EXHIBIT 10.20
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXXXXXXXXXX.XXX, INC.
AND
THE PURCHASERS IDENTIFIED ON SCHEDULE A HERETO
DATED: JUNE 1, 1999
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SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS.........................................1
1.1. Defined Terms...................................................1
SECTION 2. AUTHORIZATION AND SALE......................................4
2.1. Authorization of Preferred Stock and Warrants...................4
2.2. Sale and Purchase...............................................4
2.3. The Closing.....................................................5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION...........6
3.1. Organization and Corporate Power................................6
3.2. Authorization...................................................6
3.3. Equity Investments..............................................7
3.4. Capitalization..................................................7
3.5. Shareholder Lists and Agreements................................8
3.6. Financial Information...........................................8
3.7. Absence of Undisclosed Liabilities..............................9
3.8. Absence of Certain Changes......................................9
3.9. Tax Matters....................................................11
3.10. Title; Encumbrances; Burdensome Restrictions..................11
3.11. Intellectual Property Rights..................................12
3.12. Litigation....................................................13
3.13. No Defaults...................................................13
3.14. Labor Agreements and Actions..................................13
3.15. Compliance....................................................14
3.16. Insurance.....................................................14
3.17. Conflicts.....................................................14
3.18. Accounts; Related Transactions................................15
3.19. Securities Law Compliance.....................................15
3.20. No Consent or Approval Required...............................15
3.21. Agreements....................................................16
3.22. Brokers.......................................................18
3.23. Employee Benefit Plans; Employees.............................18
3.24. Investment Company Act........................................18
3.25. Small Business Concern........................................18
3.26. Real Property Holding Corporation.............................19
3.27. Disclosure....................................................19
3.28. Year 2000.....................................................19
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASERS................................................19
SECTION 5. CONDITIONS TO AND DELIVERIES AT CLOSING....................20
5.1. Preferred Stock................................................21
5.2. Accuracy of Representations and Warranties.....................21
5.3. Performance....................................................21
5.4. Corporate Proceedings; Consents, Etc...........................21
5.5. Certificate of Secretary.......................................21
5.6. Shareholders' Agreement and Registration Rights Agreement......21
5.7. Adverse Proceedings; No Material Adverse Effect................22
5.8. Small Business Administration Documentation....................22
5.9. Absence of Liens...............................................22
5.10. Opinion of Counsel............................................22
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5.11. Effectiveness.................................................22
5.12. Approvals.....................................................22
5.13. Other Matters.................................................23
SECTION 6. COVENANTS..................................................23
6.1 Negative Covenants..............................................23
6.2 Equity Security Restrictions....................................25
6.3 Affirmative Covenants...........................................26
6.4 Compliance with Agreements......................................27
6.5 Reservation of Common Stock.....................................27
6.6 Proprietary Information.........................................27
6.7 Public Disclosures..............................................28
6.8 ERISA...........................................................28
6.9 Best Efforts....................................................28
6.10 Remedies of Series A Stock and Preferred Stock.................27
6.11 Notice of Proposals............................................29
SECTION 7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS,
ETC.......................................................30
SECTION 8. ADDITIONAL REMEDIES........................................30
SECTION 9. EXPENSES...................................................31
SECTION 10. ADDITIONAL PROVISIONS.....................................31
10.1. Successors and Assigns........................................31
10.2. Entire Agreement..............................................32
10.3. Notices.......................................................32
10.4. Changes.......................................................34
10.5. Counterparts..................................................34
10.6. Headings......................................................34
10.7. Nouns and Pronouns............................................34
10.8 Governing Law; Consent to Jurisdiction........................34
10.9 Publicity.....................................................35
10.10. Severability.................................................35
10.11. Construction.................................................35
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") made as of this 1st
day of June, 1999, by and between XxxxxxxxXxxxxx.xxx, Inc., a Delaware
corporation (the "Corporation"), and the purchasers identified on Schedule A
hereto (the "Purchasers").
RECITALS:
Subject to the terms and conditions hereof, the Corporation desires to
issue and sell, and the Purchasers desire to purchase, in the aggregate, up to
113,327 shares of Series B Redeemable Convertible Preferred Stock, $0.01 par
value (the "Preferred Stock"), of the Corporation, and warrants to purchase (i)
a number of shares of Common Stock, $0.01 par value, of the Corporation (the
"Common Stock"), substantially in the form of Exhibit A hereto (the "Common
Stock Warrants"), and (ii) up to 37,775 shares of Preferred Stock, substantially
in the form of Exhibit B hereto (the "Preferred Stock Warrants " and,
collectively with the Common Stock Warrants, the "Warrants").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1. Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings:
"Action" shall mean any action, suit, proceeding, claim, arbitration
or investigation.
"Budget" shall mean the annual operating and capital budget of the
Corporation, with monthly breakdowns prepared by management and signed by the
Chief Executive Officer or the Chief Financial Officer of the Corporation.
"Certificate of Designations" shall mean the Certificate of
Designations for the Series B Redeemable Convertible Preferred Stock of
XxxxxxxxXxxxxx.xxx, Inc., a copy of which is attached hereto as Exhibit C.
"Certificate of Incorporation" shall mean the Corporation's Restated
Certificate of Incorporation, as amended by the Certificate of Designations.
" Closing" shall mean the Initial Closing and the Subsequent
Closing.
"Closing Date" shall mean the date of the Initial Closing or the
date of the Subsequent Closing, as applicable.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning set forth in the recitals
hereto.
"Common Stock Warrants" shall have the meaning set forth in the
recitals hereto.
"Corporation" shall mean XxxxxxxxXxxxxx.xxx, Inc., a Delaware
corporation.
"Designated Persons" shall mean the former and present directors,
officers and employees of, and consultants to, the Corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Fair Market Value" shall mean the amount per share of Preferred
Stock which a willing buyer would pay a willing seller in an arm's-length
transaction, as determined in good faith by the board of directors of the
Corporation based on an opinion of an independent investment banking firm
reasonably acceptable to the holders of a majority of the outstanding shares of
Preferred Stock with an established national reputation as a value of
securities, which opinion may be based on such assumptions as such firm shall
deem to be necessary and appropriate, without any minority or illiquidity
discount.
"Initial Closing" shall mean the closing of the transactions
contemplated under Section 2.3(a) of this Agreement.
"Intellectual Property Rights" shall mean all industrial and
intellectual property rights, including without limitation, Proprietary
Information, patents, patent applications, patent rights, mask works, mask work
applications, trademarks, trademark applications, trade names, service marks,
service xxxx applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae.
"IRS" shall mean the Internal Revenue Service.
"Javelin" shall mean TD Javelin Capital Fund, L.P., a Delaware
limited partnership, a small business investment Company licensed by the SBA,
and its successors and assigns.
"Operative Documents" shall mean, collectively, this Agreement and
the Exhibits hereto.
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"Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in the recitals
hereto.
"Preferred Stock Warrants " shall have the meaning set forth in the
recitals hereto.
"Proprietary Information" shall mean all customer lists, source and
object code, algorithms, architecture, structure, display screens, layouts,
processes, inventions, trade secrets, know-how, development tools, software and
other proprietary rights owned by the Corporation pertaining to any product or
service manufactured, marketed or sold, or proposed to be manufactured, marketed
or sold (as the case may be), by the Corporation or used, employed or exploited
in the development, license, sale, marketing or distribution or maintenance
thereof, and all documentation and media constituting, describing or relating to
the above, including without limitation, manuals, memoranda, know-how,
notebooks, records and disclosures.
"Purchasers" shall mean the persons and entities identified on
Schedule A hereto.
"Recent Balance Sheet" shall have the meaning set forth in Section
3.6(a)(iii).
"Recent Financial Statements" shall have the meaning set forth in
Section 3.6(a)(iii).
"Register", "Registered", "Registration" and "Registration
Statement" shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
"Registration Rights Agreement" shall mean the Second Amended and
Restated Registration Rights Agreement among the Corporation, Premier Research
Worldwide, Ltd., Medical Advisory Systems, Inc., The Wyndhurst Capital Group,
LLC, and the Purchasers substantially in the form attached hereto as Exhibit D.
"Related Transaction" shall have the meaning set forth in Section
3.18.
"SBA" shall mean the United States Small Business Administration.
"SBIC" shall mean each of Javelin or Origen and "SBICs" shall mean
Javelin and Origen, collectively.
"SBIC Act" shall mean the Small Business Investment Act of 1958, as
amended.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"Shareholders' Agreement" shall mean the Second Amended and Restated
Shareholders' and Voting Agreement by and among the Corporation, the Purchasers,
the holders of Series A Stock (as defined below), and the Common Stock and
Warrant holders identified therein substantially in the form attached hereto as
Exhibit E.
"Subsequent Closing" shall mean the closing of the transactions
contemplated under Section 2.3(b) of this Agreement.
