SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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) June 24, 1996
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IMATRON INC.
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(Exact Name of Registrant as Specified in Its Charter)
New Jersey
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(State or Other Jurisdiction of Incorporation)
0-12405 94-2880078
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(Commission File Number) (I.R.S. Employer Identification No.)
389 Oyster Point Boulevard, South San Francisco, CA 94080
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(Address of Principal Executive Offices) (Zip Code)
(415) 583-9964
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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5. OTHER EVENTS.
Effective June 24, 1996 Registrant and its wholly owned subsidiary
HeartScan Imaging, Inc. ("HeartScan") entered into an agreement ("Agreement")
with certain institutional and other accredited purchasers ("Purchasers")
pursuant to which Registrant agreed to sell 100,000 shares of HeartScan Series A
Preferred Shares ("Shares") to the Purchasers for an aggregate of $16,000,000.
The Shares represent all the Series A Preferred Shares issued by HeartScan and
outstanding and all of the HeartScan Series A Preferred shares owned by
Registrant. The Shares are convertible, as described below, into a 40% fully
diluted interest in HeartScan.
Further, the Agreement provides certain additional rights to
Purchasers. The Shares may be exchanged for Registrant's common stock at each
Purchaser's option and without payment of additional consideration for a defined
period and at a defined price, and thereafter for an additional period at a
different price. The first exhange period begins on closing and ends on the
earlier of two years or a HeartScan qualified public offering as defined.
Purchasers may receive that number of Registrant's common shares as is
determined by dividing $160 by $5.00. The second exchange period is a five-day
period following the second anniversary of the closing and a similar period
following each quarter thereafter until the fourth anniversary of the closing.
Purchasers may receive that number of Registrant's common shares as is
determined by dividing $160 by 73% of the then trading price of Registrant's
common stock, but not less than $1.50. Alternatively, the Shares, by their
terms, are also convertible into HeartScan common shares at a ratio initially
established at 1:10.
Purchasers of Shares are also granted the right to purchase, pro rata,
any new securities issued by HeartScan at the price proposed to be issued.
Purchasers are entitled to receive certain financial and corporate information
so long as they hold the Shares. Purchasers are entitled to elect two designated
representatives to HeartScan's board of directors so long as the purchasers in
the aggregate retain 20% of HeartScan's common stock (or shares convertible into
such common shares), or to elect one representative so long as the purchasers in
the aggregate retain 10% of HeartScan's common stock. The right to designated
representatives on the board of directors terminates on the earlier of a
qualified HeartScan public offering as defined, ownership of less than 10% in
the aggregate of HeartScan's common stock, or ten years from the closing.
HeartScan has agreed that it will not engage in certain activity or
conduct, without written approval of two-thirds of the purchasers. That conduct
includes entering into any material transaction with an affiliate; entering into
any additional business; merging, liquidating or selling substantially all its
assets; issuing or selling any other stock except a qualified public offering,
shares already reserved for purchase pursuant to employee plans, or stock
issuable pursuant to this Agreement; declaring or paying dividends, or redeeming
stock other than related to terminating employees; or investing in any other
business.
ITEM 7. EXHIBIT.
10.1. Stock Purchase Agreement dated as of June 24, 1996 among
Registrant, HeartScan Imaging, Inc. and Purchasers Listed on Exhibit A,
including Exhibits A, B, C, D and E.
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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.
IMATRON INC.
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Date: June 28, 1996 By /s/ Gary H. Brooks
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Gary H. Brooks
Its: Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
EXHIBIT 10.1
Stock Purchase Agreement
and Exhibits A, B, C, D & E
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STOCK PURCHASE AGREEMENT
dated as of June 24, 1996
among
IMATRON INC., HEARTSCAN IMAGING, INC.
and
THE PURCHASERS LISTED ON EXHIBIT A
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<TABLE>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1 PURCHASE AND SALE OF SHARES.......................................................... 1
1.1 Ownership of Shares.................................................................. 1
1.2 Sale and Purchase of the Shares...................................................... 1
ARTICLE 2 CLOSING DATE; DELIVERY............................................................... 1
2.1 Closing Date......................................................................... 1
2.2 Delivery............................................................................. 1
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF IMATRON............................................ 1
3.1 Ownership and Title.................................................................. 2
3.2 Organization and Standing............................................................ 2
3.3 Corporate Power...................................................................... 2
3.4 Subsidiaries......................................................................... 2
3.5 Capitalization....................................................................... 2
3.6 Authorization........................................................................ 3
3.7 Financial Statements................................................................. 3
3.8 Absence of Undisclosed Liabilities................................................... 4
3.9 Changes.............................................................................. 4
3.10 Title to Assets; Liens, etc.......................................................... 5
3.11 Compliance with other Instruments, None Burdensome, etc.............................. 5
3.12 Intellectual Property................................................................ 6
3.13 Litigation, etc...................................................................... 6
3.14 Employees............................................................................ 6
3.15 Registration Rights.................................................................. 7
3.16 Governmental Consent, etc............................................................ 7
3.17 Offering............................................................................. 7
3.18 Material Contracts................................................................... 7
3.19 Licenses; Compliance with Laws....................................................... 7
3.20 Disclosure........................................................................... 8
3.21 Environmental and Safety Laws........................................................ 8
3.22 Imatron Corporate Documents.......................................................... 8
3.23 HeartScan Corporate Documents........................................................ 8
3.24 Insurance............................................................................ 8
3.25 Labor Agreements and Actions......................................................... 8
3.26 Brokers or Finders................................................................... 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...................................... 9
4.1 Risk.................................................................................. 9
4.2 Experience............................................................................ 9
4.3 Principal Place of Business........................................................... 9
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4.4 Investment........................................................................... 10
4.5 Rule 144............................................................................. 10
4.6 No Public Market..................................................................... 10
4.7 Access to Data....................................................................... 10
4.8 Authorization........................................................................ 10
4.9 Brokers or Finders................................................................... 10
4.10 Investor Counsel; Investment Advisor................................................. 10
ARTICLE 5 EXCHANGE RIGHTS...................................................................... 11
5.1 Certain Definitions.................................................................. 11
5.2 First Exchange Period Rights......................................................... 11
5.3 Second Exchange Period Rights........................................................ 13
5.4 No Impairment........................................................................ 14
5.5 Mechanics of Exchange................................................................ 14
5.6 Reservation of Imatron Common Stock.................................................. 15
5.7 Participation Rights Offering........................................................ 15
5.8 Notices of Record Date............................................................... 15
ARTICLE 6 AFFIRMATIVE COVENANTS................................................................ 16
6.1 Use of Proceeds...................................................................... 16
6.2 Right of Participation............................................................... 16
6.3 Financial Information................................................................ 17
6.4 Purchasers' Right to Elect Directors................................................. 18
6.5 Termination.......................................................................... 19
ARTICLE 7 NEGATIVE COVENANTS................................................................... 19
7.1 Dealing with Affiliates.............................................................. 19
7.2 Conduct of Business.................................................................. 19
7.3 Sale of Securities................................................................... 19
7.4 Liquidation; Merger, etc............................................................. 19
7.5 Dividends; Distributions; etc........................................................ 19
7.6 Investments.......................................................................... 20
ARTICLE 8 TRANSFERABILITY OF SECURITIES........................................................ 20
8.1 Transferability...................................................................... 20
8.2 Restrictive Legend................................................................... 20
8.3 Notice of Proposed Transfers......................................................... 20
ARTICLE 9 REGISTRATION RIGHTS RELATING TO IMATRON SECURITIES................................... 21
9.1 Certain Definitions.................................................................. 21
9.2 Registration of First Exchange Period Shares......................................... 22
9.3 Registration of Second Exchange Period Shares........................................ 22
9.4 Expenses of Registration............................................................. 23
9.5 Registration Procedures.............................................................. 23
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9.6 Indemnification...................................................................... 25
9.7 Information by Holder................................................................ 27
9.8 Rule 144 Reporting................................................................... 27
9.9 Transfer of Registration Rights...................................................... 28
9.10 Additional Shares.................................................................... 28
ARTICLE 10 REGISTRATION RIGHTS RELATING TO HEARTSCAN SECURITIES................................. 28
10.1 Certain Definitions.................................................................. 30
10.2 Registration......................................................................... 30
10.3 Registration on Form S-3............................................................. 30
10.4 Limitations on Subsequent Registration Rights........................................ 31
10.5 Expenses of Registration............................................................. 31
10.6 Registration Procedures............................................................. 32
10.7 Indemnification...................................................................... 34
10.8 Information by Holder................................................................ 36
10.9 Rule 144 Reporting................................................................... 36
10.10 Transfer of Registration Rights...................................................... 37
10.11 Standoff Agreement................................................................... 37
ARTICLE 11 CONDITIONS TO CLOSING OF THE PURCHASERS.............................................. 37
11.1 Representations and Warranties Correct............................................... 37
11.2 Covenants............................................................................ 37
11.3 Qualifications....................................................................... 37
11.4 Legal Matters........................................................................ 37
11.5 Proceedings and Documents............................................................ 38
11.6 Opinion of Imatron's and HeartScan's Counsel......................................... 38
11.8 Good Standing........................................................................ 38
11.9 Equipment Supply Agreement........................................................... 38
ARTICLE 12 CONDITIONS TO CLOSING OF IMATRON..................................................... 38
12.1 Representations...................................................................... 38
12.2 Further Representations and Warranties............................................... 38
12.3 Qualifications....................................................................... 38
12.4 Legal Matters........................................................................ 39
ARTICLE 13 MISCELLANEOUS........................................................................ 39
13.1 Governing Law........................................................................ 39
13.2 Survival............................................................................. 39
13.3 Successors and Assigns............................................................... 39
13.4 Entire Agreement; Amendment.......................................................... 39
13.5 Notices, etc......................................................................... 39
13.6 Delays or Omissions.................................................................. 40
13.7 California Corporate Securities Law.................................................. 40
13.8 Expenses............................................................................. 40
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13.9 Remedies............................................................................. 40
13.10 Attorneys Fees....................................................................... 41
13.11 Counterparts......................................................................... 41
13.12 Severability......................................................................... 41
13.13 Titles and Subtitles................................................................. 41
</TABLE>
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of June 24,
1996, by and between IMATRON INC., a New Jersey corporation (the "Imatron");
HEARTSCAN IMAGING, INC., a Delaware corporation ("HeartScan") and those entities
and persons set forth on Exhibit A hereto (individually, a "Purchaser," and
collectively the "Purchasers").
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Ownership of Shares. Imatron is the registered and beneficial owner
of 100,000 shares of HeartScan's Series A Preferred Stock (the "Shares").
1.2 Sale and Purchase of the Shares. At the Closing (as defined in
Section 2.1 hereof), and in reliance upon the representations, warranties and
agreements contained herein, Imatron will sell to each Purchaser and each
Purchaser will purchase from Imatron the number of Shares specified opposite
each Purchaser's name on the Schedule of Purchasers attached hereto as Exhibit
A, at a cash price of One Hundred Sixty Dollars ($160.00) per Share. As used
herein, the term "Purchase Price" shall mean the aggregate purchase price for
the Shares payable by an individual Purchaser.
ARTICLE 2
CLOSING DATE; DELIVERY
2.1 Closing Date. The closing of the purchase and sale of the Shares
hereunder shall be held at the offices of Severson & Werson, One Embarcadero
Center, San Francisco, California 94111 at 3:00 p.m., local time, on June 24,
1996 (the "Closing") or at such other time and place as shall be mutually agreed
upon by Imatron and the Purchasers (the date of the Closing is hereafter
referred to as the "Closing Date").
2.2 Delivery. At the Closing, Imatron will deliver to each Purchaser
certificates for the number of Shares set forth opposite its name under the
heading "Shares" registered in such Purchaser's name on Exhibit A, or in
accordance with such Purchaser's instructions, and each Purchaser will deliver
to Imatron by check or wire transfer to Imatron's account the amount set forth
opposite each Purchaser's name on Exhibit A.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF IMATRON
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, Imatron represents and warrants to the Purchasers as follows:
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3.1 Ownership and Title. Imatron is the owner, beneficially and of
record, of all of the Shares free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges and restrictions. The Shares are
not subject to any restrictions with respect to transferability, except as
provided under the Securities Act of 1933 (the "Securities Act"). Upon the
transfer and delivery of the Shares to each Purchaser hereunder, such Purchaser
will receive good and absolute title thereto, free from all liens, charges,
encumbrances, equities, restrictive agreements and claims whatsoever except as
specifically provided herein.
3.2 Organization and Standing. Imatron is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of New
Jersey and is in good standing under such laws. HeartScan is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. Imatron and HeartScan each
have all requisite corporate power and authority to own and operate their
respective properties and assets, and to carry on their respective businesses as
presently conducted and as proposed to be conducted. Imatron and HeartScan are
qualified and are in good standing in each foreign jurisdiction where such
qualification is required.
3.3 Corporate Power. Imatron and HeartScan each have or will have at
the Closing Date all requisite legal and corporate power and authority to
execute and deliver this Agreement and to sell and issue the Shares hereunder
and to carry out and perform its and their obligations under the terms of this
Agreement.
3.4 Subsidiaries. Except as set forth on Exhibit B, Imatron and
HeartScan have no subsidiaries or affiliated companies and do not otherwise own
or control, directly or indirectly, any equity interest in any corporation,
association or business entity.
3.5 Capitalization.
(a) Capitalization of Imatron. At the Closing Date, the
authorized capital stock of Imatron will consist of: (i) 100,000,000 shares of
Common Stock, of which 76,268,990 shares were issued and outstanding and of
which 3,722,560 shares have been reserved for issuance under outstanding
warrants, 6,648,209 shares of which have been reserved for issuance under
various option and stock purchase plans; 1,500,000 shares of which are reserved
for issuance under an effective registration on Form S-3; and 10,666,667 shares
of which have been reserved for exchange hereunder; and (ii) 5,000,000 shares of
preferred stock of which 500,000 shares have been designated "Series A Preferred
Stock" none of which are issued and outstanding and 500,000 shares of which have
been designated "Series B Preferred Stock" none of which are issued and
outstanding. Imatron's capitalization is summarized as set forth on Exhibit C.
The outstanding shares of Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable. The shares of Imatron Common Stock
are not subject to any preemptive rights or rights of first refusal.
(b) Capitalization of HeartScan. At the Closing Date, the
authorized capital stock of HeartScan will consist of: (i) 4,000,000 shares of
Common Stock, of which 21,094
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will be issued and outstanding and of which 448,906 shares have been reserved
for issuance pursuant to stock option and other plans, 30,000 shares have been
reserved for issuance upon the exercise of warrants to be issued in connection
with the purchase and sale of the Shares, and 2,000,000 shares of which have
been reserved for issuance upon conversion of the Shares and the Series B
Preferred Stock, and (ii) 1,000,000 shares of preferred stock of which 200,000
shares have been designated "Series A Preferred Stock" and of which 100,000 are
issued and outstanding and 100,000 shares of which have been designated "Series
B Preferred Stock" and of which 100,000 shares are issued and outstanding.
HeartScan's capitalization is summarized as set forth on Exhibit C. The
outstanding shares of Series A Preferred and Series B Preferred have been duly
authorized and validly issued, and are fully paid and nonassessable. Except as
provided herein and as set forth in Exhibit B, the shares of HeartScan Common
Stock, Series A Preferred and Series B Preferred are not subject to any
preemptive rights or rights of first refusal. The Certificates of Designation
pertaining to HeartScan's Series A Preferred and Series B Preferred are attached
hereto as Exhibit D.
