
EXHIBIT A
FINANCIAL STATEMENTS
[9/30/97 10Q previously filed with SEC by Positron not reprinted here]
SCHEDULES
DISCLOSURE SCHEDULES
TO
STOCK PURCHASE AGREEMENT BETWEEN
POSITRON CORPORATION
AND
IMATRON INC.
POSITRON CORPORATION
Schedule 5.4--Tax Returns and Audits
Except as disclosed and described, all federal, state and local tax returns or
appropriate extension requests have been filed; all federal, state and local
taxes have been paid or due provision made; there are no delinquencies in the
payment of such tax or assessment or governmental charge; no notices of
deficiencies proposed or assessed has been received; Seller has not executed any
waiver of any statute of limitations on assessment or collection of any tax; no
tax returns have been audited; there are no tax liabilities, except as follows:
1. Property taxes in the approximate amount of $185,000, of which
approximately $80,000 relates to prior years.
2. State sales taxes in the State of Texas in the approximate amount
of $4,000.
3. State sales taxes to the State of Florida in the approximate amount
of $12,000.
4. State sales taxes to the State of New York in the approximate
amount of $56,000.
POSITRON CORPORATION
Schedule 5.5--Litigation or Governmental Proceedings
Except as disclosed and described, there are no legal actions, suits,
arbitration, or other legal, administrative or governmental proceedings or
investigations pending or threatened; Seller is aware of no facts likely to
result in or form a basis for such action; Seller is not in default with respect
to any judgment, order or decree or any court or governmental agency or
instrumentality; Seller is not threatened with any action or proceeding except
as follows:
1. We have been informed that Xin Xin intends to proceed with arbitration
relative to its contract with Positron Corporation for the purchase of two
POSICAM systems.
2. Numerous letters have been received from vendors threatening legal action
against the Company for its failure to pay outstanding trade payables.
3. The loan from ProFutures Bridge Capital is in default due to the failure of
the Company to pay the full $50,000 per month due on the loan. The Company's
payments have averaged approximately $45,000 per month. ProFutures has
threatened legal action.
4. All former and existing employees who are owed unpaid salaries, wages and
benefits have a claim against the Company. The amounts due could be collected
through legal action or by the Texas Workforce Commission.
5. Hadassah Medical Organization has threatened legal action if the Company
does not immediately replace its existing POSICAM system with a new system. To
date no formal legal action has been filed.
6. University Madrid PET Center has also threatened legal action if its
existing POSICAM is not upgraded to a newer machine that meets its expectations.
7. Xxxxx Xxxxxxx, a former director of the Company, claims that he is owed
consulting fees and royalties of approximately $150,000. The Company disputes
the amount of royalty actually owed to Xxxxxxx. Xxxxxxx has threatened legal
action. To date no formal action has been taken by Xx. Xxxxxxx.
8. Xxxxxx County, Texas has been awarded a default judgment against the Company
for its failure to pay property taxes in the approximate amount of $80,000.
9. Xxxxx of Dallas, Inc. received a default judgment against the Company in the
amount of $31,277.05.
10. Boxer Property (Landlord) has issued a notice for Positron Corporation to
vacate remaining space. Agreement has been reached for Positron to consolidate
its space and relocate to another facility as soon as possible.
POSITRON CORPORATION
Schedule 5.6--Compliance With Laws and Other Instruments
Disclosure of any existing registration rights of holders of certain securities
issued by Seller. Further, except as disclosed and described, the execution,
delivery and performance of the transactions contemplated by the Agreement will
not conflict with, result in a breach of, constitute, agreement or instrument to
which Seller is a party or by which it or any of its properties or assets is
bound, nor violate its Articles or Bylaws, except as follows:
A. 93 Registration Rights
A. Covers "Registrable Securities" consisting of:
(i) 353,531 shares of Common Stock issued upon
conversion of the Series E Preferred Stock;
(ii) Warrants issued in the 93 Placement and shares of
Common Stock issuable upon exercise of the Warrants
(the Warrants are currently exercisable for 527,743
shares of Common Stock at $5.51 per share);
Upon the registration of the Warrants pursuant to an
exercise of a demand right or piggyback right, the
terms and provisions of such Warrants are to be
amended to be identical or substantially identical to
the terms and provisions as then existing for the
Redeemable Warrants.
