EXHIBIT 10.14
NOTE AND WARRANT PURCHASE AGREEMENT
AMONG
EMAGEON UV, INC.
AND
WHITECAP ALABAMA GROWTH FUND I, LLC
ENHANCED ALABAMA ISSUER, LLC
ADVANTAGE CAPITAL ALABAMA PARTNERS I, L.P.
DATED AS OF JUNE 25, 2004
TABLE OF CONTENTS
Article 1 PURCHASE, SALE AND TERMS OF NOTES AND WARRANTS..........................................................3
Section 1.1 The Notes..............................................................................3
Section 1.2 The Warrants...........................................................................3
Section 1.3 Purchase and Sale of Notes and Warrants................................................4
Section 1.4 Payments and Endorsements..............................................................4
Section 1.5 Redemptions of Notes...................................................................4
(a) Required Redemptions.....................................................................................4
(b) Optional Redemptions.....................................................................................5
(c) Notice of Redemptions; Pro rata Redemptions..............................................................5
Section 1.6 Payment on Non-Business Days...........................................................5
Section 1.7 Registration of Notes, etc.............................................................5
Section 1.8 Transfer and Exchange of Notes.........................................................5
Section 1.9 Replacement of Notes...................................................................6
Section 1.10 Events of Default......................................................................6
Section 1.11 Board Observation Rights...............................................................8
Article 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................8
Section 2.1 Organization, Qualifications and Corporate Power.......................................8
Section 2.2 Authorization of Agreements, Etc.......................................................8
Section 2.3 Validity...............................................................................9
Section 2.4 Authorized Capital Stock...............................................................9
Section 2.5 Financial Statements...................................................................9
Section 2.6 Governmental Approvals................................................................10
Section 2.7 Negative Pledge of Intellectual Property..............................................10
Section 2.8 Offering of the Notes and Warrants....................................................10
Section 2.9 Brokers...............................................................................10
Article 3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.......................................................10
Article 4 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS........................................................11
Section 4.1 Conditions to the Obligations of Purchasers...........................................11
(a) Opinion of Company's Counsel............................................................................11
(b) Representations and Warranties to be True and Correct...................................................11
(c) Performance.............................................................................................11
(d) All Proceedings to be Satisfactory......................................................................11
(e) Supporting Documents....................................................................................12
(f) Preemptive and First Refusal Rights.....................................................................12
(g) Oversight Entity Approvals..............................................................................12
(h) Security Agreement......................................................................................12
Article 5 COVENANTS OF THE COMPANY...............................................................................12
Section 5.1 Financial Statements, Reports, Etc....................................................13
Note and Warrant Purchase Agreement
Page ii
Section 5.2 Corporate Existence...................................................................13
Section 5.3 Properties, Business, Insurance.......................................................13
Section 5.4 Use of Proceeds.......................................................................13
Section 5.5 Compliance with Laws..................................................................13
Section 5.6 Keeping of Records and Books of Account...............................................14
Section 5.7 Tangible Net Worth....................................................................14
Section 5.8 Debt..................................................................................14
Section 5.9 Subordination.........................................................................14
Article 6 MISCELLANEOUS..........................................................................................15
Section 6.1 Expenses..............................................................................15
Section 6.2 Survival of Agreements................................................................15
Section 6.3 Brokerage.............................................................................15
Section 6.4 Parties in Interest...................................................................15
Section 6.5 Notices...............................................................................15
Section 6.6 Governing Law.........................................................................15
Section 6.7 Entire Agreement......................................................................16
Section 6.8 Counterparts..........................................................................16
Section 6.9 Amendments............................................................................16
Section 6.10 Severability..........................................................................16
Section 6.11 Titles and Subtitles..................................................................16
Section 6.12 Confidentiality.......................................................................16
SCHEDULE I Schedule of Purchasers
SCHEDULE II Security Holders
INDEX TO EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Stock Purchase Warrant
EXHIBIT C Charter and All Amendments Thereto
EXHIBIT D Form of Opinion Letter
Note and Warrant Purchase Agreement
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NOTE AND WARRANT PURCHASE AGREEMENT, dated as of June 25, 2004, among
Emageon UV, Inc., a Delaware corporation (the "Company"), and Whitecap Alabama
Growth Fund I, LLC, an Alabama limited liability company, Enhanced Alabama
Issuer, LLC, an Alabama limited liability company, and Advantage Capital Alabama
Partners I, L.P., an Alabama limited partnership, (individually a "Purchaser"
and collectively the "Purchasers").
WHEREAS, the Company wishes to issue and sell to the Purchasers an
aggregate of $4,000,000 in principal amount of its promissory notes, together
with stock purchase warrants exercisable for shares of common stock of the
Company; and
WHEREAS, the Purchasers, severally, wish to purchase the notes and
warrants on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE 1
PURCHASE, SALE AND TERMS OF NOTES AND WARRANTS
SECTION 1.1 THE NOTES. The Company has authorized the issuance and sale
to the Purchasers, in the respective amounts set forth in the Schedule of
Purchasers attached as Schedule I hereto, of the Company's Promissory Notes, due
June 25, 2007, in the original aggregate principal amount of $4,000,000. The
Notes shall be substantially in the form set forth in Exhibit A hereto and are
herein referred to individually as a "Note" and collectively as the "Notes,"
which terms shall also include any notes delivered in exchange or replacement
therefor.
SECTION 1.2 THE WARRANTS. The Company has also authorized the issuance
and sale to the Purchasers of the Company's Stock Purchase Warrants for the
issuance (subject to adjustment as provided in the Warrants) of shares of the
Company's Common Stock as set forth in the Stock Purchase Warrants. The number
of shares of Common Stock of the Company for which such Stock Purchase Warrants
in the aggregate shall be exercisable shall initially be One Million Fifty-Two
Thousand Six Hundred Thirty-Two (1,052,632), and the Stock Purchase Warrants
shall have an exercise price of $.57 per share. Additionally, (i) if the entire
principal amount of the Notes and all accrued interest has not been repaid on or
before December 25, 2005, the Stock Purchase Warrants shall be exercisable for
an additional number of shares of Common Stock which is equal to ten percent
(10%) of the remaining then-outstanding principal amount of the Notes issued
pursuant to this Agreement divided by 0.57, and (ii) if the remaining principal
amount of the Notes and all accrued interest has not been repaid on or before
June 25, 2007, the Company will be in default under this Agreement and the Stock
Purchase Warrants shall be exercisable for an additional number of shares of
Common Stock which is equal to twenty percent (20%) of the remaining
then-outstanding principal amount of the Notes issued pursuant to this Agreement
divided by $0.57. The Stock Purchase Warrants shall be substantially in the form
set forth in Exhibit B hereto (which form of Stock Purchase Warrants shall
contain such other applicable terms as set forth therein) and are herein
referred to individually as a "Warrant" and collectively as the "Warrants",
which terms shall also include any warrants delivered in exchange or replacement
therefor.