3.6 Authorization. All corporate action on the part of Imatron and
HeartScan, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by Imatron and HeartScan,
the sale and delivery of the Shares and the performance of all of Imatron's and
HeartScan's obligations hereunder and thereunder has been taken or will be taken
prior to the Closing. This Agreement when executed and delivered by Imatron and
HeartScan, shall constitute valid and binding obligations of each, enforceable
in accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies and except
to the extent that Sections 9.6 and 10.7 may be limited by public policy and
applicable judicial decisions. The Shares are validly issued, fully paid and
nonassessable and in all such cases will be free of restrictions on transfer
other than transfer under this Agreement and applicable state and federal laws
and when the Shares have been converted or exchanged in accordance with their
terms, the HeartScan Common Stock issuable upon conversion and Imatron Common
Stock issuable upon exchange, as the case may be, will be validly issued, fully
paid and non-assessable.
3.7 Financial Statements. Imatron has delivered to the Purchasers the
following financial statements (the "Financial Statements"):
(i) Imatron's audited consolidated balance sheet, statement of
operations, statement of stockholders' equity and statement of cash flows as of
and for the year ended December 31, 1995;
(ii) Imatron's unaudited consolidating balance sheet,
statement of operations, statement of stockholders' equity and statement of cash
flows as of and for the year ended December 31, 1995; and
(iii) Imatron's unaudited consolidating balance sheet,
statement of operations, statement of stockholders' equity and statement of cash
flows as of and for the three months
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ended March 31, 1996.
The Financial Statements are complete and correct in all material
respects and have been prepared in accordance with generally accepted accounting
principles, except that the unaudited Financial Statements do not contain
footnotes normally required by generally accepted accounting principles. The
Financial Statements accurately set out and describe the financial condition and
operating results of Imatron and HeartScan as of the dates, and during the
periods, indicated therein. Except as disclosed in the Financial Statements or
in Exhibit B, neither Imatron nor HeartScan is a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation. Imatron and HeartScan
maintain and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
3.8 Absence of Undisclosed Liabilities. To the best of their knowledge,
neither Imatron nor HeartScan has any debt, liability, or obligation of any
nature, whether accrued, absolute, contingent, or otherwise, and whether due or
to become due, that is not reflected or reserved against in Financial Statements
or as set forth in Exhibit B to this Agreement, except for (1) those that may
have been incurred after March 31, 1996 and (2) those that are not required by
generally accepted accounting principles to be included in a balance sheet
(including the notes thereto). All debts, liabilities, and obligations incurred
after that date were incurred in the ordinary course of business and are usual
and normal in amount both individually and in the aggregate.
3.9 Changes. Since December 31, 1995, there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of Imatron or HeartScan from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of Imatron or HeartScan (as
such businesses is presently conducted and as they are proposed to be
conducted);
(c) any waiver by Imatron or HeartScan of a valuable right or
of a material debt owed to either;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by Imatron or HeartScan, except in the
ordinary course of business consistent with prior practice and that is not
material to the assets, properties, financial condition, operating results or
business of either (as such businesses are presently conducted and as they are
proposed to be conducted);
(e) any material change or amendment to a material contract or
arrangement
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by which Imatron or HeartScan or any of their respective assets or properties
are bound or are subject;
(f) any material change in any compensation arrangement or
agreement with any employee;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any key
officer of Imatron or HeartScan; and neither Imatron nor HeartScan, to the best
of their knowledge, know of the impending resignation or termination of
employment of any such officer;
(i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of Imatron or HeartScan;
(j) any mortgage, pledge, transfer of a security interest in,
or lien, created by Imatron or HeartScan, with respect to any of their material
properties or assets, except liens for taxes not yet due or payable;
(k) any declaration, setting aside or payment or other
distribution in respect of any of Imatron's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by
Imatron;
(l) to the best of Imatron's knowledge, any other event or
condition of any character that might materially and adversely affect the
assets, properties, financial condition, operating results or business of
Imatron (as such business is presently conducted and as it is proposed to be
conducted); or
(m) any agreement or commitment by Imatron to do any of the
things described in this Section 3.9.
3.10 Title to Assets; Liens, etc. Except as disclosed in the Financial
Statements, Imatron and HeartScan have good and marketable title to their
respective assets and have good title to all of their respective leasehold
interests, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (i) the lien of current taxes not yet due and payable, and
(ii) possible minor liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of Imatron or HeartScan, and which have not arisen otherwise than in
the ordinary course of business.
3.11 Compliance with other Instruments, None Burdensome, etc. Except as
set forth in Exhibit B, neither Imatron nor HeartScan are in violation of any
term of their respective Articles of Incorporation or Bylaws, or in any material
respect of any term or provision of any
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mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decree, and to their knowledge are not in violation of any order, statute, rule
or regulation applicable to Imatron or HeartScan where such violation would
materially and adversely affect either. The execution, delivery and performance
of and compliance with this Agreement and the transfer and sale of the Shares
have not resulted and will not result in any violation of, or conflict with, or
constitute a default under, Imatron's or HeartScan's respective Articles of
Incorporation or Bylaws or any of their agreements or result in the creation of,
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Imatron or HeartScan or the suspension, revocation, impairment,
forfeiture, or nonrenewal of any material permit, license, authorization, or
approval applicable either, their businesses or operations or any of their
assets or properties, and there is no such violation or default which materially
and adversely affects the business of Imatron or HeartScan or any of their
material properties or assets.
3.12 Intellectual Property. Except as set forth in Exhibit B, to the
best of their knowledge, Imatron and HeartScan have sufficient title and
ownership of all franchises, permits, licenses, trademarks, trademark rights,
copyrights, service marks, trade names, trade secrets, know-how information,
proprietary rights and processes, and other similar authority necessary for the
conduct of their businesses as now conducted and as proposed to be conducted by
them (collectively, the "Intellectual Property") without any conflict with or
infringement of the rights of others. Neither Imatron nor HeartScan is in
violation, nor will the transaction contemplated by this Agreement cause a
violation of the terms or provisions of any franchises, permits, or licenses to
which either is a party. There is neither pending, nor, to Imatron's and
HeartScan's knowledge, threatened, any claim or litigation against Imatron or
HeartScan contesting the validity or right to use any of the Intellectual
Property. To Imatron's and HeartScan's knowledge, no person, corporation or
other entity is infringing the Intellectual Property. To Imatron's and
HeartScan's knowledge, neither Imatron nor HeartScan is currently using the
confidential information or trade secrets of any person without the consent of,
or a grant of a license or other right to use such information or trade secrets,
from such other person or entity.
3.13 Litigation, etc. There is no action, suit, proceeding or
investigation pending against Imatron or HeartScan or their respective
properties before any court or governmental agency (nor, to Imatron's and
HeartScan's knowledge, is there any reasonable basis therefor or threat thereof)
that questions the validity of this Agreement, or the right of Imatron and
HeartScan to enter into such agreement, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition, affairs
or prospects of Imatron or HeartScan, financially or otherwise, or any change in
the current equity ownership of Imatron or HeartScan, nor are Imatron or
HeartScan aware that there is any basis for the foregoing. Neither Imatron nor
HeartScan is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality.
3.14 Employees. To the best of Imatron's and HeartScan's knowledge, no
employee of Imatron or HeartScan is obligated under, or in violation of, any
employment contract or any other contract or agreement, or subject to any
judgment, decree or order of any court or
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administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of Imatron or HeartScan or would conflict with
either's businesses. Neither the execution nor delivery of this Agreement, nor
the carrying on of Imatron's business by the employees of Imatron or the
carrying on of HeartScan's business by the employees of HeartScan, will, to the
best of Imatron's and HeartScan's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated.
3.15 Registration Rights. Except as set forth herein and in Exhibit B
hereto, HeartScan is not under any contractual obligation to register (as
defined in Section 9.1(f)) any of its presently outstanding securities or any of
its securities which may hereafter be issued.
3.16 Governmental Consent, etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of Imatron or HeartScan is required in connection with the valid execution
and delivery of this Agreement, or the offer or sale of the Shares, or the
consummation of any other transaction contemplated hereby, except qualification
(or taking such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the Shares under the
California Corporate Securities Law of 1968, as amended, and other applicable
Blue Sky laws, which filings and qualifications, if required, will be
accomplished in a timely manner.
3.17 Offering. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer and sale of the Shares in
accordance with the terms of this Agreement constitutes a transaction exempt
from the registration requirements of Section 5 of the Securities Act of 1933
(the "Securities Act"), and neither Imatron nor HeartScan nor any authorized
agent acting on their behalf will take any action hereafter that would cause the
loss of such exemption.
3.18 Material Contracts. Except as set forth in Exhibit B, Imatron and
HeartScan are in compliance with all of the material obligations under each of
the material contracts to which Imatron and HeartScan are parties, including but
not limited to Imatron's agreements with Siemens Corporation or its affiliates.
3.19 Licenses; Compliance with Laws. Imatron and HeartScan have all
local, state, federal and foreign operating authority, licenses, franchises,
permits, certificates, consents, rights and privileges and similar authority
(collectively, "Licenses") that are necessary to the operation of their
businesses as now conducted and Imatron and HeartScan believe they can obtain
any similar Licenses for the conduct of their businesses as planned to be
conducted. Such Licenses are in full force and effect, no violations have been
or are expected to be recorded in respect of any Licenses, and no proceeding is
pending or, to the knowledge of Imatron or HeartScan, threatened that could
result in the revocation or limitation of any such Licenses. To the best of
their knowledge, the businesses of Imatron and HeartScan have been and are now
being conducted in material compliance with all applicable laws, ordinances,
regulations, orders and decrees. Imatron and HeartScan know of no audits,
investigations, inquiries, or requests for information relating to their
respective businesses, products or facilities claiming any
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violation of any laws, such laws ordinances, regulations, orders and decrees. To
the best of their knowledge, Imatron and HeartScan believe that their products
and services are in material compliance with all applicable rules and
regulations promulgated by the United States Food and Drug Administration and by
the State of California Department of Health Services, Food and Drug Branch.
3.20 Disclosure. Imatron and HeartScan have fully provided each
Purchaser with an opportunity to have answered questions of officers of Imatron
and HeartScan. The information provided to the Purchaser in connection with the
transactions contemplated by this Agreement, when taken together, did not
contain (or will not contain on the Closing Date) an untrue statement of a
material fact and did not omit (or will not omit on the Closing Date) to state a
material fact required to make the statements therein, when viewed together in
light of the circumstances under which they were made, not false or misleading.
3.21 Environmental and Safety Laws. To the best of their knowledge,
Imatron and HeartScan are not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
the best of their knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
3.22 Imatron Corporate Documents. The Articles of Incorporation and
Bylaws of Imatron are in the forms previously provided to counsel for the
Purchasers.
3.23 HeartScan Corporate Documents. The Articles of Incorporation and
Bylaws of HeartScan are in the form previously provided to counsel for the
Purchasers, except that the Certificates of Determination of Preferences of
HeartScan's Series A Preferred Stock and Series B Preferred Stock will be as set
forth in Exhibit D hereto.
3.24 Insurance. Imatron has in full force and effect fire and casualty,
professional liability and product liability insurance policies, with extended
coverage, sufficient in amount (subject to reasonable deductibles) to allow it
to replace any of its properties that might be damaged or destroyed.
3.25 Labor Agreements and Actions. Neither Imatron nor HeartScan is
bound by or subject to (and none of their respective assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the best of Imatron's knowledge, has sought to represent any of the
employees, representatives or agents of Imatron or HeartScan. There is no strike
or other labor dispute involving Imatron or HeartScan pending, or to the best of
Imatron's and HeartScan's knowledge, threatened, that could have a material
adverse effect on the assets, properties, financial condition, operating
results, or business of either (as such businesses are presently conducted and
as proposed to be conducted), nor are Imatron or HeartScan aware of any labor
organization activity involving its employees. Imatron and HeartScan are not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their
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employment with either Imatron or HeartScan. To the best of its knowledge,
Imatron and HeartScan have complied in all material respects with all applicable
state and federal equal employment opportunity and other laws related to
employment.
3.26 Brokers or Finders. Imatron and HeartScan have not, and will not,
incur, directly or indirectly, as a result of any action taken by either of
them, any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement except for fees due to Ambient
Capital Group, Inc., Libra Investments, Inc., The Shemano Group, Inc. and
Heritage Trust and Finance which fees shall be paid by Imatron and/or HeartScan.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants, severally and not
jointly, to Imatron and HeartScan with respect to the purchase of the Shares,
the exchange rights as provided in Article 5 hereof (the "Exchange Rights") and
the shares of Imatron Common Stock issuable upon exercise of the Exchange Rights
(the "Imatron Exchange Shares") (the Shares, the Exchange Rights and the Imatron
Exchange Shares are collectively referred to in this Article as the
"Securities") by such Purchaser as follows:
4.1 Risk. The Purchaser is aware that investments in Imatron and
HeartScan are highly speculative and that there can be no assurance as to what,
if any, return that there may be on the Purchaser's investment in the Shares,
the Exchange Rights and the Imatron Exchange Common Stock. The Purchaser is
aware of Imatron's and HeartScan's business affairs and financial condition and
has acquired sufficient information about Imatron and HeartScan to be able to
evaluate the risks and merits of the proposed investment and to reach an
informed and knowledgeable decision to acquire the Securities.
4.2 Experience. The Purchaser is an "Accredited Investor" as defined in
Regulation D under the Securities Act. The Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to Imatron and HeartScan so that the Purchaser is capable of
evaluating the merits and risks of its investment in Imatron and HeartScan and
has the capacity to protect its own interests. If other than an individual,
unless Purchaser has previously advised Imatron in writing, Purchaser also
represents it has not been organized for the purpose of acquiring the Securities
offered hereby.
4.3 Principal Place of Business. The Purchaser's principal place of
business, or if an individual his or her residence, is located at the address
indicated in Exhibit A hereto.
4.4 Investment. The Purchaser is acquiring the Securities for
investment for its own account, not as a nominee or agent, and not with the view
to, or for public resale in connection with, any distribution thereof other than
pursuant to a registration as contemplated hereby. The
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Purchaser understands that the Shares and the Exchange Rights, have not been
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of such Purchaser's representations as expressed herein.
4.5 Rule 144. The Purchaser acknowledges that the Securities are
characterized as "restricted securities" under the federal securities laws and
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. The Purchaser is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permits limited public resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the issuer, the resale occurring not less than two
years after a party has purchased and paid for the security to be sold, the sale
being effected through a "broker's transaction" or in transactions directly with
a "market maker" and the number of shares being sold during any three-month
period not exceeding specified limitations.
4.6 No Public Market. The Purchaser understands that no public market
now exists for any of the securities issued by HeartScan and that HeartScan has
made no assurances that a public market will ever exist for HeartScan's
securities.
4.7 Access to Data. The Purchaser has had an opportunity to discuss
Imatron's and HeartScan's respective businesses, managements and financial
affairs with their managements and the opportunity to review Imatron's and
HeartScan's facilities and financial data. The Purchaser has also had an
opportunity to ask questions of officers of Imatron and HeartScan, which
questions were answered to its, his or her satisfaction. The foregoing, however,
does not limit or modify the representations and warranties of Imatron in
Section 3 of this Agreement or the right of Purchaser to rely thereon.
4.8 Authorization. This Agreement when executed and delivered by the
Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.9 Brokers or Finders. Each Purchaser represents that such Purchaser
has dealt with no broker or finder in connection with any transaction
contemplated by this agreement, except for Ambient Group, Inc., Libra
Investments, Inc., The Shemano Group, Inc. or Heritage Trust and Finance; and,
as far as such Purchaser it knows, no other broker or other person is entitled
to any commission or finder's fee in connection with this Agreement.
4.10 Investor Counsel; Investment Advisor. The Purchaser acknowledges
that it has had the opportunity to review this Agreement, the exhibits and the
schedules attached hereto and
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the transactions contemplated by this Agreement with its own legal counsel. The
Purchaser is relying solely on such counsel and not on any statements or
representations of Imatron, HeartScan, or any of their agents for legal or
investment advice with respect to this investment or the transactions
contemplated by this Agreement.