"Taxes" shall mean all federal, state, county, local and foreign
income, profits, franchise, sales, use, occupation, property, excise, payroll,
withholding and other taxes (including penalties and interest).
"Warrants" shall have the meaning set forth in the recitals hereto.
SECTION 2. AUTHORIZATION AND SALE.
2.1. Authorization of Preferred Stock and Warrants.
The Corporation has duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of up to 113,327 shares of Preferred Stock. The
Corporation has authorized the granting, pursuant to the terms of this
Agreement, of warrants to purchase shares of its Common Stock and Preferred
Stock. Pursuant to the terms of the Warrants, the Corporation has duly
authorized the issuance of 37,775 shares of Preferred Stock upon exercise of the
Preferred Stock Warrants and will authorize, upon the Number of Shares (as
defined therein) being fixed, the Common Stock for which such Warrants are then
exercisable. The Corporation has, or before the Closing will have, filed the
Certificate of Designations with the Secretary of State of the State of
Delaware.
2.2. Sale and Purchase.
a) Subject to the terms and conditions of this Agreement, at the
Closing, the Corporation will sell and issue to GE Capital Equity Investments,
Inc. ("GE") and Xxxxxx-Xxxxxxxxx Capital Focus II, L.P. ("TD" and together with
GE, the "Initial Purchasers") and the Initial Purchasers will purchase the
number of shares of Preferred Stock and Warrants indicated on Schedule A hereto
opposite each such Initial Purchaser's name for the aggregate purchase price
payable by such Initial Purchaser specified on Schedule A, for an aggregate
purchase price of $6,875,043.
b) As promptly as practicable following Small Business
Administration approvals ("SBA Approvals") of the purchase by TD Origen Capital
Fund, L.P. and TD Javelin Capital Fund, L.P. (together, the "Subsequent
Purchasers"), but in no event later than sixty (60) days after the Initial
Closing, the Subsequent Purchasers will purchase the number of shares of
Preferred Stock and Warrants indicated on Schedule A hereto
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opposite each such Subsequent Purchaser's name for the aggregate purchase price
payable by such Subsequent Purchaser specified on Schedule A, for an aggregate
purchase price of $625,003.92. In the event that SBA Approvals are not obtained
within sixty (60) days after the Initial Closing, TD will purchase the number of
shares of Preferred Stock and Warrants indicated on Schedule A hereto opposite
each Subsequent Purchaser's name for the aggregate purchase price payable by
such Subsequent Purchaser specified on Schedule A, for an aggregate purchase
price of $625,003.92.
c) The Corporation will use the proceeds from the sales of the
Preferred Stock and Warrants for product development, working capital and other
valid corporate purposes.
2.3. The Closing.
a) The closing of the sale and purchase of the Preferred Stock and
Warrants under Section 2.2(a) of this Agreement (the "Initial Closing")shall
take place on the date hereof at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 425
Lexington Avenue, New York, New York, or at such other place as is mutually
agreeable to the Corporation and the Initial Purchasers.
b) The closing of the sale and purchase of the Preferred Stock and
Warrants under Section 2.2(b) of this Agreement (the "Subsequent Closing")shall
take place not later than the earlier of (i) five days after receipt of the SBA
Approvals and (ii) the 60th day following the Initial Closing at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 425 Lexington Avenue, New York, New York, or at such
other place as is mutually agreeable to the Corporation and the Subsequent
Purchasers.
c) At each Closing, the Corporation shall deliver to each of the
Purchasers a certificate for the shares of Preferred Stock and Warrants being
purchased by such Purchaser at such Closing as set forth on Schedule A hereto,
registered in the name of such Purchaser (or its nominee), against payment to
the Corporation of the purchase price set forth in Section 2.2(a) and 2.3(b), as
applicable, by wire transfer, check or other method acceptable to the
Corporation.
d) If at the Closing any of the conditions specified in Section 5
shall not have been fulfilled, each of the Purchasers shall, at its election, be
relieved of all of its obligations under this Agreement without thereby waiving
any other rights it may have by reason of such failure or such non-fulfillment.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents and warrants to each of the Purchasers as
follows:
3.1. Organization and Corporate Power.
The Corporation:
a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
b) has all requisite corporate power and authority to own, lease and
operate its properties currently owned, leased and operated, to carry on its
business as currently conducted and to execute, deliver and perform this
Agreement; and
c) is duly qualified as a foreign corporation and in good standing
to do business in all such jurisdictions, if any, in which the conduct of its
business or its ownership, leasing or operation of property as then conducted,
owned, leased or operated, requires such qualification, except for those
jurisdictions in which failure to so qualify would not have a material adverse
effect on the business or assets of the Corporation.
d) will have all requisite power and authority to execute and
deliver the Operative Documents, to carry out the transactions contemplated
thereby, and to issue and deliver the Preferred Stock and the Warrants, and the
Common Stock or Preferred Stock, as the case may be, issuable upon exercise of
the Warrants.
3.2. Authorization.
a) The execution, delivery and performance by the Corporation of the
Operative Documents have been duly authorized by all requisite corporate action
by the Corporation, and the Operative Documents constitute the valid and binding
obligations of the Corporation, enforceable in accordance with their terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally and to general principals of
equity.
b) The issuance, sale and delivery of the Preferred Stock and
Warrants and, upon exercise of the Warrants or the conversion of the Preferred
Stock, the Common Stock or Preferred Stock, as the case may be, issuable with
respect to such exercise or conversion, have been duly authorized by all
requisite corporate action of the Corporation, and when issued, sold and
delivered in accordance with this Agreement and the Warrants, if applicable, the
Preferred Stock will be validly issued and outstanding, fully paid and
nonassessable with only limited liability attaching solely to the ownership
thereof, and not subject to preemptive or any other similar rights of the
stockholders of the Corporation or others. When issued and delivered in
accordance with the terms of the Certificate of Incorporation and the Warrants,
the Common Stock issuable upon the
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conversion of the Preferred Stock and the exercise of the Warrants will be
validly issued and outstanding, fully paid and nonassessable with only limited
liability attaching solely to the ownership thereof, and not subject to
preemptive or any other similar rights of the stockholders of the Corporation or
others.
3.3. Equity Investments.
Except for XxxxxxxxXxxxxx.xxx Medical Mall, Inc., a Delaware corporation
(the "Subsidiary"), the Corporation has never had, nor does it presently have,
any subsidiaries, nor has it owned, nor does it presently own, any capital stock
or other proprietary interest or other voting control, directly or indirectly,
in any corporation, association, trust, partnership, joint venture or other
entity. The Subsidiary has no material assets, liabilities or operations.
3.4. Capitalization.
a) The authorized capital stock of the Corporation, immediately
prior to the Closing, will consist of (i) 2,500,000 shares of Common Stock,
534,579 of which shares are issued and outstanding and (ii) 1,000,000 shares of
preferred stock, of which 133,333 shares designated as Series A Convertible
Preferred Stock (the "Series A Stock") are issued and outstanding. All of the
issued and outstanding shares of the Corporation's capital stock have been duly
authorized and validly issued and are fully paid and non-assessable and all
securities previously issued and sold by the Corporation were issued and sold in
compliance with applicable Federal securities laws. Except as set forth in
Schedule 3.4 attached hereto, no other shares of the Corporation's capital stock
or securities convertible into or exchangeable for shares of the Corporation's
capital stock have been issued or reserved for issuance, and except as set forth
in Schedule 3.4 attached hereto or contemplated by the Operative Documents, (A)
no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of capital stock of
the Corporation is authorized or outstanding, (B) there is not any, commitment
or offer of the Corporation to issue any subscription, warrant, option,
convertible security or other such right, or to issue or distribute to holders
of any shares of its capital stock any evidences of indebtedness or assets of
the Corporation, (C) the Corporation has no obligation (contingent or otherwise)
to purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof and (D) there are no restrictions on the transfer of the
Corporation's capital stock other than compliance with applicable Federal and
state securities laws. Except as contemplated by the Operative Documents or as
set forth in Schedule 3.4 attached hereto, no person or entity is entitled to
(1) any preemptive or similar right with respect to the issuance of any capital
stock of the Corporation or (2) any rights with respect to the registration of
any capital stock of the Corporation under the Securities Act.
b) Immediately after consummation of the transactions contemplated
hereby at the Closing, the authorized capital stock of the Corporation will
consist of (i) 2,500,000 shares of Common Stock, of which 534,579 shares will be
issued and
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outstanding, fully paid and nonassessable, and (ii) 1,000,000 shares of
preferred stock, 133,333 of which shares have been designated as Series A Stock
and are issued and outstanding, fully paid and nonassessable and 151,084 shares
will be designated as the Series B Convertible Redeemable Preferred Stock, of
which 113,327 shares will be issued and outstanding, fully paid and non
assessable.
c) All shares of Common Stock issuable upon conversion of the
outstanding Series A Stock and the Series B Stock being issued at the Closings
have been reserved for issuance upon conversion of such Preferred Stock.
