SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 16, 1999
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HumaScan, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-21015 22-3345046
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
c/o Christopher J.M. Blaxland,
509 County Line Road, Radnor, Pennsylvania 19087
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (610) 971-2346
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125 Moen Avenue, Cranford, New Jersey 07016
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On July 16, 1999, HumaScan Inc. ("HumaScan") entered into an Agreement
and Plan of Reorganization (the "Reorganization Agreement") with Daryl J.
Kollman and Marta C. Kollman (together, the "Kollmans"). The Reorganization
Agreement provides for the exchange ("Exchange") of all of the outstanding
shares of The New Earth Company, Inc. ("Earth Company") and The New Algae
Company, Inc. ("Algae Company" and, together with Earth Company, the
"Companies") for shares of HumaScan common stock and HumaScan preferred stock
that together will represent approximately 92.049% of the outstanding HumaScan
Common Stock (including the HumaScan Common Stock issuable upon conversion of
the HumaScan preferred stock) after the closing of the Exchange.
The following summary of the terms of the Reorganization Agreement and
certain related agreements is qualified in its entirety by the actual
agreements, copies of which are filed as exhibits to this report.
Consideration
Under the terms of the Reorganization Agreement, upon consummation of
the Exchange, the Kollmans will transfer to HumaScan (i) an aggregate of 100
shares of voting common stock and 900 shares of non-voting common stock of Earth
Company and (ii) an aggregate of 100 shares of voting common stock and 900
shares of non-voting common stock of Algae Company, and HumaScan will transfer
to the Kollmans (iii) an aggregate of 13,000,000 shares of common stock of
HumaScan and (iv) an aggregate of 748,507 shares of Series B Preferred Stock
("Preferred Stock") of HumaScan. Each share of Preferred Stock will convert
automatically into 108.520993 shares of HumaScan common stock (an aggregate of
81,228,723 shares) upon the effectiveness of either (i) a reverse stock split of
the HumaScan common stock that would provide a sufficient number of authorized
but unissued shares of HumaScan common stock to allow for the conversion of all
of the Preferred Stock or (ii) an amendment of HumaScan's certificate of
incorporation to provide for a sufficient number of authorized but unissued
shares of HumaScan common stock to allow for the conversion of all of the
Preferred Stock. HumaScan's certificate of incorporation currently authorizes
HumaScan to issue 25,000,000 shares of HumaScan common stock. As of July 16,
1999, HumaScan had outstanding 8,139,070 shares of HumaScan common stock and had
reserved 2,589,107 shares of HumaScan common stock for issuance upon the
exercise of outstanding options and warrants or pursuant to HumaScan's 1996
Stock Incentive Plan. It is anticipated that some time after the Exchange
HumaScan will either effect a reverse stock split or amend its certificate of
incorporation to provide a sufficient number of shares of HumaScan common stock
to permit the conversion of all of the Preferred Stock. Holders of shares of
Preferred Stock also will have voting, dividend and liquidation rights with
respect to such shares equivalent to the voting, dividend and liquidation rights
that a holder of the number of shares of HumaScan common stock into which their
Preferred Stock is convertible would have. Assuming the conversion of all of the
shares of Preferred Stock, the Preferred Stock and the HumaScan common stock to
be issued to the Kollmans together would represent approximately 92.049% of the
outstanding HumaScan common stock.
Management
The following persons will be elected as the directors of HumaScan upon
the closing of the Exchange:
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Marta C. Kollman
Justin Strauss
Donald P. Hateley
Donald M. Anderson
Gerald L. Olson
Christopher J.M. Blaxland
Elizabeth E. Tallett, Christopher J.M. Blaxland, Jack L. Rivkin, John F. Sasen,
Sr., Udi Toledano and Kenneth S. Hollander are currently executive officers
and/or directors of HumaScan. Upon the closing of the Exchange, each of these
persons other than Mr. Blaxland will resign from their positions. Mr. Blaxland
will resign as an executive officer but remain as a director of HumaScan.
Concurrently with the closing of the Exchange, HumaScan will pay
Andromeda Enterprises, Inc. ("Andromeda"), in consideration for its services
rendered to HumaScan in connection with the Exchange, a cash fee of $24,000 (the
"Andromeda Fee") and will issue to Andromeda or its designees warrants to
purchase 1,085,209 shares of HumaScan common stock exercisable at $0.1229 per
share (the "Andromeda Warrants"). Udi Toledano is the president and, with his
wife, owns 100% of Andromeda. Also concurrently with the closing, HumaScan will
issue to Hateley & Hampton or its designees and Wharton Capital Partners, Ltd.
warrants to purchase 3,255,629 shares and 2,897,508 shares, respectively, of
HumaScan common stock exercisable at $0.0069 per share (the "H&H and Wharton
Warrants") and will pay Wharton, in consideration of its services rendered in
connection with the Exchange, a cash fee of $100,000 (the "Wharton Fee"). Donald
P. Hateley is the managing partner of Hateley & Hampton.
Covenants
The Reorganization Agreement contains usual and customary covenants
with respect to the operation of the business of the Companies until the
closing, including the requirements that the Companies conduct their operations
in the normal course, use their best efforts to keep available the services of
the current employees and preserve the current relationships with their
customers and other persons with which they have significant business relations,
permit reasonable access to HumaScan for due diligence purposes, and hold in
confidence all information received from HumaScan, subject to customary
exceptions.
Other specific covenants of the Kollmans include, but are not limited
to, the following: (i) as soon as practicable after the date of the
Reorganization Agreement, the Kollmans are required to deliver to HumaScan a
lien search of each of the Companies and (ii) prior to the closing of the
Exchange, the Kollmans are required to cause the Companies to repay
approximately $1.7 million of indebtedness to certain third parties.
The Merger Agreement also contains covenants of HumaScan to conduct its
business consistent with the goal of consummating the Exchange and terminating
its business operations; permit reasonable access to the Kollmans for due
diligence purposes; and hold in confidence all information received from the
Kollmans, subject to customary exceptions.
Other specific covenants of HumaScan include (i) HumaScan is required
to file an information statement pursuant to Rule 14f-1 under the Securities Act
and mail it to HumaScan's stockholders not less than 10 days prior to the
closing of the Exchange, (ii) as soon as practicable after the date of the
Reorganization Agreement HumaScan is required to deliver to the Kollmans a lien
search of HumaScan, (iii) as soon as practicable after the date of the
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Reorganization Agreement HumaScan is required to file reports on Form 10-KSB for
the year ended December 31, 1998 and on Form 10-QSB for the quarters ended March
31, 1999 and June 30, 1999, and (iv) concurrently with the closing, HumaScan is
required to issue the Andromeda Warrants and the H&H and Wharton Warrants and
pay the Andromeda Fee and the Wharton Fee.
Conditions to the Exchange
The Exchange is subject to a number of conditions, including the
requirement that each of the parties comply with all of the covenants to be
complied with by such party prior to the closing of the Exchange. There are a
number of other usual and customary conditions that must be satisfied before the
Exchange can occur.
Exclusivity
Under the terms of the Reorganization Agreement, the Company cannot,
except in the limited circumstances described below, solicit, institute,
initiate, pursue or enter into any inquiries, discussions, proposals or
negotiations with any person concerning any merger, sale of all the assets,
tender offer, sale of shares of stock or similar transaction involving HumaScan
or disclose, directly or indirectly, any information not customarily disclosed
to the public concerning HumaScan, afford to any other person access to the
properties, books or records of HumaScan, or otherwise assist any person
preparing to make or who has made such an offer, or enter into any agreement
with any third party providing for a business combination transaction, or sale
of all assets of HumaScan.
Notwithstanding the foregoing, in the event that there is an
unsolicited proposal to enter into a merger, business combination, purchase of
substantially all the assets or similar transaction of or with HumaScan,
HumaScan, at its discretion, may furnish to and communicate with the party or
parties public and non-public information requested by them and HumaScan may
negotiate with these parties in good faith in respect of any of these proposals,
if its board of directors determines that the failure to provide information to
or negotiate with the party or parties may constitute a breach of their
fiduciary duties as directors of HumaScan to the stockholders of HumaScan.
HumaScan will give the Kollmans notice of the occurrence of any of the foregoing
events.
Indemnity
Pursuant to the terms of the Reorganization Agreement, the Kollmans, on
the one hand, and HumaScan, on the other hand (each of HumaScan and the Kollmans
(as a group) being referred to herein as an "Indemnitor"), have agreed to
indemnify the other for (i) breach of the representations, warranties and
covenants under the Reorganization Agreement, and (ii) the operation of
HumaScan's business prior to the closing of the Exchange. Any claim for
indemnity must be made prior to the second anniversary of the closing of the
Exchange, except that claims for breach of representations and warranties
relating to environmental, health and safety matters, Year 2000 compliance and
disclosure matters are not subject to any contractual time limitation and claims
relating to tax matters must be made prior to one year after the expiration of
the applicable statute of limitations. No indemnity payment will be made unless
the aggregate of all amounts for which indemnity would otherwise be owed by such
Indemnitor exceeds $250,000, and then, only for amounts in excess of $250,000.
Any indemnification payments made after the closing of the Exchange will be
deemed an adjustment to the consideration paid in the Exchange and will require
the Kollmans to return shares of HumaScan common stock valued at the average of
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the closing prices of the HumaScan common stock for the 30 trading days ending
on the second trading day prior to the date of such indemnification payment.
Termination
The transactions contemplated by the Reorganization Agreement may be
terminated under the following limited circumstances:
1. By mutual written consent of HumaScan and the Kollmans;
2. By either the Kollmans or HumaScan if, without fault of such
terminating party, the Exchange is not consummated on or prior to August 31,
1999; or
3. By either the Kollmans or HumaScan (if the terminating party is not
then in material breach of its obligations under the Reorganization Agreement)
if (i) a material default or breach is made by the other party with respect to
the due and timely performance of any of its obligations contained in the
Reorganization Agreement and such default cannot be cured within a reasonable
period of time, or (ii) if any of the other party's representations and
warranties (a) made without any materiality standard, are not true and correct
in all material respects as of the date the Reorganization Agreement was
executed and as of the closing date or (b) made with any materiality standard,
are not true and correct in all respects as of the date the Reorganization
Agreement was executed and as of the closing date, provided that the
inaccuracies of any such representations or warranties will not give rise to the
right to terminate unless the inaccuracies, taken as a whole, do not reflect and
would not have a material adverse effect on the results of operations, financial
condition, business, assets or prospects of either HumaScan, on the one hand, or
the Companies, on the other hand.
If the Merger Agreement is terminated because there has been a material
default or breach by one of the parties with respect to the due and timely
performance of any of its obligations that cannot be cured within 30 days, or
there has been any breach of any representation or warranty in a material
respect, then the non-terminating party shall, within five days of termination,
pay or reimburse the terminating party for all the documented out-of-pocket
reasonable fees and expenses incurred by the terminating party (including the
reasonable fees and expenses of its counsel, accountants, consultants and
advisors) in connection with the Reorganization Agreement and the transactions
contemplated by the Reorganization Agreement. Unless such termination is with
respect to a breach of a representation or warranty deemed to be made at the
closing (as opposed to upon execution of the Reorganization Agreement) and such
breach was caused by factors within the control of the non-terminating party,
then the terminating party's right to pursue all legal remedies for breach of
contract or otherwise, including damages, will survive such termination
unimpaired.
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Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(a) Financial Statements
The Company will file the required financial statements within
60 days of the last date on which its report on Form 8-K is required to
be filed.
(b) Pro Forma Financial Statements
The Company will file the required pro forma financial
statements within 60 days of the last date on which its report on Form
8-K is required to be filed.
(c) Exhibits
Exhibit Number Description
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2.1 Agreement and Plan of Reorganization,
dated July 16, 1999, among the Company,
Daryl J. Kollman and Marta C. Kollman
(without schedules and exhibits)
3.1 Form of Certificate of Designations,
Preferences and Rights of Series B
Convertible Preferred Stock of the
Company
4.1 Form of warrants to purchase shares of
Common Stock to be issued to Andromeda
Enterprises, Inc. or its designees,
Hateley & Hampton or its designees and
Wharton Capital Partners, Ltd.
27.1 Financial Data Schedule (to be filed by
amendment)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: August 2, 1999 HUMASCAN, INC.
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(Registrant)
/s/ Christopher J.M. Blaxland
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Christopher J.M. Blaxland
Chief Executive Officer and President
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Agreement and Plan of Reorganization, dated July
16, 1999, among the Company, Daryl J. Kollman and
Marta C. Kollman (without schedules and exhibits)
3.1 Form of Certificate of Designations, Preferences
and Rights of Series B Convertible Preferred Stock
of the Company
4.1 Form of warrants to purchase shares of Common Stock
to be issued to Andromeda Enterprises, Inc. or its
designees, Hateley & Hampton or its designees and
Wharton Capital Partners, Ltd.
27.1 Financial Data Schedule (to be filed by amendment)
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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
HUMASCAN INC.
