<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1998
REGISTRATION NO. 333-____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MEDJET INC.
(Exact name of registrant as specified in charter)
Delaware 22-3283541
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
--------------
1090 KING GEORGES POST ROAD, SUITE 301
EDISON, NEW JERSEY 08837
(732) 738-3990
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
--------------
EUGENE I. GORDON, PH.D.
CHIEF EXECUTIVE OFFICER
1090 KING GEORGES POST ROAD, SUITE 301
EDISON, NEW JERSEY 08837
(732) 738-3990
(Name and address, including zip code and telephone number,
including area code, of agent for service)
--------------
WITH A COPY TO:
JANE E. JABLONS, ESQ.
KELLEY DRYE & WARREN LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(212) 808-7800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after this Registration Statement becomes effective.
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, 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
- ----------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES REGISTERED OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED PER SECURITY(1) OFFERING PRICE(1) FEE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 182,724 $7.1875(2) $1,313,329 $388
$.001 per share,
issuable upon
conversion of Preferred
Stock
- ----------------------------------------------------------------------------------------------
Common Stock, par value 18,272 $7.47 $136,492 $41
$.001 per share,
issuable upon exercise
of Placement Agent's
Warrants
- ----------------------------------------------------------------------------------------------
Common Stock, par value 1,232,143(3) $10 $12,321,430 $3,635
$.001 per share
issuable upon exercise
Class A Redeemable
Common Stock Purchase
Warrants
- ----------------------------------------------------------------------------------------------
Units underlying 107,143(3) $6.72 $720,001 $213
Underwriter's Option
- ----------------------------------------------------------------------------------------------
Common Stock, par value 107,143(3) $-- $-- --
$.001 per share,
underlying
Underwriter's Option
- ----------------------------------------------------------------------------------------------
Class A Redeemable 107,143 $-- $-- $--
Common Stock Purchase
Warrants underlying
Underwriter's Option
- ----------------------------------------------------------------------------------------------
Common Stock underlying 107,143(3) $10 $1,071,430 $316
Class A Redeemable
Common Stock Purchase
Warrants included in
Underwriter's Option
==============================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Based on the average of the bid and ask prices of the Common Stock
quoted on the National Association of Securities Dealers OTC Bulletin Board on
July 17, 1998.
(3) Pursuant to Rule 416 under the Securities Act of 1933, as amended,
there are also being registered hereby such indeterminate number of additional
shares of Common Stock as may become issuable from time to time pursuant to the
anti-dilution provisions of the Units underlying the Underwriter's Option, the
Placement Agent's Warrant and the Class A Common Stock Purchase Warrants.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
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.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 22, 1998
PROSPECTUS
MEDJET INC.
1,647,425 SHARES OF COMMON STOCK AND 107,143 CLASS A
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
This Prospectus relates to the offer and sale of 1,232,143 shares of
Common Stock, par value $.001 per share ("Common Stock"), of Medjet Inc.
("Medjet" or the "Company") issuable upon the exercise of 1,232,143 Class A
Redeemable Common Stock Purchase Warrants (the "IPO Warrants") issued in
connection with the Company's initial public offering (the "IPO") of securities.
As part of the IPO, 1,071,429 Units (each unit consisting of one share of Common
Stock and one IPO warrant) were issued on August 6, 1996 and 160,714 Units were
issued on September 13, 1996 in connection with the exercise of the
underwriter's overallotment option. The Units became separable on November 6,
1996. As a result, the Common Stock and the IPO Warrants trade separately. Each
IPO Warrant entitles the holder thereof to purchase one share of Common Stock at
a price of $10.00 per share, subject to adjustment in certain circumstances. The
IPO Warrants are exercisable until November 6, 1999. The Company may redeem the
IPO Warrants at any time upon 30 days prior written notice, if the market price
of the Common Stock equals or exceeds $13.00 for any 10 consecutive trading days
within a period of 30 trading days ending within five days prior to the date of
notice of redemption.