3.5. Shareholder Lists and Agreements.
Schedule 3.5 annexed hereto sets forth a true and complete list of
all shareholders and other security holders of the Corporation showing the
number of shares of Common Stock or other securities held by each Shareholder or
security holder. Except as set forth in Schedule 3.5 attached hereto or
otherwise as contemplated by the Operative Documents, there are no agreements,
written or oral, between the Corporation and any of the holders of the
Corporation's capital stock, or between or among any holders of the
Corporation's capital stock, relating to the acquisition, disposition or voting
of such capital stock.
3.6. Financial Information.
a) The Corporation has previously delivered to the Purchasers the
following financial information:
(i) the Corporation's financial projections, dated May, 30 1999
and related statements of income;
(ii) the balance sheet of the Corporation as of March 31, 1999 (the
"Recent Balance Sheet") and the related statements of income
and schedules, prepared by the Corporation (together with the
Recent Balance Sheet, the "Recent Financial Statements");
(iii) the draft audited balance sheet of the Corporation as of June
30, 1998 and the related statements of income and cash flow,
prepared by the Corporation's independent auditors; and
(iv) the balance sheet of the Corporation as of December 31, 1998
and the related statements of income and cash flow.
For purposes of this Agreement, "Financial Statements" mean all of
the financial statements referred to in clauses (ii), (iii), and (iv) of this
Section 3.6(a).
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b) The projections referenced in Section 3.6(a)(i) above were
prepared based upon good faith assumptions and represent the Corporation's
reasonable estimate of future results based upon information available as of the
date of such projections.
c) To the Corporation's best knowledge, (i) the Financial Statements
(together with any notes and schedules thereto) are true, correct and complete,
(ii) are in accordance with the books and records of the Corporation, (iii)
fairly present the financial condition of the Corporation as of the dates
indicated and the results of operations and cash flow of the Corporation for the
periods indicated and (iv) have been prepared in accordance with generally
accepted accounting principles consistently applied.
3.7. Absence of Undisclosed Liabilities.
Except as disclosed in the Recent Financial Statements, as listed on
Schedule 3.7 attached hereto, or for liabilities incurred in the ordinary course
and in amounts not greater than incurred for a comparable period in the prior
fiscal year, and except for changes in such amounts consistent with the growth
of the Corporation's business in subsequent periods, as of the date of this
Agreement, (a) the Corporation has no liability of any nature (matured or
unmatured, fixed or contingent) which was not provided for or disclosed on the
Recent Balance Sheet, (b) all liability reserves, if any, established by the
Corporation were adequate in all respects and were established by the
Corporation in accordance with generally accepted accounting principles
consistently applied, and (c) there are no loss contingencies (as such term is
used in "Statement of Financial Accounting Standards No. 5" issued by the
Financial Accounting Standards Board in March 1975) which were not adequately
disclosed in the Recent Financial Statements as required by said Statement No.
5. There were no loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards Board in March 1975) which were not adequately provided for on the
Recent Balance Sheet.
3.8. Absence of Certain Changes.
Except as listed on Schedule 3.8 attached hereto and, with respect
to the capitalization, as listed on Schedule 3.4 attached hereto, since March
31, 1999, there has not been:
a) any material adverse change in the financial condition, results
of operations, assets, liabilities, business or prospects of the Corporation or
any occurrence or circumstance or combination thereof which could reasonably be
expected to result in any such material adverse change;
b) any funds borrowed or any obligations or liabilities (absolute or
contingent) incurred by the Corporation, except as incurred in the ordinary
course of business consistent with past practices, or any endorsement,
assumption or guaranty of payment or collection of any obligation of any other
person or entity;
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c) any discharge or satisfaction by the Corporation of any lien or
encumbrance or payment of any obligation or liability (absolute or contingent)
other than current liabilities reflected in the Recent Financial Statements;
d) any agreement or arrangement entered into by the Corporation
granting preferential rights to purchase any of the assets, properties or rights
of the Corporation (including management and control thereof), or requiring the
consent of any party to a transfer or assignment of such assets, properties or
rights (or change in the management or control thereof), or providing for the
merger or consolidation of the Corporation with or into another corporation,
association or business entity;
e) any amendment or termination of any material contract, agreement
or license to which the Corporation is a party, except in the ordinary course of
business consistent with past practices;
f) any transaction entered into by the Corporation other than in the
ordinary course of business consistent with past practices;
g) any material asset or property of the Corporation made subject to
a lien of any kind;
h) any waiver of any valuable right of the Corporation, or, except
in the ordinary course of business consistent with past practices, the
cancellation of any debt or claim held by the Corporation;
i) any declaration, setting aside or payment of dividends on, or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Corporation, or any
agreement or commitment therefor;
j) any mortgage, pledge, sale, assignment or transfer of any
tangible or intangible assets of the Corporation except in the ordinary course
of business consistent with past practices;
k) any loan by the Corporation to, or any loan to the Corporation
from, any officer, director, employee or shareholder of the Corporation, or any
agreement or commitment therefor, except advances in the ordinary course of
business for reasonable travel and entertainment expenses in customary amounts;
l) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, property or business
of the Corporation;
m) any change in the accounting methods or practices followed by the
Corporation; or
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n) any agreement entered into to do any of the foregoing described
in clauses (a) through (m) above.
3.9. Tax Matters.
Except as provided on Schedule 3.9 attached hereto, the Corporation
has filed all federal, state, county, and local tax returns and tax reports
required to be filed with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed and all
of the foregoing are true, correct and complete. All Taxes required to have been
paid or accrued by the Corporation have been fully paid or are adequately
provided for on the Recent Balance Sheet. No issues have been raised (and are
currently pending) by the IRS or any other taxing authority concerning the
Corporation's liability for Taxes, and no waivers of statutes of limitations
have been given or requested with respect to the Corporation. There is no tax
lien of any kind outstanding against the assets, property, or business of the
Corporation. All deficiencies asserted or assessments (including interest and
penalties) made as a result of any examination by the IRS or by appropriate
state or departmental tax authorities of the federal, state or local income tax,
sales tax or franchise tax returns of or with respect to the Corporation have
been fully paid or are adequately provided for on the Recent Balance Sheet and
no proposed (but unassessed) additional taxes, interest or penalties have been
asserted. The provisions for taxes in the Recent Balance Sheet are sufficient
for the payment of all accrued and unpaid federal, state or local and foreign
taxes as of such date. The Corporation has not (i) elected to be treated as a
collapsible corporation pursuant to Section 341(f) of the Code, nor (ii) made
any other elections pursuant to the Code that would have an adverse effect on
the Corporation, its financial condition, its business as presently conducted or
presently proposed to be conducted or any of its properties or assets. Except as
provided in Schedule 3.9 attached hereto, the Corporation has not made any
material payments, is not obligated to make any material payments and is not a
party to any agreement that under certain circumstances could obligate it to
make any material payments that would be treated as a "golden parachute" payment
under the Code. The Corporation is not a party to any tax allocation or sharing
agreement. The Corporation has not (i) been a member of an affiliated group
filing a consolidated federal income tax return, and (ii) had liability for the
Taxes of any entity under Treasury Regulation ss. 1.502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
3.10. Title; Encumbrances; Burdensome Restrictions.
The Corporation does not own and has never owned any real property.
The items of personal property of the Corporation reflected on the Recent
Financial Statements are in good operating condition and repair, reasonable wear
and tear excepted, are suitable for the purposes for which they are presently
used or then used in the conduct of its business, are structurally sound and
free from patent defects and there is no material expenditure presently required
in order to maintain such condition and state of repair or replace any tangible
personal property. Except as set forth on Schedule 3.10 attached hereto, and,
with respect to certain leasehold interests and licenses for the use of assets,
as
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set forth in the Recent Financial Statements, the Corporation owns good and
valid title (or leasehold title, as the case may be) to all property and assets,
real, personal or fixed, tangible or intangible, used by it in its operations as
presently conducted or as proposed to be conducted, subject to no mortgages,
liens, security interests, pledges, charges or other encumbrances of any kind.
The Corporation is not obligated under any contract or agreement or subject to
any charter or other corporate restriction which adversely affects its business,
properties, assets, prospects or condition (financial or otherwise). The
Corporation is not in violation of any zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of its owned properties. The Corporation, in its capacity as lessee, is not in
violation of any zoning, building or safety ordinance, regulation or requirement
or other law or regulation applicable to the operation of its leased properties.
The Corporation has not received any notice of violation with which it has not
complied.
