EXHIBIT 10.17
DIGIRAD CORPORATION
FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT
THIS FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT
("Agreement") is made and entered into as of November 10, 2000 by and among
Digirad Corporation, a Delaware corporation (the "Company"), and each of the
persons listed on Schedule 1 (each of which persons is referred to herein as an
"Investor," and collectively, the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF SERIES E PREFERRED STOCK.
1.1 SALE AND ISSUANCE OF SERIES E PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of Delaware on or before the Closing (as defined below) the Amended and
Restated Certificate of Incorporation in the form attached hereto as EXHIBIT A
(the "Restated Certificate").
(b) Subject to the terms and conditions of this Agreement,
each Investor agrees to purchase as applicable at the Closing, and the Company
agrees to sell and issue to each Investor at the Closing, that number of shares
of the Company's Series E Preferred Stock set forth opposite such Investor's
name on Schedule 1 for the purchase price of $3.036 per share.
1.2 CLOSING. The purchase and sale of the Series E Preferred Stock
shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, San Diego,
California, at 10:00 a.m., on November 10, 2000, or at such other time and place
as the Company and Investors acquiring more than half the aggregate principal
amount of the Series E Preferred Stock sold pursuant hereto shall mutually
agree, in writing (which time and place are designated as the "Closing"). At the
Closing, the Company shall deliver to each Investor a certificate representing
the shares of Series E Preferred Stock that such Investor is purchasing at the
Closing (as set forth on SCHEDULE 1) against payment of the purchase price
therefor by check or wire transfer or such other form of payment as shall be
mutually agreed upon by such Investor and the Company.
1.3 ADDITIONAL CLOSING(S).
(a) CONDITIONS OF ADDITIONAL CLOSING(S). At a per share
purchase price of $3.036 per share and at any time from time to time on or
before February 1, 2001, the Company may, at one or more additional closings
(each an "Additional Closing"), without obtaining the signature, consent or
permission of any of the Investors, offer and sell to additional investors (each
a "New Investor") up to that number of shares of the Series E Preferred Stock of
the Company available as authorized shares of Series E Preferred Stock in the
Restated Certificate. A New Investor may include persons or entities who are
already Investors under this Agreement.
(b) AMENDMENTS. The Company and the New Investors purchasing
Series E Preferred Stock at each Additional Closing will execute counterpart
signature pages to this
Agreement and to the Amended and Restated Co-Sale Agreement, attached hereto
as EXHIBIT C (the "Co-Sale Agreement"), the Amended and Restated Investors'
Rights Agreement, attached hereto as EXHIBIT D (the "Investors' Rights
Agreement") and the Amended and Restated Series E Voting Agreement, attached
hereto as EXHIBIT E (the "Voting Agreement") (collectively, the "Transaction
Agreements") and such New Investors will, upon delivery to the Company of
such signature pages, become parties to, and bound by, the Transaction
Agreements, each to the same extent as if they had been Investors at the
Closing. Immediately after each Additional Closing, SCHEDULE 1 to this
Agreement will be amended to list New Investors purchasing shares of Series E
Preferred Stock hereunder and the number of shares of Series E Preferred
Stock purchased by each New Investor under this Agreement at each such
Additional Closing. Any and all schedules or exhibits to the Transaction
Agreements that refer to the Investors shall also be amended to include the
New Investors.
(c) STATUS OF NEW INVESTORS. Upon the completion of each
Additional Closing as provided in this Section 1.3, each New Investor will be
deemed to be an "Investor" for all purposes under each of the Transaction
Agreements.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Investor that,
except as set forth on a Schedule of Exceptions furnished to each Investor and
attached hereto as EXHIBIT B, specifically identifying the relevant
subparagraph(s) hereof, which exceptions shall be deemed to be representations
and warranties as if made hereunder:
2.1 ORGANIZATION; GOOD STANDING; QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver this
Agreement, the Transaction Agreements and any other agreement to which the
Company is a party, the execution and delivery of which is contemplated hereby,
to issue and sell the Series E Preferred Stock and the Common Stock issuable
upon conversion thereof or upon conversion of the Series E Preferred Stock, and
to carry out the provisions of this Agreement and any Transaction Agreement. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business, properties, prospects, or financial condition.
2.2 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the Transaction Agreements and any other
agreement to which the Company is a party, the execution and delivery of which
is contemplated hereby, the performance of all obligations of the Company
hereunder and thereunder at the Closing, and the authorization, issuance (or
reservation for issuance), sale, and delivery of the Series E Preferred Stock
and the Common Stock issuable upon conversion thereof has been taken or will be
taken prior to the Closing. This Agreement and the Transaction Agreements
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting the enforcement of creditors' rights generally, (ii) as
limited by
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laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies, and (iii) to the extent the indemnification
provisions contained therein may be limited by applicable federal or state
securities laws.
2.3 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Series E
Preferred Stock being purchased by the Investors hereunder, when issued, paid
for and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, and will be
free of restrictions on transfer other than restrictions on transfer under
this Agreement and the Series E Preferred Stock and under applicable state
and federal securities laws. The Common Stock issuable upon conversion of the
Series E Preferred Stock purchased under this Agreement has been duly and
validly reserved for issuance and, when issued and paid for in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid, and nonassessable and will be free of restrictions on transfer
other than restrictions on transfer set forth in this Agreement and under
applicable state and federal securities laws.
2.4 GOVERNMENTAL CONSENTS. No consent, approval, qualification,
order or authorization of, or filing with, any local, state, or federal
governmental authority is required on the part of the Company in connection
with the Company's valid execution, delivery, or performance of this
Agreement or any Transaction Agreement, the offer, sale or issuance of the
Series E Preferred Stock or Common Stock upon conversion of the Series E
Preferred Stock, except (i) the filing of the Restated Certificate with the
Secretary of State of the State of Delaware, (ii) such filings as have been
made prior to the Closing, and (iii) any notices of sale required to be filed
with the Securities and Exchange Commission under Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), or such post
closing filings as may be required under applicable state securities laws,
which will be timely filed within the applicable periods therefor.
2.5 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of the
Company consists, or will consist prior to the Closing, of:
(i) PREFERRED STOCK. Twenty-Seven Million
One Hundred Twenty-Nine Thousand Five Hundred Sixty-Eight (27,129,568) shares
of Preferred Stock (the "Preferred Stock"), of which 2,250,000 shares have
been designated Series A Preferred Stock, all of which are issued and
outstanding, 2,281,000 shares have been designated Series B Preferred Stock,
all of which are issued and outstanding, 4,800,000 shares have been
designated Series C Preferred Stock, all of which are issued and outstanding,
8,668,140 shares have been designated Series D Preferred Stock, all of which
are issued and outstanding, and 9,130,428 shares have been designated Series
E Preferred Stock, 4,004,965 of which are issued and outstanding and up to
4,611,330 of which may be issued pursuant to this Agreement. The rights,
privileges and preferences of the Series A, Series B, Series C, Series D and
Series E Preferred Stock are as stated in the Restated Certificate.
(ii) COMMON STOCK. Thirty-Six Million Four
Hundred Thirty-Eight Thousand Seven Hundred Twenty-Nine (36,438,729) shares
of Common Stock ("Common Stock"), of which 4,065,020 shares are issued and
outstanding and up to 4,611,330 of which shall be validly reserved for
issuance upon conversion of the Series E Preferred Stock issued pursuant to
this Agreement.
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(iii) The outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Common Stock have been issued
in accordance with the registration or qualification provisions of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(iv) Except for (A) the rights created under
this Agreement, (B) the conversion privileges of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock, (C) the right of first offer set forth in
Section 1.3 of the Investors' Rights Agreement, and (D) currently outstanding
options to purchase 4,548,794 shares of Common Stock granted to employees,
consultants and advisors to the Company, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of
first refusal), or agreements for the purchase or acquisition from the
Company of any shares of its capital stock. Except for the voting rights of
the holders of Preferred Stock as provided for in the Restated Certificate,
the obligations provided for in that certain Amended and Restated Voting
Agreement dated August 8, 1997, and except pursuant to this Agreement and the
Transaction Agreements, the Company is not a party or subject to any
agreement or understanding, and, to the best of the Company's knowledge,
there is no agreement or understanding between any other persons that affects
or relates to the voting or giving of written consents with respect to any
security or the voting by a director of the Company.
2.6 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
2.7 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, to which the Company is a party or by which it
is bound other than (i) contracts for the purchase of goods and services that
were entered into in the ordinary course of business and that do not involve
more than $100,000 each, and do not extend for more than one (1) year beyond
the date hereof, (ii) sales or lease contracts entered into in the ordinary
course of business, and (iii) contracts terminable at will by the Company on
not more than thirty (30) days' notice without cost or liability to the
Company and that do not involve any employment or consulting arrangement and
are not material to the conduct of the Company's business. For the purpose of
this paragraph, employment and consulting contracts and contracts with labor
unions, and license agreements and any other agreements relating to the
acquisition or disposition of any interest in the Company's technology (other
than standard end-user license agreements) shall not be considered to be
contracts entered into in the ordinary course of business.
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer, or director of
the Company or member of his or her immediate family is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company
has a business relationship, or any firm or corporation that competes with
the Company, except that employees, officers, or directors of the Company and
members of their immediate families may own stock in publicly traded
companies that may compete with the Company. To the
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Company's knowledge, no officer or director of the Company or any member of
their immediate families is, directly or indirectly, interested in any
material contract with the Company.
2.9 REGISTRATION RIGHTS. Except as provided in the Investors' Rights
Agreement, the Company is not obligated to register under the Securities Act any
of its presently outstanding securities or any of its securities that may
subsequently be issued.
2.10 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any provision of its Restated Certificate or Bylaws or in any
material respect of any provision of any mortgage, indenture, agreement,
instrument, or contract to which it is a party or by which it is bound or, to
the best of its knowledge, of any federal or state judgment, order, writ,
decree, statute, rule, or regulation applicable to the Company. The execution,
delivery, and performance by the Company of this Agreement and any Transaction
Agreement, and the consummation of the transactions contemplated hereby and
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time or the giving of notice, either
a default under any such provision or an event that results in the creation of
any lien, charge, or encumbrance upon any assets of the Company (except as
contemplated in this Agreement and any Transaction Agreement) or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any permit, license,
authorization, or approval applicable to the Company, its business or
operations, or any of its assets or properties, which suspension, revocation,
impairment, forfeiture, or nonrenewal would be materially adverse to the
Company.
2.12 LITIGATION. There is no action, suit, proceeding, or investigation
pending or currently threatened against the Company that questions the validity
of this Agreement or any Transaction Agreement or the right of the Company to
enter into such agreements, or to consummate the transactions contemplated
hereby or thereby, or that might result, either individually or in the
aggregate, in any material adverse change in the assets, business, properties,
prospects, or financial condition of the Company, or in any change in the
current equity ownership of the Company. The foregoing includes, without
limitation, any action, suit, proceeding, or investigation pending or currently
threatened involving the prior employment of any of the Company's employees,
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers, their
obligations under any agreements with prior employers, or negotiations by the
Company with potential backers of, or investors in, the Company or its proposed
business. The Company is not a party to, or to the best of its knowledge, named
in any order, writ, injunction, judgment, or decree of any court, government
agency, or instrumentality. There is no action, suit, or proceeding by the
Company currently pending or that the Company currently intends to initiate.
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2.13 RETURNS AND COMPLAINTS. The Company has received no customer or
beta test participant complaints concerning alleged defects in its products
(or the design thereof) that, if true, would materially adversely affect the
assets, business, properties, prospects or financial condition of the Company.
2.14 DISCLOSURE. The Company has provided each Investor with all the
information reasonably available to it that such Investor has requested for
deciding whether to purchase the Series E Preferred Stock and all information
that the Company believes is reasonably necessary to enable such Investor to
make such decision. Neither this Agreement nor any other written statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
2.15 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Series E Preferred Stock, and the Common Stock issuable upon
conversion of the Series E Preferred Stock, as contemplated by this Agreement
are exempt from the registration requirements of the Securities Act and
applicable state securities laws, and neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemption.
2.16 TITLE TO PROPERTY AND ASSETS; LEASES. Except (i) as reflected in
the Financial Statements (defined in paragraph 2.17), (ii) for liens for current
taxes not yet delinquent, (iii) for liens imposed by law and incurred in the
ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iv) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation or
(v) for minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company owns its
property and assets free and clear of all mortgages, liens, claims, and
encumbrances. With respect to the property and assets it leases, the Company is
in compliance with such leases and holds a valid leasehold interest free of any
liens, claims, or encumbrances, which would be materially adverse to the
Company, subject to clauses (i)-(v) above.
2.17 FINANCIAL STATEMENTS. The Company has delivered to each Investor
its audited financial statements (balance sheet and profit and loss statement,
statement of stockholders equity and statement of cash flows including notes
thereto) at December 31, 1999, and for the fiscal year then ended and its
unaudited financial statements (balance sheet and profit and loss statement) as
at, and for the nine-month period ended September 30, 2000 (collectively, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated except that unaudited financial
statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements fairly present the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein, subject in the case of the unaudited Financial
Statements to normal year-end audit adjustments. Except as set forth in the
Financial Statements, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to September 30, 2000 which are individually not in excess of $25,000
and in the aggregate not in excess of $100,000 and (ii) obligations under
contracts and commitments
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incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Financial Statements,
which, in both cases, individually or in the aggregate, are not material to
the financial condition or operating results of the Company. Except as
disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm, partnership, joint
venture or corporation. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
generally accepted accounting principles.