ARTICLE 5
EXCHANGE RIGHTS
5.1 Certain Definitions. As used in this Section, the following terms
shall have the following respective meanings:
(a) "First Exchange Period" shall mean the period commencing
on the Closing Date and ending on the earlier to occur of (i) two years after
June 26, 1996, or (ii) the IPO Date.
(b) "Second Exchange Period" shall mean the five business (5)
day period following each Pricing Date.
(c) "Qualified Public Offering" shall mean an initial public
offering of the HeartScan's common stock to the general public with a
post-offering, pre-proceeds valuation of the existing equity at June 26, 1996
(such equity consisting of 100,000 issued and outstanding shares of Series A
Preferred, 100,000 issued and outstanding shares of Series B Preferred, 21,094
shares of issued and outstanding Common Stock and 448,906 reserved shares of
Common Stock) of no less than $56,000,000 for an initial public offering during
the first year following June 26, 1996 and of no less than $78,000,000 for an
initial public offering during the second year following June 26, 1996 and
resulting in aggregate net proceeds of not less than $15,000,000, which initial
public offering is effected pursuant to a registration statement filed with, and
declared effective by, the Securities and Exchange Commission under the
Securities Act.
(d) "IPO Date" shall mean the closing date of a Qualified
Public Offering.
(e) "Imatron Exchange Shares" shall mean the shares of Imatron
Common Stock issuable pursuant to the exchange rights set forth in Sections 5.2
and 5.3 hereof and all shares of Imatron Common Stock issued pursuant hereto.
(f) "Pricing Date" shall mean each of the second anniversary
of June 26, 1996 and each date that is three months thereafter to an including
the fourth anniversary of June 26, 1996.
5.2 First Exchange Period Rights.
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(a) Exchange Rights. Each share of Series A Preferred may be
exchanged at the option of the Purchaser, without payment of additional
consideration at any time during the First Exchange Period at Imatron's
corporate office or any transfer agent for Imatron's Common Stock, for such
number of validly issued, fully paid and nonassessable shares of Imatron Common
Stock, as is determined by dividing One Hundred Sixty Dollars ($160.00) by the
First Period Exchange Price, determined as hereinafter provided, in effect at
the time of exchange. The price at which shares of Common Stock shall be
deliverable upon exchange (the "First Period Exchange Price") shall initially be
Five Dollars ($5.00) per share of Common Stock (the "Initial First Period
Exchange Price"). The initial First Period Exchange Price shall be subject to
adjustment as hereinafter provided.
(b) Adjustments for Subdivisions, Dividends, Combinations or
Consolidations of Imatron Common Stock.
(1) In the event the outstanding shares of Imatron
Common Stock shall be combined, consolidated or subdivided, by reclassification
or otherwise, into a lesser number of shares of Imatron Common Stock, the First
Period Exchange Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(2) In the event Imatron shall declare or pay any
dividend on the Imatron Common Stock payable in Imatron Common Stock or in the
event the outstanding shares of Imatron Common Stock shall be subdivided, by
reclassification or otherwise than by payment of a dividend in Imatron Common
Stock, into a greater number of shares of Imatron Common Stock, the First Period
Exchange Price in effect immediately prior to such dividend or subdivision shall
be proportionately decreased:
(i) in the case of any such dividend,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend, or
(ii) in the case of any such subdivision, at
the close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not
have been fully paid on the date fixed therefor, the adjustment previously made
in the First Period Exchange Price which became effective on such record date
shall be cancelled as of the close of business on such record date, and
thereafter the First Period Exchange Price shall be adjusted as of the time of
actual payment of such dividend.
(c) Termination. The exchange rights pursuant to this Section
5.2 shall terminate upon the earlier of (i) the IPO Date, (ii) four years from
June 26, 1996; or (iii) upon conversion of the Shares.
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(d) Reorganization, Consolidation, Merger, etc. In case
Imatron after the Closing Date shall (a) effect a reorganization, (b)
consolidate with or merge into any other entity, or (c) transfer all or
substantially all of its properties or assets to any other entity, then, in each
such case, the Purchaser, upon the exercise of the exchange rights provided
herein, at any time after the consummation of such reorganization, consolidation
or merger or the effective date of such dissolution, as the case may be, during
the First Exchange Period shall be entitled to receive (and Imatron shall be
required to deliver), in lieu of the Imatron Common Stock issuable upon exercise
of the exchange rights as provided in Section 5.2, the stock and other
securities and property (including cash) to which such Purchaser would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if such Purchaser had exchanged the Shares to such extent.
(e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the First Period Exchange Price Pursuant to
Section 5.2(b) or (c), Imatron at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each Purchaser of Series A Preferred as appropriate a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. Imatron shall, upon the written request at
any time of any Purchaser of Series A Preferred, furnish or cause to be
furnished to such Purchaser a like certificate setting forth (i) such
adjustments and readjustments, (ii) the First Period Exchange Price at the time
in effect, and (iii) the number of shares of Imatron Common Stock and the
amount, if any, of other property which at the time would be received upon the
exchange of Series A Preferred.
5.3 Second Exchange Period Rights.
(a) Exchange Rights. Each share of Series A Preferred may be
exchanged at the option of the Purchaser, without payment of additional
consideration at any time during each Second Exchange Period, at Imatron's
corporate office or any transfer agent for Imatron's Common Stock, for such
number of validly issued, fully paid and nonassessable shares of Imatron Common
Stock, as is determined by dividing One Hundred Sixty Dollars ($160.00) by the
applicable Second Period Exchange Price. The Second Period Exchange Price is an
amount equal to seventy-three percent (73%) of the average closing price
(rounded to the nearest cent) of a share of Imatron's Common Stock, weighted by
volume, as reported in The Wall Street Journal on each trading date on which
such shares are traded during the ninety (90) day period immediately preceding
each Pricing Date, but in no event shall such 73% be less than $1.50 (the
"Second Exchange Period Floor Price"). The Second Exchange Period Floor Price
shall be subject to appropriate adjustment in the event of subdivision,
dividends, combination or consolidation of Imatron Common Stock. On each Pricing
Date Imatron shall advise the Purchasers of the applicable Second Exchange
Period Price.
(b) Termination. The exchange rights pursuant to this Section
5.3 shall terminate upon the earlier of (i) the IPO Date, (ii) five business
days after the fourth anniversary of June 26, 1996; or (iii) upon conversion of
the Shares.
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(c) Adjustments for Subdivisions, Dividends, Combinations or
Consolidations of Series A Preferred Stock. In the event the Shares shall be
combined, consolidated or subdivided by reclassification or otherwise, into a
lesser or greater number of shares of Series A Preferred, the Second Period
Exchange Price shall be proportionately increased or decreased such that the
aggregate value of all Series A Preferred Shares into which the Second Period
Exchange Price is divided to determine the exchange rate shall be not greater
than $16,000,000.
(d) Reorganization, Consolidation, Merger, etc. In case
Imatron after the Closing Date shall (a) effect a reorganization, (b)
consolidate with or merge into any other entity, or (c) transfer all or
substantially all of its properties or assets to any other entity, then, in each
such case, the Purchaser, upon the exercise hereof, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, during the Second Exchange Period
shall be entitled to receive (and Imatron shall be required to deliver), in lieu
of the Imatron Common Stock issuable upon exercise of the exchange rights as
provided in Section 5.3, the stock and other securities and property (including
cash) to which such Purchaser would have been entitled upon such consummation if
such Purchaser had so exchanged the Shares to such extent.
5.4 No Impairment. Imatron will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by Imatron but will at all times in good faith
assist in the carrying out of all the provisions of this Article 5 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Exchange Rights of the holders of the Series A Preferred against impairment.
5.5 Mechanics of Exchange. No fractional shares of Imatron Common Stock
shall be issued upon exchange of Series A Preferred. In lieu of any fractional
shares to which the holder would otherwise be entitled, Imatron shall pay cash
equal to such fraction multiplied by the then effective Exchange Price. Before
any holder of Series A Preferred shall be entitled to exchange the same into
full shares of Imatron Common Stock, it shall surrender the certificate(s)
therefor, duly endorsed, at the office of Imatron or of any transfer agent for
Imatron Common Stock together with any dividends or other distributions in cash,
securities or in kind which the Purchaser has received or is entitled to receive
from the date of issuance of the Series A Preferred to the date of exchange
(except for shares purchased pursuant to Section 5.7), and shall give written
notice to Imatron at such office that it elects to exchange the same. Imatron
shall, as soon as practicable thereafter but in no event later than five (5)
business days, issue and deliver at such office to such holder of Series A
Preferred, a certificate(s), registered in such names as specified by the
holder, for the number of shares of Imatron Common Stock to which it shall be
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a exchange into fractional shares of
Imatron Common Stock. Imatron shall use its reasonable best efforts to effect
such issuance and delivery within three (3) business days. Such exchange shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred to be converted,
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and the person(s) entitled to receive shares of Imatron Common Stock issuable
upon such exchange shall be treated for all purposes as the record holder(s) of
such shares of Imatron Common Stock on such date.
5.6 Reservation of Imatron Common Stock. Imatron shall at all times
have reserved from its authorized and unissued Imatron Common Stock a sufficient
number of shares of Imatron Common Stock to satisfy the exchange rights of the
shares of Series A Preferred Stock.
5.7 Participation Rights Offering. To the extent Imatron makes a rights
offering to all of its holders of Common Stock during the First Exchange Period
and the Second Exchange Period, the holders of the Shares shall be offered the
right to participate in such offering as if they had exchanged the Shares for
Imatron Common Stock.
5.8 Notices of Record Date. In the event that Imatron shall propose at
any time:
(a) to declare any dividend or distribution upon its Imatron
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(b) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(c) to effect any reclassification or recapitalization of its
Imatron Common Stock outstanding involving a change in the Imatron Common Stock;
or
(d) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then, in connection with each
such event, this corporation shall send to the holders of the Series A Preferred
shares:
(1) at least 30 days prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Imatron Common Stock
shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (c) and (d) above; and
(2) in the case of the matters referred to in (c) and
(d) above, at least 30 days prior written notice of the date when the same shall
take place (and specifying, if practicable, or estimating the date on which the
holders of Series A Preferred shall be entitled to exchange their Series A
Preferred for securities or other property deliverable upon the occurrence of
such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the Purchasers of Series A Preferred as provided in
Article 13 hereof.
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ARTICLE 6
AFFIRMATIVE COVENANTS
6.1 Use of Proceeds. Imatron and HeartScan covenant and agree with the
Purchasers that the net proceeds from the sale of the Shares, less all expenses
of the offering, shall be used generally as set forth in the Summary Offering
Memorandum (including the supplement thereto) dated March 1996 and in no event
shall less than $12,000,000 of such net proceeds be contributed to the capital
of HeartScan without additional consideration on the Closing Date.
6.2 Right of Participation. HeartScan hereby grants to each Purchaser
the right of participation to purchase, pro rata, all or any part of New
Securities (as defined in Section 6.2(a)) which HeartScan may, from time to
time, propose to sell and issue. A pro rata share, for purposes of this right of
participation, is the quotient obtained by dividing the sum of (x) the aggregate
number of shares of HeartScan Common Stock held by the Purchaser plus (y) the
number of shares of HeartScan Common Stock into which the Shares held by the
Purchaser may be converted by the sum of (x) the total number of outstanding
shares of HeartScan Common Stock plus (y) the total number of shares of
HeartScan Common Stock issuable upon conversion of all outstanding capital stock
convertible into HeartScan Common Stock or upon the exercise of all options and
warrants to purchase HeartScan Common Stock.
(a) Except as set forth below, "New Securities" shall mean any
shares of capital stock of HeartScan, including Common Stock and Preferred
Stock, whether now authorized or not, and rights, options or warrants to
purchase said shares of capital stock, and securities of any type whatsoever
that are, or may become, convertible into said shares of capital stock.
Notwithstanding the foregoing, "New Securities" does not include (i) securities
offered to the public generally pursuant to a Qualified Public Offering as
defined in Section 5.1(c), (ii) securities issued pursuant to the acquisition of
an unaffiliated corporation by HeartScan by merger, purchase of substantially
all of the assets or other reorganization whereby HeartScan or its shareholders
own not less than fifty-one percent (51%) of the voting power of the surviving
or successor corporation, (iii) shares of HeartScan's Common Stock or options
exercisable for the purchase of Common Stock issued to employees, officers and
directors of, and consultants and franchisees to, HeartScan, pursuant to any
incentive program approved by the Board of Directors of HeartScan, (iv) stock
issued pursuant to any rights or agreements outstanding as of the date hereof,
including, without limitation, convertible securities, options and warrants, (v)
stock issued in connection with any stock split, stock dividend or
recapitalization by HeartScan.
(b) In the event that HeartScan proposes to undertake an
issuance of New Securities, it shall first make an offering of such new
securities to each Purchaser by giving the Purchaser written notice of its
intention, describing the type of New Securities, and the price and terms upon
which HeartScan proposes to issue the same. The Purchaser shall have fifteen
(15) business days from the date of receipt of any such notice to agree to
purchase up to its pro rata share of such New Securities for the price and upon
the terms specified in the notice by giving
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written notice to HeartScan and stating therein the quantity of New Securities
to be purchased.
(c) In the event that the Purchaser fails to exercise the
right of participation within said fifteen (15) business day period, HeartScan
shall promptly, in writing, inform each Purchaser which purchases all the shares
available to it ("Fully-Exercising Purchaser") of any other Purchaser's failure
to do likewise. During the ten-day period commencing after receipt of such
information, each Fully-Exercising Investor shall be entitled to purchase, pro
rata, shares not subscribed for by the other Purchasers. If all New Securities
are not elected to be obtained as provided herein, HeartScan shall have sixty
(60) days thereafter to sell or enter into an agreement (pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within thirty
(30) days from the date of said agreement) to sell the New Securities not
elected to be purchased by the Purchaser at the price and upon terms no more
favorable to the purchasers of such securities than specified in HeartScan's
notice. In the event HeartScan has not sold the New Securities or entered into
an agreement to sell the New Securities within said sixty (60) day period (or
sold and issued New Securities in accordance with the foregoing within thirty
(30) days from the date of said agreement), HeartScan shall not thereafter issue
or sell any New Securities without first offering such securities in the manner
provided above.
(d) The right of participation granted under this Section 6.2
shall expire upon the of a Qualified Public Offering.
(e) The right of participation hereunder is not assignable, in
whole or in part, except from the Purchaser to a transferee of the Shares so
long as such transferee owns not less than 3,125 shares of Series A Preferred
Stock or equivalent shares of Common Stock on an as-converted basis
(appropriately adjusted in accordance with the terms hereof).
6.3 Financial Information. Upon written request of a Purchaser,
HeartScan will mail the following reports to each Purchaser:
(a) As soon as practicable after the end of each fiscal year,
and in any event within 90 days thereafter, audited consolidated balance sheets
of HeartScan as of the end of such fiscal year, and consolidated statements of
income and shareholders equity and consolidated statements of cash flows of
HeartScan, and any subsidiary for such year, prepared in accordance with
generally accepted accounting principles and accompanied by a report of an
independent certified public accountant of recognized standing selected by
HeartScan; and
(b) As soon as practicable after the end of the first, second
and third thirteen week accounting periods in each fiscal year of HeartScan and
in any event within 45 days thereafter, a consolidated balance sheet of
HeartScan as of the end of each such period, and consolidated statements of
income and shareholders equity and consolidated statements of cash flows of
HeartScan and any subsidiary for such period and for the then current fiscal
year to date, prepared in accordance with generally accepted accounting
principles (other than for accompanying notes), subject to changes resulting
from year-end audit adjustments.
