EXHIBIT 10.15
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
AMERICA'S DOCTOR, INC.
AND
THE PURCHASERS IDENTIFIED ON SCHEDULE A HERETO
DATED: FEBRUARY 1, 1999
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SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
SECTION 1. Certain Definitions........................................1
1.1. Defined Terms...................................................1
SECTION 2. Authorization And Sale.....................................4
2.1. Authorization of Preferred Stock and Warrants...................4
2.2. Sale and Purchase...............................................4
2.3. The Closing.....................................................4
SECTION 3. Representations And Warranties Of The Corporation..........5
3.1. Organization and Corporate Power................................5
3.2. Authorization...................................................5
3.3. Equity Investments..............................................6
3.4. Capitalization..................................................6
3.5. Shareholder Lists and Agreements................................7
3.6. Financial Information...........................................7
3.7. Absence of Undisclosed Liabilities..............................7
3.8. Absence of Certain Changes......................................8
3.9. Tax Matters.....................................................9
3.10. Title; Encumbrances; Burdensome Restrictions.................10
3.11. Intellectual Property Rights.................................10
3.12. Litigation...................................................11
3.13. No Defaults..................................................12
3.14. Labor Agreements and Actions.................................12
3.15. Compliance...................................................12
3.16. Insurance....................................................12
3.17. Conflicts....................................................13
3.18. Accounts; Related Transactions...............................13
3.19. Securities Law Compliance....................................14
3.20. No Consent or Approval Required..............................14
3.21. Agreements...................................................14
3.22. Brokers......................................................16
3.23. Employee Benefit Plans; Employees............................16
3.24. Investment Company Act.......................................17
3.25. Small Business Concern.......................................17
3.26. Real Property Holding Corporation............................17
3.27. Disclosure...................................................17
SECTION 4. Representations, Warranties And Covenants Of The
Purchasers................................................17
SECTION 5. Conditions To And Deliveries At Closing...................19
5.1. Preferred Stock................................................19
5.2. Accuracy of Representations and Warranties.....................19
5.3. Performance....................................................19
5.4. Corporate Proceedings; Consents, Etc...........................19
5.5. Certificate of Secretary.......................................20
5.6. Shareholders' Agreement and Registration Rights Agreement......20
5.7. Adverse Proceedings; No Material Adverse Effect................20
5.8. Small Business Administration Documentation....................20
5.9. Employment Agreements..........................................21
5.10. Absence of Liens.............................................21
5.11. Opinion of Counsel...........................................21
5.12. Effectiveness................................................21
5.13. Approvals....................................................21
5.14. Other Matters................................................21
SECTION 6. Survival Of Representations, Warranties And Agreements,
Etc. .....................................................22
SECTION 7. Additional Remedies.......................................22
SECTION 8. Expenses..................................................22
SECTION 9. Additional Provisions.....................................23
9.1. Successors and Assigns.........................................23
9.2. Entire Agreement...............................................23
9.3. Notices........................................................23
9.4. Changes........................................................25
9.5. Counterparts...................................................25
9.6. Headings.......................................................25
9.7. Nouns and Pronouns.............................................25
9.8. Governing Law..................................................25
9.9. Severability...................................................25
9.10. Construction.................................................26
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") made as of this 1st
day of February, 1999, by and between America's Doctor, Inc., a Delaware
corporation (the "Corporation"), and the purchasers identified on Schedule A
hereto (the "Purchasers").
RECITALS:
Subject to the terms and conditions hereof, the Corporation desires to
issue and sell, and the Purchasers desire to purchase, in the aggregate, up to
133,333 shares of Series A Convertible Preferred Stock, $0.01 par value, of the
Corporation, and warrants to purchase a number of shares of Common Stock, $0.01
par value, of the Corporation specified in such warrants, substantially in the
form of Exhibit A hereto (the "Warrants").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Action" shall mean any action, suit, proceeding, claim, arbitration
or investigation.
"Activity Event of Default" shall have the meaning set forth in
Section 6.5(b)."Budget" shall mean the annual operating and capital budget of
the Corporation, with monthly breakdowns prepared by management and signed by
the Chief Executive Officer or the Chief Financial Officer of the Corporation.
"Certificate of Incorporation" shall mean the Corporation's Restated
Certificate of Incorporation, including the Certificate of Designations with
respect to the Preferred Stock, a copy of which Certificate of Designations is
attached hereto as Exhibit B.
"Closing" shall mean the closing of the transactions contemplated
under Section 2.3(a) of this Agreement.
"Closing Date" shall mean the date of the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall mean the Corporation's Common Stock, par value
$0.01 per share.
"Corporation" shall mean America's Doctor, Inc., a Delaware
corporation.
"Designated Persons" shall mean the former and present directors,
officers and employees of, and consultants to, the Corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Intellectual Property Rights" shall mean all industrial and
intellectual property rights, including without limitation, Proprietary
Information, patents, patent applications, patent rights, mask works, mask work
applications, trademarks, trademark applications, trade names, service marks,
service ▇▇▇▇ applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae.
"IRS" shall mean the Internal Revenue Service.
"Javelin" shall mean Javelin Capital Fund, L.P., a Delaware limited
partnership, a small business investment Company licensed by the SBA, and its
successors and assigns.
"Operative Documents" shall mean, collectively, this Agreement and
the Exhibits hereto.
"Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Preferred Stock" shall mean the Corporation's Series A Convertible
Preferred Stock, par value $0.01 per share.
"Proprietary Information" shall mean all customer lists, source and
object code, algorithms, architecture, structure, display screens, layouts,
processes, inventions, trade secrets, know-how, development tools, software and
other proprietary rights owned by the Corporation pertaining to any product or
service manufactured, marketed or sold, or proposed to be manufactured, marketed
or sold (as the case may be), by the Corporation or used, employed or exploited
in the development, license, sale, marketing or distribution or maintenance
thereof, and all documentation and media constituting, describing or relating to
the above, including without limitation, manuals, memoranda, know-how,
notebooks, records and disclosures.