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SECTION 1.3 PURCHASE AND SALE OF NOTES AND WARRANTS. On the Closing
Date (as defined below), the Company will issue and sell to each of the
Purchasers, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, each of the Purchasers,
severally and not jointly, will purchase, Notes in the principal amount set
forth opposite each Purchaser's name under the heading "Principal Amount of
Notes" in the Schedule of Purchasers attached as Schedule I and a Warrant for
the aggregate purchase price set forth therein. The closing shall take place at
the office of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, on June 25, 2004 at 3:00 P.M., central time, or at such
other location, date and time as may be mutually agreed upon among the
Purchasers and the Company (such closing being called the "Closing" and such
date and time being called the "Closing Date"). At the Closing, the Company will
issue and deliver to each Purchaser one Note, payable to the order of such
Purchaser, in the principal amount set forth opposite such Purchaser's name
under the heading "Principal Amount of Notes" in the Schedule of Purchasers
attached as Schedule I, and one Warrant, registered in the name of such
Purchaser, exercisable for shares of Common Stock of the Company as provided
therein, against (i) delivery to the Company of a check payable to the order of
the Company, in the amount set forth opposite the name of such Purchaser under
the heading "Aggregate Purchase Price for Notes and Warrants" on Schedule I,
(ii) transference of such sum to the account of the Company by wire transfer, or
(iii) delivery or transference of such sum to the Company by any combination of
such methods of payment.
SECTION 1.4 PAYMENTS AND ENDORSEMENTS. Payments of principal and
interest on the Notes shall be made directly by check duly mailed or delivered
to the Purchasers at their addresses referred to in the Schedule of Purchasers
attached as Schedule I; provided, however, that in the case of Whitecap Alabama
Growth Fund I, LLC, and Advantage Capital Alabama Partners I, L.P., payment
shall be made directly by wire transfer to the accounts specified on Schedule I,
without any presentment or notation of payment, except that prior to any
transfer of any Note, the holder of record shall endorse on such Note a record
of the date to which interest has been paid and all payments made on account of
principal of such Note.
SECTION 1.5 REDEMPTIONS OF NOTES.
(a) REQUIRED REDEMPTIONS. Starting July 25, 2005 through June
25, 2007, the Company will pay to the Purchasers in eight (8)
installments and on a quarterly basis $300,000 of the principal amount
of the Notes. These eight (8) quarterly principal payments are due as
of the first day of each respective quarter, beginning on June 25,
2005. On the earlier of: (i) June 25, 2007, (ii) the accelerated
maturity of the Notes in accordance with the provisions of the Notes,
or (iii) the occurrence of a Redemption Event, the Company will pay the
principal amount of the Notes then outstanding together with all
accrued and unpaid interest then due thereon. A Redemption Event shall
mean (1) any Change of Control of the Company, (2) the issuance of any
other debt by the Company that is prohibited by section 5.8 of this
Agreement, or (3) the refinancing of the Silicon Valley Bank line of
credit (for purposes of this subsection (4), "refinancing" shall not
include periodic renewals or extensions of the line of credit by
Silicon Valley Bank). A "Change of Control of the Company" shall be
deemed to have occurred if (a) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") becomes the "beneficial owner" (as defined
in
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Rule 13d-3 promulgated under the Exchange Act), directly or indirectly,
of securities of the Company representing 50% or more of (A) the
outstanding shares of common stock of the Company or (B) the combined
voting power of the Company's then outstanding securities; (b) the
Company is party to a merger or consolidation that results in the
voting securities of the Company outstanding immediately prior thereto
failing to continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or another
entity) at least fifty (50%) percent of the combined voting power of
the voting securities of the Company or such surviving or other entity
outstanding immediately after such merger or consolidation; or (c) the
sale or disposition of all or substantially all of the Company's assets
(or consummation of any transaction having similar effect).
(b) OPTIONAL REDEMPTIONS. The Notes may be prepaid at any time
without a premium or penalty.
(c) NOTICE OF REDEMPTIONS; PRO RATA REDEMPTIONS. Each
redemption of Notes shall be made to the holders of the Notes in the
same ratio as the total principal amount of Notes then held by such
holder bears to the aggregate principal amount of the Notes then
outstanding.
SECTION 1.6 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made shall be due on a Saturday, Sunday or a public holiday under the laws of
the State of Alabama, such payment may be made on the next succeeding business
day, and such extension of time shall in such case be included in the
computation of payment of interest due.
SECTION 1.7 REGISTRATION OF NOTES, ETC. The Company shall maintain at
its principal office a register of the Notes and shall record therein the names
and addresses of the registered holders of the Notes, the address to which
notices are to be sent and the address to which payments are to be made as
designated by the registered holder if other than the address of the holder, and
the particulars of all transfers, exchanges and replacements of Notes. No
transfer of a Note shall be valid unless made on such register for the
registered holder or his executors or administrators or his or their duly
appointed attorney, upon surrender therefor for exchange as hereinafter
provided, accompanied by an instrument in writing, in form and execution
reasonably satisfactory to the Company. Each Note issued hereunder, whether
originally or upon transfer, exchange or replacement of a Note or Notes, shall
be registered on the date of execution thereof by the Company and shall be dated
the date to which interest has been paid on such Notes or Note. The registered
holder of a Note shall be that person in whose name the Note has been so
registered by the Company. A registered holder shall be deemed the owner of a
Note for all purposes of this Agreement and, subject to the provisions hereof,
shall be entitled to the principal and interest evidenced by such Note free from
all equities or rights of setoff or counterclaim between the Company and the
transferor of such registered holder or any previous registered holder of such
Note.
SECTION 1.8 TRANSFER AND EXCHANGE OF NOTES. The registered holder of
any Note or Notes may, prior to maturity, surrender such Note or Notes at the
principal office of the Company for transfer or exchange. Within a reasonable
time after notice to the Company from a registered holder of its intention to
make such exchange and without expense (other than transfer
Note and Warrant Purchase Agreement
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taxes, if any) to such registered holder, the Company shall, upon the consent of
sixty percent (60%) or more of the Company's then-existing preferred
stockholders (unless an Event of Default shall have occurred and be continuing,
in which case no preferred stockholder consent shall be required), issue in
exchange therefor another Note or Notes, in such denominations as requested by
the registered holder, for the same aggregate principal amount as the unpaid
principal amount of the Note or Notes so surrendered and having the same
maturity and rate of interest, containing the same provisions and subject to the
same terms and conditions as the Note or Notes so surrendered. Each new Note
shall be made payable to such person or persons, or registered assigns, as the
registered holder of such surrendered Note or Notes may designate, and such
transfer or exchange shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom.