3.11. Intellectual Property Rights.
a) A complete list of the Intellectual Property Rights of the
Corporation is set forth on Schedule 3.11 to this Agreement. Except as provided
on Schedule 3.11 attached hereto, there are no Intellectual Property Rights
necessary or required to enable the Corporation to carry on its respective
business as now conducted and as presently proposed to be conducted. Except as
provided on Schedule 3.11 attached hereto, no third party has any ownership
right, title, interest, claim in or lien on any of the Intellectual Property
Rights of the Corporation and there are no restrictions on the Corporation's use
or right to use the Intellectual Property Rights. The Corporation has not
granted or assigned to any other person or entity any right to make, have made,
assemble or sell the products or proposed products or to provide the services or
proposed services of the Corporation. To the best knowledge of the Corporation,
no other Person is using or infringing upon the Corporation's Intellectual
Property Rights.
b) Except as provided on Schedule 3.11 attached hereto, the
Corporation has not violated or infringed, is not currently violating or
infringing, and has not received any communications alleging that it (or any of
its employees or consultants) has violated or infringed or, by conducting its
business as presently conducted or proposed to be conducted, would violate or
infringe, the Intellectual Property Rights of any other person or entity. No
third party has claimed or has reason to claim that any Designated Person has
(a) violated or may be violating any of the terms or conditions of his
employment, non-competition or non-disclosure agreement with such third party,
(b) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party or (c)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees. No third party has
requested information from the Corporation which suggests that such a claim
might be contemplated. No Designated Person has employed or proposes to employ
any trade secret or any information or documentation proprietary to any former
employer, and no Designated Person has violated any confidential relationship
which such Designated Person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed
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product or the development or sale of any service or proposed service of the
Corporation, and the Corporation has no reason to believe there will be any such
employment or violation. None of the execution or delivery of this Agreement, or
the carrying on of the business of the Corporation as officers, employees or
agents by any Designated Person, or the conduct or proposed conduct of the
business of the Corporation, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such Designated Person is obligated or
under any judgment, decree or order of any court or administrative agency to
which such Designated Person is subject.
3.12. Litigation.
Except as provided on Schedule 3.12 attached hereto, there is no
Action pending (or, to the best knowledge of the Corporation, currently
threatened) against the Corporation, or its existing or proposed business or
activities, properties or assets or, to the best knowledge of the Corporation,
against any Designated Person in connection with such Designated Person's
relationship with, or actions taken on behalf of, the Corporation. There is no
factual or legal basis for any such Action that might result, individually or in
the aggregate, in any material adverse change in the business, properties or
financial condition of the Corporation. The Corporation is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or governmental agency or instrumentality and there is no Action by
the Corporation currently pending or which the Corporation intends to initiate.
3.13. No Defaults.
The Corporation is not in default under its Certificate of
Incorporation or bylaws. The Corporation is not in default: (a) under any note,
indenture, mortgage, other instrument evidencing indebtedness, lease, purchase
or sales order, or any other material contract, agreement or instrument to which
it is a party or by which it or any of its property is bound or affected or (b)
with respect to any order, writ, injunction, judgment or decree of any court or
any federal, state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or instrumentality. To the best
knowledge of the Corporation, there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute, a
default under any of the foregoing.
3.14. Labor Agreements and Actions.
The Corporation is not bound by or subject to any contract,
commitment or arrangement with any labor union, and no labor union has
requested, sought or attempted to represent any employees, representatives or
agents of the Corporation. There is no strike or other labor dispute involving
the Corporation pending nor, to the best knowledge of the Corporation,
threatened, nor is the Corporation aware of any labor organization activity
involving its employees.
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3.15. Compliance.
Except as provided on Schedule 3.15 attached hereto, the Corporation
(a) has complied in all material respects with all federal, state, local and
foreign laws, ordinances, regulations and orders applicable to its businesses or
the ownership of its assets, and the Corporation has not received notice of any
claimed default with respect to such laws, ordinances, rules and regulations;
and (b) has or has applied for all federal, state, local and foreign
governmental licenses and permits necessary or required to enable it to carry on
its business as now conducted and as proposed to be conducted. To the
Corporation's best knowledge, such licenses and permits, if issued, are in full
force and effect, no violations have been recorded in respect of any such
licenses or permits, and no proceeding is pending or, to the best knowledge of
the Corporation, threatened to revoke or limit any thereof. None of the
aforesaid licenses and permits shall be affected in any material adverse respect
by any Operative Document. The business of the Corporation as presently
conducted and as proposed to be conducted does not and will not, violate any
laws, ordinances, regulations or orders relating to the practice of medicine,
except as could not reasonably be expected to have a material adverse effect on
the financial condition, results of operations, assets, liabilities, business or
prospects of the Corporation.
3.16. Insurance.
To the Corporation's best knowledge, all policies of commercial
general liability, professional liability, theft, fidelity, life, fire, product
liability, worker's compensation, health, excess liability and other forms of
insurance held by the Corporation are valid and enforceable policies and are
outstanding and duly in force and all premiums with respect thereto are paid to
date. The amounts of coverage under such policies of insurance for the assets
and property of the Corporation are (a) adequate against risks usually insured
against by Persons operating similar businesses and operating similar properties
and (b) in compliance in all respects with all federal, state, local and foreign
laws, ordinances, regulations and orders applicable to its business that govern
such amounts. There is no default with respect to any provision contained in any
insurance policy, nor has there been any failure to give any notice or present
any claim under any insurance policy in a timely fashion or in the manner or
detail required by the policy. There are no outstanding claims under any
insurance policy. No insurance policy provides for retrospective or retroactive
premium adjustments. No notice of cancellation or non-renewal with respect to,
or disallowance of any claim under, any insurance policy has been received by
the Corporation. The Corporation has not been refused any insurance, nor has its
coverage been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last five years.
3.17. Conflicts.
The execution and delivery of the Operative Documents by the
Corporation, the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof by the Corporation
and the issuance,
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sale and delivery of Preferred Stock by the Corporation, will not (i) violate
any provision of law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body applicable to the Corporation or (ii) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, the
Certificate of Incorporation or bylaws, or under any note, indenture, mortgage,
lease, purchase or sales order or other material contract, agreement or
instrument to which the Corporation is a party or by which it or any of its
property is bound or affected, or (iii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Corporation.
3.18. Accounts; Related Transactions.
All accounts and notes receivable of the Corporation as of the date
of the Recent Balance Sheet and all accounts and notes receivable arising
between such date and the Closing Date are and will be valid and subsisting and
represent and will represent accounts actually accrued in the ordinary course of
business consistent with past practices. There have been no accounts receivable
of the Corporation converted to notes receivable or otherwise extended. Except
as provided on Schedule 3.18 attached hereto, no current or former stockholder,
director, officer or employee of the Corporation nor any relative or "associate"
(as defined in the rules and regulations promulgated under the Exchange Act) of
any such Person, is presently, directly or indirectly through his or its
affiliation with any other person or entity, a party to any transaction with the
Corporation providing for the furnishing of services (other than employment of
such individuals by the Corporation) by or to, or the sale of products by or to,
or rental of real or personal property from or to, or otherwise requiring cash
payments to or by, any such Person in excess of an aggregate of $1,000.00. For
purposes of this Agreement, a transaction of the type described in this Section
3.18 is sometimes herein referred to as a "Related Transaction".
3.19. Securities Law Compliance.
The Corporation has not offered any Common Stock, or any security or
securities similar to the Common Stock or the Preferred Stock, for sale to, or
solicited any offers to buy any of the foregoing from, or otherwise approached
or negotiated in respect thereof, with any Person or Persons other than a
limited number of institutional or other sophisticated investors deemed to be
"accredited investors" as such term is defined in Rule 501(a) of Regulation D
adopted under the Securities Act and no more than thirty five unaccredited
investors, and in accordance with, the Securities Act.
3.20. No Consent or Approval Required.
Except as provided on Schedule 3.20 attached hereto and for the
filing of any notice subsequent to the Closing that may be required under
applicable federal securities laws (which, if required, shall be filed on a
timely basis as may be so required), no permit, consent, approval or
authorization of, or declaration to, or filing with, any
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Person (governmental or private) is required for the valid authorization,
execution, delivery and performance by the Corporation of the Operative
Documents or for the valid authorization, designation, issuance, sale and
delivery of the Preferred Stock, or the carrying out by the Corporation of the
transactions contemplated hereby.
