EXHIBIT 4.1
MEDJET INC.
SUBSCRIPTION AGREEMENT
FOR SERIES B CONVERTIBLE PREFERRED STOCK
AND WARRANTS
SUBSCRIPTION AGREEMENT (the "Agreement") dated as of December 3, 1999
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among MEDJET INC., a Delaware corporation ("Company"), and the persons who
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execute this agreement as investors (the "Investors").
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WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase, 16,000 shares of the Company's Series B
Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred
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Stock"), having the terms set forth in the Certificate of Designations of Series
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B Convertible Preferred Stock attached hereto as Exhibit 1 (the "Certificate")
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and 1,600,000 five-year warrants, each exercisable to purchase one share of the
Company's Common Stock, par value $.001 per share, in the form attached hereto
as Exhibit 2 (the "Purchased Warrants");
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WHEREAS, in connection with the completion of the offering of the
Series B Preferred Stock to the Investors, the Company has obtained an agreement
from ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") to extend the maturity on certain payment
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obligations aggregating $150,000 to May 15, 2000 (the "▇▇▇▇▇▇ Extension");
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NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Purchase and Sale of Stock.
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1.1. Sale and Issuance of Purchased Securities. The Company shall
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sell to the Investors and the Investors shall purchase from the Company 16,000
units, each unit consisting of one share of Series B Preferred Stock and one
hundred Purchased Warrants, at a price of $125.00 per unit, or a total of 16,000
shares of Series B Preferred Stock (the "Purchased Shares") and 1,600,000
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Purchased Warrants, for an aggregate purchase price of $2,000,000. The
Purchased Shares and Purchased Warrants are referred to herein collectively as
the "Purchased Securities". The number of Purchased Shares and Purchased
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Warrants to be purchased by each Investor from the Company is set forth opposite
the name of such Investor on the signature page hereof, subject to acceptance,
in whole or in part, by the Company.
1.2. Closing. The purchase and sale of the Purchased Securities
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hereunder shall take place at a closing (the "Closing"; the date on which the
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Closing occurs is hereinafter referred to as the "Closing Date"). The Closing
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shall take place concurrently with the execution and delivery of this Agreement
by the Investors. At the Closing:
(a) each Investor shall deliver to the Company or its designees
by wire transfer, cashier's check or certified checks from a bank
acceptable to the Company, or
such other method of payment as the Company shall approve, an amount equal
to the purchase price of the portion of the Purchased Securities purchased
by such Investor, as set forth opposite its name on the signature pages
hereof;
(b) the Company shall issue and deliver to each Investor (i) a
certificate or certificates for its portion of the Purchased Shares and
(ii) warrants for the portion of the Purchased Warrants to be issued by the
Company to and purchased by such Investor, as set forth opposite such
Investor's name on the signature pages hereof;
(c) the Company and the Investors shall execute and deliver a
Registration Rights Agreement in the form attached as Exhibit 3 with
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respect to the Underlying Shares (as hereafter defined);
(d) the Company shall execute and deliver an investment banking
agreement with ▇▇▇▇ ▇▇▇▇▇ & Company, Inc. in the form attached as Exhibit 4
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providing for compensation of 500,000 warrants in the same form as the
Purchased Warrants (the "Investment Banking Warrants");
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(e) the Company shall deliver to the Investors an Opinion of
Counsel with respect to the matters set forth on Exhibit 5;
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(f) the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered into the
▇▇▇▇▇▇ Extension;
(g) the Company shall deliver to the Investors a writing, in
form and content satisfactory to the Investors, signed by the holders of a
majority of the outstanding Common Stock of the Company by which such
holders agree, if necessary, to grant their further consent and reapprove
the recent increase in the authorized number of shares of Common Stock to
30,000,000 shares; and
(h) ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall deliver to the Investors such written
agreements and assurances with respect to any pending litigation against
the Company as the Investors reasonably request.
All certificates shall have all necessary stock transfer tax stamps
(purchased at the expense of the Company) affixed.
The parties agree that for purposes of allocating the price paid for
the Purchased Securities, the Purchased Warrants have a nominal value.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Investors as follows:
2.1. Corporate Organization; Authority; Due Authorization.
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(a) The Company (i) is a corporation duly organized,
validly
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existing and in good standing under the laws of the State of Delaware, (ii) has
the corporate power and authority to own or lease its properties as and in the
places where such business is now conducted and to carry on its business as now
conducted and (iii) is duly qualified and in good standing as a foreign
corporation authorized to do business in every jurisdiction where the failure to
so qualify, individually or in the aggregate, would have a material adverse
effect on the operations, prospects, assets, liabilities, financial condition or
business of the Company (a "Company Material Adverse Effect"). Certificates of
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state authorities as of a recent date evidencing such valid existence or due
qualification, as the case may be, and good standing have been delivered to the
Investors.
(b) The Company (i) has the requisite corporate power
and authority to execute, deliver and perform this Agreement and the other
agreements and warrants contemplated hereby to which it is a party
(collectively, the "Other Agreements") and to incur the obligations herein and
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herein and therein and (ii) has been authorized by all necessary corporate
action to execute, deliver and perform this Agreement and the Other Agreements
and to consummate the transactions contemplated hereby and thereby (the
"Contemplated Transactions"). This Agreement and each of the Other Agreements
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is a valid and binding obligation of the Company enforceable in accordance with
its terms.