SECTION 1.9 REPLACEMENT OF NOTES. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will issue a new Note, of like tenor and amount and
dated the date to which interest has been paid, in lieu of such lost, stolen,
destroyed or mutilated Note; provided, however, if any Note of which a Purchaser
whose name is set forth in the Schedule of Purchasers attached as Schedule I,
its nominee, or any of its partners is the registered holder is lost, stolen or
destroyed, the affidavit of the Chief Executive Officer, Treasurer or any
Assistant Treasurer or any other authorized representative of the registered
holder setting forth the circumstances with respect to such loss, theft or
destruction shall be accepted as satisfactory evidence thereof, and no
indemnification bond or other security shall be required as a condition to the
execution and delivery by the Company of a new Note in replacement of such lost,
stolen or destroyed Note other than the registered holder's written agreement to
indemnify the Company.
SECTION 1.10 EVENTS OF DEFAULT. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) The Company shall fail to pay any installment of
principal or interest of any of the Notes when due
and such failure remains unremedied for five (5)
days; or
(b) Any material representation or warranty made by the
Company in this Agreement, or by the Company (or any
officers of the Company) in any certificate or
instrument contemplated by or made or delivered
pursuant to or in connection with this Agreement
shall prove to have been incorrect when made in any
material respect; or
(c) The Company shall fail to perform or observe any
other material term, covenant or agreement contained
in this Agreement, the Notes or the Warrants, or any
agreement executed and delivered by the Company in
connection with this Agreement on its part to be
performed or observed and any such failure remains
unremedied for thirty (30) days after written notice
thereof shall have been given to the Company by any
registered holder of the Notes; or
Note and Warrant Purchase Agreement
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(d) The Company shall be in default under that certain
Loan and Security Agreement between the Company and
Silicon Valley Bank dated April 30, 2004, and such
default remains unremedied for five (5) days; or
(e) The Company shall be involved in financial
difficulties as evidenced (i) by its admitting in
writing its inability to pay its debts generally as
they become due; (ii) by its commencement of a
voluntary case under Title 11 of the United States
Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its Board
of Directors or other governing body, the
commencement of such a voluntary case which is not
dismissed within sixty (60) days; (iii) by its filing
an answer or other pleading admitting or failing to
deny the material allegations of a petition filed
against it commencing an involuntary case under said
Title 11, or seeking, consenting to or acquiescing in
the relief therein provided, or by its failing to
controvert timely the material allegations of any
such petition; (iv) by the entry of an order for
relief in any involuntary case commenced under said
Title 11; (v) by its seeking relief as a debtor under
any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief; (vi) by
the entry of an order by a court of competent
jurisdiction (a) finding it to be bankrupt or
insolvent, (b) ordering or approving its liquidation,
reorganization or any modification or alteration of
the rights of its creditors, or (c) assuming custody
of, or appointing a receiver or other custodian for,
all or a substantial part of its property; or (vii)
by its making an assignment for the benefit of, or
entering into a composition with, its creditors, or
appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial
part of its property; or
(f) Any judgment, writ, warrant of attachment or
execution or similar process shall be issued or
levied against a substantial part of the property of
the Company and such judgment, writ, or similar
process shall not be released, vacated or fully
bonded within sixty (60) days after its issue or
levy; or
(g) Revocation of the Company's status as a Qualified
Technology Business (as that term is defined in
Alabama Code Section 40-14B-1, et. seq., and the
regulations promulgated by the Alabama Development
Office thereunder, together, hereinafter referred to
as the "Alabama CAPCo Law") by the Alabama
Development Office; or
(h) Material violation by the Company of one or more
provisions of the Alabama CAPCo Law;
then, and in any such event, any holder of any Note may, by notice to the
Company, declare the entire unpaid principal amount of the Notes, all interest
accrued and unpaid thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Notes, all such accrued interest and
all such amounts shall become and be forthwith due and payable (unless there
shall have occurred an Event of Default under subsection 1.10(f) in which case
all
Note and Warrant Purchase Agreement
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such amounts shall automatically become due and payable), without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Company.
SECTION 1.11 BOARD OBSERVATION RIGHTS. The Purchasers, by unanimous
vote, shall have the right to appoint one board observer to the Board of
Directors of the Company, who shall initially be representative of the
non-affiliate investors, who (i) shall have observation rights at all Company
Board of Directors meetings, (ii) will have the right to receive any
communications to Company Directors, and (iii) will be reimbursed by the Company
for all reasonable out-of-pocket travel and lodging expenses incurred to attend
such meetings. The Purchasers' initial board observer shall be ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("▇▇▇▇▇"). In the event that ▇▇▇▇▇ becomes unwilling or unable to serve in such
capacity, the Purchasers shall have the right to appoint his successor upon such
terms and conditions as the Purchasers deem appropriate.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers that, as
of each Closing:
SECTION 2.1 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER.
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws
of the State of Delaware and is duly licensed or
qualified to transact business as a foreign
corporation and is in good standing in each
jurisdiction in which the nature of the business
transacted by it or the character of the properties
owned or leased by it requires such licensing or
qualification, except where the failure to be so
licensed or qualified does not have a material
adverse effect on the Company's business or financial
condition. The Company has the corporate power and
authority to own and hold its properties and to carry
on its business as now conducted and as proposed to
be conducted, to execute, deliver and perform this
Agreement, to issue, sell and deliver the Notes and
Warrants and to issue and deliver the shares of
Common Stock of the Company upon exercise of the
Warrants (the "Warrant Shares").
(b) The Company has one wholly-owned subsidiary. Other
than such subsidiary, the Company does not (i) own of
record or beneficially, directly or indirectly, (A)
any shares of capital stock or securities convertible
into capital stock of any other corporation or (B)
any participating interest in any partnership, joint
venture or other non-corporate business enterprise or
(ii) control, directly or indirectly, any other
entity.
SECTION 2.2 AUTHORIZATION OF AGREEMENTS, ETC.