AND
MARTA C. KOLLMAN and
DARYL J. KOLLMAN
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TABLE OF CONTENTS
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ARTICLE I--EXCHANGE OF SHARES; CONSIDERATION......................................................................1
1.1 Transactions....................................................................................1
1.2 Consideration...................................................................................1
1.3 Closing.........................................................................................2
1.4 Delivery of Certificates at the Closing.........................................................2
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS....................................................2
2.1 Organization; Subsidiaries......................................................................2
2.2 Authority; Corporate Action.....................................................................3
2.3 No Conflict: Required Filings and Consents......................................................3
2.4 Capitalization; Ownership of Company Stock......................................................3
2.5 Licenses and Permits; Compliance with Laws......................................................4
2.6 Financial Statements............................................................................4
2.7 Real Property...................................................................................5
2.8 Material Contracts..............................................................................6
2.9 Litigation......................................................................................7
2.10 Taxes; Tax Returns and Audits...................................................................7
2.11 Absence of Certain Changes......................................................................7
2.12 Employee Benefit Plans..........................................................................9
2.13 Labor Relations; Employees......................................................................9
2.14 Insurance Policies; Claims.....................................................................10
2.15 Intellectual Property..........................................................................10
2.16 Personal Properties; Assets....................................................................11
2.17 Brokers........................................................................................11
2.18 Records........................................................................................11
2.19 No Illegal or Improper Transactions............................................................11
2.20 Related Transactions...........................................................................12
2.21 Environmental, Health and Safety Matters.......................................................12
2.22 Year 2000 Compliance...........................................................................12
2.23 Investment Representations.....................................................................13
2.24 Disclosure.....................................................................................13
2.25 HumaScan Shares................................................................................13
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF HUMASCAN..........................................................13
3.1 Organization...................................................................................14
3.2 Authority; Corporate Action....................................................................14
3.3 No Conflict; Required Filings and Consents.....................................................14
3.4 Securities and Exchange Commission Reports; Financial Statements...............................15
3.5 Capitalization.................................................................................16
3.6 Material Contracts; No Operations..............................................................16
3.7 Litigation.....................................................................................16
3.8 Taxes, Tax Returns and Audits..................................................................17
3.9 Employee Benefit Plans.........................................................................17
3.10 Labor Relations................................................................................17
3.11 Personal Properties; Assets....................................................................17
3.12 Bank Accounts..................................................................................18
3.13 Records........................................................................................18
3.14 Environmental, Health and Safety Matters.......................................................18
3.15 Disclosure.....................................................................................18
3.16 Brokers........................................................................................18
3.17 HumaScan Shares................................................................................18
</TABLE>
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ARTICLE IV--COVENANTS OF THE SHAREHOLDERS........................................................................19
4.1 Conduct of Business............................................................................19
4.2 Access to Information; Confidentiality.........................................................21
4.3 No Other Negotiations..........................................................................21
4.4 No Securities Transactions.....................................................................22
4.5 Fulfillment of Conditions......................................................................22
4.6 Disclosure of Certain Matters..................................................................22
4.7 Certain Consents...............................................................................22
4.8 Information for Exchange Act Notice............................................................22
4.9 Company Lien Search............................................................................23
4.10 Repayment of Debt..............................................................................23
4.11 Payment to HumaScan............................................................................23
ARTICLE V--COVENANTS OF HUMASCAN.................................................................................23
5.1 Conduct of Business............................................................................23
5.2 Access to Information; Confidentiality.........................................................25
5.3 No Other Negotiations..........................................................................26
5.4 Fulfillment of Conditions......................................................................26
5.5 Disclosure of Certain Matters..................................................................26
5.6 Consents.......................................................................................27
5.7 Blue Sky Compliance............................................................................27
5.8 Information Statement..........................................................................27
5.9 Cessation of Operations........................................................................27
5.10 Issuance of Warrants, etc......................................................................27
5.11 HumaScan Lien Search...........................................................................27
5.12 Form 10-KSB....................................................................................28
ARTICLE VI--JOINT COVENANTS OF THE PARTIES.......................................................................28
6.1 Further Action.................................................................................28
6.2 Schedules......................................................................................28
6.3 Regulatory and Other Authorizations............................................................28
6.4 Indemnification and Director and Officer Liability Insurance...................................28
6.5 Recapitalization...............................................................................29
6.6 Registration of Shares.........................................................................29
6.7 Survival.......................................................................................29
ARTICLE VII--CONDITIONS TO CLOSING...............................................................................29
7.1 Conditions to Each Party's Obligations.........................................................29
7.2 Conditions to the Obligations of the Shareholders..............................................30
7.3 Conditions to the Obligations of HumaScan......................................................31
ARTICLE VIII--INDEMNIFICATION....................................................................................33
8.1 General Indemnification by the Shareholders....................................................33
8.2 Notice, Etc....................................................................................33
8.3 Adjustment to Consideration; Payment...........................................................34
8.4 Representations and Warranties.................................................................35
8.5 Limitation.....................................................................................35
8.6 Indemnity as Sole Recourse for Certain Breaches................................................35
ARTICLE IX--TERMINATION..........................................................................................35
9.1 Methods of Termination.........................................................................35
9.2 Effect of Termination..........................................................................36
</TABLE>
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ARTICLE X--DEFINITIONS...........................................................................................37
10.1 Certain Defined Terms..........................................................................37
ARTICLE XI--GENERAL PROVISIONS...................................................................................38
11.1 Expenses.......................................................................................38
11.2 Notices........................................................................................38
11.3 Press Release; Public Announcements............................................................39
11.4 Nonwaiver of Rights............................................................................39
11.5 Amendment......................................................................................40
11.6 Headings.......................................................................................40
11.7 Severability...................................................................................40
11.8 Entire Agreement...............................................................................40
11.9 Benefit; Assignment............................................................................40
11.10 Governing Law..................................................................................40
11.11 Counterparts...................................................................................40
</TABLE>
EXHIBITS
Exhibit A--Certificate of Designations
Exhibit B--Form of Warrants
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated July 16, 1999, among
HUMASCAN INC., a Delaware corporation ("HumaScan"), and DARYL J. KOLLMAN and
MARTA C. KOLLMAN, individuals residing at 6707 Amber Avenue, Klamath Falls,
Oregon 97603-4190 (collectively "Shareholders"). Certain capitalized terms used
in this Agreement shall have the meanings specified in Article X.
WHEREAS, the Shareholders are the record and beneficial owners of all
of the outstanding capital stock of The New Earth Company, Inc. ("Earth
Company") and The New Algae Company, Inc. ("Algae Company," together with Earth
Company, the "Companies" and individually a "Company") in the respective amounts
set forth in Schedule 2.4; and
WHEREAS, HumaScan wishes to acquire and the Shareholders wish to
transfer all of the issued and outstanding shares of the Companies ("Shares") to
HumaScan in a transaction intended to qualify as a reorganization within the
meaning of IRC Section 368(a)(1)(B), as amended.
IT IS AGREED:
ARTICLE I
EXCHANGE OF SHARES; CONSIDERATION
1.1 Transactions. Subject to the terms and conditions of this
Agreement, on the Closing Date (as hereinafter defined), the Shareholders shall
transfer, assign and convey to HumaScan all the Shares and HumaScan shall
acquire all the Shares from the Shareholders in exchange for the HumaScan Shares
described in Section 1.2.
1.2 Consideration. The consideration issuable to the Shareholders for
the Shares shall be 13,000,000 shares of HumaScan's common stock, par value $.01
per share ("HumaScan Common Stock"), and 748,507 shares of HumaScan Series B
Preferred Stock ("HumaScan Preferred Stock;" together with the HumaScan Common
Stock, the "HumaScan Shares") with the designations, preferences and rights,
including voting rights, set forth in the Certificate of Designations attached
hereto as Exhibit A ("Consideration"). The Consideration shall be allocated and
delivered to each Shareholder in equal amounts upon delivery to HumaScan of the
certificates representing the Shares held by the Shareholders, together with
executed stock powers (or, if any certificate is lost, an affidavit of lost
certificate and indemnity agreement reasonably satisfactory to HumaScan). The
number of HumaScan Shares constituting the portion of the Consideration issuable
to any Shareholder shall be rounded up or down to the nearest whole number of
shares. The HumaScan Shares shall not be registered under securities laws, will
be issued in a private transaction under exemptions from the registration
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requirements of applicable Federal and state securities laws, and resale thereof
will be subject to restrictions contained in such securities laws.
1.3 Closing. Subject to the terms and conditions of this Agreement, the
consummation of the transactions contemplated by this Agreement shall take place
at a closing ("Closing") to be held at 10:00 a.m., local time, on the third
Business Day after the date on which the last of the conditions to Closing set
forth in Article VII hereof (other than conditions to be satisfied at the
Closing) are fulfilled or waived by the appropriate party, as the case may be,
at the offices of Graubard Mollen & Miller, 600 Third Avenue, New York, New York
10016, or at such other time, date or place as the Parties may agree upon in
writing. The date on which the Closing occurs is referred to herein as the
"Closing Date."
1.4 Delivery of Certificates at the Closing. At the Closing, the
Shareholders shall deliver to HumaScan certificates representing the Shares,
duly executed in form for transfer, not bearing restrictive legends of any
nature other than legends referring to restrictions imposed by Federal and state
securities laws and free and clear of any Liens (as hereinafter defined). At the
Closing, HumaScan shall deliver to the Shareholders the certificates
representing the HumaScan Shares. The certificates for the HumaScan Shares shall
bear the legend set forth in Schedule 1.4 hereof.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, jointly and severally, represents and
warrants to HumaScan that, as of the date hereof:
2.1 Organization; Subsidiaries.
(a) Each Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon. Each
Company is qualified to do business in each state where the nature of the
business it conducts or the properties it owns, leases or operates requires it
to so qualify (which states are listed in Schedule 2.1(a)), except where the
failure to so qualify would not reasonably be expected to have, either singly or
in the aggregate, a material adverse effect on the results of operations,
financial condition, business, assets or prospects of either of the Companies (a
"Company Material Adverse Effect") or materially impair any Shareholder's
ability to consummate the transactions contemplated by this Agreement. Each
Company has all requisite corporate power to own, lease and operate its
properties and to carry on its business as now being conducted.
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(b) Neither Company owns, directly or indirectly, any capital
stock or other securities of any issuer or any equity interest in any other
entity, including any partnership, limited partnership, limited liability
company, business trust, joint venture or any other business entity, and is not
a party to any agreement to acquire any such securities or interest.
2.2 Authority; Corporate Action. Each of the Shareholders has all
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Subject to the terms and conditions hereof, this Agreement
(and the other agreements and instruments contemplated hereby) constitutes the
valid, binding and enforceable obligation of each Shareholder, enforceable
against each such party in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
application now or hereafter in effect affecting the rights and remedies of
creditors and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
2.3 No Conflict: Required Filings and Consents.
(a) The execution and delivery of this Agreement (and the
other agreements and instruments contemplated hereby) by each of the
Shareholders, and the performance by each of the Shareholders of their
respective obligations under this Agreement (and the other agreements and
instruments contemplated hereby), does not (i) conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree applicable to
any Shareholder or the Shares or by which the ability of the Shareholders to
consummate the transactions would be adversely affected as a consequence of such
violation or default, or (ii) except as set forth on Schedule 2.3(a), result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which either Shareholder is a party or by which the Shares are
subject.
(b) The execution and delivery of this Agreement (and the
other agreements and instruments contemplated hereby) by each of the
Shareholders, and the performance of this Agreement (and the other agreements
and instruments contemplated hereby) by each of the Shareholders, does not
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental entity, except compliance with the applicable
requirements, if any, of the Exchange Act (as defined), Securities Act (as
defined), state securities laws, state takeover laws or Nasdaq.
2.4 Capitalization; Ownership of Company Stock. The authorized capital
stock of each Company and the number of issued and outstanding shares of each
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Company are set forth in Schedule 2.4 and the Shareholders are the record and
beneficial owners of all of the outstanding capital stock of each Company, free
and clear of all Liens except as set forth on Schedule 2.4 hereof. There are no
options, warrants, subscriptions, conversion rights or securities exchange
rights or other securities or other contractual rights outstanding which
require, or give any person the right to require, the issuance, delivery or sale
(including a right of conversion or exchange) of any capital stock of the
Companies, whether or not such rights are presently exercisable. There are no
preemptive rights, rights of first refusal or other similar agreements
obligating a Company to offer any shares of its capital stock to any person and
none of the shares of a Company were issued in violation of any such rights.
Except as set forth on Schedule 2.4, no holder of any securities of either
Company (or securities issuable in exchange therefor) has the right to require
any party to register such securities under the Securities Act, either on a
"demand" or a "piggyback" basis.
2.5 Licenses and Permits; Compliance with Laws. Each Company holds all
permits, licenses and approvals (collectively, the "Permits") from all Federal,
state and local governmental authorities necessary for it to own, lease and
operate its properties and to carry on its businesses as now being conducted,
and no such Permit has been rescinded and all such Permits are in full force and
effect, except for such Permits the failure to hold which would not reasonably
be expected to have, either singly or in aggregate, a Company Material Adverse
Effect. The business of each Company is being and has been conducted in
compliance with the Permits and all applicable laws, statutes, ordinances,
regulations, judgments, orders, decrees, concessions, grants and other
authorizations of any governmental authority, except for such failures that
would not reasonably be expected to have, either singly or in the aggregate, a
Company Material Adverse Effect. Neither Company is in default in any respect
under any of such Permits and no event has occurred and no condition exists
which, with the giving of notice, the passage of time, or both, would constitute
a default thereunder, except where such defaults would not reasonably be
expected to have, either singly or in the aggregate, a Company Material Adverse
Effect. Neither the execution and delivery of this Agreement nor any of the
other documents contemplated hereby nor the consummation of the transactions
contemplated hereby nor compliance by each Shareholder with any of the
provisions hereof or thereof will result in any suspension, revocation,
impairment, forfeiture or nonrenewal of any Permit, except for such Permits the
loss or impairment of which would not reasonably be expected to have, either
singly or in the aggregate, a Company Material Adverse Effect. Neither Company
presently provides any services that would require that Company to obtain any
authorization or make any registration in any foreign country.
2.6 Financial Statements.
(a) Attached as Schedule 2.6(a) are the combined financial
statements of the Companies for (i) the year ended December 31, 1998, consisting
of an audited balance sheet, statement of operations, statement of cash flows
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and statement of shareholders' equity, together with a report thereon of
PricewaterhouseCoopers LLP, and (ii) the period from January 1, 1999 through May
31, 1999, consisting of an unaudited balance sheet and statement of operations
(collectively, the "Company Financial Statements"). The Company Financial
Statements, including all related notes and schedules thereto, fairly present in
all material respects the financial position of each Company as at the
respective dates thereof and the results of operations of each Company for the
periods indicated in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved (except
as may be noted therein) and subject, in the case of interim financial
statements, to normal year-end adjustments.
(b) The accounts receivable of each Company reflected on the
balance sheet as at May 31, 1999 (each a "Balance Sheet") included in the
Company Financial Statements have arisen from bona fide transactions and are
reflected on the books and records of the respective Company in accordance with
GAAP. Reserves for any uncollectability of any such accounts receivable have
been established on the books and records of each Company in accordance with
GAAP and are reflected on the respective Balance Sheet. The prepaid items and
deferred charges recorded on the respective Balance Sheet constitute a full and
complete presentation of each and every material prepaid item and deferred
charge which each Company is entitled to list, in accordance with GAAP, as an
asset on such Balance Sheet.
(c) Each Company has no debts, liabilities, commitments or
obligations (including, without limitation, any unasserted claims for which
there are circumstances known or which should reasonably be known to exist by
such Company or any Shareholder that could serve as a basis therefor), absolute
or contingent, liquidated or unliquidated, matured or unmatured, or due or to
become due or otherwise, except for liabilities and obligations (i) reflected as
liabilities on the respective Balance Sheet, or (ii) that have arisen since May
31, 1999, in the ordinary course of business for each Company and not exceeding
$75,000 in the aggregate.
2.7 Real Property. The Companies own the real property set forth on
Schedule 2.7 ("Real Property"). Each Company has good and marketable title in
fee simple absolute to the Real Property, free and clear of all Liens, except as
set forth in Schedule 2.7. The Shareholders have delivered or made available to
HumaScan copies of the deeds and other instruments (as recorded) by which the
Companies acquired the Real Property and copies of all title insurance policies,
opinions, abstracts and surveys in possession of the Companies. All buildings
and structures owned by the Companies on the Real Property lie wholly within the
boundaries of the Real Property and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other person. Schedule 2.7
contains a true, correct and complete list and brief description of all (a) real
property leased or subleased by each Company and (b) other material real
property utilized or accessed by each Company in the operation of its respective
business, including all rights-of-way and easement agreements, all of which
properties are hereinafter referred to as the "Leased Real Property." The
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Shareholders have provided to HumaScan true, correct and complete copies of the
leases other agreements or arrangements under which such Company has the right
to use the Leased Real Property ("Leases") and any sublease to or other similar
agreement or arrangement with any third party with respect to such premises
("Subleases"). The space occupied by each Company is adequate for its current
operations and planned operations through December 31, 2010. Except as set forth
in Schedule 2.7, neither Company has subleased any Leased Real Property to
others. Each Company is in compliance with all of the provisions of its Leases
and Subleases and is not in default thereunder, except where such default or
noncompliance would not have a Company Material Adverse Effect. Each leasehold
interest (i) is valid, subsisting and in full force and effect; and (ii) is not
subject to any Liens (other than collateral assignments of the leases granted
by the landlords thereunder to the extent permitted by the terms of Leases and
which do not interfere with or detract from a Company's use of the property
subject to Leases). There are no facts known to any of the Shareholders which
would prevent any Leased Real Property from being occupied by each Company
immediately after the Closing in substantially the same manner as before. The
execution and delivery of this Agreement, and the performance of the obligations
of each of the Shareholders hereunder, will not constitute a default under any
Lease and do not require the consent of any other party to any Lease except for
consents listed on Schedule 2.3(b), all of which have been obtained, except as
otherwise noted in Schedule 2.3(b).