B. Demand Rights:
(i) exercisable by 30% of holders of Registrable
Securities (calculated assuming exercise of
Warrants);
(ii) have 2 demand rights exercisable as follows:
a. one demand right is exercisable commencing
day 180 (measured from the
effective date) and ending day 270;
b. The second demand right is exercisable
commencing day 271 and ending 5 years from
the effective date, if exercised prior to
the second anniversary of the effective date
and not as a part of a firm commitment
underwriting, unless waived by Josephthal,
Lyon & Xxxx, such demand right is limited to
the offering during any 90-day period of:
1. 200,000 shares of Common Stock
2. Warrants exercisable for 200,000
shares of Common Stock
3. 200,000 shares of Common Stock
issuable upon the exercise of
the registered Warrants.
c. Unless waived by JL&R, the demand rights
individually or in the aggregate may not be
exercised prior to day 390 in a manner to
exceed:
1. 325,000 shares of Common Stock
2. Warrants exercisable for 325,000
shares of Common Stock
3. 325,000 shares of Common Stock
issuable upon the exercise of
the registered warrants
C. Piggyback Rights:
(i) Have 3 piggyback rights that become exercisable after
day 390.
B. General Registration Rights
A. Covers Common Stock held by certain shareholders other than
Common Stock received as a part of the 93 Placement.
B. Demand Rights
(i) exercisable by 30% of the holders of "Registrable
Securities"
(ii) Have 2 demand rights exercisable as follows:
a. The demand rights are exercisable commencing
day 570 and ending the 5th anniversary of the
effective date;
C. Piggyback Rights
(i) Have 3 piggyback rights
(ii) Cut back provisions give priority to the Underwriter,
the Company and then to the 93 registration rights if
the 93 holders are exercising a demand right.
D. Overall Restriction
(i) Unless waived by JL&R any exercise of a demand right
or piggyback right prior to the 2nd anniversary of
the effective date and not as a part of a firm
commitment underwriting is limited to the offering
during any 90-day period of 200,000 shares of Common
Stock.
C. Other Registration Rights
A. One holders has piggyback rights for 977 shares of Common
Stock.
Note: The Underwriter warrants from the IPO were exchanged for
Series A Preferred Stock.
POSITRON CORPORATION
Schedule 5.8--Capital Stock
Except as disclosed and described, neither the offer nor issuance or sale of
additional stock as contemplated will constitute an event under any
anti-dilution provisions of any securities issued or issuable or any agreements
with respect to issuance of Seller which will increase the number of shares
issuable pursuant to such provisions or decrease the consideration per share to
be received by the Seller, except as described in Footnotes 6 and 7 to the
Company's Annual Report on Form 10 KSB for the Year Ended December 31, 1996.
See attached capital structure.
Section 5.8 requirements:
--------------------- ------------ ------------ -------------- ---------------
COMMON
SECURITY AUTHORIZED ISSUED EQUIVALENT RESERVED
--------------------- ------------ ------------ -------------- ---------------
--------------------- ------------ ------------ -------------- ---------------
Common Stock 15,000,000 5,128,990 5,128,990 9,871,010
--------------------- ------------ ------------ -------------- ---------------
--------------------- ------------ ------------ -------------- ---------------
Series A Preferred
Stock 5,450,000 1,595,005 1,595,005
--------------------- ------------ ------------ ------------- ----------------
--------------------- ------------ ------------ ------------- ----------------
Series B Preferred
Stock 25,000 25,000 625,000
--------------------- ------------ ------------ ------------- ----------------
POSITRON CORPORATION
Schedule 5.9--Warrants, Options, Exchange Rights and Conversion Rights
Except as disclosed and described, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, calls, contracts,
demands, or commitments, convertible securities, or other agreements or
arrangements under which Seller may be obligated to issue capital stock or other
securities. Further, except as disclosed and described, there are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of Seller's capital stock, except as described in Footnotes 6 and 7 to the
Company's Annual Report on Form 10 KSB for the Year Ended December 31, 1996.
See attached "Capital Structure, as of January 31, 1998."
Capital Structure
as of January 31, 1998
Pre-Imatron Post-Imatron
Common stock 5,128,990 5,128,990
Series A Preferred stock (A) 1,703,258 2,917,197
Series B Preferred stock (G) 667,415 1,113,825
Preferred stock dividends (C) 203,000 0
Shares issued to Imatron (L) 12,000,000
ProFutures warrants 1,500,000 2,503,242
Shares issued in private placement 0 0
---------- -----------
Total "in-the-money" shares 9,202,663 23,663,254
--------- ----------
(F) 635,276 635,276
Stock options
Series A Preferred stock warrants (B) 1,621,940 2,696,042
Series B Preferred stock warrants (H) 105,955 176,105
(J) 67,500 67,500
UroTech warrant
BF&E warrant (K) 45,000 45,000
Redeemable warrants (D) 5,737,573 10,038,228
1993 warrants (E) 527,743 923,318
----------- ----------
Total "out-of-the-money" shares
8,740,987 14,581,469
----------- ----------
Total shares 17,943,650 38,244,723
----------- ----------
If all "out-of-the-money" shares exercise approximately $38,900,000 will come to
the Company.
