EXHIBIT 10.6
FORM OF SERIES F PREFERRED STOCK SUBSCRIPTION DOCUMENTS.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
FOR CONVERTIBLE PREFERRED SHARES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN
REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (AS DEFINED IN REGULATION S OF THE 1933 ACT) EXCEPT
PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT.
This Offshore Securities Subscription Agreement ("Agreement") is
executed in reliance upon the transaction exemption afforded by Regulation S
("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended ("1933 ACT").
This Agreement has been executed by the undersigned in connection with
the offshore offering pursuant to Regulation S of an amount not exceeding
$750,000 of the 1998 Series F Convertible Preferred Stock (the "Shares") of
IMAGING DIAGNOSTICS SYSTEMS, INC
Electronic Bulletin Board Symbol "IMDS" a corporation organized under the laws
of Florida, United States of America (the "Issuer" or "Company").
The Undersigned Purchaser:
NAME:_____________________________________
ADDRESS:__________________________________
__________________________________________
__________________________________________
, a non "U.S. person" (the "Purchaser") hereby represents and warrants to, and
agrees with, Issuer as follows:
1. The Offering.
a. The undersigned hereby subscribes for ___________ Convertible
Preferred Shares (the "Shares"), at the aggregate subscription price of
U.S.$10,000 per share, payable in United States Dollars, for a total
consideration of $___________Dollars (the "Subscription Proceeds"). The
Shares shall pay an 6% cumulative dividend payable in common stock at
the time of each conversion. The Shares are subject to a mandatory, 24
month conversion feature at the end of which all Shares outstanding
will be automatically converted ("Mandatory Conversion") based upon the
conversion formula set forth in Section 7.d.
b. Form of Payment. Purchaser shall pay the total Subscription
Proceeds hereunder by delivering good funds by wire transfer in United
States Dollars into the escrow account as follows:
First Union Bank of Connecticut
Stamford Executive Office
000 Xxxx Xxxxxx, X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
ABA # 000000000
Swift # XXXXXX00
Account: 00000-0000000-0
Account Name: Xxxxxx X. XxXxxxx, Esquire - Trustee Account
2. Subscriber Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. Purchaser represents and warrants to
Issuer as follows:
(i) Neither the Purchaser nor any person or entity for whom the
Purchaser is acting as fiduciary is a U.S. person. A U.S. person means
any one of the following:
(1) any natural person resident in the United States of
America;
(2) any partnership or corporation organized or
incorporated under the laws of the United States;
(3) any estate of which any executor or administrator is
a U.S. person;
(4) any trust of which any trustee is a U.S. person;
(5) any agency or branch of a foreign entity located in
the United States;
(6) any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or
other fiduciary for the benefit or account of a
U.S. person;
(7) any discretionary account or similar account
(other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an
individual) resident in the Untied States; and
(8) any partnership or corporation if:
(A) organized or incorporated under the laws of any
foreign jurisdiction; and
(B) formed by a U.S. person, principally for the
purpose of investing in securities not registered
under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Securities Act) who
are not natural persons, estates or trusts.
(ii) At the time the buy order was originated, Purchaser was outside
the United States and is outside the United States as of the date of
the execution and delivery of this Agreement. No offer to purchase the
Shares to Purchaser was made to a person in the United States.
(iii) Purchaser is purchasing the Shares for its own account or for the
account of beneficiaries for whom the Purchaser has full investment
discretion with respect to the Shares and whom the Purchaser has full
authority to bind so that each such beneficiary is bound hereby as if
such beneficiary were a direct purchaser hereunder and all
representations, warranties and agreements herein were made directly by
such beneficiary. Purchaser is not purchasing the Shares on behalf of
any U.S. person and the sale has not been prearranged with a purchaser
in the United States.
(iv) Purchaser represents and warrants and hereby agrees that all
offers and sales of the Shares by it or by persons acting on its behalf
shall only be made (A) in compliance with the safe harbor contained in
Regulation S; (B) pursuant to registration of Shares under the
Securities Act; or (C) pursuant to an exemption from registration.
(v) Purchaser understands and acknowledges that the Shares have not
been registered under the 1933 Act and may not be offered or sold in
the United States or to U.S. persons or for the account or benefit of a
U.S. person (other than distributors as defined in Regulation S) unless
the Shares are registered under the Securities Act or an exemption from
the registration requirements is available.
(vi) Purchaser acknowledges that the purchase of the Shares involves a
high degree of risk and further acknowledges that it can bear the
economic risk of the purchase of the Shares, including the total loss
of its investment. Purchaser acknowledges that it has obtained the
advice of competent legal counsel in its domicile
jurisdiction that Purchaser is qualified under the laws of its domicile
to purchase the securities offered hereunder and that the offer and
sale of said securities will not violate the laws of its domicile
jurisdiction.
(vii) Purchaser understands that the Shares are being offered and sold
to it in reliance on the rules promulgated under Regulation S and that
the Issuer is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of Purchaser set forth herein in order to determine the
applicability of such rules and the legality of Purchaser to acquire
the Shares.
(viii) Purchaser is sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of its
investments, and to make an informed decision relating thereto.
(ix) In evaluating its investment, Purchaser has consulted with its own
investment and/or legal and/or tax advisors.
(x) Purchaser understands that in the view of the SEC the statutory
basis for the exemption claimed for this transaction would not be
present if the offering of Shares, although in technical compliance
with Regulation S, is part of a plan or scheme to evade the
registration provision of the Securities Act. Purchaser is acquiring
the Shares for investment purposes and has no present intention to sell
the Shares in the United States, to a U.S. person or for the account or
benefit of a U.S. person. Purchaser hereby confirms that the purpose of
including the Purchaser Representation Letter (see Exhibit B attached
hereto) to facilitate the transfer of the certificates representing the
Shares into street name, is to enable Purchaser to comply with the
requirements of certain offshore portfolio management regulations and
the security requirements of offshore lenders for margin loans.
(xi) Purchaser is neither an underwriter of, nor a dealer in, the
Shares. Purchaser is not participating, pursuant to a contractual
agreement, in the distribution of the Shares.