2.8 Material Contracts.
(a) Schedule 2.8(a) sets forth a complete and correct list of
all agreements of the following types to which either Company is a party or by
which it or the Shares is bound or subject and all or any portion of which are
currently in effect (collectively, the "Material Contracts"): (i) agreements
that would be required to be filed as exhibits to any filings or reports
(collectively, the "Required Reports") made by HumaScan under the Securities Act
or Exchange Act following the Closing; (ii) employment, severance, termination,
consulting and retirement agreements; (iii) loan agreements, indentures, letters
of credit, mortgages, notes and other debt instruments; (iv) other agreements,
including contracts with customers and suppliers, that require aggregate future
payments to or by each Company of more than $50,000; (v) agreements containing
any "change of control" provisions that will be triggered by any of the
transactions contemplated by this Agreement; (vi) agreements, arrangements or
understandings with any director or officer of either Company or with any
Shareholder or with any affiliate of any thereof; (vii) agreements prohibiting a
Company from engaging or competing in any line of business or limiting such
competition; (viii) joint venture, partnership and similar agreements; (ix)
acquisition or divestiture agreements relating to the sale or purchase of assets
or stock of either Company (other than sales of inventory in the ordinary course
of business) or the purchase of assets or stock of any other person (other than
the purchase of inventory, supplies or equipment in the ordinary course of
business); (x) brokerage, finder's or financial advisory agreements; (xi)
guarantees of indebtedness for borrowed money of any person; (xii) material
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licensing and rights arrangements for any Intellectual Property (as defined),
including all licenses of Intellectual Property and any related rights to or
granted by either Company (or any Shareholder); and (xiii) all other agreements
that, individually or together with one or more related agreements, are material
to the assets, financial condition, business or operations of each Company. True
and complete copies of all Material Contracts have been delivered to HumaScan or
made available for inspection. Neither Company is currently, nor has it been
during the past five years, a party to any prime contract, subcontract, basic
ordering agreement, letter contract, arrangement, purchase order, or delivery
order of any kind, including all amendments, modifications, and options
thereunder or relating thereto, given by a party holding itself out as a Federal
or state government or agency, division, subdivision or procuring office or
agent thereof.
(b) All Material Contracts are valid and in full force and
effect and neither Company has (nor does any Shareholder have any knowledge that
any other party thereto has) violated any provision of, or committed or failed
to perform any act which with or without notice, lapse of time or both would
constitute a default under the provisions of, any Material Contract. The
execution and delivery of this Agreement and the performance of the obligations
of each Company hereunder will not constitute a default under any Material
Contract or Lease or Sublease.
2.9 Litigation. Except as set forth on Schedule 2.9, there are no
actions, suits, arbitrations, mediations or other proceedings pending or, to the
knowledge of any of the Shareholders, threatened against either Company at law
or in equity before any court, Federal, state, municipal or other governmental
department or agency or other tribunal nor are there any customer complaints or
other circumstances which could reasonably be expected to serve as a basis for
same. Neither Company nor its property or assets is subject to any order,
judgment, injunction or decree of any court or governmental authority.
2.10 Taxes; Tax Returns and Audits. Each Company has prepared and filed
on a timely basis with all appropriate Federal, state, local and foreign
governmental authorities all returns in respect of Taxes it is required to file
on or prior to the Closing and all such returns completely and accurately set
forth the amount due of any Taxes relating to the applicable period. Each
Company has paid in full all Taxes due on or before the Closing and, in the case
of Taxes accruing on or before the Closing that are not due on or before the
Closing, has established adequate reserves on its books and records and
financial statements (including its Balance Sheet) for such payment in
accordance with GAAP. Each Company has withheld from each payment made to any of
its present or former employees, officers, directors or other party all amounts
required by law to be withheld and has, where required, remitted such amounts
within the applicable periods to the appropriate governmental authorities.
Except as set forth on Schedule 2.10, (i) there are no assessments against
either Company with respect to Taxes that have been issued and are outstanding;
(ii) no governmental authorities have audited or, to the knowledge of each of
the Shareholders, examined either Company in respect of Taxes; (iii) neither
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Company has executed or filed any agreement extending the period of assessment
or collection of any Taxes which has not yet expired by its terms; (iv) neither
Company has received written notification from any governmental authority of its
intention to commence any audit or investigation; and (v) neither Company is a
party to, or bound by, or has any obligation under any Tax sharing or Tax
indemnification agreement, provision or arrangement, whether formal or informal,
and no power of attorney, which is currently in effect, has been granted with
respect to any matter relating to Taxes of such Company. The obligations, if
any, resulting from the tax audit referred to in Schedule 2.10 are personal
obligations of the Shareholders and are not obligations of the Companies.
2.11 Absence of Certain Changes. Except as set forth on Schedule 2.11,
neither Company has, since May 31, 1999:
(a) issued, delivered or agreed to issue any stock, bonds or
other corporate securities (whether authorized and unissued or held in the
treasury), or granted or agreed to grant any options (including employee stock
options), warrants or other rights for the issue thereof;
(b) borrowed or agreed to borrow any funds;
(c) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities incurred in the ordinary course of business and consistent with
prior practice;
(d) made capital expenditures exceeding $25,000 in the
aggregate for each Company;
(e) other than the payments to Donald and Neil Townsend
described in Section 4.10 hereof, discharged or satisfied any obligation or
encumbrance other than ordinary operating expenses and trade payables reflected
on the Balance Sheet, and trade payables and other operating expenses incurred
after May 31, 1999 in the ordinary course of business and consistent with prior
practice, all of which payments have been made in a manner consistent with prior
practice;
(f) failed to pay any payables when due, consistent with
prior practice;
(g) sold, transferred, leased to others or otherwise disposed
of any assets outside of the ordinary course of business or canceled or
compromised any debt or claim, or waived or released any right of substantial
value;
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(h) received any notice of termination or threatened
termination of any Material Contract, Lease, Sublease, Permit or other
agreement, or suffered any damage, destruction or loss (whether or not covered
by insurance), the effect of which would reasonably be expected to have a
Company Material Adverse Effect;
(i) encountered any labor union organizing activity labor
disputes or had any material adverse change in its relations with its employees
or agents, clients or insurance carriers;
(j) made any accrual or arrangement for any payment or any
bonus, or any increase in compensation or any severance or termination payment
to (i) any present or former officer or employee of either Company; or (ii) any
person, firm or corporation which is or was furnishing professional or
consulting services to such Company;
(k) transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, any license or any of
the Intellectual Property used in the businesses or operations of either
Company, or licensed or otherwise transferred or disposed of any of its material
Intellectual Property;
(l) except as set forth in Schedule 2.11(l), declared or made,
or agreed to declare or make, any payment of dividends or distributions of any
assets of any kind whatsoever to any of its Shareholders or any affiliate of any
of its Shareholders, or purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock, or made or agreed to make any payment to any of its
Shareholders or any affiliate of any of its Shareholders, whether on account of
debt, management fees or otherwise;
(m) suffered any material adverse change, in any case or in
the aggregate, in its assets, liabilities, financial condition, results of
operations or business; or
(n) entered into any agreement or made any commitment to take
any of the types of action described in any of the foregoing clauses (other than
clauses (h), (i) or (m)).
2.12 Employee Benefit Plans. Schedule 2.12 sets forth a list of all the
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), programs and arrangements
maintained by each Company for the benefit of any current or former employee,
officer or director of such Company (collectively, the "Company Benefit Plans").
Each Company Benefit Plan intended to be qualified under Sections 401(a) and
501(a) of the Code is the subject of a favorable determination letter from the
Internal Revenue Service that it is so qualified and, to the knowledge of each
Company and each of the Shareholders, nothing has occurred since the date of the
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most recent letter that could reasonably be expected to materially adversely
affect the qualified status of any Company Benefit Plan (other than amendments
to such Company Benefit Plan and changes in applicable law for which the
remedial amendment period has not yet expired). Each Company Benefit Plan has
been operated in all material respects in accordance with the terms and
requirements of applicable law and all required returns and filings for each
Company Benefit Plan have been timely made, except for failures that would not
have a Company Material Adverse Effect. Neither Company nor any other entity
under common control (within the meaning of Section 414(b) or (c) of the Code)
with such Company has incurred any direct or indirect liability under, arising
out of or by operation of Title IV of ERISA in connection with any Company
Benefit Plan and no fact or event exists, to the knowledge of each of the
Shareholders, that could reasonably be expected to give rise to any such
liability. All contributions due and payable on or before the date hereof in
respect of each Company Benefit Plan have been made in full and in proper form.
2.13 Labor Relations; Employees. Neither Company is a party to any
collective bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the employees of such Company. To
the knowledge of each of the Shareholders, there have been no labor
organization activities involving any of the employees of either Company during
the last five years. None of the employees of the Company is subject to an
employment agreement or employment restriction with such Company or, to the
knowledge of each of the Shareholders, with any prior employer, and all
employees of each Company are terminable at will. No employee of either Company
other than a Shareholder has any right or claim (legal, equitable or otherwise)
to receive any Consideration.
2.14 Insurance Policies; Claims. All the insurance policies and bonds
maintained by or on behalf of the Companies are provided by reputable insurers
or issuers, and provide adequate coverage for all normal risks incident to the
businesses of each Company and its assets. No claims have been made against
either Company as a result of allegedly defective products or services or any
alleged libelous, slanderous or defamatory statements or activities and none of
the Shareholders or either of the Companies knows of any circumstances which
could reasonably be expected to give rise to any such claim. No insurance policy
issued to or on behalf of either Company has ever been canceled by the policy
issuer. No issuer of any policy covering either Company or any of its assets,
operations or employees has refused to honor a claim during the past three
years.
2.15 Intellectual Property.
(a) Each Company owns or possesses all right, title and
interest in and to, or a valid and enforceable license or other right to use all
of the Intellectual Property that is used in or necessary to the conduct of the
business of such Company. Schedule 2.15(a) identifies all material Intellectual
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Property that is used or necessary in the conduct of the business of each
Company (including all applications and registrations therefor). Except as
disclosed in Schedule 2.15(a), (i) each Company has the exclusive right to use
its Intellectual Property; (ii) all registrations with respect thereto are in
full force and effect; (iii) all relevant documentation and explanatory
materials relating thereto in reasonable detail has been provided to HumaScan;
and (iv) each Company has taken appropriate and reasonable security measures to
protect the secrecy and confidentiality of such Company's trade secrets and
related Intellectual Property. All Intellectual Property licensed to third
parties is listed on Schedule 2.15(a). Neither Company has infringed,
misappropriated or otherwise violated any Intellectual Property of any other
person and, to the knowledge of each of the Shareholders, no person is
infringing upon any Intellectual Property right of either Company. To the
knowledge of each Shareholder, no circumstances exist which would reasonably
form the basis for any challenge the ownership or other rights to use the
Intellectual Property.
(b) "Intellectual Property" means all patents, patent
applications and patent disclosures; all inventions (whether or not patentable
and whether or not reduced to practice); all registered and unregistered,
statutory and common law trademarks, service marks and service mark rights,
trade dress, trade names and trade name rights, corporate names and domain names
and URLs and all the goodwill associated therewith; all registered and
unregistered, statutory and common law, copyrights; all registrations,
applications and renewals for any of the foregoing; all protocols, codes and
operating systems; and all trade secrets, confidential information, formulae,
compositions, manufacturing and production processes and techniques, research
information, drawings, specifications, design plans, improvements, proposals,
technical and computer data, documentation and software, brand names,
inventions, processes, trade dress, business and product names, industrial
models, designs, methodologies, computer programs (including all source codes),
databases, HTML, Java and related codes, technical information, engineering and
technical drawings, financial business and marketing plans, customer and
supplier lists and related proprietary information, marketing materials and all
other proprietary rights.
2.16 Personal Properties; Assets. Each Company (a) has good and
marketable title to all personal properties and assets used by it in the conduct
of its business (except personal properties sold or otherwise disposed of since
June 1,1999 in the ordinary course of business), and those personal properties
acquired after May 31, 1999 and not thereafter disposed of, free and clear of
all Liens, except (i) statutory Liens securing payments not yet due, (ii) such
imperfections or irregularities of title, claims, Liens, charges, security
interests or encumbrances which do not secure monetary obligations and which do
not materially affect the use or marketability of the personal properties or
assets subject thereto or affected thereby or otherwise materially impair a
Company's business operations or use of such assets and (iii) those Liens
described on Schedule 2.16, and (b) is the lessee of all other personal property
not owned by it reflected on Schedule 2.16. Each lease for such personal
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property that is material to the businesses of a Company is valid without
default thereunder by the lessee or, to the knowledge of each of the
Shareholders, each lessor and each Company is in possession of the personal
property purported to be leased thereunder. The personal properties and assets
of each Company are in good operating condition and repair (ordinary wear and
tear excepted), and constitute all of the personal properties and assets which
are necessary for the businesses and operations of the Company.
2.17 Brokers. Except as set froth on Schedule 2.17, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of each Company or each
Shareholder.
2.18 Records. The books of account, minute books, stock certificate
books and stock transfer ledgers of each Company are complete and correct in all
material respects, and there have been no material transactions involving either
Company of the type typically recorded in such records that have not been
recorded.
2.19 No Illegal or Improper Transactions. Neither Company nor any
officer, director, employee, agent or affiliate of either Company has offered,
paid or agreed to pay to any person or entity (including any governmental
official) or solicited, received or agreed to receive from any such person or
entity, directly or indirectly, any money or anything of value for the purpose
or with the intent of (i) obtaining or maintaining business for the benefit of
such Company, (ii) illegally or improperly facilitating the purchase or sale of
any product or service, or (iii) avoiding the imposition of any fine or penalty,
in any manner which is in violation of any applicable ordinance, regulation or
law.
2.20 Related Transactions. Except for compensation and related
arrangements with employees for services rendered consistent with past practices
and as set forth on Schedule 2.20 hereof, no current or former director,
officer, employee or shareholder of either Company, nor any immediate family
member of any of the foregoing, has been (a) a party to any transaction with
such Company (including, but not limited to, any contract, agreement or other
arrangements providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such director,
officer, employee or Shareholder) entered into since January 1,1996 or which
otherwise have terms that are currently in effect, or (b) the direct or indirect
owner of a one (1%) percent or more equity interest in any corporation, firm,
association or business organization which is a present competitor, supplier or
customer of either Company, nor does any such person receive income from any
source other than a Company which relates to the business of, or should properly
accrue to, such Company.
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2.21 Environmental, Health and Safety Matters.
(a) Each Company is in compliance with Environmental, Health
and Safety Requirements, except for such noncompliance as would not reasonably
be expected to have a Company Material Adverse Effect.
(b) Neither Company has received any written notice, report or
other information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to such Company or its property arising under
Environmental, Health, and Safety Requirements.
2.22 Year 2000 Compliance.
(a) All Information Technology (as defined) created by the
Companies or used in or relied on by the Companies in the conduct of their
businesses has been designed or modified, as the case may be, to record, store,
process and present date/time data (including without limitation, calculating,
comparing and sequencing) from, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000 and leap year calculations, and all
such Information Technology is not reasonably expected to malfunction, cease to
function or provide invalid or incorrect results or degrade in performance as a
result of date/time data, including to the extent that other Information
Technology, when used in combination with Information Technology of such
Company, properly exchanges date/time data with it.
(b) "Information Technology" means electronic data,
communications and other systems utilizing computer hardware, computer software,
computer firmware and other similar or related items including source codes,
operating codes, programs, utilities and other software.
2.23 Investment Representations. Each Shareholder represents as to
him/herself that (i) all HumaScan Shares to be acquired by such Shareholder
pursuant to this Agreement will be acquired for his or her account and not with
a view towards distribution thereof; (ii) he/she must bear the economic risk of
the investment in the HumaScan Shares, which cannot be sold by him/her unless
they are registered under the Securities Act, or an exemption therefrom is
available thereunder; (iii) he/she has had both the opportunity to ask questions
and receive answers from the officers and directors of HumaScan and all persons
acting on HumaScan's behalf concerning the business and operations of HumaScan
and to obtain any additional information to the extent HumaScan possesses or may
possess such information or can acquire it without unreasonable effort or
expense necessary to verify the accuracy of such information; and (iv) he/she
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has reviewed copies of the HumaScan Reports described in Section 3.4. Each
Shareholder acknowledges, as to him/herself, that (a) he/she is either (i) an
"accredited investor" as such term is defined in Regulation D promulgated under
the Securities Act or (ii) a person possessing sufficient knowledge and
experience in financial and business matters to enable it to evaluate the merits
and risks of an investment in HumaScan; and (b) he/she understands that the
certificates representing the HumaScan Shares shall bear legends to the effect
that the HumaScan Shares may not be transferred except upon compliance with (i)
the registration requirements of the Securities Act (or an exemption therefrom)
and (ii) the provisions of this Agreement.