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(c) So long as the Purchaser is a holder of at least 1,500
Shares such other information relating to the financial condition, business,
prospects or corporate affairs of HeartScan as a Purchaser from time to time may
reasonably request, including, but not limited to annual budgets and financial
plans; provided, however, that HeartScan shall not be obligated to provide
information which it reasonably considers to be a trade secret or similar
confidential information unless the Purchaser provides satisfactory assurances
in writing that it will maintain the confidentiality of the information and not
use it in any manner detrimental to HeartScan.
(d) In addition to the foregoing, HeartScan will permit the
Purchaser, at the Purchaser's expense, to visit and inspect HeartScan's
properties, to examine its books of account and records and to discuss
HeartScan's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Purchaser, provided, however, that
HeartScan shall not be obligated pursuant to this section to provide access to
any information which it reasonably considers to be a trade secret or similar
confidential information unless the Purchaser provides satisfactory assurances
in writing that it will maintain the confidentiality of the information and not
use it any manner detrimental to HeartScan.
(e) The Purchaser agrees that any information obtained by the
Purchaser pursuant to this Section which is identified in writing by HeartScan
to be confidential to HeartScan will not be disclosed without the prior written
consent of HeartScan.
6.4 Purchasers' Right to Elect Directors.
(a) Effective as of the Closing Date, two (2) representatives
of the Purchasers shall have been elected directors of HeartScan. Imatron and
HeartScan shall take all action necessary to ensure that such representatives
are duly elected in accordance with HeartScan's Bylaws. So long as Purchasers
retain ownership in the aggregate shares of Common Stock (or shares convertible
into such shares) equal to or greater than 20% of HeartScan's Common Stock
(including outstanding Common Stock, shares of capital stock convertible into
Common Stock and options to purchase Common Stock) HeartScan shall include two
(2) representatives of the Purchasers among the persons nominated to the Board
of Directors at each annual meeting of HeartScan's stockholders, and if and so
long as Purchasers retain ownership in the aggregate shares of Common Stock (or
shares convertible into such shares) equal to or greater than 10% of HeartScan's
Common Stock (including outstanding Common Stock, shares of capital stock
convertible into Common Stock and options to purchase Common Stock) HeartScan
shall include one (1) representative of the Purchasers among the persons
nominated to the Board of Directors at each annual meeting of HeartScan's
stockholders.
(b) At any time at which HeartScan's shareholders will have
the right to or will vote for or consent in writing to the election of
directors, the Purchasers and Imatron hereby agree to vote such shares of
HeartScan's capital stock presently owned or hereafter acquired by them, or over
which they have voting control as are necessary to cause and maintain the
election to the Board of Directors of the Purchasers' designated representatives
as provided above.
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(c) This Section 6.4 shall terminate on the earlier to occur
of the following: (a) the date on which HeartScan has consummated a Qualified
Public Offering, (b) the date on which the Purchasers ownership in the aggregate
shares of Common Stock (or shares convertible into such shares) is less than 10%
of HeartScan's Common Stock (including outstanding Common Stock, shares of
capital stock convertible into Common Stock and options to purchase Common
Stock), and (c) the tenth anniversary of the effective date of this Agreement.
6.5 Termination. The covenants set forth in this Section 6, unless
otherwise provided, shall terminate and be of no further force or effect at such
time as HeartScan completes a Qualified Public Offering.
ARTICLE 7
NEGATIVE COVENANTS
HeartScan covenants and agrees that on and after the Closing Date,
without the prior written approval of two-thirds in interest of the Purchasers,
it will not:
7.1 Dealing with Affiliates. Enter into any material transaction,
including, without limitation, any loans or extensions of credit, release or
guarantee, management contract or royalty agreements, deferred or contingent
compensation agreement, consulting or other agreement with any affiliate;
provided however, that any wholly-owned subsidiary and any entity in which
HeartScan shall have a direct or indirect financial interest together with
unaffiliated third parties shall not be an affiliate for purposes of this
Section 7.1.
7.2 Conduct of Business. Engage in any business other than the business
engaged in or proposed to be engaged in by HeartScan or any subsidiary on the
date hereof and any businesses or activities substantially similar or related
thereto.
7.3 Sale of Securities. Issue and sell any securities other than (i) a
Qualified Public Offering, (ii) up to 470,000 shares of HeartScan's Common Stock
or options exercisable for the purchase of Common Stock issued to employees,
officers and directors of, and consultants and franchisees to, HeartScan,
pursuant to any incentive program approved by the Board of Directors of
HeartScan, and (iii) stock issued pursuant to any outstanding security as of the
date hereof or issuable in connection with this offering.
7.4 Liquidation; Merger, etc. Liquidate or dissolve, merge, consolidate
or sell substantially all of its assets.
7.5 Dividends; Distributions; etc. Declare or pay any dividends; or
purchase, redeem or otherwise acquire for value or make any other distribution
with respect to any of HeartScan's capital stock, other than the repurchase of
shares of capital stock from terminating or terminated employees at a price no
greater than fair market value.
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7.6 Investments. Invest, directly or indirectly, in any business or
enterprise other than in connection with the operation of its business such as a
joint venture organized to own or operate a coronary scanning center; provided
however, pending the use of the net proceeds of this offering in their
businesses and subject to the provisions of Section 6.1, above, Imatron and
HeartScan may invest such net proceeds in short term interest bearing deposits
and securities.
ARTICLE 8
TRANSFERABILITY OF SECURITIES
8.1 Transferability. The Shares and the Imatron Exchange Shares shall
not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. Each Purchaser will cause any
proposed purchaser, assignee, transferee, or pledgee of the Shares or the
Imatron Exchange Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
8.2 Restrictive Legend. Each certificate representing (i) the Shares
and (ii) the Imatron Exchange Shares, and (iii) any other securities issued in
respect of such securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event shall (unless otherwise
permitted by the provisions of Section 8.3 below) be stamped or otherwise
imprinted with the following legend (in addition to any legend required under
applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE CORPORATION RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT."
Each Purchaser consents to the issuer of such securities
making a notation on its records and giving instructions to any transfer agent
of the Shares or of the Imatron Exchange Shares in order to implement the
restrictions on transfer established in this Agreement. As used hereinafter the
term "Restricted Securities" shall mean the securities of Imatron and HeartScan
required to bear the legend set forth in this section.
8.3 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 8.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than a
transfer not involving a change in beneficial ownership), unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the
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holder thereof shall give written notice to the issuer thereof of such holder's
intention to effect such transfer, sale, assignment or pledge. Each such notice
shall reasonably describe the manner and circumstances of the proposed transfer,
sale, assignment or pledge, and shall, if reasonably requested by the issuer, be
accompanied, at such holder's expense by either (i) written opinion of legal
counsel who shall be, and whose legal opinion shall be, reasonably satisfactory
to Imatron and the issuer of the relevant securities addressed to Imatron and
such issuer, to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act, or
(ii) a "no action" letter from the Securities and Exchange Commission (the
"Commission") to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted securities
in accordance with the terms of the notice delivered by the holder to Imatron.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear, except if such transfer is made pursuant to Rule 144, the
appropriate restrictive legend set forth in Section 8.2 above, except that such
certificate shall not bear such restrictive legend if in the opinion of counsel
for such holder and Imatron such legend is not required in order to establish
compliance with any provision of the Securities Act. HeartScan shall respond
promptly to any such request, but in no event more than ten (10) business days
following receipt of such written notice.
ARTICLE 9
REGISTRATION RIGHTS RELATING TO IMATRON SECURITIES
9.1 Certain Definitions. As used in this Section, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "First Exchange Period Shares" shall be the shares of
Imatron Common Stock issuable upon exercise of the First Exchange Period Rights
provided in Section 5.2 hereof.
(c) "Second Exchange Period Shares" shall be the shares of
Imatron Common Stock issuable upon exercise of the Second Exchange Period Rights
provided in Section 5.3 hereof.
(d) "Holder" shall mean any Purchaser holding Registrable
Securities and any person holding Registrable Securities to whom the rights
under this Agreement have been transferred in compliance with Section 9.9
hereof. A Purchaser shall be deemed to hold any securities to which it has the
right to exchange pursuant to this Agreement.
(e) "Registrable Securities" means the Imatron Exchange Shares
issuable pursuant to the Exchange Rights; provided, however, that shares of
Imatron Common Stock or
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other securities shall only be treated as Registrable Securities if and so long
as (i) such securities have not been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (ii)
all such securities may be sold by the Holder thereof under Rule 144 promulgated
under the Securities Act, or a successor rule, within such period as Purchaser
may sell all such securities.
(f) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
(g) "Registration Expenses" shall mean all expenses, except as
otherwise stated below, incurred in complying with Sections 9.2-9.5 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for Imatron
and all reasonable fees and disbursements of one counsel for the selling
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of Imatron which shall be paid in any event by Imatron and
Selling Expenses (as hereinafter defined)).
(h) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of the
securities registered by the Holders and, except as set forth above, all fees
and disbursements of counsel to Holder.
(i) "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
9.2 Registration of First Exchange Period Shares. Within one hundred
twenty (120) days following the Closing Date Imatron will effect such
registration as will permit or facilitate the sale and distribution of the First
Exchange Period Shares.
9.3 Registration of Second Exchange Period Shares.
(a) Within eighteen (18) months following the Closing Date,
Imatron will effect such registration as will permit or facilitate the sale and
distribution of the Second Exchange Period Shares. In addition, after fourteen
(14) months following the Closing Date, if any Holder or Holders request that
Imatron file a registration statement on Form S-3 (or any successor form to Form
S-3) for a public offering of shares of Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and Imatron is a registrant
entitled to use Form S-3 to register the Registrable Securities for such an
offering, Imatron shall use its best efforts to cause such Registrable
Securities to be registered for the offering on such form and to cause such
Registrable Securities to be qualified in such jurisdictions as the Holder or
Holders may reasonably request; provided, however, that Imatron shall not be
required to effect more than one registration pursuant to this Section 9.3 in
any six (6) month period or more than a total of two registrations under this
Section 9.3., or if the anticipated offering price net of underwriting
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discounts and commissions would be less than $1,000,000. Upon receipt of a
notice from a Holder pursuant to this Section 9.3, Imatron will promptly give to
each other Holder written notice thereof; and include in such registration (and
any related qualification under blue sky laws or other compliance) and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after receipt of such
written notice from Imatron, by any such other Holder.
(b) Notwithstanding the foregoing, Imatron shall not be
obligated to take any action pursuant to this Section 9.3 in any particular
jurisdiction in which Imatron would be required to execute a general consent to
service of process in effecting such registration, qualification or compliance
unless Imatron is already subject to service in such jurisdiction and except as
may be required by the Securities Act.
9.4 Expenses of Registration. All Registration Expenses incurred in
connection with a registration pursuant to Sections 9.2 and 9.3 shall be borne
by Imatron except that any registrations in excess of two pursuant to Section
9.3 shall be borne pro rata by the Holder or Holders requesting the registration
according to the number of Registrable Securities included in such registration.
Unless otherwise stated, all Selling Expenses relating to securities registered
on behalf of the Holders and all other registration expenses shall be borne by
the Holders of such securities pro rata on the basis of the number of shares so
registered.
9.5 Registration Procedures. In the case of each registration,
qualification or compliance effected by Imatron pursuant to this Agreement,
Imatron will keep each Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense Imatron will promptly:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective until the distribution
described in the Registration Statement has been completed. In the event a
registration on Form S-3 shall be available to Imatron, the Registration
Statement shall be filed in such form.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that Imatron shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless Imatron is
already subject to service in such jurisdiction and except as may be required
under the Securities Act.
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(d) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form with the managing underwriter or such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(e) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by Imatron are then listed.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities registered, in each case not later than the effective
date of such registration.
(h) Furnish, at the request of any Holder participating in the
registration of Registrable Securities pursuant to this Article 9, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Article 9, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing Imatron for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of Imatron, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(i) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters or the Holders may
reasonably request in order to facilitate the public offering of such
securities.
(j) Furnish to the Holders such information as such Holders
may reasonably request in order for such Holders to perform such due diligence
in connection with any registration as they deem necessary or appropriate.
(k) Remove the legend provided for under Section 8.2 hereof
upon such
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registration; provided however, Imatron may stamp or otherwise imprint on the
certificates a legend providing that a prospectus must be delivered in
connection with any sale thereof.
(l) Deliver to each Holder a letter confirming the compliance
of each registration statement with the requirements of the Securities Act and
the fact that such registration statement does not contain an untrue statement
of a material fact and does not omit to state a material fact required to make
the statements therein not false or misleading.
(m) It shall not be a condition of registration under this
Article 9 that the Holder exchange the Shares for Imatron Common Stock.
9.6 Indemnification.
(a) Imatron will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act or the 1934 Act, with respect to
which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act or the 1934
Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading, or any violation by Imatron of the Securities Act, or the
1934 Act, or any rule or regulation promulgated under the Securities Act, or the
1934 Act, or under any state securities law or under common law, applicable to
Imatron in connection with any such registration, qualification or compliance,
and Imatron will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that Imatron will not be liable (i) for amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Imatron (which consent shall not
be unreasonably withheld) and (ii) in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to Imatron by
an instrument duly executed by such Holder, controlling person or underwriter
and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify Imatron, each of its
directors and officers, each underwriter, if any, of
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Imatron's securities covered by such a registration statement, each person who
controls Imatron or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
Imatron, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to Imatron by an instrument duly executed by such Holder and stated to
be specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this subsection (b) (i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), and (ii) shall be limited in an amount equal to
the aggregate net proceeds of the shares sold by such Holder, except to the
extent such liability arises out of or is based on willful misconduct by such
Holder.
(c) Each party entitled to indemnification under this Section
9.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement except to the extent that the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses, but shall pay the fees and expenses of one
separate counsel retained by the Indemnified Party in the event of such conflict
of interest. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section 9.6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss,
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liability, claim, damage, or expense referred to therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(f) The obligations of Imatron and Holders under this Section
9.6 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article 9 and otherwise.
9.7 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to Imatron such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as Imatron may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
9.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration or pursuant
to a registration on Form S-3, Imatron agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that Imatron becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) File with the Commission in a timely manner all reports
and other documents required of Imatron under the Securities Act and the
Securities Exchange Act of 1934, as amended (at any time after it has become
subject to such reporting requirements); and
(c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser forthwith upon request a written statement by Imatron
as to its compliance with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by Imatron for an offering of its securities to the general
public), and of the Securities Act and the Securities Exchange Act of 1934 (at
any time after it has become subject to such reporting requirements), a copy of
the most recent annual or quarterly report of Imatron, and such other reports
and documents of Imatron and other
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information in the possession of or reasonably obtainable by Imatron as a
Shareholder may reasonably request in availing itself of any rule or regulation
of the Commission allowing a Shareholder to sell any such securities without
registration.
9.9 Transfer of Registration Rights. The rights to cause Imatron to
register securities granted Holders under Sections 9.2 and 9.3 may be assigned
to a transferee or assignee in connection with any transfer or assignment of
Registrable Securities by a Holder provided that: (i) such transfer may
otherwise be effected in accordance with applicable securities laws and (ii)
such assignee or transferee becomes a party to this Agreement and assumes all of
the obligations of the transferring Holder under Article 9.
