Exhibit 1.1
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Between
INTELLIGENT MEDICAL IMAGING, INC.
and
JNC OPPORTUNITY FUND LTD.
Dated as of June 30, 1998
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
June 30, 1998, between Intelligent Medical Imaging, Inc., a Delaware corporation
(the "COMPANY"), and JNC Opportunity Fund Ltd., a Cayman Islands corporation
(the "PURCHASER").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchaser and the Purchaser desires
to purchase from the Company, an aggregate principal amount of $3,000,000 of the
Company's 6% Convertible Debentures, due June 30, 2001 (the "DEBENTURES"), which
are convertible into shares of the Company's common stock, $.01 par value per
share (the "COMMON STOCK").
IN CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration the receipt and adequacy are hereby
acknowledged, the Company and Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES
1.1 THE CLOSING
(a) The Closing. (i) Subject to the terms and conditions set forth in this
Agreement, the Company shall issue and sell to the Purchaser and the Purchaser
shall purchase the Debentures for an aggregate purchase price of $3,000,000. The
closing of the purchase and sale of the Debentures (the "Closing") shall take
place at the offices of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP (the
"ESCROW AGENT"), 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or other
place as mutually agreed immediately following the execution hereof or such
later date as the parties shall agree. The date of the Closing is hereinafter
referred to as the "CLOSING DATE."
(ii) Prior to the Closing, the parties shall deliver or shall cause to be
delivered to the Escrow Agent such items as are required to be delivered by them
in accordance with and subject to the terms and conditions of the Escrow
Agreement, dated as of the date hereof, by and among the Company, the Purchaser
and the Escrow Agent, in the form of EXHIBIT E (the "ESCROW AGREEMENT"),
including the following: (A) the Company shall deliver (1) the Debentures
registered in the name of the Purchaser, (2) a common stock purchase warrant, in
the form of EXHIBIT D, registered in the name of the Purchaser, pursuant to
which the Purchaser shall have the right at any time and from time to time
thereafter through the fifth anniversary date of the Original Issue Date to
acquire 120,000 shares of Common Stock at an exercise price per share of $3.923
(the "WARRANT"), (3) the legal opinion of Xxxxxxx & Xxxxxx, LLP outside counsel
to the Company, substantially in the form of EXHIBIT C, and (4) all other
documents, instruments and writings required to have been delivered at or prior
to the Closing Date by the Company pursuant to this Agreement, including an
executed Registration Rights Agreement, dated the date hereof, between the
Company and the Purchaser, in the form of EXHIBIT B (the "REGISTRATION RIGHTS
AGREEMENT"), and the Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT F, delivered to and acknowledged by the Company's transfer agent (the
"TRANSFER AGENT INSTRUCTIONS"); and (B) the Purchaser shall deliver (1)
$3,000,000 in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose,
and (2) all documents, instruments and writings required to have been delivered
at or prior to the Closing Date by the Purchaser pursuant to this Agreement,
including, without limitation, an executed Registration Rights Agreement; and
(C) each party hereto shall deliver all other executed instruments, agreements
and certificates as are required to be delivered hereunder by or on their behalf
at the Closing.
1.2 FORM OF DEBENTURES. The Debentures shall be in the form of EXHIBIT A.
.2 FORM OF DEBENTURES. The Debentures shall be in the form of EXHIBIT A.
1.3 CERTAIN DEFINED TERMS. For purposes of this Agreement, "CONVERSION
PRICE," "ORIGINAL ISSUE DATE" and "TRADING DAY" shall have the meanings set
forth in Exhibit A; "BUSINESS DAY" shall mean any day except Saturday, Sunday
and any day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
ARTICLE II REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company has no subsidiaries other than as set forth in SCHEDULE 2.1(A)
(collectively the "SUBSIDIARIES"). Each of the Subsidiaries is an entity, duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the full power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of the Company
and the Subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of the Securities (as defined below) or any of this
Agreement, the Debentures, the Registration Rights Agreement, the Warrant or the
Escrow Agreement (collectively, the "TRANSACTION DOCUMENTS"), (y) have or result
in a material adverse effect on the results of operations, assets, prospects, or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (z) adversely impair the Company's ability to perform fully on a
timely basis its obligations under any of the Transaction Documents (any of (x),
(y) or (z), a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents, and otherwise to carry out
its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the Company
and, when delivered (or filed, as the case may be) in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate of incorporation, by-laws or other charter documents.