2.18 CHANGES. Since September 30, 2000, there has not been:
(a) any change in the assets, liabilities, financial
condition, or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(e) any material change to a contract or arrangement by or to
which the Company or any of its assets is bound or subject;
(f) any change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(g) any sale, assignment, or transfer of any interest in any
patents, trademarks, copyrights, or trade secrets;
(h) any resignation or termination of employment of any key
officer of the Company; and the Company does not know of the impending
resignation or termination of employment of any such officer;
(i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in,
or creation of a lien by the Company with respect to any of its properties or
assets, except liens for taxes not yet due or payable;
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(k) any loans or guarantees made by the Company to or for
the benefit of its employees, officers, or directors, or any members of their
immediate families, other than travel advances and other similar advances
made in the ordinary course of its business;
(l) any declaration, setting aside, or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company;
(m) to the Company's knowledge, any other event or condition
of any character that might materially and adversely affect the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is proposed to be conducted); or
(n) any agreement or commitment by the Company to do any of
the things described in this paragraph 2.18.
2.19 PATENTS AND TRADEMARKS. The Company owns or possesses sufficient
title and ownership of all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, and proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted without any conflict with, or infringement of the rights of, others.
The Schedule of Exceptions contains a complete list of patents and pending
patent applications of the Company. Except for agreements with its own employees
or consultants, substantially in the form referenced in paragraph 2.22 below,
and standard end-user license agreements, there are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses, or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, and proprietary rights and processes of
any other person or entity which options, licenses or agreements are material to
the Company or its business as now conducted and as proposed to be conducted.
The Company has not received any communication alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets, or
other proprietary rights or processes of any other person or entity and to the
Company's knowledge without further investigation, the Company is not in such
violation. The Company is not aware that any of the Company's employees is
obligated under any contract (including licenses, covenants, or commitments of
any nature) or other agreement, or subject to any judgment, decree, or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as proposed, will, to the Company's knowledge, conflict with or result
in a breach of the terms, conditions, or provisions of, or constitute a default
under, any contract, covenant, or instrument under which any of such employees
is now obligated. The Company does not believe it is or will be necessary to use
any inventions of any of its employees (or persons it currently intends to hire)
made prior to their employment by the Company.
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2.20 MANUFACTURING AND MARKETING RIGHTS. The Company has not granted
rights to manufacture, produce, assemble, license, market, or sell its
products to any other person and is not bound by any agreement that affects
the Company's exclusive right to develop, manufacture, assemble, distribute,
market, or sell its products.
2.21 EMPLOYEES; EMPLOYEE COMPENSATION. To the best of the Company's
knowledge, there is no strike, or labor dispute or union organization
activities pending or threatened between it and its employees. To the best of
the Company's knowledge, none of the Company's employees belongs to any union
or collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
employment opportunity and other laws related to employment. To the best of
the Company's knowledge, no employee of the Company is or will be in
violation of any judgment, decree, or order, or any term of any employment
contract, patent disclosure agreement, or other contract or agreement
relating to the relationship of such employee with the Company, or any other
party, because of the nature of the business conducted or to be conducted by
the Company or to the use by the employee of his best efforts with respect to
such business. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation agreement, bonus plan,
incentive plan, profit sharing plan, retirement agreement, or other employee
compensation agreement other than with respect to the Company's Stock Option
Plan and options granted thereunder. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a
present intention to terminate the employment of any of the foregoing.
Subject to general principles related to wrongful termination of employees,
the employment of each officer and employee of the Company is terminable at
the will of the Company.
2.22 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee and officer of the Company has executed a Proprietary Information
and Inventions Agreement substantially in the form or forms which have been
delivered to the Investors.
2.23 TAX RETURNS, PAYMENTS, AND ELECTIONS. The Company has filed all
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith. The provision for
taxes of the Company as shown in the Financial Statements is adequate for taxes
due or accrued as of the date thereof. The Company has not elected pursuant to
the Internal Revenue Code of 1986, as amended ("Code"), to be treated as an S
corporation or a collapsible corporation pursuant to Section 1362(a) or Section
341(o) of the Code, nor has it made any other election pursuant to the Code
(other than elections that relate solely to methods of accounting, depreciation,
or amortization) that would have a material effect on the business, properties,
prospects, or financial condition of the Company. The Company has never had any
tax deficiency proposed or assessed against it and has not executed any waiver
of any statute of limitations on the assessment or collection of any tax or
governmental charge. None of the Company's federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has ever been
audited by governmental authorities. Since the date of the Financial Statements,
the Company has made adequate provisions on its books of account for all taxes,
assessments, and governmental charges with respect to its business, properties,
and operations for such period. The Company has withheld or collected from each
payment made to each of its employees the amount of all taxes, including, but
not limited to, federal income taxes,
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Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act
taxes required to be withheld or collected therefrom, and has paid the same
to the proper tax receiving officers or authorized depositories.
2.24 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law, or regulation.
2.25 SECTION 83(b) ELECTIONS. To the best of the Company's knowledge,
all individuals who have purchased shares of the Company's Common Stock have
timely filed elections under Section 83(b) of the Internal Revenue Code and any
analogous provisions of applicable state tax laws.
2.26 MINUTE BOOKS. The minute books of the Company made available to
special counsel to Investors contain a complete summary of all meetings of
directors and stockholders since the Company's incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
2.27 REAL PROPERTY HOLDING COMPANY. The Company is not a real property
holding company within the meaning of Internal Revenue Code Section 897.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor hereby represents warrants, covenants and agrees that:
3.1 AUTHORIZATION. Such Investor has full power and authority to enter
into this Agreement and that this Agreement constitutes a valid and legally
binding obligation of such Investor.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with each
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Series E Preferred Stock or the Common Stock issuable upon conversion
thereof (collectively, the "Securities") will be acquired for investment for
such Investor's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, each Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, distribute or grant participation to
such person, or to any third person, with respect to any of the Securities.
3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. Each Investor understands
that the issuance of the Securities may not be registered under the Securities
Act on the ground that the sale provided for in this Agreement and the issuance
of the Securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof and that the Company's reliance on such
exemption is predicated on the Investors' representations set forth herein. Each
Investor realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the Investor has in mind merely acquiring
the Securities for a fixed or
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determinable period in the future, or for a market rise, or for sale if the
market does not rise. No Investor has any such intention.
3.4 RECEIPT OF INFORMATION. Each Investor believes such Investor has
received all the information such Investor considers necessary for deciding
whether to purchase the Series E Preferred Stock to be issued to it. Each
Investor further represents that such Investor has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Series E Preferred Stock, and the business,
properties, prospects, and financial condition of the Company and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to such Investor or to which such Investor
had access. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the
Investors to rely thereon.
3.5 INVESTMENT EXPERIENCE. Each Investor represents that such Investor
is experienced in evaluating and investing in securities of companies in the
development state and acknowledges that such Investor is able to fend for
himself, herself or itself, can bear the economic risk of such Investor's
investment, and has such knowledge and experience in financial and business
matters that such Investor is capable of evaluating the merits and risks of the
investment in the Series E Preferred Stock. If other than an individual,
Investor also represents such Investor has not been organized for the purpose of
acquiring the Series E Preferred Stock, or if such Investor has been organized
for the purpose of acquiring the Series E Preferred Stock that all investors in
such fund are accredited.
3.6 ACCREDITED INVESTOR. Except as otherwise disclosed to the Company
in writing, Investor either is (a) an accredited investor as defined in Rule
501(a) of Regulation D of the SEC under the Securities Act, or (b) neither (x) a
national or resident of the United States, its territories, possessions or any
area subject to its jurisdiction, nor (y) a corporation, partnership, trust or
other entity created or organized in the United States, its territories,
possessions or any area subject to its jurisdiction, nor (z) a corporation,
partnership, trust or other entity, any of the equity owners of which is
described in clause (x) or (y) above and agrees not to sell, hypothecate, pledge
or otherwise dispose of any interest in the Securities in the United States, its
territories, possessions or any area subject to its jurisdiction, or to any
person who is a national thereof or resident therein (including any estate of
such person), or any corporation, partnership or other entity created or
organized therein, unless such securities have been either registered under the
Securities Act, or are exempt from the registration requirements of the
Securities Act, in the opinion of the Company's counsel, and Investor has
complied with any restrictions on transfer contained in this Agreement.
3.7 RESTRICTED SECURITIES. Each Investor understands that the Series E
Preferred Stock (and any Common Stock issued on conversion thereof) may not be
sold, transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Preferred Stock or Common Stock
issued on conversion thereof or an available exemption from registration under
the Securities Act, the Series E
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Preferred Stock (and any Common Stock issued on conversion thereof) must be
held indefinitely. In particular, each Investor is aware that the Series E
Preferred Stock (and any Common Stock issued on conversion thereof) may not
be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that Rule are met. Among the conditions for use of Rule
144 may be the availability of current information to the public about the
Company. Such information is not now available, and the Company has no
present plans to make such information available.
3.8 CONFIDENTIALITY. Each Investor hereby represents, warrants and
covenants that it shall maintain in confidence, and shall not use or disclose
without the prior written consent of the Company, any information identified as
confidential that is furnished to it by the Company in connection with this
Agreement, including (without limitation) all financial statements, budget and
other information delivered or provided to such Investor. This obligation of
confidentiality shall not apply, however, to any information (i) in the public
domain through no unauthorized act or failure to act by Investor, (ii) lawfully
disclosed to Investor by a third party who possessed such information without
any obligation of confidentiality, (iii) known previously by Investor or
lawfully developed by Investor independent of any disclosure by the Company or
(iv) required to be disclosed by law. Investor further covenants that Investor
shall return to the Company all tangible materials containing such information
upon request by the Company.
3.9 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, each Investor further agrees not to make any
disposition of all or any portion of the Preferred Stock or Common Stock issued
on conversion thereof without the consent of the Company, unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and Section 7, provided and to the extent that such sections are
applicable, and:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and, if
reasonably requested by the Company, the Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144, as currently in existence,
except in unusual circumstances.
(c) Notwithstanding the provisions of subsections (a) and (b)
above, no such registration statement or opinion of counsel or consent of the
Company shall be necessary for a transfer by an Investor to an affiliated entity
which controls, is controlled by, or under common control with, the Investor,
provided that the transferee agrees in writing for the benefit of the Company to
be bound by this Section 3 and Section 7.
3.10 MARKET STAND-OFF AGREEMENT. Each Investor hereby agrees that it
shall not, to the extent requested by the Company and an underwriter of Common
Stock (or other securities) of the Company, sell or otherwise transfer or
dispose (other than to those donees who agree to be similarly bound) of any
Preferred Stock or Common Stock issued on conversion thereof during a
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reasonable and customary period of time, as agreed to by the Company and the
underwriters, not to exceed 180 days, following the effective date of a
registration statement of the Company filed under the Securities Act;
provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers shares (or securities) to be
sold on its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company, all holders of
at least one percent (1%) of the issued and outstanding securities of the
Company and all other persons with registration rights (whether or not pursuant
to this Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Preferred Stock or Common Stock
issued on conversion thereof of each Investor (and the shares or securities of
every other person subject to the foregoing restriction) until the end of such
reasonable and customary period.
4. CONDITIONS OF INVESTORS' OBLIGATIONS AT THE CLOSING.
The obligations of each Investor under subparagraph 1.1(b) of this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of the Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall deliver
to each Investor at the Closing a certificate certifying that the conditions
specified in paragraphs 4.1 and 4.2 have been fulfilled.
4.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors' special counsel, which shall have received all such counterpart
original and certified or other copies of such documents as it may reasonably
request.
4.5 OPINION OF COMPANY COUNSEL. Each Investor shall have received from
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an opinion, dated as
of the Closing, in form and substance satisfactory to the Investors.
4.6 CO-SALE AGREEMENT. The Company and each Investor shall have entered
into the Amended and Restated Co-Sale Agreement, the form of which is attached
hereto as EXHIBIT C.
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4.7 INVESTORS' RIGHTS AGREEMENT. The Company and each Investor shall
have entered into the Amended and Restated Investors' Rights Agreement, the
form of which is attached hereto as EXHIBIT D.
4.8 VOTING AGREEMENT. The Company and each Investor shall have entered
into the Amended and Restated Series E Voting Agreement, the form of which is
attached hereto as EXHIBIT E.
4.9 STATE SECURITIES LAWS. The Company shall have obtained all
necessary state securities law permits and qualifications, or have the
availability of exemptions therefrom, required by any state for the offer and
sale of the Series E Preferred Stock and the Common Stock issuable upon
conversion of the Series E Preferred Stock.
4.10 RESTATED CERTIFICATE. The Restated Certificate shall have been
filed with the Delaware Secretary of State.