9.10 Additional Shares. In the event that Imatron shall fail to comply
with Section 9.5(b) or fail to cause the registration with respect to the First
Exchange Period Shares to become effective within one hundred twenty (120) days
of the Closing Date as provided in Section 9.2 or in the event Imatron shall
fail to cause the registration of the Second Exchange Period Shares to become
effective within eighteen (18) months of the Closing Date as provided in Section
9.3, Imatron shall pay to the Purchasers for each month or portion thereof until
such registrations become effective an amount equal to one percent (1%) of the
greater of (i) the purchase price paid for such shares pursuant to this
Agreement, or (ii) the value of such shares measured by the average closing
price of a share of Imatron Common Stock on the five trading days immediately
preceding the dates one hundred twenty (120) days and eighteen (18) months
following the Closing Date, as the case may be. Such payments shall be paid by
the delivery to the Purchasers of shares of Imatron Common valued in the same
manner as in (ii) above. Provided that Imatron shall continue to use its
reasonable best efforts to cause such registration to become effective as
promptly as practicable, the delivery of such shares shall be in full
satisfaction of any liability on the part of Imatron for failing to register
such shares as provided herein; provided further however, that such delivery
shall not excuse Imatron from the obligation to register all of such shares
which obligation shall continue. Any shares of Imatron Common Stock issued
pursuant to this Section 9.10 shall be subject to the same registration rights
provided in this Section 9. In connection with the issuance of such shares, each
Purchaser shall, if requested by Imatron, confirm in writing with respect to
such shares the representations and warranties set forth in Sections 4.1-4.6
above.
ARTICLE 10
REGISTRATION RIGHTS RELATING TO HEARTSCAN SECURITIES
10.1 Certain Definitions. As used in this Section, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
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(b) "Holder" shall mean any Purchaser holding HeartScan
Registrable Securities and any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in compliance with Section
10.10 hereof. A Purchaser shall be deemed to hold any HeartScan securities into
which it has a right to convert.
(c) "Registrable Securities" means (i) the HeartScan Common
Stock to be issued upon the conversion of the Shares, and (ii) any common or
preferred stock of HeartScan issued or issuable in respect of the Shares sold
and transferred pursuant to this Agreement or other securities issued or
issuable upon any stock split, stock dividend, recapitalization, or similar
event, or any capital stock otherwise issued or issuable with respect to the
Shares sold and transferred pursuant to this Agreement; provided, however, that
shares of HeartScan Common Stock or other securities shall only be treated as
Registrable Securities if and so long as (A) such securities have not been sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (B) all such securities may be sold by the
Holder thereof under Rule 144 promulgated under the Securities Act, or a
successor rule, within such period as Purchaser may sell all such securities.
(d) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
(e) "Registration Expenses" shall mean all expenses, except as
otherwise stated below, incurred by HeartScan in complying with Sections
10.2-10.6 hereof, including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees, fees and disbursements of
counsel for HeartScan and all reasonable fees and disbursements of one counsel
for the selling Holders, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of HeartScan which shall be paid in any
event by HeartScan and Selling Expenses (as hereinafter defined)).
(f) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
commission thereunder, all as the same shall be in effect at the time.
(g) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth above.
(i) "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
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10.2 Registration by HeartScan.
(a) Notice of Registration. If at any time or from time to
time HeartScan shall determine to register any of its equity securities, either
for its own account or the account of a security holder or holders, other than
(i) a registration relating solely to employee benefit plans or (ii) a
registration relating solely to a Rule 145 transaction, HeartScan will: (A)
promptly give to each Holder written notice thereof; and (B) include in such
registration (and any related qualification under blue sky laws or other
compliance) and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within twenty (20)
days after receipt of such written notice from HeartScan, by any Holder.
(b) Underwriting. If the registration of which HeartScan gives
notice is for a registered public offering involving an underwriting, HeartScan
shall so advise the Holders as a part of the written notice given pursuant to
Section 10.2. In such event the right of any Holder to registration pursuant to
this Section 10.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with HeartScan and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by HeartScan. Notwithstanding any other provision of this
Section 10.2, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may require from each Holder, as a condition for including such
Holder's Registrable Securities in such registration, the agreement from the
Holder not to sell any or part of the Registrable Securities for a period of one
hundred twenty (120) days following the effective date of the registration
statement. If any Holder or holder disapproves of the terms of any such
underwriting, he or she may elect to withdraw therefrom by written notice to
HeartScan and the managing underwriter.
(c) Right to Terminate Registration. HeartScan shall have the
right to terminate or withdraw any registration initiated by it under this
Section 10.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
10.3 Registration on Form S-3.
(a) If any Holder or Holders request that HeartScan file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of Registrable Securities the reasonably anticipated
aggregate price to the public of which, net of underwriting discounts and
commissions, would exceed $1,000,000, and HeartScan is a registrant entitled to
use Form S-3 to register the Registrable Securities for such an offering,
HeartScan shall use its best efforts to cause such Registrable Securities to be
registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as the Holder or Holders may
reasonably request; provided, however, that
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HeartScan shall not be required to effect more than one registration pursuant to
this Section 6.6 in any six (6) month period or more than a total of two
registrations under this Section 6.6., or if the anticipated offering price net
of underwriting discounts and commissions would be less than $1,000,000. The
notice provisions of Section 6.6 shall be applicable to each registration
initiated under this Section 10.3.
(b) Notwithstanding the foregoing, HeartScan shall not be
obligated to take any action pursuant to this Section 10.3: (i) in any
particular jurisdiction in which HeartScan would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless HeartScan is already subject to service in
such jurisdiction and except as may be required by the Securities Act; (ii) if
HeartScan, within ten (10) days of the receipt of the request of the initiating
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement with the commission within ninety (90) days of receipt of
such request (other than with respect to a registration statement relating to a
Rule 145 transaction, an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities); (iii)
during the period starting with the date sixty (60) days prior to HeartScan's
estimated date of filing of, and ending on the date six (6) months immediately
following, the effective date of any registration statement pertaining to
securities of HeartScan (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), provided that
HeartScan is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or (iv) if HeartScan shall
furnish to such Holder or Holders a certificate signed by the President of
HeartScan stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to HeartScan or its shareholders for registration
statements to be filed at such time, then HeartScan's obligation to use its best
efforts to file a registration statement shall be deferred for a period not to
exceed one hundred twenty (120) days from the receipt of the request to file
such registration by such Holder; provided however, that HeartScan shall not
utilize this right more than once in any twelve month period. The limitations
set forth in this Section 10.3(b) shall not apply to registrations under Section
10.2
10.4 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, HeartScan shall not, without the consent of Holders of a
majority of the Registrable Securities, enter into any agreement granting any
holder or prospective holder of any securities of HeartScan registration rights
with respect to such securities unless such new registration rights, including
standoff obligations, are subordinate to the registration rights granted Holders
hereunder.
10.5 Expenses of Registration. All Registration Expenses incurred in
connection with a registration pursuant to Sections 10.2 and 10.3 shall be borne
by HeartScan except that any registrations in excess of two pursuant to Section
10.3 shall be borne pro rata by the Holder or Holders requesting the
registration according to the number of Registrable Securities included in such
registration. Unless otherwise stated, all Selling Expenses relating to
securities registered on behalf of the Holders and all other Registration
Expenses shall be borne by the Holders of such securities pro rata on the basis
of the number of shares so registered.
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10.6 Registration Procedures. In the case of each registration,
qualification or compliance effected by HeartScan pursuant to this Agreement,
HeartScan will keep each Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense HeartScan will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the Registration
Statement has been completed; provided, however, that (i) such 180-day period
shall be extended for a period of time equal to the period the Holder refrains
from selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of HeartScan; and (ii) in the
case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 180-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Act, permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (A) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (B) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (A) and (B) above to be contained in periodic reports
filed pursuant to Section 13 or 15(d) of the 1934 Act in the registration
statement.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Use its best efforts to register and qualify the
securities covered by such registration statement such other securities or Blue
sky laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that HeartScan shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless HeartScan is
already subject to service in such jurisdiction and except as may be required
under the Securities Act.
(d) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form with the managing underwriter or such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(e) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the
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Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by HeartScan are then listed.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities registered, in each case not late than the effective date
of such registration.
(h) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Article 10, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Article 10, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing HeartScan for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of HeartScan, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(i) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
(j) Furnish to the Holders such information as such Holders
may reasonably request in order for such Holders to perform such due diligence
in connection with any registration as they deem necessary or appropriate.
(k) Remove the legend provided for under Section 8.2 hereof
upon such registration; provided however, Imatron may stamp or otherwise imprint
on the certificates a legend providing that a prospectus must be delivered in
connection with any sale thereof.
(l) Deliver to each Holder a letter confirming the compliance
of each registration statement with the requirements of the Securities Act and
the fact that such registration statement does not contain an untrue statement
of a material fact and does not omit to state a material fact required to make
the statements therein not false or misleading.
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(m) It shall not be a condition of registration under this
Article that the Holder convert the Shares into HeartScan Common Stock.
10.7 Indemnification.
(a) HeartScan will indemnify each Holder, each of its officers
and directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act or the 1934 Act, with respect to
which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act or the 1934
Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading, or any violation by HeartScan of the Securities Act, or
the 1934 Act, or any rule or regulation promulgated under the Securities Act, or
the 1934 Act, applicable to HeartScan in connection with any such registration,
qualification or compliance, and HeartScan will reimburse each such Holder, each
of its officers and directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action; provided, however, that HeartScan will
not be liable (i) for amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of HeartScan (which consent shall not be unreasonably withheld) and (ii) in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to HeartScan by an instrument duly executed by such
Holder, controlling person or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify HeartScan, each of its
directors and officers, each underwriter, if any, of HeartScan's securities
covered by such a registration statement, each person who controls HeartScan or
such underwriter within the meaning of Section 15 of the Securities Act, and
each other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein
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not misleading, and will reimburse HeartScan, such Holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to HeartScan by an instrument duly
executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) (i) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld),
and (ii) shall be limited in an amount equal to the aggregate initial public
offering price of the shares sold by such Holder, unless such liability arises
out of or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this Section
10.7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement except to the extent
the failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action and provided further, that the
Indemnifying Party shall not assume the defense for matters as to which there is
a conflict of interest or separate and different defenses, but shall pay the
fees and expenses of one separate counsel retained by the Indemnified Party in
the event of such conflict of interest. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(d) If the indemnification provided for in this Section 10.7
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged
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untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of HeartScan and Holders under this
Section 10.7 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 10.7 and otherwise.
10.8 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to HeartScan such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as HeartScan may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
10.9 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration or
pursuant to a registration on Form S-3, after such time as a public market
exists for the Common Stock of HeartScan, HeartScan agrees to use its best
efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that HeartScan becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) File with the Commission in a timely manner all reports
and other documents required of HeartScan under the Securities Act and the
Securities Exchange Act of 1934, as amended (at any time after it has become
subject to such reporting requirements); and
(c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser forthwith upon request a written statement by HeartScan
as to its compliance with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by HeartScan for an offering of its securities to the general
public), and of the Securities Act and the Securities Exchange Act of 1934 (at
any time after it has become subject to such reporting requirements), a copy of
the most recent annual or quarterly report of HeartScan, and such other reports
and documents of HeartScan and other information in the possession of or
reasonably obtainable by HeartScan as a Shareholder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a
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Shareholder to sell any such securities without registration.
10.10 Transfer of Registration Rights. The rights to cause HeartScan to
register securities granted Holders under Sections 10.2 and 10.3 may be assigned
to a transferee or assignee reasonably acceptable to HeartScan in connection
with any transfer or assignment of Registrable Securities by a Holder provided
that: (i) such transfer may otherwise be effected in accordance with applicable
securities laws and (ii) such assignee or transferee becomes a party to this
Agreement and assumes all of the obligations of the transferring Holder under
this Section 10.10.
10.11 Standoff Agreement. Each Holder agrees upon the initial public
offering of HeartScan's securities in connection with any registration of
HeartScan's securities in an initial public offering other than (i) a
registration relating solely to employee benefit plans or (ii) a registration
relating solely to a Rule 145 transaction, upon request of HeartScan or the
underwriters managing any underwritten offering of HeartScan's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of HeartScan or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred twenty (120) days) from the effective date of such registration as may
be requested by the underwriters.
ARTICLE 11
CONDITIONS TO CLOSING OF THE PURCHASERS
The Purchasers' obligation to purchase the Shares at the Closing are
subject to the fulfillment of the following conditions (which conditions may be
waived by the Purchasers):
11.1 Representations and Warranties Correct. The representations and
warranties made by Imatron in Section 3 hereof shall be true and correct as of
the Closing Date.
11.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by Imatron on or prior to the Closing Date shall
have been performed or complied with by Imatron.
11.3 Qualifications. Imatron shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
in connection with the offer and sale of the Shares.
11.4 Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby, shall have
been reasonably approved by counsel to the Purchasers.
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11.5 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Purchasers' counsel, and such counsel shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
11.6 Opinion of Imatron's and HeartScan's Counsel. Each purchaser shall
have received from Severson & Werson, A Professional Corporation, counsel for
Imatron and HeartScan, an opinion, dated as of the Closing, in the form attached
hereto as Exhibit E.
11.7 Secretaries' Certificates. The respective Secretaries of Imatron
and HeartScan shall deliver to counsel for the Purchasers at the Closing
certificates certifying, among other things, the approval of the transactions
contemplated hereby by Imatron's and HeartScan's Board of Directors, and the
continued full force and effect of Imatron's and HeartScan's respective Articles
of Incorporation and Bylaws.
11.8 Good Standing. Imatron and HeartScan shall deliver to counsel for
the Purchasers at the Closing certificates of good standing executed by the
Secretary of State in each jurisdiction where Imatron and HeartScan are
incorporated.
11.9 Equipment Supply Agreement. Imatron and HeartScan shall have
entered into an Equipment Supply Agreement substantially in the form previously
provided to counsel to the Purchasers.
ARTICLE 12
CONDITIONS TO CLOSING OF IMATRON
Imatron's obligation to transfer and sell the Shares at the Closing is,
at the option of Imatron, subject to the fulfillment on or before the Closing
Date of the following conditions:
12.1 Representations and Warranties. The representations made by the
Purchasers in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Closing Date.
12.2 Further Representations and Warranties. In the event any Purchaser
shall have been organized for the purpose of purchasing the Shares, the
beneficial owners of such Purchaser shall have provided to Imatron and HeartScan
such information, representations and warranties as Imatron and HeartScan may
reasonably require.
12.3 Qualifications. Imatron shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
in connection with the offer and sale of the Shares.
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12.4 Legal Matters. All material matters of a legal nature which
pertain to this Agreement, and the transactions contemplated hereby, shall have
been reasonably approved by counsel to Imatron.
ARTICLE 13
MISCELLANEOUS
13.1 Governing Law. This Agreement shall be governed in all respects by
the internal laws of the State of Delaware.
13.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser or
Imatron and the closing of the transactions contemplated hereby.
13.3 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of a Purchaser to purchase the Shares shall
not be assignable without the consent of Imatron.
13.4 Entire Agreement; Amendment. This Agreement or any term hereof,
may be amended, waived, discharged or terminated with the written consent of
Imatron, HeartScan and Purchasers holding at least a majority of the Shares (or
HeartScan Common Stock issuable upon conversion of the Shares). This Agreement
and the other documents delivered pursuant hereto at the Closing constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
13.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
or courier, addressed as follows:
To Imatron or
HeartScan: Imatron Inc.
389 Oyster Point Blvd.
South San Francisco, California 94080
Attention: President
With a copy to: Severson & Werson
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One Embarcadero Center, 25th Floor
San Francisco, California 94111
Attention: Roger S. Mertz, Esq.
To any Purchaser: At its address specified in
Exhibit A hereto
With a copy to: Werbel McMillin & Carnelutti
711 Fifth Avenue, 5th Floor
New York, New York 10022
Attention: Stephen M. Davis, Esq.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective on receipt.
13.6 Delays or Omissions. Except as expressly provided herein, no delay
or omissionto exercise any right, power or remedy accruing to any holder of any
Shares, upon any breach or default of Imatron under this Agreement, shall impair
any such right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
13.7 California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
13.8 Expenses. Imatron and the Purchasers shall bear their own expenses
incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby, except that Imatron shall pay the reasonable legal expenses
incurred by the Purchasers not to exceed an aggregate total of $10,000.
