As filed with the Securities and Exchange Commission on May 6, 1998
Registration No. 333-________
FORM S-3
SECURITIES AND EXCHANGE COMMISSION
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IMATRON INC.
(Exact name of issuer specified in its charter)
New Jersey 94-2880078
(State of incorporation) (I.R.S. Employer Identification No.)
389 Oyster Point Boulevard
South San Francisco, California 94080
(650) 583-9964
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
S. Lewis Meyer
President and Chief Executive Officer
Imatron Inc.
389 Oyster Point Boulevard
South San Francisco, California 94080
(650) 583-9964
(Name, address including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Roger S. Mertz, Esq.
Severson & Werson
One Embarcadero Center, 26th Floor
San Francisco, California 94111
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: ( )
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: ( X )
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: ( )
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: ( )
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: ( )
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C> <C>
Title of Each Class Proposed Maximum Proposed Maximum
Of Securities To Be Amount To Be Offering Price Aggregate Offering Amount Of
Registered Registered Per Share (1) Price (1) Registration Fee
Common Stock 15,037,875 $2.77 $41,654,914 $12,228
Shares
</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for purposes of determining the
registration fee, based on the average of the high and low sales prices on
April 30, 1998, as reported on the NASDAQ National Market System.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATE(S), AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
ii
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED MAY 6, 1998
PROSPECTUS
15,037,875 Shares
IMATRON INC.
Common Stock No Par Value
This Prospectus relates to the sale of up to 15,037,875 shares of Common Stock,
no par value, of Imatron Inc. (the "Company") by shareholders of the Company
(the "Selling Shareholders"). A total of 36,868 shares are currently issued and
outstanding (the "Outstanding Shares"); a total of 4,334,340 shares are issuable
upon the exercise of outstanding warrants (the "Warrants") (the "Warrant
Shares"); and a total of 10,666,667 shares are issuable upon the exercise of
outstanding Common Stock exchange rights (the "Exchange Rights") (the "Exchange
Rights Shares"). All of the Outstanding Shares, the Warrants, and the Exchange
Rights were previously issued by the Company to the Selling Shareholders in
private transactions. The Outstanding Shares, the Warrant Shares, and the
Exchange Rights Shares are collectively referred to in this Prospectus as the
"Shares." The Selling Shareholders intend to sell the Shares from time to time
in open market and/or private sales, or by any other appropriate method.
The Company will receive proceeds upon the exercise of the Warrants by the
Selling Shareholders, but will not receive any of the proceeds from the sale of
the Shares. The Company has agreed to bear all of the expenses in connection
with the registration (but not the sale) of the Shares.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is May 6, 1998
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TABLE OF CONTENTS
AVAILABLE INFORMATION.........................................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................3
THE COMPANY...................................................................3
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS...............................5
RISK FACTORS..................................................................5
USE OF PROCEEDS..............................................................12
OFFERING PRICE...............................................................13
SELLING SHAREHOLDERS.........................................................13
PLAN OF DISTRIBUTION.........................................................15
EXPERTS......................................................................15
LEGAL OPINION................................................................16
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AVAILABLE INFORMATION
Imatron Inc. ("Imatron" or the "Company") is subject to the informational
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the Commission's
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as at the following Regional Offices of the Commission: Northeast Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048 and Midwest
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained by mail from the Public Reference
Section of the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission's Internet address is http://www.sec.gov. The
Commission's Web site also contains reports, proxy and information statements,
and other information regarding the Company that has been filed electronically
with the Commission. Shares of the Company's Common Stock are traded on the
NASDAQ National Market System under the symbol "IMAT." Information concerning
the Company may also be obtained by contacting NASDAQ/NMS.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31, 1997,
filed April 16, 1998 (File No. 0-12405) and all amendments thereto and the
description of the Company's Common Stock contained in a registration statement
filed under the Exchange Act, including any amendment or report filed for the
purpose of updating such description, are hereby incorporated by reference into
this Prospectus. All documents filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of Common Stock shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents, except the Board Compensation
Committee Report on Executive Compensation and the Performance Graph included in
the Proxy Statement pursuant to Item 402(k) and (l) of Regulation S-K. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus. The Company will provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the information
that has been incorporated by reference in this Registration Statement filed
with the Commission under the Exchange Act with respect to the Common Stock
offered by the Prospectus, other than certain exhibits to such documents. Such
requests should be directed to the Chief Financial Officer, Imatron Inc., 389
Oyster Point Boulevard, South San Francisco, California, 94080, telephone number
(650) 583-9964.
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THE COMPANY
Imatron is a technology-based company principally engaged in the business of
designing, manufacturing, and marketing a high performance computed tomography
(CT) scanner that uses a scanning electron beam. CT refers to a diagnostic
imaging device in which cross-sectional (tomographic) images of a patient's
anatomy are acquired from multiple intensity readings taken as an x-ray source
rotates around the patient. ULTRAFAST CT technology is more than 20 times faster
than conventional computed tomography, enabling users to perform certain tests
involving organs in motion (e.g. the heart) that no other medical imaging
equipment is able to perform.
For over a decade, the scanner has been used in large and mid-sized hospitals
and free standing imaging clinics. The Company also provides service, parts, and
maintenance to hospitals and clinics that operate its scanners. The
technological advantage provided by high-speed tomography now provides Imatron
the opportunity to develop a new and additional market, by performing simple,
low cost, non-invasive screening to detect the earliest signs of heart disease
by means of the Coronary Artery Scan ("CAS"). This vast new market involves
activity in both diagnostic services and equipment manufacturing.
The Company is also engaged in the related businesses of performing research and
development for itself and others in the field of CT devices and of licensing
its patents and know-how in the field of imaging sciences.
Imatron was incorporated in New Jersey in February, 1983. Its executive offices
are located at 389 Oyster Point Boulevard, South San Francisco, California
94080, and its telephone number is (650) 583-9964.
In 1993, Imatron organized HeartScan Imaging, Inc. as a wholly-owned subsidiary
to develop and operate a network of company-owned coronary artery disease risk
assessment centers in cooperation and conjunction with the established medical
(primarily cardiology) community in specific metropolitan areas. In that same
year, HeartScan opened a test facility adjacent to Imatron's headquarters. In
July, 1995, it opened its first coronary artery disease risk assessment center
in Seattle, Washington. In January, 1996, it opened its second facility in
Houston, Texas. It opened similar facilities in Washington, D.C. and Pittsburgh,
Pennsylvania, in May, 1996. HeartScan's centers deliver the CAS diagnostic test
together with other risk factor tests in a manner consistent with established
channels of patient referral, as well as with the new channels of patient
referral being created by health care reform and the growth of managed-care
systems.
A significant component of HeartScan's approach is to offer the CAS procedure
and a full battery of coronary artery disease risk assessment testing to
consumers without necessarily requiring a physician's referral, an approach
designed to result in more rapid acceptance of the test and a shorter return on
the investment cycle. This is achieved by means of two broad and mutually
supportive approaches - increasing the number of coronary artery disease risk
assessment centers in operation, which in turn, both directly and indirectly,
increases the demand for Imatron's C-150/Evolution scanner currently in
distribution.
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HeartScan Imaging, Inc. was incorporated in Delaware in April, 1993. Its
executive offices are currently co-located with those of Imatron Inc. at 389
Oyster Point Boulevard, South San Francisco, California 94080, and its telephone
number is (650) 583-9964.
DISCOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Prospectus, including all documents incorporated by reference, includes
"forward-looking" statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act and the Private Securities Litigation
Reform Act of 1995. The forward-looking statements in this Prospectus reflect
the Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties, including specifically an absence of significant revenues, a
history of losses, no assurance that technology can be completed or that it will
not be delayed, significant competition, the uncertainty of proprietary rights,
the uncertainty as to indemnification risks, possible adverse effects of future
sales of shares on the market, trading risks of low-priced stocks and those
other risks and uncertainties discussed herein, that could cause actual results
to differ materially from historical results or those anticipated. In this
Prospectus, the words "anticipates," "believes," "expects," "intends," "future
and similar expressions identify forward-looking statements. Readers are
cautioned to consider the specific risk factors described herein and in "Risk
Factors," and not to place undue reliance on the forward-looking statements
contained herein, which speak only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
events or circumstances that may arise after the date hereof. All subsequent
written and oral forward-looking statements attributable to the Company or to
persons acting on its behalf are expressly qualified in their entirety by this
section.