5. CONDITIONS OF NEW INVESTORS' OBLIGATIONS AT ANY ADDITIONAL CLOSING.
The obligations of any New Investor under subparagraph 1.1(b) of this
Agreement are subject to the fulfillment on or before each Additional Closing of
each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the Additional
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
5.2 PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Additional
Closing.
5.3 COMPLIANCE CERTIFICATE. The President of the Company shall deliver
to each Investor at any Additional Closing a certificate certifying that the
conditions specified in paragraphs 5.1 and 5.2 have been fulfilled.
5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at any Additional Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the New Investors' special counsel, which shall have received all
such counterpart original and certified or other copies of such documents as it
may reasonably request.
5.5 CO-SALE AGREEMENT. Each New Investor shall have executed signature
pages to the Amended and Restated Co-Sale Agreement, the form of which is
attached hereto as EXHIBIT C.
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5.6 INVESTORS' RIGHTS AGREEMENT. Each New Investor shall have
executed signature pages to the Amended and Restated Investors' Rights
Agreement, the form of which is attached hereto as EXHIBIT D.
5.7 VOTING AGREEMENT. Each New Investor shall have executed signature
pages to the Amended and Restated Series E Voting Agreement, the form of which
is attached hereto as EXHIBIT E.
5.8 STATE SECURITIES LAWS. The Company shall have obtained all
necessary state securities law permits and qualifications, or have the
availability of exemptions therefrom, required by any state for the offer and
sale of the Series E Preferred Stock and the Common Stock issuable upon
conversion of the Series E Preferred Stock.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING AND ANY ADDITIONAL
CLOSING.
The obligations of the Company to each Investor, or any New Investor,
under this Agreement are subject to the fulfillment on or before the Closing, or
any Additional Closing, of each of the following conditions by that Investor:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of each Investor or any New Investor contained in Section 3 hereof shall be true
on and as of the Closing, or any Additional Closing, with the same effect as
though such representations and warranties had been made on and as of the date
of the Closing.
6.2 STATE SECURITIES LAWS. The Company shall have obtained all
necessary state securities law permits and qualifications, or have the
availability of exemptions therefrom, required by any state for the offer and
sale of the Series E Preferred Stock and the Common Stock issuable upon
conversion of the Series E Preferred Stock.
6.3 PAYMENT OF PURCHASE PRICE. Each Investor or New Investor, as the
case may be, shall have delivered the purchase price specified in Section 1.1.
6.4 RESTATED CERTIFICATE. The Restated Certificate shall have been
filed with the Delaware Secretary of State.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties hereto and no party
shall be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
7.2 SURVIVAL OF WARRANTIES. The warranties, representations, and
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
-15-
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any Series E Preferred Stock or Common Stock issued
upon conversion thereof or upon conversion of Series E Preferred Stock).
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as expressly provided in this Agreement.
7.4 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.5 COUNTERPARTS. This Agreement may be executed 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.
7.6 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.7 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified (or upon
the date of attempted delivery where delivery is refused) or, if sent by
telecopier, telex, telegram, or other facsimile means, upon receipt of
appropriate confirmation of receipt, or upon deposit with the United States
Postal Service, by registered or certified mail, or next day air courier, with
postage and fees prepaid and addressed to the party entitled to such notice at
the address indicated for such party on the signature page hereof, or at such
other address as such party may designate by 10 days' advance written notice to
the other parties to this Agreement.
7.8 FINDER'S FEES. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for and commission or compensation in the nature of a
finder's fee (and the cost and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees, or
representatives is responsible.
7.9 EXPENSES. Irrespective of whether the Closing is effected, each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery, and performance of this Agreement.
7.10 ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, any Transaction Agreement or
any other agreement
-16-
contemplated hereby, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and disbursements in addition to any other relief to
which such party may be entitled.
7.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of at least a majority
of the Common Stock not previously sold to the public that is issued or issuable
upon conversion of the Series E Preferred Stock purchased pursuant to this
Agreement. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities have been converted), each future holder of all such securities, and
the Company.
7.12 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.13 EXCULPATION AMONG INVESTORS. Each Investor acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Investor agrees that no Investor nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Investor shall be liable for any action heretofore or hereafter taken or omitted
to be taken by any of them in connection with the Series E Preferred Stock or
Common Stock issued upon conversion thereof.
7.14 PUBLICITY. No party hereto shall originate any publicity, news
release, or other public announcement, written or oral (a "Release"), relating
to this Agreement, or to performance hereunder or the existence of an
arrangement between the parties hereto without the prior written approval of
each other party hereto, which approval will not be unreasonably withheld or
delayed, except where such Release is required by applicable law; provided that
in such event the party intending to issue the Release shall consult with the
other party or parties with respect to the text thereof and such other party or
parties shall be provided with a copy of the Release prior to its release.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: DIGIRAD CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
NEW INVESTORS: ▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P., III
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P., IV
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
VECTOR LATER-STAGE EQUITY FUND II
(QP), L.P.
By: Vector Fund Management II, L.L.C.
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, M.D.
Managing Director
VECTOR LATER-STAGE EQUITY FUND II, L.P.
By: Vector Fund Management, II, L.L.C.
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, M.D.
Managing Director
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
OCEAN AVENUE INVESTORS, LLC -
ANACAPA FUND
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Manager
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HEALTH CARE INDEMNITY, INC.
By: Columbia/HCA Healthcare Corporation
Its: Investment Advisor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice-President, Investments
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
AUREUS DIGIRAD, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Its: Member
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ VENTURES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Address: 2 World Financial Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
MID CAROLINA CARDIOLOGY, PA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
--------------------------------------
Its: Chief Executive Officer
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, AS JOINT TENANTS
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, M.D.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, JR., M.D.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr., M.D.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ FAMILY LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Manager
Address: ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
GFP DIGIRAD
By: /s/ ▇▇▇▇▇ Genoelman
--------------------------------------
Its: Managing Member
--------------------------------------
Name: ▇▇▇▇▇ Genoelman
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ VENTURES LLC
By: /s/ illegible
--------------------------------------
Its: Manager
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1919
Racine, Wisconsin 53401-1919
INGLEWOOD VENTURES, LP
By: /s/ illegible
--------------------------------------
Its: Member
--------------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL FOUNDATION INVESTMENT
FUND, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Its: Assistant Treasurer
--------------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PALIVACINNI PARTNERS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Manager
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 1
SCHEDULE OF INVESTORS
FIRST CLOSING - NOVEMBER 10, 2000
INVESTOR SHARES TO BE PURCHASED PURCHASE PRICE
-------- ---------------------- --------------
▇▇▇▇▇▇▇▇▇ Capital Partners, L.P., III 98,814 $299,999.31
▇▇▇▇▇▇▇▇▇ Capital Partners, L.P., IV 230,566 $699,998.38
Vector Later-Stage Equity Fund II 123,517 $374,997.61
(QP), L.P.
Vector Later-Stage Equity Fund II, L.P. 41,172 $124,998.19
Ocean Avenue Investors, LLC 164,690 $499,998.84
- Anacapa Fund I
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ventures, LLC 1,317,523 $3,999,999.82
Health Care Indemnity, Inc. 329,380 $999,997.68
Aureus Digirad, LLC 658,761 $1,999,998.40
Mid Carolina Cardiology, PA 32,938 $99,999.77
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇ 8,234 $24,998.42
▇▇▇▇▇▇▇, as Joint Tenants --------- --------------
TOTALS 3,005,595 $9,124,986.42
========= ==============
SCHEDULE 1
SCHEDULE 2
SCHEDULE OF INVESTORS
SECOND CLOSING - DECEMBER 8, 2000
INVESTOR SHARES TO BE PURCHASED PURCHASE PRICE
-------- ---------------------- --------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, M.D. 8,234 $24,998.42
▇▇▇▇▇▇ Family LLC 65,876 $199,999.54
GFP Digirad 83,992 $254,999.71
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr., M.D. 6,587 $19,998.13
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8,234 $24,998.42
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇ 8,234 $24,998.42
-------- ------------
TOTALS 181,157 $549,992.64
======== ============
SCHEDULE 2
SCHEDULE 3
SCHEDULE OF INVESTORS
THIRD CLOSING - JANUARY 19, 2001
INVESTOR SHARES TO BE PURCHASED PURCHASE PRICE
-------- ---------------------- --------------
▇▇▇▇ Ventures LLC 164,690 $499,998.84
IngleWood Ventures, LP 329,380 $999,997.68
The University of North Carolina at 164,690 $499,998.84
Chapel Hill Foundation Investment
Fund, Inc.
Palivacinni Partners, LLC 24,703 $74,998.31
-------- ------------
TOTAL: 683,463 $2,074,993.67
======== ============
SCHEDULE 3
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DIGIRAD CORPORATION
Digirad Corporation, a corporation organized and existing under the
laws of the state of Delaware, hereby certifies as follows:
1. The name of the corporation is
Digirad Corporation. The date the
Corporation filed its original Certificate of Incorporation with the Secretary
of State was January 2, 1997.
2. This Amended and Restated Certificate of Incorporation restates and
amends the provisions of the original Certificate of Incorporation of this
Corporation as heretofore in effect and was duly adopted by the Corporation's
Board of Directors in accordance with Sections 241 and 245 of the General
Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation is hereby amended and
restated to read as herein set forth in full:
ARTICLE I
The name of the Corporation (hereinafter called "Corporation") is
Digirad Corporation.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ of Kent 19901, and the
name of the registered agent of the Corporation in the State of Delaware at such
address is CorpAmerica, Inc.
ARTICLE III
The purpose of this Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
A. CLASSES OF STOCK. This Corporation is authorized to issue two (2)
classes of shares, to be designated "Common" and "Preferred" and referred to
herein as the "Common Stock" or the "Preferred Stock" respectively. The total
number of shares of Common Stock the Corporation is authorized to issue is
Thirty-Six Million Four Hundred Thirty-Eight Thousand Seven Hundred Twenty-Nine
(36,438,729). The par value is $0.001 per share. The total number of shares of
Preferred Stock the Corporation is authorized to issue is Twenty-Seven Million
One
Hundred Twenty-Nine Thousand Five Hundred Sixty-Eight (27,129,568). The par
value is $0.001 per share.
The Board of Directors of the Corporation may divide the Preferred
Stock into any number of series. The Board of Directors shall fix the
designation and number of shares of each such series. The Board of Directors
may determine and alter the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series of the Preferred
Stock. The Board of Directors (within the limits and restrictions of any
resolution adopted by it, originally fixing the number of shares of any
series) may increase or decrease the number of shares of any such series
after the issue of shares of that series, but not below the number of then
outstanding shares of such series.
B. Rights, Preferences, Privileges and Restrictions of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock.
1. Designation of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock.
Two Million Two Hundred Fifty Thousand (2,250,000)
shares of Preferred Stock are designated Series A Preferred Stock (the
"Series A Preferred Stock") with the rights, preferences and privileges
specified herein. Two Million Two Hundred Eighty-One Thousand (2,281,000)
shares of Preferred Stock are designated Series B Preferred Stock (the
"Series B Preferred Stock") with the rights, preferences and privileges
specified herein. Four Million Eight Hundred Thousand (4,800,000) shares of
Preferred Stock are designated Series C Preferred Stock (the "Series C
Preferred Stock") with the rights, preferences and privileges specified
herein. Eight million six hundred sixty-eight thousand one hundred forty
(8,668,140) shares of Preferred Stock are designated Series D Preferred Stock
(the "Series D Preferred Stock"). Nine Million One Hundred Thirty Thousand
Four Hundred Twenty-Eight (9,130,428) shares of Preferred Stock are
designated Series E Preferred Stock (the "Series E Preferred Stock"). As used
in this Article IV, Division B, the term "Preferred Stock" shall refer to the
Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock.
2. DIVIDEND PROVISIONS.
The holders of shares of Preferred Stock shall be
entitled to receive non-cumulative dividends, out of any assets legally
available therefor, prior and in preference to any declaration or payment of any
dividend (payable other than in Common Stock of this Corporation) on the Common
Stock or any other junior equity security of this Corporation, at the rate of
$.10 per share of Series A Preferred Stock, $.11 per share of Series B Preferred
Stock, $.125 per share of Series C Preferred Stock, $.23073 per share of Series
D Preferred Stock and $.3036 per share of Series E Preferred Stock per annum
plus an amount equal to that paid on outstanding shares of Common Stock of this
Corporation, whenever funds are legally available therefor, payable quarterly
when, as and if declared by the Board of Directors and shall be non-cumulative.
Dividends, if declared, must be declared and paid with respect to all series of
2
Preferred Stock contemporaneously, and if less than full dividends are declared,
the same percentage of the dividend rate will be payable to each series of
Preferred Stock.
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation,
dissolution or winding up of this Corporation, either voluntary or involuntary,
the holders of Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this Corporation to the
holders of Common Stock or any other junior equity security by reason of their
ownership thereof an amount for each share of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, respectively, held by such holder equal to the sum of (i) $1.00
for each such outstanding share of Series A Preferred Stock (the "Original
Series A Issue Price"), (ii) $1.10 for each such outstanding share of Series B
Preferred Stock (the "Original Series B Issue Price"), (iii) $1.25 for each such
outstanding share of Series C Preferred Stock (the "Original Series C Issue
Price"), (iv) $2.3073 for each outstanding share of Series D Preferred Stock
(the "Original Series D Issue Price"), (v) $3.036 for each outstanding share of
Series E Preferred Stock (the "Original Series E Issue Price") and (vi) in each
case, an amount equal to all declared but unpaid dividends on each such share.