(xii) Purchaser represents and warrants that neither it nor any of its
affiliates will directly or indirectly maintain any short position in
Shares, Common Stock or any other securities of the Issuer so long as
any of the Shares have not been converted into Common Stock; (xiii)
Purchaser represents and warrants that it is an "accredited investor"
as that term is defined in Regulation D.
(xiv) The undersigned is not subscribing for the Shares as a result of,
or pursuant to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
meeting.
(xv) The Purchaser is purchasing the Shares for its own account for
investment, and not with a view toward the resale or distribution
thereof. Purchaser is neither an underwriter of, nor a dealer in, the
Shares or the Common Stock issuable upon conversion thereof and is not
participating in the distribution or resale of the Shares or the Common
Stock issuable upon conversion or exercise thereof.
If Purchaser is purchasing the Shares subscribed for
hereby in representative or fiduciary capacity, the representations and
warranties in this Offshore Securities Subscription Agreement shall be
deemed to have been made on behalf of the person or persons for whom
Purchaser is so purchasing.
The foregoing representations and warranties are true
and accurate as of the date hereof, shall be true and accurate as of
the date of the acceptance by the Issuer of Purchaser's subscription,
and shall survive thereafter. If Purchaser has knowledge, prior to the
acceptance of its Offshore Securities Subscription Agreement by the
Issuer, that any such representations and warranties shall not be true
and accurate in any respect, the Purchaser, prior to such acceptance,
will give written notice of such fact to the Issuer specifying which
representations and warranties are not true and accurate and the
reasons therefor.
b. Current Public Information. Purchaser acknowledges that Purchaser
has acquired and carefully reviewed the Issuer's annual report on Form 10-KSB
for its fiscal year ended June 30, 1997, and its quarterly reports on Form
10-QSB filed for the quarters ended September 30, 1997, and December 31, 1997,
the proxy statement September 7, 1997 and Forms 8-K filed since June 1997
(together, the "SEC Reports"). Except as set forth in this Agreement and the SEC
Reports, no representations or warranties have been made to Purchaser by the
Issuer or any agent, employee or affiliate of the Issuer, and in entering into
this transaction Purchaser is not relying upon any information, other than that
provided pursuant to this Agreement and the SEC Reports and the results of
independent investigation by Purchaser.
c. Independent Investigation; Access. Purchaser acknowledges that
Purchaser, in making the decision to purchase the Shares subscribed for, has
relied upon independent investigations made by it and its Purchaser
representative, if any, and Purchaser and such representatives, if any, have,
prior to any sale to Purchaser, had an opportunity to ask questions of, and to
receive answers from Issuer or any person acting on its behalf concerning the
terms and conditions of this offering. Purchaser and its advisors, if any, have
been furnished with access to all publicly available materials relating to the
business, finances and operations of the Issuer and materials relating to the
offer and sale of the Shares which have been requested. Purchaser and its
advisors, if any, have received complete and satisfactory answers to any such
inquiries.
d. No Government Recommendations or Approval. Purchaser understands
that no federal or state agency has made or will make any finding or
determination relating to the fairness for public investment in the Shares, or
has passed or made, or will pass on or make, any recommendation or endorsement
of the Shares.
e. Entity Purchases. If Purchaser is a partnership, corporation or
trust, the person executing this Agreement on its behalf represents and warrants
that:
(i) He or she has made due inquiry to determine the truthfulness of the
representations and warranties made pursuant to this Agreement;
(ii) He or she is duly authorized (if the undersigned is a trust, by
the trust agreement) to make this investment and to enter into and
execute this Agreement on behalf of such entity.
(f) Limits on Amount of Conversion and Ownership. Other than the
Mandatory Conversion provisions contained in this Agreement, in no event shall
the Purchaser be entitled to convert that amount of Shares in excess of that
amount upon conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Purchaser and its affiliates (other than shares
of Common Stock which may be deemed beneficially owned through the ownership of
the unconverted portion of the Shares), and (2) the number of shares of Common
Stock issuable upon the conversion of the Shares with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Purchaser and its affiliates of more than 4.9% of the
outstanding shares of Common Stock of the Company. For purposes of this
provision to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13 (d) of the Securities Exchange Act of
1934, as amended, and Regulation 13 D-G thereunder, except as otherwise provided
in clause (1) of such provision.
3. Issuer Representations.
Issuer represents and warrants to the Purchaser as follows:
a. Reporting Company Status. Seller is a "Reporting Issuer" as defined
by Rule 902 of Regulation S. Seller has registered its Common Stock, no
par value per share (the "Common Stock"), pursuant to the Securities
Exchange Act of 1933, as amended (the "Exchange Act"), and the Common
Stock is listed and trades on the Electronic Bulletin Board. Seller has
filed all material required to be filed pursuant to all reporting
obligations under Section 15(d) of the Exchange Act for a period of at
least twelve (12) months immediately preceding the offer or sale of the
Securities (or for such shorter period that Seller has been required to
file such material).
b. Offshore Transaction. Issuer has not offered Convertible Preferred
Shares to any person in the United States or to any U.S. person or for
the account or benefit of any U.S. person. At the time the buy order
was originated, Issuer and/or its agent reasonably believed that
Purchaser was outside of the United States and was not a U.S. Person.
Issuer and/or its agent reasonably believe that the transaction has not
been prearranged with a Purchaser in the United States.
(i) At the time the buy order was originated, Seller
and/or its agents reasonable believe the Purchaser was outside
of the United States and was not a U.S. person, based on the
representations of Purchaser.
(ii) Seller and/or its agents reasonably believe that
the transaction has not been pre-arranged with a buyer in the
United States, based on the representations of Purchaser.
(iii) No offer to buy or sell the Securities was or
will be made by Seller to any person in the United States.
(iv) The sale of the Securities by Seller pursuant to
this Agreement will be made in accordance with the provisions
and requirements of Regulation S provided that the
representations and warranties of Purchaser in Section 2(a)
hereof are true and correct.