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of risk.
Prospective investors may lose all or a part of their investment. Consequently,
the following factors, in addition to the other information contained in this
Prospectus, should be considered carefully in evaluating the Company and its
business before purchasing the securities offered hereby:
Short Operating History. Imatron was incorporated in February, 1983 and in
April, 1983 became the successor to Imatron Associates, a limited partnership
established in February, 1981. Imatron operated as a development-stage company
until the fourth quarter of 1984, at which time it recognized its initial sale
of an ULTRAFAST CT7 scanner. Imatron incurred losses each quarter from inception
through December 31, 1990. Its first recorded profitable year was the year ended
December 31, 1991 during which a $4,000,000 payment for the licensing of
technology to Siemens Corporation was received. The Company incurred net losses
of $2,871,000 and $6,523,000 in the years ended December 31, 1993 and 1992,
respectively. In 1994, Imatron, as a stand alone company, incurred its first
year of net income from operations amounting to $3,221,000 which was partially
offset by $911,000 of net losses by HeartScan. In 1997, 1996, and 1995, the
Company incurred net losses of $11,422,000, $13,737,000, and $2,449,000,
respectively. The net losses are partially a result of the operating losses
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incurred by HeartScan which amounted to $8,172,000, $7,845,000, and $2,132,000
in the years ended December 31, 1997, 1996, and 1995, respectively. The net
losses incurred by HeartScan reflect non-cash minority interest expense of
$1,744,000 and $3,272,000 recorded in both 1997 and 1996, respectively, as a
result of the accounting treatment relative to its convertible Series A
Preferred Stock having "beneficial conversion features". There is no assurance
that Imatron can return to profitable operations in the future.
In the past, Imatron has funded its losses primarily through the sale of
securities in three public offerings and a number of private placements, through
the exercise of options and warrants, through the 1991 license for medical uses
of its electron-beam technology to Siemens Corporation, and through revolving
lines of credit. In 1995, the Company raised $9,882,000 (net of offering costs)
in two offerings of Common Stock to certain institutional investors. In 1996,
the Company received $16,672,000 through the sale of shares of common stock and
the exercise of warrants and stock options for shares of common stock. Also in
1996, HeartScan raised $14,798,00 (net of offering costs) for use exclusively to
develop its operations. As of December 31, 1997, the Company has a consolidated
accumulated deficit of $82,716,000. As of December 31, 1997, HeartScan has a
accumulated deficit of $20,044,000.
The Company's liquidity is affected by many factors, some based on the normal
ongoing operations of the business and others related to the uncertainties of
the industry and global economies. Although the cash requirements will fluctuate
based on timing and extent of these factors, management believes that cash, cash
equivalents, and short-term investments existing at December 31, 1997 together
with the borrowing capability, and the estimated proceeds from ongoing sales of
products and services in 1998 will provide the Company and HeartScan with
sufficient cash for operating activities and capital requirements through
December 31, 1998.
Material Dependence Upon Key Personnel. The Company and HeartScan have been and
will continue to be materially dependent upon the technical expertise of its
engineering management personnel. The loss of a significant number of such
personnel would have a materially adverse effect upon the Company's business and
future prospects. The Company does not maintain key-man life insurance.
High Cost of Scanner. The distributor list price of Imatron's ULTRAFAST CT
scanner is significantly higher than that of commercially available conventional
CT scanners and higher than the price of "top-of-the-line" scanners. Such
pricing may limit the market for Imatron's product. Potential customers'
budgetary limitations, including those imposed by government regulation, may
often compel the purchase of lower cost, conventional CT scanners.
Limited Clinical Demonstration of Certain Advantages of Company's Scanner. The
Company's scanners have been used in a clinical environment on humans since
April, 1983. Clinical use of the C-100 XL scanner model began in February 1989.
The C-150 ULTRAFAST CT scanner was first used in 1992. Fifty-four C-150 scanners
are currently installed in a clinical setting. The Company believes that market
acceptance of the ULTRAFAST CT scanner continues to depend in substantial part
upon the clinical demonstration of certain asserted technological advantages and
diagnostic capabilities. There is no assurance that these asserted technological
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advantages and diagnostic capabilities will result in the development of a
significant market for the ULTRAFAST CT that will allow the Company to operate
profitably.
Product Liability Risks. As a manufacturer and marketer of medical diagnostic
equipment, the Company is subject to potential product liability claims. As a
supplier of radiological diagnostic services, HeartScan is also subject to
potential liability claims. For example, the exposure of normal human tissue to
x-rays, which is inherent in the use of CT scanners for diagnostic imaging, may
result in potential injury to patients, thereby subjecting the Company to
possible liability claims. The Company presently maintains primary and excess
product liability insurance with aggregate limits of $5,000,000 per occurrence.
No assurance can be given that the Company's product liability insurance
coverage will continue to be available or, if available, that it can be obtained
in sufficient amounts or at reasonable cost or that it will prove sufficient to
pay any claims that may arise.
Reliance On Patents And Proprietary Technology. Imatron relies heavily on
proprietary technology which it attempts to protect through patents and trade
secrets.
In February 1981, the Company was granted the exclusive use for five years and
non-exclusive use thereafter of certain technology and a patent pending owned by
the University of California (UC) under the terms of a license agreement between
UC and Emersub, a wholly-owned subsidiary of a former principal shareholder of
the Company, and a sublicense agreement between Emersub and Imatron Associates
(the predecessor to the Company), respectively. In June 1986, the license and
sublicense agreements were amended to extend the Company's exclusive use of the
technology through January 2000, the expiration of the patent in exchange for
modified minimum annual royalty payments. Under the terms of Emersub's license
with UC, Emersub was obligated to make certain additional payments in connection
with the license. In October 1990, pursuant to subsequent amendments of the
license and sublicense agreements, the Company issued an aggregate of 132,813
shares of Series A Preferred Stock to UC and Emersub in satisfaction of this
obligation. The University of California converted their 125,000 Series A
Preferred Stock into 625,000 common stock shares in 1993. Emersub converted
their 7,813 Series A Preferred Stock into 39,065 common stock shares in
September 1995.
Under the continuing sublicense agreement, as amended, the Company is required
to pay annual royalties to Emersub equal to 2.125% of net sales of certain of
the Company's products. The Company's Chairman of the Board, Dr. Douglas P.
Boyd, receives 6% of all of the royalties paid by Emersub to UC. Loss by Imatron
of its rights under the patent as a result of termination of its sublicense from
Emersub, or the underlying license, could have a material adverse effect upon
Imatron's business and future prospects.
Development of portions of the technology covered by the UC patent and
sublicensed to Imatron has been funded in substantial part through research
financing made available to UC by the National Institutes of Health. As a result
of such financing, it is possible that the U. S. Government may assert certain
claims in such UC patents, including the right to a royalty-free license for
governmental use.
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In addition, Imatron holds twenty-eight U.S. Patents of its own (each with a
remaining life in excess of 3 years) and has filed three U.S. patent
applications covering various integral components of the scanner including,
among others, its electron beam assembly and its x-ray detector and has filed
applications corresponding to several of these patents and applications in
various European Patent Convention countries, Canada and Japan. There can be no
assurance that any such applications will result in the issuance of a patent to
the Company. Imatron's patents and patent applications have not been tested in
litigation and no assurance can be given that patent protection will be upheld
or will be as extensive as claimed. Furthermore, no assurance can be given as to
the Company's ability to finance litigation against parties which may infringe
upon such patents or parties which may claim that the Company's scanner
infringes upon their patents. However, the agreement signed by the Company and
Siemens Corporation in March 1991 allows Siemens Corporation to enter litigation
in favor of Imatron.