(c) CAPITALIZATION. The number of authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(C). No shares of
Common Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any of the Transaction
Documents. Except as disclosed in SCHEDULE 2.1(C), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, except as a result of the purchase and
sale of the Debentures and the Warrant, securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. To the knowledge of the
Company, except as specifically disclosed in the SEC Documents (as defined
below) or SCHEDULE 2.1(C), no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) or has the right to
acquire by agreement with or by obligation binding upon the Company beneficial
ownership of in excess of 5% of the Common Stock. A "Person" means an individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF THE DEBENTURES AND THE WARRANT. The Debentures and the
Warrant are duly authorized, and, when issued and paid for in accordance with
the terms hereof, shall have been validly issued, fully paid and nonassessable,
free and clear of all liens, encumbrances and rights of first refusal of any
kind (collectively, "LIENS"). The Company has on the date hereof and will, at
all times while the Debentures and the Warrant are outstanding, maintain an
adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the holders of the Debentures and the Warrant, to enable it to
perform its conversion, exercise and other obligations under this Agreement, the
Debentures and the Warrant. Such number of reserved and available shares of
Common Stock is not less than the sum of (i) 200% of the number of shares of
Common Stock which would be issuable upon conversion in full of the Debentures,
assuming such conversion occurred on the Original Issue Date or the Filing Date
(as defined in the Registration Rights Agreement), whichever yields a lower
Conversion Price, (ii) the number of shares of Common Stock issuable upon
exercise of the Warrant, and (iii) the number of shares Common Stock which would
be issuable upon payment of interest on the Debentures, assuming each Debenture
is outstanding for three years and all interest is paid in shares of Common
Stock (such number of shares, the "INITIAL MINIMUM"). All such authorized shares
of Common Stock shall be duly reserved for issuance to the holders of such
Debentures and Warrant. The shares of Common Stock issuable upon conversion of
the Debentures, as payment of interest thereon and upon exercise of the Warrant
are collectively referred to herein as the "UNDERLYING SHARES." The Debentures,
the Warrant and the Underlying Shares are, collectively, the "SECURITIES." When
issued in accordance with the Debentures and the Warrant, in accordance with
their respective terms, the Underlying Shares shall have been duly authorized,
validly issued, fully paid and nonassessable, free and clear of all Liens.
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), or (ii) subject to
obtaining the Required Approvals (as defined below), conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, indenture or instrument (evidencing
a Company debt or otherwise) to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including Federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (ii) and
(iii), as could not, individually or in the aggregate, have or result in a
Material Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority,
except for violations which, individually or in the aggregate, could not have or
result in a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Neither the Company nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other Federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filings required pursuant to Section 3.12, (ii)
the filing of the Underlying Securities Registration Statement with the
Securities and Exchange Commission (the "COMMISSION") meeting the requirements
set forth in the Registration Rights Agreement and covering the resale of the
Underlying Shares by the Purchaser, (iii) the application(s) to the Nasdaq
National Market (the "NASDAQ") for the listing of the Underlying Shares with the
NASDAQ (and with any other national securities exchange or market on which the
Common Stock is then listed), (iv) applicable Blue Sky filings and, and (v) in
all other cases where the failure to obtain such consent, waiver, authorization
or order, or to give such notice or make such filing or registration could not
have or result in, individually or in the aggregate, a Material Adverse Effect
(the consents, waivers, authorizations, orders, notices and filings referred to
in (i)-(v) of this Section are, collectively, the "REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in the SEC
Documents, there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (Federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, individually or in
the aggregate, have or result in a Material Adverse Effect.
(h) NO DEFAULT OR VIOLTATION. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred which has not
been waived which, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority, except as could not individually or in the
aggregate, have or result in a Material Adverse Effect.
(i) PRIVATE OFFERING. Assuming the accuracy of the representations and
warranties of the Purchaser set forth in Sections 2.2(b)-(h), the offer,
issuance and sale of the Securities to the Purchaser as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Neither the Company nor any Person acting on its
behalf has taken any action could subject the offering, issuance or sale of the
Securities to the registration requirements of the Securities Act.
(j) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the three years preceding the date hereof (or such
shorter period as the Company was required by law to file such material) (the
foregoing materials being collectively referred to herein as the "SEC DOCUMENTS"
and, together with the Schedules to this Agreement the "DISCLOSURE MATERIALS")
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Documents prior to the expiration of any such extension.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Documents, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. All material agreements to which the
Company is a party or to which the property or assets of the Company are subject
have been filed as exhibits to the SEC Documents as required. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting ("GAAP") principles applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. Since December 31, 1997, except as specifically
disclosed in the SEC Documents, (a) there has been no event, occurrence or
development that has had or that could have or result in a Material Adverse
Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (c) the Company has not
altered its method of accounting or the identity of its auditors and (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in compliance
with existing Company stock option plans or salary paid in accordance with
existing employment agreements or otherwise made in the ordinary course
consistent with prior practice) with respect to its capital stock, or purchased,
redeemed (or made any agreements to purchase or redeem) any shares of its
capital stock. The Company last filed audited financial statements with the
Commission on March 31, 1998, and has not received any comments from the
Commission in respect thereof.
(k) INVESTMENT COMPANY. The Company is not, and is not an Affiliate (as
defined in Rule 405 under the Securities Act) ) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) CERTAIN FEES. Except for certain fees payable by the Company to Xxxxxxx
Capital Partners, Ltd., no fees or commissions will be payable by the Company to
any broker, financial advisor or consultant, finder, placement agent, investment
banker, or bank with respect to the transactions contemplated by this Agreement.
The Purchaser shall have no obligation with respect to any fees or with respect
to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions
contemplated by this Agreement. The Company shall indemnify and hold harmless
the Purchaser, its employees, officers, directors, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as such fees and expenses are
incurred.
(m) SOLICITATION MATERIALS. Neither the Company nor any Person acting on
the Company's behalf has (i) distributed any offering materials in connection
with the offering and sale of the Securities, or (ii) solicited any offer to buy
or sell the Securities by means of any form of general solicitation or
advertising.
(n) FORM S-3 ELIGIBILITY. The Company is eligible to register securities
for resale with the Commission under Form S-3 promulgated under the Securities
Act.
(o) EXCLUSIVITY. The Company shall not issue and sell the Debentures to any
Person other than the Purchaser other than with the specific prior written
consent of the Purchaser.
(p) SENIORITY. Except with respect to or in connection with private label
vendor financing and/or other financing arrangements between the Company and
Prime Leasing, Inc., no indebtedness of the Company is senior to the Debentures
in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution, or otherwise.