2.2. Capitalization. Immediately prior to the Closing, the
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authorized capital of the Company consisted of (i) 30,000,000 shares of Common
Stock, $.001 par value per share (the "Common Stock"), of which 3,901,431 shares
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of Common Stock are outstanding, and (ii) 1,000,000 shares of Preferred Stock,
$.01 par value per share, of which 16,000 shares have been designated as Series
B Convertible Preferred Stock, none of which shares are outstanding. Immediately
after the Closing the capitalization of the Company will be as set forth on
Exhibit 6. The Certificate has been duly filed with and recorded by the
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Secretary of State of the State of Delaware and proof of such filing has been
delivered to the Investors. All outstanding shares were issued in compliance
with all applicable Federal and state securities laws. Except as contemplated
by this Agreement or as set forth in the disclosure letter delivered to the
Investors prior to the execution of this Agreement (the
"Company Disclosure Letter", which letter is referenced in Exhibit 7), there
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are (i) no outstanding subscriptions, warrants, options, conversion privileges
or other rights or agreements to purchase or otherwise acquire or issue any
shares of capital stock of the Company (or shares reserved for such purpose),
(ii) no preemptive rights or rights of first refusal with respect to the
issuance of additional shares of capital stock of the Company, including the
Purchased Securities and the shares of Common Stock which the Purchased Warrants
and Investment Banking Warrants are exercisable to purchase and for which the
Purchased Shares are convertible into, and (iii) no commitments or
understandings (oral or written) of the Company to issue any shares, warrants,
options or other rights. Exhibit 6 sets forth the warrants, options, convertible
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securities and other stock purchase rights outstanding on the date hereof, the
number of shares of common stock issuable thereunder and the exercise or
conversion price thereof, as the case may be, (i) immediately prior to and (ii)
immediately after the Closing. To the best of the Company's knowledge, except as
set forth in the Company Disclosure Letter, none of the shares of Common Stock
are subject to any shareholders' agreement, voting trust agreement or similar
arrangement or understanding. Except as set forth in the Company Disclosure
Letter, the Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or
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exercisable for securities having the right to vote) with the stockholders of
the Company on any matter.
2.3. Validity of Purchased Shares. The issuance of the Purchased
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Shares has been duly authorized, and when issued, sold and delivered in
accordance with the terms and for the consideration expressed herein, the
Purchased Shares shall be validly issued, fully paid and non-assessable.
2.4. Common Stock Issuable upon Conversion of Purchased Shares
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and Exercise of Purchased Warrants and Investment Banking Warrants. The
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issuance of the shares of Common Stock (the "Underlying Shares") issuable upon
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conversion of the Purchased Shares or upon exercise of the Purchased Warrants
and the Investment Banking Warrants has been duly authorized and the Underlying
Shares have been, and at all times prior to such conversion or exercise will
have been, duly reserved for issuance upon such conversion or exercise and, when
so issued, will be validly issued, fully paid and non-assessable.
2.5. Private Offering. Neither the Company nor anyone acting on
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its behalf has within the last 12 months issued, sold or offered any security of
the Company to any person or organization under circumstances that would cause
the issuance and sale of the Purchased Securities, as contemplated by this
Agreement, or the issuance of the Investment Banking Warrants to be subject to
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). The Company agrees that neither the Company nor anyone
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acting on its behalf will offer the Purchased Securities or Investment Banking
Warrants or any part thereof or any similar securities for issuance or sale to,
or solicit any offer to acquire any of the same from, anyone so as to make the
issuance and sale of the Purchased Securities or the issuance of the Investment
Banking Warrants subject to the registration requirements of Section 5 of the
Securities Act.
2.6. Brokers and Finders. The Company has not retained any
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investment banker, broker or finder in connection with the Contemplated
Transactions.
2.7. Subsidiaries. The Company has no Subsidiaries and does not
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otherwise directly or indirectly control any other business entity. As used in
this Agreement, "Subsidiary" means any corporation or other organization,
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whether incorporated or unincorporated, of which the Company directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which the Company is a
general partner or any limited liability company of which the Company is a
manager.
2.8. Other Interest. The Company does not own directly or
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indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity.
2.9. Use of Proceeds. The Company will use the proceeds from the
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sale of the Purchased Securities as set forth on Exhibit 8 attached hereto.
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2.10. No Conflict; Required Filings and Consents.