(c) The execution and delivery by the Company of this
Agreement, the performance by the Company of its
obligations hereunder, the issuance, sale and
delivery of the Notes and Warrants have been duly
authorized by all requisite corporate
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action and will not violate any provision of law, any
order of any court or other agency of government, the
Certificate of Incorporation (the "Charter") or the
By-laws of the Company, as amended, or any provision
of any indenture, contract, agreement or other
instrument to which the Company or any of its
properties or assets is bound (including, without
limitation, that certain line of credit agreement
between the Company and Silicon Valley Bank), or
conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default
under any such indenture, contract, agreement or
other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(d) The Notes and Warrants have been duly authorized and,
when issued in accordance with this Agreement, will
be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or
through the Company. The shares of Common Stock of
the Company issuable upon exercise of the Warrants
will be duly reserved for issuance upon exercise of
the Warrants and, when so issued, will be duly
authorized, validly issued, fully paid and
nonassessable shares of Common Stock, and will be
free and clear of all liens, charges, restrictions,
claims and encumbrances imposed by or through the
Company, except for transfer restrictions imposed by
applicable securities laws. The issuance, sale or
delivery of the Notes and Warrants, or the issuance
or delivery of the Warrant Shares is not subject to
any preemptive right of shareholders of the Company
or to any right of first refusal or other right in
favor of any person.
SECTION 2.3 VALIDITY. This Agreement, the Notes and the Warrants have
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms
(subject, as to enforcement of remedies, to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting the rights of creditors generally).
SECTION 2.4 AUTHORIZED CAPITAL STOCK. The authorized capital stock of
the Company consists of [capital structure to be provided by Emageon in the form
as provided in Schedule II]
SECTION 2.5 FINANCIAL STATEMENTS. The Company has furnished to the
Purchasers the audited balance sheet of the Company as of December 31, 2003 (the
"Balance Sheet") and the related audited statements of operations, stockholders'
equity and cash flows of the Company for the year ended December 31, 2003. All
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and fairly present the
financial position of the Company as of December 31, 2003, and the results of
its operations and cash flows for the year ended December 31, 2003. Since the
date of the Balance Sheet, (i) there has been no change in the assets,
liabilities or financial condition of the Company from that reflected in the
Balance Sheet except for changes in the ordinary course of business which in the
aggregate have not been materially adverse and (ii) none of the business,
prospects, financial condition, operations, property or affairs of the Company
has been materially adversely affected by any occurrence or development,
individually or in the aggregate, whether or not insured against.
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SECTION 2.6 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III, no
registration or filing with, or consent or approval of or other action by, any
federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement, the issuance, sale and delivery of the Notes or Warrants or,
upon exercise thereof, the issuance and delivery of the Warrant Shares, other
than (i) filings pursuant to state securities laws (all of which filings have
been made by the Company, other than those which are required to be made after
the Closing and which will be duly made on a timely basis) in connection with
the sale of the Notes and Warrants.
SECTION 2.7 [INTENTIONALLY OMITTED.]
SECTION 2.8 OFFERING OF THE NOTES AND WARRANTS. Neither the Company nor
any person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes and Warrants or
any security of the Company similar to the Notes and Warrants has offered the
Notes and Warrants or any such similar security for sale to, or solicited any
offer to buy the Notes and Warrants or any such similar security from, or
otherwise approached or negotiated with respect thereto with, any person or
persons, and neither the Company nor any person acting on its behalf has taken
or will take any other action (including, without limitation, any offer,
issuance or sale of any security of the Company under circumstances which might
require the integration of such security with Notes and Warrants under the
Securities Act of 1933, as amended (the "Securities Act") or the rules and
regulations of the Commission thereunder), in either case so as to subject the
offering, issuance or sale of the Notes and Warrants to the registration
provisions of the Securities Act.
SECTION 2.9 BROKERS. The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the
specific purpose of acquiring the Notes or Warrants;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's
stage of development so as to be able to evaluate the risks
and merits of its investment in the Company and it is able
financially to bear the risks thereof;
(e) it has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's
management;
Note and Warrant Purchase Agreement
Page 11
(f) the Notes and Warrants being purchased by it are being
acquired for its own account for the purpose of investment and
not with a view to or for sale in connection with any
distribution thereof; and
(e) it understands that (i) the Notes and Warrants and the Warrant
Shares have not been registered under the Securities Act by
reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 505 or 506 promulgated under the
Securities Act, (ii) the Notes and Warrants and, upon
conversion thereof, the Warrant Shares must be held
indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such
registration, (iii) the Notes and Warrants and the Warrant
Shares will bear a legend to such effect and (iv) the Company
will make a notation on its transfer books to such effect.
ARTICLE 4
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS
SECTION 4.1 CONDITIONS TO THE OBLIGATIONS OF PURCHASERS. The obligation
of each Purchaser to purchase and pay for the Notes and Warrants being purchased
by it on the Closing Date is, at its option, subject to the satisfaction, on or
before the Closing Date of the following conditions:
(A) [INTENTIONALLY OMITTED.]
(B) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article II shall be true,
complete and correct on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as
of such date, and the Chief Executive Officer and Chief Financial
Officer of the Company shall have certified to such effect to the
Purchasers in writing.
(C) PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date and the Chief
Executive Officer and Chief Financial Officer of the Company shall have
certified to the Purchasers in writing to such effect and to the
further effect that all of the conditions set forth in this Article IV
have been satisfied.
(D) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and
other proceedings to be taken by the Company in connection with the
transactions contemplated hereby and all documents incident thereto
shall be satisfactory in form and substance to the Purchasers and their
counsel, and the Purchasers and their counsel shall have received all
such counterpart originals or certified or other copies of such
documents as they reasonably may request.
Note and Warrant Purchase Agreement
Page 12
(E) SUPPORTING DOCUMENTS. The Purchasers and their counsel
shall have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by the
Secretary of State of the State of Delaware, and (B)
a certificate of said Secretary dated as of a recent
date as to the due incorporation and good standing of
the Company, the payment of all excise taxes by the
Company and listing all documents of the Company on
file with said Secretary;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing and
certifying: (A) that attached thereto is a true and
complete copy of the By-laws of the Company as in
effect on the date of such certification; (B) that
attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors or the
shareholders of the Company authorizing the
execution, delivery and performance of this
Agreement, the issuance, sale and delivery of the
Notes and Warrants and the reservation, issuance and
delivery of the Warrant Shares, and that all such
resolutions are in full force and effect and are all
the resolutions adopted in connection with the
transactions contemplated by this Agreement; (C) that
the Charter has not been amended since the date of
the last amendment referred to in the certificate
delivered pursuant to clause (i)(B) above; and (D) to
the incumbency and specimen signature of each officer
of the Company executing any of this Agreement, the
Notes and Warrants and any certificate or instrument
furnished pursuant hereto, and a certification by
another officer of the Company as to the incumbency
and signature of the officer signing the certificate
referred to in this clause (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and
affairs of the Company as the Purchasers or their
counsel reasonably may request.