(q) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The Company has not,
in the two years preceding the date hereof, received notice (written or oral)
from the NASDAQ or any other stock exchange, market or trading facility on which
the Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange or market. The Company is in compliance with all
such maintenance requirements.
(r) PATENTS AND TRADEMARKS. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, licenses and rights (collectively, the "INTELLECTUAL
PROPERTY RIGHTS") which are necessary or material for use in connection with its
business, and which the failure to so have would have a Material Adverse Effect.
To the best knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.
(s) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as set forth on
SCHEDULE 6(B) to the Registration Rights Agreement, (i) the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied and
(ii) no Person, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(t) REGULATORY PERMITS. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate Federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(u) TITLE. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property and personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each case free
and clear of all Liens, except for liens, claims or encumbrances as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
Subsidiaries. Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.
(v) DISCLOSURE. The Company confirms that it has not provided the Purchaser
or its agents or counsel with any information that constitutes or might
constitute material non-public information. The Company understands and confirms
that the Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Purchaser regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company as follows:
(a) ORGANIZATION; AUTHORITY. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation with the requisite corporate power and authority, to enter into
and to consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The purchase by the Purchaser
of the Securities hereunder has been duly authorized by all necessary action on
the part of the Purchaser. Each of this Agreement, the Registration Rights
Agreement and the Escrow Agreement has been duly executed and delivered by the
Purchaser and constitutes the valid and legally binding obligation of the
Purchaser, enforceable against it in accordance with its terms.
(b) INVESTMENT INTENT. The Purchaser is acquiring the Securities for its
own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof or interest
therein, without prejudice, however, to the Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all times
to sell or otherwise dispose of all or any part of such Securities pursuant to
an effective registration statement under the Securities Act and in compliance
with applicable state securities laws or under an exemption from such
registration.
(c) PURCHASER STATUS. At the time the Purchaser was offered the Debentures
and the Warrant, it was, and at the date hereof it is, and at each exercise date
under the Warrant, it will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act.
(d) EXPERIENCE OF THE PURCHASER. The Purchaser, either alone or together
with its representatives, 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 in the Securities, and has so evaluated the
merits and risks of such investment.
(e) ABILITY OF THE PURCHASER TO BEAR RISK OF INVESTMENT. The Purchaser is
able to bear the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. The Purchaser acknowledges receipt of the
Disclosure Materials and further acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(g) GENERAL SOLICITATION. The Purchaser is not purchasing the Debentures as
a result of or subsequent to any advertisement, article, notice or other
communication regarding the Debentures published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar.
(h) RELIANCE. The Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) Securities may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements of the Securities Act. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred securities under the
Securities Act. Notwithstanding the foregoing, provided the Company receives
such an opinion, the Company hereby consents to and agrees to register on the
books of the Company and with any transfer agent for the securities of the
Company any transfer of Securities by the Purchaser to an Affiliate of the
Purchaser or to a fund under common management with the Purchaser, and any
transfer among any such Affiliates or funds, provided that transferee certifies
to the Company that it is an "accredited investor" as defined in Rule 501(a)
under the Securities Act and that it is acquiring the Securities solely for
investment purposes. Any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights of a Purchaser under this
Agreement and the Registration Rights Agreement.
(b) The Purchaser agrees to the imprinting, so long as is required by this
Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Debentures, the payment of interest thereon,
and exercise of the Warrant or other issuances of Underlying Shares as
contemplated hereby, by the Debentures or the Warrant occurs at any time while
an Underlying Securities Registration Statement is effective under the
Securities Act or, in the event there is not an effective Underlying Securities
Registration Statement at such time, if in the opinion of counsel to the Company
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Company's transfer agent on
the day that the Underlying Securities Registration Statement is declared
effective by the Commission. The Company agrees that it will provide the
Purchaser, upon request, with a certificate or certificates representing
Underlying Shares, free from such legend at such time as such legend is no
longer required hereunder. The Company may not make any notation on its records
or give instructions to any transfer agent of the Company which enlarge the
restrictions of transfer set forth in this Section.
3.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the issuance
of the Underlying Shares upon (i) conversion of the Debentures and payment of
interest thereon in accordance with the terms of the Debentures, and (ii)
exercise of the Warrant in accordance with its terms, may result in dilution of
the outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its obligation
to issue Underlying Shares upon (x) conversion of the Debentures and payment of
interest thereon in accordance with the terms of the Debentures, and (y)
exercise of the Warrant in accordance with its terms, is unconditional and
absolute, subject to the limitations set forth herein, in the Debentures or
pursuant to the Warrant, regardless of the effect of any such dilution.
3.3 FURNISHING OF INFORMATION. As long as the Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as the Purchaser owns Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Purchaser and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. The
Company further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights Agreement,
the Company shall qualify or exempt the issuance and sale of the Underlying
Shares under the securities or Blue Sky laws of such jurisdictions in the United
States as the Purchaser may reasonably request and shall continue such
qualification or exemption at all times until the Purchaser notifies the Company
in writing that it no longer owns Securities; PROVIDED, HOWEVER, that neither
the Company nor its Subsidiaries shall be required in connection therewith to
qualify as a foreign corporation where they are not now so qualified or to take
any action that would subject the Company to general service of process in any
such jurisdiction where it is not then subject.
3.5 INTEGRATION. The Company shall not, and shall use its best efforts to
ensure that, no Affiliate shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser.