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(a) The execution and delivery of this Agreement and the
Other Agreements by the Company do not, and the performance of this Agreement
and the Other Agreements and the consummation by the Company of the Contemplated
Transactions will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws or equivalent organizational documents of the Company,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or by which any property or asset of the
Company is bound or affected, or (iii) except as set forth in the Company
Disclosure Letter, result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, result
in the loss of a material benefit under, or give to others any right of purchase
or sale, or any right of termination, amendment, acceleration, increased
payments or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company is a party or by which the
Company or any property or asset of the Company is bound or affected, except, in
the case of clauses (i)(y), (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or delay
consummation of any of the Contemplated Transactions in any material respect, or
otherwise prevent the Company from performing its obligations under this
Agreement or any Other Agreement in any material respect, and would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
execution and delivery of this Agreement and the Other Agreements by the Company
do not, and the performance of this Agreement and the Other Agreements and the
consummation by the Company of the Contemplated Transactions will not, result in
any material breach of or constitute a material default (or an event which with
notice or lapse of time or both would become a material default) under, result
in the loss of a material benefit under, or give to others any right of purchase
or sale, or any right of termination, amendment, acceleration, increased
payments or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company pursuant to, any Company
Material Contract (as hereafter defined).
(b) The execution and delivery of this Agreement and the
Other Agreements by the Company do not, and the performance of this Agreement
and the Other Agreements and the consummation by the Company of the Contemplated
Transactions will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
domestic or foreign (each a "Governmental Entity") except for applicable
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requirements, if any, of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or any state securities or "blue sky" laws ("Blue Sky Laws").
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2.11. Compliance. Except as set forth in the Company Disclosure
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Letter the Company is not in conflict with, or in default or violation of (i)
any law, rule, regulation, order, judgment or decree applicable to the Company
or by which any property or asset of the Company is bound or affected
("Legal Requirement"), or (ii) any note, bond, mortgage, indenture, contract,
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agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company is a party or by which the Company or any property or asset
of the
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Company is bound or affected, in each case except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Company Material Adverse Effect. The Company has not received any notice or
other communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement. The Company has
obtained all licenses, permits, and other authorizations and have taken all
actions required by applicable law or governmental regulations in connection
with their business as now conducted, where the failure to obtain any such item
or to take any such action would have, individually or in the aggregate, a
Company Material Adverse Effect. None of the Company or, to the knowledge of
Company, any director, officer, agent, employee or other person acting on behalf
of any of the foregoing has used any corporate funds for unlawful contributions,
payments, gifts or entertainment or for the payment of other unlawful expenses
relating to political activity, or made any direct or indirect unlawful payments
to governmental or regulatory officials or others. For purposes of this
Agreement "Governmental Body" shall mean any: (a) nation, state, commonwealth,
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province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
2.12. SEC Documents.
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(a) The Company has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") since its formation (collectively, the "Company Reports"). As of their
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respective dates, the Company Reports filed prior to or on the date hereof (i)
complied as to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act, and the rules and regulations thereunder
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The representation in clause (ii) of the preceding
sentence shall not apply to any misstatement or omission in any Company Report
filed prior to the date of this Agreement which was superseded by a subsequent
Company Report filed prior to the date of this Agreement. Except as set forth in
the Company Disclosure Letter the Company is not a party or subject to any note,
bond, mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal that is required to be described in or filed as an
exhibit to any Company Report and that is not described in or filed as an
exhibit to such Company Report as required by the Securities Act or the Exchange
Act, as the case may be. No event has occurred prior to the date hereof as a
consequence of which the Company would be required to file a Current Report on
Form 8-K pursuant to the requirements of the Exchange Act as to which such a
report has not been timely filed with the SEC. Any reports, statements and
registration statements and amendments thereto (including, without limitation,
Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current
Reports on Form 8-K, as amended) filed by the Company with the SEC after the
date hereof shall be mailed to the Investors no later than the date of such
filing.
(b) Each of the consolidated balance sheets of Company
included in or incorporated by reference into the Company Reports (including the
related notes
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and schedules) fairly presents the consolidated financial position of the
Company and the Company Subsidiaries as of its date, and each of the
consolidated statements of income, retained earnings and cash flows of Company
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of the Company and the Company
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. The Company has no liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of the
Company or in the notes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except for (i) liabilities or
obligations that were so reserved on, or reflected in (including the notes to),
the consolidated balance sheet of the Company as of September 30, 1999; (ii)
liabilities or obligations arising in the ordinary course of business since
September 30, 1999; and (iii) liabilities or obligations which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
2.13. Litigation. Except as set forth in the Company Disclosure
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Letter there are no claims, actions, suits, investigations, inquiries or
proceedings pending against the Company or, to the knowledge of the Company,
threatened against the Company, or any officer, director, employee or agent
thereof in his or her capacity as such, at law or in equity, or before or by any
court, tribunal, arbitrator, mediator or any federal or state commission, board,
bureau, agency or instrumentality, that, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect.
2.14. Absence of Certain Changes. Except as specifically
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contemplated by this Agreement or set forth in the Company Disclosure Letter,
since September 30, 1999, there has not been (i) any event, occurrence, fact,
condition, change, development or effect ("Event") that would reasonably be
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expected to have a Company Material Adverse Effect; (ii) any declaration,
payment or setting aside for payment of any dividend (except to Company wholly
owned by Company) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of Company or any
Company Subsidiary; (iii) any return of any capital or other distribution of
assets to stockholders of Company or any Company Subsidiary (except to Company
wholly owned by Company); (iv) any acquisition (by merger, consolidation,
acquisition of stock or assets or otherwise) of any person or business; (v) any
other action or agreement or undertaking by Company or any Company Subsidiary
that, if taken or done on or after the date hereof would reasonably be expected
to have a Company Material Adverse Effect; or (vi) any material change in its
accounting principles, practices or methods. Without limiting foregoing, since
September 30, 1999, there has been no Company Material Adverse Effect affecting
the Company's financial condition as of the date of this Agreement or results of
operations through the date of this Agreement which would be reflected in its
audited financial statements to be prepared for and through December 31, 1999.