13.9 Remedies. Imatron and HeartScan stipulate that the remedies at law
of the
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<PAGE>
Purchasers in the event of any default or threatened default by either Imatron
or HeartScan in the performance of or compliance with any of the terms of this
Agreement are not and will not be adequate and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof.
13.10 Attorneys Fees. In any action or proceeding brought to enforce
any provision of this Agreement, the successful party shall be entitled to
recover the reasonable attorneys' fees in addition to any other available
remedy.
13.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
13.12 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
13.13 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
The foregoing agreement is hereby executed as of the date first above
written.
IMATRON
IMATRON INC.
By /s/ S. Lewis Meyer
-------------------------
S. Lewis Meyer,
President
HEARTSCAN
HEARTSCAN IMAGING, INC.
By /s/ Dale E. Grant
-------------------------
Dale E. Grant,
President
PURCHASERS
SC FUNDAMENTAL VALUE FUND, L.P.
By /s/
---------------------------
Its________________________
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<PAGE>
HAVE A HEART, LLC
By /s/
---------------------------
Its Managing Member
SC FUNDAMENTAL VALUE, BVI, LTD.
By /s/
---------------------------
Its
(Signature Page to Stock Purchase Agreement)
ELLIOTT ASSOCIATES, L.P.
By /s/
---------------------------
Its
CRAMER, ROSENTHAL, McGLYNN, INC.
By /s/
---------------------------
Its
RAVICH REVOCABLE TRUST OF 1989
JESS M. RAVICH, TRUSTEE
By /s/ Jess M. Ravich, Trustee
----------------------------
Jess M. Ravich, Trustee
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<PAGE>
GRACE BROTHERS, LTD.
By /s/ Bradford T. Whitmore
----------------------------
BRADFORD T. WHITMORE
Its General Partner
(Signature Page to Stock Purchase Agreement)
THE GALILEO FUND, L.P.
By DDJ Galileo, LLC, its General Partner
By /s/ Judy K. Mencher
----------------------------
Judy K. Mencher
Its: Member
WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc.,
its Attorney-in-Fact
By /s/
----------------------------
Its
LAKESHORE INTERNATIONAL LIMITED
By: Global Capital Management, Inc.,
Investment Manager
By /s/ John D. Brandenborg
----------------------------
John D. Brandenborg
Its: Vice President
MERCED PARTNERS LIMITED PARTNERSHIP
By: Global Capital Management, Inc.,
Investment Manager
By /s/ John D. Brandenborg
----------------------------
John D. Brandenborg
Its: Vice President
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<PAGE>
MODERN WOODMEN OF AMERICA
By /s/
----------------------------
Its
(Signature Page to Stock Purchase Agreement)
/s/ Joseph B. Galichia, M.D.
----------------------------
JOSEPH B. GALICHIA, M.D.
LAGUNITAS PARTNERS, L.P.
By /s/ Jon Gruber
----------------------------
Jon Gruber, General Partner
THE COPERNICUS FUND, L.P.
By /s/
----------------------------
Its___________________________________
CREDIT SUISSE (GUERNSEY) LIMITED
By /s/
----------------------------
Its
BANQUE PRIVEE EDMOND DE
ROTHSCHILD S.A.
By /s/ Charles Cay
----------------------------
Charles Cay
Its: First Vice President
By /s/ Lisiane Spicher
----------------------------
Lisiane Spicher
Its: Authorized Officer
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<PAGE>
REINFRANK LIVING TRUST UA 6/13/96
By /s/ R. Rudolph Reinfrank
----------------------------
R. Rudolph Reinfrank, Trustee
(Signature Page to Stock Purchase Agreement)
STEPHEN P. RADER AND ANNE W. RADER,
and their successors, as trustees of the
Rader Living Trust
dated 09/09/94
/s/ Stephen P. Rader
----------------------------
By Stephen P. Rader, Trustee
/s/ Gary Post
----------------------------
GARY POST
A.B. LAFFER, V.A. CANTO & ASSOCIATES
By /s/
----------------------------
Its___________________________________
/s/ Kathleen Sullivan
----------------------------
KATHLEEN SULLIVAN
/s/ Mark Siegel
----------------------------
MARK SIEGEL
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<PAGE>
Schedule of Exhibits
Exhibit A - Schedule of Purchasers
Exhibit B - Schedule of Exceptions
Exhibit C - Summary of Capitalization of Imatron and HeartScan
Exhibit D - Certificates of Designation of Preferences of Series A Preferred
Stock and Series B Preferred Stock
Exhibit E - Form of Opinion of Counsel to Imatron and HeartScan
-46-
<PAGE>
<TABLE>
EXHIBIT A
Schedule of Purchasers
<CAPTION>
Name of and Registered Purchase
Address of Purchaser Price No. of Shares
<S> <C> <C>
SC Fundamental Value Fund, $3,480,000 21,750
L.P.
712 Fifth Avenue
New York, NY 10019
Attn: Neil Koffler
Tel: (212) 957-3500
Fax (212) 957-3434
Have A Heart, LLC. $2,000,000 12,500
c/o The Yucaipa Companies
10000 Santa Monica Blvd., 5th
Floor
Los Angeles, CA 90067
Attn: Mark A. Resnik
Tel: (310) 789-7200
Fax: (310) 789-7201
SC Fundamental Value BVI, Ltd. $1,520,000 9,500
c/o Citco Fund Services
Corporate Center, West Bay Road
Box 31106 SMB
Grand Cayman, Cayman Islands
Tel: (212) 957-3500
Fax (212) 957-3434
Elliott Associates, L.P. $1,332,800 8,330
712 Fifth Avenue, 36th Floor
New York, New York 10019
Attn: Mark D. Brodsky
Tel: (212) 974-2151
Fax: (212) 974-2092
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<PAGE>
Ravich Revocable Trust of 1989 $1,000,000 6,250
Jess M. Ravich, Trustee
c/o Libra Investments, Inc.
11766 Wilshire Blvd., Suite 870
Los Angeles, CA 90025
Attn: Jess Ravich
Tel: (310) 312-5600
Fax: (310) 312-5665
Grace Brothers, Ltd. $900,000 5,625
1560 Sherman Avenue, Suite 9000
Evanston, IL 60201
Attn: Brad Whitmore
Tel: (847) 733-1230
Fax: (847) 733-0339
CRM Partners, L.P. $776,000 4,850
707 Westchester Ave.
White Plains, New York 10604
Attn: Gene Trainor
Tel: (914) 681-4475
Fax: (914) 682-3618
The Galileo Fund, L.P. $680,000 4,250
141 Linden St., Suite 4
Wellesley, MA 02181
Attn: Jay Burnham
Tel: (617) 283-8500
Fax: (617) 283-8555
-ii-
<PAGE>
Westgate International, L.P. $667,200 4,170
c/o Midland Bank Trust
Corporation
(Cayman) Limited
P.O. Box 1109
Mary Street
Grand Cayman, Cayman Islands
Notices to:
c/o Stonington Management
Corporation
712 Fifth Avenue. 36th Floor
New York, New York 10019
Attn: Mark D. Brodsky
Tel: (212) 974-2151
Fax: (212) 974-2092
Lakeshore International Ltd. $520,000 3,250
601 Lakeshore Parkway, Suite 200
Minnetonka, MN 55305
Attn: Dale Wilenbring
Tel: (612) 476-7241
Fax: (612) 476-7201
Merced Partners Limited $480,000 3,000
Partnership
By: Global Capital Management,
Inc.
General Partner
601 Carlson Parkway, Suite 200
Minnetonka, MN 55305
Attn: Dale Wilenbring
Tel: (612) 476-7241
Fax: (612) 476-7201
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<PAGE>
Modern Woodmen Of America $400,000 2,500
1701 First Avenue
Rock Island, IL 61201
Attn: Mike Dau
Tel: (309) 793-5566
Fax: (309) 786-1701
Joseph P. Galichia, M.D. $400,000 2,500
551 North Hillside, #410
Wichita, Kansas 67214
Tel: (316) 688-9112
Fax: (316) 688-9181
Lagunitas Partners L.P. $400,000 2,500
50 Osgood - Penthouse
San Francisco, CA 94133
Tel: (415) 981-2101
Fax: (415) 956-7858
CRM Retirement Partners, L.P. $384,000 2,400
707 Westchester Ave.
White Plains, New York 10604
Attn: Gene Trainor
Tel: (914) 681-4475
Fax: (914) 682-3618
The Copernicus Fund, L.P. $320,000 2,000
141 Linden Street, Suite 4
Wellesley, MA 02181
Tel: (617) 283-8500
Fax: (617) 283-8555
CRM Madison Partners, L.P. $192,000 1,200
707 Westchester Ave.
White Plains, New York 10604
Attn: Gene Trainor
Tel: (914) 681-4475
Fax: (914) 682-3618
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<PAGE>
Credit Suisse (Guernsey) Limited $128,000 800
Helvetia Court
P.O. Box 368
St. Peter Port, Guernsey
Channel Islands BY1 3YJ
Attn: Nikki Baudains
Tel: (41)(22) 818-9111
Fax: (41)(22) 818-9127
Banque Privee Edmond de $96,000 600
Rothschild,
S.A. Geneva
18 rue de Hesse
CH 1204 Geneve
Switzerland
Attn: Charles Gay, First Vice
President
Tel: (4122) 818.91.11
Fax: (4122) 818.91.21
Reinfrank Living Trust UA $72,000 450
6/13/95
R. Rudolph Reinfrank, Trustee
6725 Zumirez Drive
Malibu, CA 90265
Tel: (310) 551-2286
Fax: (310) 561-0591
Stephen P. Rader and Anne W. $72,000 450
Rader, and their successors, as
trustees of the Rader Living Trust
dated 09/09/94
18850 Rosita St.
Tarzana, CA 91356
Tel: (310) 556-7614
Fax: (310) 556-3568
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<PAGE>
Cramer, Rosenthal, McGlynn, $48,000 300
Inc.
707 Westchester Ave.
White Plains, New York 10604
Attn: Gene Trainor
Tel: (914) 681-4475
Fax: (914) 682-3618
Gary Post $48,000 300
Ambient Capital Group, Inc.
10990 Wilshire Blvd., Suite 1800
Los Angeles, CA 90024
Attn: Gary Post
Tel: (310) 445-2323
Fax: (310) 445-2330
A.B. Laffer, V.A. Canto $48,000 300
& Associates
5405 Morehouse Drive, Suite 340
San Diego, CA 92121
Attn: Howard Appel
Tel: (619) 458-0811
Fax: (619) 458-9856
Kathleen Sullivan $19,200 120
c/o David Cooper, CPA
11-11 Tahquitz Canyon Way,
Suite 113
Palm Springs, CA 92262
Tel: (619) 320-2002
Fax: (619)
Mark S. Siegel $16,800 105
c/o Remy Investors & Consultants
1801 Century Park East, Suite 111
Los Angeles, CA 90067
Tel: (310) 843-0050
Fax: (310) 843-0010
</TABLE>
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<PAGE>
EXHIBIT B
Exceptions
Section 3.4. Subsidiaries
HeartScan Imaging, Inc.
Imatron Japan Inc.
InVision Technologies, Inc.
<TABLE>
Section 3.7. Financial Statements
Imatron has guaranteed the following leases on behalf of HeartScan
Imaging, Inc.:
<CAPTION>
Initial
Monthly
Lessor Site Term Payment
<S> <C> <C> <C>
Finova Seattle, WA 06/95-07/00 $45,240
CIT Houston, TX 01/96-02/01 $36,316
NDS Washington, DC 07/96-06/01 $27,805
NDS Pittsburgh, PA 07/96-06/01 $27,805
Pacific Consolidated Seattle, WA 08/94-07/98 $ 6,449
TMH Medical Offices Houston, TX 06/95-05/00 $ 5,855
Laing Properties Washington, DC 01/96-12/06 $ 5,351
</TABLE>
Section 3.13. Litigation
Siemens Corporation, Imatron's distributor in the United States, Europe
and certain other countries, has asserted a claim against Imatron as a result of
the lapse of certain foreign registrations of one of the patents assigned to
Siemens by Imatron in connection with the March 31, 1995 agreement between the
companies. The technology involved in the patent is not presently used in any of
Imatron's products and Imatron believes that resolution of the claim will not
have a material adverse impact upon it. Imatron and Siemens have reached an
agreement in principle to substitute a new patent in place of the patent with
respect to which certain foreign registrations have lapsed.
Section 3.15. Registration Rights
Imatron has entered into numerous registration rights agreements with
purchasers of
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<PAGE>
its (Exhibit B - Continued)
securities in the 1992 unit offering, the 1995 private placement, the 1996
private placement and other minor purchasers of its securities. Pursuant to the
1996 private placement, Imatron has agreed to register 4,000,000 shares of its
Common Stock within 60 days of May 24, 1996. If such registration is not
effective as of such date, the purchasers of such shares have a right to rescind
the transaction.
HeartScan has agreed to provided registration rights to Imatron
covering the shares of common stock issuable upon conversion of its Series B
Preferred Stock.
Section 3.17. Material Contracts
See Exception to Section 3.13.
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<PAGE>
EXHIBIT C
<TABLE>
Summary of Pro-Forma Capitalization
<CAPTION>
Imatron Inc.
Common
Shares
<S> <C>
Common Stock outstanding 76,268,990
Common Stock issuable upon exercise of outstanding warrants 3,722,560
Common Stock reserved for issuance under option and other plans 6,648,209
Common Stock reserved for issuance under S-3 registration 1,500,000
Common Stock reserved for issuance under the Agreement 10,666,667
----------
98,806,426
==========
HeartScan Imaging, Inc.
Common
Shares
Common Stock Outstanding 21,094
Common Stock issuable upon conversion of Series A Preferred 1,000,000
Common Stock issuable upon conversion of Series B Preferred 1,000,000
Warrants to be issued in connection with Agreement 30,000
Common Stock reserved for issuance under stock option plans 448,906
---------
2,500,000
=========
</TABLE>
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<PAGE>
EXHIBIT D
Certificates of Designation of Series A Preferred Stock and Series B
Preferred Stock of HeartScan Imaging, Inc.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
HEARTSCAN IMAGING, INC.
Pursuant to Section 242
of the Corporation Law of the
State of Delaware
HeartScan Imaging, Inc. (the "Corporation"), a Corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify as follows:
The Board of Directors of the Corporation, on June 10, 1996, by
unanimous written consent pursuant to Section 141 of the General Corporation Law
of the State of Delaware, adopted resolutions pursuant to Section 242 of the
General Corporation Law of Delaware, setting forth an amendment to the
Certificate of Designation of the Series A Preferred Stock and declaring said
amendment to be advisable. The stockholder of the Corporation duly approved said
proposed amendment by written consent in accordance with Section 228 and 242 of
the General Corporation Law of the state of Delaware. The resolution setting
forth the amendment is as follows:
RESOLVED, that the Certificate of Designation of the Series A Preferred
Stock of this
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<PAGE>
Corporation be amended by restating in its entirety the Certificate of
Designation Relating to the Series A Preferred Stock of HeartScan Imaging, Inc.
to read as follows:
RESOLVED, that pursuant to the authority expressly granted by the
Certificate of Incorporation, as amended, of the Corporation, there is hereby
created a series of Preferred Stock, $.001 par value, consisting of 200,000
shares, the issuance of which is hereby authorized, which shall be designated
"Series A Preferred Stock" and which shall have the following rights,
preferences, voting powers, privileges and restrictions in addition to those set
forth in the Certificate of Incorporation, as amended, of the Corporation:
Section 1. Dividends. The holders of outstanding shares of Series A
Preferred shall be entitled to receive in any fiscal year, out of any assets at
the time legally available therefor, dividends in cash in such amounts and at
such times as the Board of Directors deems advisable. No dividend or other
distribution shall be declared or paid on any share of Common Stock (other than
a stock dividend payable in Common Stock) or on any share of any series or class
of Preferred Stock unless an equal dividend per share is declared on the Series
A Preferred (on an as-converted basis) and paid at the same time as on the
Common Stock.