3.6 INCREASE IN AUTHORIZED SHARES. At such times as the Company would be,
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from (a) issuing 200% of the number of Underlying Shares
as would then be issuable upon a conversion in full of the principal amount of
Debentures and as payment of any accrued and unpaid interest in respect thereof
in shares of Common Stock, or (b) honoring the exercise in full of the Warrant,
in either case, due to the unavailability of a sufficient number of shares of
authorized but unissued or reserved Common Stock, the Board of Directors of the
Company shall promptly (and in any case, within 30 Business Days from such date)
prepare and mail to the stockholders of the Company proxy materials requesting
authorization to amend the Company's Certificate of Incorporation to increase
the number of shares of Common Stock which the Company is authorized to issue to
at least such number of shares as reasonably requested by the Purchaser in order
to provide for such number of authorized and unissued shares of Common Stock to
enable the Company to comply with its conversion exercise and reservation of
shares obligations as set forth in this Agreement, the Debentures and the
Warrant (the sum of (x) the number of shares of Common Stock then authorized,
(y) the number of shares of Common Stock then outstanding plus all shares of
Common Stock issuable upon exercise of all outstanding options, warrants and
convertible instruments, and (z) the sum of (i) 200% of the number of Underlying
Shares as are then issuable upon a conversion in full of the principal amount of
Debentures and as payment of interest thereon, and (ii) the number of Underlying
Shares as are issuable upon exercise in full of the Warrant, shall be a
reasonable number). In connection therewith, the Board of Directors shall (a)
adopt proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder approval
to carry out such resolutions (and hold a special meeting of the stockholders no
later than the 60th day after delivery of the proxy materials relating to such
meeting) and (c) within five (5) Business Days of obtaining such stockholder
authorization, file an appropriate amendment to the Company's Certificate of
Incorporation to evidence such increase.
3.7 LISTING AND RESERVATION OF UNDERLYING SHARES. (a) The Company shall (i)
not later than the fifth Business Day following the Closing Date hereunder
prepare and file with the NASDAQ (or such other national securities exchange or
market or trading or quotation facility on which the Common Stock is then
listed) an additional shares listing application covering a number of shares of
Common Stock which is at least equal to the number of shares required to be
reserved pursuant to Section 2.1(d), (ii) take all steps necessary to cause such
shares to be approved for listing in the NASDAQ (as well as on any such other
national securities exchange or market or trading or quotation facility on which
the Common Stock is then listed) as soon as possible thereafter, and (iii)
provide to the Purchaser evidence of such listing, and the Company shall
maintain the listing of its Common Stock thereon. If the number of Underlying
Shares as are issuable upon conversion in full of the then outstanding principal
amount of Debentures, as payment of interest thereon, and upon exercise of the
then unexercised portion of the Warrant exceeds 85% of the number of Underlying
Shares previously listed on account thereof with NASDAQ (and such other required
exchanges), the Company shall take the necessary actions to immediately list a
number of Underlying Shares as equals the sum of (x) 200% of the number of
Underlying Shares then issuable upon conversion of the principal amount of the
Debentures and as payment of interest thereon and (y) the number of Underlying
Shares as are then issuable upon exercise of the Warrant.
(b) The Company shall maintain a reserve of Common Stock for issuance upon
conversion of the Debentures and for payment of interest thereupon in shares of
Common Stock pursuant to the terms of the Debentures and upon exercise of the
Warrant in accordance with its terms, in such amount as may be required to
fulfill obligations in full under the Transaction Documents, which reserve shall
include a number of shares of Common Stock equal to no less than the Initial
Minimum.
3.8 CONVERSION PROCEDURES. The Transfer Agent Instructions, Conversion
Notice (as defined in EXHIBIT A) and Notice of Exercise under the Warrant set
forth the totality of the procedures with respect to the conversion of the
Debentures and exercise of the Warrant, including the form of legal opinion, if
necessary, that shall be rendered to the Company's transfer agent and such other
information and instructions as may be reasonably necessary to enable the
Purchaser to convert its Debentures and exercise the Warrant as contemplated in
the Debentures and the Warrant (as applicable).
3.9 NOTICE OF BREACHES. (a) Each of the Company and the Purchaser shall
give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document. However, no disclosure by either party pursuant to this Section shall
be deemed to cure any breach of any representation, warranty or other agreement
contained in any Transaction Document.
(b) Notwithstanding the generality of Section 3.9(a), the Company shall
promptly notify the Purchaser of any notice or claim (written or oral) that it
receives from any lender of the Company to the effect that the consummation of
the transactions contemplated by the Transaction Documents violates or would
violate any written agreement or understanding between such lender and the
Company, and the Company shall promptly furnish by facsimile to the holders of
the Securities a copy of any written statement in support of or relating to such
claim or notice.
3.10 CONVERSION AND EXERCISE OBLIGATIONS OF THE COMPANY. The Company shall
honor conversions of the Debentures and exercises of the Warrant and shall
deliver Underlying Shares in accordance with the respective terms, conditions
and time periods set forth in the respective Debentures and the Warrant.