This Prospectus also relates to 182,724 shares of Common Stock issuable
upon conversion of the Company's outstanding Series A Convertible Preferred
Stock, par value $.01 per share (the "Preferred Stock"), and 18,272 shares of
Common Stock issuable upon exercise of a warrant (the "Placement Agent's
Warrant") issued to a representative of the placement agent engaged by the
Company in connection with its sale in April 1998 of Preferred Stock. The
110,000 shares of Preferred Stock issued and outstanding as of the date hereof
will automatically convert into 182,724 shares of Common Stock upon the
effective date of the registration statement of which this Prospectus forms a
part. No additional consideration will be paid by the holders of the Preferred
Stock in connection with the conversion thereof. The Placement Agent's Warrant,
which entitles the holder thereof to purchase 18,272 shares of Common Stock at a
purchase price per share equal to the lesser of: (i) $7.47 or (ii) 110% of the
average closing bid price for the Common Stock as quoted on the National
Association of Securities Dealers, Inc. ("NASD") OTC Bulletin Board for a 20
trading day period ending on the last trading day immediately prior to an
automatic conversion event (as defined in the warrant agreement), is
exercisable, in whole or in part, until April 19, 2002. The exercise price of
the Placement Agent's Warrant is subject to adjustment in certain circumstances
and may be paid in either cash or shares of Common Stock through the utilization
of a cashless exercise provision set forth in the Placement Agent's Warrant.
Additionally, this Prospectus relates to 107,143 shares of Common Stock
and 107,143 IPO Warrants issuable upon exercise of the Unit Purchase Option (the
"Underwriter's Option") issued by the Company to an affiliate of the underwriter
in connection with the IPO and 107,143 shares of Common Stock issuable upon
exercise of the IPO Warrants underlying the Underwriter's Option. The exercise
price of the Underwriter's Option is $6.72 per Unit. Such exercise price is
subject to adjustment in certain circumstances.
The total gross proceeds to the Company from this offering may range
from zero to $14,249,352 (assuming that the exercise price of the Placement
Agent's Warrant is $7.47 and that the exercise price is paid in cash) if the IPO
Warrants, Placement Agent's Warrant, the Underwriter's Option and the IPO
Warrants underlying the Underwriter's Option are each exercised in full.
The Company will pay all expenses incurred in connection with this
offering. Additionally, the Company has also agreed to pay to the underwriter of
the IPO, a fee in the amount of 8.0% of the exercise price of any of the IPO
Warrants exercised beginning as of August 6, 1997, if (a) the market
<PAGE>
price of the Common Stock on the date the IPO Warrant is exercised is greater
than the exercise price of the IPO Warrant, (b) the exercise of the IPO Warrant
is solicited by such NASD member and such NASD member is designated in writing
by the holder of such IPO Warrant as the soliciting broker, (c) the IPO Warrant
is not held in a discretionary account, (d) disclosure of the compensation
arrangement is made upon the sale and exercise of the IPO Warrants, (e)
soliciting by such NASD member of the exercise of the IPO Warrant is not in
violation of Regulation M promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and (f) solicitation of the exercise is in
compliance with the regulations and rules of the NASD. The legal, accounting and
other fees and expenses related to offer and sale of the securities contemplated
hereby are estimated to be $47,000. This offering is not being underwritten.
The Common Stock and IPO Warrants are quoted on the OTC Bulletin Board.
Quotes for OTC Bulletin Board securities are not listed in the financial
sections of newspapers. On July 17, 1998, the last reported per share bid and
ask prices of the Common Stock on the OTC Bulletin Board were $7.125 and $7.25,
respectively, and the last reported bid and ask prices of the IPO Warrants on
the OTC Bulletin Board were $2.00 and $2.50, respectively.
THE IPO WARRANTS ISSUABLE UPON EXERCISE OF THE UNDERWRITER'S OPTION, THE COMMON
STOCK ISSUABLE UPON CONVERSION OF THE PREFERRED STOCK AND THE COMMON STOCK
ISSUABLE UPON EXERCISE OF EACH OF THE IPO WARRANTS, THE PLACEMENT AGENT'S
WARRANT AND THE IPO WARRANTS UNDERLYING THE UNDERWRITER'S OPTION INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREOF FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE SECURITIES OFFERED HEREBY.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 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 July __, 1998.
2
<PAGE>
No person is authorized in connection with the offering made hereby to
give any information or to make any representation not contained in this
Prospectus. If given or made, such information or representation must not be
relied upon as having been authorized by the Company. Neither the delivery of
this Prospectus nor any offer or 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. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
in any jurisdiction to any person to whom it would be unlawful to make such an
offer or solicitation in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of 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 can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and at Seven World Trade Center, 13th Floor, New York, New York
10048. In addition, the Company is required to file electronic versions of these
documents through the Commission's Electronic Data Gathering, Analysis and
Retrieval system (EDGAR). The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Copies of such material may also be obtained at prescribed rates
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549. The Common Stock and IPO
Warrants are quoted on the OTC Bulletin Board. The Company intends to furnish
its stockholders with annual reports containing audited financial statements and
such other periodic reports as the Company deems appropriate or as may be
required by law.