On March 31, 1995, the Company and Siemens Corporation ("Siemens") entered into
an agreement (the "Memorandum of Understanding") relating in part to certain of
the Company's patents. Pursuant to the agreement, the Company transferred to
Siemens five patents, two of which cover features of the Company's C-150
scanner, in partial consideration of the cancellation by Siemens of a $4 million
term loan to the Company. As part of the agreement Siemens granted to the
Company a non-exclusive, irrevocable, perpetual license to the five patents. The
license is subject to a royalty of $20,000 for each new C-150 unit produced by
the Company beginning with the twenty-first C-150 unit produced in any year.
In September 1995, Siemens asserted a claim against the Company regarding the
lapse of certain foreign registrations of one of the patents assigned to Siemens
by the Company in connection with the March 31, 1995 agreement between the
companies. The technology involved in the patent is not used presently in any of
the Company's products. The Company substituted a patent, subject to existing
license-back, currently used in its technology for the previously transferred
patent. Representatives of Siemens have agreed with the Company to these terms.
In the event some or all of the Company's patent applications are denied and/or
some or all of its patents held invalid, the Company would be prevented from
precluding its competitors from using the protected technology set forth in such
patent applications or patents. Because the Company's products involve
confidential proprietary technology and know-how, the Company does not believe
such a loss of patent rights would have a material adverse effect upon the
Company.
The Company also believes that many of its proprietary technologies are better
protected as trade secrets or copyrights than by patents. Moreover, although
protection of the Company's existing proprietary technologies is important,
other factors such as product development, customer support and marketing
ability are equally important to the development of the Company's business.
Limited or Single Sources of Supply. The Company manufactures its scanner at its
South San Francisco, California facility. To date, the typical manufacturing
cycle has required approximately six months from the authorization of
manufacturing to the delivery of a scanner.
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Many of the components and sub-assemblies used in the scanner have been
developed and designed by Imatron to its custom specifications and are
obtainable from limited or single sources of supply. In view of the customized
nature of many of these components and sub-assemblies, there may be extended
delays between their order and deliver. Delays in such delivery could adversely
affect Imatron's present and future production schedules. The Company has made
and continues to make inventory investments to acquire long lead time components
and sub-assemblies to minimize the impact of such delays. In recent years, the
Company has developed alternative sources for many of its scanner subcomponents
and continues its programs to qualify vendors for the remaining critical parts.
Also, certain vendors currently require cash-on-delivery or prepayment terms.
There can be no assurance that such actions will not adversely affect the
Company's production schedule and its ability to deliver products in a timely
manner. As a result of certain vendors currently requiring cash-on-delivery or
prepayment terms, the Company must maintain higher levels of cash and other
sources of credit to fund material purchases than otherwise would be required.
Volatility of Stock Price. The market prices for securities of advanced
technology companies have historically been highly volatile, including the
market price of shares of the Company's Common Stock. Future announcements by
the Company or its competitors, including announcements concerning technological
innovations or new commercial products, results of clinical testing, changes in
government regulations, regulatory actions, health care reform, proprietary
rights, litigation and public concerns as to the safety of the Company's or its
collaborators' products, as well as period-to-period variances in financial
results could cause the market price of the Common Stock to fluctuate
substantially. In addition, the stock market has experienced extreme price and
volume fluctuations that have particularly affected the market price for many
advanced technology companies that have often been unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock.
Food And Drug Administration And Other Governmental Regulation. Amendments to
the Federal Food, Drug, and Cosmetic Act ("Amendments") enacted in 1976, and
regulations issued or authorized thereunder, provide for regulation by the
Federal Food and Drug Administration ("FDA") of the marketing, manufacture,
labeling, packaging, sale and distribution of "medical devices," including the
Company's scanner. Among these regulations are requirements that medical device
manufacturers register their manufacturing facilities with the FDA, list devices
manufactured by them file various reports and comply with specified Good
Manufacturing Practice ("GMP") regulations. The FDA enforces additional
regulations regarding the safety of equipment utilizing x-rays, including CT
scanners. Various states also impose similar regulations.
The Amendments also impose certain requirements which must be met prior to the
initial marketing of medical devices introduced into commerce after May 28,
1976. Other requirements imposed on medical device manufacturers include a
pre-market notification process commonly known as the 510(k) application to
market a new or modified medical device. Additionally, and specifically if
required by the FDA, a pre-market approval ("PMA") may be required. This process
is potentially expensive and time consuming and must be completed prior to
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marketing a new medical device. The Company has received appropriate clearances
from the FDA to market both the C-100 and C-150 ULTRAFAST CT scanner. The
Company believes that it is presently in substantial compliance with the GMP
requirements and other regulatory issues promulgated by the FDA.
The FDA also regulates the safety and efficacy of radiological devices. Although
the Company believes it is in compliance with all applicable radiological health
regulations promulgated by the FDA, there can be no assurance that the ULTRAFAST
CT scanner will continue to comply with all such standards and regulations that
may be promulgated. In any event, compliance with all such requirements can be
costly and time consuming, with a resultant materially adverse effect upon the
development of the Company's business and its future profitability.
FDA clearance to market does not guarantee or imply reimbursement by third-party
payers such as Medicare, Medicaid, Blue Cross/Blue Shield or private health
insurers. Medicare and Medicaid reimburse for procedures that are generally
accepted or that have been proven safe and effective. The Health Care Financing
Administration ("HCFA"), which oversees Medicare and Medicaid payment policies,
will not authorize payment for procedures which are considered to be
experimental. HCFA has determined that diagnostic examinations of the head and
other parts of the body performed by CT scanners are covered if the contractor
who administers the local Medicare program finds that medical and scientific
literature and opinion support the effective use of a scan for the particular
condition.
The Federal government and certain states have enacted cost-containment measures
such as the establishment of maximum fee standards in an attempt to limit the
extent and cost of governmental reimbursement of allowable medical expenses
under Medicare, Medicaid and similar governmental programs. A number of states
have adopted or are considering the adoption of similar measures. Such
limitations have led to a reduction in, and may further limit funds available
for, the purchase of diagnostic equipment such as the Company's scanner and in
the number of diagnostic imaging procedures performed in hospitals and other
medical institutions such as imaging clinics.
Certain states have adopted requirements that hospitals and other health care
facilities, such as imaging clinics, obtain a Certificate of Need ("CON") for
major capital expenditures, in the absence of which they will be denied
reimbursement for services and funding relating to such capital expenditures. A
number of states have enacted more stringent CON legislation such as requiring
private physicians to obtain a CON for any CT scanner, regardless of cost. There
can be no assurance that Imatron's potential customers will be able to secure
CONs or will be willing to pursue the application procedure.
The Company's primary customers operate in the healthcare industry. The health
care industry is highly regulated. Both existing and future governmental
regulations could adversely impact the market for the Company's ULTRAFAST CT
scanner and the Company's business. The Company's operations are also subject to
regulation by other federal, state and local governmental entities empowered to
enforce pertinent statutes and regulations, such as those enforced by the
Occupational Safety and Health Agency and the Environmental Protection Agency.
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In some cases, state or local regulations may be stricter than regulations
imposed by the federal government. The Company was most recently inspected by
the State of California Department of Occupational Safety and Health
Administration in November, 1993. Minor violations were issued by Cal/OSHA and
were immediately corrected by the Company. The subsequent follow up inspection
in December, 1993 by the same regulatory body yielded satisfactory results
without the issuance of further notice of violation. The Company believes that
it is in substantial compliance with California regulations applicable to its
business. In November, 1996 and again in January, 1997, the FDA conducted
routine inspections of Imatron's manufacturing operations. Both inspections
concluded without Notices of Observations. Imatron frequently provides field
modifications or updates of components and software to operational sites.