2.24 Disclosure. No representation or warranty by any of the Companies
or the Shareholders contained in this Agreement or any Schedule hereto contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
2.25 HumaScan Shares. The Shareholders acknowledge that the number of
shares of HumaScan Common Stock authorized by its certificate of incorporation
is 25,000,000, which number is insufficient to allow conversion of the HumaScan
Preferred Stock or the warrants to be issued pursuant to Section 5.10 without
the effectuation of the reverse stock split referred to in Section 6.5.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF HUMASCAN
HumaScan represents and warrants to the Shareholders as follows:
3.1 Organization. HumaScan is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
3.2 Authority; Corporate Action. HumaScan has all necessary corporate
power and authority to enter into this Agreement (and the other agreements and
instruments contemplated hereby) and to consummate the transactions contemplated
hereby and thereby. Subject to the completion of the action described in Section
6.5, all corporate action necessary to be taken by HumaScan to authorize the
execution, delivery and performance of this Agreement and all other agreements
and instruments delivered by HumaScan in connection with the transactions
contemplated hereby or thereby has been duly and validly taken and this
Agreement and other agreements and instruments contemplated hereby have been
duly executed and delivered by HumaScan. Subject to the terms and conditions
hereof, this Agreement and the other agreements and instruments contemplated
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hereby constitute the valid, binding and enforceable obligations of HumaScan,
enforceable in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws of general application now or hereafter in
effect affecting the rights and remedies of creditors and by general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
3.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement (and the
other agreements and instruments contemplated hereby) by HumaScan and the
performance thereto of its obligations under this Agreement (and the other
agreements contemplated hereby) will not (i) conflict with or violate its
Certificate of Incorporation or By-laws, (ii) conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree applicable to
HumaScan or by which its properties or assets is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the properties or assets of HumaScan pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which HumaScan is a party
or by which HumaScan or any of its properties or assets is bound or subject,
except, in the case of clauses (ii) and (iii), above, for any such conflicts,
violations, breaches, defaults or other alterations or occurrences that would
not reasonably be expected to have a HumaScan Material Adverse Effect.
(b) The execution and delivery of this Agreement (and the
other agreements and instruments contemplated hereby) by HumaScan does not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental entity, except (i) compliance with the
applicable requirements, if any, of the Exchange Act, Securities Act, state
securities laws or state takeover laws, and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not reasonably be expected to have a HumaScan Material
Adverse Effect.
3.4 Securities and Exchange Commission Reports; Financial
Statements.
(a) Except as set forth in Section 3.4(c), HumaScan has filed
all forms, reports, statements and other documents required to be filed with the
Commission under the Exchange Act since January 1,1998. The Representatives of
the Companies and the Shareholders have had access to, in the same form filed
with the Commission, together with any amendments thereto, copies of HumaScan's
(i) Annual Report on Form 10-K for the year ended December 31, 1997 and all
Quarterly Reports on Form 10-Q filed since January 1,1998, (ii) all proxy
statements relating to meetings of shareholders (whether annual or special)
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since January 1, 1998, (iii) all reports on Form 8-K filed since January 1,1998,
(iv) Form 12b-25 relating to the Annual Report on Form 10-KSB for the year ended
December 31, 1998, and (v) all other reports or registration statements (as of
their respective effective dates) filed by HumaScan since January 1, 1998
(collectively, the "HumaScan Reports"). As of their respective filing dates, the
HumaScan Reports (i) complied as to form in all material respects with the
requirements of the Exchange Act (and applicable rules and regulations
thereunder) and the Securities Act (and applicable rules and regulations
thereunder) and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The financial statements of HumaScan for the nine month
period ended September 30, 1998 (collectively, the "HumaScan Financial
Statements") are contained in the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998. The HumaScan Financial Statements, including all
related notes and schedules thereto, fairly present in all material respects the
consolidated financial position of HumaScan as at the respective dates thereof
and the consolidated results of operations and cash flows of HumaScan for the
periods indicated in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be noted therein) and subject, in
the case of interim financial statements, to normal year-end adjustments. Since
the date of the HumaScan Financial Statements HumaScan has sold substantially
all of its assets and ceased its operations. Attached hereto as Schedule 3.4(b)
is an unaudited balance sheet of HumaScan at December 31, 1998.
(c) HumaScan has not filed its Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998, with the Commission and has not
engaged auditors to audit its financial statements for such fiscal year.
HumaScan has not filed its Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1999.
3.5 Capitalization. The authorized capital stock of HumaScan and the
number of issued shares of each class of capital stock is set forth in Schedule
3.5. Except as set forth on Schedule 3.5, there are no options, warrants,
subscriptions, conversion rights or securities exchange rights or other
securities or other contractual rights outstanding which require, or give any
person the right to require, the issuance, delivery or sale (including right of
conversion or exchange) of any capital stock of HumaScan , whether or not such
rights are presently exercisable. There are no pre-emptive rights, rights of
first refusal or other similar agreements obligating HumaScan to offer any
shares of its capital stock to any person. Except as set forth on Schedule 3.5
no holder of any securities of HumaScan (or securities issuable in exchange
therefor) has the right to require any party to register such securities under
the Securities Act (as defined), either on a "demand" or a "piggyback" basis.
HumaScan does not have outstanding any bonds, debentures, notes or other
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obligations under the terms of which the holders of which have any rights to
vote with the shareholders of HumaScan. HumaScan has reserved 2,589,107 shares
of HumaScan Common Stock for issuance pursuant to stock-based awards (including
employee stock options) that may be made under the HumaScan 1996 Stock Incentive
Plan and other options, warrants and rights to acquire securities of HumaScan
(exclusive of the warrants referred to in Section 5.10 and shares of HumaScan
Common Stock issuable upon conversion of the shares of HumaScan Preferred Stock
to be issued at the Closing). Upon consummation of the transactions contemplated
hereby, effectuation of the reverse stock split referred to in Section 6.5 and
conversion of the HumaScan Preferred Stock to be issued to the Shareholders but
without giving effect to the exercise of the warrants to be issued pursuant to
Section 5.10, the Shareholders will own 92.049% of the shares of HumaScan Common
Stock to be then outstanding.
3.6 Material Contracts; No Operations. Except as set forth in Schedule
3.6, there are no contracts, agreements or other documents required to be filed
with the HumaScan Reports that have not been filed as exhibits thereto under the
Exchange Act ("HumaScan Material Contracts"). Except as set forth on Schedule
3.6, HumaScan is not currently a party to any material contract, agreement or
other arrangement. HumaScan has ceased its operations and the HumaScan Material
Contracts, other than those set forth in Schedule 3.6, have been terminated and
have no further force and effect.
3.7 Litigation. There are no actions, suits, arbitrations, mediations
or other proceedings pending or, to the knowledge of HumaScan, threatened
against HumaScan at law or in equity before any court, Federal, state, municipal
or other governmental department or agency or other tribunal nor are there any
customer complaints or other circumstances which could reasonably serve as a
basis for same. Neither HumaScan nor its property is subject to any order,
judgment, injunction or decree. No claim, action, proceeding or investigation is
pending or, to the best knowledge of HumaScan, threatened against HumaScan which
could impact HumaScan or its assets.
3.8 Taxes, Tax Returns and Audits. HumaScan has (or, in the case of
returns becoming due after the date hereof and on or before the Closing Date,
will have prior to the Closing Date) prepared and filed on a timely basis with
all appropriate Federal, state, local and foreign governmental authorities all
returns in respect of Taxes it is required to file on or prior to the Closing
Date or by such date will have obtained the appropriate extensions to file, and
all such returns completely and accurately (or, in the case of returns becoming
due after the date hereof and on or before the Closing Date, will completely and
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accurately) set forth the amount due of any Taxes relating to the applicable
period. HumaScan has paid (or, in the case of Taxes becoming due after the date
hereof and on or before the Closing Date, will have paid) in full all Taxes due
on or before the Closing Date and, in the case of Taxes accruing on or before
the Closing Date that are not due on or before the Closing Date, HumaScan has or
will have established adequate reserves on its books and records and financial
statements for such payment in accordance with GAAP. HumaScan has withheld from
each payment made to any of its present or former employees, officers, directors
or other party all amounts required by law to be withheld and has, where
required, remitted such amounts within the applicable periods to the appropriate
governmental authorities. In addition, except as set forth on Schedule 3.8, (i)
there are no assessments against HumaScan with respect to Taxes that have been
issued and are outstanding; (ii) no governmental authorities have audited or, to
the knowledge of HumaScan, examined HumaScan in respect of Taxes; (iii) HumaScan
has not executed or filed any agreement extending the period of assessment or
collection of any Taxes which has not yet expired by its terms; (iv) HumaScan
has not received written notification from any governmental authority of its
intention to commence any audit or investigation; and (v) HumaScan is not a
party to or bound by or nor does it have any obligation under any tax sharing or
tax indemnification agreement, provision or arrangement, whether formal or
informal, and no power of attorney, which is currently in effect, has been
granted with respect to any matter relating to Taxes of HumaScan.
3.9 Employee Benefit Plans. HumaScan is not a party to any employee
pension benefit plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and other than the 1996
Stock Incentive Plan, HumaScan has no programs and arrangements maintained for
the benefit of any current or former employee, officer or director.
3.10 Labor Relations. HumaScan is not a party to any collective
bargaining agreement or other contract or agreement with any labor organization
or other representative of any of the employees of HumaScan. To the knowledge of
HumaScan, there have been no labor organization activities involving any of the
employees of HumaScan during the last five years. There are no employment
agreements currently in effect between HumaScan and any employee.
3.11 Personal Properties; Assets. HumaScan (a) has good and marketable
title to all personal property and assets owned by it free and clear of all
Liens, except (i) statutory Liens securing payments not yet due, and (ii) such
imperfections or irregularities of title, claims, Liens, charges, security
interests or encumbrances which do not secure monetary obligations and which do
not materially affect the use or marketability of the personal properties or
assets subject thereto or affected thereby or otherwise materially impair the
use of such assets. The personal properties and assets of HumaScan are in good
operating condition and repair (ordinary wear and tear excepted).
3.12 Bank Accounts. Schedule 3.12 sets forth the name of each bank in
which HumaScan has an account or safe deposit box, vault, lock-box or other
arrangement, the account number and description of each account at each bank and
the names of all persons authorized to draw thereon or to have access thereto;
and the names of all persons, if any, holding tax or other powers of attorney
from HumaScan.
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3.13 Records. The books of account, minute books, stock certificate
books and stock transfer ledgers of HumaScan are complete and correct in all
material respects, and there have been no material transactions involving
HumaScan of the type typically recorded in such records that have not been
recorded.
3.14 Environmental, Health and Safety Matters.
(a) HumaScan is in compliance with Environmental, Health and
Safety Requirements, except for such noncompliance as would not reasonably be
expected to have, either singly or in the aggregate, a HumaScan Material Adverse
Effect.
(b) HumaScan has not received any written notice, report or
other information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to HumaScan or its property arising under Environmental,
Health, and Safety Requirements, the subject of which would reasonably be
expected to have, either singly or in the aggregate, a HumaScan Material Adverse
Effect.
3.15 Disclosure. No representation or warranty by HumaScan contained in
this Agreement or any Schedule hereto, when taken together with the HumaScan
Reports, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.16 Brokers. Except as set forth on Schedule 3.16, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transaction contemplated by this Agreement
based upon arrangements made by or on behalf of HumaScan.
3.17 HumaScan Shares. Upon issuance in accordance with the terms of
this Agreement, the HumaScan Shares will be validly issued, fully paid and
non-assessable; provided that the issuance of shares of HumaScan Common Stock
upon conversion of the HumaScan Preferred Stock and exercise of the warrants
referred to in Section 5.10 is subject to the effectiveness of the transactions
referred to in Section 6.5.
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ARTICLE IV
COVENANTS OF THE SHAREHOLDERS
4.1 Conduct of Business. Each Shareholder covenants and agrees that,
from the date hereof through the Closing Date, except as otherwise set forth in
this Agreement or agreed to by HumaScan in writing, they shall cause each
Company to:
(a) conduct its business only in the ordinary course and in a
manner consistent with the current practice of such business, preserve
substantially intact the business organization of each Company, use its best
efforts to keep available the services of the current employees of each Company
and preserve the current relationships of each Company with customers and other
persons with which a Company has significant business relations, and comply with
all requirements of law, the violation of which would reasonably be expected to
have, either singly or in the aggregate, a Company Material Adverse Effect;
(b) not (i) issue, sell, transfer, dispose of, pledge or
otherwise encumber or grant any rights or interests to others of any kind with
respect to, all or any part of its capital stock, including but not limited to
the issuance of any options, obligations, rights, warrants or other securities
convertible into or exchangeable for its capital stock, or any other class of
securities, whether debt or equity, of any Company or enter into any discussions
or negotiations with any other party to do so; or (ii) amend or otherwise modify
the terms of any such securities, options, obligations, rights or warrants in a
manner inconsistent with the provisions of this Agreement or the effect of which
shall be to make such terms more favorable to the holders thereof.
(c) except as set forth on Schedule 4.1(c), not sell, lease,
transfer, dispose of, pledge or otherwise encumber any of its property or assets
other than consistent with past practices and in the ordinary course of business
or enter into any discussions or negotiations with any other party to do so;
(d) except as set forth on Schedule 4.1(d), not declare any
dividend or make any distribution in cash, securities or otherwise on the
outstanding shares of its capital stock, or directly or indirectly redeem or
purchase any such capital stock;
(e) not, in any manner whatsoever, advance, transfer (other
than in payment for goods received or services rendered in the ordinary course
of business) or distribute to any of the Shareholders or any of their
affiliates, or otherwise withdraw, cash or cash equivalents in any manner
inconsistent with established cash management practices, except to pay existing
obligations of each Company in accordance with their terms;
(f) not make, agree to make or announce any general wage or
salary increase or enter into or amend any employment contract or, unless
provided for by contract executed on or before the date of this Agreement and
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provided to HumaScan, increase the compensation payable or to become payable to
any of its officers or employees or adopt or increase the benefits of any bonus,
insurance, pension or other employee benefit plan, payment or arrangement,
except for those increases, consistent with past practices, normally occurring
as the result of regularly scheduled salary reviews and increases, and except
for increases directly or indirectly required as a result of changes in
applicable law or regulations;
(g) not make any capital expenditures, except in the ordinary
course of business and consistent with past practices;
(h) not propose or adopt any amendments to its Certificate of
Incorporation or By-laws, except as contemplated hereby;
(i) not merge or consolidate with, or acquire all or
substantially all of the assets of, or otherwise acquire any business operations
of, any person or entity or enter into any agreement for any of the foregoing;
(j) not (i) change any of its methods of accounting in effect
at December 31, 1998, or (ii) make or rescind any material, express or deemed
election relating to taxes, settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or change any of its methods of reporting income or
deductions for Federal income tax purposes from those employed in the
preparation of the Federal income tax returns for the taxable year ending
December 31, 1998;
(k) not deviate from past practices or schedules with respect
to the payment of accounts payable or collection of accounts receivable;
(l) not prepay, before the scheduled maturity thereof, any of
its long-term debt, or incur any obligation for borrowed money, whether or not
evidenced by a note, bond, debenture or similar instrument, other than
indebtedness incurred in the ordinary course of business consistent with past
practices;
(m) not enter into or modify in any material respect any
Material Contract, Lease or Permit other than in the ordinary course of
business;
(n) not take any action that will, or could reasonably be
expected to, result in any of its representations and warranties set forth in
this Agreement being inaccurate or in any of the conditions to the transactions
contemplated hereby not being satisfied;
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(o) continue to maintain and service the assets of each
Company consistent with past practice; and maintain insurance policies providing
insurance coverage for its business and the assets of each Company of the kinds,
in the amounts and against the risks as are commercially reasonable for the
businesses and risks covered; and
(p) forebear from agreeing in writing or otherwise to do any
of the foregoing other than the matters referred to in paragraphs (a) and (o).