The Company has filed with the Commission a Registration Statement on
Form S-3, as amended (the "Registration Statement"), under the Securities Act
with respect to the securities being offered by this Prospectus. As permitted by
the rules and regulations of the Commission, this Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the offer and
sale of the securities, reference is made to the Registration Statement and the
exhibits thereto. Statements contained in this Prospectus concerning the
provisions of documents filed with the Registration Statement as exhibits are
necessarily summaries of such documents, and each such statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus:
(a) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997;
(b) Annual Report on Form 10-KSB/A No. 1 for the fiscal year ended
December 31, 1997;
(c) Quarterly Report on Form 10-QSB for the quarter ended March
31, 1998;
(d) The Company's definitive Proxy Statement pursuant to Schedule 14A
filed with the Commission on June 3, 1998; and
3
<PAGE>
(e) The description of the Common Stock offered hereby contained in
the Company's Registration Statement on Form 8-A which was
declared effective by the Commission on August 6, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 (other than, in the case of the Company's Proxy Statement, portions thereof
not deemed to be "filed" for the purposes of Section 18 of the Exchange Act) and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities to be made hereunder shall be
deemed to be incorporated herein by reference and shall be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be 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 such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of the documents incorporated herein or in the Registration
Statement by reference (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the information the
Registration Statement so incorporates). Written or telephone requests for such
documents should be directed to Investor Relations Department, Medjet Inc., 1090
King Georges Post Road, Suite 301, Edison, New Jersey 08837, telephone (732)
738-3990.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this Prospectus and in the documents incorporated
herein constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 2B of the Exchange Act. For this purpose, any
statements contained herein or incorporated herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "plans," "expects" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors, including those set forth under the caption "Risk Factors"
and elsewhere in this Prospectus, that could cause the actual results of the
Company to differ materially from those indicated by such forward-looking
statements.
THE COMPANY
Medjet Inc. (the "Company"), incorporated in Delaware in December 1993,
is engaged in the research and development of medical technology with a current
emphasis on ophthalmic surgical technology and equipment, and has developed a
proprietary technology and derivative devices for corneal surgery. The basic
technology is based on a hair thin, circular beam of saline water solution
moving in varying excess of supersonic speed, depending on the specific
application. In each application, the waterjet beam substitutes for a
conventional, oscillating metal or diamond blade. In combination with other
elements of the device, it is capable of removing the epithelium (the front
surface layer of the cornea of the eye) in a procedure known as epithelial
keratoplasty, or shaving thin shaped layers from the cornea, in a procedure
known as lamellar keratoplasty. The device normally used to perform lamellar
keratoplasty is known as a microkeratome. The Company's waterjet-based
microkeratome is known as the HydroBlade(TM) Keratome. The procedure with the
new device may, subject to regulatory approval, be used to treat diseases of the
cornea as well as to correct vision deficiencies such as nearsightedness
("myopia"), farsightedness ("hyperopia") or astigmatism. Layers of the cornea,
either parallel or shaped (resembling contact lenses), are excised in order to
reshape the anterior cornea surface to achieve close-to-ideal focusing. In
combination with a proprietary template of prescribed dimensions, the shape of
the layer to be removed can be determined in advance.
4
<PAGE>
The Company has demonstrated that its technology can be used to remove
the epithelium, a procedure called hydro-epithelial keratoplasty ("HEK") or to
treat diseased cornea in a procedure known as hydro-therapeutic keratoplasty
("HTK"), in which diseased corneal tissue is removed. HEK may be used to treat
diseases of the epithelium or damage to the epithelium that sometimes occurs.
Epithelial removal is often the first step in surgery of the cornea. It may be
used beneficially as the first step in the currently-used laser refractive
surgery technique known as photo-refractive keratectomy ("PRK"). Management
believes that the HEK procedure is superior to currently used techniques. The
device to carry out HEK procedures, the Company's HydroBrush(TM) Keratome, has
been cleared for marketing by the U.S. Food and Drug Administration (the "FDA").
Approximately 45,000 corneal procedures, primarily full transplants, are
performed annually in the United States. The Company believes that HTK will make
feasible partial transplants, which would be more desirable and safer than
currently performed corneal procedures. HTK may also be used to create a uniform
thickness flap of corneal tissue as the first step in a current modification of
the PRK technique known as the light ablation system for in-situ keratomileusis
("LASIK"). Currently, blade-based microkeratomes are used to make the flap and
in management's view are somewhat unsafe, difficult to learn and have limited
the use of LASIK as an alternate to PRK.