If upon the occurrence of such an event the assets and funds thus distributed
among the holders of the Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of this Corporation legally available for distribution
shall be distributed, ratably among the holders of the Preferred Stock in
proportion to the product of the liquidation preference of each such share and
the number of such shares owned by each such holder.
(b) Upon the completion of the distribution
required by subsection 3(a) above, if assets remain in the Corporation, the
holders of the Common Stock shall receive an amount equal to $.21 per share
(adjusted to reflect any subsequent stock splits, stock dividends, or other
recapitalizations) for each share of Common Stock held by them. If, upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Common Stock shall be insufficient to permit payment to such
holders of the full aforesaid preferential amounts, then the entire assets and
funds of this Corporation legally available for distribution (after giving
effect to the distribution referred to in Section 3(a) hereof) shall be
distributed ratably among the holders of the Common Stock in proportion to the
amount of such stock owned by each such holder.
(c) After the distributions described in
subsections 3(a) and (b) have been paid, the remaining assets of this
Corporation available for distribution to stockholders shall be distributed
among the holders of Preferred Stock and Common Stock pro rata based on the
number of shares of Common Stock held by each (assuming conversion of all such
Preferred Stock).
4. REDEMPTION.
(a) The outstanding Preferred Stock shall be
redeemable as provided in this Section 4. The Series A Redemption Price shall be
the total amount equal to $1.00 per share of Series A Preferred Stock to be
redeemed together with any declared but unpaid
3
dividends on such shares to the Redemption Date (as such term is hereinafter
defined). The Series B Redemption Price shall be the total amount equal to
$1.10 per share of Series B Preferred Stock to be redeemed together with any
declared but unpaid dividends on such shares to the Redemption Date. The
Series C Redemption Price shall be the total amount equal to $1.25 per share
of Series C Preferred Stock to be redeemed together with any declared but
unpaid dividends on such shares to the Redemption Date. The Series D
Redemption Price shall be the total amount equal to $2.3073 per share of
Series D Preferred Stock to be redeemed together with any declared but unpaid
dividends on such shares to the Redemption Date. The Series E Redemption
Price shall be the total amount equal to $3.036 per share of Series E
Preferred Stock to be redeemed together with any declared but unpaid
dividends on such shares to the Redemption Date.
(b) On or at any time after July 31, 2004,
upon the receipt by this Corporation from the holders of at least 66-2/3% of the
then outstanding shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock,
voting as a single class, of a written request for redemption hereunder of their
respective shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock (the
"Redemption Request"), this Corporation shall, from any source of funds legally
available therefor, redeem all of the shares of Preferred Stock by paying in
cash therefor a sum equal to the Series A Redemption Price, the Series B
Redemption Price, the Series C Redemption Price, the Series D Redemption Price
and the Series E Redemption Price, respectively.
(c) (i) At least 15, but no more than 30,
days prior to the date fixed for any redemption of the Preferred Stock (the
"Redemption Date"), which Redemption Date shall be no later than 45 days
following the Corporation's receipt of the Redemption Request, written notice
shall be mailed, first class postage prepaid, to each holder of record (at
the close of business on the business day next preceding the day on which
notice is given) of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock to be redeemed at the address last shown on the records of this
Corporation for such holder or given by the holder to this Corporation for
the purpose of notice or if no such address appears or is given, at the place
where the principal executive office of this Corporation is located,
notifying such holder of the redemption to be effected, specifying the number
of shares to be redeemed from such holder, the Redemption Date, the Series A
Redemption Price, the Series B Redemption Price, the Series C Redemption
Price, the Series D Redemption Price or the Series E Redemption Price as the
case may be, the place at which payment may be obtained and the date on which
such holder's Conversion Rights (as hereinafter defined) as to such shares,
terminating and calling upon such holder to surrender to this Corporation, in
the manner and at the place designated, such holder's certificate or
certificates representing the shares to be redeemed (the "Redemption
Notice"). Except as provided in subsection 4(c)(iii), on or after the
Redemption Date, each holder of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock to be redeemed shall surrender to this Corporation the
certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon the Series A
Redemption Price, Series B Redemption Price, Series C Redemption Price, the
Series D Redemption Price or the Series E Redemption Price, as the case may
be, of such shares shall be payable, to the order of the person whose name
appears on such certificate
4
or certificates as the owner thereof and each surrendered certificate shall
be canceled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(ii) If the funds of the Corporation
legally available for redemption of outstanding shares of Preferred Stock on any
Redemption Date are insufficient to redeem the total number of shares of
Preferred Stock to be redeemed on such date, those funds which are legally
available will be used to redeem the maximum possible number of such shares
ratably among the holders of (A) first, such shares of Series B, Series C,
Series D and Series E Preferred Stock to be redeemed, and (B) second, such
shares of Series A Preferred Stock to be redeemed. The shares of Preferred Stock
not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of
this Corporation are legally available for the redemption of shares of Preferred
Stock, such funds shall immediately be used to redeem the balance of the shares
which this Corporation has become obligated to redeem on any Redemption Date but
which it has not redeemed.
(iii) From and after the Redemption Date,
unless there shall have been a default in payment of the applicable Series A
Redemption Price, Series B Redemption Price, Series C Redemption Price, Series D
Redemption Price or the Series E Redemption Price, all rights of the holders of
such shares as holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(except the right to receive the Series A Redemption Price, Series B Redemption
Price, Series C Redemption Price, Series D Redemption Price or the Series E
Redemption Price, without interest, upon surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of this Corporation or be deemed to be
outstanding for any purpose whatsoever.
(iv) At least three days prior to the
Redemption Date, this Corporation shall deposit the Series A Redemption Price,
Series B Redemption Price, Series C Redemption Price, Series D Redemption Price
and Series E Redemption Price of all outstanding shares of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock, designated for redemption in the
Redemption Notice, and not yet redeemed or converted, with a bank or trust
company having aggregate capital and surplus in excess of $50,000,000, as a
trust fund for the benefit of the holders of the shares designated for
redemption and not yet redeemed. Simultaneously, this Corporation shall deposit
irrevocable instructions and authority to such bank or trust company to pay, on
and after the Redemption Date or prior thereto, the Series A Redemption Price,
Series B Redemption Price, Series C Redemption Price, Series D Redemption Price
and Series E Redemption Price, as the case may be, to the holders thereof upon
surrender of their certificates. Any monies deposited by this Corporation
pursuant to this subsection 4(c)(iv) for the redemption of shares which are
thereafter converted into shares of Common Stock pursuant to Section 5 hereof no
later than the close of business on the Redemption Date shall be returned to
this Corporation forthwith upon such conversion. The balance of any monies
deposited by this Corporation pursuant to this subsection 4(c)(iv) remaining
unclaimed at the expiration of two years following the Redemption Date shall
thereafter be returned to this Corporation, provided that the stockholder to
which such monies would be payable hereunder shall be entitled, upon proof of
its ownership of the Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock,
5
Series D Preferred Stock or Series E Preferred Stock, as the case may be, and
payment of any bond requested by this Corporation, to receive such monies but
without interest from the Redemption Date.
5. CONVERSION. The holders of Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT.
(i) Subject to subsection 5(c), each
outstanding share of Preferred Stock shall be convertible, at the option of the
holder thereof at any time after the date of issuance of such share (and on or
prior to the fifth day prior to the Redemption Date, if any, as may have been
fixed in any Redemption Notice), at the office of this Corporation or any
transfer agent for such series of Preferred Stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing the
Original Series A Issue Price, the Original Series B Issue Price, the Original
Series C Issue Price, the Original Series D Issue Price and the Original Series
E Issue Price, respectively, by the Conversion Price at the time in effect for
such series or shares of such series. The initial Conversion Price per share for
shares of Preferred Stock shall be the Original Series A Issue Price, the
Original Series B Issue Price, the Original Series C Issue Price, the Original
Series D Issue Price and the Original Series E Issue Price, respectively,
provided, however, that the Conversion Prices for the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock shall be subject to adjustment
as set forth in subsection 5(c).
(ii) Each outstanding share of Preferred
Stock shall automatically be converted into shares of Common Stock at the
Conversion Price at the time in effect for such shares immediately upon:
(A) the closing of this
Corporation's sale of its Common Stock in a bona fide, firm commitment
underwritten public offering registered under the Securities Act of 1933, as
amended (the "Securities Act"), which results in aggregate gross offering
proceeds to this Corporation of at least $15,000,000, at a public offering price
of not less than $7.50 per share (adjusted to reflect subsequent stock
dividends, stock splits or recapitalizations) (a "Qualifying Public Offering");
or
(B) the approval of (i)
holders of at least 75% of the then outstanding shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock, voting together as a single class and (ii)
holders of not less than 60% of the Series D Preferred Stock voting as a class.
(b) MECHANICS OF CONVERSION. Before any holder
of Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of this Corporation or of any transfer agent for
such stock, and shall be given written notice by mail postage prepaid, to this
Corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This Corporation
shall, as soon as practicable thereafter, issue and deliver at such
6
office to such holder of Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion
shall be deemed to have been made immediately prior to the close of business
on the date of such surrender of the shares of such series of Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such
date. If the conversion is in connection with an underwritten offer of
securities registered pursuant to the Securities Act, the conversion may, at
the option of any holder tendering shares of such series of Preferred Stock
for conversion, be conditioned upon the closing with the underwriter of the
sale of securities pursuant to such offering, in which event the person(s)
entitled to receive the Common Stock issuable upon such conversion of shares
of such series of Preferred Stock shall not be deemed to have converted such
shares of such series of Preferred Stock until immediately prior to the
closing of such sale of securities.
(c) CONVERSION PRICE ADJUSTMENTS OF THE
PREFERRED STOCK. The Conversion Prices of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock shall be subject to adjustment from time to time as follows:
(i) (A) If this Corporation shall
issue any Additional Stock (as defined below) without consideration or for a
consideration per share less than the Conversion Price for shares of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock in effect immediately prior to the
issuance of such Additional Stock, the new Conversion Price for such shares of
such series of Preferred Stock shall be determined by multiplying the Conversion
Price for such series of Preferred Stock in effect immediately prior to the
issuance of Additional Stock by a fraction:
(x) the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (for purposes of this calculation
only, including the number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Preferred Stock at the
Conversion Price for such shares in effect immediately prior to such
issuance of Additional Stock) plus the number of shares of Common Stock
equivalents which the aggregate consideration received by this
Corporation for the shares of such Additional Stock so issued would
purchase at the Conversion Price in effect at the time for the shares
of the series of Preferred Stock with respect to which the adjustment
is being made; and
(y) the denominator
of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (for purposes of this calculation
only, including the number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Preferred Stock at the
Conversion Price for such shares in effect immediately prior to such
issuance of Additional Stock) plus the number of such shares of
Additional Stock so issued.
7
Any series of issuances of Additional Stock consisting of
Common Stock or the same series of Preferred Stock, issued at the same price and
within a six-month period, shall be treated as one issuance of Additional Stock
for the purposes of this calculation.
(B) No adjustment of the
Conversion Price for such series of Preferred Stock shall be made in an amount
less than one cent per share, provided that any adjustments which are not
required to be made by reason of this sentence shall be carried forward and
shall be either taken into account in any subsequent adjustment made prior to
three years from the date of the event giving rise to the adjustment being
carried forward, or shall be made at the end of three years from the date of the
event giving rise to the adjustment being carried forward. Except to the limited
extent provided for in subsections 5(c)(i)(E)(3) and (c)(i)(E)(4), no adjustment
of such Conversion Price for such series of Preferred Stock pursuant to this
subsection 5(c)(i) shall have the effect of increasing the Conversion Price for
such series of Preferred Stock above the Conversion Price for such series in
effect immediately prior to such adjustment.
(C) In the case of the issuance
of Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by this Corporation for any
underwriting or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance
of the Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance
of options to purchase or rights to subscribe for Common Stock, securities by
their terms convertible into or exchangeable for Common Stock or options to
purchase or rights to subscribe for such convertible or exchangeable securities
(which are not excluded from the definition of Additional Stock), the following
provisions shall apply:
(1) The aggregate
maximum number of shares of Common Stock deliverable upon exercise of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
subsections 5(c)(i)(C) and (c)(i)(D)), if any, received by the Corporation upon
the issuance of such options or rights plus the minimum purchase price provided
in such options or rights for the Common Stock covered thereby.
(2) The aggregate
maximum number of shares of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange thereof shall be
deemed to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the
consideration, if any, received by this Corporation for any such securities and
related options or rights (excluding any cash received on
8
account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by this Corporation upon the conversion
or exchange of such securities or the exercise of any related options or
rights (the consideration in each case to be determined in the manner
provided in subsections 5(c)(i)(C) and (c)(i)(D)).