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"Purchasers" shall mean the persons and entities identified on
Schedule A hereto.
"Recent Balance Sheet" shall have the meaning set forth in Section
3.6(a)(iii).
"Recent Financial Statements" shall have the meaning set forth in
Section 3.6(a)(iii).
"Register", "Registered", "Registration" and "Registration
Statement" shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
"Registration Rights Agreement" shall mean the Amended and Restated
Registration Rights Agreement among the Corporation, Premier Research Worldwide,
Ltd., Medical Advisory Systems, Inc. and the Purchasers substantially in the
form attached hereto as Exhibit D.
"Related Transaction" shall have the meaning set forth in Section
3.18.
"SBA" shall mean the United States Small Business Administration.
"SBIC" shall mean each of Javelin or Origen and "SBICs" shall mean
Javelin and Origen, collectively.
"SBIC Act" shall mean the Small Business Investment Act of 1958, as
amended.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"Shareholders' Agreement" shall mean the Amended and Restated
Shareholders' and Voting Agreement by and among the Corporation, the Purchasers,
and the Common Stock shareholders identified therein substantially in the form
attached hereto as Exhibit C.
"Taxes" shall mean all federal, state, county, local and foreign
income, profits, franchise, sales, use, occupation, property, excise, payroll,
withholding and other taxes (including penalties and interest).
"Warrants" shall have the meaning set forth in the second Recital
above.
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SECTION 2. AUTHORIZATION AND SALE.
2.1. Authorization of Preferred Stock and Warrants.
The Corporation has duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of up to 133,333 shares of its preferred stock
having the rights, restrictions, privileges and preferences set forth in the
Certificate of Incorporation. The Corporation has, or before the Closing will
have, authorized the granting, pursuant to the terms of this Agreement, of
shares of its Common Stock pursuant to the terms of the Warrants. The
Corporation has, or before the Closing will have, filed the Certificate of
Incorporation with the Secretary of State of the State of Delaware.
2.2. Sale and Purchase.
a) Subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 2.3), the Corporation will sell and issue to
Purchasers and Purchasers will purchase the number of shares of Preferred Stock
indicated on Schedule A hereto opposite each such Purchaser's name and a Warrant
for the purchase price of $30.00 per share, for an aggregate purchase price of
$3,999,990.
b) The Corporation will use the proceeds from the sales of the
Preferred Stock and Warrants for product development, working capital and other
valid corporate purposes.
2.3. The Closing.
a) The closing of the sale and purchase of the Preferred Stock and
Warrants under this Agreement shall take place on the date hereof at the offices
of Rifkin, Livingston, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as is mutually
agreeable to the Corporation and the Purchasers.
b) At the Closing, the Corporation shall deliver to each of the
Purchasers a certificate for the shares of Preferred Stock being purchased by
such Purchaser as set forth on Schedule A hereto, registered in the name of such
Purchaser (or its nominee), and a Warrant, against payment to the Corporation of
the purchase price set forth in Section 2.2(a), by wire transfer, check or other
method acceptable to the Corporation.
c) If at the Closing any of the conditions specified in Section 5
shall not have been fulfilled, each of the Purchasers shall, at its election, be
relieved of all of its obligations under this Agreement without thereby waiving
any other rights it may have by reason of such failure or such non-fulfillment.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents and warrants to each of the Purchasers as
follows:
3.1. Organization and Corporate Power.
The Corporation:
a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
b) has all requisite corporate power and authority to own, lease and
operate its properties currently owned, leased and operated, to carry on its
business as currently conducted and to execute, deliver and perform this
Agreement; and
c) is duly qualified as a foreign corporation and in good standing
to do business in all such jurisdictions, if any, in which the conduct of its
business or its ownership, leasing or operation of property as then conducted,
owned, leased or operated, requires such qualification, except for those
jurisdictions in which failure to so qualify would not have a material adverse
effect on the business or assets of the Corporation.
d) will have all requisite power and authority to execute and
deliver the Operative Documents, to carry out the transactions contemplated
thereby, and to issue and deliver the Preferred Stock and the Warrants, and the
Common Stock issuable upon exercise of the Warrants.
3.2. Authorization.
a) The execution, delivery and performance by the Corporation of the
Operative Documents have been duly authorized by all requisite corporate action
by the Corporation, and the Operative Documents constitute the valid and binding
obligations of the Corporation, enforceable in accordance with their terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally and to general principals of
equity.
b) The issuance, sale and delivery of the Preferred Stock and
Warrants and, upon exercise of the Warrants or the conversion of the Preferred
Stock, the Common Stock issuable with respect to such exercise or conversion,
have been duly authorized by all requisite corporate action of the Corporation,
and when issued, sold and delivered in accordance with this Agreement, the
Preferred Stock will be validly issued and outstanding, fully paid and
nonassessable with only limited liability attaching solely to the ownership
thereof, and not subject to preemptive or any other similar rights of the
stockholders of the Corporation or others. When issued and delivered in
accordance with the terms of the Certificate of Incorporation and the Warrants,
the Common Stock issuable upon the conversion of the Preferred Stock and the
exercise of the Warrants will be validly issued and outstanding, fully paid and
nonassessable with only limited liability
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attaching solely to the ownership thereof, and not subject to preemptive or any
other similar rights of the stockholders of the Corporation or others.
3.3. Equity Investments.
The Corporation has never had, nor does it presently have, any
subsidiaries, nor has it owned, nor does it presently own, any capital stock or
other proprietary interest or other voting control, directly or indirectly, in
any corporation, association, trust, partnership, joint venture or other entity.