HEK is performed with a device known as the HydroBrush(TM) Keratome,
which precisely and safely debrides the epithelial layer of the cornea (with a
minimum of debris or residue) down to the Bowman's layer (the layer of the
cornea below the epithelium), in a discrete circular region with a well defined
boundary. There is no discernible damage to the Bowman's layer using high
magnification scanning electron microscope imaging. In contrast, knife blade
scrapes to debride the epithelium leave substantial debris and damage to
Bowman's layer. On rabbits, the regrowth of the epithelium is observed to be
about one-third faster (typically two days instead of three) when the cornea is
debrided with the HydroBrush(TM) Keratome than when blade scraping is used. In
addition, in contrast to blade scraping, which takes a few minutes, the
HydroBrush(TM) debriding process takes a few seconds and requires minimal
training or experience, and no initial dehydration is observed. Thus, the
Company believes that HEK should be ideal for use with PRK procedures.
The HydroBrush(TM) Keratome utilizes a waterjet brush, a thin, high
speed, linear jet about 2 mm wide of sterile, saline water solution flowing on
and along the underside of a transparent applanator plate. A circular, passive,
globe alignment device (the "EyeMask") is placed against the anterior corneal
surface and an insert in the EyeMask defines the circular region, up to 8 mm in
diameter, to be debrided. The applanator, which directs the flow of water, is
brought into light contact with the corneal upper surface at the apex of the
cornea. The applanator is simply slid by hand across the EyeMask and the
waterjet brush gently removes the epithelium. The spent water is directed to an
absorbent material shroud placed against the nose.
The sterile, saline water solution comes from a small, flexible,
sterile, 15 ml plastic bottle in the high pressure apparatus. When the device is
activated by pressurizing a working fluid around the outside of the bottle, the
bottle is pressurized, squeezed and emptied by the external hydrostatic pressure
of about 6000 pounds per square inch to produce a circular, 100 micron diameter,
constant, high speed saline waterjet which runs for 8 seconds, and then shuts
off automatically when the bottle is empty. The saline waterjet is converted to
the linear HydroBrush(TM) keratome on the underside of the applanator plate.
The high hydrostatic pressure to activate the device is produced by a
miniature water pressure intensifier driven by a liquid CO2 air-gun type
cartridge. A small diameter, flexible tube carries high pressure water to the
device handle. The CO2 cartridge, the sterile saline bottle, the EyeMask inserts
and the spent water catcher constitute an inexpensive set of disposables.
The HydroBrush(TM) Keratome is intended to become the first
commercially available product using the Company's waterjet technology and would
be both an early source of revenue for the Company and the basis for additional
applications to the FDA for permitted uses of the device. An application for
5
<PAGE>
use in removal of pteryguim is in process. Pterygium afflicts over 100 million
people worldwide and is difficult to treat surgically with a low rate of
recurrence. If it can be demonstrated that pterygium recurrence rate is reduced
by using this product the procedure rate could be several million per year. No
arrangements for commercial marketing of any HydroBrush(TM) application have
been finalized to date.
The Company's HydroBlade(TM) Keratome, which consists of a waterjet
nozzle and a globe fixation device is used with a miniature high pressure system
similar to that used for the HydroBrush(TM) Keratome. However, it operates at a
pressure of 20,000 psi. In this case, scanning is accomplished by sliding the
nozzle along tracks on the globe fixation device.
The Company believes that the HydroBlade(TM) Keratome, through the use
of a procedure known as hydro-refractive keratoplasty ("HRK"), has the potential
to reduce or eliminate a patient's dependence on eyeglasses or contact lenses by
modifying the shape of the anterior corneal surface to correct inherent vision
deficiencies. Based on feasibility studies on enucleated eyes and animal
studies, the Company believes that the HydroBlade(TM) Keratome cuts more
precisely, more quickly and with less tissue damage than the sharpest metal,
diamond or laser scalpels and that the HRK microkeratome, if cleared by the FDA,
will result in a safer, more accurate and more stable corneal adjustment that is
less painful for patients than other refractive surgery procedures currently
available. The Company anticipates, based on its studies, that HRK could cost
less than other such procedures, although the cost to the patient is determined
by the surgeon.
The Company believes that the HydroBlade(TM) Keratome, when used in
HTK, would be used similarly to other microkeratomes but would allow for safe
removal of layers of corneal tissue of a predetermined shape and thickness with
a higher degree of accuracy and far less tissue damage. This has already been
demonstrated on cadaver eyes. The Company intends to file an investigational
device exemption to perform clinical trials and then submit a Section 510(k)
notification for a ruling of substantial equivalence to current microkeratomes,
resulting in permission for the Company to market the HydroBlade(TM) Keratome
for HTK.