3.21. Agreements.
a) Except as listed on Schedule 3.21 attached hereto, (x) the
Corporation is not a party to any written or oral contract not made in the
ordinary course of business and (y) whether or not made in the ordinary course
of business, the Corporation is not a party to any written or oral:
(i) contract with any labor union;
(ii) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess
of normal operating requirements;
(iii) contract for the employment of any officer, individual
employee or other person on a full-time basis or any contract
with any person on a consulting basis;
(iv) bonus, pension, profit-sharing, retirement, stock purchase,
stock option, hospitalization, medical insurance or similar
plan, contract or understanding in effect with respect to
employees or any of them or the employees of others;
(v) agreement or indenture relating to the borrowing of money or
to the mortgaging, pledging or otherwise placing of a lien on
any assets of the Corporation;
(vi) guaranty of any obligation for borrowed money or otherwise;
(vii) lease or agreement under which the Corporation is lessee of or
holds or operates any property, real or personal, owned by any
other party;
(viii)lease or agreement under which the Corporation is lessor of or
permits any third party to hold or operate any property, real
or personal, owned or controlled by the Corporation;
(ix) agreement or other commitment for capital expenditures in
excess of $10,000.00;
(x) distributor, dealer, manufacturer's representative or sales
agency agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the
Corporation (except for agreements
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which, in the aggregate, are not material to the business of
the Corporation);
(xi) contract, agreement or commitment under which the Corporation
is obligated to pay any broker's fees, finder's fees or any
such similar fees, to any third party;
(xii) contract, agreement or commitment under which the Corporation
has issued, or may become obligated to issue, any shares of
capital stock of the Corporation, or any warrants, options,
convertible securities or other commitments pursuant to which
the Corporation is or may become obligated to issue any shares
of its capital stock;
(xiii) contract, agreement or commitment under which the Corporation
is obligated to repurchase or otherwise acquire or retire any
shares of its capital stock;
(xiv) contract, agreement or commitment with officers, directors,
employees or shareholder of the Corporation or persons or
entities related to or affiliated with any such persons;
(xv) contract, agreement or commitment relating to product
development;
(xvi) agreements which limit the freedom of the Corporation or its
employees, officers or directors to engage in any area of
business or to compete with any other person or entity; or
(xvii) any other contract, agreement, arrangement or understanding
which is material to the operation of the business of the
Corporation.
The Corporation has furnished to the Purchasers true and correct copies of all
such written agreements and other documents.
b) Except as contemplated by the Operative Documents, no Person has
any right to cause the Corporation to effect the registration under the
Securities Act of any shares of Common Stock, Preferred Stock or any other
securities (including without limitation, debt securities) of the Corporation.
c) Except as provided in Schedule 3.21 attached hereto, the
execution, delivery and performance by the Corporation of the Operative
Documents and the offering, issuance and sale of the Preferred Stock, the
Warrants and the Common Stock issuable upon conversion of the Preferred Stock
and upon the exercise of the Warrants does not and will not conflict with or
result in any violation of, breach of or default under any purchase order issued
by the Corporation for an amount equal to or in excess of $5,000 or any other
contract, obligation or commitment of the Corporation, or any charter provision,
bylaw or corporate restriction of the Corporation, or result in the creation of
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any lien, charge, security interest or encumbrance of any nature upon any of the
properties or assets of the Corporation or violate any instrument, agreement,
judgment, decree, order, statute, rule or governmental regulation applicable to
the Corporation or to which the Corporation is a party or by which it or any of
its properties are bound.
3.22. Brokers.
Except as provided on Schedule 3.22 attached hereto, neither the
Corporation, nor any of its officers, directors, employees or stockholders have
employed any broker or finder in connection with the transactions contemplated
by this Agreement.
3.23. Employee Benefit Plans; Employees.
a) Except as provided on Schedule 3.23 attached hereto, the
Corporation has no employee benefit plans, pension, retirement, deferred
compensation, profit sharing, bonus, incentive, stock option, severance, health,
life, disability, group insurance or other plans, programs or arrangements.
b) No employee of the Corporation will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as a result
of the transactions contemplated hereby.
c) The Corporation is not aware that any officer, director,
executive or management employee of or consultant to the Corporation has any
plans to terminate his relationship with the Corporation. Except as provided in
Schedule 3.23 attached hereto, the Corporation is in compliance with and has
been in compliance with all applicable laws relating to the employment of labor,
including without limitation, provisions relating to wages, laws, equal
opportunity, collective bargaining and the payment of social security and other
taxes. Except as provided on Schedule 3.23 attached hereto, all employees of the
Corporation are engaged on a full-time basis.
3.24. Investment Company Act.
The Corporation is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended.
3.25. Small Business Concern.
The Company represents and warrants to the SBICs that the Company,
taken together with its "affiliates" (as that term is defined in 13 C.F.R.
ss.121.103), is a "Small Business Concern" within the meaning of 15 U.S.C.
ss.662(5), that is Section 103(5) of the Small Business Investment Act of 1958,
as amended (the "Act"), and the regulations thereunder, including 13 C.F.R.
ss.107, and meets the applicable size eligibility criteria set forth in 13
C.F.R. ss.121.301(c)(1) or the industry standard covering the industry in which
the Company is primarily engaged as set forth in 13 C.F.R. ss.121.301(c)(2).
Neither the Company nor any of its subsidiaries presently engages in any
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activities for which a small business investment company is prohibited from
providing funds by the SBIC Act, including 13 C.F.R. ss.107.
3.26. Real Property Holding Corporation.
The Corporation is not a real property holding corporation within
the meaning of Code Section 897(c)(2) and any regulations promulgated
thereunder.
3.27. Disclosure.
Neither this Agreement nor any other written document, certificate,
instrument or statement furnished or made to the Purchasers by or on behalf of
the Corporation in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. There is no fact known to the Corporation which materially adversely
affects the business, properties or financial condition of the Corporation which
has not been set forth in this Agreement or in the other documents,
certificates, instruments or statements furnished to the Purchasers by or on
behalf of the Corporation.
3.28. Year 2000.
The computer systems and software created by the Corporation are
able to accurately process, provide and/or receive date data, including but not
limited to, calculating, comparing and sequencing from, into and between the
twentieth century (through year 1999), the year 2000 and the twenty-first
century including leap year calculations. To the Corporation's knowledge, each
vendor of products or services to the Corporation will continue to furnish its
products or services to the Corporation without interruption or material delay
on and after January 1, 2000. To the Corporation's knowledge, any and all
computer hardware, software, firmware and other product or service furnished by
any vendor to the Corporation, including any and all enhancements, upgrades,
customizations, modifications, maintenance and the like, are able to accurately
process, provide and/or receive date data, including but not limited to,
calculating, comparing and sequencing from into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century
including leap year calculations.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each of the Purchasers, severally and not jointly, represents,
warrants and covenants to the Corporation that:
a) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Shareholders' Agreement have been duly
authorized by all requisite action by the Purchasers and each constitutes the
valid and binding obligation of the Purchasers, enforceable in accordance with
its terms;
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b) it is acquiring the Preferred Stock and Warrants for its own
account, for investment and not with a view to the distribution thereof within
the meaning of the Securities Act;
c) it understands that the Preferred Stock and Warrants have not
been, and will not be, registered under the Securities Act, in each case by
reason of its issuance by the Corporation in a transaction exempt from the
registration requirements of the Securities Act; and that the Preferred Stock
and Warrants must be held by it indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from registration;
d) it understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to it) promulgated under the
Securities Act depends on the satisfaction of various conditions, and that, if
and when applicable, Rule 144 may only afford the basis for sales in limited
amounts;
e) it will not transfer the Preferred Stock or Warrants except in
compliance with the Shareholders' Agreement, the Registration Rights Agreement
and applicable law;
f) it has not employed any broker or finder in connection with the
transactions contemplated by this Agreement;
g) (i) it is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act, and by reason of its business and
financial experience, and the business and financial experience of those persons
retained by it to advise it with respect to its investment in the Preferred
Stock, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment, is able to bear the economic risk of such investment
and, at the present time, is able to afford a complete loss of such investment
and (ii) it is familiar with the business of the Corporation and has had the
opportunity to ask questions of the officers and directors of the Corporation
and to obtain such information about the financial condition of the Corporation
as it has requested; and
h) it is aware that each certificate representing shares of
Preferred Stock or Common Stock issued pursuant to the transactions contemplated
hereby (including upon exercise of Warrants or conversion of Preferred Stock)
shall contain a legend substantially to the effect set forth on Exhibit F
hereto.
SECTION 5. CONDITIONS TO AND DELIVERIES AT CLOSING.
The obligations of each of the Purchasers hereunder are subject to
the satisfaction of the following conditions at or before the Initial Closing;
provided, however, that each of the following conditions may be waived in
writing, in advance, by the approval of each of the Purchasers:
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5.1. Preferred Stock.
The Purchasers shall have received the Preferred Stock to be issued
in connection with such Closing which shall have been duly authorized, issued
and executed by the Corporation. The gross proceeds to the Corporation from the
sale of the Preferred Stock and Warrants at the Initial Closing shall be no less
than $6,875,043.
5.2. Accuracy of Representations and Warranties.
To the Corporation's best knowledge, each representation and
warranty contained in Section 3 and in the Operative Documents shall be true on
and as of such Closing Date with the same effect as though such representation
and warranty had been made on and as of that date.
5.3. Performance.
The Corporation shall have performed and complied with all
agreements and conditions contained in this Agreement and in the Operative
Documents required to be performed or complied with by the Corporation prior to
or at the Closing.
5.4. Corporate Proceedings; Consents, Etc.
All corporate and other proceedings to be taken and all waivers and
consents to be obtained in connection with the transactions contemplated by the
Operative Documents shall have been taken or obtained and all documents incident
thereto shall be satisfactory in form and substance to each of the Purchasers
and to their counsel and each of the Purchasers shall have received all such
originals or certified or other copies of such documents it may reasonably have
requested.