3.4. Capitalization.
a) The authorized capital stock of the Corporation, immediately
prior to the Closing, will consist of (i) 2,500,000 shares of Common Stock,
534,579 of which shares are issued and outstanding and (ii) 1,000,000 shares of
preferred stock, none of which shares are issued and outstanding. All of the
issued and outstanding shares of the Corporation's capital stock have been duly
authorized and validly issued and are fully paid and non-assessable and all
securities previously issued and sold by the Corporation were issued and sold in
compliance with applicable Federal securities laws. Except as set forth in
Schedule 3.4, no other shares of the Corporation's capital stock or securities
convertible into or exchangeable for shares of the Corporation's capital stock
have been issued or reserved for issuance, and except as set forth in Schedule
3.4 or contemplated by the Operative Documents, (A) no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Corporation is authorized
or outstanding, (B) there is not any, commitment or offer of the Corporation to
issue any subscription, warrant, option, convertible security or other such
right, or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Corporation, (C) the Corporation
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof and (D) there are no
restrictions on the transfer of the Corporation's capital stock other than
compliance with applicable Federal securities laws. Except as contemplated by
the Operative Documents or as set forth in Schedule 3.4, no person or entity is
entitled to (1) any preemptive or similar right with respect to the issuance of
any capital stock of the Corporation or (2) any rights with respect to the
registration of any capital stock of the Corporation under the Securities Act.
b) Immediately after consummation of the transactions contemplated
hereby at the Closing, the authorized capital stock of the Corporation will
consist of (i) 2,500,000 shares of Common Stock, of which 534,579 shares will be
issued and outstanding, fully paid and nonassessable, and 383,333 shares will be
reserved for issuance upon the conversion of Preferred Stock and Warrants, and
(ii) 1,000,000 shares of preferred stock, 133,333 of which shares will be
designated as Preferred Stock and will be issued and outstanding, fully paid and
nonassessable.
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3.5. Shareholder Lists and Agreements.
Schedule 3.5 annexed hereto sets forth a true and complete list of
all shareholders and other security holders of the Corporation showing the
number of shares of Common Stock or other securities held by each Shareholder or
security holder. Except as set forth in Schedule 3.5 or otherwise as
contemplated by the Operative Documents, there are no agreements, written or
oral, between the Corporation and any of the holders of the Corporation's
capital stock, or between or among any holders of the Corporation's capital
stock, relating to the acquisition, disposition or voting of such capital stock.
3.6. Financial Information.
a) The Corporation has previously delivered to the Purchasers the
following financial information:
(i) the Corporation's financial projections, dated December
31, 1998 and related statements of income;
(ii) the balance sheet of the Corporation as of December 31,
1998 and the related statements of income and schedules, prepared by
the Corporation; and
(iii) the draft audited balance sheet of the Corporation as of
June 30, 1998 (the "Recent Balance Sheet") and the related
statements of income and cash flow, prepared by the Corporation's
independent auditors (together, the "Recent Financial Statements").
b) The projections referenced in Section 3.6(a)(i) above were
prepared based upon good faith assumptions and represent the Corporation's
reasonable estimate of future results based upon information available as of the
date of such projections.
c) To the Corporation's best knowledge, (i) the Recent Financial
Statements (together with any notes and schedules thereto) are true, correct and
complete, (ii) are in accordance with the books and records of the Corporation,
(iii) fairly present the financial condition of the Corporation as of the dates
indicated and the results of operations and cash flow of the Corporation for the
periods indicated and (iv) have been prepared in accordance with generally
accepted accounting principles consistently applied.
3.7. Absence of Undisclosed Liabilities.
Except as disclosed in the Recent Financial Statements, as listed on
Schedule 3.7 hereof, or for liabilities incurred in the ordinary course and in
amounts not greater than incurred for a comparable period in the prior fiscal
year, as of the date of this Agreement, to the Corporation's best knowledge, (a)
the Corporation has no liability of any nature (matured or unmatured, fixed or
contingent) which was not
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provided for or disclosed on the Recent Balance Sheet, (b) all liability
reserves, if any, established by the Corporation were adequate in all respects
and were established by the Corporation in accordance with generally accepted
accounting principles consistently applied, and (c) there are no loss
contingencies (as such term is used in "Statement of Financial Accounting
Standards No. 5" issued by the Financial Accounting Standards Board in March
1975) which were not adequately disclosed in the Recent Financial Statements as
required by said Statement No. 5. There were no loss contingencies (as such term
is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which were not adequately
provided for on the Recent Balance Sheet.
3.8. Absence of Certain Changes.
Except as listed on Schedule 3.8 and, with respect to the
capitalization, as listed on Schedule 3.4, since June 30, 1998, there has not
been:
a) any material adverse change in the financial condition, results
of operations, assets, liabilities, business or prospects of the Corporation or
any occurrence or circumstance or combination thereof which could reasonably be
expected to result in any such material adverse change;
b) any funds borrowed or any obligations or liabilities (absolute or
contingent) incurred by the Corporation, except as incurred in the ordinary
course of business consistent with past practices, or any endorsement,
assumption or guaranty of payment or collection of any obligation of any other
person or entity;
c) any discharge or satisfaction by the Corporation of any lien or
encumbrance or payment of any obligation or liability (absolute or contingent)
other than current liabilities reflected in the Recent Financial Statements;
d) any agreement or arrangement entered into by the Corporation
granting preferential rights to purchase any of the assets, properties or rights
of the Corporation (including management and control thereof), or requiring the
consent of any party to a transfer or assignment of such assets, properties or
rights (or change in the management or control thereof), or providing for the
merger or consolidation of the Corporation with or into another corporation,
association or business entity;
e) any amendment or termination of any material contract, agreement
or license to which the Corporation is a party, except in the ordinary course of
business consistent with past practices;
f) any transaction entered into by the Corporation other than in the
ordinary course of business consistent with past practices;
g) any material asset or property of the Corporation made subject to
a lien of any kind;
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h) any waiver of any valuable right of the Corporation, or, except
in the ordinary course of business consistent with past practices, the
cancellation of any debt or claim held by the Corporation;
i) any declaration, setting aside or payment of dividends on, or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Corporation, or any
agreement or commitment therefor;
j) any mortgage, pledge, sale, assignment or transfer of any
tangible or intangible assets of the Corporation except in the ordinary course
of business consistent with past practices;
k) any loan by the Corporation to, or any loan to the Corporation
from, any officer, director, employee or shareholder of the Corporation, or any
agreement or commitment therefor, except advances in the ordinary course of
business for reasonable travel and entertainment expenses in customary amounts;
l) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, property or business
of the Corporation;
m) any change in the accounting methods or practices followed by the
Corporation; or
n) any agreement entered into to do any of the foregoing described
in clauses (a) through (m) above.