Section 2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary, the holders of the Series A
Preferred shall be entitled on a pro rata basis to receive, prior to and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock and any other series or class of
Preferred Stock, including the Series B Preferred Stock, by reason of their
ownership thereof, the amount of One Hundred Sixty Dollars ($160.00) per share
for each share of Series A Preferred then held by them, and, in addition, an
amount equal to all accrued but unpaid dividends on the shares of Series A
Preferred then held by them. If upon occurrence of such event the assets and
funds thus distributed among the holders of the Series A Preferred Shares shall
be insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Series A
Preferred Shares in proportion to the preferential amount each such holder is
otherwise entitled to receive. After payment has been made to the holders of the
Series A Preferred Shares of the full amounts to which they shall be entitled as
aforesaid, the holders of the Common Stock, the Series A Preferred Shares, and
on any other series or class of Preferred Stock shall share ratably all
remaining assets of the Corporation in proportion to the number of shares of
Common Stock
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<PAGE>
then held by them (on an as-converted basis).
(b) For purposes of this Section 2, a merger or consolidation
of this Corporation with or into any other Corporation or Corporations (other
than a wholly owned subsidiary Corporation), or the merger of any other
Corporation(s) into this Corporation, or the sale of all or substantially all of
the assets of this Corporation, or any corporate reorganization, in which
consolidation, merger, sale of assets or reorganization the stockholders of this
Corporation receive distributions in cash, property, rights or securities as a
result of such consolidation, merger, sale of assets or reorganization, shall be
treated as a liquidation, dissolution or winding up of this Corporation and such
distributions shall be made in accordance with Section 2(a) above.
Section 3. Conversion. The holders of the Series A Preferred shall have
conversion rights as follows: (the "Conversion Rights"):
(a) Optional and Automatic Conversion. Each share of Series A
Preferred shall be convertible at the option of the holder thereof, without
payment of additional consideration at any time after the date of issuance of
such share at the office of the Corporation or any transfer agent for the Series
A Preferred, into such number of fully paid and nonassessable shares of Common
Stock, as is determined by dividing Ten Dollars ($10.00) by the Conversion
Price, determined as hereinafter provided, in effect at the time of conversion.
The price at which shares of Common Stock shall be deliverable upon conversion
(the "Conversion Price") shall initially be One Dollar ($1.00) per share of
Common Stock (the "Initial Conversion Price"). Such Initial Conversion Price
shall be subject to adjustment as hereinafter provided. Each share of Series A
Preferred shall be automatically converted, without the payment of additional
consideration, into such shares of Common Stock upon the closing of a Qualified
Public Offering. For purposes of this subsection (b), a "Qualified Public
Offering" means an initial public offering of the HeartScan's common stock to
the general public with a post-offering pre-proceeds fully-diluted valuation of
the equity existing as of June 26, 1996 (such equity consisting of 100,000
issued and outstanding shares of Series A Preferred, 100,000 issued and
outstanding shares of Series B Preferred, 21,094 shares of issued and
outstanding reserved Common Stock and 448,906 reserved shares of Common Stock)
of no less than $56,000,000 for an initial public offering during the first year
following June 26, 1996 and no less than $78,000,000 for an initial public
offering during the second year following June 26, 1996 for an initial public
offering resulting in net proceeds to the Corporation of not less than
$15,000,000, which initial public offering is effected pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission under the Securities Act.
(b) Mechanics of Conversion of Series A Preferred Stock. No
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<PAGE>
fractional shares of Common Stock shall be issued upon conversion of Series A
Preferred. In lieu of any fractional shares to which the holder would otherwise
be entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price. Before any holder of Series A Preferred
shall be entitled to convert the same into full shares of Common Stock, (s)he
shall surrender the certificate(s) therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series A Preferred respectively,
and shall give written notice to the Corporation at such office that (s)he
elects to convert the same. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred, a certificate(s), registered in such names as specified by the
holder, for the number of shares of Common Stock to which (s)he shall be
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional shares of
Common Stock, and any accrued and unpaid dividends on the converted Series A
Preferred Stock respectively. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series A Preferred to be converted, and the person(s) entitled to
receive shares of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder(s) of such shares of Common Stock on such
date. If the conversion is in connection with an underwritten offer of
securities registered pursuant to the Securities Act of 1933 or with any other
transaction, the conversion may, at the option of any holder tendering Series A
Preferred for conversion, be conditioned upon the closing with the underwriter
of the sale of securities pursuant to such offering or the closing of the other
transaction, in which event the holder entitled to receive the Common Stock
issuable upon such conversion of the Series A Preferred shall not be deemed to
have converted such Series A Preferred until immediately prior to the closing of
such sale of securities or of such other transaction.
(c) Adjustments to Conversion Price.
(i) In the event the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, the Conversion Price in effect
immediately prior to such combination or consolidation shall, concurrently with
the effectiveness of such combination or consolidation, be proportionately
increased.
(ii) In the event the Corporation shall declare or
pay any dividend on the Common Stock payable in Common Stock or in the event the
outstanding shares of Common Stock shall be subdivided, by reclassification or
otherwise than by payment of a dividend in Common Stock, into a greater number
of shares of Common Stock, the Conversion Price in effect immediately prior to
such dividend or subdivision shall be proportionately decreased:
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<PAGE>
(A) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or
(B) in the case of any such
subdivision, at the close of business on the date immediately prior to the date
upon which such corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not
have been fully paid on the date fixed therefor, the adjustment previously made
in the Conversion Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted as of the time of actual payment of such
dividend.
(d) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred against impairment.
The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of Common Stock shares remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Series A Preferred
as appropriate.
(e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred as appropriate a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series A Preferred, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series A Preferred.
(f) Reservation of Common Stock. The Corporation shall at all
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<PAGE>
times have reserved from its authorized and unissued Common Stock a sufficient
number of shares of Common Stock to satisfy the conversion rights of the shares
of Series A Preferred Stock.
(g) Notices of Record Date. In the event that this Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iv) to merge or consolidate with or into any other
Corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then, in connection with each
such event, this Corporation shall send to the holders of the Series A Preferred
shares:
(1) at least 30 days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to
in (iii) and (iv) above, at least 30 days' prior written notice of the date when
the same shall take place (and specifying, if practicable, or estimating the
date on which the holders of Common Stock shares shall be entitled to exchange
their Common Stock shares for securities or other property deliverable upon the
occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Series A Preferred at the address for each
such holder as shown on the books of this Corporation.
Section 4. Voting Rights. Except as otherwise required by law, each
share of Series A Preferred Stock issued and outstanding shall have the right to
vote with the holders of Common Stock on all matters, each share of Series A
Preferred Stock having that number of votes equal to the number of Common
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<PAGE>
Stock shares into which the Series A Preferred is convertible as adjusted from
time to time.
Section 5. Residual Rights. All rights accruing to the outstanding
shares of this Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.
Section 6. No reissuance of Series A Preferred. No shares of Series A
Preferred acquired by this Corporation by reason of redemption, purchase,
conversion or otherwise, shall be reissued.
Section 7. Covenants. In addition to any other rights provided by law,
so long as any Series A Preferred shall be outstanding, this Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than two-thirds of such outstanding shares of Series A
Preferred:
(a) Amend or repeal any provision of, or add any provision to,
this Corporation's Certificate of Incorporation or Bylaws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, any Series A Preferred or increase or
decrease the number of Series A Preferred authorized hereby;
(b) reclassify any Common Stock into shares having any
preference or priority as to dividends or assets superior to or on a parity with
any such preference or priority of the Series A Preferred;
(c) apply any of its assets to the redemption, retirement,
purchase or acquisition directly or indirectly. through subsidiaries or
otherwise, of any Common Stock, except from officers, directors or employees of
or consultants to this Corporation or its subsidiaries upon termination of
employment, directorship or consulting pursuant to the terms of stock purchase
agreements or restricted stock purchase agreements entered into with such
officers, directors, employees or consultants.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its seal to be affixed
hereto and this Certificate of Amendment to be signed by its President and
attested by its Secretary this 10th day of June, 1996.
HEARTSCAN IMAGING, INC.
BY_______________________
President
ATTEST:
- ------------------------
Secretary
-viii-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
HEARTSCAN IMAGING, INC.
Pursuant to Section 242
of the Corporation Law of the
State of Delaware
HeartScan Imaging, Inc. (the "Corporation"), a Corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify as follows:
The Board of Directors of the Corporation, on June 10, 1996, by
unanimous written consent pursuant to Section 141 of the General Corporation Law
of the State of Delaware, adopted resolutions pursuant to Section 242 of the
General Corporation Law of Delaware, setting forth an amendment to the
Certificate of Designation of Series B Preferred Stock and declaring said
amendment to be advisable. The stockholder of the Corporation duly approved said
proposed amendment by written consent in accordance with Section 228 and 242 of
the General Corporation Law of the state of Delaware. The resolution setting
forth the amendment is as follows:
RESOLVED, that the Certificate of Designation of Series B Preferred
Stock of this Corporation be amended by restating in its entirety the
Certificate of Designation Relating to the Series B Preferred Stock of HeartScan
Imaging, Inc. to read as follows:
RESOLVED, that pursuant to the authority expressly granted by the
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<PAGE>
Certificate of Incorporation, as amended, of the Corporation, there is hereby
created a series of Preferred Stock, $.001 par value, consisting of 100,000
shares, the issuance of which is hereby authorized, which shall be designated
"Series B Preferred Stock" and which shall have the following rights,
preferences, voting powers, privileges and restrictions in addition to those set
forth in the Certificate of Incorporation, as amended, of the Corporation:
Section 1. Dividends. The holders of outstanding shares of Series B
Preferred shall be entitled to receive in any fiscal year, out of any assets at
the time legally available therefor, dividends in cash in such amounts and at
such times as the Board of Directors deems advisable. No dividend or other
distribution other than a stock dividend payable in Common Stock shall be
declared or paid on any share of Common Stock or on any share of any series or
class of Preferred Stock unless an equal dividend per share is declared on the
Series B Preferred (on an as-converted basis) and paid at the same time as on
the Common Stock.
Section 2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary, the holders of the Series B
Preferred shall be entitled on a pro rata basis to receive, prior to and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their ownership
thereof, the amount of Eighty Dollars ($80.00) per share for each share of
Series B Preferred then held by them, and, in addition, an amount equal to all
accrued but unpaid dividends on the shares of Series B Preferred then held by
them. The liquidation preference of the Series B Preferred Stock shall only be
payable after payment has been made to the holders of the Corporation's Series A
Preferred Stock (hereinafter designated collectively with the Series B Preferred
Stock as the "Preferred Shares") of a liquidation preference in the amount of
One Hundred Sixty Dollars ($160.00) per share plus accrued and unpaid dividends
on the shares of the Series A Preferred Stock for each such share of Series A
Preferred held by them. If upon occurrence of such event the assets and funds
thus distributed among the holders of the Preferred Shares shall be insufficient
to permit the payment to such holders of the full preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Preferred Shares in
proportion to the preferential amount each such holder is otherwise entitled to
receive. After payment has been made to the holders of the Preferred Shares of
the full amounts to which they shall be entitled as aforesaid, and in the order
of preference as aforesaid, the holders of the Common Stock and the Preferred
Shares shall share ratably all remaining assets of the Corporation in proportion
to the number of shares of Common Stock then held by them (on an as-converted
basis).
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<PAGE>
(b) For purposes of this Section 2, a merger or consolidation
of this Corporation with or into any other Corporation or Corporations (other
than a wholly owned subsidiary Corporation), or the merger of any other
Corporation(s) into this Corporation, or the sale of all or substantially all of
the assets of this Corporation, or any corporate reorganization, in which
consolidation, merger, sale of assets or reorganization the stockholders of this
Corporation receive distributions in cash, property, rights or securities as a
result of such consolidation, merger, sale of assets or reorganization, shall be
treated as a liquidation, dissolution or winding up of this Corporation and such
distributions shall be made in accordance with Section 2(a) above.
Section 3. Conversion. The holders of the Series B Preferred shall have
conversion rights as follows: (the "Conversion Rights"):
(a) Optional and Automatic Conversion. Each share of Series B
Preferred shall be convertible at the option of the holder thereof, without
payment of additional consideration at any time after the date of issuance of
such share at the office of the Corporation or any transfer agent for the Series
B Preferred, into such number of fully paid and nonassessable shares of Common
Stock, as is determined by dividing Ten Dollars ($10.00) by the Conversion
Price, determined as hereinafter provided, in effect at the time of conversion.
The price at which shares of Common Stock shall be deliverable upon conversion
(the "Conversion Price") shall initially be One Dollar ($1.00) per share of
Common Stock (the "Initial Conversion Price"). Such Initial Conversion Price
shall be subject to adjustment as hereinafter provided. Each share of Series B
Preferred shall be automatically converted, without the payment of additional
consideration, into such shares of Common Stock upon the closing of a Qualified
Public Offering. For purposes of this subsection (b), a "Qualified Public
Offering" means an initial public offering of the HeartScan's common stock to
the general public with a post-offering pre-proceeds fully-diluted valuation of
the equity existing as of June 26, 1996 (such equity consisting of 100,000
issued and outstanding shares of Series A Preferred, 100,000 issued and
outstanding shares of Series B Preferred, 21,094 shares of issued and
outstanding reserved Common Stock and 448,906 reserved shares of Common Stock)
of no less than $56,000,000 for an initial public offering during the first year
following June 26, 1996 and no less than $78,000,000 for an initial public
offering during the second year following June 26, 1996 for an initial public
offering resulting in net proceeds to the Corporation of not less than
$15,000,000, which initial public offering is effected pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission under the Securities Act.
(b) Mechanics of Conversion of Series B Preferred Stock. No
fractional shares of Common Stock shall be issued upon conversion of Series B
Preferred. In lieu of any fractional shares to which the holder would otherwise
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<PAGE>
be entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price. Before any holder of Series B Preferred
shall be entitled to convert the same into full shares of Common Stock, (s)he
shall surrender the certificate(s) therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series B Preferred respectively,
and shall give written notice to the Corporation at such office that (s)he
elects to convert the same. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series B
Preferred, a certificate(s), registered in such names as specified by the
holder, for the number of shares of Common Stock to which (s)he shall be
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional shares of
Common Stock, and any accrued and unpaid dividends on the converted Series B
Preferred Stock respectively. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series B Preferred to be converted, and the person(s) entitled to
receive shares of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder(s) of such shares of Common Stock on such
date. If the conversion is in connection with an underwritten offer of
securities registered pursuant to the Securities Act of 1933 or with any other
transaction, the conversion may, at the option of any holder tendering Series B
Preferred for conversion, be conditioned upon the closing of the sale of
securities pursuant to such offering or the closing of the other transaction, in
which event the holder entitled to receive the Common Stock issuable upon such
conversion of the Series B Preferred shall not be deemed to have converted such
Series B Preferred until immediately prior to the closing of such sale of
securities or other transaction.
(c) Adjustments to Conversion Price.
(i) In the event the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, the Conversion Price in effect
immediately prior to such combination or consolidation shall, concurrently with
the effectiveness of such combination or consolidation, be proportionately
increased.