(v) The transactions contemplated by this Agreement
(a) have not been and will not be pre-arranged by Seller with
a purchaser located in the United States or a purchaser which
is a U.S. Person, and (b) are not and will not be part of a
plan or scheme by Seller to evade the registration provisions
of the 1933 Act.
c. No Directed Selling Efforts. In regard to this transaction, Issuer,
has not conducted any "directed selling efforts" as that term is
defined in Rule 902 of Regulation S nor has Issuer conducted any
general solicitation relating to the offer and sale of Convertible
Preferred Shares to U.S. persons residing within the United States or
elsewhere.
d. Shares. The Shares and shares of Common Stock issuable upon
conversion of the Shares, when issued and delivered will be duly and
validly authorized and issued, fully paid and non-assessable and will
not subject the holders thereof to any liability by reason of being
such holders. The stock certificates representing Common Stock issued
upon conversion of the Shares shall be unlegended and there shall be no
stop transfer instructions issued in relation to such common stock.
e. Authority to Enter Agreement. This Agreement and the transaction
contemplated thereunder, when acknowledged by the signature of an
officer of the Issuer, has been duly authorized, validly executed and
delivered on behalf of the Issuer and is a valid and binding agreement
of the Issuer in accordance with its terms.
f. Non-contravention. The execution and delivery of this Agreement, the
consummation of the issuance of the Shares and the transactions
contemplated hereunder do not and will not conflict with or result in a
breach by the Issuer of any of the terms or provisions of, or
constitute a default under, the certificate of incorporation or by-laws
of the Issuer (or any equivalent documents thereto) or any indenture,
mortgage, deed of trust, or other material agreement or instrument to
which the Issuer is a party or by which it or any of its properties or
assets are bound, or any existing applicable law, rule, or regulation
or any applicable decrees, judgment, or order of any court, federal or
state regulatory body, administrative agency or other governmental body
having jurisdictions over the Issuer or any of its properties or
assets.
g. Prior Shares Issued Under Regulation S or Regulation D. In the past
twelve months the Company raised $ 2,600,000 in Regulation S offerings
of which $500,000 has not yet been converted. The Company has raised $
-0- in Regulation D offerings in the past twelve months of which $ -0-
has not yet been converted.
h. Current Authorized Shares. As of February 19, 1998, there were
48,000,000 authorized shares of Common Stock of which approximately
27,798,304 shares of Common Stock were deemed issued and outstanding on
a fully diluted basis.
i. Securities Law Compliance. Based upon the representations and
warranties of the Purchaser in Section 2 and of all other Purchasers
executing similar agreements in connection with this offering, with
respect to the Company's actions, to the best of the Company's
knowledge, (i) the offer and the sale of Shares has been made so as to
conform in all respects with the requirements of Regulation S and with
the requirements of all other published rules and regulations of the
SEC currently in effect relating to offerings to non-residents of the
United States of the type contemplated herein; and (ii) neither the
offer, sale or delivery of the Shares under the terms of this Agreement
will violate Section 5 of the Securities Act, as presently in effect.
j. Filings. Issuer undertakes and agrees pursuant to the sale of its
securities under Regulation S to make all necessary filings in
connection with the sale of its securities as required by the laws and
regulations of the United States, including, Form 8-K and mandatory
NASDAQ notification, if any. Issuer further agrees, with respect to the
filing of Form 8-K, that it will only identify Purchaser as an
"accredited investor" as that term is defined in Regulation D and will
not disclose Purchaser's name in Form 8-K or otherwise unless such
disclosure is required by law.
k. Use of Proceeds. Issuer represents that the net proceeds of this
offering will be used for working capital.
l. Concerning the Securities.The issuance, sale and delivery of the
Shares have been duly authorized by all required corporate action on
the part of Issuer, and when issued, sold and delivered in accordance
with the terms hereof and thereof for the consideration expressed
herein and therein, will be duly and validly issued, fully paid and
non-assessable. A sufficient number of shares of Common Stock upon
conversion of the Shares has been duly and validly reserved for
issuance and upon issuance in accordance with the terms of the Shares,
shall be duly and validly issued, fully paid, and non-assessable and
will not subject the holders thereof, if such persons are non-U.S.
persons, to personal liability by reason of being such holders. There
are no pre-emptive rights of any shareholder of Issuer.
m. Distributor. Each distributor participating in the offering of the
Shares, if any, has agreed in writing, a copy of which has been
delivered to Issuer with this Agreement, that all offers and sales of
the Shares prior to the expiration of a period commencing on the date
of the Closing of the last purchase and sale of the Convertible
Preferred Shares offered by the Issuer and ending 40 days thereafter
(the "Restricted Period") shall only be made (A) in compliance with the
safe harbor contained in Regulation S; (B) pursuant to registration of
Shares under the Securities Act; or (C) pursuant to an exemption from
registration.
n. SEC Reports. The SEC Reports are all the documents (other than
preliminary materials) that Issuer has been required to file with the
SEC from December 31, 1996, to the date hereof. As of their respective
dates, none of the SEC Reports 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, and no
material event has occurred since the filing of Issuer's SEC Report on
Form 10-KSBA for the year ended December 31, 1996, which could make any
of the disclosures contained therein misleading. The financial
statements of Issuer included in the SEC Reports have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, only to normal recurring year-end audit adjustments) and
present fairly the consolidated financial position of Issuer and its
consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and changes in financial position for the
periods then ended.
o. Information Supplied. The information supplied by Issuer to
Purchaser in connection with the offering of the Shares does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements, in the light of the
circumstances in which they were made, not misleading.
p. Threatened or Pending Litigation. The Company is not aware of any
material threatened or pending litigation or investigation or other
proceeding other than those matters disclosed in its SEC Reports.
q. True Statements. Neither this Agreement nor any of the SEC Reports
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under
which such statements are made. There exists no fact or circumstances
which, to the knowledge of the Company, materially and adversely
affects the business, properties, assets, or conditions, financial or
otherwise, of the Company, which has not been set forth in this
Agreement or disclosed in such documents.