3.9. Tax Matters.
Except as provided on Schedule 3.9 hereof, the Corporation has filed
all federal, state, county, and local tax returns and tax reports required to be
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed and all of the foregoing are
true, correct and complete. All Taxes required to have been paid or accrued by
the Corporation have been fully paid or are adequately provided for on the
Recent Balance Sheet. No issues have been raised (and are currently pending) by
the IRS or any other taxing authority concerning the Corporation's liability for
Taxes, and no waivers of statutes of limitations have been given or requested
with respect to the Corporation. There is no tax lien of any kind outstanding
against the assets, property, or business of the Corporation. All deficiencies
asserted or assessments (including interest and penalties) made as a result of
any examination by the IRS or by appropriate state or departmental tax
authorities of the federal, state or local income tax, sales tax or franchise
tax returns of or with respect to the Corporation have been fully paid or are
adequately provided for on the Recent Balance Sheet and no proposed (but
unassessed) additional taxes, interest or penalties have been asserted. The
provisions for taxes in the Recent Balance Sheet are sufficient for the payment
of all accrued and unpaid federal, state or local and foreign
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taxes as of such date. The Corporation has not (i) elected to be treated as a
collapsible corporation pursuant to Section 341(f) of the Code, nor (ii) made
any other elections pursuant to the Code that would have an adverse effect on
the Corporation, its financial condition, its business as presently conducted or
presently proposed to be conducted or any of its properties or assets. The
Corporation has not made any material payments, is not obligated to make any
material payments and is not a party to any agreement that under certain
circumstances could obligate it to make any material payments that would be
treated as a "golden parachute" payment under the Code. The Corporation is not a
party to any tax allocation or sharing agreement. The Corporation has not (i)
been a member of an affiliated group filing a consolidated federal income tax
return, and (ii) had liability for the Taxes of any entity under Treasury
Regulation ss. 1.502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
3.10. Title; Encumbrances; Burdensome Restrictions.
The Corporation does not own and has never owned any real property.
The items of personal property of the Corporation reflected on the Recent
Financial Statements are in good operating condition and repair, reasonable wear
and tear excepted, are suitable for the purposes for which they are presently
used or then used in the conduct of its business, are structurally sound and
free from patent defects and there is no material expenditure presently required
in order to maintain such condition and state of repair or replace any tangible
personal property. Except as set forth on Schedule 3.10 attached hereto, and,
with respect to certain leasehold interests and licenses for the use of assets,
as set forth in the Recent Financial Statements, the Corporation owns good and
valid title (or leasehold title, as the case may be) to all property and assets,
real, personal or fixed, tangible or intangible, used by it in its operations as
presently conducted or as proposed to be conducted, subject to no mortgages,
liens, security interests, pledges, charges or other encumbrances of any kind.
The Corporation is not obligated under any contract or agreement or subject to
any charter or other corporate restriction which adversely affects its business,
properties, assets, prospects or condition (financial or otherwise). The
Corporation is not in violation of any zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of its owned properties. The Corporation, in its capacity as lessee, is not in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of its leased properties.
The Corporation has not received any notice of violation with which it has not
complied.
3.11. Intellectual Property Rights.
a) A complete list of the Intellectual Property Rights of the
Corporation is set forth on Schedule 3.11 to this Agreement. Except as set forth
on Schedule 3.11 attached hereto, there are no Intellectual Property Rights
necessary or required to enable the Corporation to carry on its respective
business as now conducted and as presently proposed to be conducted. No third
party has any ownership right, title, interest, claim in
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or lien on any of the Intellectual Property Rights of the Corporation and there
are no restrictions on the Corporation's use or right to use the Intellectual
Property Rights. The Corporation has not granted or assigned to any other person
or entity any right to make, have made, assemble or sell the products or
proposed products or to provide the services or proposed services of the
Corporation. To the best knowledge of the Corporation, no other Person is using
or infringing upon the Corporation's Intellectual Property Rights.
b) Except as set forth on Schedule 3.11, the Corporation has not
violated or infringed, is not currently violating or infringing, and has not
received any communications alleging that it (or any of its employees or
consultants) has violated or infringed or, by conducting its business as
presently conducted or proposed to be conducted, would violate or infringe, the
Intellectual Property Rights of any other person or entity. No third party has
claimed or has reason to claim that any Designated Person has (a) violated or
may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees. No third party has requested
information from the Corporation which suggests that such a claim might be
contemplated. No Designated Person has employed or proposes to employ any trade
secret or any information or documentation proprietary to any former employer,
and no Designated Person has violated any confidential relationship which such
Designated Person may have had with any third party, in connection with the
development, manufacture or sale of any product or proposed product or the
development or sale of any service or proposed service of the Corporation, and
the Corporation has no reason to believe there will be any such employment or
violation. None of the execution or delivery of this Agreement, or the carrying
on of the business of the Corporation as officers, employees or agents by any
Designated Person, or the conduct or proposed conduct of the business of the
Corporation, will 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 such Designated Person is obligated or under any
judgment, decree or order of any court or administrative agency to which such
Designated Person is subject.
3.12. Litigation.
Except as set forth on Schedule 3.12 hereof, there is no Action
pending (or, to the best knowledge of the Corporation, currently threatened)
against the Corporation, or its existing or proposed business or activities,
properties or assets or, to the best knowledge of the Corporation, against any
Designated Person in connection with such Designated Person's relationship with,
or actions taken on behalf of, the Corporation. There is no factual or legal
basis for any such Action that might result, individually or in the aggregate,
in any material adverse change in the business, properties or financial
condition of the Corporation. The Corporation is not a party to or subject to
the provisions of any order, writ, injunction, judgment or decree of any
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court or governmental agency or instrumentality and there is no Action by the
Corporation currently pending or which the Corporation intends to initiate.