3.11 RIGHT OF FIRST REFUSAL; SUBSEQUENT REGISTRATIONS. (a) The Company
shall not, directly or indirectly, without the prior written consent of the
Purchaser, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities in a transaction intended to be exempt or not subject to registration
under the Securities Act (a "SUBSEQUENT PLACEMENT") for a period of 180 days
after the Closing Date, except (i) the granting of options or warrants to
employees, officers and directors, and the issuance of shares upon exercise of
options granted, under any stock option plan heretofore or hereinafter duly
adopted by the Company, (ii) shares of Common Stock issued upon exercise of any
currently outstanding warrants and upon conversion of any currently outstanding
convertible securities of the Company, in each case disclosed in SCHEDULE
2.1(C), (iii) shares of Common Stock issued upon conversion of Debentures and as
payment of interest thereon and upon exercise of the Warrant in accordance with
the Debentures or the Warrant, respectively, and (iv) securities which may be
issued in connection with a joint venture or strategic alliance unless (A) the
Company delivers to the Purchaser a written notice (the "SUBSEQUENT PLACEMENT
NOTICE") of its intention to effect such Subsequent Placement, which Subsequent
Placement Notice shall describe in reasonable detail the proposed terms of such
Subsequent Placement, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Placement shall be affected, and attached
to which shall be a term sheet or similar document relating thereto and (B) the
Purchaser shall not have notified the Company by 5:00 p.m. (New York City time)
on the fifth (5th) Trading Day after its receipt of the Subsequent Placement
Notice of its willingness to cause the Purchaser to provide (or to cause its
sole designee to provide), subject to completion of mutually acceptable
documentation (which, if the Purchaser shall have indicated willingness to
provide such financing, the Purchaser shall use its reasonable and good faith
effort to complete prior to twenty (20) Trading Days from the date of its notice
to the Company to provide such financing), financing to the Company on
substantially the terms set forth in the Subsequent Placement Notice. If the
Purchaser shall fail to notify the Company of its intention to enter into such
negotiations within such time period, the Company may effect the Subsequent
Placement substantially upon the terms and to the Persons (or Affiliates of such
Persons) set forth in the Subsequent Placement Notice; PROVIDED, that the
Company shall provide the Purchaser with a second Subsequent Placement Notice,
and the Purchaser shall again have the right of first refusal set forth above in
this paragraph (a), if the Subsequent Placement subject to the initial
Subsequent Placement Notice shall not have been consummated for any reason on
the terms set forth in such Subsequent Placement Notice within thirty (30)
Trading Days after the date of the initial Subsequent Placement Notice with the
Person (or an Affiliate of such Person) identified in the Subsequent Placement
Notice.
(b) Except for (x) Underlying Shares, (y) other "Registrable Securities"
(as such term is defined in the Registration Rights Agreement) to be registered,
and securities of the Company permitted pursuant to Schedule 6(b) of the
Registration's Rights Agreement to be registered in the Underlying Securities
Registration in accordance with the Registration Rights Agreement, and (z)
Common Stock to be registered for resale in connection with financings permitted
pursuant to paragraph (a)(i) and (iv) of Section 3.11(a), the Company shall not,
without the prior written consent of the Purchaser (i) issue or sell any of its
or any of its Affiliates' equity or equity-equivalent securities pursuant to
Regulation S promulgated under the Securities Act, or (ii) register for resale
any securities of the Company for a period of not less than 90 Trading Days
after the date that the Underlying Securities Registration Statement is declared
effective by the Commission. Any days that a Purchaser is unable to sell
Underlying Securities under the Underlying Securities Registration Statement
shall be added to such 90 Trading Day period for the purposes of (i) and (ii)
above.
3.12 CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. The Company shall: (i)
issue a press release acceptable to the Purchaser disclosing the transactions
contemplated hereby on the Closing Date, (ii) file with the Commission a Report
on Form 8-K disclosing the transactions contemplated hereby within ten (10)
Business Days after the Closing Date, and (iii) timely file with the Commission
a Form D promulgated under the Securities Act as required under Regulation D
promulgated under the Securities Act and provide a copy thereof to the Purchaser
promptly after the filing thereof. The Company shall, no less than two (2)
Business Days prior to the filing of any disclosure required by clauses (ii) and
(iii) above, provide a copy thereof to Encore Capital Management, L.L.C.
("ENCORE"). No such filing or disclosure may be made that mentions the Purchaser
or Encore by name without the prior consent of Encore.
3.13 USE OF PROCEEDS. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of Company debt or to redeem any Company equity or
equity-equivalent securities. Pending application of the proceeds of this
placement in the manner permitted hereby, the Company will invest such proceeds
in interest bearing accounts and/or short-term, investment grade interest
bearing securities.
3.14 TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection with
the sale of all or substantially all of the assets of the Company, the Company
shall not transfer, sell or otherwise dispose of any Intellectual Property
Rights, or allow any of the Intellectual Property Rights to become subject to
any Liens, or fail to renew such Intellectual Property Rights (if renewable and
it would otherwise lapse if not renewed), without the prior written consent of
the Purchaser.
3.15 REIMBURSEMENT. If the Purchaser, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse the Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which the Purchaser is a named party, the Company will pay the
Purchaser the charges, as reasonably determined by the Purchaser, for the time
of any officers or employees of the Purchaser devoted to appearing and preparing
to appear as witnesses, assisting in preparation for hearings, trials or
pretrial matters, or otherwise with respect to inquiries, hearings, trials, and
other proceedings relating to the subject matter of this Agreement. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchaser who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchaser and any such Affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Purchaser and any such Affiliate and any such Person. The
Company also agrees that neither the Purchaser nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of the
Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Purchaser or entity in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 FEES AND EXPENSES. At the Closing the Company shall (i) pay $15,000 to
the Escrow Agent in connection with the preparation and negotiation of the
Transaction Documents, and (ii) pay to $5,000 to Encore for its due diligence
expenses and disbursements in connection with the transactions contemplated
hereby. Other than the amounts contemplated in the immediately preceding
sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities.