A subsequent and potentially more commercially valuable use of the
HydroBlade(TM) Keratome is for refractive surgery through HRK. Subsequent to the
permitted marketing of the HydroBlade(TM) Keratome for HTK, the Company intends
to seek FDA clearance to market the device for HRK.
Upon clearance or other marketing approval by the FDA of its
HydroBlade(TM) Keratome for HRK, the Company intends to market this product to
individual or affiliated groups of ophthalmologists for treatment of patients in
a clinical setting. The Company expects to derive a significant part of its
revenue by selling a basic system and selling disposables. In addition to
standard templates for standard refractive corrections, the Company expects to
make available custom templates for individual patient treatment as required.
The Company believes that its proprietary waterjet technology has
additional surgical applications. However, only limited studies of such
applications have been carried out. The Company's current focus is on
applications to ophthalmology.
The Company is in the development stage and has not sold any products
or generated any revenues. As of the date of this Prospectus, the Company's
research and development activities have been limited to constructing and
testing experimental versions of the keratome and conducting a limited number of
feasibility studies using porcine, rabbit and human cadaver eyes and live
animals to prove that a hair-thin beam of water can smoothly incise and shape
the anterior surface of the cornea and that the cornea will heal properly after
the surgery. Human clinical trials are currently being performed.
6
<PAGE>
The FDA has recommended to the Company that it seek permission to
market the HTK microkeratome through a Section 510(k) notification together with
a limited number of clinical trials, and it is the intention of the Company to
file a notification with the FDA in the second half of 1998 relating to two uses
of the HTK microkeratome. Although there can be no assurance that this will
prove to be the case, permission granted to the 510(k) notifications should
enable the Company to commence its marketing efforts sooner than if the Company
had to submit to the FDA a pre-market approval ("PMA") application. To obtain
FDA clearance of the 510(k) notification, a company must demonstrate, among
other matters, that the device is safe and easy to use. Human clinical trial
data is sometimes required to be submitted with a 510(k) notification. A PMA
application is typically a more complex submission which usually includes the
results of clinical studies to demonstrate safety and effectiveness, and
preparing an application is a detailed and time-consuming process. Once a PMA
application has been submitted, the FDA's review may be lengthy and may include
requests for additional data.
Although the therapeutic uses described above are the Company's initial
intended uses for its two devices, the Company recognizes that other uses may
eventually be made of the waterjet microkeratome. One such use, for which the
Company believes the potential market could be significant, is for refractive
surgical correction. Therefore, the later phase of the Company's FDA strategy
relates to the HRK microkeratome. Although the Company believes that the HRK
microkeratome may be considered for permission to market by the FDA through a
510(k) notification based upon the similarities of the microkeratome between the
HTK use and the HRK use, obtaining such permission for the HRK microkeratome is
likely to be somewhat more complicated than for HTK. There can be no assurance
that either the HTK use or the HRK use will be permitted for marketing by the
FDA. The differences between the two uses are found in the components, other
than the waterjet scalpel, which comprise the microkeratome. For the HRK
microkeratome, the Company may be required to show that the procedure is
effective, stable and does not decrease visual acuity to any significant extent.
The Company believes that, based on two features of the HRK
microkeratome, it may also be considered for 510(k) notification by the FDA.
First, based on the preliminary experimentation conducted with waterjet
microkeratomes, there are no known or anticipated physical or chemical processes
that would impact on the safety of the HRK procedure. The waterjet microkeratome
cuts by mechanisms similar to that of conventional scalpels (although at speeds
of more than 100 times greater), except that the Company believes that HRK would
not produce certain side effects incident to other refractive surgery
procedures. Such side effects include the inferior cut produced by the
oscillating blade used in conventional microkeratomes, and the potential
carcinogenic effects, dehydration from overheating and high amplitude shock
waves to the eye resulting from the high energy, pulsed radiation used in the
PRK procedure. PRK could represent the strongest competition to HRK. As a result
of the anticipated safety issues, the FDA approval process for PRK involved
numerous clinical studies on human eyes and took several years to complete. The
Company believes that the FDA approval process for the HRK microkeratome should
be shorter and entail fewer clinical studies in light of the expected higher
level of safety and lack of anticipated side effects, in comparison to other
previously permitted products, but there can be no assurances that this will be
the case.
The second feature of the HRK microkeratome is the benign nature of the
waterjet cut. While a conventional scalpel tears the lamellae (layers of the
stroma) and PRK completely or partially destroys the surface lamellae, the
waterjet beam has a unique cutting action which separates the various lamellae
prior to cutting the targeted tissue, thereby preserving the integrity of the
remaining lamellae and both localizing and minimizing the damage to the lamellae
generally. The healing process following a waterjet cut is expected to be less
traumatic than that following a conventional scalpel cut or a PRK cut, as
observed in rabbits, although improved healing process has not yet been
demonstrated in human eyes.