Imatron voluntarily advised the FDA during these inspections that certain field
corrections were ongoing. The FDA concurred with Imatron's decision to field
upgrade certain sites and assigned recall numbers Z-304/307-7 and Z-298/299-7.
Imatron is required to notify the FDA periodically of the status of these
corrections and again upon completion. Imatron believes that it is in
substantial compliance with the regulations promulgated by the FDA.
HeartScan's activities are subject to extensive regulation, generally by state
and local government entities. Although HeartScan believes it is in substantial
compliance with all applicable radiological health standards and regulations,
there can be no assurance that its business will continue to comply with all
such standards and regulations that may be promulgated. In any event, compliance
with all such requirements can be costly and time consuming, with a resultant
materially adverse effect upon the development of HeartScan's business and its
future profitability. HeartScan's operations are also subject to regulation by
other federal, state and local governmental entities empowered to enforce
pertinent statutes and regulations, such as those enforced by the Federal Food
and Drug Administration, Occupational Safety and Health Administration and the
Environmental Protection Agency. Changes in governmental regulations or new
regulations adopted in the future may materially adversely affect Imatron's
business. In some cases, state or local regulations may be stricter than
regulations imposed by the Federal government.
Competition. In the non-cardiac imaging applications market (composed
principally of hospital radiology departments), the Company's principal
competition is from current manufacturers of conventional CT scanners, including
General Electric Company, Siemens Corporation, Elscint, Picker International,
Inc., Philips Medical Systems, Toshiba Medical Corporation and others.
Non-invasive diagnostic imaging techniques such as ultrasound, radioisotope
imaging, digital subtraction angiography and magnetic resonance imaging are also
partially competitive with the Company's scanners, particularly in the cardiac
imaging market. Each of the companies named above, as well as ATL, Accuson and
ADAC Laboratories, markets equipment using one or more of these techniques. All
of these companies have greater financial resources and larger staffs than those
of the Company, and their products are, in most cases, substantially less
expensive than the ULTRAFAST CT scanner.
The Company believes that to compete successfully against these competitors, it
must continue to demonstrate that the ULTRAFAST CT scanner is both an acceptable
substitute for conventional CT scanners in scanning areas of the body where
11
<PAGE>
motion is not a limitation and a valuable cardiac diagnostic tool capable of
producing useful images of the heart. Although the Company believes that the
ULTRAFAST CT can produce images of a quality and resolution as good as or
superior to images produced by state-of-the-art conventional CT scanners, it
lacks certain features that many competing premium scanners offer. These include
lack of a high-resolution mode. There is no certainty that potential purchasers
of the Company's scanner will accept it without such features.
Also, the Company believes that customers and potential customers expect a
continuing development effort to improve the functionality and features of the
scanner. The Company continually seeks to develop product enhancements and
improve product reliability. Imatron's future success may depend on its ability
to complete certain product enhancement and product reliability projects
currently in progress, as well as on its continued ability to develop new
products or product enhancements in response to new products that may be
introduced by other companies. There can be no assurance that Imatron will be
able to continue to improve product reliability or introduce new product models
or product enhancements as required to remain competitive.
Other factors, in addition to those described above, that a potential purchaser
would consider in the decision to replace a conventional CT scanner with an
ULTRAFAST CT scanner include purchase price, patient throughput capacity,
anticipated operating expenses, estimated useful life and post-sale customer
service and support. The Company believes that its scanner and/or the Company is
competitive with respect to each of these factors.
Reliance on Distributors. Historically, a substantial portion of the Company's
sales of its scanners is done through distributors. There is no assurance that
the Company's distributors will actually meet their contractual minimum
obligations on a timely basis. Failure by the distributors to meet their
obligations could adversely affect the Company's operations and financial
position. As of April 1, 1998, the Company assumed direct distribution of
its scanners from Siemens Corporation, the Company's principal distributors.
No Dividends on Preferred and Common Stock. The Company has not paid any
dividends on its Preferred or Common Stock since inception. Even if its future
operations result in revenues and/or profitability, as to which there can be no
assurance, there is no present anticipation that dividends will be paid. Rather,
the Company expects that any future earnings will be applied toward the further
development of the Company's business.
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of the
Shares by the Selling Shareholders. As described under "Selling Shareholders", a
portion of the Shares will be acquired by the Selling Shareholders upon exercise
of the Warrants. Upon the exercise of a Warrant, the Company will receive the
applicable exercise price per share from the Selling Shareholder. The Company
will use such proceeds to increase working capital.
12
<PAGE>
OFFERING PRICE
This Prospectus may be used from time to time by the Selling Shareholders who
offer the Common Stock registered hereby for sale. The offering price of such
Common Stock will be determined by the Selling Shareholder and may be based on
market price prevailing at the time of sale, at prices relating to such
prevailing market prices, or at negotiated prices. The market price of the
Company's Common Stock on the date of any proposed sale, as listed on the NASDAQ
National Market System, symbol "IMAT", is the most significant but not the only,
factor used to determine the offering price of the Shares.
SELLING SHAREHOLDERS
The following provides certain information with respect to the Common Stock
beneficially owned by the Selling Shareholders who are entitled to use this
Prospectus. The information in the table is as of the date of this Prospectus.
The Common Stock offered by this Prospectus may be offered from time to time by
the Selling Shareholders named below or their nominees:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Available for Percent Owned After
Name of Selling Shares Beneficially Sale Under this Completion of the
Securityholder Owned(1) Prospectus Offering(3)
-------------- -------- ---------- -----------
Banque Privee Edmond de Rothschild, S.A.
Geneva 64,000 64,000(2) *
Barnfield Limited 96,242 85,333(2) *
Xing-Rong Chen 25,000 25,000 *
Cramer, Rosenthal, McGlynn, Inc. 32,000 32,000(2) *
CRM Madison Partners, L.P. 128,000 128,000(2) *
CRM Partners, L.P. 517,333 517,333(2) *
CRM Retirement Partners, L.P. 256,000 256,000(2) *
Elliott Associates, L.P.(4) 1,355,933 888,533(2) 1.69%
Joseph P. Galichia, M.D. 266,667 266,667(2) *
Global Bermuda Limited Partnership 1,666,667 1,666,667(2) 2.07%
Grace Brothers, Ltd. 600,000 600,000(2) *
Charles Higgins, M.D. 25,000 25,000 *
13
<PAGE>
Laffer Associates 32,000 32,000(2) *
Lagunitas Partners L.P. 266,667 266,667(2) *
Lakeshore International Ltd. 346,667 346,667(2) *
Merced Partners Limited Partnership
653,333 653,333(2) *
Modern Woodmen of America 266,667 266,667(2) *
Gary Post 161,000 32,000(2) *
Stephen P. Rader and Anne W. Rader, and
their successors, as trustees of the Rader
Living Trust dated 9/9/94 48,000 48,000(2) *
Ravich Revocable Trust of 1989 677,957 666,667(2) *
Reinfrank Living Trust UA 6/13/95 48,000 48,000(2) *
SC Fundamental Value BVI, Ltd.(5) 1,013,333 1,013,333(2) 1.27%
SC Fundamental Value Fund, L.P.(5) 2,320,000 2,320,000(2) 2.85%
Gerhard Sennewald, M.D. 100,000 100,000 *
Mark S. Siegel 11,200 11,200(2) *
Sitrick and Company Inc.(6) 221,208 221,208 *
Kathleen Sullivan 12,800 12,800(2) *
TeraRecon, Inc. 4,000,000 4,000,000 4.82%
Westgate International, L.P.(4) 894,400 444,800(2) *
All Selling Shareholders as a Group 15,106,074 15,037,875
</TABLE>
* Less than 1%
(1) Includes shares owned prior to this offering and the shares which are
issuable upon the exercise of the Exchange Rights and the Warrants held by
the Selling Shareholders. The number of shares being offered hereby is
shown in the "Shares Available for Sale Under this Prospectus" column.