4.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement, the
Debentures, the Transfer Agent Instructions, the Warrant and the Escrow
Agreement contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
4.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 8:00 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in the Purchase Agreement later than 8:00 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If to the Company: Intelligent Medical Imaging, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx,XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Xxxxxxx & Xxxxxx, LLP
000 Xxxxx Xxxx Xxx
Xxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
If to the Purchaser: JNC Opportunity Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Director
With copies to: Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Managing Member
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser; or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
4.5 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. Except as set forth in
Section 3.1(a), the Purchaser may not assign this Agreement or any of the rights
or obligations hereunder (other than to an Affiliate of the Purchaser) without
the consent of the Company, except that the Purchaser may assign its rights
hereunder and under the Transaction Documents without the consent of the Company
as long as such assignee demonstrates to the reasonable satisfaction of the
Company its satisfaction of the representations and warranties set forth in
Section 2.2. This provision shall not limit the Purchaser's right to transfer
securities or transfer or assign rights hereunder or under the Registration
Rights Agreement.
4.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and, other with respect to Encore who is an intended beneficiary of, and
entitled to enforce, Sections 3.12, 4.1 and 4.11, is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.
4.8 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
4.9 SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and conversion or
exercise (as the case may be) of the Debentures and the Warrant.
4.10 EXECUTION. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 PUBLICITY. The Company and the Purchaser shall consult with each other
in issuing any press releases or otherwise making public statements or filings
and other communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated hereby
and neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
party with prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Purchaser or Encore, or include the name of the Purchaser or Encore in
any filing with the Commission, or any regulatory agency, trading facility or
stock market without the prior written consent of Encore, except to the extent
such disclosure (but not any disclosure as to the controlling Persons thereof)
is required by law, in which case the Company shall provide the Purchaser and
Encore with prior notice of such disclosure.
4.12 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company under
the Transaction Documents. Each of the Company and the Purchaser agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Debenture Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
INTELLIGENT MEDICAL IMAGING, INC.
By: /s/ XXXX XXXXXXX
----------------------------------
Name: Xxxx Xxxxxxx
Title: CFO
JNC OPPORTUNITY FUND LTD.
By: /s/ XXXX X. XXXX
----------------------------------
Name: Xxxx X. Xxxx
Title:
SCHEDULE 2.1(A) to
Convertible Debenture Purchase Agreement
Subsidiaries: None
SCHEDULE 2.1(C) to
Convertible Debenture Purchase Agreement
Authorized, issued and outstanding capital stock of the Company:
AUTHORIZED: 30,000,000 Shares Common Stock $.01 par value
2,000,000 Shares Preferred Stock $.01 par value
ISSUED AND OUTSTANDING 11,583,333 Shares Common Stock $.01 par value
AS OF JUNE 25, 1998:
-0- Shares Preferred Stock $.01 par value
Outstanding options, warrants, script rights, calls, commitments, rights or
obligations convertible into or exchangeable for or rights to acquire or
subscribe for Common Stock:
Options Reserved under Plans -
Employee Plan - 2,686,500
Non-Employee Director Plan - 268,650
----------------------------------------------------------------------
GRANTED EXERCISED IN RESERVE
Employee 2,274,511 767,625 411,989
NON EMPLOYEE 42,900 -0- 225,750
--------------------------------------------------------------------
WARRANTS OUTSTANDING AT JUNE 25, 1998
22,800 at $2 per share
205,989 at $1.09 per share
200,000 at $1.00 per share
45,714 at $.035 per share
474,503 TOTAL
for an aggregate
total purchase price
of $486,814.47
DOES NOT INCLUDE WARRANTS ISSUABLE TO PRIME LEASING CO. FOR UP TO 100,000
WARRANTS AT AVERAGE PER SHARE TRADING PRICE FOR QUARTER IN WHICH WARRANTS ARE
ISSUED. TERM OF WARRANTS IS 36 MONTHS FROM DATE OF ISSUANCE.
Persons of Groups of Related Persons who beneficially own or have the right to
acquire in excess of 5% of the Common stock:
1) The TCW Group, Inc., as parent holding company, holds 5% or more
indirectly through its subsidiaries.
2) Xxxx X. Xxxxxxxxxx, CEO and President of IMI, holds 5% or more which
includes 10,000 shares held of record by Xxxxx Xxxxxxx, Xx.
Xxxxxxxxxx' daughter, who has granted Xx. Xxxxxxxxxx a voting proxy
and right of first refusal with respect to the foregoing securities,
and (ii) 1,245,000 shares held of record by Xxxxxxxxxx Family
Investments Limited Partnership, the sole general partner of which is
Xxxxxxxxxx Holdings, Inc. ("FHI"). Xx. Xxxxxxxxxx is the sole
director, President and a majority shareholder of FHI.
3) Xxxx Xxxxxxxxx, Vice President of IMI, holds 5% or more in his own
name, that of shares held by Xx. Xxxxxxxxx'x wife, Xxxxx Xxxxxxxxx,
and shares held by Xx. Xxxxxxxxx as custodian for his son, Xxxx X.
Xxxxxxxxx.
4) R. Xxxxx Xxxxxxxx, formerly a director of IMI, holds 5% or more,
including shares held by his wife, Xxxxx Xxxxxxxxx.
5) X. Xxxx Price holds 5% or more, as an investment adviser.
EXHIBIT A
See Exhibit Number 4.1 to this Registration Statement.