2.15. Taxes.
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(a) The Company has filed all material tax returns and
reports required to be filed by it, or requests for extensions to file such
returns or reports have been timely filed and granted and have not expired, and
all tax returns and reports are complete and accurate in all respects, except to
the extent that such failures to file, have extensions granted that remain in
effect or be complete and accurate in all respects, as applicable, individually
or in the aggregate, would not have a Company Material Adverse Effect. The
Company has paid all taxes shown as due on such tax returns and reports. The
most recent financial statements contained in the Company Reports reflect an
adequate reserve for all taxes payable by the Company for all taxable periods
and portions thereof accrued through the date of such financial statements, and
no deficiencies for any taxes have been proposed, asserted or assessed against
the Company that are not adequately reserved for, except for inadequately
reserved taxes and inadequately reserved deficiencies that would not,
individually or in the aggregate, have a Company Material Adverse Effect. No
requests for waivers of the time to assess any taxes against the Company have
been granted or are pending, except for requests with respect to such taxes that
have been adequately reserved for in the most recent financial statements
contained in the Company Reports, or, to the extent not adequately reserved, the
assessment of which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) As used in this Section 2.15, "taxes" shall include all
Federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other person and any interest, penalties or
additions to tax.
2.16. Employee Benefit Plans. Except as would not, individually
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or in the aggregate, have a Company Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of the current or former
employees or directors of the Company that are sponsored, maintained or
contributed to by the Company, or with respect to which the Company has any
liability, including without limitation any such plan that is an "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), are in compliance with all applicable
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requirements of law, including ERISA and the Code, and (ii) the Company has no
liabilities or obligations with respect to any such employee benefit plans or
programs, whether accrued, contingent or otherwise, nor to the knowledge of the
Company are any such liabilities or obligations expected to be incurred. The
execution of, and performance of the transactions contemplated in, this
Agreement or the other Agreements will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan that will or may
result in any payment (whether of severance pay, bonus, golden parachute or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee. The only severance agreements or severance policies applicable to the
Company are the agreements and policies specifically referred to in the Company
Disclosure Letter.
2.17. Labor Matters. The Company has no material obligations,
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contingent or otherwise, under any employment, severance or consulting
agreement, any collective bargaining agreement or any other contract with a
labor union or other labor or employee group. To the knowledge of Company, as
of the date of this Agreement, there are no
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negotiations, demands or proposals that are presently pending or overtly
threatened by or on behalf of any labor union with respect to the unionizing of
employees of Company. There is no labor strike, labor dispute, work slowdown,
stoppage or lockout actually pending or, to the knowledge of the Company,
threatened against or affecting the Company, except as would not, individually
or in the aggregate, have a Company Material Adverse Effect. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
the Company, threatened against the Company relating to its business, except for
any such proceeding which would not have a Company Material Adverse Effect.
2.18. Contracts. Except as set forth in the Company Reports or
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the Company Disclosure Letter, the Company is not a party or subject to, and its
property and assets are not bound or affected by, any of the following (each, a
"Company Material Contract"):
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(a) any agreement or understanding with an affiliate of the Company;
(b) any contract relating to the acquisition, transfer, use,
development, sharing or license of any technology or any Proprietary Asset
(as hereafter defined);
(c) any single note, bond, mortgage, indenture, contract, lease,
license, agreement, understanding, instrument, bid or proposal pursuant to
which the financial obligation of the Company thereunder or applicable to
the assets or properties of the Company subject thereto could exceed
$10,000 after the Closing Date;
(d) any single contract, bid or offer to which the Company is a party
or by which the Company is bound to provide services to third parties which
provides for recurring monthly revenues to the Company in excess of
$10,000;
(e) any contract creating or involving any agency relationship,
distribution arrangement or franchise relationship;
(f) any contract which includes any exclusivity restrictions
applicable to the Company or imposes any restriction on the Company's right
or ability (A) to compete with any person, (B) to acquire any product or
other asset or any services from any other person, to sell any product or
other asset to or perform any services for any other person or to transact
business or deal in any other manner with any other person, or (C) develop
or distribute any technology;
(g) any contract relating to the acquisition, issuance or transfer of
any securities, except as contemplated hereunder;
(h) any contract involving or incorporating any guaranty, any pledge,
any performance or completion bond, any indemnity or any surety
arrangement;
(i) any contract creating or relating to any partnership or joint
venture or any sharing of revenues, profits, losses, costs or liabilities;
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(j) any contract constituting or relating to a Government Contract
(as hereafter defined) or Government Bid (as hereafter defined);
(k) any contract that was entered into outside the ordinary course
of business or was inconsistent with the Company's past practices;
(l) any other Company Contract that has a term of more than 120 days
and that may not be terminated by the Company (without penalty) within 120
days after the delivery of a termination notice by the Company; or
(m) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation that is
material to the ownership or operation of any of the Company.