3.13. No Defaults.
The Corporation is not in default under its Certificate of
Incorporation or bylaws. The Corporation is not in default: (a) under any note,
indenture, mortgage, other instrument evidencing indebtedness, lease, purchase
or sales order, or any other material contract, agreement or instrument to which
it is a party or by which it or any of its property is bound or affected or (b)
with respect to any order, writ, injunction, judgment or decree of any court or
any federal, state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or instrumentality. To the best
knowledge of the Corporation, there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute, a
default under any of the foregoing.
3.14. Labor Agreements and Actions.
The Corporation is not bound by or subject to any contract,
commitment or arrangement with any labor union, and no labor union has
requested, sought or attempted to represent any employees, representatives or
agents of the Corporation. There is no strike or other labor dispute involving
the Corporation pending nor, to the best knowledge of the Corporation,
threatened, nor is the Corporation aware of any labor organization activity
involving its employees.
3.15. Compliance.
Except as set forth on Schedule 3.15 hereof, the Corporation (a) has
complied in all material respects with all federal, state, local and foreign
laws, ordinances, regulations and orders applicable to its businesses or the
ownership of its assets, and the Corporation has not received notice of any
claimed default with respect to such laws, ordinances, rules and regulations;
and (b) has or has applied for all federal, state, local and foreign
governmental licenses and permits necessary or required to enable it to carry on
its business as now conducted and as proposed to be conducted. To the
Corporation's best knowledge, such licenses and permits, if issued, are in full
force and effect, no violations have been recorded in respect of any such
licenses or permits, and no proceeding is pending or, to the best knowledge of
the Corporation, threatened to revoke or limit any thereof. None of the
aforesaid licenses and permits shall be affected in any material adverse respect
by any Operative Document.
3.16. Insurance.
To the Corporation's best knowledge, all policies of commercial
general liability, professional liability, theft, fidelity, life, fire, product
liability, worker's compensation, health, excess liability and other forms of
insurance held by the
12
Corporation are valid and enforceable policies and are outstanding and duly in
force and all premiums with respect thereto are paid to date. The amounts of
coverage under such policies of insurance for the assets and property of the
Corporation are (a) adequate against risks usually insured against by Persons
operating similar businesses and operating similar properties and (b) in
compliance in all respects with all federal, state, local and foreign laws,
ordinances, regulations and orders applicable to its business that govern such
amounts. There is no default with respect to any provision contained in any
insurance policy, nor has there been any failure to give any notice or present
any claim under any insurance policy in a timely fashion or in the manner or
detail required by the policy. There are no outstanding claims under any
insurance policy. No insurance policy provides for retrospective or retroactive
premium adjustments. No notice of cancellation or non-renewal with respect to,
or disallowance of any claim under, any insurance policy has been received by
the Corporation. The Corporation has not been refused any insurance, nor has its
coverage been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last five years.
3.17. Conflicts.
The execution and delivery of the Operative Documents by the
Corporation, the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof by the Corporation
and the issuance, sale and delivery of Preferred Stock by the Corporation, will
not (i) violate any provision of law, statute, rule or regulation, or any
ruling, writ, injunction, order, judgment or decree of any court, administrative
agency or other governmental body applicable to the Corporation or (ii) conflict
with or result in any breach of any of the terms, conditions or provisions of,
or constitute (wht due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, the
Certificate of Incorporation or bylaws, or under any notice, indenture,
mortgage, lease, purchase or sales order or other material contract, agreement
or instrument to which the Corporation is a party or by which it or any of its
property is bound or affected, or (iii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Corporation.
3.18. Accounts; Related Transactions.
All accounts and notes receivable of the Corporation as of June 30,
1998 and all accounts and notes receivable arising between such date and the
Closing Date are and will be valid and subsisting and represent and will
represent accounts actually accrued in the ordinary course of business
consistent with past practices. There have been no accounts receivable of the
Corporation converted to notes receivable or otherwise extended.b) Except as set
forth on Schedule 3.18 hereof, no current or former stockholder, director,
officer or employee of the Corporation nor any relative or "associate" (as
defined in the rules and regulations promulgated under the Exchange Act) of any
such Person, is presently, directly or indirectly through his or its affiliation
with any other person or entity, a party to any transaction with the Corporation
providing for
13
the furnishing of services (other than employment of such individuals by the
Corporation) by or to, or the sale of products by or to, or rental of real or
personal property from or to, or otherwise requiring cash payments to or by, any
such Person in excess of an aggregate of $1,000.00. For purposes of this
Agreement, a transaction of the type described in this Section 3.18 is sometimes
herein referred to as a "Related Transaction".
3.19. Securities Law Compliance.
The Corporation has not offered any Common Stock, or any security or
securities similar to the Common Stock or the Preferred Stock, for sale to, or
solicited any offers to buy any of the foregoing from, or otherwise approached
or negotiated in respect thereof, with any Person or Persons other than a
limited number of institutional or other sophisticated investors deemed to be
"accredited investors" as such term is defined in Rule 501(a) of Regulation D
adopted under the Securities Act and no more than thirty five unaccredited
investors, and in accordance with, the Securities Act.
3.20. No Consent or Approval Required.
Except as set forth on Schedule 3.20 and for the filing of any
notice subsequent to the Closing that may be required under applicable federal
securities laws (which, if required, shall be filed on a timely basis as may be
so required), no permit, consent, approval or authorization of, or declaration
to, or filing with, any Person (governmental or private) is required for the
valid authorization, execution, delivery and performance by the Corporation of
the Operative Documents or for the valid authorization, designation, issuance,
sale and delivery of the Preferred Stock, or the carrying out by the Corporation
of the transactions contemplated hereby.