EXHIBIT B
See Exhibit Number 1.2 to this Registration Statement
EXHIBIT C
Xxxxxxx & Xxxxxx, LLP
Counsellors at Law Since 1894 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
(000) 000-0000
FAX (000) 000-0000
June 30, 1998
JNC Opportunity Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx House, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Ladies and Gentlemen:
We have acted as counsel to Intelligent Medical Imaging, Inc. (the
"Company") in connection with the execution and delivery of 6% Convertible
Debentures in the aggregate principal amount of $3,000,000 of even date herewith
(the "Debenture") of the Company payable to JNC Opportunity Fund Ltd. (the
"Purchaser") and a Convertible Debenture Purchase Agreement (the "Purchase
Agreement") each between the Company and the Purchaser of even date herewith,
and in connection with the consummation of the transactions contemplated
thereby. Capitalized terms used herein without definition are used as defined in
the Purchase Agreement.
This opinion is delivered to the Purchaser at the closing of the
transactions contemplated by the Purchase Agreement.
In our capacity as counsel to the Company, we have examined originals, or
copies identified to our satisfaction as being true copies, of such corporate
records, agreements, instruments and other documents of the Company as in our
judgment are necessary or appropriate to enable us to render the opinions
expressed below.
In connection with our opinions expressed herein we have, in addition to
the records, agreements, instruments and documents referred to in the preceding
paragraph, reviewed the following (collectively, the "Transaction Documents"
and, individually, a "Transaction Document"):
(a) the Purchase Agreement;
(b) the Debenture;
(c) the Common Stock Purchase Warrant (the "Warrant");
(d) the Registration Rights Agreement; and
(e) Escrow Agreement
We have also examined such other documents and matters of law which we
deemed relevant or necessary as a basis for the opinions expressed herein. As to
questions of fact material to such opinions, we have, when relevant facts were
not independently verified by us, relied without verification upon the Officer's
Certificate attached hereto (the "officer's Certificate"), and representations
and warranties of the Company as set forth in the Purchase Agreement, or
certificates of public officials or upon the accuracy and completeness of the
representations as to factual matters set forth in the Transaction Documents.
Whenever our opinion with respect to the existence or absence of facts is
stated to be based on our knowledge or awareness, it is intended to signify that
during the course of our representation of the Company, no information has come
to the attention of attorneys in this Firm who have worked on the transactions
contemplated by the Transaction Documents which would give such attorneys
knowledge of the existence or absence of such facts. However, except to the
extent expressly set forth herein, we have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from our representation of the Company.
In our examination, we have assumed (a) the genuineness of all signatures,
(b) the completeness and authenticity of all documents and records submitted to
us as originals, (c) the conformity to original documents and records of all
documents and records submitted to us as certified photostatic or conformed
copies, (d) the due execution and delivery of the Transaction Documents by all
parties to such documents other than the Company, (e) the validity of all
applicable statutes, ordinances, rules and regulations, (f) the legal capacity
of all natural persons executing documents, and (g) the proper indexing and
accuracy of all public records and documents.
The opinions contained herein are as of the closing on the date hereof, and
we assume no responsibility to update or supplement this opinion to reflect any
facts or circumstances which may hereafter come to our attention or any changes
in law which may hereafter occur.
You have not asked us to pass upon the power and authority of any parties
to the Transaction Documents (other than the Company) to enter into the
Transaction Documents or to effect the transactions contemplated thereby, and
for purposes of this opinion we are assuming that all parties (other than the
Company) have the requisite power and authority to enter into and perform all
their respective obligations thereunder, have taken all necessary corporate
action to enter into the Transaction Documents and to effect such transactions,
have duly executed and delivered such documents, and such documents constitute
valid and binding obligations of such entities (other than the Company),
enforceable against them in accordance with their terms.
We have investigated such questions of law as we have deemed necessary for
the purpose of rendering this opinion. Our opinions expressed herein are limited
to the laws of the State of New York, the Corporation Law of the State of
Delaware and the federal law of the United States, and we do not express any
opinion herein concerning any other law.
We render no opinion on matters except as specifically stated.
We are not expressing any opinion as to, and hereby assume that all actions
have been taken to effect, the Purchaser's compliance with any state or federal
laws (or regulations of any political subdivision thereof) applicable to the
transactions described in the Transaction Documents (including without
limitation the enforcement of any rights granted thereby) because of the nature
of the business of the Purchaser or facts relating specifically to any of them,
or as to the effect of any such non-compliance as a result thereof on the
opinions set forth below.
The opinions hereinafter expressed are qualified to the extent that (a) the
enforceability of any right or remedy granted in the Transaction Documents may
be subject to or affected by any bankruptcy, reorganization, insolvency,
avoidance, equitable subordination, fraudulent conveyance, arrangement,
moratorium, marshaling or other similar laws relating to or affecting the rights
of creditors generally, including, without limitation, the Federal Bankruptcy
Code and similar state and federal laws, (b) the remedy of injunctive relief,
specific performance and any other equitable remedies may be unavailable in any
jurisdiction or may be withheld as a matter of judicial discretion; (c) the
enforceability of any right or remedy granted in the Transaction Documents may
be subject to general principles of equity, including without limitation
concepts of materiality, reasonableness, good faith and fair dealing (regardless
of whether enforceability is considered in a proceeding in equity or in law) and
to the discretion of the court before which proceedings thereof may be brought;
(d) the enforceability of any agreement or instrument or any right granted
thereunder may be subject to public policy considerations or court decisions
which may limit rights to obtain indemnification; (e) the enforceability of any
agreement or instrument, any right granted thereunder or provisions thereof
expressly or by implication waiving broadly or vaguely stated rights, unknown
future rights, defenses to obligations or rights granted by law, where such
waivers are against public policy or prohibited by law, may be subject to the
unenforceability under certain circumstances under applicable law or court
decisions but, for the purposes of this clause (e), the application of any such
law or decision would not, in our opinion, render the Transaction Documents
invalid as a whole, or render the remedies provided for therein, taken as a
whole, inadequate for the practical realization of the benefits intended to be
provided thereby (except for the economic consequences of procedural or other
delay, and (f) the enforceability of any right or remedy granted in the
Transaction Documents may be subject to or affected by any usury or other
similar laws relating to the setting of interest rates, or the payment of
interest.