The Company has made available to the Investors true and accurate copies of the
Company Material Contracts. Except as set forth in the Company Disclosure
Letter all such Company Material Contracts, are valid and binding and are or
will be in full force and effect and enforceable in accordance with their
respective terms. Except as set forth in the Company Disclosure Letter no
consent of any person is needed in order that each such Company Material
Contract shall continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination by reason of the
consummation of the transactions contemplated by this Agreement, except for
consents the absence of which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. The Company
is not in violation or breach of or default under any such Company Material
Contract, nor to the Company's knowledge is any other party to any such Company
Material Contract in violation or breach of or default under any such Company
Material Contract, in each case where such violation or breach would give rise
to a right of termination or modification. For purposes of this Agreement
"Government Bid" shall mean any quotation, bid or proposal submitted to any
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Governmental Body or any proposed prime contractor or higher-tier subcontractor
of any Governmental Body. For purposes of this Agreement "Government Contract"
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shall mean any prime contract, subcontract, letter contract, purchase order or
delivery order executed or submitted to or on behalf of any Governmental Body or
any prime contractor or higher-tier subcontractor, or under which any
Governmental Body or any such prime contractor or subcontractor otherwise has or
may acquire any right or interest.
2.19. Environmental Matters. As of the date of this Agreement,
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(i) the Company is in compliance with all applicable Environmental Laws (as
hereinafter defined), (ii) there is no civil, criminal or administrative
judgment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the knowledge
of the Company, threatened against the Company or any of its respective
properties pursuant to Environmental Laws, and (iii) there are no past or
present Events which, reasonably may be expected to prevent compliance with, or
which have given rise to or will give rise to liability on the part of the
Company under, Environmental Laws, except, in each case, for any deviations from
the foregoing which, individually or in the aggregate, do not and would not
reasonably be expected to have a Company Material Adverse Effect. The Company
has provided or made
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available to the Investors prior to the date of this Agreement true, accurate
and complete copies of all environmental reports in the possession of the
Company relating to any of their respective past or present properties. As used
herein, the term "Environmental Laws" shall mean laws relating to pollution,
------------------
waste control, the generation, presence or disposal of asbestos, hazardous or
toxic wastes or substances, the protection of the environment, environmental
activity or public health and safety.
2.20. Proprietary Assets. (a) For purposes of this Agreement
------------------
"Proprietary Assets" shall mean any: (i) patent, patent application, trademark
-------------------
(whether registered or unregistered), trademark application, trade name,
fictitious business name, service ▇▇▇▇ (whether registered or unregistered),
service ▇▇▇▇ application, copyright (whether registered or unregistered),
copyright application, maskwork, maskwork application, trade secret, know-how,
customer list, franchise, system, computer software, computer program,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset; or (ii) right to use or exploit any of the foregoing.
(b) The Company Disclosure Letter sets forth, with respect
to each Proprietary Asset of the Company registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) a
brief description of such Proprietary Asset and (ii) the names of the
jurisdictions covered by the applicable registration or application. The Company
Disclosure Letter identifies and provides a brief description of all other
Proprietary Assets owned by the Company, and identifies and provides a brief
description of each Proprietary Asset licensed to the Company by any person
(except for any Proprietary Asset that is licensed to the Company under any
third party software license generally available to the public at a cost of less
than $10,000), and identifies the license agreement under which such Proprietary
Asset is being licensed to the Company. Except as set forth in the Company
Disclosure Letter, the Company: has good, valid and marketable title to all of
the Proprietary Assets identified in the Company Disclosure Letter (including
without limitation all Proprietary Assets used in the business of the Company
and held in the name of ▇▇▇▇▇▇ ▇▇▇▇▇▇), free and clear of all liens and other
encumbrances; has a valid right to use all Proprietary Assets identified in the
Company Disclosure Letter; and is not obligated to make any payment to any
person for the use of any Proprietary Asset. Except as set forth in the Company
Disclosure Letter, the Company has not developed jointly with any other person
any Proprietary Asset with respect to which such other person has any rights.
(c) The Company has taken all measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all
Proprietary Assets of the Company (except Proprietary Assets whose value would
be unimpaired by public disclosure) and otherwise to maintain and protect the
value of all Proprietary Assets of the Company. Except as set forth in the
Company Disclosure Letter, the Company has not (other than pursuant to license
agreements identified in the Company Disclosure Letter) disclosed or delivered
to any person, or permitted the disclosure or delivery to any person of, (i) the
source code, or any portion or aspect of the source code, of any Proprietary
Asset, or (ii) the object code, or any portion or aspect of the object code, of
any Proprietary Asset of the Company.
(d) Except as set forth in the Company Disclosure Letter,
(i) to
-11-
the best of the knowledge of the Company, none of the Proprietary Assets of the
Company infringes or conflicts with any Proprietary Asset owned or used by any
other Person, (ii) the Company is not infringing, misappropriating or making any
unlawful use of, and the Company has not at any time infringed, misappropriated
or made any unlawful use of, or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person, and (iii) to the best of the knowledge of the
Company, no other Person is infringing, misappropriating or making any unlawful
use of, and no Proprietary Asset owned or used by any other person infringes or
conflicts with, any Proprietary Asset of the Company.