4.2 Access to Information; Confidentiality.
(a) Between the date of this Agreement and the Closing Date,
the Shareholders shall cause each Company to (i) permit HumaScan and its
Representatives reasonable opportunity to meet with and ask questions of the
appropriate officers of the Companies and grant reasonable access to all of the
books, records, reports and other related materials, offices and other
facilities and properties of each Company; (ii) permit HumaScan and its
Representatives to make such inspections thereof as they may reasonably request;
and (iii) furnish HumaScan and its Representatives with such financial and
operating data (including without limitation the work papers of each Company's
accountants) and other information with respect to each Company as HumaScan may
from time to time reasonably request.
(b) Shareholder shall hold and shall cause his/her
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all terms of
this Agreement and related agreements and all documents and information
concerning HumaScan furnished to them by HumaScan or its Representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
any of the Shareholders, (ii) in the public domain through no fault of any of
the Shareholders or (iii) later lawfully acquired by any of the Shareholders
from another source, which source shall not be the agent of HumaScan or person
under confidentiality obligation to HumaScan) and, except as otherwise required
by applicable law, rule or regulation, none of the Shareholders shall release or
disclose such information to any other person, except its auditors, actuaries,
attorneys, financial advisors, bankers and other consultants and advisors who
need to know same in connection with this Agreement.
4.3 No Other Negotiations. Unless and until this Agreement shall have
been terminated pursuant to its terms, none of the Shareholders or any of their
Representatives shall, directly or indirectly, solicit, institute, initiate,
pursue or enter into any inquiries, discussions, proposals or negotiations with
any person concerning any merger, sale of substantial assets, tender offer, sale
of shares of stock or similar transaction involving a Company or disclose,
directly or indirectly, any information not customarily disclosed to the public
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concerning a Company, afford to any other person access to the properties, books
or records of a Company, or otherwise assist any person preparing to make or who
has made such an offer, or enter into any agreement with any third party
providing for a business combination transaction, equity investment or sale of
significant amount of assets of a Company.
4.4 No Securities Transactions. Neither of the Shareholders shall
engage in any transactions involving the securities of HumaScan prior to the
Closing Date. In addition, each Shareholder covenants that he/she will not sell
or otherwise transfer any HumaScan Shares acquired in this transaction unless
such stock is registered under the Securities Act or an exemption therefrom is
available.
4.5 Fulfillment of Conditions. The Shareholders shall use their best
efforts to fulfill, or cause to be fulfilled, the conditions specified in
Article VII to the extent that the fulfillment of such conditions is within
their control. The foregoing obligation includes taking or refraining from such
actions as may be necessary to fulfill such conditions (including causing each
Company to conduct its business in such manner that on the Closing Date the
representations and warranties concerning the Companies contained herein shall
be accurate as though then made, except as contemplated by the terms hereof).
4.6 Disclosure of Certain Matters. During the period from the date
hereof through the Closing Date, the Shareholders shall give HumaScan prompt
written notice of any event or development that occurs that (a) had it existed
or been known on the date hereof would have been required to be disclosed under
this Agreement, (b) would cause any of the representations and warranties
concerning any of the Companies contained herein to be inaccurate or otherwise
misleading, (c) gives a Shareholder any reason to believe that any of the
conditions set forth in Article VII will not be satisfied, or (d) is of a nature
that is or may be materially adverse to the operations, prospects or condition
(financial or otherwise) of a Company.
4.7 Certain Consents. The Shareholders, in consultation with HumaScan
and its Rep resentatives, shall use their best efforts to obtain consents under
all Material Contracts, Leases and Permits and all other instruments to which
each Company is a party or by which it is bound which require the consent of any
other party or person either by the terms thereof or as a matter of law in
connection with the transactions contemplated hereby.
4.8 Information for Exchange Act Notice. The Shareholders will
cooperate with HumaScan in the preparation of HumaScan's mailing to its
stockholders of an Information Statement pursuant to Rule 14f-1 of the Exchange
Act and furnish to HumaScan all information as HumaScan or its counsel may
reasonably request and that is required or customary for inclusion in the
Information Statement. The Shareholders covenant that all information furnished
by the Shareholders for inclusion in the Information Statement will comply in
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all material respects with the applicable provisions of the Exchange Act and
will not at the time of the mailing of the Information Statement contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein and necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
4.9 Company Lien Search. The Shareholders will as soon as practicable
after the execution of this Agreement, order and provide to HumaScan a lien
search ("Company Lien Search") by a mutually acceptable company of each of the
Companies in respect of Uniform Commercial Code filings, Federal and state tax
lien and judgments, and Federal and state courts (including bankruptcy court) in
each jurisdiction in which the Companies are incorporated and conduct a
substantive portion of their business operations, as listed in Schedule 2.1(a)
which Lien Search will be paid by the Shareholders.
4.10 Repayment of Debt. Prior to the Closing Date, the Shareholders
shall cause the Companies to repay all amounts due to Donald Townsend and Neil
Townsend (collectively the "Townsends") including accrued interest or will
obtain, if required, the written consent of the Townsends to the transactions
contemplated hereby in accordance with the terms of this Agreement. As of the
date hereof, the outstanding obligations owed by the Companies to the Townsends
equal approximately $1.7 million.
4.11 Payment to HumaScan. On the Closing Date, the Shareholders shall
cause the Companies to pay HumaScan $75,000 to reimburse HumaScan for its
expenses in connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF HUMASCAN
5.1 Conduct of Business. HumaScan covenants and agrees that from the
date hereof through the Closing Date HumaScan will conduct its business and
operations consistent with the plan to consummate the transactions contemplated
hereby and terminate the operations of HumaScan, including:
(a) complying with all requirements of law, the violation of
which would reasonably be expected to have, either singly or in the aggregate, a
HumaScan Corporation Material Adverse Effect;
(b) not (i) issuing, selling, transferring, disposing of,
pledging or otherwise encumbering or granting any rights or interests to others
of any kind with respect to, all or any part of its capital stock, including
issuing any options, obligations, rights, warrants or other securities
convertible into or exchangeable for its capital stock, or any other class of
securities, whether debt or equity, of HumaScan other than pursuant to
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outstanding instruments defining the rights of securities holders; or (ii)
amending or otherwise modifying the terms of any outstanding options,
obligations, rights or warrants in a manner inconsistent with the provisions of
this Agreement or the effect of which shall be to make such terms more favorable
to the holders thereof;
(c) not declaring any dividend or making any distribution in
cash, securities or otherwise on the outstanding shares of its capital stock
other than as required by the Certificate of Incorporation, or directly or
indirectly redeeming or purchasing any such capital stock;
(d) not, in any manner whatsoever, advancing, transferring
(other than in payment for goods received or services rendered in the ordinary
course of business) or distributing to any of the shareholders of HumaScan or
any of their affiliates, or otherwise withdrawing, cash or cash equivalents in
any manner inconsistent with established cash management practices, except
paying existing obligations of HumaScan in accordance with their terms;
(e) not making, agreeing to make or announcing any general
wage or salary increase or entering into any employment contract or, unless
provided for by contract executed on or before the date of this Agreement and
provided to the Companies, increasing the compensation payable or to become
payable to any of its officers or employees or adopting or increasing the
benefits of employee bonus, insurance, pension or other employee benefit plan,
payment or arrangement, except as a result of changes in applicable law or
regulations;
(f) not making any capital expenditures;
(g) except as contemplated hereby, not proposing or adopting
any amendments to its Certificate of Incorporation or By-laws;
(h) not merging or consolidating with, or acquiring all or
substantially all of the assets of, or otherwise acquiring any business
operations of, any person or entity or entering into any agreement for any of
the foregoing;
(i) not (i) changing any of its methods of accounting in
effect at December 31, 1998, or (ii) making or rescinding any material, express
or deemed election relating to taxes, settling or compromising any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes, or changing any of its methods of reporting
income or deductions for Federal income tax purposes from those employed in the
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preparation of the Federal income tax returns for the taxable year ended
December 31, 1998;
(j) not deviating from past practices or schedules with
respect to the payment of accounts payable or collection of accounts receivable;
(k) not prepaying, before the scheduled maturity thereof, any
of its long-term debt, or incur any obligation for borrowed money, whether or
not evidenced by a note, bond, debenture or similar instrument, other than
indebtedness incurred in the ordinary course of business consistent with past
practices;
(l) not entering into or modifying in any material respect any
HumaScan Material Contract, other than in the ordinary course of business,
provided HumaScan may enter into and modify its officer and director liability
insurance, including its renewal and/or extension through tail and similar
arrangements;
(m) not taking any action that will, or could reasonably be
expected to, result in any of its representations and warranties set forth in
this Agreement being inaccurate in a manner that would result in a HumaScan
Material Adverse Effect or in any of the conditions to the transactions
contemplated hereby not being satisfied; and
(n) forebearing from agreeing in writing or otherwise to do
any of the foregoing other than the matters referred to in paragraph (a).
Nothing herein shall prohibit HumaScan from selling or assigning, with or
without consideration, its domestic and foreign trademarks and other
intellectual property relating to its discontinued operations.
5.2 Access to Information; Confidentiality.
(a) Between the date of this Agreement and the Closing Date,
HumaScan will (i) permit the Shareholders and their Representatives reasonable
opportunity to meet with and ask questions of the appropriate officers of
HumaScan and grant reasonable access to all the books, records, reports and
other related materials, offices and other facilities and properties of
HumaScan; and (ii) permit the Shareholders and their Representatives to make
such inspections thereof as they may reasonably request; and (iii) furnish the
Shareholders and their Representatives with such financial and operating data
(including without limitation the work papers of HumaScan's accountants) and
other information with respect to HumaScan as the Shareholders may from time to
time reasonably request.
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(b) HumaScan shall hold and shall cause its Representatives to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning any of the Companies or the Shareholders furnished to
them by the Shareholders or their Representatives in connection with the
transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) previously known by HumaScan, (ii) in
the public domain through no fault of HumaScan or (iii) later lawfully acquired
by HumaScan from another source, which source shall not be the agent of any of
the Shareholders or person under confidentiality obligation to any of the
Shareholders and, except as otherwise required by applicable law, rule or
regulation, HumaScan shall not release or disclose such information to any other
person, except its auditors, actuaries, attorneys, financial advisors, bankers
and other consultants and advisors who need to know same in connection with this
Agreement.
5.3 No Other Negotiations.
(a) Unless and until this Agreement shall have been terminated
pursuant to its terms, neither HumaScan nor any of its Representatives shall,
directly or indirectly, solicit, institute, initiate, pursue or enter into any
inquiries, discussions, proposals or negotiations with any person concerning any
merger, sale of all the assets, tender offer, sale of shares of stock or similar
transaction involving HumaScan or disclose, directly or indirectly, any
information not customarily disclosed to the public concerning HumaScan, afford
to any other person access to the properties, books or records of HumaScan, or
otherwise assist any person preparing to make or who has made such an offer, or
enter into any agreement with any third party providing for a business
combination transaction, or sale of all assets of a HumaScan Party.
(b) Notwithstanding Section 5.3(a) to the contrary, in the
event that there is an unsolicited proposal to enter into a merger, business
combination, purchase of substantially all the assets or similar transaction of
or with HumaScan, HumaScan, at its discretion, may furnish to and communicate
with the party or parties public and non-public information requested by them
and HumaScan may negotiate with these parties in good faith in respect of any of
these proposals, if its board of directors determines that the failure to
provide information to or negotiate with the party or parties may constitute a
breach of their fiduciary duties as directors of HumaScan to the shareholders of
HumaScan. Notwithstanding anything herein to the contrary, nothing will prohibit
the board of directors from responding to a tender offer or complying with its
obligations under Rules 14d-9 or 14e-2 of the Exchange Act. HumaScan shall give
the Shareholders prompt notice of the occurrence of any event referred to in
this Section 5.3(b).
5.4 Fulfillment of Conditions. From the date hereof to the Closing,
HumaScan shall use its best efforts to fulfill or cause to be fulfilled the
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conditions specified in Article VIII to the extent that the fulfillment of such
conditions is within their control. The foregoing obligation includes taking or
refraining from such actions as may be necessary to fulfill such conditions
(including conducting the business of HumaScan in such manner that on the
Closing Date the representations and warranties of HumaScan contained herein
shall be accurate as though then made).
5.5 Disclosure of Certain Matters. During the period from the date
hereof through the Closing Date, HumaScan shall give the Shareholders prompt
written notice of any event or development that occurs that (a) had it existed
or been known on the date hereof would have been required to be disclosed under
this Agreement, (b) would cause any of the representations and warranties of
HumaScan contained herein to be inaccurate or otherwise misleading, (c) gives
HumaScan any reason to believe that any of the conditions set forth in Article
VII will not be satisfied, or (d) is of a nature that would result in a HumaScan
Material Adverse Effect.
5.6 Consents. HumaScan, in consultation with the Shareholders, shall
use its best efforts to obtain any necessary consents, if any, of any other
party or person required as a matter of law or otherwise in order to consummate
the transactions contemplated hereby.
5.7 Blue Sky Compliance. HumaScan will make such filings in each
jurisdiction wherein resides a Shareholder as may be necessary under the laws of
such jurisdiction to permit the issuance of the HumaScan Shares hereunder, to
the extent the laws of such jurisdiction permit such issuance.
5.8 Information Statement. HumaScan will mail to its stockholders the
Information Statement described in Section 4.8 hereof in accordance with the
provisions of the Exchange Act.
5.9 Cessation of Operations. Notwithstanding anything to the contrary
contained in Article V or elsewhere in this Agreement, HumaScan shall be
permitted to take any additional action as may be necessary or incidental to
continue the cessation of its operations and shall promptly thereafter give
written notice to the Shareholders of such action.
5.10 Issuance of Warrants, etc. Concurrently with the Closing, HumaScan
shall (i) pay Andromeda, Inc. ("Andromeda"), in consideration for its services
rendered to HumaScan in connection with the transactions contemplated by this
Agreement, a cash fee of $25,000 and shall issue to Andromeda or its designees
warrants to purchase 1,085,209 shares of Common Stock of HumaScan exercisable at
$0.1229 per share in the form of Exhibit B annexed hereto ("Andromeda
Warrants"), (ii) issue to Hateley & Hampton or its designees and Wharton Capital
Partners, Ltd. ("Wharton") warrants to purchase 3,255,629 shares and 2,897,508
shares, respectively, of Common Stock of HumaScan exercisable at $0.0069 per
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share in the form of Exhibit B annexed hereto (the "H&H and Wharton Warrants")
and (iii) pay to Wharton, in consideration for its services rendered in
connection with the transactions contemplated by this Agreement, a cash fee of
$100,000.
5.11 HumaScan Lien Search. HumaScan will, as soon as practicable after
the execution of this Agreement, order and provide to the Shareholders a lien
search ("HumaScan Lien Search") by a mutually acceptable company of HumaScan in
respect of Uniform Commercial Code filings, Federal and state tax lien and
judgments, and Federal and state courts (including bankruptcy court) in each
jurisdiction in which HumaScan is incorporated and conducts a substantive
portion of its business operations, which Lien Search will be paid by HumaScan.
5.12 Form 10-KSB. HumaScan will prepare and file its Annual Report on
form 10-KSB for the fiscal year ended December 31, 1998 and its Quarterly Report
on Form 10-QSB for the periods ended March 31, 1999 and June 30, 1999, as soon
as practicable after the execution of this Agreement.
ARTICLE VI
JOINT COVENANTS OF THE PARTIES
6.1 Further Action. Each of the Parties shall execute all documents and
other instruments and take all further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Upon the terms and subject to the conditions hereof, each of the Parties
shall use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
6.2 Schedules. The Parties shall have the obligation to supplement or
amend the Schedules being delivered concurrently with the execution of this
Agreement and annexed hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules. The obligations of
the Parties to amend or supplement the Schedules being delivered herewith shall
terminate on the Closing Date. Notwithstanding any such amendment or
supplementation, except as otherwise provided herein, the representations and
warranties of the Parties shall be made with reference to the Schedules as they
exist at the time of execution of this Agreement.