r. Delivery Instructions. On the Closing Date the Shares being
purchased hereunder shall be delivered to Xxxxxx X. XxXxxxx, Esq. as
Escrow Agent, who will simultaneously wire to the Company the funds
being held in escrow, less placement fees, at which time the Escrow
Agent shall then have the Shares delivered to the Purchaser, per the
Purchaser's instructions.
s. Non-contravention. The execution and delivery of this Agreement by
the Company, the issuance of the Shares, and the consummation by the
Company of the other transactions contemplated by this Agreement, and
the Preferred Stock do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or
constitute a default under, the (i) certificate of incorporation or
by-laws of the Company, (ii) any indenture, mortgage, deed of trust, or
other material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, (iii) any
material existing applicable law, rule, or regulation or any applicable
decree, judgment, or (iv) order of any court, United States federal or
state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or
any of its properties or assets, except such conflict, breach or
default which would not have a material adverse effect on the
transactions contemplated herein.
t. No Default. Except as set forth in the Company's SEC Reports the
Company is not in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust or other material instrument or
agreement to which it is a party or by which it or its property is
bound, and neither the execution of, nor the delivery by the Company
of, nor the performance by the Company of its obligations under, this
Agreement or the Preferred Stock, other than the conversion provision
thereof, will conflict with or result in the breach or violation of any
of the terms or provisions of, or constitute a default or result in the
creation or imposition of any lien or charge on any assets or
properties of the Company under, (i) any material indenture, mortgage,
deed of trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is bound,
(ii) any statute applicable to the Company or its property, (iii) the
Certificate of Incorporation or By-Laws of the Company, (iv) any decree
, judgment, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company regulation of any
court or governmental agency or body having jurisdiction over the
Company or its properties, or (v) the Company's listing agreement for
its Common Stock.
4. Restricted Period; Conversion.
Rule 903 (c) under Regulation S restricts Purchaser from offering and
selling the Shares, or the Common Stock into which the Shares are convertible,
to U.S. persons or for the account or benefit of a U.S. person during the forty
(40) day Restricted Period.
5. Reliance on Representations.
Purchaser understands that the offer and sale of the Shares is not
being registered under the Securities Act. Issuer is relying on the rules
governing offers and sales made outside the United States pursuant to Regulation
S. Rules 901 through 903 of Regulation S govern this transaction.
6. Transfer Agent Instructions.
a. Legends on Certificate. Purchaser may transfer the Shares
to persons other than U.S. persons in accordance with Regulation S
prior to the expiration of the 40 day restricted period. Accordingly,
Purchaser acknowledges that the Company will instruct its transfer
agent to place a stop transfer order with respect to certificates
representing the Shares and that such certificates will bear the
following legend:
"The shares represented by this certificate have been issued
pursuant to Regulation S promulgated under the Securities Act
of 1933, as amended ("Act"), and have not been registered
under the Act. These shares may not be offered or sold within
the United States or to or for the account of a "U.S. Person"
(as that term is defined in Regulation S) until after May 15,
1998. The terms of conversion are subject to a Subscription
Agreement that was entered into with the Company.
b. Purchaser Representation Letter. Issuer agrees to accept a
Purchaser's Representation Letter from the Purchaser in the form of
Exhibit "B" attached, as sole and sufficient evidence that the
Purchaser has complied with applicable securities laws and upon receipt
of such a letter shall promptly transfer, or instruct the transfer
agent, for the Convertible Preferred Shares, if any, to transfer the
Shares into "Street Name", if so requested by Purchaser, as
expeditiously as practical after receipt of the certificates and the
Purchaser Representation Letter.
c. Transfer Agent Instructions. Issuer shall issue, or
instruct the transfer agent for the Shares, if any, to issue one or
more share certificates representing Shares, in the names of qualified
purchasers to be specified prior to Closing. All of the Shares so
issued will be issued pursuant to Regulation S. Issuer warrants further
that the Shares shall be freely transferable on the books and records
of Issuer subject to compliance with Regulation S and other applicable
securities laws and the terms of this Agreement.
7. TERMS OF CONVERSION.
a. Shares. Upon the Company's receipt of a facsimile or
original of Purchaser's signed Notice of Conversion, and the original Preferred
Share Certificates the Company shall instruct its transfer agent to issue one or
more Certificates representing that number of shares of Common Stock into which
the Shares are convertible in accordance with the provisions regarding
conversion set forth in Exhibit A hereto. The Seller's transfer agent or
attorney shall act as Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Share.
b. Conversion Date. Such conversion shall be effectuated by
surrendering to the Company, or its attorney, the Shares to be converted
together with a facsimile or original of the signed Notice of Conversion which
evidences Purchaser's intention to convert those Shares indicated. The date on
which the Notice of Conversion is effective ("Conversion Date") shall be deemed
to be the date on which the Purchaser has delivered to the Company a facsimile
or original of the signed Notice of Conversion and the original Shares to be
converted. The Company shall deliver to the Purchaser, or per the Purchaser's
instructions, the shares of Common Stock, without restrictive legend within 5
business days of the Conversion Date.
c. Common Stock to be Issued Without Restrictive Legend. Upon
the conversion of any Shares and upon receipt by the Company or its attorney of
a facsimile or original of Purchaser's signed Notice of Conversion (See Exhibit
A), Seller shall instruct Seller's transfer agent to issue Stock Certificates
without restrictive legends in the name of Purchaser (or its nominee) and in
such denominations to be specified at conversion representing the number of
shares of Common Stock issuable upon such conversion, as applicable. Seller
warrants that no instructions, other than these instructions, have been given or
will be given to the transfer agent and that the Common Stock shall otherwise be
freely transferable on the books and records of Seller.
d. Conversion Rate. Except as provided in subsection 2f,
Purchaser is entitled to convert, at anytime after May 15, 1998, the entire face
amount of the Shares, plus accrued interest, at seventy percent (70%) of the 5
day average closing bid price, as reported by Bloomberg, LP for the 5 trading
days immediately preceding the applicable Conversion Date (the "Conversion
Price"). No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded up or
down, as the case may be, to the nearest whole share. The Shares are subject to
a mandatory, 24 month conversion feature at the end of which all Shares
outstanding will be automatically converted, upon the terms set forth in this
section ("Mandatory Conversion Date").