14
<PAGE>
(2) Shares are based on the maximum amount available under the Second Exchange
Period Rights as described in Section 5.3 of the Stock Purchase Agreement
dated as of June 24, 1996.
(3) Percentages are based upon the assumption that upon the completion of this
offering the respective Selling Shareholder has sold the Common Stock
listed as "Shares Available for Sale Under this Prospectus" and are
computed on the basis of 78,967,091 shares of Common Stock issued and
outstanding as of January 31, 1998.
(4) Paul E. Singer, either directly or indirectly, may be deemed to control
each of these entities. Elliott Associates, L.P. and Westgate
International, L.P. may be deemed to be a group for purposes of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended.
(5) Gary Siegler and Peter Collery own controlling interests in both SC
Fundamental Value BVI, Ltd. And SC Fundamental Value Fund, L.P. and each
individual shares the power to vote and dispose of the Shares owned by
such Selling Shareholders.
(6) Sitrick and Company Inc. has provided public relations consulting services
to the Company and HeartScan at varying times during the past two years.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that the Selling Shareholders
intend to sell their Shares from time to time in private or public transactions,
in transactions involving principals, in transactions involving brokers, or by
any other lawful methods. Sales through brokers may be made by any method of
trading authorized by the NASDAQ National Market System or any stock exchange on
which the Shares of Common Stock may be listed in the future, including block
trading in negotiated transactions. Without limiting the foregoing, such brokers
may act as dealers by purchasing any or all of the Shares covered by this
Prospectus, either as agents for others or as principals for their own accounts
and reselling such shares pursuant to this Prospectus. In sales made through
underwriters, dealers or brokers, such entities may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Shareholders and/or the purchasers of shares for whom they may act as agents.
The Company will pay all of the expenses incident to the registration of the
Shares. The Company will not pay any expenses incident to the offering and sale
of the Common Stock to the public, including, but not limited to commissions and
discounts of underwriters, dealers or agents.
EXPERTS
The consolidated financial statements and schedule of Imatron Inc. as of
December 31, 1997 and for the year then ended have been incorporated herein by
reference and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated herein
by reference, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements and schedule of Imatron Inc. as of
December 31, 1996, and for each of the two years in the period ended December
31, 1996, incorporated herein by reference and in the registration statement
15
<PAGE>
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon, incorporated herein by reference, and are included in
reliance upon such report given the authority of such firm as experts in
accounting and auditing.
LEGAL OPINION
The legality of the shares of Common Stock offered will be passed upon for the
Company by Severson & Werson, A Professional Corporation, One Embarcadero
Center, 26th Floor, San Francisco, California 94111.
16
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representation must not be relied upon as having been authorized by Imatron Inc.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than those specifically offered hereby or an
offer to buy to any person in any jurisdiction in which such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any time subsequent to the
date hereof.
15,037,875 Shares
IMATRON INC.
No Par Common Stock
PROSPECTUS
May 6, 1998
17
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable by the Company in connection
with the issuance and distribution of the Common Stock being registered.1 All
the amounts shown are estimates except for the registration fee.
SEC Registration fee $ 12,228
NASDAQ National Market listing fee 17,500
Printing and engraving expenses 500
Legal fees and expenses 7,500
Accounting fees and expenses2 7,500
Total $ 45,228
ITEM 15. Indemnification of Directors and Officers.
Article IX of the Bylaws of the Company sets forth the extent to which officers
or directors of the Company may be indemnified against any liabilities which may
incur. The general effect of such Bylaw provision is that any person made a
party to an action, suit or proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the Company, or of another corporation
or other enterprise which he served as such at the request of the Company, shall
be indemnified by the Company against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by it in connection with such action, suit or proceeding, to the full extent
permitted under the laws of the State of New Jersey.
The general effect of the indemnification provisions contained in Section
14A:3-5 of the New Jersey General Corporation Law is as follows: A director or
officer who, by reason of such directorship or officership, is involved in any
action, suit or preceding (other than an action by or in the right of the
Company) may be indemnified by the Company against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that his conduct was
unlawful. A director or officer who, by reason of such directorship or
officership, is involved in any action or suit by or in the right of the Company
may be indemnified by the Company against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
- ----------------------
1 Blue Sky filings.
2 Including legal expenses associated with Blue Sky filings.
18
<PAGE>
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification may be made in respect of any claim,
issue or matter as to which he shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that a court of appropriate jurisdiction shall approve
such indemnification.
ITEM 16. Exhibits.
Exhibit No. Description
3.1 Certificate of Incorporation of the Company, as amended, as of March 31,
1983.3
3.2 Certificate of Amendment of Certificate of Incorporation filed with the New
Jersey Secretary of State on June 7, 1988.4
3.3 Certificate of Amendment of Certificate of Incorporation filed with the New
Jersey Secretary of State on June 17, 1988.5
3.4 Certificate of Amendment of Certificate of Incorporation filed with the New
Jersey Secretary of State on July 26, 1988.6
3.5 Certificate of Correction of Certificate of Amendment of Certificate of
Incorporation filed with the New Jersey Secretary of State on February 7,
1989.7
3.6 Certificate of Amendment of Certificate of Incorporation filed with the New
Jersey Secretary of State on April 29, 1990.8
3.7 Certificate of Amendment of Certificate of Incorporation filed with the New
Jersey Secretary of State on December 7, 1990.9
- -------------------
3 Filed as an Exhibit to the Company's Registration Statement
on Form S-8 filed with the Commission on February 3, 1989
(File No. 33-26833) and incorporated herein by reference.
4 Filed as an Exhibit to the Company's Registration Statement
on Form S-8 filed with the Commission on February 3, 1989
(File No. 33-26833) and incorporated herein by reference.
5 Filed as an Exhibit to the Company's Form 8 amending the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 filed with the Commission on May 2,
1989 and incorporated herein by reference.
6 Filed as an Exhibit to the Company's Registration Statement
on Form S-8 filed with the Commission on February 3, 1989
(File No. 33-26833) and incorporated herein by reference.
7 Filed as an Exhibit to the Company's Form 8 amending the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 filed with the Commission on May 2,
1989 and incorporated herein by reference.
8 Filed as an Exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989 and
incorporated herein by reference.
19
<PAGE>
3.8 Certificate of Amendment of Certificate of Incorporation filed with the New
Jersey Secretary of State on July 7, 1997.10
3.9 Bylaws, as amended as of April 30, 1992.11
4.1 Common Stock Purchase Agreement dated June 24, 1996 between the Company,
HeartScan Imaging Inc., and investors in the HeartScan Imaging, Inc. Series
A Preferred Stock Private Offering.12
4.2 Warrant Purchase Agreement between the Company and TeraRecon Inc. dated
October 15, 1997.13
4.3 Common Stock Purchase Warrant which expires October 15, 2001 issued to
TeraRecon Inc.13
4.4 Warrant Purchase Agreement between the Company and TeraRecon Inc. dated
October 21, 1997. 13
4.5 Common Stock Purchase Warrant which expires October 21, 2001 issued to
TeraRecon Inc. 13
4.6 Form of Common Stock Purchase Warrant which expires January 28, 2002 issued
to investors in connection with a Private Offering which concluded January
28, 1997. 13
4.7 Warrant Purchase Agreement between the Company and TeraRecon Inc., dated
April 24, 1998.
4.8 Common Stock Purchase Warrant which expires April 24, 2002 issued to
TeraRecon Inc.
- -----------------
9 Filed as an Exhibit to the Company's Registration Statement
on Form S-8 filed with the Commission on May 6, 1991 (File
No. 33-40391) and incorporated herein by reference.
10 Filed as an Exhibit to the Company's Registration
Statement on Form 8-K filed with the Commission on July 17,
1997 and incorporated herein by reference.
11 Filed as an Exhibit to Post-Effective Amendment No. 1
to the Company's Registration Statement on Form S-3 filed
with the Commission on May 5, 1992 (File No. 33-32218) and
incorporated herein by reference.