(ii) In the event the Corporation shall declare or
pay any dividend on the Common Stock payable in Common Stock or in the event the
outstanding shares of Common Stock shall be subdivided, by reclassification or
otherwise than by payment of a dividend in Common Stock, into a greater number
of shares of Common Stock, the Conversion Price in effect immediately prior to
such dividend or subdivision shall be proportionately decreased:
(A) in the case of any such dividend,
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<PAGE>
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend, or
(B) in the case of any such subdivision, at
the close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not
have been fully paid on the date fixed therefor, the adjustment previously made
in the Conversion Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted as of the time of actual payment of such
dividend.
(d) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred against impairment.
The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of Common Stock shares remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Series B Preferred
as appropriate.
(e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series B Preferred as appropriate a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series B Preferred, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series B Preferred.
(f) Reservation of Common Stock. The Corporation shall at all
times have reserved from its authorized and unissued Common Stock a sufficient
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<PAGE>
number of shares of Common Stock to satisfy the conversion rights of the shares
of Series B Preferred Stock.
(g) Notices of Record Date. In the event that this Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iv) to merge or consolidate with or into any other
Corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then, in connection with each
such event, this Corporation shall send to the holders of the Series B Preferred
shares:
(1) at least 30 days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to
in (iii) and (iv) above, at least 30 days' prior written notice of the date when
the same shall take place (and specifying, if practicable, or estimating the
date on which the holders of Common Stock shares shall be entitled to exchange
their Common Stock shares for securities or other property deliverable upon the
occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Series B Preferred at the address for each
such holder as shown on the books of this Corporation.
Section 4. Voting Rights. Except as otherwise required by law, each
share of Series B Preferred Stock issued and outstanding shall have the right to
vote with the holders of Common Stock on all matters, each share of Series B
Preferred Stock having that number of votes equal to the number of Common Stock
shares into which the Series B Preferred is convertible as adjusted from
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<PAGE>
time to time.
Section 5. Residual Rights. All rights accruing to the outstanding
shares of this Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.
Section 6. No reissuance of Series A Preferred. No shares of Series A
Preferred acquired by this Corporation by reason of redemption, purchase,
conversion or otherwise, shall be reissued.
Section 7. Covenants. In addition to any other rights provided by law,
so long as any Series B Preferred shall be outstanding, this Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than two-thirds of such outstanding shares of Series A
Preferred:
(a) Amend or repeal any provision of, or add any provision to,
this Corporation's Certificate of Incorporation or Bylaws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, any Series B Preferred or increase or
decrease the number of Series B Preferred authorized hereby;
(b) reclassify any Common Stock into shares having any
preference or priority as to dividends or assets superior to or on a parity with
any such preference or priority of the Series B Preferred;
(c) apply any of its assets to the redemption, retirement,
purchase or acquisition directly or indirectly. through subsidiaries or
otherwise, of any Common Stock, except from officers, directors or employees of
or consultants to this Corporation or its subsidiaries upon termination of
employment, directorship or consulting pursuant to the terms of stock purchase
agreements or restricted stock purchase agreements entered into with such
officers, directors, employees or consultants.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its seal to be affixed
hereto and this Certificate of Amendment to be signed by its President and
attested by its Secretary this 10th day of June, 1996.
HEARTSCAN IMAGING, INC.
BY_______________________
President
ATTEST:
- ------------------------
Secretary
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<PAGE>
EXHIBIT E
Form of Opinion of Counsel to Imatron and HeartScan
June 24, 1996
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
Ladies and Gentlemen:
We have acted as counsel to Imatron Inc., a New Jersey corporation
("Imatron") and HeartScan Imaging, Inc., a Delaware corporation ("HeartScan") in
connection with the execution and delivery of that certain Stock Purchase
Agreement dated as of June 24, 1996 (the "Purchase Agreement"). This opinion is
furnished to you pursuant to Section 11.6 of the Purchase Agreement. Capitalized
terms used herein and not otherwise defined herein are used herein as defined in
the Purchase Agreement.
For purposes of this opinion, we have examined the following:
(a) A copy of the Purchase Agreement;
(b) A copy of the Certificate of Incorporation of
Imatron, as amended, certified by the Secretary of State of New Jersey on June
10, 1996;
(c) A copy of the Certificate of Incorporation of
HeartScan, as amended, certified by the Secretary of State of Delaware on June
17, 1996;
(d) A copy of the By-laws of Imatron certified to us
by an officer of Imatron as being complete and in full force and effect as of
the date of this opinion.
<PAGE>
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
June 24, 1995
Page 2
(e) A copy of the By-laws of HeartScan certified to
us by an officer of HeartScan as being complete and in full force and effect as
of the date of this opinion.
(f) Records certified to us by an officer of Imatron
constituting all records of proceedings and actions of the board of directors of
Imatron relating to the transaction contemplated by the Purchase Agreement.
(g) Records certified to us by an officer of
HeartScan constituting all records of proceedings and actions of the board of
directors and shareholders of HeartScan relating to the transaction contemplated
by the Purchase Agreement.
We have assumed the genuineness and authenticity of all signatures and
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies and the
accuracy and completeness and authenticity of certificates of public officials
and of all corporate records and information made available to us by the
Company. We have assumed with respect to the Purchasers, that each has the power
to enter into and perform all of its obligations under the Purchase Agreement,
the due authorization by the Purchaser of all requisite actions, the due
execution and delivery of the Purchase Agreement by the Purchasers and the
enforceability of the Purchase Agreement against the Purchasers.
In rendering this opinion, we relied as to factual matters upon the
certificates referred to above. We have also examined originals or copies of
such corporate documents or records of the Company as we have deemed appropriate
for the opinions expressed herein. Where we render an opinion "to our knowledge"
or with respect to matters "of which we have knowledge," it is based on the
actual knowledge of attorneys in this firm who are currently involved with the
transactions contemplated by the Purchase Agreement and a review of the above
certificates. With your consent we have not examined any records of any court,
administrative tribunal or other similar entity in connection with our opinion
in Paragraph 7 below. While nothing has come to our attention leading us to
question or giving us reasonable grounds to question the accuracy of such
certificates or information, we have not, except as specifically noted in this
opinion, made any independent review or investigation.
Based on the foregoing, we are of the opinion that:
(a) Imatron is a corporation duly organized, validly existing and in
good standing under the laws of the New Jersey and has all requisite power and
authority to own, lease and
<PAGE>
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
June 24, 1995
Page 3
operate its properties and assets and to conduct its business as now being
conducted. HeartScan is a corporation duly organized, validly existing and in
good standing under the laws of the Delaware and has all requisite power and
authority to own, lease and operate its properties and assets and to conduct its
business as now being conducted.
(b) Imatron and HeartScan have all requisite corporate power and
authority to enter into the Purchase Agreement, to sell the Shares, and to carry
out their respective obligations under the Purchase Agreement. The execution,
delivery and performance of the Purchase Agreement have been duly and validly
authorized by all requisite corporate proceedings on the part of Imatron and
HeartScan respectively. The Purchase Agreement when executed and delivered by
Imatron and HeartScan, shall constitute valid and binding obligations of each,
subject to the following qualifications: (i) that certain provisions of the
Agreement may not be enforceable, but that such enforceability will not, subject
to the other exceptions, qualifications, and limitations in this Letter, render
the contract invalid as a whole or substantially interfere with realization of
the principal benefits provided by the Agreement; (ii) subject to the laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies; and (iii) except to the extent that Sections 9.6, 9.10 and
10.7 may be limited by public policy and applicable judicial decisions.
(c) The execution and delivery of the Purchase Agreement by Imatron and
HeartScan do not, and the consummation by Imatron and HeartScan of the
transactions contemplated thereby will not result in or constitute: (a) a
default, breach or violation of or under the Certificate of Incorporation or
Bylaws of either; (b) to our knowledge, a default, breach or violation of or
under any mortgage, deed of trust, indenture, note, bond, license, lease
agreement or other instrument or obligation to which either Imatron or HeartScan
is a party or by which any of their respective properties or assets are bound;
(c) to our knowledge, a violation of any statute, rule, regulation, order,
judgement or decree of any court, public body or authority by which either
Imatron or HeartScan or any of their respective properties or assets are bound;
(d) to our knowledge an event which (with notice or lapse of time or both) would
permit any person to terminate, accelerate the performance required by, or
accelerate the maturity of any indebtedness or obligation of Imatron or
HeartScan under any Agreement or commitment to which either is a party or by
which the either is bound or by which any of their respective properties or
assets are bound; (e) to our knowledge, the creation or imposition of any lien,
charge or encumbrance on any property of Imatron or HeartScan under any
agreement or commitment to which either is a party or by which either is bound
or by which any of their respective properties or assets are bound; or (f) to
our knowledge an event which would require any consent under any agreement or
commitment to which Imatron or HeartScan is a party or
<PAGE>
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
June 24, 1995
Page 4
by which the either is bound or by which any of their respective properties or
assets are bound.
(d) The authorized capital stock of Imatron consists of: (a)
100,000,000 shares of Common Stock, of which (i) 76,268,990 shares are issued
and outstanding, (ii) 3,687,560 shares have been reserved for issuance under
outstanding warrants, (iii) 6,648,209 shares have been reserved for issuance
under various stock plans, and (iii) 10,666,667 shares are reserved for exchange
hereunder; and (b) 10,000,000 shares of preferred stock of which (i) 2,632,813
shares have been designated "Series A Preferred Stock," none of which is issued
and outstanding, and (ii) 380,000 shares have been designated "Series B
Preferred Stock," none of which is issued and outstanding.
(e) The authorized capital stock of HeartScan consists of: (a)
4,000,000 shares of Common Stock, of which (i) 21,094 shares are issued and
outstanding, (ii) 448,906 shares have been reserved for issuance pursuant stock
option and other plans, (iii) 30,000 shares have been reserved for issuance upon
the exercise of warrants to be issued in connection with the purchase and sale
of the Shares, and (iv) 2,000,000 shares have been reserved for issuance upon
conversion of the outstanding Series A Preferred Stock and Series B Preferred
Stock; and (b) 1,000,000 shares of preferred stock of which (i) 200,000 shares
have been designated "Series A Preferred Stock" and of which 100,000 are issued
and outstanding, and (ii) 100,000 shares of which have been designated "Series B
Preferred Stock" and of which all 100,000 shares are issued and outstanding.
(f) The HeartScan Preferred Shares to be transferred at Closing, and
the HeartScan common shares into which those Shares can be converted, have been
duly authorized by all necessary corporate action on the part of HeartScan.
(g) To our knowledge, there is no suit, claim, investigation or
proceeding pending or threatened against Imatron or HeartScan which questions
the validity of the Purchase Agreement or any action taken or to be taken
pursuant thereto. To our knowledge, except as set forth on Exhibit B to the
Purchase Agreement, there is no action, suit, claim, investigation or proceeding
pending or threatened, against or involving Imatron or HeartScan or any of their
properties or assets. To our knowledge, there are no outstanding orders,
judgments, injunctions, awards, or decrees of any court, arbitrator or
governmental or regulatory body against Imatron or HeartScan.
(h) Subject to the accuracy of the Purchasers' representations as set
forth in the Purchase Agreement, the offer, sale and issuance of the Shares to
be sold in conformity with the terms of the Purchase Agreement constitute
transactions exempt from the registration
<PAGE>
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
June 24, 1995
Page 5
requirements of Section 5 of the Securities Act of 1933, as amended, and of the
California Corporate Securities Law of 1968.
(i) Except as set forth on Exhibit B to the Purchase Agreement and
except for the filing of any notice prior or subsequent to the Closing that may
be required under applicable state and/or federal securities laws, no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution and delivery by Imatron or HeartScan
of the Purchase Agreement, and for the offering, sale, execution or delivery of
the Shares, or for the performance by Imatron of its obligations under the
Purchase Agreement. Notwithstanding the foregoing, no opinion is rendered with
respect to whether HeartScan currently has or will in fact be able to obtain any
or all of the authorizations, consents, approvals licenses or registrations that
may in the future be necessary to implement it business plan.
In rendering the foregoing opinions, we have assumed, without
verification, the following:
(A) All representations, warranties and covenants contained in the
Purchase Agreement are accurate; provided, however, that any statement set forth
in a representation or warranty for which an opinion is rendered herein is
excluded from the scope of this assumption;
(B) There are no oral agreements among the parties which conflict with
or materially amend or supplement the provisions of the Purchase Agreement;
(C) The Purchasers will comply with their obligations under the
Purchase Agreement and with all requisite legal procedures in connection with
their rights in respect of such documents;
(D) That any wire transfers, drafts or checks tendered by any Purchaser
will be honored; and
(E) If a Purchaser is a corporation or other entity, it has have filed
any required state franchise, income or similar tax returns and has paid any
required state franchise, income or similar taxes.
<PAGE>
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
June 24, 1995
Page 6
With respect to assumptions (A) and (B), above, we confirm to you that
(i) we have no knowledge that any of the representations, warranties and
covenants contained in the Purchase Agreement are inaccurate, and (ii) we have
no knowledge of any oral agreements among the parties which conflict with or
materially amend or supplement the provisions of the Purchase Agreement.
Furthermore, in rendering the foregoing opinion, we make no
representation and express no opinion as to:
a. The enforceability of the indemnification provisions set forth in
the Purchase Agreement;
b. The compliance or noncompliance by Imatron or HeartScan with
applicable antifraud statues under the rules and regulations applicable to state
and federal laws concerning the issuance of securities;
c. The enforceability of any covenant by which a person agrees not to
compete with any other person.
The foregoing opinions are further qualified to the extent that the
validity or enforceability of any provisions of the Purchase Agreement are
subject to the following:
(i) Bankruptcy, insolvency, reorganization, moratorium, rehabilitation,
liquidation, conservatorship, receivership or other similar laws now or
hereafter in effect relating to creditors' rights generally;
(ii) Limitations on the availability of the remedy of specific
performance and injunctive and other forms of equitable relief by reason of
equitable defenses and the discretion of courts before which any proceeding
therefore may be brought;
(iii) The compliance or non-compliance with applicable state and
federal anti-fraud or misrepresentation statues, rules and regulations
concerning the issuance of securities;
(iv) Limitations on the enforceability of contracts or obligations by
entities deemed to be doing business in the State of California which have
failed to qualify to do business in the State of California or whose authority
to conduct business in the State of California has been suspended;
<PAGE>
To Each of the Purchasers Listed
on Exhibit A to the Purchase Agreement
June 24, 1995
Page 7
(v) Limitations based on state law and public policy regarding the
enforceability of express or implied waivers including, without limitation,
waivers of rights, claims or defenses;
(vi) Limitations on the enforceability of a requirement that provisions
of a document may only be amended or waived in writing, to the extent that an
oral agreement modifying provisions of the document has been performed;
(vii) Limitations on the effectiveness of "severability" provisions
depending on the materiality of the unenforceable provision to the document as a
whole and the undertakings of the parties thereunder;
(viii) The effect of California court decisions which have held that
certain provisions of agreements are unenforceable where a party's enforcement
of such provisions under the circumstances would violate the party's implied
covenant of good faith and fair dealing;
(ix) The effect of California, federal law or equitable principles
which limit the amount of attorneys' fees that can be recovered under certain
circumstances.
The opinion set forth herein is as of the date of this opinion and we
disclaim any undertaking to update this opinion based upon any changes in fact
or law of which we may become aware.
As you are aware, we are admitted to practice law only in the State of
California. Except with respect to the due incorporation and good standing of
Imatron and HeartScan, we express no opinion on any laws (including any laws
relating to conflicts of laws) other than the federal laws of the United States
of America and the laws of the State of California. With your permission we
assume, without investigation, that the laws of Delaware and California, and the
interpretations thereof, are the same. The preceding opinion is based solely on
such laws.
This opinion is for your benefit and may not be relied on by any other
person, or by you in any other context or for any other purpose, nor may copies
hereof be delivered to any other person without our prior written consent.
Very truly yours,