The Company intends to continue the research and development of its
technology and related manufacturing processes and to commence human clinical
trials of the HRK microkeratome. If the HTK microkeratome or the HRK
microkeratome is permitted to be marketed or otherwise approved for
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marketing in the United States, the Company will be required to establish a
marketing organization and production facilities, which will require additional
financing, unless the Company identifies third parties to perform such functions
under license or other arrangements. No assurance can be given that the
Company's research and development efforts will be successfully completed, or
that the HTK microkeratome or HRK microkeratome will prove to be safe and
effective for the purposes intended, will be permitted to be marketed or
otherwise approved for marketing by the FDA or any other regulatory agency or
will be commercially successful.
The Company was incorporated under the laws of the State of Delaware in
December 1993. Its offices are located at 1090 King Georges Post Road, Suite
301, Edison, New Jersey 08837; its telephone number is (732) 738-3990.
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS,
THE FOLLOWING FACTORS CONCERNING THE BUSINESS OF THE COMPANY AND THE SECURITIES
OFFERED HEREBY, AND SHOULD CONSULT INDEPENDENT ADVISORS AS TO THE TAX, BUSINESS
AND LEGAL CONSIDERATIONS REGARDING AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY.
NO REVENUES; UNCERTAIN PROFITABILITY; DEVELOPMENT STAGE COMPANY;
HISTORY OF LOSSES. Since its inception, the Company has been principally engaged
in developmental and organizational activities. To date, the Company has
generated no revenues from operations. No revenues are expected from operations
until, and only if, the Company begins commercial marketing of its keratome or
other products, which is not expected to occur before the fourth quarter of
1998. In addition, commercial marketing of the Company's products in the U.S.
will be contingent upon obtaining FDA permission or approval and possibly the
approval of other governmental agencies. To date, only the Company's
HydroBrush(TM) Keratome has been granted 510(k) notification from tHe FDA and is
the Company's only product which has received the regulatory approvals required
prior to the commencement of commercial marketing. The Company is currently
seeking FDA approval of certain of its devices. Regulatory approval procedures
are often extremely time consuming, expensive and uncertain. Accordingly, there
can be no assurance that the Company in the future will be able to generate
sufficient revenues to operate on a profitable basis.
The Company, which was founded in December 1993, is in the development
stage, and its business is subject to all of the risks inherent in the
establishment of a new business enterprise. The likelihood of success of the
Company must be considered in light of the problems, expenses, complications and
delays frequently encountered in connection with the formation of a new
business, the development of new products, the competitive and regulatory
environment in which the Company is operating and the possibility that its
activities will not result in the development of any commercially viable
products. There can be no assurance that the Company's activities will
ultimately result in the development of commercially saleable or useful
products.
The Company has experienced annual operating losses and negative
operating cash flow since inception. At March 31, 1998, the Company had an
accumulated deficit of approximately $4,000,000 excluding approximately
$1,500,000 which was applied to additional paid-in capital when the Company
converted from a subchapter S corporation to a C corporation for federal income
tax purposes in connection with the IPO. Unless and until the Company's product
development and marketing activities are successful and its products are sold,
of which there can be no assurance, the Company will not have any revenues to
apply to operating expenses and the Company will continue to incur losses.
Additionally, as a result of the start-up nature of its business and the fact
that it has not commercially marketed any products, the Company expects to
sustain substantial operating losses in the future.
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NEED FOR FUTURE FINANCING. To proceed with its planned research and
development and possible marketing activities, the Company believes that it will
require additional capital before, if ever, it reaches profitability and
positive cash flow. As a result, the Company will be required to raise
additional funds through public or private financing including grants that may
be available for its research and development. In connection with a private
placement offering (the "Private Placement") of the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock"),
commenced in the first quarter of 1998, the Company, through its placement
agent, as of the date of this Prospectus, has raised $1,100,000. The offering of
an additional $2,900,000 of securities in connection with the Private Placement
is continuing through July 31, 1998. There can, however, be no assurance that
the Company will successfully consummate, in whole or in part, the sale of such
securities nor can there be any assurance that the Company will be able to
obtain other additional financing on terms favorable to it or its stockholders,
if at all. If adequate funds are not available to satisfy short-term or
long-term capital requirements, the Company may be required to reduce
substantially, or eliminate, certain areas of its product development
activities, limit its operations significantly, or otherwise modify its business
strategy. The failure of the Company to obtain any other acceptable financing
would have a material adverse effect on the operations of the Company. Without
additional financing as a result of the consummation of the Private Placement,
the exercise of the Company's outstanding warrants or otherwise, the Company
would become unable to maintain its current operations and would be unable to
carry out its business plan. Except for the Private Placement and currently
outstanding warrants and options, the Company has no current plans,
understandings or commitments to obtain any additional financing from the sale
of its securities or otherwise. Additional financing from the sale of its
securities may result in dilution of the Company's then current stockholders.