5.5. Certificate of Secretary.
The Purchasers shall have received a certificate of the Secretary of
the Corporation, dated the date of the Closing, to the effect that (i) attached
thereto is a true and complete copy of the Certificate of Incorporation and the
bylaws of the Corporation (as amended through such date) as in effect on the
date thereof, (ii) the Certificate of Incorporation and the bylaws are
sufficient in form and substance to permit the transactions contemplated in the
Operative Documents, (iii) attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors authorizing the execution,
delivery and performance of the Operative Documents, the execution, issuance and
delivery of the Preferred Stock and Warrants, and certifying that such
resolutions are the only resolutions of the Board of Directors with respect to
such matters, (iv) the Corporation is in good standing in reliance on a good
standing certificate from the Secretary of State of the State of Delaware as of
a recent date.
5.6. Shareholders' Agreement and Registration Rights Agreement.
The Shareholders' Agreement and the Registration Rights Agreement
shall have each been executed and delivered by the Corporation and such other
parties
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named therein. In addition, the Corporation and such parties shall have complied
with all of the terms and conditions of the Shareholders' Agreement, including
without limitation, the placement of legends required to be placed on securities
owned by such parties.
5.7. Adverse Proceedings; No Material Adverse Effect.
No suit, action, or other proceeding seeking to restrain, prevent or
change the transactions contemplated hereby, in the Registration Rights
Agreement or in the Shareholders' Agreement or otherwise questioning the
validity or legality of such transactions shall have been instituted and be
pending. No event, occurrence, fact, condition, change, development or effect
shall have occurred, exist or come to exist since March 31, 1999, that,
individually or in the aggregate, has constituted or resulted in or could
reasonably be expected to constitute or result in, a material adverse effect on
the Corporation other than as may be due to a change in general economic
conditions.
5.8. Small Business Administration Documentation.
On or before the closing of the Investment, the SBIC shall have
received from the Company SBA Form 480 (Size Status Declaration) and SBA Form
652 (Assurance of Compliance ) which have been completed and executed by the
Company, and SBA Form 1031 (Portfolio Finance Report), Parts A and B of which
has been completed by the Company (the "SBA Documents").
5.9. Absence of Liens.
The Corporation's business and assets shall be free and clear of all
liens, claims, security interests and encumbrances whatsoever except as set
forth on Schedule 3.9 attached hereto.
5.10. Opinion of Counsel.
The Purchasers shall have received opinions from Rifkin, Livingston,
Xxxxxxx & Silver, LLC and Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Corporation, dated the Closing Date, addressed to the Purchasers, and
satisfactory in form and substance to Purchasers.
5.11. Effectiveness.
The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
5.12. Approvals.
The Board of Directors of the Corporation shall have each duly
approved this Agreement, the Shareholders' Agreement, the Registration Rights
Agreement, the Certificate of Designations, the Warrants and the transactions
contemplated under each of the foregoing, and the Purchasers shall have received
a certificate of an officer of the Corporation certifying the resolutions or the
Board of Directors of the Corporation with respect to such approvals. Any
shareholder approval required in connection with the
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transaction contemplated hereby shall have been obtained, and the Purchasers
shall have received a certificate of an officer of the Corporation certifying
the resolutions of the shareholders of the Corporation with respect to such
approvals.
5.13. Other Matters.
All business and legal due diligence shall have been satisfactorily
completed by each of the Purchasers and their counsel, as determined in each of
the Purchasers' sole discretion. All corporate, legal, governmental,
administrative and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory in substance and form to the
Purchasers, and the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as it may reasonably
request.
SECTION 6. COVENANTS.
6.1 Negative Covenants.
The Corporation will not, without the consent of holders of at least
a majority of the Preferred Stock (other than holders as to which the
Corporation has reasonably withheld its consent to the assignment or transfer of
the benefit of such covenants as contemplated by Section 10.1), from and after
the date hereof:
(i) redeem, purchase or otherwise acquire, or permit any subsidiary
to redeem, purchase or otherwise acquire, any of the Corporation's equity
securities or any securities exercisable for, exchangeable for or
convertible into such equity securities, except to the extent permitted
pursuant to the terms and provisions of the Certificate of Incorporation,
except for redemptions, purchases or acquisitions (i) in connection with
obligations existing on the date hereof under the Shareholders' Agreement
and the Employment Agreement, dated as of February 1, 1999, between the
Corporation and Xxxxx X. Xxxxxx, M.D.; (ii) in connection with delivery of
equity securities or any securities exercisable for, exchangeable for or
convertible into such equity securities of the Corporation upon the
exercise, conversion or exchange of (a) the warrants, options or
convertible securities outstanding on the date hereof ; (b) the Warrants;
(c) the Series A Stock; (d) the Preferred Stock; and (e) warrants issued
to Wyndhurst in connection with the transactions contemplated hereby;
(iii) using available cash of the Corporation in an amount not to exceed
$500,000 in the aggregate; and (iv) purchases financed through issuances
of equity securities or any securities exercisable for, exchangeable for
or convertible into such equity securities of the Corporation at a price
per share of Common Stock (determined on an as converted basis in the case
of any securities exercisable for, exchangeable for or convertible into
such equity securities) not less than the price per share of Common Stock
being paid in conjunction with such redemption, purchase or acquisition;
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(ii) unless approved by the Corporation's board of directors, make,
or permit any subsidiary to make, any loans or advances to, guarantees for
the benefit of, or investments in, any person (other than a wholly-owned
subsidiary), except for (a) advances to employees in the ordinary course
of business and (b) investments having a stated maturity no greater than
one year from the date the Corporation makes such investment in
obligations of the United States government or any agency thereof or
obligations guaranteed by the United States government, certificates of
deposit of commercial banks having combined capital and surplus of at
least $50 million, commercial paper with a rating of at least "Prime-1"
according to Xxxxx'x Investors Service, Inc. or money-market funds with
assets of at least $25 million;
(iii) enter into, or permit any of its subsidiaries to enter into,
any agreement or instrument, which by its terms would restrict the
Corporation's ability to perform any of its obligations pursuant to the
terms of this Agreement, the Registration Rights Agreement, the
Certificate of Incorporation, the Shareholders' Agreement or the Company's
bylaws (including, without limitation, all obligations relating to making
redemptions of the Preferred Stock);
(iv) directly or indirectly, or permit any subsidiary to directly or
indirectly, enter into, amend or terminate any Related Transaction,
without the approval of the Board of Directors of the Corporation, except
for the payment of salary and benefits in the ordinary course of business;
(v) increase the compensation paid to any of the Corporation's
officers, except pursuant to any employment agreement or arrangement as in
existence as of the Closing, or enter into any new or amended employment
agreement or arrangement with any officer of the Corporation, unless such
increase, agreement or arrangement is approved by a majority of the
disinterested members of the Compensation Committee of the Corporation;
-24-
(vi) incur, assume or otherwise suffer to exist any Debt, except (i)
Debt reflected on the Corporation's Recent Balance Sheet and delivered to
the Purchasers in connection with the issuance of the Preferred Stock;
(ii) capitalized lease obligations in an amount not to exceed $500,000 in
the aggregate at any time outstanding; (iii) arising under a bank credit
facility entered into by the Corporation after the date hereof on
commercially reasonable terms in an aggregate amount at any time
outstanding not to exceed $3,000,000; and (iv) each Note (as defined in
the Shareholders' Agreement (for purposes of this Agreement, "Debt" means,
without duplication, (a) all obligations for borrowed money and all
obligations evidenced by bonds, debentures, notes or other similar
instruments on which interest charges are customarily paid, (b) all
obligations, contingent of otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker's acceptances issued
for the account of the Corporation or its subsidiaries, (c) all
capitalized lease obligations (to the extent required by generally
accepted accounting principles to be included on the balance sheets) and
(d) all obligations (contingent or otherwise) to guarantee, purchase or
otherwise acquire, or otherwise assure a creditor against loss in respect
of, Debt of another person);
(vii) sell, lease or exchange, or permit any subsidiary to sell,
lease or exchange, any assets of the Corporation and/or any subsidiary
representing in the aggregate more than 10% of the Company's consolidated
net worth determined in accordance with United States generally accepted
accounting principles consistently applied, except for sales, leases,
exchanges and licenses in the ordinary course of business;
(viii) acquire (including pursuant to a merger or consolidation), or
permit any subsidiary to acquire, all or any substantial portion of the
business or assets of any person, where the acquisition involves an
aggregate consideration of more than $7,500,000, unless after giving
effect to such transaction or series of transactions, the Corporation
would be in compliance with the covenants set forth in this Section 6.1;
(ix) declare, pay or set aside any dividends or distributions on any
class of stock; or
(x) engage in any business or line of business other than the
hosting, development and provision of interactive consumer healthcare
networks, related internet health care business and related electronic
commerce.