6.3 Regulatory and Other Authorizations. The Parties will promptly make
all necessary filings, if any, and use their best efforts to obtain all
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authorizations, consents, orders and approvals of all Federal, state and other
regulatory bodies and officials that are required for the consummation of the
transactions contemplated by this Agreement and will cooperate fully with each
other in connection therewith.
6.4 Indemnification and Director and Officer Liability Insurance.
(a) HumaScan and the Shareholders agree that all rights to
indemnification for acts or omissions occurring prior to the Closing Date now
existing in favor of the current directors and officers of HumaScan as provided
in the certificate of incorporation or bylaws of HumaScan or in any
indemnification agreements shall survive the Closing Date and shall continue in
full force and effect in accordance with their terms.
(b) If after the Closing Date, HumaScan shall cause to be
maintained in effect the policies of directors' and officers' liability
insurance, the policies will cover former officers and directors of HumaScan.
(c) If, after the Closing Date, HumaScan or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns assume the obligations set forth in this Section 6.4.
(d) The provisions of this Section 6.4 are intended to be for
the benefit of, and shall be enforceable by, each indemnified party and his or
her heirs and representatives and shall survive the Closing.
6.5 Recapitalization. As promptly as practicable after the Closing, the
Shareholders will take such actions as are necessary to cause HumaScan to
effectuate a reverse stock split, in the ratio of 1:10.8520933, of the HumaScan
Common Stock, including without limitation the authorization of such stock split
by the Shareholders and the dissemination to the stockholders of HumaScan of
such information with respect thereto as is required by the securities laws of
the United States and General Corporation Law of the State of Delaware.
6.6 Registration of Shares. Promptly after the Closing, the
Shareholders shall cause HumaScan to file with the Commission a registration
statement under the Securities Act to register for sale to the public such
number of authorized but unissued shares of HumaScan Common Stock as are
necessary for HumaScan to meet the "public float" requirements for listing the
HumaScan Common Stock for quotation on Nasdaq. Such registration statement shall
also include the shares issuable upon the conversion of the HumaScan Preferred
Stock to be issued to the Shareholders and the shares of HumaScan Common Stock
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issuable upon exercise of the warrants to be issued pursuant to Section 5.10 and
may include such other shares as the Shareholders determine. The Shareholders
and HumaScan shall use their best efforts to cause such registration statement
to be declared effective by the Commission as soon as practicable after the
effectuation of the reverse split contemplated by Section 6.5.
6.7 Survival. Each representation, warranty, covenant and agreement
made or deemed made by any Party to another under this Agreement shall survive
the Closing, and shall continue in full force and effect until such time as the
obligation to indemnify with respect to such representation, warranty, covenant
or agreement terminates.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Each Party's Obligations. The respective obligations
of each Party to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(a) Directors and Officers of HumaScan. On the Closing
Date the persons listed on Schedule 7.1(a) shall have been elected directors of
HumaScan;
(b) No Governmental Order or Regulation. There shall not be in
effect any order, decree or injunction (whether preliminary, final or
appealable) of a United States Federal or state court of competent jurisdiction,
and no regulation shall have been enacted or promulgated by any governmental
authority or agency, that prohibits consummation of the transactions
contemplated hereby, and no litigation pending or threatened regarding same;
(c) Issuance of Securities. The Andromeda Warrants and the H&H
and Wharton Warrants shall have been issued to Andromeda, Hateley & Hampton and
Wharton, respectively, and Andromeda shall have been paid its $25,000 fee and
Wharton shall have been paid its $100,000 fee; and
(d) Obligations to HumaScan Shareholders. The Board of
Directors of HumaScan has not determined, in good faith and in accordance with
its fiduciary responsibilities to the HumaScan shareholders, after being advised
by outside counsel, to withdraw its recommendation to proceed with the
transactions contemplated hereby.
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7.2 Conditions to the Obligations of the Shareholders. The obligations
of each Shareholder to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations and Warranties; Covenants. Without
supplementation after the date hereof, the representations and warranties of
HumaScan contained in this Agreement shall be, with respect to those
representations and warranties qualified by any materiality standard, true and
correct in all respects, as of the Closing, and with respect to all other
representations and warranties, true and correct in all material respects, as of
the Closing Date, with the same force and effect as if made as of the Closing,
and all the covenants contained in this Agreement to be complied with by
HumaScan on or before the Closing Date shall have been complied with, and the
Shareholders shall have received a certificate of an officer of HumaScan to such
effect; provided, however, that if this condition shall be fulfilled, the
Shareholders shall have no right to terminate this Agreement under Section
9.1(c) if, in the aggregate and taken as a whole, the breach of any of such
representation and warranties or covenants would not result in a HumaScan
Material Adverse Effect;
(b) Legal Opinion. The Shareholders shall have received from
Graubard Mollen & Miller, counsel to HumaScan, a legal opinion addressed to the
Shareholders, dated the Closing Date, opining in all material respects to the
effect of the matters set forth in Sections 3.1, 3.2, 3.3 and 3.17 (except that
the opinions with respect to the matters set forth in Section 3.3(a)(ii) and
(iii) may be to the best of such counsel's knowledge);
(c) Consents. HumaScan shall have obtained and delivered to
the Shareholders all government and private third party consents described in
Sections 5.6 and 6.3 hereto;
(d) No Material Adverse Change; Cessation of Business
Operations. At the Closing, there shall have been no material adverse change in
the assets, liabilities, financial condition or business of HumaScan as of the
date of this Agreement ("HumaScan Material Adverse Change"). Between the date of
this Agreement and the Closing Date, there shall not have occurred an event
which would reasonably be expected to constitute a HumaScan Material Adverse
Effect. On or before the Closing Date, HumaScan shall have terminated its
business operations;
(e) Necessary Proceedings. All proceedings, corporate or
otherwise, to be taken by HumaScan in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and validly
taken, and copies of all documents, resolutions and certificates incident
thereto, duly certified by the officers of HumaScan as of the Closing, shall
have been delivered to the Shareholders; and
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(f) Lien Search. HumaScan shall have provided the HumaScan
Lien Search to the Shareholders.
7.3 Conditions to the Obligations of HumaScan. The obligations of
HumaScan to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Representations and Warranties; Covenants. Without
supplementation after the date hereof, the representations and warranties of the
Shareholders contained in this Agreement shall be, with respect to those
representations and warranties qualified by any materiality standard, true and
correct in all respects, as of the Closing, and with respect to all other
representations and warranties, true and correct in all material respects, as of
the Closing Date, with the same force and effect as if made as of the Closing,
and all the covenants and agreements contained in this Agreement to be complied
with by any of the Shareholders on or before the Closing Date shall have been
complied with, and HumaScan shall have received a certificate of each of the
Shareholders to such effect; provided, however, that if this condition shall be
fulfilled, HumaScan shall have no right to terminate this Agreement under
Section 9.1(b) if, in the aggregate and taken as a whole, the breach of any of
such representation and warranties or covenants would not result in a Company
Material Adverse Effect;
(b) Legal Opinion. HumaScan shall have received from Hateley &
Hampton, P.C., counsel to each of the Shareholders, a legal opinion addressed to
HumaScan, dated the Closing Date, opining in all material respects to the effect
of the matters set forth in Sections 2.1, 2.2, 2.3 and 2.4 (except that the
opinions in Section 2.3(a)(ii) may be to the best of such counsel's knowledge);
(c) Consents. The Shareholders shall have obtained and
delivered to HumaScan all governmental and private third party consents to the
transactions contemplated hereby (as described in Sections 4.7 and 6.3 hereto)
as necessary to ensure the uninterrupted continuation of the Material Contracts,
Leases and Permits;
(d) No Material Adverse Change. Except as provided in this
Agreement, at the Closing, there shall have been no material adverse change in
the assets, liabilities, financial condition or business of Companies as of May
31, 1999 ("Company Material Adverse Change"). Between the date of this Agreement
and the Closing Date, there shall not have occurred an event which would
reasonably be expected to constitute a Company Material Adverse Effect;
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(e) Necessary Proceedings. All actions to be taken by the
Shareholders in connection with the consummation of the transactions
contemplated by this Agreement shall have been duly and validly taken, and
copies of all documents, resolutions and certificates incident thereto, duly
certified by each Shareholder as of the Closing Date, shall have been delivered
to HumaScan;
(f) Release by Shareholders. Each Shareholder shall execute
and deliver to HumaScan a certificate acknowledging and agreeing that, except as
set forth in this Agreement, each Company has no obligation or duty to their
respective Shareholders (or any of its affiliates) now owing or to become due
and that each such Shareholder has no rights with respect to any assets or
securities of the Company;
(g) Lien Search; Coast Loan. The Companies shall have provided
the Company Lien Search to HumaScan and the assets of the Companies shall be
free and clear of all Liens except for Liens granted to Coast Business Credit, a
division of Southern Pacific Bank ("Coast"). The amount owing to Coast shall not
exceed $15,000,000;
(h) Company Shares. The Shares shall be free and clear of all
Liens; and
(i) D&O Insurance. HumaScan shall have obtained a binder for
directors and officers liability insurance having limits at least equal to those
in effect on the date hereof and providing for such insurance to be in effect
for at least one year after the Closing Date.
ARTICLE VIII
INDEMNIFICATION
8.1 General Indemnification by the Shareholders. Subject to the
limitations set forth in Section 8.5, the Shareholders shall jointly and
severally indemnify and hold harmless HumaScan, from and against, and shall
reimburse HumaScan for, any Damages which may be sustained, suffered or incurred
by any of them, whether as a result of any Third Party Claim or otherwise, and
which arise or result from or in connection with or are attributable to (i) the
breach of any of a Shareholder's covenants, representations, warranties,
agreements, obligations or undertakings contained in this Agreement; or (ii) the
operation of Company's business prior to the Closing Date. Claims made for
indemnity hereunder must be made prior to the second anniversary of the Closing
Date, except that with respect to claims arising as a result of a breach of the
representations and warranties in (A) Sections 2.1, 2.2 and 2.4, such claims may
be made without limitation as to time, and (B) Section 2.10, such claims must be
made prior to one year after the expiration of the statute of limitations for
each respective Tax. Any claim for indemnity asserted within the relevant period
shall survive until resolved.
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8.2 Notice, Etc.
(a) Third Party Claims. In the event that HumaScan
("Indemnified Party") becomes aware of a Third Party Claim for which a
Shareholder ("Indemnifying Party") would be liable hereunder, the Indemnified
Party shall give reasonably prompt notice in writing to the Indemnifying Party
of such Claim, identifying the basis for such Claim or demand, and the amount or
the estimated amount thereof to the extent then determinable (which estimate
shall not be conclusive of the final amount of such Claim whether or not the
Claim is a Third Party Claim ("Claim Notice"); provided, however, that any delay
in giving such Claim Notice will not be deemed a waiver of nor result in any
discontinuation of any rights of the Indemnified Party except to the extent the
rights of the Indemnifying Party are actually materially prejudiced by such
delay. The Indemnifying Party may, and upon request of the Indemnified Party
shall, retain counsel (who shall be reasonably acceptable to the Indemnified
Party) to represent the Indemnified Party and shall pay the reasonable fees and
disbursements of such counsel with regard thereto; provided, however, that any
Indemnified Party is hereby authorized, prior to the date on which it receives
written notice from the Indemnifying Party designating such counsel, to retain
counsel, whose fees and expenses shall be at the expense of the Indemnifying
Party, to file any motion, answer or other pleading and take such other action
which it reasonably shall deem necessary to protect its interests or those of
the Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnifying Party. After the Indemnifying Party shall
retain such counsel, the Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (x) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (y) the
named parties of any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not, in
connection with any proceedings or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one such firm for the
Indemnified Party (except to the extent the Indemnified Party retained counsel
to protect its (or the Indemnifying Party's) rights prior to the selection of
counsel by the Indemnifying Party). If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim which the Indemnifying Party
defends. A Third Party Claim may not be settled by the Indemnifying Party
without the prior written consent of the Indemnified Party (which consent will
not be unreasonably withheld) unless, as part of such settlement, the
Indemnified Party shall receive a full and unconditional release; provided,
however, that the Indemnifying Party shall not settle any claim without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld) if such Claim is not exclusively for monetary Damages.
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(b) Direct Claims. In the event any Indemnified Party shall
have a Direct Claim against any Indemnifying Party hereunder, the Indemnified
Party shall send a Claim Notice with respect to such Claim to the Indemnifying
Party.
(c) Books and Records. After delivery of a Claim Notice or
other notification of a claim, so long as any right to indemnification exists
pursuant to this Article VIII, the affected Parties each agree to retain all
books and records related to such Claim. In each instance, the Indemnified Party
shall have the right to be kept fully informed by the Indemnifying Party and its
legal counsel with respect to any legal proceedings. Any information or
documents made available to any Party hereunder and designated as confidential
by the Party providing such information or documents and which is not otherwise
generally available to the public and not already within the knowledge of the
Party to whom the information is provided (unless otherwise covered by the
confidentiality provisions of any other agreement among the Parties hereto, or
any of them), and except as may be required by applicable law, shall not be
disclosed to any third party (except for the representatives of the Party being
provided with the information, in which event the Party being provided with the
information shall request its representatives not to disclose any such
information which it otherwise required hereunder to be kept confidential).
8.3 Adjustment to Consideration; Payment. Any indemnification payments
made hereunder after the Closing Date shall be deemed to be an adjustment to the
Consideration. In payment thereof, the Shareholders shall return to HumaScan,
for cancellation, shares of HumaScan Common Stock valued at the average of the
closing prices of the HumaScan Common Stock, as quoted in the market on which
such shares are traded, for the thirty (30) trading days ending on the second
trading day prior to the day on which such payment is due.
8.4 Representations and Warranties. For purposes of calculating the
amounts payable for a claim of indemnification arising out of a breach of a
representation or warranty made by the Indemnifying Party, the representations
and warranties shall be deemed to have been made without any materiality
qualifications or standards which may be contained in such representation or
warranty.
8.5 Limitation. The Indemnifying Party shall not be required to
indemnify the Indemnified Party hereunder unless the aggregate of all amounts
for which indemnity would otherwise be due to the Indemnified Party against it
exceeds $250,000, and then only for amounts in excess of $250,000. For purposes
of this Section 8.5, the Shareholders shall collectively be considered as a
single Party.
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8.6 Indemnity as Sole Recourse for Certain Breaches. After the Closing
Date, a Party may seek remedy against any other Party with respect to any
representation or warranty hereunder only under and in accordance with the terms
of this Article VIII.
ARTICLE IX
TERMINATION
9.1 Methods of Termination. The transactions contemplated herein may be
terminated and/or abandoned at any time but not later than the Closing:
(a) By mutual written consent of HumaScan and the
Shareholders;
(b) By HumaScan (if it is not then in material breach of its
obligations hereunder) if (i) a material default or breach shall be made by a
Shareholder with respect to the due and timely performance of any of their
covenants and agreements contained herein and such default or breach results or
would result in a HumaScan Material Adverse Effect and such default or breach
cannot be cured within a reasonable period of time, or (ii) if any of the
Shareholders' representations and warranties, (x) made without any materiality
standard, are not true and correct in all material respects as of the date
hereof and as of the Closing Date or (y) made with any materiality standard, are
not true and correct in all respects as of the date hereof and as of the Closing
Date; provided, however, that the inaccuracies of any such representations or
warranties shall not give rise to the right to terminate under this clause (ii)
of this Section 9.1(b)(ii) unless the inaccuracies, in the aggregate and taken
as a whole, do not reflect and would not result in a Company Material Adverse
Effect;
(c) By the Shareholders (if they are not then in material
breach of their obligations hereunder) if (i) a material default or breach shall
be made by HumaScan with respect to the due and timely performance of any of
their covenants and agreements contained herein and such default or breach
results or would result in a HumaScan Material Adverse Effect and such default
or breach cannot be cured within a reasonable period of time, or (ii) if
HumaScan representations and warranties, (x) made without any materiality
standard, are not true and correct in all material respects as of the date
hereof and as of the Closing Date or (y) made with any materiality standard, are
not true and correct in all respects as of the date hereof and as of the Closing
Date, provided, however, that the inaccuracies of any such representations or
warranties shall not give rise to the right to terminate under this clause (ii)
of this Section 9.1(c)(ii) unless the inaccuracies, in the aggregate and taken
as a whole, do not reflect and would not result in a HumaScan Material Adverse
Effect; and
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(d) By HumaScan, if pursuant to Section 7.1(e), the Board of
Directors of HumaScan shall withdraw, modify or change its recommendation so
that it is not in favor of this Agreement or the transactions contemplated
hereby.