12 Filed as an Exhibit to the Company's Form 8 amending the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 filed with the Commission on July 1,
1996 and incorporated herein by reference.
13 Filed as an Exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 filed with
the Commission on April 16, 1998 and incorporated herein by
reference.
20
<PAGE>
5.1 Opinion of Severson & Werson, A Professional Corporation, as to the
legality of securities being registered.
23.1 Consent of KPMG Peat Marwick LLP, independent certified pubic accountants.
23.2 Consent of Ernst & Young LLP, auditors.
23.3 Consent of Counsel included in Exhibit 5.1.
24.1 Power of Attorney (contained in signature pages).
ITEM 17. Undertakings.
A. Rule 415 Offering.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any Prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) to reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statemen (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price sete forth in the "Calculation of Registration Fee"
table in the effective Registration Statement;
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the Registration Statement is on Form S-3, or Form S-8, and the information
required or to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
21
<PAGE>
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering
(4) To deliver or cause to be delivered with the Prospectus, to each person
to whom the Prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the Prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Exchange Act; and, where interim financial information required to be presented
by Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver,
or cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
B. Filings Incorporating Subsequent Exchange Act Documents By Reference.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offering therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Undertaking In Respect Of Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
22
<PAGE>
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of South San Francisco, State of California, on April
30, 1998.
IMATRON INC.
By: /s/ S. Lewis Meyer
------------------
S. Lewis Meyer
President and Chief Executive Officer
23
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Douglas P. Boyd and S. Lewis Meyer, or
either of them, his true and lawful attorney-in-fact, each with full power of
substitution for him in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or their or his substitutes
or substitute, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/S. LEWIS MEYER President, Chief Executive Officer April 30, 1998
- --------------------- and Director
S. Lewis Meyer
/s/DOUGLAS P. BOYD Chairman of the Board April 30, 1998
- ---------------------
Douglas P. Boyd
/s/GARY H. BROOKS Vice President Finance, Chief Financial April 30, 1998
- --------------------- Officer, and Chief Accounting Officer
Gary H. Brooks
/s/JOHN L. COUCH Director April 30, 1998
- ---------------------
John L. Couch
/s/TERRY ROSS Director April 30, 1998
- ---------------------
Terry Ross
/s/ALDO TEST Director April 30, 1998
- ---------------------
Aldo Test
/s/JOSE FILIPE GUEDES Director April 30, 1998
- ---------------------
Jose Filipe Guedes
/s/WILLIAM J. McDANIEL Director April 30, 1998
- ---------------------
William J. McDaniel
24
<PAGE>
IMATRON INC.
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
14,037,875 Shares of Common Stock
Sequential
Exhibit No. Description Page No.
4.7 Warrant Purchase Agreement between the Company and
TeraRecon Inc. dated April 24, 1998 26
4.8 Common Stock Purchase Warrant which expires April 24,
2002 issued to TeraRecon Inc. 34
5.1 Opinion of Counsel as to legality of securities being
registered. 40
23.1 Consent of KPMG Peat Marwick LLP, independent certified
public accountants. 42
23.2 Consent of Ernst & Young LLP, auditors. 43
23.3 Consent of counsel inlcuded in Exhibit 5.1.
24.1 Power of Attorney (contained in signature pages)
25
EXHIBIT 4.7
WARRANT PURCHASE AGREEMENT BETWEEN
THE COMPANY AND TERARECON INC. DATED APRIL 24, 1998
THIS WARRANT PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 24th day of April, 1998 by and between IMATRON INC., a New Jersey
corporation (the "Company") and TeraRecon Inc., a Delaware corporation (the
"Investor").
R E C I T A L S:
WHEREAS, the Company desires to issue to Investor and the Investor
desires to purchase from the Company a warrant (the "Warrant") to purchase
1,000,000 shares of the Company's common stock (the "Shares") all on the terms
and conditions hereinafter provided. The Warrant and the Shares are hereafter
collectively referred to as the "Securities".
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Issuance of Warrant. For good and valuable consideration the receipt
and sufficiency of which is acknowledged by the Company, the Company agrees to
issue to Investor the Warrant, the form of which is attached hereto as Exhibit
A.
2. Investor Representations. Investor hereby represents and warrants to
the Company as follows:
(a) The Investor understands that: (a) The offer and sale of
the Securities by the Company to Investor has not been registered under the
Securities Act of 1933 (the "Securities Act"), in reliance on an exemption from
such registration available under the Securities Act and rules adopted
thereunder; (b) The Investor must hold the Warrant indefinitely unless the
Securities are subsequently registered under the Securities Act and qualified
under applicable state securities laws, or unless an exemption from such
registration and qualification is available.
(b) The Investor is acquiring the Securities for his or her
own account, for investment, and not with a view to any sale or distribution of
any interest therein.
(c) The Investor has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Securities, and the Investor is able to bear the
economic risks of such an investment.
(d) All statements made, and information furnished, by the
Investor in this certificate and all other information furnished by the Investor
to the Company, are true and complete, to the best of the Investor's knowledge.
26
<PAGE>
3. Restrictions on Transfer. The Investor agrees that:
(a) The Investor will not attempt to transfer the Securities
in violation of the restrictions set forth in this Agreement.
(b) The Company may note such restrictions on transfer in its
records and refuse to recognize any transfer which violates this agreement or
for which the Company has not received an acceptable opinion of counsel stating
that such transfer will not violate such restrictions.
(c) One or more legends indicating a lack of registration
under the Securities Act and a lack of qualification under state securities laws
will be imprinted on the Securities. One such legend shall read substantially as
follows:
THE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A
REGISTRATION UNDER SAID ACT OR (ii) IF AN EXEMPTION FROM REGISTRATION UNDER SAID
ACT IS AVAILABLE AND THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THAT
EFFECT REASONABLY SATISFACTORY TO IT.
4. Binding on Successors; Indemnification. The Investor agrees that the
above representations and warranties are binding on the Investor's successors
and assigns and are made for the benefit of the Company and any other persons
who may become liable for violations of federal or state securities laws as a
result of the falsity of any of the Investor's representations or warranties.
The Investor agrees to indemnify, defend, and hold harmless such persons from
any liability arising from the falsity of any of the Investor's representations
or warranties or from the breach of any covenant of Investor contained herein.
5. Registration Rights. The Company hereby grants to Investor the
following registration rights with respect to the Shares:
(a) Definitions.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act of 1933
(the "Securities Act").
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, and the declaration or ordering of
the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with the provisions of this Section 5, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, blue sky fees and expenses, and
the expenses of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
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"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Shares and all fees and
disbursements of counsel to Investor.
"Shares" means the shares of the Company's common stock
exercisable upon exercise of the Warrant and any common stock issued with
respect thereto (e.g. upon a stock split or stock dividend.
"Investor" means the person set forth above and any permitted
assignee.
(b) Company Registration.
i) Notice of Registration. If, at any time after
the date hereof, the Company shall determine to register any of its
securities either for its own account or the account of a security holder
or holders exercising their respective demand registration rights, other than
a registration relating solely to employee benefit plans, or a registration
relating solely to a Commission Rule 145 transaction, or a registration on any
registration form which does not permit secondary sales, the Company will:
a) promptly give to Investor written notice
thereof (which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue sky or
other state securities laws); 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 Shares specified in a written request
or requests, made by Investor within fifteen (15) days after receipt of the
written notice from the Company described in this clause (i), except as set
forth in Section 5(b)(ii) below.
ii) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting: the Company shall so advise Investor as part of the written
notice given pursuant to Section 5(b) hereof. In such event, the right of
Investor to registration pursuant to this Section 5 shall be conditioned
upon Investor's participation in such underwriting and the inclusion of
Investor's Shares in the underwriting to the extent provided herein. Investor
shall (together with the Company, its directors and officers, and any other
shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 5, if the
underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the underwriter may exclude from such registration
and underwriting some or all of the Shares which would otherwise be underwritten
pursuant hereto. Any securities so excluded shall be apportioned pro rata among
Investor and any other shareholders distributing their securities through such
underwriting according to the total amount of securities otherwise entitled to
be included therein owned by such shareholders or in such other proportions as
shall mutually be agreed upon.