(F) PREEMPTIVE AND FIRST REFUSAL RIGHTS. All shareholders of
the Company having any preemptive or first refusal rights with respect
to the issuance of the Notes and Warrants or the Warrant Shares shall
have irrevocably waived the same in writing.
(G) SECURITY AGREEMENT. The execution and delivery by the
Company of the Security Agreement among the Company and the Purchasers
dated as of the Closing Date (the "Security Agreement") granting the
Purchasers a security interest in all of the Company's assets, now
existing or hereafter acquired (excluding equipment and intellectual
property).
ARTICLE 5
COVENANTS OF THE COMPANY
The Company covenants and agrees with each of the Purchasers that:
Note and Warrant Purchase Agreement
Page 13
SECTION 5.1 FINANCIAL STATEMENTS, REPORTS, ETC. So long as the Notes
are outstanding, the Company shall furnish to each Purchaser:
(a) within one hundred twenty (120) days after the end of each
fiscal year of the Company a consolidated balance sheet of the
Company and its subsidiaries, if any, as of the end of such
fiscal year and the related consolidated statements of
operations, stockholders equity and cash flows for the fiscal
year then ended, prepared in accordance with generally
accepted accounting principles and audited by a firm of
independent certified public accountants of recognized
national standing selected by the Board of Directors of the
Company;
(b) within thirty (30) days after the end of each month in each
fiscal year a consolidated balance sheet of the Company and
its subsidiaries, if any, and the related consolidated
statements of operations unaudited but prepared in accordance
with generally accepted accounting principles and certified by
the Chief Financial Officer of the Company, such consolidated
balance sheet to be as of the end of such month and such
consolidated statements of operations to be for such month and
for the period from the beginning of the fiscal year to the
end of such month;
(c) promptly after the commencement thereof, notice of all legal
actions, suits, claims, proceedings, investigations and/or
inquiries that could materially adversely affect the Company
or any of its subsidiaries, if any;
(d) promptly upon sending, making available or filing the same,
all press releases, reports and financial statements that the
Company sends or makes available to its shareholders or
directors or files with the Securities and Exchange
Commission; and
(e) promptly, from time to time, such other information regarding
the business, prospects, financial condition, operations,
property or affairs of the Company and its subsidiaries as
such Purchaser reasonably may request.
SECTION 5.2 CORPORATE EXISTENCE. The Company shall maintain its
corporate existence, rights and franchises in full force and effect.
SECTION 5.3 PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
as to its properties and business, with financially sound and reputable
insurers, insurance against such casualties and contingencies and of such types
and in such amounts as is customary for companies similarly situated, which
insurance shall be deemed by the Company to be sufficient.
SECTION 5.4 USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Notes and Warrants solely for general corporate purposes.
SECTION 5.5 COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules, regulations and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
Note and Warrant Purchase Agreement
Page 14
SECTION 5.6 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles consistently
applied, reflecting all financial transactions of the Company, and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
SECTION 5.7 TANGIBLE NET WORTH. The Company will maintain at all times
a Tangible Net Worth in the amount not less than that required by Silicon Valley
Bank in the Company's agreements with Silicon Valley Bank. Tangible Net Worth
shall mean with respect to the Company at any time, (i) the assets of the
Company including all items which should be classified as assets on the
financial statements of the Company, but excluding the amount of goodwill,
patents, trademarks, service marks, trade names, copyright and organization
expenses (to the extent reflected in determining the assets of the Company) less
(ii) all items which should be classified as liabilities on the financial
statements of the Company.
SECTION 5.8 DEBT. Without the prior written unanimous consent of the
Purchasers, the Company shall not create, incur, assume or suffer to exist
indebtedness of any description whatsoever, excluding:
(a) the indebtedness evidenced by the Notes;
(b) the indebtedness evidenced by that certain Loan and Security
Agreement between the Company and Silicon Valley Bank dated
April 30, 2004;
(c) the endorsement of negotiable instruments payable to Company
for deposit or collection in the ordinary course of business;
(d) trade payables incurred in the ordinary course of business;
and
(e) indebtedness incurred in connection with equipment financings,
leases, and technology licenses.
SECTION 5.9 SUBORDINATION. The Company shall not make any payment upon
any debt owing to any shareholder, insider or officer except as expressly
permitted by a subordination agreement executed by such creditor and Purchasers.
SECTION 5.10 NEGATIVE PLEDGE OF INTELLECTUAL PROPERTY. The Company will
not pledge, mortgage, grant or permit the creation of any lien or any kind upon
the Company's intellectual property without the Purchasers' prior written
consent; provided, however, that nothing in this paragraph shall prevent Company
from granting licenses of its intellectual property in the ordinary course of
its business.
Note and Warrant Purchase Agreement
Page 15
ARTICLE 6
MISCELLANEOUS
SECTION 6.1 EXPENSES. The Company will pay the first $20,000 of the
Purchaser's closing costs relating to the Notes and Warrants. Such closing costs
are due and payable to the Purchasers, out of funds other than proceeds from the
issuance and sale of the Notes, as of the Closing Date and shall be allocated
among the Purchasers in the same ratio as the total principal amount of Notes
set forth opposite each Purchaser's name under the heading "Principal Amount of
Notes" in the Schedule of Purchasers attached as Schedule I to the original
aggregate principal amount of the Notes ($4,000,000). Otherwise, each party
hereto will pay its own expenses in connection with the transactions
contemplated hereby, whether or not such transactions shall be consummated.
SECTION 6.2 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made in this Agreement or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement, the
issuance, sale and delivery of the Notes and Warrants, and the issuance and
delivery of the Warrant Shares.
SECTION 6.3 BROKERAGE. Each party hereto will indemnify and hold
harmless the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 6.4 PARTIES IN INTEREST. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Purchasers shall inure to the benefit of any and all subsequent
holders from time to time of Notes, Warrants or Warrant Shares.
SECTION 6.5 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
facsimile or recognized overnight courier service, addressed as follows:
(g) if to the Company, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and
(h) if to any Purchaser, at the address of such Purchaser set
forth in Schedule I;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of Alabama.
Note and Warrant Purchase Agreement
Page 16
SECTION 6.7 ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement of the parties
with respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference. There are no other agreements of the
parties and no party is relying on any representations of the other not
expressly set forth herein. All Schedules and Exhibits hereby are hereby
incorporated herein by reference.