DEPENDENCE UPON A KEY OFFICER; ATTRACTION AND RETENTION OF KEY
PERSONNEL. The business of the Company is highly dependent upon the active
participation of its founder and Chief Executive Officer, Dr. Eugene I. Gordon.
The loss or unavailability to the Company of Dr. Gordon would have a material
adverse effect on the Company's business prospects and potential earning
capacity. The recruitment of skilled scientific personnel is critical to the
Company's success. There can be no assurance that it will be able to continue to
attract and retain such personnel in the future. In addition, the Company's
anticipated growth and expansion into areas and activities requiring additional
expertise, clinical testing, governmental approvals, production and marketing of
the Company's products (which would be required if the Company does not enter
into licensing arrangements) is expected to place increased demands upon the
Company's financial resources and corporate structure. The Company expects to
satisfy such demands, if they arise, through the hiring of additional management
personnel and the development of additional expertise by existing management.
UNCERTAINTY OF MARKET ACCEPTANCE; RELIANCE ON SINGLE TECHNOLOGY.
Acceptance of the Company's products is difficult to predict and will require
substantial marketing efforts and the expenditure of significant funds by a
licensee or by the Company. There can be no assurance that the products will be
accepted by the medical community once they are permitted or approved. Market
acceptance of the Company's products will depend in large part upon the
Company's ability to demonstrate the operational advantages, safety and
cost-effectiveness of its products compared to other comparable surgical
techniques. Failure of the products to achieve market acceptance will have a
material adverse effect on the Company's financial condition and results of
operations.
At present, the Company's only products (although still in development
stage) are its keratomes, and the Company expects that its keratomes will be, if
and when commercially available, its sole products for an indefinite period of
time. The Company's present narrow focus on particular products makes the
Company vulnerable to the development of superior competing products and changes
in technology that could eliminate the need for the Company's products. There
can be no assurance that significant changes in the foreseeable future in the
need for the Company's products or the desirability of those products will not
occur.
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DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS. The Company's success
will depend in part on whether it successfully obtains and maintains patent
protection for its products, preserves its trade secrets and operates without
infringing the proprietary rights of third parties.
The Company has sought to protect its proprietary interest in its
products by applying for patents in the United States and corresponding patents
abroad. The Company has one issued U.S. patent and one issued foreign patent.
The Company has four U.S. patents pending, three of which have been allowed and
a number of foreign patents in process. There can be no assurance that any other
patent will be issued to the Company, that any patents owned by or issued to the
Company, or that may issue to the Company in the future, will provide a
competitive advantage or will afford protection against competitors with similar
technology, or that competitors of the Company will not circumvent, or challenge
the validity of, any patents issued to the Company. There also can be no
assurance that any patents issued to or licensed by the Company will not be
infringed upon or designed around by others or would prevail in a legal
challenge, that others will not obtain patents that the Company will need to
license or design around, that the keratomes or any other potential product of
the Company will not inadvertently infringe upon the patents of others, or that
others will not manufacture the Company's patented products upon expiration of
such patents. There can be no assurance that existing or future patents of the
Company will not be invalidated. Additionally, patent applications filed in
foreign countries and patents granted in such countries are subject to laws,
rules and procedures which differ from those in the United States. Patent
protection in such countries may be different from patent protection provided by
United States laws and may not be as favorable to the Company.
Also, there can be no assurance that the Company's non-disclosure
agreements and other safeguards will protect its proprietary information and
trade secrets or provide adequate remedies for the Company in the event of
unauthorized use or disclosure of such information, or that others will not be
able to independently develop such information. As is the case with the
Company's patent rights, the enforcement by the Company of its non-disclosure
agreements can be lengthy and costly, with no guarantee of success. There can be
no assurance that the Company's program of patent protection, internal security
of its proprietary information and non-disclosure agreements will be sufficient
to protect the Company's proprietary technology from competitors.