e. Nothing contained in this Subscription Agreement shall be
deemed to establish or require the payment of interest to the Purchaser at a
rate in excess of the maximum rate permitted by governing law. In the event that
the rate of interest required to be paid exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing law and
such excess shall be returned with reasonable promptness by the Purchaser to the
Company.
f. It shall be the Company's responsibility to take all
necessary actions and to bear all such costs to issue the Certificate of Common
Stock as provided herein, including the responsibility and cost for delivery of
an opinion letter to the transfer agent, if so required. The person in whose
name the certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. Upon surrender of any
Shares that are to be converted in part, the Company shall issue to the
Purchaser new Shares equal to the unconverted amount, if so requested by
Purchaser.
g. In the event the Common Stock is not delivered per the
written instructions of the Purchaser, within 5 (five) business days after the
Conversion Date, then in such event the Company shall pay to Purchaser one
percent (1%) in cash, of the dollar value of the Shares being converted per each
day after the fifth business day following the Conversion Date that the Common
Stock is not delivered.
The Company acknowledges that its failure to deliver the Common Stock
within 5 business days after the Conversion Date will cause the Purchaser to
suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Agreement a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to qualify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to deliver the Common Stock pursuant to the terms of this
Agreement.
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 7 is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 7(g) shall not
apply but instead the provisions of Section 7(h) shall apply.
The Company shall make any payments incurred under this Section 7(g) in
immediately available funds within three (3) business days from the date of
issuance of the applicable Common Stock. Nothing herein shall limit a
Purchaser's right to pursue actual damages or cancel the conversion for the
Company's failure to issue and deliver Common Stock to the Purchaser within
tenth (10) business days after the Conversion Date.
h. The Company shall at all times reserve and have available
all Common Stock necessary to meet conversion of the Shares by all Purchasers of
the entire amount of Shares then outstanding. If, at any time Purchaser submits
a Notice of Conversion and the Company does not have sufficient authorized but
unissued shares of Common Stock available to effect, in full, a conversion of
the Shares (a "Conversion Default", the date of such default being referred to
herein as the "Conversion Default Date"), the Company shall issue to the
Purchaser all of the shares of Common Stock which are available, and the Notice
of Conversion as to any Shares requested to be converted but not converted (the
"Unconverted Shares"), upon Purchaser's sole option, may be deemed null and
void. The Company shall provide notice of such Conversion Default ("Notice of
Conversion Default") to all existing Purchasers of outstanding Shares, by
facsimile, within one (1) business day of such default (with the original
delivered by overnight or two day courier), and the Purchaser shall give notice
to the Company by facsimile within five business days of receipt of the original
Notice of Conversion Default (with the original delivered by overnight or two
day courier) of its election to either nullify or confirm the Notice of
Conversion.
The Company agrees to pay to all Purchasers of outstanding Shares
payments for a Conversion Default ("Conversion Default Payments") in the amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Shares held by each Purchaser where N = the number of
days from the Conversion Default Date to the date (the "Authorization Date")
that the Company authorizes a sufficient number of shares of Common Stock to
effect conversion of all remaining Shares. The Company shall send notice
("Authorization Notice") to each Purchaser of outstanding Shares that additional
shares of Common Stock have been authorized, the Authorization Date and the
amount of Purchaser's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in cash or shall be convertible into Common
Stock at the Conversion Rate, at the Purchaser's option, payable as follows: (i)
in the event Purchaser elects to take such payment in cash, cash payments shall
be made to such Purchaser of outstanding Shares by the fifth day of the
following calendar month, or (ii) in the event Purchaser elects to take such
payment in stock, the Purchaser may convert such payment amount into Common
Stock at the conversion rate set forth in section 7(d) at anytime after the 5th
day of the calendar month following the month in which the Authorization Notice
was received, until the expiration of the mandatory 24 month conversion period.
The company acknowledges that its failure to maintain a sufficient
number of authorized but unissued shares of Common Stock to effect in full a
conversion of the Shares will cause the Purchaser to suffer damages in an amount
that will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision set forth in
this section represents the parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Agreement.
Nothing herein shall limit the Purchaser's right to pursue actual
damages or cancel the Notice of Conversion for the Company's failure to maintain
a sufficient number of authorized shares of Common Stock.
8. Closing Date and Escrow Agent.
The date of the issuance of the Shares in the name of the Purchaser
(the "Closing Date") shall be the date funds are wired to the Company. Closing
shall be effected through delivery of funds and certificates to the Escrow
Agent. Purchaser shall forthwith deliver the necessary funds as indicated in
Paragraph 1 to the Escrow Agent. Share Certificates will be delivered at the
instructions of the Issuer to the Escrow Agent: Xxxxxx X. XxXxxxx, Esquire, 0000
Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000. Purchaser herein instructs
the Escrow Agent, and gives the Escrow Agent its good and sufficient authority
to release the Subscription Proceeds, less placement fees to which the Issuer
has agreed in writing, in connection with the purchase of the Shares, upon
receipt by the Escrow Agent of said Shares subscribed for, subject to the terms
and conditions of any Escrow Agreement in effect between the Issuer and the
Escrow Agent. Purchaser and Issuer agree that the Escrow Agent, in his capacity
as Escrow Agent, has no liability as a result of any fraudulent or unlawful
conduct of any party other than the Escrow Agent and agree to hold the Escrow
Agent harmless in such event. The Escrow Agent shall not be liable for any
action taken or omitted by him in good faith and in no event shall the Escrow
Agent be liable or responsible except for the Escrow Agent's own gross
negligence or willful misconduct. The Escrow Agent has made no representations
or warranties in connection with this transaction and has not been involved in
the negotiation of the terms of this Agreement or any matters relative thereto.
Seller and
Purchaser each agree to indemnify and hold harmless the Escrow Agent
from and with respect to any suits, claims, actions or liabilities arising in
any way out of this transaction including the obligation to defend any legal
action brought which in any way arises out of or is related to this Agreement.