SECTION 6.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.9 AMENDMENTS. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the holders of at least 66-2/3% of the outstanding principal amount
of the Notes.
SECTION 6.10 SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 6.11 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are for convenience only and are not to be considered in
construing or interpreting any term or provision of this Agreement.
SECTION 6.12 CONFIDENTIALITY. The Company and each of the Purchasers
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or under any suit, action or proceeding relating to the Agreement or the
enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of, or any prospective assignee of, any of its rights or obligations under this
Agreement, (g) with the consent of the Company and unanimous consent of
Purchasers or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Company or any Purchaser on a non-confidential basis from a source other
than the Company. For the purposes of this Section, "Information" means all
information received from the Company relating to the Company or its business,
other than any such information that is available to the Company or any
Purchaser on a non-confidential basis prior to disclosure by the Company;
provided that, in the case of information received from the Company after the
date hereof, such information is clearly identified at the time of delivery as
confidential. Any party required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such party has exercised the same degree of care to
maintain the confidentiality of such Information as such party would accord to
its own confidential information.
Note and Warrant Purchase Agreement
Page 17
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Note and Warrant Purchase Agreement as of the day and year first above written.
EMAGEON UV, INC.
By:
----------------------------------------
Its:
-----------------------------
PURCHASERS:
WHITECAP ALABAMA GROWTH FUND I, LLC
By:
--------------------------------
▇▇▇▇▇ ▇▇▇▇, its President
ENHANCED ALABAMA ISSUER, LLC
By:
--------------------------------
Its:
-------------------------
ADVANTAGE CAPITAL ALABAMA PARTNERS I, L.P.
By:
--------------------------------
Its:
-------------------------
Note and Warrant Purchase Agreement
Page 18
SCHEDULE I
SCHEDULE OF PURCHASERS
INITIAL CLOSING:
AGGREGATE PURCHASE PRICE
NAME AND PRINCIPAL AMOUNT FOR NOTES
ADDRESS OF PURCHASER OF NOTES AND WARRANTS
-------------------- ---------------- ------------------------
Whitecap Alabama Growth Fund I, LLC $2,000,000 $2,000,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Wire Instructions:
Bank Name: US Bank
ABA #: ▇▇▇▇▇▇▇▇▇
Account Name: US Bank Trust
Account #: 180121167365
FFC: 744845000
Attn. ▇▇▇▇ ▇▇▇▇▇▇▇▇/▇▇▇-▇▇▇-▇▇▇▇
>
Enhanced Alabama Issuer, LLC $1,000,000 $1,000,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Advantage Capital Alabama Partners I, L.P. $1,000,000 $1,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Wire Instructions:
JPMorgan Chase Bank
Houston, Texas
ABA #: ▇▇▇▇▇▇▇▇▇
A/C #: 00103409232
Account Name: Structured #1 Trust Clearing Account
Ref: Advantage Capital Alabama Partners I Limited
Partnership
FFC: 10207078.2
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇ 9CTH
TOTAL: $4,000,000 $4,000,000
Note and Warrant Purchase Agreement
Page 19
SCHEDULE II
SECURITY HOLDERS
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS OR THE
TRANSFEROR THEREOF HAS PROVIDED TO THE ISSUER AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
--------------------------------------------------------------------------------
THIS NOTE IS SUBORDINATE TO THE COMPANY'S DEBT TO SILICON VALLEY BANK AND IS
SUBJECT TO THAT CERTAIN SUBORDINATION AGREEMENT EXECUTED BY THE PAYEE AND
SILICON VALLEY BANK CONTEMPORANEOUSLY HEREWITH.
EMAGEON UV, INC.
NOTE DUE JUNE 25, 2007
$ June 25, 2004
--------
For value received, EMAGEON UV, INC., a Delaware corporation (the "Company"),
hereby promises to pay to____________________________________ or registered
assigns (hereinafter referred to as the "Payee"), on or before June 25, 2007,
the principal sum of____________________________ ($____________________) or such
part thereof as then remains unpaid, and to pay interest from the date hereof on
the whole amount of said principal sum remaining from time to time unpaid at the
rate of eight and one quarter percent (8.25%) per annum through June 25, 2006,
and at the rate of ten percent (10%) per annum beginning June 26, 2006 until the
whole amount of the principal hereof remaining unpaid shall become due and
payable, and to pay interest at the rate of twelve and one-half percent (12.5%)
per annum (so far as the same may be legally enforceable) on all overdue
principal (including any overdue required redemption), premium and interest.
Principal and interest shall be payable in lawful money of the United States of
America, in immediately available funds, at the principal office of the Payee or
at such other place as the legal holder may designate from time to time in
writing to the Company. Payments of principal and interest shall be made
according to the amortization schedule attached as Schedule A hereto. Interest
shall be computed on the basis of a 360-day year and a thirty (30) day month.
Notwithstanding any other provision of this Note, the holder hereof does not
intend to charge and the Company shall not be required to pay any interest or
other fees or charges in excess of the maximum permitted by applicable law; any
payments in excess of such maximum shall be refunded to the Company or credited
to reduce principal hereunder.
This Note is issued pursuant to and is entitled to the benefits of a certain
Note and Warrant Purchase Agreement, dated as of June 25, 2004, between the
Company and the Persons listed in the Schedule of Purchasers attached as
Schedule I thereto (as the same may be amended from
20
time to time, hereinafter referred to as the "Agreement"), and each holder of
this Note, by his acceptance hereof, agrees to be bound by the provisions of the
Agreement.
As further provided in the Agreement and subject to compliance with the state
and federal securities laws, upon surrender of this Note for transfer or
exchange, a new Note or new Notes of the same tenor dated the date to which
interest has been paid on the surrendered Note and in an aggregate principal
amount equal to the unpaid principal amount of the Note so surrendered will be
issued to, and registered in the name of, the transferee or transferees. The
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the Company
promises to pay all cost of collection, including all reasonable attorney's
fees.
This Note shall be governed by, and construed in accordance with, the laws of
the State of Alabama.
The Company and all endorsers and guarantors of this Note hereby waive
presentment, demand, notice of nonpayment, protest and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note.
EMAGEON UV, INC.
By:
------------------------------------------
Its:
------------------------------------
21
SCHEDULE A
22
EXHIBIT B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS OR THE
TRANSFEROR THEREOF HAS PROVIDED TO THE ISSUER AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
No. W-_____ Right to Purchase Shares of Common
Stock of Emageon UV, Inc.
EMAGEON UV, INC.