(e) By either the Shareholders or HumaScan (if the terminating
Party is not then in material breach of its obligations hereunder) if the
Closing Date has not occurred by August 31, 1999 for any reason unless the
Parties agree to an extension in writing.
9.2 Effect of Termination. In the event of termination by a Party, or
both Parties, pursuant to Section 9.1 hereof, written notice thereof shall
forthwith be given to the other Party and all obligations (except as set forth
in this Section 9.2) of the Parties shall terminate and no Party shall have any
right against the other Party hereto. Notwithstanding the foregoing, if this
Agreement is so terminated by one Party under Section 9.1(b) or (c) above, it is
expressly agreed and understood that the non-terminating party shall, within
five days of termination, pay or reimburse the terminating party for all the
documented out-of-pocket reasonable fees and expenses incurred by the
terminating party (including the reasonable fees and expenses of its counsel,
accountants, consultants and advisors) in connection with this Agreement and the
transactions contemplated hereby, and if such termination is with respect to a
representation or warranty made upon execution of this Agreement or a breach of
a representation or warranty deemed to be made at the Closing and such breach
was caused by factors within the control of the non-terminating party, then the
terminating Party's right to pursue all legal remedies for breach of contract or
otherwise, including, without limitation, Damages relating thereto shall survive
such termination unimpaired. If the transactions contemplated by this Agreement
are terminated and/or abandoned as provided herein:
(a) Each Party hereto will return all documents, work papers
and other material (and all copies thereof) of the other Party, relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the Party furnishing the same; and
(b) All confidential information received by either Party
hereto with respect to the business of the other Party shall be treated in
accordance with Sections 4.2 and 5.2 hereof, which shall survive such
termination or abandonment.
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ARTICLE X
DEFINITIONS
10.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Business Day" means a day of the year on which banks are not
required or authorized to be closed in the City of New York.
"Commission" means the Securities and Exchange Commission.
"Company Material Adverse Effect" means a material adverse
effect on the results of operations, financial conditions, business, assets or
prospects of a Company, or a material impairment of a Shareholders ability to
consummate the transactions contemplated by this Agreement.
"Damages" means the dollar amount of any loss, damage, cost,
expense or liability, including, without limitation, reasonable attorneys' fees
and disbursements incurred by an Indemnified Party in any action or proceeding
between the Indemnified Party and the Indemnifying Party or between the
Indemnified Party and a third party, which is determined (as provided in Article
VIII) to have been sustained, suffered or incurred by a Party and to have arisen
from or in connection with an event or state of facts which is subject to
indemnification under this Agreement; the amount of Damages shall be the amount
finally determined by a court of competent jurisdiction or appropriate
governmental administrative agency (after the exhaustion of all appeals) or the
amount agreed to upon settlement in accordance with the terms of this Agreement.
"Direct CIaim" means a claim by Party against another Party.
"Environmental, Health and Safety Requirements" means all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, as such requirements are enacted and in effect
on or prior to the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"HumaScan Material Adverse Effect" means a material adverse
effect on the financial condition or assets of HumaScan and its subsidiaries,
taken as a whole and considered as one enterprise, or an event that would
materially impair HumaScan's ability to consummate the transactions contemplated
by this Agreement.
"Lien" means any lien, claim, charge, option, security
interest, restriction or encumbrance.
"Party" means HumaScan, on the one hand, and the Shareholders,
on the other hand (collectively, the "Parties").
"Representatives" of either Party means such Party's
employees, accountants, auditors, actuaries, counsel, financial advisors,
bankers, investment bankers and consultants.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" or "Taxes" means all income, gross receipts, sales,
stock transfer, excise, bulk transfer, use, employment, franchise, profits,
property or other taxes, fees, stamp taxes and duties, assessments, levies or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto.
"Third Party Claim" means a claim, demand, suit, proceeding or
action by a person, firm, corporation or government entity other than a Party
hereto or any affiliate of such Party.
ARTICLE XI
GENERAL PROVISIONS
11.1 Expenses. Except as otherwise provided herein, all costs and
expenses, including, without limitation, fees and disbursements of
Representatives, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such costs and
expenses, whether or not the Closing shall have occurred. The Shareholders shall
pay all such expenses incurred by the Companies.
11.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered personally or by facsimile or one day after
delivery to a nationally recognized overnight courier, in each case, to the
Parties at the following addresses or facsimile numbers (or at such other
40
<PAGE>
address or facsimile numbers for a Party as shall be specified by like notice,
except that notices of changes of address shall be effective upon receipt):
(a) If to the Shareholders, as set forth in Schedule 2.4(b)
with a copy to:
Hateley & Hampton
1800 Century Park East - 6th Floor
Los Angeles, CA 90067-1501
Attention: Donald P. Hateley
Facsimile: (310) 229-5799
(b) if to HumaScan:
HumaScan Inc.
c/o Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: Noah Scooler, Esq.
Facsimile: (212) 818-8881
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller, Esq
Facsimile No.: (212) 818-8881
11.3 Press Release; Public Announcements. No Party shall make any
public announcements in respect of this Agreement or the transactions
contemplated herein without prior consultation and approval by the other Party
as to the form and content thereof, which approval shall not be unreasonably
withheld. Notwithstanding the foregoing, HumaScan may make any disclosure which
its counsel advises is required by applicable law or regulation, in which case
HumaScan shall give the Shareholders reasonable advance notice and opportunity
to comment.
11.4 Nonwaiver of Rights. The representations, warranties, covenants
and agreements made or deemed made by any Party to another shall not be affected
or deemed waived by reason of the fact that the other Party or its
Representatives knew or should have known that any such representations,
warranties, covenants or agreement is or might be inaccurate in any respect. Any
furnishing of information by any Party to another pursuant to, or otherwise in
connection with, this Agreement, including, without limitation, any information
contained in any document, contract, book or record of the delivering Party to
which another Party shall have access or any information obtained by, or made
available to, any Party as a result of any investigation made by or on behalf of
41
<PAGE>
such Party prior to or after the date of this Agreement, shall not affect such
Party's right to rely on any representation, warranty, covenant or agreement
made or deemed made by another Party in this Agreement and shall not be deemed a
waiver thereof. Notwithstanding the foregoing, in the event a Party learns prior
to Closing that a representation, warranty or covenant of the other Party is
materially inaccurate, that Party shall have the obligation to notify the other
Party of such inaccuracy.
11.5 Amendment. This Agreement may not be amended or modified except by
an instrument in writing signed by the Parties.
11.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
11.8 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto constitute the entire agreement and supersede any prior agreements
(including any confidentiality agreement) and undertakings, both written and
oral, between any of the Shareholders, Companies and/or HumaScan with respect to
the subject matter hereof.
11.9 Benefit; Assignment. This Agreement shall inure to the benefit of
and be binding upon the Parties and the successors and permitted assigns of the
Parties and, except as otherwise expressly provided herein, are not intended to
confer upon any other person any rights or remedies hereunder. This Agreement is
not assignable by any Party without the express written consent of the other
Parties.
11.10 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law.
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11.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
THE NEXT PAGE IS THE SIGNATURE PAGE
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date first written above.
HUMASCAN INC.
/s/ Christopher Blaxland
By:___________________________________________
Title: President
SHAREHOLDERS:
/s/ Daryl J. Kollman
______________________________________________
Daryl J. Kollman, Shareholder
/s/ Marta C. Kollman
______________________________________________
Marta C. Kollman, Shareholder
44
EXHBIT 3.1
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND
RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK
OF
HUMASCAN INC.
------------------------------------------
Under Section 151 of the General
Corporation Law of the State of Delaware
------------------------------------------
HUMASCAN INC., a Delaware corporation (the "Corporation"), hereby
certifies that, pursuant to the authority vested in the Board of Directors of
the Corporation under ARTICLE FOURTH of the Corporation's Certificate of
Incorporation, and in accordance with Section 151 of the Delaware General
Corporation Law, the Board of Directors has adopted the following resolution
creating the Corporation's Series B Convertible Preferred Stock:
RESOLVED, that a series of preferred stock of the Corporation be hereby
created and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof are as follows:
(1) Designation. Such series shall be designated and known as the
Series B Convertible Preferred Stock (hereinafter called "Series B Preferred
Stock"). Each share of Series B Preferred Stock shall be identical in all
respects with the other shares of Series B Preferred Stock.
(2) Number of Shares. The number of shares of Series B Preferred Stock
shall initially be 800,000 shares, which number from time to time may be
increased or decreased (but not decreased below the number of shares of the
series then outstanding) by the Board of Directors. The Series B Preferred Stock
is not subject to a right of redemption by the Corporation.
(3) Dividends. The holder of the Series B Preferred Stock shall be
entitled to receive dividends on the Series B Preferred Stock equivalent to the
dividends receivable by a holder of the Common Stock of the Corporation holding
that number of shares of common stock of the Corporation, par value $.01 per
share ("Common Stock"), as the number of shares of Series B Preferred Stock held
by the holder thereof are convertible into pursuant to Section (5) hereof.
<PAGE>
(4) Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, then, after all distributions and payments required to be made to
the holders of senior stock (as defined in Section (9) hereof), the holder of
Series B Preferred Stock shall be entitled to be paid such amount as he would
receive had he converted all of his shares of Series B Preferred Stock into
Common Stock at the Conversion Ratio specified in Section (5) hereof. The merger
or consolidation of the Corporation with or into one or more other entities or
the sale, lease or conveyance of all or a part of its assets shall not be deemed
to be a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of the foregoing provisions of this Section (4).
(5) Conversion.
(a) Each share of Series B Preferred Stock shall automatically
be converted ("Mandatory Conversion") into 108.520933 shares of Common Stock
("Conversion Ratio") on the occurrence of any "Recapitalization Event," as
defined in subsection (5)(d). Such Conversion Ratio does not give effect to any
event of the type specified in subsection (5)(b) occurring after the date of
filing of this Certificate of Designations and shall be appropriately adjusted
upon the occurrence of any such event. Each holder of shares of Series B
Preferred Stock, by its acceptance thereof, acknowledges that the Corporation
will not have sufficient shares of authorized but unissued Common Stock to allow
for the conversion thereof into shares of Common Stock prior to the occurrence
of a Recapitalization Event.
(b) The Conversion Ratio of the Series B Preferred Stock and,
accordingly, the number of shares of Common Stock into which the shares of
Series B Preferred Stock shall be converted shall be subject to adjustment from
time to time as follows. In case the Corporation shall (i) subdivide or split
its outstanding shares of Common Stock into a larger number of shares by
recapitalization, reclassification or split-up thereof, or by issuance of shares
of Common Stock as a dividend or distribution on the Common Stock, or (ii)
combine its outstanding shares of Common Stock into a smaller number of shares
by reverse stock split (including any reverse stock split which constitutes a
Recapitalization Event), recapitalization, reclassification or combination
thereof, the Conversion Ratio in effect immediately prior thereto shall be
adjusted so that the holder of any shares of Series B Preferred Stock thereafter
shall be entitled to receive upon such conversion, after the happening of any of
such events, the same number of shares of Common Stock as such holder would have
received had such shares of Series B Preferred Stock been converted immediately
prior to the happening of such event.
(c) Whenever the number of shares of Common Stock deliverable
upon the conversion of each share of Series B Preferred Stock shall be adjusted
pursuant to the provisions of subsection (5)(b), the Corporation shall promptly
(i) file with the transfer agent, if any, for the shares of Series B Preferred
Stock, a certificate, signed by the Chairman of the Board or the President or a
Vice President of the Corporation, and (ii) mail, or cause the transfer agent to
mail, to each holder of shares of Series B Preferred Stock, at its last address
as it shall appear upon the stock records of the Corporation, a notice setting
forth in each case, the increased or decreased number of shares of Common Stock
thereafter deliverable upon the conversion of each share of Series B Preferred
Stock. The certificate filed with the transfer agent shall show, in addition, in
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<PAGE>
reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based.
(d) As used herein, the term "Recapitalization Event" means
either (i) the effectiveness of a reverse stock split of the Common Stock which
will provide a sufficient number of authorized but unissued shares of Common
Stock to allow for the conversion of all outstanding shares of Series B
Preferred Stock, after giving effect to such stock split, into Common Stock or
(ii) the effectiveness of an amendment to the Corporation's Certificate of
Incorporation to provide for a sufficient number of authorized but unissued
shares of Common Stock to be issued upon conversion of all outstanding shares of
Series B Preferred Stock. Shares of Series B Preferred Stock shall be deemed to
have been converted on the date such Mandatory Conversion occurs, and the person
entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes, including, but not limited to, with respect to the
right to vote the Common Stock, as the record holder of such Common Stock on
such date.
(6) Voting Rights. Each holder of shares of Series B Preferred Stock
shall be entitled to vote on all matters on which the holders of shares of
Common Stock are entitled to vote and, in connection therewith, to cast that
number of votes equivalent to the number of shares of Common Stock into which
the shares of Series B Preferred Stock held by such holder are convertible
pursuant to Section (5) hereof. Each holder of Series B Preferred Stock shall
also be entitled to vote as provided herein and as required by applicable law.
(7) Preemptive Rights. Holders of shares of Series B Preferred Stock
shall, as such, have no preemptive right to purchase or otherwise acquire shares
of any class of stock or other securities of the Corporation now or hereafter
authorized.
(8) Junior and Parity Stock. As used herein with respect to Series B
Preferred Stock the following terms shall have the following meanings:
(a) The term "parity stock" shall mean any class of stock of
the Corporation hereafter authorized which expressly states that it ranks on a
parity with the Series B Preferred Stock in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
(b) The term "junior stock" shall mean the Corporation's
Common Stock and any other class of stock of the Corporation hereafter
authorized over which the Series B Preferred Stock is expressly stated as having
a preference or priority in the payment of dividends or in the distribution of
assets on any liquidation, dissolution or winding up of the Corporation.
(9) Senior Stock. The term "senior stock" shall mean the Corporation's
Series A Preferred Stock and any other class of preferred stock or capital stock
which may be hereafter authorized by the Corporation unless such stock is
expressly made junior stock or parity stock by the terms of its designation. So
long as any shares of Series B Preferred Stock are outstanding, the Corporation
shall not, without the consent of the holders of all outstanding shares of
Series B Preferred Stock, issue any Series A Preferred Stock or authorize a new
class or series of senior stock.
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<PAGE>
(10) Amendment. The provisions of this Certificate may be amended upon
the affirmative vote or written consent of the holders of the Common Stock, to
the extent required by law, and upon the affirmative vote or written consent of
the holders of all outstanding shares of Series B Preferred Stock.
IN WITNESS WHEREOF, HUMASCAN INC. has caused this Certificate
of Designations to be duly executed by its President and attested to by its
Secretary, who affirm that the information contained in the foregoing
Certificate of Designations is true under the penalties of perjury this ___ day
of ______ 1999.
HUMASCAN INC.