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If Investor disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Shares excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
The Company shall bear all Registration Expenses incurred in connection
with any registration, qualification and compliance by the Company pursuant to
this Section 5(b). All Selling Expenses shall be borne by the holders of the
securities so registered pro rata on the basis of the number of their shares so
registered.
iii) Registration Procedures. In the case of
registration effected by the Company pursuant to this Agreement, the Company
will keep Investor advised in writing as to the initiation of registration and
as to the completion thereof. At its expense, the Company will:
a) keep such registration effective for a period of
one year or until Investor has completed the distribution described in the
registration statement relating thereto, whichever first occurs;
b) furnish such number of prospectuses and other documents
incident thereto as Investor from time to time may reasonably request; and
c) use its best efforts to register or qualify the
Shares under the securities or blue sky laws of such jurisdictions as Investor
may request; provided, however, that the Company shall not be obligated to
register or qualify such Shares in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
order to effect such registration, qualification, or compliance, unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or regulations thereunder.
d) Notify the holder of Shares 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.
(c) Request for Registration. In case the Company shall
receive from the Investor a written request that the Company effect any
registration, qualification, or compliance with respect to all or a part of the
Shares the Company will: (i) as soon as practicable, use its diligent best
efforts to effect all such registrations, qualifications and compliances
(including, without limitations, the execution of an undertaking to file
post-effective amendments, appropriate qualifications under the applicable blue
sky or other state securities laws and appropriate compliance with exemptive
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of the Investor's
Shares as are specified in such request, together with all or such portion of
the Shares of any Holder or Holders joining in such request as are specified in
a written request given within thirty days after receipt of such written notice
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from the Company; provided that the Company shall not be obligated to take any
action to effect such registration, qualification or compliance pursuant to this
subparagraph 5(c): (A) After the Company has effected two such registrations
pursuant to this subparagraph 5(c) and such registrations have been declared or
ordered effective; or (B) If the amount of securities being offered for sale is
less than 25 percent of the Shares.
Subject to the foregoing clauses (A) through (B), the Company shall
file a registration statement covering the Shares so requested to be registered
as soon as practical, but in any event within ninety days, after receipt of the
request or requests of the Investor; provided, however, that if the Company
shall furnish to such Investor a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Company and it stockholders for such
registration statement to be filed at the date filing would be required and it
is therefore essential to defer the filing of such registration statement, the
Company shall have an additional period of not more than ninety days within
which to file such registration statement.
The Investor shall bear all Registration Expenses incurred in connection
with any registration, qualification and compliance by the Company pursuant to
this Section 5(c). All Selling Expenses shall be borne by the Holders of the
securities so registered pro rata on the basis of the number of their shares so
registered.
(d) Indemnification.
i) The Company will indemnify the Investor, each of its officers,
directors and partners, and each person controlling such Investor 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 ny 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 the Company 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 the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse the Investor, each of its officers, directors and
partners, and each person controlling the Investor, 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 the Company 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 the Company (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
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<PAGE>
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by the Investor, controlling person or
underwriter and stated to be specifically for use therein.
ii) The Investor will, if Shares held by the Investor are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter 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 the Company, 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 the Company by an instrument
duly executed by the Investor and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of the Investor under this
subsection 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 Investor (which consent shall not be unreasonably withheld), and
(ii) shall be limited in an amount equal to the ggregate net proceeds of the
shares sold by the Investor, except to the extent such liability arises out of
or is based on willful misconduct by the Investor.
iii) Each party entitled to indemnification under this Section
5(d)(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.
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iv) If the indemnification provided for in this Section 5(d) 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 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.
v) The obligations of the Company and the Investor under this
Section 5(d) shall survive the completion of any offering of Shares in a
registration statement under this Section 5 and otherwise.
vi) Information by Investor. The Investor of Shares included in
any registration shall furnish to the Company such information regarding
Investor, the Shares held by it and the distribution proposed by such Investor
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
vii) Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under Section 5 may be assigned
to a transferee or assignee in connection with any transfer or assignment of
Shares 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 Section 5.
6. 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 Shares to the public without registration, 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 Investor owns any Shares, 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
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<PAGE>
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 the Company, and such other reports and documents of Imatron
and other 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.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned purchasers of securities and the
Company have executed this Agreement as of the day and year first above written.
COMPANY:
IMATRON INC.
By:
President
INVESTOR:
TERARECON INC.
By:
Its:
33
EXHIBIT 4.8
COMMON STOCK PURCHASE WARRANT WHICH
EXPIRES APRIL 24, 2002 ISSUED TO TERARECON INC.
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (i) IN A REGISTRATION UNDER
SAID ACT OR (ii) IF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE
AND THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THAT EFFECT REASONABLY
SATISFACTORY TO IT
IMATRON INC.
COMMON STOCK PURCHASE WARRANT
This Warrant Expires April 24, 2002
Warrant No. 98-TR1 Shares: 1,000,000
THIS CERTIFIES that, subject to the terms and conditions herein set forth,
TeraRecon Inc. (the "Holder") is entitled to purchase from Imatron Inc., a New
Jersey corporation (the "Company"), at any time or from time to time during the
Exercise Period (as hereinafter defined) the number of shares of fully paid and
non-assessable shares of Common Stock of the Company (the "Shares") as provided
herein upon surrender hereof at the principal office of the Company, and, at the
election of the holder hereof, upon payment of the purchase price at said office
in cash or by cashier's check or by the wire transfer of funds in a dollar
amount equal to the purchase price of the Shares for which the consideration is
being given.
This Warrant shall be exercisable for that number of Shares as set forth
above.
1. Purchase Price. Subject to adjustment as hereinafter provided, the
purchase price of one share of Common Stock (or such securities as may be
substituted for one share of Common Stock pursuant to the provisions hereinafter
set forth) shall be Four Dollars and Fifty Cents ($4.50) per share. The purchase
price of one share of Common Stock is referred to herein as the "Warrant Price".
2. Exercise Period. The exercise Period shall mean the period commencing on
the date hereof and ending four years thereafter.
3. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities issuable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
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(a) Adjustment of Warrant Price and Number of Shares. The Warrant
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Warrant Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Warrant Price resulting from such adjustment, the number of shares obtained by
multiplying the Warrant Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Warrant Price resulting from
such adjustment. In case the Company shall at any time subdivide its outstanding
shares of Common Stock into a greater number of shares, the Warrant Price in
effect immediately prior to such subdivision shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock of the Company
shall be combined into a smaller number of shares, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased.
(b) Adjustment for Dividends in Stock. In case at any time or from
time to time on or after the date hereof the holders of the Common Stock of the
Company (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock of the
Company by way of dividend (other than as provided for in Paragraph 2(b)
herein), then and in each such case, the holder of this Warrant shall, upon the
exercise hereof, be entitled to receive, in addition to the number of shares of
Common shall, upon the exercise hereof, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of such other or additional
stock of the Company which such holder would hold on the date of such exercise
had it been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, given effect to all adjustments called
for during such period by this Paragraph 3. The Company shall give the Holder
thirty (30) days advance written notice of of any dividend causing an adjustment
pursuant to this subsection.
(c) Adjustment for Changes in Common Stock. In the event changes in
the outstanding Common Stock of the Company by reason of split-ups,
recapitalizations, reclassifications, mergers, consolidations, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
are effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities, or other assets or property (an "Organic Change"),
then, as a condition of such Organic Change, lawful and adequate provisions
shall be made by the Company whereby the Holder hereof shall thereafter have the
right to purchase and receive (in lieu of the shares of the Common Stock of the
Company immediately therefore purchasable and receivable upon the exercise of
the rights represented hereby) such shares of stock, securities or other assets
or property as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of shares
of such stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby; provided, however, that in the event
the value of the stock, securities or other assets or property (determined in
good faith by the Board of Directors of the Company) issuable or payable with
respect to one share of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby is
in excess of the Warrant Price hereof effective at the time of a merger and
securities received in such reorganization, if any, are publicly traded, then
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<PAGE>
this Warrant shall expire unless exercised prior to such Organic Change. In the
event of any Organic Change, appropriate provision shall be made by the Company
with respect to the rights and interests of the Holder of this Warrant to the
end that the provisions hereof (including, without limitation, provisions for
adjustments of the Warrant Price and of the number of shares purchasable and
receivable upon the exercise of this Warrant) shall thereafter be applicable, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof.