(3) In the event of
any change in the number of shares of Common Stock deliverable or any increase
in the consideration payable to this Corporation upon exercise of such options
or rights or upon conversion of or in exchange for such convertible or
exchangeable securities, including, but not limited to, a change resulting from
the anti-dilution provisions thereof, the Conversion Price of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock, as the case may be, obtained with
respect to the adjustment which was made upon the issuance of such options,
rights or securities, and any subsequent adjustments based thereon shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities; provided, however, that this section shall not have any effect on
any conversion of such series of Preferred Stock prior to such change or
increase.
(4) Upon the
expiration of any such options or rights, the termination of any such rights to
convert or exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock, as the case may be, obtained with
respect to the adjustment which was made upon the issuance of such options,
rights or securities or options or rights related to such securities, and any
subsequent adjustments based thereon, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock actually issued upon the
exercise of such options or rights upon the conversion or exchange of such
securities or upon the exercise of the options or rights related to such
securities; provided, however, that this section shall not have any effect on
any conversion of such series of Preferred Stock prior to such expiration or
termination.
(ii) "Additional Stock" shall mean any
shares of Common Stock issued (or deemed to have been issued pursuant to
subsection 5(c)(i)(E)) by this Corporation after June 22, 1998, other than:
(A) Common Stock issued
pursuant to a transaction described in subsection 5(c)(iii) hereof, or
(B) 5,454,860 shares of Common
Stock, net of repurchases and the cancellation or expiration of options, issued
or issuable to employees, directors, consultants or advisors of this Corporation
under stock option and restricted stock purchase agreements approved by the
Board of Directors commencing as of May 1994, and such other number of shares of
Common Stock as may be fixed from time to time by the Board of Directors and
approved by a majority of then outstanding Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, voting as a single class, issued or issuable to employees,
directors, consultants or advisors
9
of this Corporation under stock option and restricted stock purchase
agreements approved by the Board of Directors, or
(C) Common Stock issued or
issuable upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock.
(iii) In the event this Corporation
should at any time or from time to time after the effective date hereof fix a
record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then as of such record date (or
the date of such dividend distribution, split or subdivision if no record date
is fixed), the Conversion Price for the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock, as the case may be, shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase of outstanding
shares determined in accordance with subsection 5(c)(i)(E).
(iv) If the number of shares of Common
Stock outstanding at any time after the effective date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Series E Preferred Stock, as the case may be, shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.
(d) OTHER DISTRIBUTIONS. In the event this
Corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this Corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection
5(c)(iii), then, in each such case for the purpose of this subsection 5(d), the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of this Corporation into
which their shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, as the
case may be, are convertible as of the record date fixed for the determination
of the holders of Common Stock of this Corporation entitled to receive such
distribution.
(e) RECAPITALIZATIONS. If at any time or from
time to time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 5 or Section 6) provision shall be made so that the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
10
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, shall
thereafter be entitled to receive upon conversion of such series of Preferred
Stock the number of shares of stock or other securities or property of this
Corporation or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such
case, appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, after the
recapitalization to the end that the provisions of this Section 5 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of such series of Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
(f) NO IMPAIRMENT. This Corporation will
not, by amendment of its Certificate of Incorporation or through any
reorganization, revitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by this Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 5
and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock against impairment.
(g) FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(i) No fractional shares shall be
issued upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred
Stock, and the number of shares of Common Stock to be issued shall be rounded to
the nearest whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
such series of Preferred Stock the holder is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion.
(ii) Upon the occurrence of each
adjustment or, readjustment of the Conversion Price of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
Series E Preferred Stock, as the case may be, pursuant to this Section 5, this
Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock, or instrument
convertible into shares of any such series of Preferred Stock, as the case may
be, a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. This
Corporation shall, upon the written request furnish or cause to be furnished to
such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price at the time in effect, and (C) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of a share of such series of
Preferred Stock.
11
(h) NOTICES OF RECORD DATE. In the event of
any taking by this Corporation of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to
receive any other right, this Corporation shall mail to each holder of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock or Series E Preferred Stock at least 20 days prior to the
date specified therein, a notice specifying the date on which by such record
is to be taken for the purpose of such dividend, distribution or right and
the amount and character of such dividend, distribution or right.
(i) RESERVATION OF COMMON STOCK ISSUABLE UPON
CONVERSION. This Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
authorized shares of such series of Preferred Stock, and if at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then authorized shares of such
series of Preferred Stock, in addition to such other remedies as shall be
available to the holders of such series of Preferred Stock, this Corporation
will take such corporate action as may, in the opinion of its counsel be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes.
(j) NOTICES. Any notice required by the
provisions of this Section 5 to be given to the holders of shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock shall be deemed given if
deposited in the United States postage prepaid, and addressed to each holder
of record at such holder's address appearing on the books of this Corporation.
6. MERGER; CONSOLIDATION.
(a) If at any time after the effective date
hereof there is a merger, consolidation or other corporate reorganization in
which stockholders of this Corporation immediately prior to such transaction own
less than 50% of the voting securities of the surviving or controlling entity
immediately after the transaction, or sale of all or substantially all of the
assets of this Corporation (hereinafter, an "Acquisition"), then, as a part of
such Acquisition, provision shall be made so that the holders of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock and Series E Preferred Stock shall be entitled to
receive, prior to any distribution to holders of Common Stock or other junior
equity security of the Corporation, the number of shares of stock or other
securities or property to be issued to this Corporation or its stockholders
resulting from such Acquisition in an amount per share equal to the Original
Series A Issue Price, Original Series B Issue Price, Original Series C Issue
Price, Original Series D Issue Price and Original Series E Issue Price, as
applicable, plus a further amount equal to any dividends declared but unpaid on
such shares. Subject to the following sentence, the holders of Common Stock
shall thereafter be entitled to receive, pro rata, the remainder of the number
of shares of stock or other securities or
12
property to be issued to this Corporation or its stockholders resulting from
such Acquisition. Notwithstanding anything to the contrary in this Section 6,
in the event the aggregate value of stock, securities and other property to
be distributed to this Corporation or its stockholders with respect to an
Acquisition is less than $5.25 per share (such dollar amount to be
appropriately adjusted to reflect any subsequent stock splits, stock
dividends or other recapitalizations) of Common Stock outstanding (for
purpose of this calculation only, including in the number of shares of Common
Stock outstanding the number of shares of Common Stock then issuable upon
conversion of all outstanding Preferred Stock), then the stock, securities or
other property shall be distributed among the holders of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, the Series D
Preferred Stock, Series E Preferred Stock and the Common Stock according to
the provisions of Section 3 hereof as if such Acquisition were deemed a
liquidation.
(b) Any securities to be delivered to the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, the Series D Preferred Stock, Series E Preferred Stock and
Common Stock pursuant to subsection 6(a) above shall be valued as follows:
(i) Securities not subject to investment
letter or other similar restrictions on free marketability;
(A) If traded on a securities
exchange, the value shall be deemed to be the average of the closing prices of
the securities on such exchange over the 30-day period ending three days prior
to the closing;
(B) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever are applicable) over the 30-day period ending three
days prior to the closing; and
(C) If there is no active
public market, the value shall be the fair market value thereof, as mutually
determined by the Corporation and the holders of not less than a majority of the
then outstanding shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, the Series D Preferred Stock and Series E Preferred
Stock.
(ii) The method of valuation of
securities subject to investment letter or other restrictions on free
marketability shall be to make an appropriate discount from the market value
determined as above in subsections 6(b)(i)(A), (B) or (C) to reflect the
approximate fair market value thereof, as mutually determined by this
Corporation and the holders of a majority of the then outstanding shares of
Series A Preferred Stock, Series B Preferred, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock, voting as a single class.
(c) In the event the requirements of
subsection 6(a) are not complied with, this Corporation shall forthwith either:
(i) cause such closing to be postponed
until such time as the requirements of this Section 6 have been complied with,
or
(ii) cancel such transaction, in which
event the rights, preferences and privileges of the holders of the Series A
Preferred Stock, Series B Preferred
13
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock shall revert to and be the same as such rights, preferences
and privileges existing immediately prior to the date of the first notice
referred to in subsection 6(d) hereof.
(d) This Corporation shall give each holder of
record of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Series E Preferred Stock written notice of
such impending transaction not later than 20 days prior to the stockholders'
meeting called to approve such action, or 20 days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in writing
of the final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the impending transaction and the
provisions of this Section 6, and this Corporation shall thereafter give such
holders prompt notice of any material changes. The transaction shall in no event
take place earlier than 20 days after the Corporation has given the first notice
provided for herein or earlier than 10 days after the Corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of a majority
of the then outstanding Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
voting as a class.
(e) The provisions of this Section 6 are in
addition to the protective provisions of Section 8 hereof.
7. VOTING RIGHTS; DIRECTORS.
(a) The holder of each outstanding share of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock shall have the right to
one vote for each share of Common Stock into which such outstanding Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock could be converted on the record
date for the vote or written consent of stockholders. In all cases any
fractional share, determined on an aggregate conversion basis, shall be rounded
to the nearest whole share. With respect to such vote, such holder shall have
full voting rights and powers equal to the voting rights and powers of the
holders of Common Stock, and shall be entitled, notwithstanding any provision
hereof to notice of any stockholders' meeting in accordance with the bylaws of
this Corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have the
right to vote.
(b) Notwithstanding subsection 7(a), (i) so
long as at least fifty percent (50%) of the shares of Series A Preferred Stock
and Series B Preferred Stock originally issued remain issued and outstanding,
the holders of Series A Preferred Stock and Series B Preferred Stock, voting
together as a separate class, shall be entitled to elect one member of the Board
of Directors, (ii) so long as at least fifty percent (50%) of the shares of
Series C Preferred Stock originally issued remain issued and outstanding, the
holders of Series C Preferred Stock, voting as a separate class, shall be
entitled to elect one member of the Board of Directors, (iii) so long as at
least fifty percent (50%) of the shares of Series D Preferred Stock originally
issued remain issued and outstanding, the holders of Series D Preferred Stock,
voting as a separate class, shall be entitled to elect one member of the Board
of Directors and (iv) so long as at least fifty percent
14
(50%) of the shares of Series E Preferred Stock originally issued remain
issued and outstanding, the holders of Series E Preferred Stock, voting as a
separate class, shall be entitled to elect one member of the Board of
Directors. Any additional directors shall be elected by the holders of
Preferred Stock and Common Stock, voting together as a single class.
A vacancy in any directorship elected by the holders of Series
A Preferred Stock and Series B Preferred Stock shall be filled only by vote of
the holders of Series A Preferred Stock and Series B Preferred Stock, voting
together as a separate class; a vacancy in any directorship elected by the
holders of Series C Preferred Stock shall be filled only by vote of the holders
of Series C Preferred Stock; a vacancy in any directorship elected by the
holders of Series D Preferred Stock shall be filled only by a vote of the
holders of Series D Preferred Stock; and a vacancy in any directorship elected
by the holders of Series E Preferred Stock shall be filled only by a vote of the
holders of Series E Preferred Stock. Any vacancy in any other directorship shall
be elected by the holders of Preferred Stock and Common Stock, voting together
as one class.
This subsection 7(b) shall be void and of no further effect
thereafter upon the occurrence of either of the following events:
(i) the closing of a Qualifying Public
Offering;
(ii) upon the distribution to the
stockholders pursuant to Section 3 or Section 6 hereof of the net proceeds of
the sale of all or substantially all the assets of the Corporation.
8. PROTECTIVE PROVISIONS.
(a) In addition to any approvals required by
law, so long as shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock
are outstanding, this Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding voting power of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock (voting, as one class, in accordance with Section 7):
(i) sell, convey, or otherwise dispose
of all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) in which this Corporation is not the surviving corporation or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of this Corporation is disposed of,
provided, however, that this restriction shall not apply to any mortgage, deed
of trust, pledge or other encumbrance or hypothecation of the Corporation's or
any of its subsidiaries' assets for the purpose of securing any contract or
obligation; or
(ii) alter or change the rights,
preferences, privileges or restrictions of the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Series E Preferred Stock; or
15
(iii) increase the authorized number of
shares of Common Stock or Preferred Stock; or
(iv) create (by reclassification or
otherwise) any new class or series of stock having a preference over, or being
on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock with
respect to voting, dividends, redemption or conversion or upon liquidation; or
(v) pay or declare any dividend on its
Common Stock or any other junior equity security other than a dividend in Common
Stock of this Corporation; or
(vi) change the authorized number of
directors; or
(vii) do any act or thing which would
result in taxation of the holders of shares of Preferred Stock under section
305(b) of the Internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue Code as hereafter from time to time amended).
(b) In addition to any approvals required by
law, so long as shares of Series C Preferred Stock are outstanding, this
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the then
outstanding voting power of Series C Preferred Stock, voting as a single class:
(i) alter or change the rights,
preferences, privileges or restrictions of the shares of Series C Preferred
Stock; or
(ii) create (by reclassification or
otherwise) any new class or series of stock having a preference over, or being
on a parity with, the Series C Preferred Stock with respect to voting,
dividends, redemption or conversion or upon liquidation.