On the basis of the foregoing and in reliance thereon, and subject to the
assumptions, limitations, qualifications and exceptions set forth herein, we are
of the opinion that:
1. The Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
with the requisite corporate power and authority to own and use its properties
and assets and to carry on its business as currently conducted. To our
knowledge, the Company has no subsidiaries. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
2. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
3. Based solely on our review of the Company's Certificate of
Incorporation on file with the Delaware Secretary of State, the Company's
Bylaws, the Company's minute book, the Company's stock records, the SEC
Documents (as defined in paragraph 8 below) and the Officer's Certificate
attached hereto (the "Officer's Certificate"), (i) no shares of common stock of
the Company, par value $.01 per share ("Common Stock"), are entitled to
preemptive or similar rights, nor (ii) except as specifically disclosed in
Schedule 2.1(c) to the Purchase Agreement, are there any outstanding options,
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or, except as a result of the purchase and sale of the
Debentures and the Warrant, securities, rights or obligations convertible into
or exchangeable for, or giving any person any right to subscribe for or acquire
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock.
4. The Debentures and the Warrant have been duly authorized and, when
paid for and issued in accordance with the terms of the Purchase Agreement,
shall have been validly issued and fully paid.
5. The Company has duly authorized and reserved for issuance such
number of Underlying Shares (such number being not less than 200% of the number
of shares of Common Stock which would be issuable upon conversion of the
Debentures, assuming such conversion occurred as of the date hereof) as are
issuable upon conversion of the Debentures, as payment of interest thereon, and
upon exercise of the Warrant as required pursuant to the terms of the Purchase
Agreement, the Debentures and the Warrant. When issued by the Company in
accordance with the terms of the Purchase Agreement, the Debentures and the
Warrant (as the case may be), and assuming the payment in full of the purchase
price of the Debentures and payment in full of the exercise price of the
Warrants (as the case may be) the Underlying Shares will be validly issued,
fully paid and nonassessable.
6. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated by such agreements do not and will not (i) conflict with or violate
any provision of its Certificate of Incorporation or Bylaws, (ii) to our
knowledge (except with respect to exhibits listed in the SEC Documents as to
which this opinion is given without a knowledge qualification) and subject to
Required Approvals, conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or other written instrument relating to indebtedness of
the Company or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company is
subject, or by which any property or asset of the Company is bound or affected,
except where such violation or restriction would not have, or result in, a
Material Adverse Effect, and except that we express no opinion with respect to
usury laws. To our knowledge, the business of the Company is not being conducted
in violation of any law, ordinance or regulation of any governmental authority.
7. Other than the Required Approvals, the Company is not required to
obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other Federal, state, local or other
governmental authority in connection with the execution, delivery and
performance by the Company of the Transaction Documents.
8. To our knowledge, the Company has filed all reports required to be
filed by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (collectively, the "SEC Documents") on a timely
basis, or has received a valid extension of such time of filing and made such
filing within the applicable grace period. As of their respective dates, the SEC
Documents complied in all material respects as to form with the requirements of
the Securities Act and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
9. Assuming the accuracy of the representations and warranties of the
Company set forth in Section 2.1 of the Purchase Agreement and of the Purchaser
set forth in Section 2.2 of the Purchase Agreement, the offer, issuance and sale
of the Debentures and the Warrant and the offer, issuance and sale of the
Underlying Shares to the Purchaser pursuant to the Purchase Agreement, the
Debentures and the Warrant are exempt from the registration requirements of the
Securities Act.
The opinions contained herein are as of the date hereof, and we assume no
responsibility to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention or any changes in law
which may hereafter occur.
The above opinions are limited solely to matters expressly set forth above.
No other opinions are intended, nor should they be inferred herefrom. This
opinion is rendered solely for the benefit of the Purchaser, and solely in
connection with the transactions described above and, except for its counsel,
may not be relied upon by you or any other person or entity for any other
purpose.
Very truly yours,
/s/ Xxxxxxx & Xxxxxx, LLP
-------------------------
XXXXXXX & XXXXXX, LLP
CERTIFICATE OF OFFICER
INTELLIGENT MEDICAL IMAGING, INC.
The undersigned being the duly elected and acting Chief Financial Officer
of Intelligent Medical Imaging, Inc., a Delaware corporation (the "Company"), in
connection with the opinion of Xxxxxxx & Xxxxxx (the "Opinion"), to JNC
Opportunity Fund Ltd., a Cayman Islands corporation, to which this Certificate
is attached, hereby certify as follows:
1. The Company has no subsidiaries.
2. No shares of common stock of the Company, par value $.01 per share
("Common Stock"), are entitled to preemptive or similar rights. Except as
specifically disclosed in Schedule 2.1(c) to the Purchase Agreement, there are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Debentures and the Warrant, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock
3. All of the factual representations of the Company set forth in the
Purchase Agreement are true and correct as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this consent as of this
30th day of June, 1998.
/S/ XXXX XXXXXXX
--------------------
EXHIBIT D
See Exhibit Number 4.2 to this Registration Statement.