STOCK PURCHASE WARRANT
1. ISSUANCE. This Warrant is issued to _______________________________
(the "Holder") by EMAGEON UV, INC., a Delaware corporation (hereinafter with its
successors called the "Company"). This Warrant is one of a series of warrants
(collectively, the "Warrants") that were originally issued by the Company on
June 25, 2004 (the "Original Issue Date") pursuant to a certain Note and Warrant
Purchase Agreement, dated June 25, 2004, among the Company and the other parties
thereto (the "Purchase Agreement").
2. NUMBER OF SHARES. Subject to the terms and conditions hereinafter
set forth, the registered Holder of this Warrant, is entitled upon surrender of
this Warrant with the subscription form annexed hereto duly executed, at the
office of the Company, at _________________________________________ or such
other office as the Company shall notify the Holder of in writing, to purchase
from the Company _____________ shares of Common Stock of the Company at a price
equal to fifty-seven cents ($0.57) per share (the "Purchase Price"); provided,
however, that (i) if the entire principal amount of the Notes issued to the
Holder pursuant to the Purchase Agreement (the "Notes") and all accrued interest
has not been repaid on or before December 25, 2005, the Holder shall thereafter
be entitled to receive, upon payment of the Purchase Price therefor, and
additional number of fully paid and non-assessable shares of Common Stock which
is equal to the number of shares that is determined when ten percent (10%) of
the then-remaining outstanding principal amount of the Notes issued to the
Holder pursuant to the Purchase Agreement is divided by 0.57; and (ii) if the
remaining principal amount of the Notes and all accrued interest has not been
repaid on or before June 25, 2007, the Company will be in default under the
Purchase Agreement and the Holder shall thereafter be entitled to receive, upon
payment of the Purchase Price therefor, and additional number of fully paid and
non-assessable shares of Common Stock which is equal to the number of shares
that is determined when twenty percent (20%) of the then-remaining outstanding
principal amount of the Notes issued to the Holder pursuant to the Purchase
Agreement is divided by 0.57.
23
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in
cash or by cashier's check, (ii) by the surrender by the Holder to the Company
of any promissory notes or other debt obligations issued by the Company, with
all such notes and obligations so surrendered being credited against the
aggregate Purchase Price in an amount equal to the principal amount thereof plus
accrued interest to the date of surrender, or (iii) by any combination of the
foregoing. The Board shall promptly respond in writing to an inquiry by the
Holder as to the fair market value of any securities the Holder may wish to
deliver to the Company pursuant to clause (ii) above.
4. NET ISSUE ELECTION.
(a) In lieu of exercise pursuant to Section 3, the Holder may
elect to receive, without the payment by the Holder of any additional
consideration, shares equal to the value of this Warrant or any portion hereof
by the surrender of this Warrant or such portion to the Company, with the net
issue election notice annexed hereto duly executed, at the office of the
Company; provided, however, that the Holder may use the net issue election
provided for in this Section 4 only after the shares issuable upon exercise of
this Warrant have a readily ascertainable fair market value. For purposes of
this Section 4, the term "readily ascertainable fair market value" means a value
which can be determined by referencing trades of such shares on a securities
exchange. Thereupon, the Company shall issue to the Holder such number of fully
paid and nonassessable shares of Common Stock, if any, as is computed using the
following formula:
X = Y (A-B)
-------
A
where
X = the number of shares to be issued to the Holder
pursuant to this Section 4.
Y = the number of shares covered by this Warrant in respect of
which the net issue election is made pursuant to this Section
4.
A = the fair market value of one share of Common Stock, as
determined in accordance with (b) below, as at the time the
net issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the
time the net issue election is made pursuant to this Section
4.
(b) For purposes of this Section 4, fair market value (the
"Market Price") of a share of Common Stock as of a particular date (the
"Determination Date") shall mean the average of the closing prices of such
security's sales on the principal securities exchanges on which such security
may at the time be listed, or, if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the last sale prices quoted by Nasdaq, or if on any day
such security is not quoted by Nasdaq, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter
24
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of five
(5) trading days consisting of the day prior to the day as of which "Market
Price" is being determined and the four (4) consecutive business days prior to
such day.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. ISSUANCE DATE. The person or persons in whose name or names any
certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
7. EXPIRATION DATE; AUTOMATIC EXERCISE. This Warrant shall expire at
the sooner of (i) the close of business on June 25, 2012, (ii) the effective
date of any merger of the Company in which the Company does not survive,
provided that the holder of this Warrant has been given prior written notice of
such event at least ten (10) business days prior thereto (which notice need not
specify the precise date of such event as long as it is given at least ten (10)
business days prior to the date on which such event actually begins), or (iii)
the effective date of the initial public offering of the Company's Common Stock,
provided that the holder of this Warrant has been given written notice of such
event at least ten (10) business days prior thereto (which notice need not
specify the precise date of such event as long as it is given at least ten (10)
business days prior to the date on which such event actually begins), and, in
each case, this warrant shall be void thereafter. Notwithstanding the foregoing,
this Warrant shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 4 hereof (provided that such shares have a readily
ascertainable market value at such time), without any further action on behalf
of the Holder, immediately prior to the time this Warrant would otherwise expire
pursuant to the preceding sentence.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of its Common Stock free from all preemptive or
similar rights therein, as will be sufficient to permit, respectively, the
exercise of this Warrant in full of all shares of Common Stock of the Company
receivable upon such exercise. The Company further covenants that such shares as
may be issued pursuant to such exercise and conversion will, upon issuance, be
duly and validly issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof.
9. STOCK DIVIDENDS. If after the date hereof the Company shall
subdivide its Common Stock (or any other shares of stock or other securities at
the time receivable upon the exercise of this Warrant), by split-up or
otherwise, or combine the Common Stock (or any other shares of stock or other
securities at the time receivable upon the exercise of this Warrant), or issue
additional shares of Common Stock (or any other shares of stock or other
securities at the time receivable upon the exercise of this Warrant) in payment
of a stock dividend on the Common Stock (or any other shares of stock or other
securities at the time receivable upon the exercise of
25
this Warrant), the number of shares issuable on the exercise of this Warrant
shall forthwith be proportionately increased in the case of a subdivision or
stock dividend, or proportionately decreased in the case of a combination, and
the Purchase Price shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a
combination.