(c) In addition to any approvals required by
law, so long as shares of Series D Preferred Stock are outstanding, this
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the then
outstanding voting power of Series D Preferred Stock, voting as a single class:
(i) sell, convey, or otherwise dispose
of all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) in which this Corporation is not the surviving corporation or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of this Corporation is disposed of,
provided, however, that this restriction shall not apply to any mortgage, deed
of trust, pledge or other encumbrance or hypothecation of the Corporation's or
any of its subsidiaries' assets for the purpose of securing any contract or
obligation; or
(ii) alter or change the rights,
preferences, privileges or restrictions of the shares of Series D Preferred
Stock; or
16
(iii) increase the authorized number of
shares of Series D Preferred Stock;
or
(iv) increase the authorized number of
directors; or
(v) create (by reclassification or
otherwise) any new class or series of stock having a preference over, or being
on a parity with, the Series D Preferred Stock with respect to voting,
dividends, redemption or conversion or upon liquidation.
(d) In addition to any approvals required by
law, so long as shares of Series E Preferred Stock are outstanding, this
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least sixty-six percent (66%)
of the then outstanding voting power of Series E Preferred Stock, voting as a
single class:
(i) materially or adversely alter or
change the rights, preferences or privileges of the shares of Series E Preferred
Stock as a separate series in a manner that is dissimilar and disproportionate
relative to the manner in which the rights, preferences or privileges of the
other series of Preferred Stock are altered, or
(ii) increase the authorized number of
shares of Series E Preferred Stock.
9. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock shall be redeemed or
converted pursuant to Section 4 or 5 hereof the shares so redeemed or converted
shall be cancelled and shall not be issuable by this Corporation, and the
Certificate of Incorporation of this Corporation shall be appropriately amended
to effect the corresponding reduction in this Corporation's authorized capital
stock.
10. REPURCHASE OF SHARES. In connection with repurchases by this
Corporation of its Common Stock pursuant to agreements with certain of the
holders thereof approved by this Corporation's Board of Directors, each holder
of Preferred Stock shall be deemed to have waived the application, in whole or
in part, of any provisions of the Delaware General Corporation Law or any
applicable law of any other state which might limit or prevent or prohibit such
repurchases.
C. COMMON STOCK.
1. RELATIVE RIGHTS OF PREFERRED STOCK AND COMMON STOCK. All
rights preferences, voting powers, relative, participating optional or other
special rights and privileges, and qualifications, limitations, or restrictions
of the Common Stock are expressly made subject and subordinate to those that may
be fixed with respect to any shares of the Preferred Stock.
2. VOTING RIGHTS. Except as otherwise required by law or this
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect of each share of stock held by such holder of record on the books of the
Corporation for the election of directors and on all matters submitted to a vote
of stockholders of the Corporation.
17
3. DIVIDENDS. Subject to the preferential rights of the
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of the
assets of the Corporation which are by law available therefor, dividends
payable either in cash, in property or in shares of capital stock.
4. DISSOLUTION, LIQUIDATION OR WINDING UP. In the event of any
dissolution, liquidation or winding up of the affairs of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock, holders of Common Stock shall be
entitled to participate in any distribution of the assets of the Corporation in
accordance with Section 3 of Article IV, Division B hereof.
5. NO PREEMPTIVE RIGHTS. The holders of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Common Stock shall not have any preemptive
rights. The foregoing shall not, however, prohibit the Corporation from granting
contractual rights of first refusal to purchase securities to holders of
Preferred Stock.
ARTICLE V
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the bylaws of the Corporation; provided, however, that
the bylaws may only be amended in accordance with the provisions thereof and,
provided further that, the authorized number of directors may be changed only
with the approval of the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock (voting as one
class) in accordance with Section 7 of Article IV Division B.
B. Elections of directors need not be by written ballot unless
the bylaws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the bylaws of the Corporation may provide or as
may be designated from time to time by the Board of Directors of the
Corporation.
ARTICLE VI
A. EXCULPATION.
1.
CALIFORNIA. The liability of each and every
director of this Corporation for monetary damages shall be eliminated to the
fullest extent permissible under
California law.
2. DELAWARE. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a
18
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is hereafter
amended to further reduce or to authorize, with the approval of the
Corporation's stockholders, further reductions in the liability of the
Corporation's directors for breach of fiduciary duty, then a director of the
Corporation shall not be liable for any such breach to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
3. CONSISTENCY. In the event of any inconsistency
between Sections 1 and 2 of this Division A, the controlling Section, as to any
particular issue with regard to any particular matter, shall be the one which
provides to the director in question the greatest protection from liability.
B. INDEMNIFICATION.
1.
CALIFORNIA. This Corporation is authorized to indemnify the
directors and officers of this Corporation to the fullest extent permissible
under
California law. Moreover, this Corporation is authorized to provide
indemnification of (and advancement of expenses to) agents (as defined in
Section 317 of the
California Corporations Code) through bylaw provisions,
agreements with agents, vote of stockholders or disinterested directors or
otherwise, in excess of the indemnification and advancement otherwise permitted
by Section 317 of the
California Corporations Code, subject only to applicable
limits set forth in Section 204 of the California Corporations Code, with
respect to actions for breach of duty to the Corporation and its stockholders.
2. DELAWARE. To the extent permitted by applicable law, this
Corporation is also authorized to provide indemnification of (and advancement of
expenses to) such agents (and any other persons to which Delaware law permits
this Corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
Corporation, its stockholders and others.
3. CONSISTENCY. In the event of any inconsistency between
Sections 1 and 2 of this Division B, the controlling Section, as to any
particular issue with regard to any particular matter, shall be the one which
authorizes for the benefit of the agent or other person in question the
provision of the fullest, promptest, most certain or otherwise most favorable
indemnification and/or advancement.
C. EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of any
of the foregoing provisions of this Article VI shall not adversely affect any
right or protection of a director, officer, agent or other person existing at
the time of, or increase the liability of any director of the Corporation with
respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
19
ARTICLE VII
The Corporation shall have perpetual existence.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been executed as of this ____ day of November 2000.
DIGIRAD CORPORATION
By:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
[SIGNATURE PAGE TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION]
EXHIBIT B
SCHEDULE OF EXCEPTIONS
B-1
EXHIBIT B
SCHEDULE OF EXCEPTIONS
THIS SCHEDULE OF EXCEPTIONS IS MADE AND GIVEN WITH RESPECT TO SECTION 2
OF THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT, DATED AS
OF NOVEMBER 10, 2000, BY AND AMONG
DIGIRAD CORPORATION, A DELAWARE CORPORATION
(THE "COMPANY"), AND THE INVESTORS LISTED ON SCHEDULE 1 ATTACHED THERETO (THE
"PURCHASE AGREEMENT"). ALTHOUGH THE SECTION NUMBERS SET FORTH BELOW CORRESPOND
TO THE SECTION NUMBERS IN THE PURCHASE AGREEMENT, ANY INFORMATION DISCLOSED
HEREIN UNDER ANY SECTION NUMBER SHALL BE DEEMED TO BE DISCLOSED AND INCORPORATED
INTO ANY OTHER SECTION NUMBER UNDER THE PURCHASE AGREEMENT WHERE SUCH
DISCLOSURES WOULD BE APPROPRIATE. WHERE THE TERMS OF A LEASE, CONTRACT OR OTHER
DISCLOSURE ITEM HAVE BEEN SUMMARIZED OR DESCRIBED IN THIS SCHEDULE, SUCH SUMMARY
OR DESCRIPTION DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE MATERIAL TERMS
OF SUCH LEASE, CONTRACT OR OTHER ITEM. UNLESS THE CONTEXT OTHERWISE REQUIRES,
ALL CAPITALIZED TERMS SHALL HAVE THE SAME MEANING AS DEFINED IN THE PURCHASE
AGREEMENT. UNLESS OTHERWISE INDICATED BELOW, ALL REFERENCES TO THE CLOSING OR
THE CLOSING DATE SHALL BE DEEMED TO REFER TO SUCH TERMS AS THEY ARE DEFINED IN
THE PURCHASE AGREEMENT.
SECTION 2.5
CAPITALIZATION
1. Warrants to purchase 172,925 shares, 27,307 shares and 57,642 shares of
Series E Preferred Stock at $3.036 per share were issued to ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Company on October 27, 1999, May 9, 2000 and August 14, 2000
respectively.
2. Warrants to purchase 24,703 shares, 3,901 shares and 8,235 shares of
Series E Preferred Stock at $3.036 per share were issued to Priority
Capital on October 27, 1999, May 9, 2000 and August 14, 2000
respectively.
3. Upon the closing of this offering, the Company will issue warrants to
purchase an aggregate of 65,876 shares of Series E Preferred Stock at
$3.036 per share in connection with certain convertible promissory
notes issued September 29, 2000 in the aggregate principal amount of
$2,000,000.
SECTION 2.6
SUBSIDIARIES
The Company has formed the following subsidiaries: Orion Imaging
Systems, Inc, a Delaware corporation, and Digirad Imaging Systems, Inc., a
Delaware corporation.
SECTION 2.7
CONTRACTS AND OTHER COMMITMENTS.
The Company has, from time to time, entered into the following
Consulting Agreements:
1. Bio-Reg Associates, Inc. Consulting Agreement dated November 20,
1995.
2. Makago Electronics, Inc. Project Consulting Agreement dated
January 27, 1998.
3. ▇▇▇▇▇▇ ▇▇▇▇▇ Consulting Agreement dated June 24, 1998.
4. ▇▇▇▇▇▇ ▇▇▇▇ Project Consulting Agreement dated July 1, 1998.
5. ▇▇▇ ▇▇▇▇▇ Consulting Agreement dated July 20, 1998.
6. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Consulting Agreement dated August 8, 1998.
7. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CPA Consulting Agreement dated August 14, 1998.
8. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Consulting Agreement dated August 14, 1998.
9. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, MD, PhD Consulting Service Agreement
dated March 4, 1999.
10. Separation and Consulting Agreement and General Release with
▇▇▇▇▇ ▇. ▇▇▇▇▇ dated May 20, 1999.
11. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Mechanical Design Consulting Agreement dated
June 14, 1999.
12. C4S Consulting Agreement dated July 26, 1999
13. ▇▇▇▇▇ & Associates Consulting Agreement dated September 13, 1999.
14. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Consulting Agreement dated October 4, 1999.
15. ▇▇▇▇ ▇▇▇▇ Consulting Agreement dated December 3, 1999.
16. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Consulting Agreement dated February 25, 2000.
17. Design & Development with ▇▇▇▇▇ ▇▇▇▇▇ & Associates dated February
18, 1998.
The Company has entered into the following Purchase Contracts (over
$100,000):
1. Purchase Order #70145 with QuickSil Inc. dated September 8, 2000
in the amount of $266,250.
2. Purchase Order #60274 with Nuclear Fields USA dated October 18,
2000 in the amount of $212,600.
3. Purchase Order # 51645 with ▇▇▇▇▇▇ Crystals, Ltd. dated February
2, 2000 in the amount of $350,631.
4. Purchase Order #52322 with Segami Corporation dated October 12,
2000 in the amount of $280,000.
The Company has, from time to time, entered into the following
contracts:
1. Shareholders Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (as sole trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Revocable Trust) dated May 13, 1994.
2. Stock Purchase Agreement (Series A Preferred Stock) with ▇▇▇▇▇▇▇▇▇
Capital Partners, L.P., dated May 13, 1994.
3. Restricted Stock Purchase Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated May 9,1994.
4. Stock Purchase Agreement (Series A Preferred Stock) with ▇▇▇▇▇▇▇▇▇
Capital Partners, L.P., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated March 1, 1995.
5. Stock Purchase Agreement (Series A Preferred Stock) with ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ Trust Dated 3/15/89, ▇▇▇▇▇▇▇▇▇ Capital Partners, L.P.,
▇▇▇▇▇▇▇▇▇ Capital Partners, L.P., II, ▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇
Family Trust, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇ Trustees
for the ▇▇▇▇ Family Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇ dated April 23, 1996.
6. Stock Purchase Agreement (Series B Preferred Stock) with ▇▇▇▇▇▇▇▇▇
Capital Partners, L.P. and ▇▇▇▇▇▇▇▇▇ Capital Partners, L.P., II
dated December 8, 1995.
7. Stock Purchase Agreement (Common Stock) with ▇▇▇▇▇ ▇. ▇▇▇▇ dated
April 23, 1996.
8. Secured Convertible Promissory Notes dated September 6, 1996 in
the aggregate principal amount of $5,000,000. Notes to convert to
shares of Series C Preferred Stock as set forth in the promissory
note agreements at the closing of the of the Series D Preferred
Stock sale.
9. Secured Convertible Promissory Notes dated September 30, 1996 in
the aggregate principal amount of $1,000,000. Notes to convert to
shares of Series C Preferred Stock as set forth in the promissory
note agreements at the closing of the of the Series D Preferred
Stock sale.
10. Series D Preferred Stock Purchase Agreement dated August 8, 1997.
11. Series E Preferred Stock Purchase Agreement dated June 23, 1998.
12. Additional Series E Preferred Stock Agreement dated March 15,
2000.