(e) Except as set forth in the Company Disclosure Letter,
there has not been any claim by any customer or other person alleging that any
Proprietary Asset of the Company (including each version thereof that has ever
been licensed or otherwise made available by the Company to any person) does not
conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company, and, to the best of the knowledge of the Company, there
is no basis for any such claim.
(f) The Proprietary Assets of the Company constitute all
the Proprietary Assets necessary to enable the Company to conduct its businesses
in the manner in which such businesses have been and are being conducted or are
expected to be conducted pursuant to the Business Plan included in the Company
Disclosure Letter. Except as set forth in the Company Disclosure Letter (i) the
Company has not licensed any of its Proprietary Assets to any person on an
exclusive, semi-exclusive or royalty-free basis, and (ii) the Company has not
entered into any covenant not to compete or contract limiting their ability to
exploit fully any of its Proprietary Assets or to transact business in any
market or geographical area or with any person.
2.21. No Adverse Actions. Except as set forth in the Company
------------------
Disclosure Letter, there is no existing, pending or, to the knowledge of the
Company, threatened termination, cancellation, limitation, modification or
change in the business relationship of Company, with any supplier, customer or
other person except such as would not reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect.
2.22. Insurance. The Company maintains with sound and reputable
---------
insurance companies all insurance customarily maintained by comparable
companies.
2.23. Disclosure. No representation or warranty of the Company
----------
herein and no information contained or referenced in the Company Reports or
Company Disclosure Letter contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading.
-12-
3. Representations and Warranties of the Investors. Each Investor
-----------------------------------------------
represents and warrants to the Company as follows:
3.1. Authorization. When executed and delivered by such
-------------
Investor, this Agreement will constitute the valid and binding obligation of
such Investor.
4. Securities Laws.
---------------
4.1. Securities Laws Representations and Covenants of Investors.
----------------------------------------------------------
(a) 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 Purchased
Securities to be received by such Investor 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 such that such Investors would
constitute an "underwriter" under the Securities Act, and that such Investor has
no present intention of selling, granting any participation in or otherwise
distributing the Purchased Securities. 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, transfer or grant
participations to such person or to any third person with respect to, any of the
Purchased Securities.
(b) Each Investor understands and acknowledges that the
offering of the Purchased Securities pursuant to this Agreement will not be
registered under the Securities Act or qualified under any Blue Sky Laws on the
grounds that the offering and sale of the Purchased Securities are exempt from
registration and qualification, respectively, under the Securities Act and the
Blue Sky Laws, and that the Company's reliance upon such exemption is predicated
upon such Investor's representations set forth in this Agreement.
(c) Each Investor covenants that, unless the Purchased
Shares, the Purchased Warrants, the Underlying Shares or any other shares of
capital stock of the Company received in respect of the foregoing have been
registered pursuant to the Registration Rights Agreement being entered into
among the Company and the Investors, such Investor will not dispose of such
securities unless and until such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with an opinion of
counsel reasonably satisfactory in form and substance to the Company to the
effect that (x) such disposition will not require registration under the
Securities Act and (y) appropriate action necessary for compliance with the
Securities Act and any applicable state, local or foreign law has been taken;
provided, however, that an Investor may dispose of such securities without
-------- -------
providing the opinion referred to above if the Company has been provided with
adequate assurance that such disposition is made in compliance with Rule 144
under the Securities Act (or any similar or analogous rule) and any applicable
state, local or foreign law.
(d) In connection with the investment representations made
herein, each Investor represents that (i) such Investor is able to fend for
itself in the Contemplated Transactions; (ii) such Investor has such knowledge
and experience in financial
-13-
and business matters as to be capable of evaluating the merits and risks of such
Investor's prospective investment in the Purchased Securities; (iii) such
Investor has the ability to bear the economic risks of such Investor's
prospective investment and can afford the complete loss of such investment; (iv)
such Investor has been furnished with and has had access to such information as
is in the Company Disclosure Letter together with the opportunity to obtain such
additional information as it requested to verify the accuracy of the information
supplied; and (v) such Investor has had access to officers of the Company and an
opportunity to ask questions of and receive answers from such officers and has
had all questions that have been asked by such Investor satisfactorily answered
by the Company.
(e) Each Investor further represents by execution of this
Agreement that such Investor qualifies as an "accredited investor" as such term
is defined under Rule 501 promulgated under the Securities Act. Any Investor
that is a corporation, a partnership, a trust or other business entity further
represents by execution of this Agreement that it has not been organized for the
purpose of purchasing the Purchased Securities.
(f) By acceptance hereof, each Investor agrees that the
Purchased Shares, the Purchased Warrants, the Underlying Shares and any shares
of capital stock of the Company received in respect of the foregoing held by it
may not be sold by such Investor without registration under the Securities Act
or an exemption therefrom, and therefore such Investor may be required to hold
such securities for an indeterminate period.