The Escrow Agent is not rendering securities advice to anyone with respect to
this proposed transaction; nor is the Escrow Agent opining on the compliance of
the proposed transaction under applicable securities law. In the event the Share
Certificates are not received by the Escrow Agent from the Issuer within Five
(5) Business Days of the date of receipt of the Escrowed Funds, the Escrow Agent
shall return the Escrowed funds without interest to the Purchaser by wire
transfer pursuant to written instructions.
9. Conditions to the Company's Obligation to Sell.
Issuer reserves the right to reject this Agreement prior to signing by
Issuer. Purchaser understands that Issuer's obligation to sell the Shares
subscribed for hereunder is conditioned upon:
a. The receipt and acceptance by Issuer of this Agreement for all the
Shares as evidenced by execution of this subscription agreement by the
Chief Executive Officer or Chief Financial Officer of the Issuer. The
acceptance of funds by the Issuer's counsel shall be deemed to be
constructive acceptance of this Agreement. Purchaser understands this
Agreement is irrevocable; and
b. Delivery into the Escrow Agent by Purchaser of good U.S. funds as
payment in full for the purchase of the Shares and all fees.
10. Conditions to Purchaser's Obligation to Purchase.
Issuer understands that Purchaser's obligation to purchase the Shares
subscribed for hereunder is conditioned upon the following:
a. execution and delivery of this Agreement;
b. delivery to the Escrow Attorney of an opinion letter signed by
counsel for the Company in the form attached hereto as Exhibit
C; and
c. delivery of Shares.
11. Governing Law.
This agreement shall be governed by and construed under the laws of the
State of Florida without regard to its choice of law principles.
12. Change in Regulation S.
(a) During the twenty-four month period following issuance of the
Shares, if there is any change in Regulation S that would restrict the
conversion of the Shares free of legend into Common Stock according to the terms
and conditions set forth in this Agreement, or impose a restrictive period,
longer than ninety (90) days, before which such Common Stock may be used by the
holders without registration, then in such event Purchaser may notify the
Company in writing that Purchaser demands that the Company file a registration
statement under the 1933 Act covering the registration of all the Purchaser's
Common Stock issuable upon conversion ("Registrable Securities"). Upon receipt
of such notice, the Company shall, effect as soon as practicable, and in any
event within 120 days of the receipt of such request, the registration under the
1933 Act of all Registrable Securities which the Purchaser requests, (a "Demand
Registration"). All such action required by Company to complete the registration
shall be done as soon as possible at Company's sole cost and expense, except for
Blue Sky fees and costs and Purchaser's attorney fees and costs.
(b) If the Purchaser initiating the registration request hereunder
("Initiating Purchaser") intends to distribute the Registrable Securities
covered by their request by means of an underwriting, it shall so advise the
Company as a part of its request made pursuant to this Section 12 and the
Company shall include such information in the written notice referred to in
Section 12(a). In such event, the right of any Purchaser to include his
Registrable Securities in such registration shall be conditioned upon such
Purchaser's participation in such underwriting and the inclusion of such
Purchaser's Registrable Securities in the underwriting. All Purchasers proposing
to distribute their securities through such underwriting shall, together with
the Company enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Purchasers, and reasonably acceptable to the Company;
provided that no Purchaser shall be required to
make any representations other than with respect to its ownership of Registered
Securities and its intended method of distribution. All underwritten fees, costs
and discounts shall be at the sole cost of Purchaser(s)
(c) The Company is not obligated to effect a demand registration under
this Section 12 if in the written opinion of counsel to the Company reasonably
acceptable to the person or persons from whom written request for registration
has been received (and satisfactory to the Company's transfer agent to permit
the transfer) that registration under the 1933 Act is not required for the
immediate public transfer of the Registrable Securities free of legend pursuant
to Rule 144 or other applicable provisions.
(d) If the Company is not able to effect the Demand Registration within
120 days of the Company's receipt of written notice to file a Demand
Registration, then the Company shall pay to each Purchaser of outstanding Shares
liquidated damages equal to two percent (2%) in cash, of the dollar value of the
Shares still owned for each 30 day beyond 120 days of the receipt of a request
for a Demand Registration until such registration is complete. The Company shall
make payment within 5 business days following each thirty day period, and if not
so paid, interest at the rate of 10% per annum shall accrue on the late payment.
The two percent (2%) in liquidated damages per said 30 day period will cease
accruing on the one year anniversary of the issuance of the Shares, but shall
still be payable by the Company at the end of each thirty day period.
The Company acknowledges that its failure to register the Common Stock
within 120 days of the receipt of a request for a Demand Registration will cause
the Purchaser to suffer damages in an amount that will be difficult to
ascertain. Accordingly, the parties agree that it is appropriate to include in
this Agreement a provision for liquidated damages. The parties acknowledge and
agree that the liquidated damages provision set forth in this section represents
the parties' good faith effort to qualify such damages and, as such, agree that
the form and amount of such liquidated damages are reasonable and will not
constitute a penalty. The payment of liquidated damages shall not relieve the
Company from its obligations to deliver the Common Stock pursuant to the terms
of this Agreement.
13. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereof with respect to the subject matter hereof and supersedes any and
all prior or contemporaneous representations, warranties, agreements and
understandings in connection therewith. This Offshore Securities Subscription
Agreement may be amended only in writing executed by all parties hereto.
14. Independent Counsel. The undersigned acknowledge that they have been advised
to consult with their own attorneys and financial advisors regarding this
Agreement.
15. Submission to Jurisdiction.
(a) Forum Selection and Consent to Jurisdiction. Any litigation based
thereon, or arising out of, under, or in connection with, this Agreement or any
course of conduct, course of dealing, statements (whether oral or written) or
actions of the Company or Holder shall be brought and maintained exclusively in
the courts of the state of Florida. The Company hereby expressly and irrevocably
submits to the jurisdiction of the state and federal Courts of the state of
Florida for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Company further irrevocably consents to the
service of process by registered mail, postage prepaid, or by personal service
within or without the State of Florida. The Company hereby expressly and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such litigation
brought in any such court referred to above and any claim that any such
litigation has been brought in any inconvenient forum. To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property. The Company hereby irrevocably waives such immunity in respect
of its obligations under this agreement and the other loan documents.