6.2 Equity Security Restrictions.
The Corporation will not, without the consent of holders of at least
a majority of the Preferred Stock outstanding, authorize, issue or enter into
any agreement providing for the issuance (contingent or otherwise) of any notes
or debt securities containing equity features (including, without limitation,
any notes or debt securities
-25-
convertible into or exchangeable or exercisable for equity securities, issued in
connection with the issuance of equity securities or containing profit
participation features), or any equity securities (or any securities convertible
into, or exchangeable or exercisable for, any equity securities) ranking senior
as to dividends or upon liquidation to the Preferred Stock.
6.3 Affirmative Covenants.
The Corporation will, and will cause each subsidiary to:
(i) at all times cause to be done all things reasonably necessary to
maintain, preserve and renew its corporate existence and all material
licenses, authorizations and permits necessary to the conduct of its
businesses;
(ii) maintain and keep its properties in good repair, working order
and condition, ordinary wear and tear excepted, and from time to time make
all necessary or desirable repairs, renewals and replacements, so that its
businesses may be properly and advantageously conducted at all times,
except where the failure to so comply would not have a material adverse
effect on the business, assets, financial condition, results of operations
or prospects of the Corporation and its subsidiaries taken as a whole;
(iii) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same become delinquent and
before penalties accrue thereon) and all claims for labor, materials or
supplies which if unpaid might by law become a lien upon any of its
property, to the extent to which the failure to so pay or discharge might
reasonably be expected to have a material adverse effect upon the
business, assets, financial condition, results of operations or prospects
of the Corporation and its subsidiaries taken as a whole, unless and to
the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance
with generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
(iv) comply with all other obligations which it incurs pursuant to
any contract or agreement, whether oral or written, express or implied, as
such obligations become due to the extent to which the failure to so
comply might reasonably be expected to have a material adverse effect upon
the business, assets, financial condition, results of operations or
prospects of the Corporation and its subsidiaries taken as a whole, unless
and to the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance
with generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
-26-
(v) comply with all applicable laws, rules, regulations and orders
of all domestic and foreign governmental authorities, including, without
limitation, the Foreign Corrupt Practices Act and environmental laws or
regulations or requirements, the violation of which might reasonably be
expected to have a material adverse effect upon the business, assets,
financial condition, results of operations or prospects of the Corporation
and its subsidiaries taken as a whole;
(vi) apply for and use its best efforts to continue in force with
responsible insurance companies adequate insurance covering risks of such
types and in such amounts as are customary for corporations of similar
size engaged in similar lines of business and, without limiting the
foregoing, maintain "key man" life insurance covering Xxxxx X. Xxxxxx (so
long as such individual is an employee of the Corporation) and naming the
Corporation as beneficiary in the amount of $1,000,000 for such policy,
the proceeds of which will be available for general corporate purposes of
the Corporation; and
(vii) maintain proper books of record and account which fairly
present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in
each case are required in accordance with generally accepted accounting
principles, consistently applied.
6.4 Compliance with Agreements.
The Corporation will use its best efforts to perform and observe (i)
all of its obligations to each holder of the Preferred Stock and Warrants and
all of its obligations to each holder of the underlying Common Stock and
Preferred Stock set forth in the Certificate of Incorporation (as amended prior
to the Closing) and the Corporation's bylaws and (ii) all of its obligations to
each holder of Registrable Securities set forth in the Registration Rights
Agreement.
6.5 Reservation of Common Stock.
The Corporation will at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the conversion of the Preferred Stock, the number of shares of
Common Stock issuable upon the conversion of all outstanding Preferred Stock.
All shares of Preferred Stock and Common Stock which are so issuable will, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Corporation will take all such actions as may
be necessary to assure that all such shares of Preferred Stock and Common Stock
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of stock may be listed (except for official notice of issuance which will
be promptly transmitted by the Corporation upon issuance).
6.6 Proprietary Information.
-27-
The Corporation will, and will cause each subsidiary to, use its
best efforts to possess and maintain all material Proprietary Information which
the Corporation deems necessary to the conduct of their respective businesses
and own all right, title and interest in and to, or have a valid license or
right for, all material Proprietary Information used by the Corporation or any
subsidiary in the conduct of their respective businesses.
6.7 Public Disclosures.
The Corporation will not, nor will it permit any subsidiary to,
disclose any Purchaser's name or identity as an investor in the Corporation in
any press release or other public announcement or in any document or material
filed with any governmental entity, without the prior written consent of such
Purchaser, unless such disclosure is required by applicable law or governmental
regulations or by order of a court of competent jurisdiction in which case prior
to making such disclosure the Corporation will use reasonable efforts to give
written notice to such Purchaser describing in reasonable detail the proposed
content of such disclosure and will permit such Purchaser to review and comment
upon the form and substance of such disclosure.
6.8 ERISA.
Neither the Corporation nor any subsidiary shall incur any material
liability with respect to retiree medical or death benefits or unfunded benefits
payable after termination of employment. All employee benefit plans and
arrangements maintained or contributed to by the Corporation, any subsidiary or
any ERISA Affiliate shall be maintained in compliance in all material respects
with all applicable law, including any reporting requirements. With respect to
any plan maintained by or contributed to by the Corporation or any subsidiary,
neither the Corporation nor any subsidiary will fail to make any contribution
due from it under the terms of such plan or as required by law. An "ERISA
Affiliate" for purposes of this Section is any trade or business, whether or not
incorporated, which, together with the Corporation, is under common control, as
described in Section 414(b) or (c) of the Code.
6.9 Best Efforts.
The Corporation will take or cause to be taken all actions and make
or cause to be made all filings necessary or appropriate in connection with the
consummation of the transactions contemplated by this agreement and the
performance of the Corporation's obligations hereunder.
6.10 Remedies of Preferred Stock.
(a) If on any date (i) the Corporation shall have breached in any
material respect any of the covenants set forth in Section 6.1(i), (iii), (iv),
(v), (vi), (vii), (viii), (ix) or (x) or Section 6.2 of this Agreement and such
breach continues for a period of 30 days after notice in writing by a majority
in interest of the Purchasers, or (ii) any court or regulatory or administrative
agency shall have issued a judgment or ruling that the Corporation or any
subsidiary is engaged in the practice of medicine and such judgment
-28-
or ruling is reasonably likely to result in a material adverse change in the
financial condition, results of operations, assets, liabilities, business or
prospects of the Corporation and its subsidiaries taken as a whole (each of (i)
and (ii), a "Material Breach"), then, within 15 days of the first such
occurrence, the Corporation shall notify the holders in writing that either (A)
the number of directors constituting the Board of Directors of the Corporation
has been increased by one director (the "Additional Director"), and the holders
of the Preferred Stock, by vote of the holders of a majority of the shares of
Preferred Stock, shall have the right to elect such Additional Director who
shall be in addition to the remaining directors; or (B) the Corporation has
granted to each holder of Preferred Stock the right, at such holder's option
(subject to clause (c) below), exercisable by written notice to the Corporation
within 90 days after written notice by the Corporation of its election under
this clause (B), to require the Corporation to repurchase all, but not less than
all, of its shares of Preferred Stock at a redemption price equal to the greater
of (i) the liquidation value of each such share plus all accrued and unpaid
dividends thereon, and (ii) the Fair Market Value per share. Payment of the
redemption price shall be made by the Corporation within 60 days after the date
of receipt of a written notice of redemption and surrender of the certificates
representing the holder's shares of Preferred Stock at the Corporation's
principal office. In the case of any increase in the size of the Board of
Directors pursuant to this paragraph, the Additional Director shall continue as
director and such additional voting rights shall continue, until such time as
such Material Breach shall have been cured. If any Material Breach shall have
occurred and is continuing more than 180 days after such occurrence or if any
further Material Breach shall occur then, notwithstanding the Corporation's
election of the remedy prescribed in clause (A) above, each holder of Preferred
Stock shall thereafter have the option to exercise the rights prescribed in each
of clauses (A) and (B) above.
(b) The rights of the holders of Preferred Stock under paragraph (a)
shall revest in the event of each and every subsequent Material Breach.
(c) The foregoing rights of holders of Preferred Stock to take any
actions as provided in this Section 6.10 may be exercised only by action of the
holders of a majority of the outstanding shares of Preferred Stock, as the case
may be.
(d) If the funds of the Corporation legally available for redemption
of the shares of Preferred Stock surrendered for redemption are insufficient to
redeem the total number of shares of Preferred Stock surrendered for redemption,
those funds which are legally available will be used to redeem the maximum
possible number of shares of Preferred Stock surrendered for redemption ratably
among the shares of Preferred Stock so surrendered. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
Preferred Stock so surrendered for redemption, such funds will immediately be
used to redeem any such shares of Preferred Stock ratably.
(e) No share of Preferred Stock is entitled to any dividends
declared after the date on which the redemption price of such share is paid. On
such date all rights of
-29-
the holder of such shares will cease, and such shares will not be deemed to be
outstanding.