13. Second Additional Series E Preferred Stock Agreement dated April
6, 2000.
14. Third Additional Series E Preferred Stock Agreement dated June 9,
2000.
15. Convertible Promissory Note with Health Care Indemnity, Inc. dated
January 25, 2000.
16. Convertible Promissory Note and Warrant Purchase Agreements dated
September 29, 2000 in the amount of $2,000,000.
17. Building Lease with ▇▇▇▇/▇▇▇▇ No. 1, a California general
partnership, for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ dated
January 27, 1998 for the period February 16, 1998 through March
31, 2002.
18. Building Lease with Research Diversified for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
dated April 7, 1999 for the period August 1, 1999 through July 31,
2001.
19. Building Lease with ▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ dated March 23, 1999 for the period May 1, 1999 through
April 30, 2001.
20. Building Lease with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated November 23, 1999 for the period
January 1, 2000 through December 31, 2000.
21. Building Lease with Western Salt Company for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated March 24, 1999 for the period
April 1, 1999 through March 31, 2001.
22. Building Lease with ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇ ▇▇▇ ▇▇▇▇ for ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated August 18, 1999 for the
period September 1, 1999 through December 31, 2000.
23. Building Lease with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ for ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated August 4, 1999 for the period
September 15, 1999 through September 14, 2000.
24. Amendment to building lease with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ for ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated August 10, 2000.
25. Letter of Intent regarding proposed acquisition of Nuclear Imaging
Systems, Inc. nuclear medicine mobile service business dated May
11, 2000.
26. Asset Purchase Agreement by and among
Digirad Corporation, Orion
Imaging Systems, Inc., Florida Cardiology & Nuclear Medicine
Group, P.A. and Dr. ▇▇▇▇ ▇▇▇▇▇▇▇ dated August 31, 2000.
27. Exclusive Placement Agent Agreement with Banc of America
Securities LLC in connection with a proposed private placement of
securities dated July 20, 2000.
28. Contract V797P6897a with Department of Veteran Affairs dated
September, 20, 2000.
29. Service Agreement with Universal Servicetrends, Inc. dated August
25, 2000.
See disclosures in Section 2.19 with respect to Patents, Trademarks or
other technology of the Company.
SECTION 2.8
RELATED-PARTY TRANSACTIONS.
The Company has, from time to time, entered into the following Loan
Agreements with certain of its employees and directors.
1. Loan Agreement with ▇▇▇▇ ▇. ▇▇▇▇▇▇ in an aggregate amount of
$245,000 dated September 1, 1993, as amended.
2. Loan Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in an aggregate amount of
$245,000 dated September 1, 1993, as amended.
3. Loan Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (as sole trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Revocable Trust) in an aggregate amount of
$245,000 dated September 1, 1993, as amended.
4. Promissory Note Secured by Stock Pledge Agreement with ▇▇▇▇▇ ▇.
▇▇▇▇ dated June 23, 1999 in the amount of $4,180.
5. Promissory Note Secured by Stock Pledge Agreement with ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ dated May 15, 2000 in the amount of $33,419.
6. Promissory Note Secured by Stock Pledge Agreement with ▇▇▇ ▇▇▇▇
dated May 15, 2000 in the amount of $35,000.
7. Promissory Note Secured by Stock Pledge Agreement with Shulai
Zhao dated May 15, 2000 in the amount of $11,904.
8. Promissory Note Secured by Stock Pledge Agreement with ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ dated July 14, 2000 in the amount of $3,500.
9. Promissory Note Secured by Stock Pledge Agreement with ▇▇▇ ▇▇▇▇▇▇▇
dated August 9, 2000 in the amount of $5,682.
10. Promissory Note Secured by Stock Pledge Agreement with ▇▇▇▇ ▇▇▇▇▇▇
dated September 22, 2000 in the amount of $17,500.
11. Promissory Note with ▇▇▇▇▇ ▇▇▇▇▇▇▇ dated August 18, 2000 in the
Famount of $5,000.
12. Promissory Note to ▇▇▇▇▇▇▇▇▇ Capital Partners, L.P. III dated
September 29, 2000 in the aggregate principal amount of $300,000.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the Board of the Board of Directors, is a
general partner in ▇▇▇▇▇▇▇▇▇.
13. Promissory Note to ▇▇▇▇▇▇▇▇▇ Capital Partners, ▇.▇. ▇▇ dated
September 29, 2000 in the aggregate principal amount of $700,000.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, a member of the Board of Directors, is a
general partner in ▇▇▇▇▇▇▇▇▇.
14. Promissory Note to Vector Later-Stage Equity Fund II (QP), L.P.
Fin the aggregate principal amount of $375,000. ▇▇▇▇▇▇▇ ▇▇▇▇, a
member of the Company's Board of Directors, is a general partner
in Vector.
15. Promissory Note to Vector Later-Stage Equity Fund II, L.P. in the
aggregate principal amount of $125,000. ▇▇▇▇▇▇▇ ▇▇▇▇, a member of
the Company's Board of Directors, is a general partner in Vector.
SECTION 2.16
TITLE TO PROPERTY AND ASSETS; LEASES.
1. Loan and Security Agreement with MMC/GATX Partnership No. 1 dated
FFOctober 27, 1999.
2. First Amendment to Loan and Security Agreement with MMC/GATX
Partnership No. 1 dated August 14, 2000.
3. Loan and Security Agreement with Silicon Valley Bank dated April
1, 2000.
4. Amendment to Loan and Security Agreement with Silicon Valley Bank
dated August 2, 2000.
5. Master Lease Agreement with GE Healthcare Financial Services dated
September 26, 2000.
SECTION 2.17
FINANCIAL STATEMENTS
The following are liabilities individually in excess of $25,000 and in
the aggregate in excess of $100,000:
1. Arrow CNC Inc. $80,982
2. ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ $85,412
3. Crown Circuits, Inc. $131,330
4. Dynamic Details, Inc. $43,008
5. Federal Express Corp. $28,690
6. ▇▇▇▇▇▇ Crystals, Ltd. $52,446
7. ▇▇▇▇▇▇ Circuits, Inc. $30,008
8. IC Interconnect $30,550
9. ▇.▇. Marketing Inc. $45,959
10. Juki Automation Systems $93,416
11. Massachusetts General Hospital $124,895
12. Mitel Semiconductor $41,932
13. Nuclear Fields USA $75,634
14. Onsite Commercial Staffing $35,955
15. Photopeak, Inc. $63,220
16. Prudential Insurance $58,902
17. Quicksil Corp. $162,307
18. Supercool Thermoelectric $30,238
19. Technology Imaging Services $33,110
20. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ $25,150
21. Vista Industrial Products $34,031
22. Wacker Siltronic Corporation $41,039
SECTION 2.18
CHANGES.
(j) Schedules 01-10 to Equipment Lease agreement with MarCap Corporation dated
October 1, 2000 in the amount of $1,969,837.
SECTION 2.19
PATENTS AND TRADEMARKS.
A. STATUS OF PATENT ACTIVITY
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B. STATUS OF TRADEMARK ACTIVITY
I. Registration of "Digirad"
Filed Application.................................................................................September 6, 1994
Patent Office Action...............................................................................February 7, 1995
Amended Application filed...........................................................................August 14, 1995
Patent Office Action.................................................................................April 23, 1996
Reconsideration requested..............................................................................July 5, 1996
Appeal filed.......................................................................................October 18, 1996
Appeal Brief filed................................................................................December 20, 1996
Examining Attorney's Appeal Brief filed..............................................................March 10, 1997
Notice of Acceptance of Statement of Use..............................................................March 2, 1999
II. Registration of "SpectrumPlus"
Application Serial No. 75/202,359 filed...........................................................November 22, 1996
III. Registration of "Notebook Imager"
Application Serial No. 75/202,360 filed...........................................................November 22, 1996
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
C. OPTIONS, LICENSES OR AGREEMENTS:
1. ASIC Development Agreement with Augustine Engineering dated April
10, 1998.
2. Development and Supply Agreement with QuickSil Inc. dated June
18, 1999.
3. Supply and Development with Ethicon Endo-Surgery, Inc. dated June
23, 1998.
4. Termination Agreement with Ethicon Endo-Surgery, Inc. dated June
22, 1999.
5. Memorandum of Agreement for the "High Resolution Breast Gamma
Emission Imaging System" project with the University of Southern
California dated April 23, 1997.
6. Research Agreement with University of California San Diego
effective date May 28, 1996.
7. NIH Grant No. 2 R44 DK47761-02A1 entitled "Instrument for
Real-Time Renal Monitoring" dated September 17, 1997. Amount
$749,969.
8. Massachusetts General Hospital Phase II SBIR "Instrument for
Real-Time Monitoring" SBIR Research and Option Subcontract dated
February 16, 1998. Amount $340,000.
9. Option Agreement for Low-Resistivity Photon-Transparent Window
Attached to Photo-Sensitive Silicon Detector with The Regents of
the University of California through the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Berkeley National Laboratory dated June 3, 1998.
10. Research Agreement with The Regents of the University of
California, San Diego dated October 30, 1998.
11. License Agreement for Detector with The Regents of the University
of California through the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Berkeley
National Laboratory dated April 30, 1999.
12. Software License Agreement with Segami Corporation dated June
16, 1999.
13. License Agreement with Science Applications International
Corporation dated April 7, 2000.
SECTION 2.20
MANUFACTURING AND MARKETING RIGHTS.
1. Distribution and Supply Agreement with National Imaging Resources
dated October 16, 1998.
2. Imager Distribution Agreement with Mitsui & Co., Ltd. Dated
January 21, 2000.
3. Termination of Distribution and Supply Agreement with National
Imaging Resources dated June 13, 2000.
4. Distribution and Supply Agreement with AND Canada, Inc. dated
February 25, 2000.
5. Distribution and Supply Agreement with American Medical Systems
dated April 26, 2000.
6. Distribution and Supply Agreement with AMIS dated May 2, 2000.
7. Distribution and Supply Agreement with CMS Imaging, Inc. dated
July 18, 2000.
8. Distribution and Supply Agreement with Delta Imaging Systems
dated April 26, 2000.
9. Distribution and Supply Agreement with Performance Medical Group,
Inc. dated May 4, 2000.
10. National Account Agreement with Performance Medical Group, Inc.
dated May 4, 2000.
SECTION 2.22
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS.
To the Company's knowledge, the majority of its employees have executed
copies of the Employee Proprietary Information and Inventions Agreement.
SECTION 2.23
TAX RETURNS, PAYMENTS, AND ELECTIONS.
The following tax items are noted:
1. The Company was audited by the Franchise Tax Board (State of
California) for 1993, 1994, and 1995 in a routine examination.
There were no deficiencies noted.
2. The Company paid a $1,180.31 penalty assessed against it by the
IRS for a tax deficiency that occurred in 1991.
SECTION 7.8
FINDER'S FEES
The Company has entered into an Exclusive Placement Agent Agreement
with Banc of America Securities LLC ("BAS"), under which it may owe BAS fees and
be obligated to issue BAS a warrant to purchase shares of Series E Preferred
Stock in connection with the Closing.
EXHIBIT C
AMENDED AND RESTATED CO-SALE AGREEMENT
Filed separately as an Exhibit to this Registration Statement
C-1
EXHIBIT D
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
Filed separately as an Exhibit to this Registration Statement
D-1
EXHIBIT E
AMENDED AND RESTATED SERIES E VOTING AGREEMENT
Filed separately as an Exhibit to this Registration Statement
E-1
AMENDMENT NUMBER ONE TO THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK
PURCHASE AGREEMENT
This Amendment Number One (this "Amendment") to the
Fourth Additional
Series E Preferred Stock Purchase Agreement dated as of November 10, 2000 (the
"Agreement") is made as of March 9, 2001 by and among Digirad Corporation, a
Delaware corporation (the "Company"), each of the undersigned entities listed
hereto under the heading "New Investors" (the "New Investors") and the holders a
majority of the Series E Preferred Stock purchased pursuant to the Agreement
listed hereto under the heading "Prior Investors" (the "Prior Investors").
Capitalized terms used herein which are not defined herein shall have the
definition ascribed to them in the Agreement.
RECITALS
A. The Company desires to sell and issue up to 150,362 additional
shares of its Series E Preferred Stock to the New Investors pursuant to an
Additional Closing under the Agreement.
B. The Company desires to amend the Agreement to permit the
Company to conduct Additional Closings on or before March 30, 2001.
C. Section 7.11 of the Agreement provides that any term of the
Agreement may be amended with the written consent of the Company and the holders
of at least a majority of the Common Stock issuable upon conversion of the
Series E Preferred Stock issued pursuant to the Agreement.
In consideration of the foregoing and the promises and covenants
contained herein and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 1.3 OF THE AGREEMENT.
The parties hereby agree to amend and restate Section 1.3(a) of the
Agreement in its entirety to state as follows:
(a) "CONDITIONS OF ADDITIONAL CLOSING(S). At a per
share purchase price of $3.036 per share and at any time from time to
time on or before March 30, 2001, the Company may, at one or more
additional closings (each an "Additional Closing"), without obtaining
the signature, consent or permission of any of the Investors, offer and
sell to additional investors (each a "New Investor") up to that number
of shares of the Series E Preferred Stock of the Company available as
authorized shares of Series E Preferred Stock in the Restated
Certificate. A New Investor may include persons or entities who are
already Investors under this Agreement."