(b) Waiver of Jury Trial. The Purchaser and the Company hereby
knowingly, voluntarily and intentionally waive any rights they may have to a
trial by jury in respect of any litigation based hereon, or arising out of,
under, or in connection with, this agreement, or any course of conduct, course
of dealing, statements (whether oral or written) or actions of the Holder or the
Company. The Company acknowledges and agrees that it has received full and
sufficient consideration for this provision and that this provision is a
material inducement for the Purchaser entering into this agreement.
(c) Submission To Jurisdiction. Any legal action or proceeding in
connection with this Agreement or the performance hereof may be brought in the
state and federal courts located in Florida, and the
parties hereby irrevocably submit to the non-exclusive jurisdiction of such
courts for the purpose of any such action or proceeding.
16. Miscellaneous.
(a) All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(b) Neither this Subscription Agreement nor any provision hereof shall
be waived, modified, changed, discharged, terminated, revoked or canceled,
except by an instrument in writing signed by the party effecting the same
against whom any change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed: (i) if to the
Company, at its principal executive offices or (ii) if to the undersigned, at
the address for correspondence set forth in the Questionnaire, or at such other
address as may have been specified by written notice given in accordance with
this paragraph 16(c).
(d) This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of Florida,
as such laws are applied by Florida courts to agreements entered into, and to be
performed in, Florida by and between residents of Florida, and shall be binding
upon the undersigned, the undersigned's heirs, estate, legal representatives,
successors and assigns and shall inure to the benefit of the Company, its
successors and assigns. If any provision of this Subscription Agreement is
invalid or unenforceable under any applicable statue or rule of law, then such
provisions shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof that may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
(e) This Subscription Agreement, together with the Exhibits referred to
herein and made a part hereof, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by both parties hereto.
(f) This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective as
an original.
17. Full Name and Address of Purchaser for Registration Purposes:
NAME:___________________________________________________________
ADDRESS:________________________________________________________
________________________________________________________________
________________________________________________________________
XXXX.XX.___________________ FAX NO.____________________
CONTACT NAME:_____________________________________________
18. Delivery Instructions: (If different from Registration Name):
NAME:___________________________________________________________
ADDRESS:________________________________________________________
________________________________________________________________
TELE. NO._____________________ FAX NO.____________________
CONTACT NAME:_______________________________________________________
SPECIAL INSTRUCTIONS:________________________________________________
________________________________________________________________
19. Issuer's Acceptance Based Upon Purchaser Representations.
Issuer is accepting this subscription based upon and in reliance upon
the representations and warranties of Purchaser contained herein, including
without limitation, those contained in section 2 and this Agreement would not be
accepted by Issuer in the absence of such representations and warranties.
IN WITNESS WHEREOF, this Offshore Securities Subscription Agreement was duly
executed as of the _______ day of _____________________, 1998.
Company Name:____________________________________________________________
Purchaser
By:____________________________________________
Official Signatory of Purchaser
Name (Printed):_________________________________________________________
Title:_____________________________________________________________
Country of Execution:____________________________________________________
Accepted this ___ day of the month of _________________________, 1998.
IMAGING DIAGNOSTICS SYSTEMS, INC
By:______________________________________________
Xxxxx Xxxxxx, its President duly authorized
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the
Preferred Shares.)
The undersigned hereby irrevocably elects, as of ______________, 199_
to convert ________ 1998 Series F Preferred Shares into shares of Common Stock
of ______________________ (the "Company") according to the conditions set forth
in the Subscription Agreement dated _____________, 199_. A. The undersigned
represents that it is not a U.S. Person as defined in Regulation S promulgated
under the Securities Act of 1933, as amended, and is not converting the Shares
on behalf of any U.S. Person.
Date of Conversion*_________________________________________
Applicable Conversion Price_________________________________
Number of shares of Common Stock____________________________
Signature___________________________________________________
[Name]
Address for delivery of the Common Stock __________________________
________________________________________________________________
________________________________________________________________
Phone______________________ Fax______________________________
Please call me at ________________ if you need to confirm this facsimile Notice
of Conversion.
EXHIBIT B
PURCHASER REPRESENTATION LETTER
Dear Sirs:
The undersigned__________________, has purchased on _______________,
1998, ______________ Series F Convertible Preferred Shares (the "Shares") of
IMAGING DIAGNOSTICS SYSTEMS, INC (the "Company"). In connection with such
purchase, the undersigned, has executed and delivered a subscription agreement
("Subscription Agreement") of your design. As the transaction restriction period
has expired, the undersigned hereby requests that the Shares be transferred into
"Street Name" of __________________________.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Shares was made to it outside of the United States
and the undersigned was, at the time the Subscription Agreement was executed and
delivered, and is now, outside the United States;
(2) It is not a U.S. Person (as such term is defined in Section 902(a) of
Regulation S promulgated under the United States Securities Act of 1933 (the
"Securities Act"); and it has purchased the Shares for its own account and not
for the account or benefit of any U.S. person;
(3) All offers and sales by the undersigned of the Shares shall be made pursuant
to an effective registration statement under the Securities Act or pursuant to
and exemption from, or in a transaction not subject to the registration
requirements of, the Securities Act;
(4) It is familiar with and understands the terms, conditions and requirements
contained in Regulation S and definitions of U.S. persons contained in
Regulation S;
(5) The undersigned has not engaged in any "directed selling efforts" (as such
term is defined in Regulation S) with respect to the Shares or the Common Stock
that is issuable upon conversion; and
(6) The undersigned purchased its Shares with investment intent and at the time
of the purchase of said Shares had no interest to sell, dispose of or otherwise
transfer the Shares. The purpose for this request is to facilitate the
management of the undersigned's investment accounts.