POSITRON CORPORATION
Footnotes
A. Series A Convertible Preferred Stock converts into common stock one for
one. Dividends are payable semi-annually at 8%. Initially convertible
at $1.33 per share; $1.31 after giving effect to the Series A Preferred
Stock dividends; $.86 after giving effect to the issuance of shares to
Imatron; $.75 after giving effect to the issuance of shares at $.50;
and, $.68 after giving effect to the issuance of shares at $.375.
B. Series A Preferred Stock warrants, convertible into common stock one
for one at $1.33 per share initially; $1.29 after ratcheting effect for
shares issued to Imatron; $1.04 after ratcheting to give effect to $8
million raised at $.50 per share; and, $.94 after ratcheting to give
effect to $8 million raised at $.375 per share.
C. Series A Preferred Stock dividends accumulated dividends since issuance
of preferred stock.
D. Prior to issuance of shares to Imatron at $.01 per share the strike
price of the warrant is $5.51; subsequent to issuance of the
aforementioned shares the strike price is $3.61 per share. $2.48 after
ratcheting to give effect to $8 million raised at $.50 per share; and,
$2.21 after ratcheting to give effect to $8 million raised at $.375 per
share. Expire 12/3/98.
E. 1993 warrants have same provisions as the Redeemable Warrants.
F. Employees' stock options generally exercisable at $2.65 per option.
G. Series B Convertible Preferred Stock converts into common stock one for
one. Initially convertible at $1.33 per share; $1.31 after giving
effect to the Series A Preferred Stock dividends; $.86 after giving
effect to the issuance of shares to Imatron; $.75 after giving effect
to the issuance of shares at $.50, and, $.68 after giving effect to the
issuance of shares at $.375.
H. Series B Preferred Stock warrants, convertible into common stock one
for one at $1.33 per share initially; $1.29 after ratcheting effect for
shares issued to Imatron; $1.04 after ratcheting to give effect to $8
million raised at $.50 per share; and, $.94 after ratcheting to give
effect to $8 million raised at $.375 per share.
I. Ten-year warrants expiring in 2006, exercisable 200,000 at $2.40 and
100,000 at $1.91.
J. Uro-Tech warrants exercisable at $2.00 until 2/7/00.
K. BF&E warrants exercisable at $2.00 until 2/7/00.
L. Shares issued to give Imatron at least 51% control.
SCHEDULE 5.9
Warrants, Options, Exchange and/or Conversion Rights
Except as disclosed and described, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, calls, contract,
demands, or commitments, convertible securities, or other agreements or
arrangements under which Seller may be obligated to issue capital stock or other
securities. Further, except as disclosed and described, there are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of Seller's capital stock.
Rate of Adjusted Price
Number Conversion (if Following
Security Outstanding Exercise Price applicable) Transaction
-------- ----------- -------------- -------------- --------------
Series A ----------- -------------- -------------- --------------
Series B ----------- -------------- -------------- --------------
Series A
Warrants ----------- -------------- -------------- --------------
Series B
Warrants ----------- -------------- -------------- --------------
1987 Employee
SOP ----------- -------------- -------------- --------------
1994 Employee
SOP ----------- -------------- -------------- --------------
1993 Warrants ----------- -------------- -------------- --------------
Redeemable
Warrants ----------- -------------- -------------- --------------
UroTech
Warrants ----------- -------------- -------------- --------------
Boston
Financial
Warrants ----------- -------------- -------------- --------------
ProFutures
Warrants ----------- -------------- -------------- --------------
K. Xxxxx Xxxxx ----------- -------------- -------------- --------------
Xxxx Xxxx ----------- -------------- -------------- --------------
POSITRON CORPORATION
Schedule 5.11--Board of Directors
Name Age Position
---- --- --------
Xxxx X. Xxxx, Ph.D. 47 Director and Chairman of the Board
K. Xxxxx Xxxxx, M.D. 57 Director
Xxxx X. Xxxxxx, M.D. 69 Director
Xxxxxx X. Xxxxxxxxx, Ph.D. 56 Director
Schedule 10.1
to
Stock Purchase Agreement
In connection with the Special Shareholders' Meeting to be called pursuant to
Section 7.6, Buyer will reimburse Seller for expenses incurred in preparing
materials and soliciting proxies up to $50,000.
Schedule 12
Provisions of registration rights agreements or other agreements containing
registration rights provisions to which Seller is a party.
See Schedule 5.6