(d) Certain Events. If any change in the outstanding Common Stock of
the Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, then the Board of Directors of the Company shall make an adjustment
in the number and class of shares available under the Warrant, the Warrant Price
or the application of such provisions, so as to protect such purchase rights as
aforesaid. The adjustment shall be such as will give the Holder of the Warrant
upon exercise for the same aggregate Warrant Price the total number, class and
kind of shares as he would have owned had the Warrant been exercised prior to
the event and had he continued to hold such shares until after the event
requiring adjustment.
4. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any subscription hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined by the fair market value of
one share of the Company's Common Stock on the date of exercise as determined by
the average of the closing or last reported sale prices on the NASDAQ National
Market over the 5-day period ending five days prior to the time of such
exercise.
5. No Stockholder Rights. This Warrant shall not entitle its holder to any
of the rights of a stockholder of the Company prior to exercise thereof.
6. Representations, Warranties and Covenants. This Warrant is issued and
delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
(a) The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant has
been duly authorized, issued, executed and delivered by the Company and is the
valid and binding obligation of the Company, enforceable in accordance with its
terms.
(b) The share of the Common Stock issuable upon the exercise of this
Warrant have been duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable. The Company further covenants that during the period
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Warrant.
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(c) The issuance, execution and delivery of this Warrant do not, and
the issuance of the share of Common Stock upon the exercise of this Warrant in
accordance with the terms hereof will not, (i) violate or contravene the
Company's Articles or by-laws, or any law, statute, regulation, rule, judgment
or order applicable to the Company, (ii) violate, contravene or result in a
breach or default under any material contract, agreement or instrument to which
the Company is a party or by which the Company or any of its assets are bound,
or (iii) require the consent of approval of or the filing of any notice or
registration with any person or entity except for the filing of notice pursuant
to federal and state securities laws which, if required, the Company covenants
and agrees to file within the prescribed period.
(d) The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificate for
shares of Common Stock upon the exercise of this Warrant.
7. Exercise of Warrant. This Warrant may be exercised by the registered
holder or its registered assigns, in whole or in part, by the surrender of this
Warrant at the principal office of the Company, together with the form of
subscription hereof duly executed, accompanied by payment in full of the amount
of the Warrant Price in the form described in this Warrant. Upon partial
exercise hereof, a new warrant or warrants containing the same date and
provisions as this Warrant shall be issued by the Company to the registered
holder for the number of shares of Common Stock with respect to which this
Warrant shall not have been exercised. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Common Stock issuable upon such exercise shall be treated for all
purposes as the holder of such shares of record as of the close of business on
such date. As promptly as practicable on or after such date, the Company shall
issue and deliver to the person or persons entitled to receive the same, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share as provided above.
8. Certificate of Adjustment. Whenever the Warrant Price is adjusted as
herein provided, the Company shall promptly deliver to the record holder of this
Warrant a certificate of an officer of the Company setting forth the relevant
Warrant Price or number of shares after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
9. Compliance With Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof (or shares of any security into which such Common
Stock may be converted) are being acquired for investment and that the holder
will not offer, sell or otherwise dispose of this Warrant and any shares of
Common Stock to be issued upon exercise hereof (or shares of any security into
which such Common Stock may be converted) except under circumstances which will
not result in a violation of the Securities Act of 1933, as amended (the "Act").
Upon exercise of this Warrant, the holder hereof shall, if requested by the
Company, confirm in writing its investment purpose and acceptance of the
restrictions on transfer of the shares of Common Stock.
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<PAGE>
10. Registration Rights. The Company grants to the Holder those
registration rights contained in that certain Warrant Purchase Agreement of even
date herewith between the Company and the Holder.
11. Subdivision of Warrant. At the request of the holder of this Warrant in
connection with a transfer or exercise of a portion of the Warrant, upon
surrender of such Warrant for such purpose to the Company, the Company at its
expense (except for any transfer tax payable) will issue and exchange therefor
warrants of like tenor and date representing in the aggregate the right to
purchase such number of shares of such Common Stock as shall be designated by
such holder at the time of such surrender; provided, however, that the Company's
obligations to subdivide securities under this section shall be subject to and
conditioned upon the compliance of any such subdivision with applicable state
securities laws and with the Act.
12. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dates as of such cancellation,
in lieu of this Warrant.
13. No Impairment. The Company will not, by amendment of its Articles or
through any reclassification, capital reorganization, consolidation, merger,
sale or conveyance of assets, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder.
14. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
15. Miscellaneous. This Warrant shall be governed by the laws of the State
of California. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the Company and
the registered holder hereof. All notices and other communications from the
Company to the holder of this Warrant shall be by telecopy or expedited courier
service to the address furnished to the Company in writing by the last holder of
this Warrant who shall have furnished an address to the Company in writing.
38
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ISSUED this 24th day of April, 1998.
ATTEST: IMATRON INC.
By
- --------------------------- -------------------------------
S. Lewis Meyer, President
39
EXHIBIT 5.1
OPINION OF COUNSEL AS TO LEGALITY OF SECURITIES BEING REGISTERED.
SEVERSON & WERSON
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
ONE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111
FAX (415) 956-0439
TELEPHONE (415) 398-3344
May 4, 1998
Imatron Inc.
389 Oyster Point Boulevard
South San Francisco, California 94080
Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by Imatron Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission on behalf of certain Selling Shareholders covering the
offering of up to 15,037,875 shares of the Company's Common Stock (the
"Shares"). Such total includes 36,868 shares currently issued and outstanding;
4,334,340 shares which are issuable upon the exercise of outstanding warrants;
and 10,666,667 shares which are issuable upon the exercise of outstanding Common
Stock exchange rights. All of the outstanding shares, the warrants and the
exchange rights were previously issued by the Company to the Selling
Shareholders in private transactions.
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Company's Certificate of
Incorporation and Bylaws, as amended, and such other records, documents,
certificates, memoranda and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents were due
execution and delivery are a prerequisite to the effectiveness thereof.
We do not hold ourselves out as experts in the laws of the State of New
Jersey and our opinion is based solely on a review of the New Jersey Business
Corporation Act, as reported in unofficial compilations.
40
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On the basis of the foregoing, and in reliance thereon, we are of the
opinion that:
The Shares, when sold and issued in accordance with the Registration
Statement and related Prospectus, will be validly issued, fully paid, and
nonassessable.
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm or entity without our
prior written consent.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
SEVERSON & WERSON
A Professional Corporation
By: /s/ Roger S. Mertz
------------------
Roger S. Mertz
41
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
The Board of Directors
Imatron Inc.
We consent to the use of our report dated April 6, 1998 relating to the
consolidated balance sheet of Imatron Inc. and subsidiary as of December 31,
1997 and the related consolidated statements of operations, shareholders' equity
and cash flows for the year then ended and the related financial statement
schedule incorporated herein by reference and to the reference to our firm under
the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
San Francisco, California
May 4, 1998
42
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Imatron Inc. for the
registration of 15,037,875 shares of its common stock and to the incorporation
by reference therein of our report dated, February 14, 1997, except for Note 12,
as to which date is April 10, 1998 with respect to the consolidated financial
statements of Imatron Inc. as of December 31, 1996 and for each of the two years
in the period ended December 31, 1996 included in its Annual Report(Form 10-K/A)
for the year ended December 31, 1997, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
May 5, 1998
43