By: ______________________________________
Name:
Title: President
Attested to by: __________________________________
Name:
Title: Secretary
4
EXHIBIT 4.1
EXHIBIT B
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN
THIS WARRANT EXCEPT AS HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, _________ ____, 2004
WARRANT
For the Purchase of
_________________ Shares of Common Stock
of
HUMASCAN INC.
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and
valuable consideration, duly paid by or on behalf of ("Holder"), as registered
owner of this Warrant, to HUMASCAN INC. ("Company"), Holder is entitled, at any
time or from time to time at or after __________ ___, 1999 ("Commencement
Date"), and at or before 5:00 p.m., Eastern Time ____________ ___, 2004
("Expiration Date"), but not thereafter, to subscribe for, purchase and receive,
in whole or in part, up to _____________________________________________________
(_______) shares of Common Stock of the Company, $0.01 par value ("Common
Stock"). If the Expiration Date is a day on which banking institutions are
authorized by law to close, then this Warrant may be exercised on the next
succeeding day which is not such a day in accordance with the terms herein.
During the period ending on the Expiration Date, the Company agrees not to take
any action that would terminate the Warrant. This Warrant is initially
exercisable at $______ per share of Common Stock purchased; provided, however,
that upon the occurrence of any of the events specified in Section 6 hereof, the
rights granted by this Warrant, including the exercise price and the number of
shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified. The term "Exercise Price" shall mean the initial exercise
price or the adjusted exercise price, depending on the context, of a share of
Common Stock. The term "Securities" shall mean the shares of Common Stock
issuable upon exercise of this Warrant.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. If the subscription rights represented hereby shall
not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire. The Holder acknowledges that
on the date of issuance of this Warrant the Company does not have sufficient
<PAGE>
authorized but unissued shares of Common Stock to allow for the exercise of this
Warrant, which may not be exercised until the effectuation of the reverse stock
split referred to in Section 7.
2.2 Legend. Each certificate for Securities purchased under this
Warrant shall bear a legend as follows, unless such Securities have been
registered under the Securities Act of 1933, as amended ("Act"):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act and applicable state law."
2.3 Conversion Right.
2.3.1 Determination of Amount. In lieu of the payment of the
Exercise Price in cash, the Holder shall have the right (but not the obligation)
to convert this Warrant, in whole or in part, into Common Stock ("Conversion
Right"), as follows: upon exercise of the Conversion Right, the Company shall
deliver to the Holder (without payment by the Holder of any of the Exercise
Price) that number of shares of Common Stock equal to the quotient obtained by
dividing (x) the "Value" (as defined below) of the portion of the Warrant being
converted at the time the Conversion Right is exercised by (y) the Market Price.
The "Value" of the portion of the Warrant being converted shall equal the
remainder derived from subtracting (a) the Exercise Price multiplied by the
number of shares of Common Stock being converted from (b) the Market Price of
the Common Stock multiplied by the number of shares of Common Stock being
converted. As used herein, the term "Market Price" at any date shall be deemed
to be the last reported sale price of the Common Stock on such date, or, in case
no such reported sale takes place on such day, the average of the last reported
sale prices for the immediately preceding three trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or if any such exchange
on which the Common Stock is listed is not its principal trading market, the
last reported sale price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through the Nasdaq National Market or SmallCap Market,
or, if applicable, the OTC Bulletin Board, or if the Common Stock is not listed
or admitted to trading on any of the foregoing markets, or similar organization,
as determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it.
2.3.2 Exercise of Conversion Right. The Conversion Right may
be exercised by the Holder on any business day on or after the Commencement Date
and not later than the Expiration Date by delivering the Warrant with a duly
executed exercise form attached hereto with the conversion section completed to
the Company, exercising the Conversion Right and specifying the total number of
shares of Common Stock the Holder will purchase pursuant to such conversion.
3. Transfer.
3.1 General Restrictions. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
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<PAGE>
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The Company shall
immediately transfer this Warrant on the books of the Company and shall execute
and deliver a new Warrant or Warrants of like tenor to the appropriate
assignee(s) expressly evidencing the right to purchase the aggregate number of
shares of Common Stock purchasable hereunder or such portion of such number as
shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the Act,
and applicable state law, the availability of which is established to the
reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange Commission and compliance with applicable state
law.
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in
Section 3 hereof, this Warrant may be exercised or assigned in whole or in part.
In the event of the exercise or assignment hereof in part only, upon surrender
of this Warrant for cancellation, together with the duly executed exercise or
assignment form and funds (or conversion equivalent) sufficient to pay any
Exercise Price and/or transfer tax, the Company shall cause to be delivered to
the Holder without charge a new Warrant of like tenor to this Warrant in the
name of the Holder evidencing the right of the Holder to purchase the aggregate
number of shares of Common Stock and Warrants purchasable hereunder as to which
this Warrant has not been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of reasonably satisfactory indemnification, the Company shall execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed and
delivered as a result of such loss, theft, mutilation or destruction shall
constitute a substitute contractual obligation on the part of the Company.
5. Registration Rights.
5.1 "Piggy-Back" Registration.
5.1.1 Grant of Right. The Holders of this Warrant shall have
the right for a period of seven years from the Commencement Date to include all
or any part of this Warrant and the shares of Common Stock underlying this
Warrant (collectively, the "Registrable Securities") as part of any registration
of securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or
any equivalent form); provided, however, that if, in the written opinion
of the Company's managing underwriter or underwriters, if any, for such offering
(the "Underwriter"), the inclusion of the Registrable Securities, when added to
the securities being registered by the Company or the selling stockholder(s),
will exceed the maximum amount of the Company's securities which can be marketed
(i) at a price reasonably related to their then current market value, or (ii)
without materially and adversely affecting the entire offering, the Company
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<PAGE>
shall nevertheless register all or any portion of the Registrable Securities
required to be so registered but such Registrable Securities shall not be sold
by the Holders until 90 days after the registration statement for such offering
has become effective; and provided further that, if any securities are
registered for sale on behalf of other stockholders in such offering and such
stockholders have not agreed to defer such sale until the expiration of such 90
day period, the number of securities to be sold by all stockholders in such
public offering during such 90 day period shall be apportioned pro rata among
all such selling stockholders, including all holders of the Registrable
Securities, according to the total amount of securities of the Company proposed
to be sold by said selling stockholders, including all holders of the
Registrable Securities.
5.1.2 Terms. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, including any filing fees
payable to the National Association of Securities Dealers, Inc. ("NASD"), but
the Holders shall pay any and all underwriting commissions and the expenses of
any legal counsel selected by the Holders to represent them in connection with
the sale of the Registrable Securities. In the event of such a proposed
registration, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than thirty days written notice prior to
the proposed date of filing of such registration statement. Such notice to the
Holders shall continue to be given for each registration statement filed by the
Company until such time as all of the Registrable Securities have been sold by
the Holder. The holders of the Registrable Securities shall exercise the
"piggy-back" rights provided for herein by giving written notice, within twenty
days of the receipt of the Company's notice of its intention to file a
registration statement. The Company shall cause any registration statement filed
pursuant to the above "piggyback" rights to remain effective until all
Registrable Securities thereunder have been sold, or are freely saleable,
without restriction, under an exemption from the registration requirements.
Nothing contained in this Warrant shall be construed as requiring any Holder to
exercise this Warrant or any part thereof prior to the initial filing of any
registration statement or the effectiveness thereof.
5.2 Demand Registration. In addition to the right of registration
granted pursuant to Section 5.1, the Company agrees, upon written demand
("Initial Demand Notice") of the Holder(s) of at least 51% of the Registrable
Securities ("Majority Holders")to, on one occasion, register all or any portion
of the Registrable Securities requested by the Majority Holders in the Initial
Demand Notice. On such occasion, the Company will file a Registration Statement
covering such Registrable Securities within sixty days after receipt of the
Initial Demand Notice and use its best efforts to have such registration
statement declared effective promptly thereafter. The demand for registration
may be made at any time during a period of seven years beginning with the
Commencement Date. The Company covenants and agrees to give written notice of
its receipt of any Initial Demand Notice by any Holders to all other registered
Holders of the Registrable Securities within ten days from the date of the
receipt of any such Initial Demand Notice.
5.2.1 Terms. The company shall bear all fees and expenses
attendant to registering the Registrable Securities, including any filing fees
payable to the NASD, but the Holders shall pay any and all underwriting
commissions and the expenses of any legal counsel selected by the holders to
represent them in connection with the sale of the Registrable Securities. The
Company agrees to use its prompt best efforts to cause the filing required
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<PAGE>
herein to become effective and to qualify or register the Registrable Securities
in such States as are reasonably requested by the Holder(s); provided, however,
that in no event shall the Company be required to register the Registrable
Securities in a State in which such registration would cause (i) the Company to
be obligated to do business in such State, or (ii) the principal stockholders of
the Company to be obligated to escrow their shares of capital stock of the
Company. The Company shall cause any registration statement filed to pursuant to
the demand rights granted under Section 5.2 to remain effective for a period of
at least nine consecutive months from the effective date of such registration
statement. Should this registration or the effectiveness thereof be delayed by
the Company, the exercisability of the Warrant shall be extended for a period of
time equal to the delay in registering the Registrable Securities. Moreover, if
the Company fails to comply with the provisions of this Section 5.2 or with
Section 5.1, the Company shall, in addition to any other equitable or other
relief available to the Holders, be liable for any and all incidental, special
and consequential damages and damages due to loss of profits sustained by the
Holders.
5.3 General Terms
5.3.1 Indemnification.
(a) The Company shall indemnify the Holder(s) of
the Registrable Securities to be sold pursuant to any registration statement
hereunder and any underwriter or person deemed to be an underwriter under the
Act and each person, if any, who controls such Holders or underwriters or
persons deemed to be underwriters within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder(s) of the Registrable Securities to
be sold pursuant to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, against all
loss, claim, damage, expense or liability (including all reasonable attorneys'
fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising from information furnished by or
on behalf of such Holders, in writing, for specific inclusion in such
registration statement.
(b) If any action is brought against a party
hereto, ("Indemnified Party") in respect of which indemnity may be sought
against the other party ("Indemnifying Party"), such Indemnified Party shall
promptly notify Indemnifying Party in writing of the institution of such action
and Indemnifying Party shall assume the defense of such action, including the
employment and fees of counsel reasonably satisfactory to the Indemnified Party.
Such Indemnified Party shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of such counsel
shall have been authorized in writing by Indemnifying Party in connection with
the defense of such action, or (ii) Indemnifying Party shall not have employed
counsel to defend such action, or (iii) such Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to it
which may result in a conflict between the Indemnified Party and Indemnifying
Party (in which case Indemnifying Party shall not have the right to direct the
defense of such action on behalf of the Indemnified Party), in any of which
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<PAGE>
events, the reasonable fees and expenses of not more than one additional firm of
attorneys designated in writing by the Indemnified Party shall be borne by
Indemnifying Party. Notwithstanding anything to the contrary contained herein,
if Indemnified Party shall assume the defense of such action as provided above,
Indemnifying Party shall not be liable for any settlement of any such action
effected without its written consent.
(c) If the indemnification or reimbursement
provided for hereunder is finally judicially determined by a court of competent
jurisdiction to be unavailable to an Indemnified Party (other than as a
consequence of a final judicial determination of willful misconduct, bad faith
or gross negligence of such Indemnified Party), then Indemnifying Party agrees,
in lieu of indemnifying such Indemnified Party, to contribute to the amount paid
or payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.
(d) The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
5.3.2 Exercise of Warrants. Nothing contained in this Warrant
shall be construed as requiring the Holder(s) to exercise their Warrants prior
to or after the initial filing of any registration statement or the
effectiveness thereof.
5.3.3 Documents Delivered to Holders. The Company shall
furnish to each Holder participating in any of the foregoing offerings and to
each Underwriter of any such offering, if any, a signed counterpart, addressed
to such Holder or Underwriter, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under any underwriting agreement related thereto), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
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investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and inde
pendent auditors, all to such reasonable extent and at such reasonable times and
as often as any such Holder shall reasonably request.
6. Adjustments
6.1 Adjustments to Exercise Price and Number of Securities. The
Exercise Price and the number of shares of Common Stock underlying this Warrant
shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends - Recapitalization, Reclassification,
Split-Ups. If, after the date hereof, and subject to the provisions of Section
6.2 below, the number of outstanding shares of Common Stock is increased by a
stock dividend on the Common Stock payable in shares of Common Stock or by a
split-up, recapitalization or reclassification of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock issuable on exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares.
6.1.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.3, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, upon the effective date
thereof, the number of shares of Common Stock issuable on exercise of this
Warrant shall be decreased in proportion to such decrease in outstanding shares.
6.1.3 Adjustments in Exercise Price. Whenever the number of
shares of Common Stock purchasable upon the exercise of this Warrant is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
6.1.4 Replacement of Securities upon Reorganization, etc. In
case of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which solely
affects the par value of such shares of Common Stock, or in the case of any
merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is
dissolved, the Holder of this Warrant shall have the right thereafter (until the
expiration of the right of exercise of this Warrant) to receive upon the
exercise hereof, for the same aggregate Exercise Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or other transfer, by a Holder of the number of shares of Common Stock
of the Company obtainable upon exercise of this Warrant immediately prior to
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such event; and if any reclassification also results in a change in shares of
Common Stock covered by Sections 6.1.1 or 6.1.2, then such adjustment shall be
made pursuant to Sections 6.1.1, 6.1.2, 6.1.3 and this Section 6.1.4. The
provisions of this Section 6.1.4 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
6.1.5 Changes in Form of Warrant. This form of Warrant need
not be changed because of any change pursuant to this Section, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.
6.2 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
7. Reservation and Listing. Promptly upon issuance of this Warrant, the Company
shall take all action necessary to effectuate a reverse stock split of its
Common Stock to provide sufficient authorized but unissued shares of Common
Stock to enable this Warrant to be exercised in full. The Company shall at all
times thereafter reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issuance upon exercise of this Warrant,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issuable upon such exercise
shall be duly and validly issued, fully paid and non-assessable and not subject
to preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges (or, if applicable on
Nasdaq) on which the Common Stock is then listed and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent or to receive notice
as a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be.
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8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution, or (ii)
the Company shall offer to all the holders of its Common Stock any additional
shares of capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefor, or (iii) a merger or reorganization in which the
Company is not the surviving party, or (iv) a dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property, assets and
business shall be proposed.
8.3 Notice of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change ("Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's President and Chief Financial Officer.
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to its principal executive
office.
9. Miscellaneous.
9.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
9.2 Entire Agreement. This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
9.3 Binding Effect. This Warrant shall inure solely to the benefit of
and shall be binding upon, the Holder and the Company and their respective
successors, legal rep resentatives and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Warrant or any provisions herein contained.
9.4 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Warrant shall be brought and enforced in the courts
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of the State of New York or of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
9.5 Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the _____ day of ___________, 1999.
HUMASCAN INC.
By:______________________________________
Name:
Title:
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Form to be used to exercise Warrant:
- ------------------------------------
- ------------------------------------
- ------------------------------------
Date: _____________________, 19___
The undersigned hereby elects irrevocably to exercise the
within Warrant and to purchase ________ shares of Common Stock of
_________________________ and hereby makes payment of $____________ (at the rate
of $_________ per share of Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the Common Stock as to which this Warrant is
exercised in accordance with the instructions given below.
or
The undersigned hereby elects irrevocably to convert its right
to purchase ____________ shares of Common Stock purchasable under the within
Warrant into __________ shares of Common Stock of
__________________________________________ (based on a "Market Price" of
$________ per share of Common Stock). Please issue the Common Stock in
accordance with the instructions given below.
--------------------------------------
Signature
- ---------------------------
Signature Guaranteed
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
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Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer
of the within Warrant):
FOR VALUE RECEIVED, ________________________________ does
hereby sell, assign and transfer unto _________________________________ the
right to purchase _____________________ shares of Common Stock of
_________________________________ ("Company") evidenced by the within Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.
Dated:____________________, 19___
--------------------------------------
Signature
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
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