2. AMENDMENT TO SCHEDULES TO THE AGREEMENT.
The parties hereby agree to amend the Schedules to the Agreement to add
Schedule 4, in the form attached hereto as EXHIBIT A.
3. EFFECT OF AMENDMENT.
Except as amended and set forth above, the Agreement shall continue in
full force and effect.
4. COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each
which will be deemed an original, and all of which together shall constitute one
instrument.
5. SEVERABILITY.
If one or more provisions of this Amendment is held to be unenforceable
under applicable law, such provision shall be excluded from this Amendment and
the balance of the Amendment shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
6. ENTIRE AGREEMENT.
This Amendment, together with the Agreement, constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
7. GOVERNING LAW.
This Amendment shall be governed by and construed under the laws of the
State of California as applied to agreements among California residents entered
into and to be performed entirely within California.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
2
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
COMPANY: DIGIRAD CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
NEW INVESTORS: ▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P.
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P., II
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER ONE TO
THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
ANACAPA INVESTORS, LLC -
ANACAPA I
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇ ▇▇▇▇▇
Manager
Address: ▇▇ ▇. ▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER ONE TO
THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
PRIOR INVESTORS: ▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. III
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P., IV
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AUREUS DIGIRAD, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Member
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ VENTURES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
Address: ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER ONE TO
THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
SCHEDULE 4
SCHEDULE OF INVESTORS
FOURTH CLOSING - MARCH 9, 2001
INVESTOR SHARES TO BE PURCHASED PURCHASE PRICE
-------- ---------------------- --------------
Anacapa Investors, LLC 25,362 $76,999.03
Anacapa Fund I
▇▇▇▇▇▇▇▇▇ Capital Partners, L.P. 64,000 $194,304.00
▇▇▇▇▇▇▇▇▇ Capital Partners, ▇.▇. ▇▇ 61,000 $185,196.00
-------- -----------
TOTAL: 150,362 $456,499.03
======== ===========
AMENDMENT NUMBER TWO TO THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK
PURCHASE AGREEMENT
This Amendment Number Two (this "Amendment") to the
Fourth Additional
Series E Preferred Stock Purchase Agreement dated as of November 10, 2000, as
amended (the "Agreement") is made as of March 16, 2001 by and among Digirad
Corporation, a Delaware corporation (the "Company"), each of the undersigned
entities listed hereto under the heading "New Investors" (the "New Investors"),
and the holders a majority of the Series E Preferred Stock purchased pursuant to
the Agreement listed hereto under the heading "Prior Investors" (the "Prior
Investors"). Capitalized terms used herein which are not defined herein shall
have the definitions ascribed to them in the Agreement.
RECITALS
A. The Company desires to sell and issue additional shares of its
Series E Preferred Stock pursuant to Additional Closings as permitted under the
Agreement.
B. Section 7.11 of the Agreement provides that any term of the
Agreement may be amended with the written consent of the Company and the holders
of at least a majority of the Common Stock issuable upon conversion of the
Series E Preferred Stock issued pursuant to the Agreement.
In consideration of the foregoing and the promises and covenants
contained herein and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. ADDITIONAL CLOSINGS UNDER THE AGREEMENT.
Pursuant to Section 1.3 of the Agreement, the parties agree that on or
before March 30, 2001, the Company may conduct Additional Closings, the next of
which will occur March 16, 2001 with the New Investors in the amounts indicated
on EXHIBIT A attached hereto. By their execution of this Amendment, the New
Investors hereby enter into and become parties to the Agreement as if they had
originally executed the signature pages to the Agreement and shall be deemed to
be included within the definition of "Investors" thereunder. In addition, by
their execution of counterpart signature pages to each of the Transaction
Agreements, the Investors shall enter into and become parties to each of the
Transaction Agreements and shall be deemed to be included within the definition
of "New Investors" thereunder.
The parties further agree that pursuant to Section 1.3 of the
Agreement, the Company may conduct Additional Closings on or before March 30,
2001 without obtaining the consent of the Prior Investors. Upon the execution of
a counterpart signature page to this Amendment and the Transaction Agreements by
any of such New Investors, such New Investors shall become parties to the
Agreement and Transaction Agreements to the same extent as if they had executed
this Amendment and Transaction Agreements as of the date hereof and shall be
included in the definition of New Investors under this Amendment for all
purposes. EXHIBIT A to this Amendment shall be automatically amended as
appropriate to reflect the Additional Closing and
the addition of such individuals and/or entities as New Investors under this
Amendment.
2. AMENDMENT TO SCHEDULES TO THE AGREEMENT.
The parties hereby agree to amend the Schedules to the Agreement to add
Schedule 5, in the form attached hereto as EXHIBIT A.
3. EFFECT OF AMENDMENT.
Except as amended and set forth above, the Agreement shall continue in
full force and effect.
4. COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each
which will be deemed an original, and all of which together shall constitute one
instrument.
5. SEVERABILITY.
If one or more provisions of this Amendment is held to be unenforceable
under applicable law, such provision shall be excluded from this Amendment and
the balance of the Amendment shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
6. ENTIRE AGREEMENT.
This Amendment, together with the Agreement, constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
7. GOVERNING LAW.
This Amendment shall be governed by and construed under the laws of the
State of California as applied to agreements among California residents entered
into and to be performed entirely within California.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
2
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
COMPANY: DIGIRAD CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
NEW INVESTORS: THE ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇ REVOCABLE TRUST DATED
4/13/89
By: /s/ illegible
----------------------------------------
Its: Trustee
----------------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ FAMILY TRUST UDT DATED 4/25/86
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Trustee
----------------------------------------
Address: c/o Signal Ventures
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER TWO TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ TRUST DATED 5/14/82
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Its: Trustee
----------------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Elliot ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ TRUST DATED 12/2/88
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Its: TTEE - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Address: c/o Malibu Clothes
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
THE ▇▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TRUST DATED 7/31/81
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Its: Trustee
----------------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER TWO TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
▇▇▇▇ ▇ ▇▇▇▇ TRUSTEE OF NON-EXEMPT TRUST C
UNDER ▇▇▇ ▇. & ▇▇▇▇ ▇. ▇▇▇▇ QUALIFIED
MARITAL TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Its: Trustee
----------------------------------------
Address: c/o Evergreen Wealth Management
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ FAMILY TRUST
By: /s/ illegible
----------------------------------------
Its: Trustee
----------------------------------------
Address: ▇/▇ ▇▇▇▇ ▇▇▇▇▇▇ Property Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Its:
----------------------------------------
Address: c/o ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital
Management
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER TWO TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
PAGE TRUST DATED 3/3/89
By: /s/ illegible
-------------------------------
Its: Trustee
-------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ MARITAL TRUST DTD 4/26/94
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Its:
-------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER TWO TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
PRIOR INVESTORS: AUREUS DIGIRAD, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Member
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ VENTURES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
Address: ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇.
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇. ▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. III
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇. ▇▇
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER TWO TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
SCHEDULE 5
SCHEDULE OF INVESTORS
FIFTH CLOSING - MARCH 16, 2001
INVESTOR SHARES TO BE PURCHASED PURCHASE PRICE
-------- ---------------------- --------------
The ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇ Revocable 24,671 $74,901.16
Trust dated 04/13/89
▇▇▇▇▇ ▇▇▇▇▇▇▇ 24,671 $74,901.16
▇▇▇▇▇▇ Family Trust UDT Dated 04/25/86 24,671 $74,901.16
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Trust dated 05/14/82 8,223 $24,965.03
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Trust dated 24,671 $74,901.16
12/02/88
The ▇▇▇▇▇▇▇ ▇. And ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 16,447 $49.933.09
Trust dated 07/31/81
▇▇▇ ▇. & ▇▇▇▇ ▇. ▇▇▇▇ Qualified 24,671 $74,901.16
Marital Trust
▇▇▇▇▇▇▇ Family Trust 24,671 $74,901.16
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 82,236 $249,668.50
Page Trust dated 03/03/89 24,671 $74,901.16
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇. 16,447 $49,933.09
▇▇▇▇▇▇▇ Marital Trust DTD 04/26/94 -------- ------------
TOTAL: 296,050 $898,807.80
======== ============
AMENDMENT NUMBER THREE TO THE
FOURTH ADDITIONAL SERIES E PREFERRED STOCK
PURCHASE AGREEMENT
This Amendment Number Three (this "Amendment") to the Fourth Additional
Series E Preferred Stock Purchase Agreement dated as of November 10, 2000, as
amended (the "Agreement") is made as of April 9, 2001 by and among Digirad
Corporation, a Delaware corporation (the "Company"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Ventures, LLC
(the "New Investor"), and the holders a majority of the Series E Preferred Stock
purchased pursuant to the Agreement listed hereto under the heading "Prior
Investors" (the "Prior Investors"). Capitalized terms used herein which are not
defined herein shall have the definitions ascribed to them in the Agreement.
RECITALS
A. The Company desires to sell and issue additional shares of its
Series E Preferred Stock to the New Investor pursuant to an Additional Closing
as permitted under Section 1.3 of the Agreement.
B. In connection with its issuance of additional shares of Series E
Preferred Stock to the New Investor, the Company has filed a Certificate of
Amendment of Amended and Restated Certificate of Incorporation so as to
authorize additional shares of Series E Preferred Stock issuable pursuant to the
Agreement.
C. The Company desires to amend the Agreement to permit the Company to
conduct Additional Closings on or before April 30, 2001.
D. Section 7.11 of the Agreement provides that any term of the
Agreement may be amended with the written consent of the Company and the holders
of at least a majority of the Common Stock issuable upon conversion of the
Series E Preferred Stock issued pursuant to the Agreement.
In consideration of the foregoing and the promises and covenants
contained herein and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
2. AMENDMENT TO SECTION 1.3 OF THE AGREEMENT.
The parties hereby agree to amend and restate Section 1.3(a) of the
Agreement in its entirety to state as follows:
(a) "CONDITIONS OF ADDITIONAL CLOSING(S). At a per
share purchase price of $3.036 per share and at any time from time to
time on or before April 30, 2001, the Company may, at one or more
additional closings (each an "Additional Closing"), without obtaining
the signature, consent or permission of any of the Investors, offer and
sell to additional investors (each a "New Investor") up to that number
of shares of the Series E Preferred Stock of the Company available as
authorized shares of Series E
Preferred Stock in the Restated Certificate. A New Investor may
include persons or entities who are already Investors under this
Agreement."
2. EFFECT OF AMENDMENT.
Pursuant to Section 1.3 of the Agreement, the parties agree that by its
execution of this Amendment, the New Investor will hereby enter into and become
party to the Agreement as if it had originally executed a signature page to the
Agreement and shall be deemed to be included within the definition of
"Investors" thereunder.
3. AMENDMENT TO SCHEDULES TO THE AGREEMENT.
The parties hereby agree to amend the Schedules to the Agreement to add
Schedule 6, in the form attached hereto as EXHIBIT A.
4. EFFECT OF AMENDMENT.
Except as amended and set forth above, the Agreement shall continue in
full force and effect.
5. COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each
which will be deemed an original, and all of which together shall constitute one
instrument.
6. SEVERABILITY.
If one or more provisions of this Amendment is held to be unenforceable
under applicable law, such provision shall be excluded from this Amendment and
the balance of the Amendment shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
7. ENTIRE AGREEMENT.
This Amendment, together with the Agreement, constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
8. GOVERNING LAW.
This Amendment shall be governed by and construed under the laws of the
State of California as applied to agreements among California residents entered
into and to be performed entirely within California.
2
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
COMPANY: DIGIRAD CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
NEW INVESTOR: ▇▇▇▇▇▇▇ ▇▇▇▇▇ VENTURES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
Address: ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER THREE TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
PRIOR INVESTORS: ▇▇▇▇▇▇▇ ▇▇▇▇▇ VENTURES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
Address: ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇.
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇. ▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. III
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, ▇.▇. ▇▇
By: ▇▇▇▇▇▇▇▇▇ Associates, L.P.,
Its General Counsel
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
VECTOR LATER-STAGE EQUITY FUND II, L.P.
VECTOR LATER-STAGE EQUITY FUND II
(QP), L.P.
By: Vector Fund Management II, L.L.C.
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, M.D.
Managing Director
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER THREE TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
ANACAPA INVESTORS, LLC -
ANACAPA I
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
▇▇▇ ▇▇▇▇▇
Manager
Address: ▇▇ ▇. ▇▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INGLEWOOD VENTURES, LP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Its: Member
--------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO AMENDMENT NUMBER THREE TO
THE FOURTH ADDITIONAL SERIES E PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
SCHEDULE 6
SCHEDULE OF INVESTORS
SIXTH CLOSING - APRIL 9, 2001
INVESTOR SHARES TO BE PURCHASED PURCHASE PRICE
-------- ---------------------- --------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Ventures, LLC 808,836 2,455,626.10
------- ------------
TOTAL: 808,836 2,455,626.10
======= ============