(f) Any shares of Preferred Stock which are redeemed or otherwise
acquired by the Corporation will be cancelled and will not be reissued, sold or
transferred.
6.11 Notice of Proposals. The Corporation shall notify the
Purchasers promptly of any proposals received by the Corporation or made by the
Corporation with respect to any material business combination transaction and
shall keep the Purchasers informed of the status thereof on a reasonably current
basis.
6.12 Transfers. Prior to a Qualified IPO (as defined in the
Stockholders' Agreement), no Purchaser shall transfer any shares of Preferred
Stock without transferring a pro rata portion of the Warrants held by it.
The covenants set forth in this Section 6 shall expire upon
consummation of a Qualified IPO (as defined in the Shareholders' Agreement).
SECTION 7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
All representations and warranties hereunder shall survive the
Closing for a period of two years and thereafter shall terminate. All statements
contained in any certificate or other instrument delivered by the Corporation or
by an officer on behalf of the Corporation through the date hereof pursuant to
this Agreement, any agreement delivered in connection herewith, or in connection
with the transactions contemplated by this Agreement shall constitute
representations and warranties by the Corporation under this Agreement. All
agreements contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative, and in any event, so long as any
of the shares of Preferred Stock are outstanding.
SECTION 8. ADDITIONAL REMEDIES.
In case any one or more of the representations, warranties,
covenants and/or agreements set forth in this Agreement or any other agreement
executed in connection herewith shall have been breached by the Corporation, and
in case any claim is made against the Corporation by any shareholder that the
securities issued to it by the Corporation were issued in violation of any state
securities or "blue sky" laws, the Corporation agrees to indemnify, defend and
hold the Purchasers harmless from and against all demands, claims, actions or
causes of action, assessments, losses, damages (including, without limitation,
diminution in value), liabilities, costs and expenses (including, without
limitation, interest, penalties, fines, punitive damages and reasonable
attorneys' fees and disbursement), arising out of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or covenants in this Agreement, or in the schedules and
exhibits attached hereto or in any
-30-
documents furnished by or on behalf of the Corporation or such violation of
state securities or "blue sky" laws.
SECTION 9. EXPENSES.
The Corporation shall bear its own expenses and legal fees with
respect to the transactions contemplated by the Operative Documents and shall
pay, and save the Purchasers harmless against all liability for the payment of:
(a) all costs and other expenses incurred in connection with the GE Capital
Equity Investments, Inc.'s due diligence, the preparation of the Operative
Documents and the Corporation's performance of and compliance with all
agreements and conditions contained therein on its part to be performed or
complied with prior to the date hereof, including the fees and disbursements of
counsel to the Purchasers for services rendered in connection therewith up to
$50,000, (b) all costs and other expenses incurred by the Corporation in
connection with delivering to the Purchasers the Preferred Stock, Warrants and
the Common Stock upon conversion or exercise thereof, (c) the fees and
disbursements of one counsel to the Purchasers for services rendered after the
date hereof in connection with (i) any amendment or waiver with respect to any
of the terms or conditions of any of the Operative Documents or (ii) the
enforcement of the rights of the Purchasers pursuant to the terms and conditions
of any of the Operative Documents if such enforcement results from a breach by
the Corporation of any of its obligations under any of the Operative Documents.
The Corporation further agrees that it shall pay, and shall save the Purchasers
harmless from any and all liability with respect to, any stamp, issue or similar
taxes which may be determined to be payable in connection with the execution,
delivery, performance and/or issuance, as the case may be, of the Preferred
Stock, the Warrants or the Common Stock upon conversion or exercise thereof, or
any amendment or waiver of the terms or conditions of any of the Operative
Documents. The Corporation shall reimburse the members of its board of
directors, including any members designated by the holders of the Preferred
Stock, for travel and other out-of-pocket expenses associated with their
services as members of the board of directors, and shall reimburse the
Purchasers for any expenses incurred by Purchasers on behalf of the Corporation.
SECTION 10. ADDITIONAL PROVISIONS.
10.1. Successors and Assigns.
(a) This Agreement shall bind and inure to the benefit of the
Corporation and the Purchasers, and the respective successors, assigns,
transferees, heirs, executors and administrators of the Corporation and the
Purchasers, provided that the covenants in Section 6 shall not inure to the
benefit of any assignee or transferee of a Purchaser if the Corporation has
reasonably withheld its consent (subject to clause (b) of this Section 10.1) to
the assignment or transfer of the benefit of such covenants.
(b) Not less than five (5) days prior to any proposed transfer of
shares of Preferred Stock, the transferring Purchaser shall give written notice
to the Corporation identifying the proposed transferee and the number of shares
proposed to be transferred.
-31-
Unless within five (5) days of the receipt of such notice, the Corporation shall
notify such Purchaser that it does not consent to the assignment or transfer of
the benefit of the covenants in Section 6, the Corporation shall be deemed to
have consented to the assignment or transfer.
10.2. Entire Agreement.
This Agreement (as amended from time to time) and the other writings
referred to herein or delivered pursuant thereto (including all Schedules and
Exhibits hereto) which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
10.3. Notices.
All notices, requests, consents and other communications hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, by
nationally-recognized overnight courier service or by telecopy, receipt
confirmed, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by the addressee to the
addressor listing all parties:
If to the Corporation, to:
XxxxxxxxXxxxxx.xxx, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, M.D.
With copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
And
Rifkin, Livingston, Xxxxxxx & Xxxxxx, XXX
Xxxxxx Xxxxx, Xxxxx 000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
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If to the Purchasers, to:
GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
And:
Xxxxxx-Xxxxxxxxx Capital Focus II, L.P.
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxx
And:
TD Origen Capital Fund, L.P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xx, XX 00000
Attention: J. Xxxxxxx Xxxxxxx
And:
TD Javelin Capital Fund, L.P.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
With copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. xx Xxxx, Esq.
And:
Law Offices of Xxxxxx X. Xxxxxx
Xxx Xxxxxxxxx Xxxxx, Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
All such notices, advises and communications shall be deemed to have
been received (a) in the case of personal delivery or overnight courier service,
on the date
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of such delivery, (b) in the case of telecopy, upon receipt of a confirmation
report, and (c) in the case of mailing, on the third day after the posting
thereof.
10.4. Changes.
The terms and provisions of this Agreement may not be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
except pursuant to the consent of the Corporation and the Purchasers, or their
permitted transferees.
10.5. Counterparts.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
10.6. Headings.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
10.7. Nouns and Pronouns.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the similar
form of names and pronouns shall include the plural and vice-versa.
10.8 Governing Law; Consent to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR INVESTIGATION
IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS),
AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL
BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY
SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS
-34-
CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES
OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.9 Publicity.
Each of the parties hereto agrees that it will make no statement
regarding the transactions contemplated hereby which is inconsistent with any
press release agreed to by the parties hereto. Notwithstanding the foregoing,
each of the parties hereto may, in documents required to be filed by it with any
regulatory body, make such statements with respect to the transactions
contemplated hereby as each may be advised is legally necessary upon advice of
its counsel.
10.10. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.11. Construction.
The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their behalf.
THE CORPORATION:
XXXXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
PURCHASERS:
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
XXXXXX-XXXXXXXXX CAPITAL FOCUS II, L.P.
By: Xxxxxx-Xxxxxxxxx Partners II, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx, Principal
TD ORIGEN CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx, Vice President
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TD JAVELIN CAPITAL FUND, L.P.
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxxx,
Vice President
-37-
Exhibit F
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS (COLLECTIVELY REFERRED TO AS THE
"ACTS") AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THE ACTS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND WITHOUT A VIEW TO
DISTRIBUTION. THE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED EXCEPT
(i) UPON REGISTRATION PURSUANT TO THE ACTS, OR (ii) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE RESPECTIVE REGISTRATION PROVISIONS OF
THE ACTS, UPON RECEIPT BY THE ISSUER OF AN OPINION OF ACCEPTABLE
COUNSEL THAT REGISTRATION UNDER THE ACTS, OR ANY OF THEM, IS NOT
REQUIRED FOR RESALE OR TRANSFER."
-38-
Schedule A
Purchasers
Aggregate
Preferred Common Stock Preferred Purchase
Name and Address Stock Warrants Stock Warrants Price
---------------- ----- -------- -------------- -----
GE Capital Equity 75,551 tbd 25,183 $4,999,965.12
Investments, Inc.
000 Xxxx Xxxxx Xxxx, XX
00000
Stamford
TD Javelin Capital Fund, 4,722 tbd 1,574 $312,501.96
L.P.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
TD Origen Capital Fund, L.P. 4,722 tbd 1,574 $312,501.96
One Technology Center
0000 Xxxxxxxxxx Xxxx., X.X.
Xxxxxxxxxxx, XX 00000
Xxxxxx-Xxxxxxxxx Capital 28,332 tbd 9,444 $1,875,011.70
Focus II, L.P. ------- ---
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
TOTAL: 113,327 37,775 $7,499,980.62
-1-