3.21. Agreements.
a) Except as listed on Schedule 3.21, (x) the Corporation is not a
party to any written or oral contract not made in the ordinary course of
business and (y) whether or not made in the ordinary course of business, the
Corporation is not a party to any written or oral:
(i) contract with any labor union;
(ii) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess
of normal operating requirements;
(iii) contract for the employment of any officer, individual
employee or other person on a full-time basis or any contract
with any person on a consulting basis;
(iv) bonus, pension, profit-sharing, retirement, stock purchase,
stock option, hospitalization, medical insurance or similar
plan, contract or
14
understanding in effect with respect to employees or any of
them or the employees of others;
(v) agreement or indenture relating to the borrowing of money or
to the mortgaging, pledging or otherwise placing of a lien on
any assets of the Corporation;
(vi) guaranty of any obligation for borrowed money or otherwise;
(vii) lease or agreement under which the Corporation is lessee of or
holds or operates any property, real or personal, owned by any
other party;
(viii) lease or agreement under which the Corporation is lessor of
or permits any third party to hold or operate any property,
real or personal, owned or controlled by the Corporation;
(ix) agreement or other commitment for capital expenditures in
excess of $10,000.00;
(x) distributor, dealer, manufacturer's representative or sales
agency agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the
Corporation (except for agreements which, in the aggregate,
are not material to the business of the Corporation);
(xi) contract, agreement or commitment under which the Corporation
is obligated to pay any broker's fees, finder's fees or any
such similar fees, to any third party;
(xii) contract, agreement or commitment under which the Corporation
has issued, or may become obligated to issue, any shares of
capital stock of the Corporation, or any warrants, options,
convertible securities or other commitments pursuant to which
the Corporation is or may become obligated to issue any shares
of its capital stock;
(xiii) contract, agreement or commitment under which the Corporation
is obligated to repurchase or otherwise acquire or retire any
shares of its capital stock;
(xiv) contract, agreement or commitment with officers, directors,
employees or shareholder of the Corporation or persons or
entities related to or affiliated with any such persons;
(xv) contract, agreement or commitment relating to product
development;
(xvi) agreements which limit the freedom of the Corporation or its
employees, officers or directors to engage in any area of
business or to compete with any other person or entity; or
15
(xvii) any other contract, agreement, arrangement or understanding
which is material to the operation of the business of the
Corporation.
The Corporation has furnished to counsel to the Purchasers true and correct
copies of all such written agreements and other documents.
b) Except as contemplated by the Operative Documents, no Person has
any right to cause the Corporation to effect the registration under the
Securities Act of any shares of Common Stock, Preferred Stock or any other
securities (including without limitation, debt securities) of the Corporation.
c) Except as set forth in Schedule 3.21, the execution, delivery and
performance by the Corporation of the Operative Documents and the offering,
issuance and sale of the Preferred Stock, the Warrants and the Common Stock
issuable upon conversion of the Preferred Stock and upon the exercise of the
Warrants does not and will not conflict with or result in any violation of,
breach of or default under any purchase order issued by the Corporation for an
amount equal to or in excess of $5,000 or any other contract, obligation or
commitment of the Corporation, or any charter provision, bylaw or corporate
restriction of the Corporation, or result in the creation of any lien, charge,
security interest or encumbrance of any nature upon any of the properties or
assets of the Corporation or violate any instrument, agreement, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Corporation or to which the Corporation is a party or by which it or any of its
properties are bound.
3.22. Brokers.
Except as set forth on Schedule 3.22, neither the Corporation, nor
any of its officers, directors, employees or stockholders have employed any
broker or finder in connection with the transactions contemplated by this
Agreement.
3.23. Employee Benefit Plans; Employees.
a) Except as set forth on Schedule 3.23, the Corporation has no
employee benefit plans, pension, retirement, deferred compensation, profit
sharing, bonus, incentive, stock option, severance, health, life, disability,
group insurance or other plans, programs or arrangements.
b) No employee of the Corporation will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as a result
of the transactions contemplated hereby.
c) The Corporation is not aware that any officer, director,
executive or management employee of or consultant to the Corporation has any
plans to terminate his relationship with the Corporation. Except as set forth in
Schedule 3.23, the Corporation is in compliance with and has been in compliance
with all applicable laws relating to the employment of labor, including without
limitation, provisions relating to wages, laws, equal opportunity, collective
bargaining and the payment of social security and other
16
taxes. Except as set forth on Schedule 3.23, all employees of the Corporation
are engaged on a full-time basis.
3.24. Investment Company Act.
The Corporation is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended.
3.25. Small Business Concern.
The Company represents and warrants to the SBICs that the Company,
taken together with its "affiliates" (as that term is defined in 13 C.F.R.
ss.121.103), is a "Small Business Concern" within the meaning of 15 U.S.C.
ss.662(5), that is Section 103(5) of the Small Business Investment Act of 1958,
as amended (the "Act"), and the regulations thereunder, including 13 C.F.R.
ss.107, and meets the applicable size eligibility criteria set forth in 13
C.F.R. ss.121.301(c)(1) or the industry standard covering the industry in which
the Company is primarily engaged as set forth in 13 C.F.R. ss.121.301(c)(2).
Neither the Company nor any of its subsidiaries presently engages in any
activities for which a small business investment company is prohibited from
providing funds by the SBIC Act, including 13 C.F.R. ss.107.
3.26. Real Property Holding Corporation.
The Corporation is not a real property holding corporation within
the meaning of Code Section 897(c)(2) and any regulations promulgated
thereunder.