4.2. Legends. All certificates for the Purchased Shares,
-------
Purchased Warrants and the shares of Common Stock issued upon conversion or
exercise thereof, and each certificate representing any shares of capital stock
of the Company received in respect of the foregoing, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon or
otherwise and each certificate for any such securities issued to subsequent
transferees of any such certificate (unless otherwise permitted herein) shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE [SECURITIES REPRESENTED BY
THIS WARRANT] HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES [WARRANTS] MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT."
In addition, such certificates shall bear any legend that, in the opinion of the
Company's counsel, is required pursuant to any state, local or foreign law
governing the Purchased Shares, the Purchased Warrants or the Underlying Shares.
5. Additional Covenants of the Company.
-----------------------------------
5.1. Reports, Information, Shares.
----------------------------
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(a) The Company shall cooperate with each Investor in
supplying such information as may be reasonably requested by such Investor to
complete and file any information reporting forms presently or hereafter
required by the SEC as a condition to the availability of an exemption,
presently existing or hereafter adopted, from the Securities Act for the sale of
any of the Purchased Shares, the Purchased Warrants, the Underlying Shares and
shares of capital stock of the Company received in respect of the foregoing.
(b) The Company shall deliver to each Investor,
contemporaneously with delivery to other holders of Common Stock, a copy of each
report of the Company delivered to holders of Common Stock.
(c) The Company shall keep reserved for issuance a
sufficient number of authorized but unissued shares of Common Stock so that the
Purchased Warrants may be exercised to purchase, and the Purchased Shares may be
converted into, Common Stock at any time.
5.2. Expenses; Indemnification.
-------------------------
(a) The Company agrees to pay on the Closing Date and save
the Investors harmless against liability for the payment of any stamp or similar
taxes (including interest and penalties, if any) that may be determined to be
payable in respect of the execution and delivery of this Agreement, the issue
and sale of any Purchased Securities, the expense of preparing and issuing the
Purchased Securities, the cost of delivering the Purchased Securities purchased
by each Investor to such Investor's home office, insured to such Investor's
satisfaction, and the costs and expenses incurred in the preparation of all
certificates and letters on behalf of the Company and of the Company's
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with. Each Investor shall be responsible
for its out-of-pocket expenses arising in connection with the Contemplated
Transactions, including, without limitation, fees and disbursements of counsel
to the Investors and due diligence expenses of the Investors.
(b) The Company hereby agrees and acknowledges that the
Investors have been induced to enter into this Agreement and to purchase the
Purchased Securities hereunder, in part, based upon the representations,
warranties and covenants of the Company contained herein. The Company hereby
agrees to pay, indemnify and hold harmless the Investors and any director,
officer or employee of any Investor against all claims, losses and damages
resulting from any and all legal or administrative proceedings, including
without limitation, reasonable attorneys' fees and expenses incurred in
connection therewith (collectively, "Loss"), resulting from a breach by the
----
Company of any representation or warranty of the Company contained herein or the
failure of the Company to perform any covenant made herein.
(c) As soon as reasonably practicable after receipt by an
Investor of notice of any Loss in respect of which the Company may be liable
under this Section 5.2, the Investor shall give notice thereof to the Company.
Each Investor may, at its option, claim indemnity under this Section 5.2 as soon
as a claim has been threatened by a third party,
-15-
regardless of whether an actual Loss has been suffered, so long as counsel for
such Investor shall in good faith determine that such claim is not frivolous and
that such Investor may be liable or otherwise incur a Loss as a result thereof
and shall give notice of such determination to the Company. Each Investor shall
permit the Company, at the Company's option and expense, to assume the defense
of any such claim by counsel mutually and reasonably satisfactory to the Company
and the Investors who are subject to such claim, and to settle or otherwise
dispose of the same; provided, however, that each Investor may at all times
-------- -------
participate in such defense at such Investor's expense; and provided, further,
-------- -------
that the Company shall not, in defense of any such claim, except with the prior
written consent of each Investor subject to such claim, (i) consent to the entry
of any judgment that does not include as an unconditional term thereof the
giving by the claimant or plaintiff in question to each Investor and its
subsidiaries of a release of all liabilities in respect of such claims, or (ii)
consent to any settlement of such claim. If the Company does not promptly assume
the defense of such claim irrespective of whether such inability is due to the
inability of the afore-described Investors and the Company to mutually agree as
to the choice of counsel, or if any such counsel is unable to represent an
investor due to a conflict or potential conflict of interest, then an Investor
may assume such defense and be entitled to indemnification and prompt
reimbursement from the Company for its costs and expenses incurred in connection
therewith, including without limitation, reasonable attorneys' fees and
expenses. Such fees and expenses shall be reimbursed to the Investors as soon as
practicable after submission of invoices to the Company.
5.3. Information Statement. As soon as is practicable following
---------------------
the Closing, the Company shall prepare and file with the SEC an information
statement regarding the recent increase in the authorized number of shares of
Common Stock of the Company. Thereafter, the Company shall furnish such
information statement to the stockholders of the Company in accordance with the
appropriate SEC rules and regulations and shall take all such other actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock upon the
conversion and exercise in full of all Purchased Securities from time to time
outstanding.