10. MERGERS AND RECLASSIFICATIONS. Subject to Section 7 hereof, if
after the date hereof there shall be any reclassification, capital
reorganization or change of the Common Stock (other than as a result of a stock
dividend provided for in Section 9 hereof), or any consolidation of the Company
with, or merger of the Company into, another corporation or other business
organization (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the outstanding Common Stock), or any sale or conveyance to another
corporation or other business organization of all or substantially all of the
assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to receive the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock which might have
been received by or acquired by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance, and in any such case appropriate provisions shall be made with
respect to the rights and interest of the Holder to the end that the provisions
hereof (including without limitation, provisions for the adjustment of the
number of shares issuable hereunder) shall thereafter be applicable in relation
to any shares of stock or other securities and property thereafter deliverable
upon exercise hereof.
11. FRACTIONAL SHARES. In no event shall any fractional shares of
Common Stock of the Company be issued upon any exercise of this Warrant. If,
upon exercise of this Warrant as an entirety, the Holder would, except as
provided in this Section 11, be entitled to receive a fractional share of Common
Stock of the Company, then the Company shall issue the next higher number of
full shares of Common Stock, issuing a full share with respect to such
fractional share.
12. CERTIFICATE OF ADJUSTMENT. Whenever the number of shares issuable
hereunder is adjusted, as herein provided, the Company shall promptly deliver to
the Holder a certificate setting forth the number of shares issuable hereunder
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
13. NOTICES OF RECORD DATE, ETC. In the event of:
(i) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right,
26
(j) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger
involving the Company, or sale or conveyance of all or
substantially all of its assets, or
(k) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least twenty
(20) days prior to the date specified in such notice on which any such action is
to be taken.
14. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the holders of at least
66-2/3% of the outstanding principal amount of the Notes issued pursuant to the
Purchase Agreement. No such amendment, modification or waiver shall be effective
as to this Warrant unless the terms of such amendment, modification or waiver
shall apply with the same force and effect to all of the other Warrants then
outstanding.
15. WARRANT REGISTER; TRANSFERS, ETC. (a) The Company will maintain a
register containing the names and addresses of the registered
holders of the Warrants. The Holder may change its address as
shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication
required or permitted to be given to the Holder may be given
by certified mail or delivered to the Holder at its address as
shown on the warrant register.
(b) This Warrant and the shares exercisable or exercised pursuant
to this Warrant ("Warrant Shares") may be transferred by the
Holder only if (i) such transfer is made in accordance with
applicable federal and state securities laws, (ii) Holder
transfers this Warrant and such Warrant Shares in their
entirety, (iii) such transfer is made to a third party who or
that acquires the Note or Notes held by the Holder in their
entirety and who or that is not reasonably considered to be a
competitor of the Company by the Company and the Holder, and
(iv) such transfer is made in accordance with this subsection
(b). Upon surrender of this Warrant to the Company, together
with the assignment hereof properly endorsed, for transfer of
this Warrant as an entirety by the Holder, the Company shall
issue a new warrant of the same denomination to the assignee.
Holder agrees that, absent an effective registration statement
filed with the Securities & Exchange Commission under the
Securities Act of 1933, as amended, covering the disposition
or sale of this Warrant or the Warrant Shares issued or
issuable upon exercise hereof, as the case may be, and
registration or qualification applicable state securities
laws, Holder will not sell, transfer, pledge, hypothecate or
otherwise dispose any or all such Warrants or Warrant Shares,
as the case may be, unless either (A) the Company
27
has received an opinion of counsel, in form and substance
reasonably satisfactory to the Company, to the effect that
such registration is not required in connection with such
disposition or (B) the sale of such securities is made
pursuant to Securities & Exchange Commission Rule 144.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor
and denomination and deliver the same (i) in exchange and
substitution for and upon surrender and cancellation of any
mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen
or destroyed, upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft or destruction of such
Warrant (including a reasonably detailed affidavit with
respect to the circumstances of any loss, theft or
destruction) and of indemnity reasonably satisfactory to the
Company, provided, however, that so long as any purchaser
named in Schedule I to the Purchase Agreement is the
registered holder of this Warrant, no indemnity shall be
required other than its written agreement to indemnify the
Company against any loss arising from the issuance of such new
warrant.
16. NO IMPAIRMENT. The Company will not, by amendment of its Articles
of Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
17. INVESTMENT INTENT. By accepting this Warrant, the Holder hereof
shall be deemed to have made all of those representations and warranties
contained in Article III of the Purchase Agreement as they relate to this
Warrant and the securities issuable upon exercise hereof.
18. NO RIGHTS OR LIABILITY AS A STOCKHOLDER. This Warrant does not
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company. No provisions hereof, in the absence of affirmative action by
the Holder hereof to exercise this Warrant hereunder, and no enumeration herein
of the rights or privileges of the Holder hereof shall give rise to any
liability of such Holder as a stockholder of the Company.
19. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
Delaware.
20. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
21. BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Alabama, then such action may be taken
or right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
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22. MARKET STAND-OFF AGREEMENT. The Holder hereby agrees that, during
the period specified by the managing underwriter of an underwritten public
offering of equity securities of the Company for the account of the Company or
any Holder hereunder (but in any event not to exceed ninety (90) days following
the effective date of the registration statement relating to such underwritten
public offering or one hundred and eighty (180) days following the effective
date of a registration statement relating to an initial public offering of the
Company's securities), the Holder shall not, to the extent requested by such
managing underwriter, directly or indirectly, effect any sale of any equity
securities of the Company except pursuant to such registration.
Dated: June 25, 2004 EMAGEON UV, INC.
By:
-------------------------------------
Its:
---------------------------------
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Subscription
To:____________________ Date:_________________________
The undersigned hereby subscribes for __________ shares of Common Stock
covered by this Warrant. The certificate(s) for such shares shall be issued in
the name of the undersigned or as otherwise indicated below:
----------------------------------------
Signature
----------------------------------------
Name for Registration
----------------------------------------
Mailing Address
Net Issue Election Notice
To:____________________ Date:_________________________
The undersigned hereby elects under Section 4 to surrender the right to
purchase _______ shares of Common Stock pursuant to this Warrant. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
-----------------------------------------
Signature
-----------------------------------------
Name for Registration
-----------------------------------------
Mailing Address
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Assignment
For value received hereby sells,
----------------------------
assigns and transfers unto
-----------------------------------------------------
--------------------------------------------------------------------------------
Please print or typewrite name and address of Assignee
--------------------------------------------------------------------------------
the within Warrant, and does hereby irrevocably constitute and appoint
its attorney to transfer the within Warrant on the books
-----------------------
of the within named Company with full power of substitution on the premises.
Dated:
-----------------------
-------------------------
In the Presence of:
-----------------------------
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EXHIBIT C
CHARTER AND ALL AMENDMENTS THERETO
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