3.27. Disclosure.
To the Corporation's best knowledge, neither this Agreement nor any
other written document, certificate, instrument or statement furnished or made
to the Purchasers by or on behalf of the Corporation in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact known to the
Corporation which materially adversely affects the business, properties or
financial condition of the Corporation which has not been set forth in this
Agreement or in the other documents, certificates, instruments or statements
furnished to the Purchasers by or on behalf of the Corporation.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each of the Purchasers, severally and not jointly, represents,
warrants and covenants to the Corporation that:
17
a) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Shareholders' Agreement have been duly
authorized by all requisite action by the Purchasers and each constitutes the
valid and binding obligation of the Purchasers, enforceable in accordance with
its terms;
b) it is acquiring the Preferred Stock and Warrants for its own
account, for investment and not with a view to the distribution thereof within
the meaning of the Securities Act;
c) it understands that the Preferred Stock and Warrants have not
been, and will not be, registered under the Securities Act, in each case by
reason of its issuance by the Corporation in a transaction exempt from the
registration requirements of the Securities Act; and that the Preferred Stock
and Warrants must be held by it indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from registration;
d) it understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to it) promulgated under the
Securities Act depends on the satisfaction of various conditions, and that, if
and when applicable, Rule 144 may only afford the basis for sales in limited
amounts;
e) it will not transfer the Preferred Stock or Warrants except in
compliance with the Shareholders' Agreement, the Registration Rights Agreement
and applicable law;
f) it has not employed any broker or finder in connection with the
transactions contemplated by this Agreement; and
g) (i) it is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act, and by reason of its business and
financial experience, and the business and financial experience of those persons
retained by it to advise it with respect to its investment in the Preferred
Stock, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment, is able to bear the economic risk of such investment
and, at the present time, is able to afford a complete loss of such investment
and (ii) it is familiar with the business of the Corporation and has had the
opportunity to ask questions of the officers and directors of the Corporation
and to obtain such information about the financial condition of the Corporation
as it has requested.
18
SECTION 5. CONDITIONS TO AND DELIVERIES AT CLOSING.
The obligations of each of the Purchasers hereunder are subject to
the satisfaction of the following conditions at or before the Closing; provided,
however, that each of the following conditions may be waived in writing, in
advance, by the approval of each of the Purchasers:
5.1. Preferred Stock.
The Purchasers shall have received the Preferred Stock to be issued
in connection with such Closing which shall have been duly authorized, issued
and executed by the Corporation. The gross proceeds to the Corporation from the
sale of the Preferred Stock and Warrants shall be no less than $3,999,990.
5.2. Accuracy of Representations and Warranties.
To the Corporation's best knowledge, each representation and
warranty contained in Section 3 and in the Operative Documents shall be true on
and as of such Closing Date with the same effect as though such representation
and warranty had been made on and as of that date.
5.3. Performance.
The Corporation shall have performed and complied with all
agreements and conditions contained in this Agreement and in the Operative
Documents required to be performed or complied with by the Corporation prior to
or at the Closing.
5.4. Corporate Proceedings; Consents, Etc.
All corporate and other proceedings to be taken and all waivers and
consents to be obtained in connection with the transactions contemplated by the
Operative Documents shall have been taken or obtained and all documents incident
thereto shall be satisfactory in form and substance to each of the Purchasers
and to their counsel and each of the Purchasers shall have received all such
originals or certified or other copies of such documents it may reasonably have
requested.
19
5.5. Certificate of Secretary.
The Purchasers shall have received a certificate of the Secretary of
the Corporation, dated the date of the Closing, to the effect that (i) attached
thereto is a true and complete copy of the Certificate of Incorporation and the
bylaws of the Corporation (as amended through such date) as in effect on the
date thereof, (ii) the Certificate of Incorporation and the bylaws are
sufficient in form and substance to permit the transactions contemplated in the
Operative Documents, (iii) attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors authorizing the execution,
delivery and performance of the Operative Documents, the execution, issuance and
delivery of the Preferred Stock and Warrants, and certifying that such
resolutions are the only resolutions of the Board of Directors with respect to
such matters, (iv) the Corporation is in good standing in reliance on a good
standing certificate from the Secretary of State of the State of Delaware as of
a recent date.
5.6. Shareholders' Agreement and Registration Rights Agreement.
The Shareholders' Agreement and the Registration Rights Agreement
shall have each been executed and delivered by the Corporation and such other
parties named therein. In addition, the Corporation and such parties shall have
complied with all of the terms and conditions of the Shareholders' Agreement,
including without limitation, the placement of legends required to be placed on
securities owned by such parties.
5.7. Adverse Proceedings; No Material Adverse Effect.
No suit, action, or other proceeding seeking to restrain, prevent or
change the transactions contemplated hereby, in the Registration Rights
Agreement or in the Shareholders' Agreement or otherwise questioning the
validity or legality of such transactions shall have been instituted and be
pending. No event, occurrence, fact, condition, change, development or effect
shall have occurred, exist or come to exist since June 30, 1998, that,
individually or in the aggregate, has constituted or resulted in or could
reasonably be expected to constitute or result in, a material adverse effect on
the Corporation other than as may be due to a change in general economic
conditions.
5.8. Small Business Administration Documentation.
On or before the closing of the Investment, the SBIC shall have
received from the Company SBA Form 480 (Size Status Declaration) and SBA Form
652 (Assurance of Compliance ) which have been completed and executed by the
Company, and SBA Form 1031 (Portfolio Finance Report), Parts A and B of which
has been completed by the Company (the "SBA Documents").
20
5.9. Employment Agreements.
Employment agreements in the forms attached as Exhibit E hereto
shall have been executed and delivered by the Corporation and each of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
5.10. Absence of Liens.
The Corporation's business and assets shall be free and clear of all
liens, claims, security interests and encumbrances whatsoever except as set
forth on Schedule 3.9.
5.11. Opinion of Counsel.
The Purchasers shall have received an opinion from Rifkin,
Livingston, ▇▇▇▇▇▇▇ & Silver, LLC, counsel for the Corporation, dated the
Closing Date, addressed to the Purchasers, and satisfactory in form and
substance to Purchasers.
5.12. Effectiveness.
The Certificate of Incorporation shall have been made effective by
filing such Certificate of Incorporation with the Secretary of State of the
State of Delaware.