(7) The undersigned has not entered into any short sales with respect to the
Common Stock of the Company during the period that it owned the Shares;
(8) Limits on Amount of Conversion and Ownership. Other than the Mandatory
Conversion provisions contained in the Subscription Agreement which are not
limited by the following, in no other event shall the Purchaser be entitled to
convert that amount of Shares in excess of that amount upon conversion of which
the sum of (1) the number of shares of Common Stock beneficially owned by the
Purchaser and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of
the Shares), and (2) the number of shares of Common Stock issuable upon the
conversion of the Shares with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Purchaser and its
affiliates of more than 4.9% of the outstanding shares of Common Stock of the
Company. For purposes of this provision to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13 (d) of
the Securities Exchange Act of 1934, as amended, and Regulation 13 D-G
thereunder, except as otherwise provided in clause (1) of such provision.
(9) Purchaser acknowledges that the Company's Common Stock is traded on a
"designated offshore securities market" as defined in Regulation S. Purchaser
shall request any selling broker in accordance with reasonable business
practices to effect transactions in the Common Stock if feasible in the
"designated offshore securities market".
Dated this ___ day of the month of ___________________, 199 .
By:
----------------------------- ------------------------
Official Signature of Purchaser Title
EXHIBIT C
Form of Pre-Closing Opinion Letter
_______________, 1998
Purchasers of (Company) (Describe Securities)
Re: (Company)
Ladies and Gentlemen:
We have acted as counsel to (Company), a corporation incorporated under the laws
of the State of _____________ (the "Company"), in connection with the proposed
issuance and sale of ______________ (the "Securities") pursuant to the related
Offshore Securities Subscription Agreement (including all Exhibits and
Appendices thereto) (collectively the "Agreements") with ________________
("Distributor"), dated _________________ between the Company and the
Distributor.
In connection with rendering the opinions set forth herein, we have examined
drafts of the Agreement, the Company's Certificate of Incorporation, and its
Bylaws, as amended to date (other documents - describe), the proceedings of the
Company's Board of Directors taken in connection with entering into the
Agreements, and such other documents, agreements and records as we deemed
necessary to render the opinions set forth below.
In conducting our examination, we have assumed the following: (i) that each of
the Agreements has been executed by each of the parties thereto in the same form
as the forms which we have examined, (ii) the genuineness of all signatures, the
legal capacity of natural persons, the authenticity and accuracy of all
documents submitted to us as copies, (iii) that each of the Agreements has been
duly and validly authorized, executed, and delivered by the party or parties
thereto other than the Company, and (iv) that each of the Agreements constitutes
the valid and binding agreement of the party or parties thereto other than the
Company, enforceable against such party or parties in accordance with the
Agreements' terms.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of _____________, is
duly qualified to do business as a foreign corporation and is in good standing
in all jurisdictions where the Company owns or leases properties, maintains
employees or conducts business, except for jurisdictions in which the failure to
so qualify would not have a material adverse effect on the Company, and has all
requisite corporate power and authority to own its properties and conduct its
business;
2. The authorized capital stock of the Company consists of ___________ shares of
Common Stock, ___________ par value per share ("Common Stock") and __________
shares of Preferred Stock, par value $__________ per share; (describe classes if
applicable)
3. The Common Stock is registered pursuant to Section 12(b) or Section 12(g) of
the Securities Exchange Act of 1934, as amended and the Company has timely filed
all the material required to be filed pursuant to Sections 13(a) or 15(d) of
such Act for a period of at least twelve months preceding the date hereof;
4. When duly countersigned by the Company's transfer agent and registrar, and
delivered to you or upon your order against payment of the agreed consideration
therefor in accordance with the provisions of the Agreements, the Securities
(and any Common Stock to be issued upon the conversion of the Securities) as
described in the Agreements represented thereby will be duly authorized and
validly issued, fully paid and nonassessable;
5. The company has the requisite corporate power and authority to enter into the
Agreements and to sell and deliver the Securities and the Common Stock to be
issued upon the conversion of the Securities as described in the Agreements;
each of the Agreements has been duly and validly authorized by all necessary
corporate action by the Company to our knowledge, no approval of any
governmental or other body is required for the execution and delivery of each of
the Agreements by the Company or the consummation of the transactions
contemplated thereby; each of the
Agreements has been duly and validly executed and delivered by and on behalf of
the Company, and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws affecting creditors rights generally,
and except as to compliance with federal, state, and foreign securities laws, as
to which no opinion is expressed;
6. To the best of our knowledge, the execution, delivery and performance of the
Agreements by the company and the performance of its obligations thereunder do
not and will not constitute a breach or violation of any of the terms and
provisions of, or constitute a default under or conflict with or violate any
provisions of (i) the Company's Certificate of Incorporation or By-Laws, (ii)
any indenture, mortgage, deed of trust, agreement or other instrument to which
the Company is a party or by which it or any of its property is bound, (iii) any
applicable statue or regulation or as other, (iv) or any judgment, decree or
order of any court of governmental body having jurisdiction over the Company or
any of its property.
7. The issuance of Common Stock upon conversion of the Series ____ Preferred
Stock in accordance with the terms and conditions of the Certificate of
Designation and the Agreements, will not violate the applicable listing
agreement between the Company and any securities exchange or market on which the
Company's securities are listed.
8. To our knowledge, after due inquiry, there is no pending or threatened
litigation investigation or other proceedings against the Company (except as
described in Exhibit A hereto).
This opinion is rendered only with regard to the matters set out in the numbered
paragraphs above. No other opinions are intended nor should they be inferred.
This opinion is based solely upon the laws of the State of ___________, as
currently in effect, and the (General) Corporation Law of the State of
___________ and does not include an interpretation or statement concerning the
laws of any other state or jurisdiction. Insofar as the enforceability of the
Agreements may be governed by the laws of other states, we have assumed that
such laws are identical in all respects to the laws of the State of
_____________.
The opinions expressed herein are given to you solely for your use in connection
with the transaction contemplated by the Agreements and may not be relied upon
by any other person or entity or for any other purpose without our prior
consent.
Very truly yours,
By:__________________________