6. Miscellaneous.
-------------
6.1. Entire Agreement; Successors and Assigns. This
----------------------------------------
Agreement, the Purchased Securities and the Registration Rights Agreement
constitute the entire contract between the parties relative to the subject
matter hereof and no party shall be liable or bound to the other in any manner
by any warranties, representations or covenants except as specifically set forth
herein. Any previous agreement among the parties with respect to the sale of
the Purchased Securities is superseded by this Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective executors, administrators, heirs, successors and assigns of the
parties. Except as expressly provided herein, nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
6.2. Survival of Representations and Warranties.
------------------------------------------
Notwithstanding any right of the Investors fully to investigate the affairs of
the Company and notwithstanding any knowledge of facts determined or
determinable by any Investor pursuant to such right of
-16-
investigation or right of investigation, each Investor has the right to rely
fully upon the representations, warranties, covenants and agreements of the
Company contained in this Agreement or in any documents delivered pursuant to
this Agreement. All such representations and warranties of the Company shall
survive the execution and delivery of this Agreement and each Closing hereunder
and shall continue in full force and effect for six months after any applicable
statute of limitations (taking into account any waiver or tolling thereof) with
respect to claims which may arise thereunder or relate thereto shall have run
and the provisions of this Section 6.2 shall constitute a waiver by the Company
of any such applicable statute of limitations.
6.3. Governing Law; Jurisdiction. This Agreement shall be
---------------------------
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of law. Each party hereby irrevocably
consents and submits to the jurisdiction of any New York State or United States
Federal Court sitting in the State of New York, County of New York, over any
action or proceeding arising out of or relating to this Agreement and
irrevocably consents to the service of any and all process in any such action or
proceeding by registered mail addressed to such party at its address specified
in Exhibit 9. Each party further waives any objection to venue in New York and
---------
any objection to an action or proceeding in such state and county on the basis
of forum non-conveniens. Each party also waives any right to trial by jury.
6.4. 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.
6.5. Headings. The headings of the sections of this
--------
Agreement are for convenience and shall not by themselves determine the
interpretation of this Agreement.
6.6. Notices. Any notice required or permitted hereunder
-------
shall be given in writing and shall be deemed effectively given upon personal
delivery and if a fax number has been provided, upon delivery (with answerback
confirmed), addressed to a party at its address and the fax number, if any,
shown below or at such other address and fax number as such party may designate
by three days advance notice to the other party.
Any notice to the Investors shall be sent to the addresses set forth on
Exhibit 9, with a copy to:
---------
▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Any notice to the Company shall be sent to:
Medjet Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman and CEO
with a copy to:
▇▇▇▇ & ▇▇▇▇▇ Professional Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Short, Esq.
6.7. Rights of Transferees. Any and all rights and
---------------------
obligations of Investors herein incident to the ownership of Purchased
Securities shall pass successively to all subsequent transferees of such
Purchased Securities until extinguished pursuant to the terms hereof.
6.8. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or any other provision of this Agreement.
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Purchased Securities subscribed for INVESTORS:
hereunder:
▇▇▇▇ ▇▇▇▇▇ INVESTMENT PARTNERS, L.P.
By: ▇▇▇▇ ▇▇▇▇▇ CAPITAL MANAGEMENT,
L.L.C., General Partner
10,400 Purchased Shares and
1,040,000 Purchased Warrants By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
▇▇▇▇ ▇▇▇▇▇ INVESTMENTS, LTD.
By: F.M.C. Limited
1,600 Purchased Shares and
160,000 Purchased Warrants By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
▇▇▇▇▇▇▇ AND ▇▇▇ ▇▇▇▇▇▇▇▇ JTWROS
800 Purchased Shares and
80,000 Purchased Warrants By: /s/ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
760 Purchased Shares and /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
76,000 Purchased Warrants ------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
360 Purchased Shares and /s/ ▇▇▇▇ ▇▇▇▇▇▇
36,000 Purchased Warrants -----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-19-
▇▇▇▇-▇▇▇▇ ▇. ▇▇▇▇▇▇, MD GENERAL
PARTNERSHIP
By: ▇▇▇▇ ▇▇▇▇▇ Capital Management, L.L.C.,
General Partner
2,000 Purchased Shares and By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
200,000 Purchased Warrants __________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
80 Purchased Shares and /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
8,000 Purchased Warrants _____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-20-
ACCEPTED AND AGREED BY:
MEDJET INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman of the Board and Chief
Executive Officer
Date: December 3, 1999
-21-
EXHIBITS TO THE SUBSCRIPTION AGREEMENT
Exhibit 1: Certificate of Designations of Preferences and Rights of Series B
Convertible Preferred Stock
Exhibit 2: Form of Warrants
Exhibit 3: Registration Rights Agreement
Exhibit 4: Investment Banking Agreement
Exhibit 5: Legal Opinion
Exhibit 6: Capitalization Post-Closing
Exhibit 7: Disclosure Letter
Exhibit 8: Use of Proceeds
Exhibit 9: Name, Address and Fax Number of Investors
-22-