5.13. Approvals.
The Board of Directors of the Corporation shall have each duly
approved this Agreement, the Shareholders' Agreement, the Registration Rights
Agreement, the Certificate of Incorporation, the Warrants and the transactions
contemplated under each of the foregoing, and the Purchasers shall have received
a certificate of an officer of the Corporation certifying the resolutions or the
Board of Directors of the Corporation with respect to such approvals. Any
shareholder approval required in connection with the transaction contemplated
hereby shall have been obtained, and the Purchasers shall have received a
certificate of an officer of the Corporation certifying the resolutions of the
shareholders of the Corporation with respect to such approvals.
5.14. Other Matters.
All business and legal due diligence shall have been satisfactorily
completed by each of the Purchasers and their counsel, as determined in each of
the Purchasers' sole discretion. All corporate, legal, governmental,
administrative and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory in substance and form to the
Purchasers, and the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as it may reasonably
request.
21
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
All representations and warranties hereunder shall survive the
Closing for a period of two years and thereafter shall terminate. All statements
contained in any certificate or other instrument delivered by the Corporation or
by an officer on behalf of the Corporation through the date hereof pursuant to
this Agreement, any agreement delivered in connection herewith, or in connection
with the transactions contemplated by this Agreement shall constitute
representations and warranties by the Corporation under this Agreement. All
agreements contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative, and in any event, so long as any
of the shares of Preferred Stock are outstanding.
SECTION 7. ADDITIONAL REMEDIES.
In case any one or more of the representations, warranties,
covenants and/or agreements set forth in this Agreement or any other agreement
executed in connection herewith shall have been breached by the Corporation, and
in case any claim is made against the Corporation by any shareholder that the
securities issued to it by the Corporation were issued in violation of any state
securities or "blue sky" laws, the Corporation agrees to indemnify, defend and
hold the Purchasers harmless from and against all demands, claims, actions or
causes of action, assessments, losses, damages (including, without limitation,
diminution in value), liabilities, costs and expenses (including, without
limitation, interest, penalties, fines, punitive damages and reasonable
attorneys' fees and disbursement), arising out of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or covenants in this Agreement, or in the schedules and
exhibits attached hereto or in any documents furnished by or on behalf of the
Corporation or such violation of state securities or "blue sky" laws.
SECTION 8. EXPENSES.
The Corporation shall bear its own expenses and legal fees with
respect to the transactions contemplated by the Operative Documents and shall
pay, and save the Purchasers harmless against all liability for the payment of:
(a) all costs and other expenses incurred in connection with the preparation of
the Operative Documents and the Corporation's performance of and compliance with
all agreements and conditions contained therein on its part to be performed or
complied with prior to the date hereof, including the fees and disbursements of
one counsel to the Purchasers for services rendered in connection therewith, up
to $50,000, (b) all costs and other expenses
22
incurred by the Corporation in connection with delivering to the Purchasers the
Preferred Stock, Warrants and the Common Stock upon conversion or exercise
thereof, (c) the fees and disbursements of one counsel to the Purchasers for
services rendered after the date hereof in connection with (i) any amendment or
waiver with respect to any of the terms or conditions of any of the Operative
Documents or (ii) the enforcement of the rights of the Purchasers pursuant to
the terms and conditions of any of the Operative Documents if such enforcement
results from a breach by the Corporation of any of its obligations under any of
the Operative Documents. The Corporation further agrees that it shall pay, and
shall save the Purchasers harmless from any and all liability with respect to,
any stamp, issue or similar taxes which may be determined to be payable in
connection with the execution, delivery, performance and/or issuance, as the
case may be, of the Preferred Stock, the Warrants or the Common Stock upon
conversion or exercise thereof, or any amendment or waiver of the terms or
conditions of any of the Operative Documents. The Corporation shall reimburse
the members of its board of directors, including any members designated by the
holders of the Preferred Stock, for travel and other out-of-pocket expenses
associated with their services as members of the board of directors, and shall
reimburse the Purchasers for any expenses incurred by Purchasers on behalf of
the Corporation.
SECTION 9. ADDITIONAL PROVISIONS.
9.1. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the
Corporation and the Purchasers, and the respective successors, assigns,
transferees, heirs, executors and administrators of the Corporation and the
Purchasers.
9.2. Entire Agreement.
This Agreement (as amended from time to time) and the other writings
referred to herein or delivered pursuant thereto (including all Schedules and
Exhibits hereto) which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and supercede all prior and
contemporaneous arrangements or understandings with respect thereto.
9.3. Notices.
All notices, requests, consents and other communications hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, by
nationally-recognized overnight courier service or by telecopy, receipt
confirmed, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by the addressee to the
addressor listing all parties:
23
If to the Corporation, to:
America's Doctor, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
With a copy to:
Rifkin, Livingston, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
If to the Purchasers, to:
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital Focus II, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
And:
TD Origen Capital Fund, L.P.
One Technology Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
And:
Javelin Capital Fund, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
Law Offices of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
24
All such notices, advises and communications shall be deemed to have been
received (a) in the case of personal delivery or overnight courier service, on
the date of such delivery, (b) in the case of telecopy, upon receipt of a
confirmation report, and (c) in the case of mailing, on the third day after the
posting thereof.
9.4. Changes.
The terms and provisions of this Agreement may not be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
except pursuant to the consent of the Corporation and the Purchasers, or their
permitted transferees.
9.5. Counterparts.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
9.6. Headings.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
9.7. Nouns and Pronouns.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the similar
form of names and pronouns shall include the plural and vice-versa.
9.8. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland, without regard to conflict of laws.
9.9. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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9.10. Construction.
The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf.
THE CORPORATION:
AMERICA'S DOCTOR, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
PURCHASERS:
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL FOCUS II, L.P.
By: ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Partners II, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Principal
TD ORIGEN CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
JAVELIN CAPITAL FUND, L.P.
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
27
Schedule A
Purchasers
----------
Series A Preferred Total
Name and Address Shares Purchase Price
---------------- ------ --------------
Javelin Capital Fund, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 16,667 $ 500,010
TD Origen Capital Fund, L.P.
One Technology Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇.▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 16,667 $ 500,010
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital Focus II, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 99,999 $2,999,970
---------- ----------
TOTAL: 133,333 $3,999,990
28