INFRINGEMENT CLAIMS; LITIGATION. If any of the Company's products are
found to infringe upon the patents or proprietary rights of another party, the
Company may be required to obtain licenses under such patents or proprietary
rights of such other party. No assurance can be given that any such licenses
would be made available on terms acceptable to the Company, if at all. If
required licenses were to be unavailable, the Company could be prohibited from
using, marketing or selling certain technology and devices and such prohibition
could have a material adverse effect on the Company. The use of the
HydroBrush(TM) Keratome to perform HEK may be subject to a claim of infringement
of a U.S. patent assigned to Summit Technology, Inc. ("Summit"). Such patent
claims the use of a fluid jet for removal of a corneal epithelium layer and
requires that the force of the fluid jet be directed towards the eye at an angle
other than tangential. The HydroBrush(TM) Keratome does not use jet force
directly into the eye to effect epithelium removal. If the Summit patent is
found to be valid and the use of the HydroBrush(TM) Keratome for HEK is found to
infringe upon the Summit patent, the Company may be required to obtain a license
under such patent and no assurance can be given that any such license will be
made available on terms acceptable to the Company, if at all. In such case,
although the Company would not be prohibited from performing HRK, it would be
prohibited from using the HydroBrush(TM) Keratome for HEK and such prohibition
could have a material adverse effect on the Company.
On April 21, 1998, the Company was served with a complaint by the New
Jersey Institute of Technology ("NJIT") commencing a lawsuit in the United
States District Court for the District of New Jersey ("U.S. District Court").
Each of the Company, Dr. Gordon, a former employee, certain patent law firms and
an individual lawyer were named as defendants. The complaint alleges that the
defendants, with deceptive intent, failed to name an NJIT professor and/or NJIT
research associate as a co-inventor
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on the Company's U.S. Patent No. 5,556,406 on the "Lamellar Surgical Device and
Procedure" and breached fiduciary duties and contractual obligations owed to
NJIT. The complaint seeks monetary damages from the Company and an order
directing that the Company's patent (and corresponding foreign patents and
patent applications) on the Lamellar Surgical Device and Procedure be assigned
and transferred to NJIT. It further seeks an order that NJIT has not infringed
any valid claim of such patent and a declaratory judgment that all of the
Company's claims under such patent are invalid and unenforceable against NJIT.
NJIT's patent application relating to a refractive correction procedure
based on the use of an isotonic waterjet had previously been denied by the
United States Patent and Trademark Office as inoperable. The three inventors of
the subject of such denied patent application, one of which was Dr. Gordon,
assigned such patent application to NJIT as part of a dispute settlement in
which NJIT agreed to grant an exclusive license to the Company of the patent
rights under such patent application. Prior to being served with the complaint
by NJIT, the Company and Dr. Gordon had filed a complaint on March 27, 1998
against NJIT in the Superior Court of the State of New Jersey, Middlesex County,
seeking a declaratory judgment that NJIT has no ownership or other interest in
the patent rights to the Company's Lamellar Surgical Device and Procedure and
certain monetary damages. NJIT has moved to have the Company's lawsuit remanded
to the U.S. District Court and included in its lawsuit. The Company has moved to
have the NJIT lawsuit dismissed on the basis that NJIT has not been harmed by
the Company's patent and therefore it cannot challenge its validity. As a
result, the Company believes that the lawsuit brought in U.S. Court by NJIT
should be dismissed.
The Company intends to vigorously defend against the lawsuit commenced
by NJIT and to actively prosecute the suit it has commenced against NJIT. The
litigation between NJIT and the Company may be lengthy in duration and expensive
in nature and will divert certain resources of the Company from other expected
uses. An outcome in this matter that is adverse to the Company would have a
material adverse effect on the Company.
COMPETITIVE TECHNOLOGIES, PROCEDURES AND COMPANIES. The Company is
engaged in a rapidly evolving field. There are many companies, both public and
private, universities and research laboratories engaged in research activities
relating to other vision correction alternatives. Competition from these
companies, universities and laboratories is intense and is expected to increase.
The Company's initial products will compete with other presently existing forms
of treatment for vision disorders, including eyeglasses, contact lenses, corneal
transplants, other refractive surgery procedures and other technologies under
development. Additionally, the Company's products will compete with scalpels in
removing films, such as epithelium or pterygium, from the anterior surface of
the eye. There can be no assurance that persons whose vision can be corrected
with eyeglasses or contact lenses will elect to undergo the surgical procedures
with the Company's products when non-surgical vision correction alternatives are
available.
The Company is aware of ongoing research at certain companies and
institutions into a variety of procedures for corneal adjustment and refractive
surgery, including waterjet technology under development by Visijet (Surgijet)
Inc. Some of these companies and institutions, which may in the future become
competitors of the Company, have substantially greater resources, research and
development staffs and facilities, as well as greater experience in research and
development, obtaining regulatory approval and manufacturing and marketing
medical device products than the Company.
Additionally, there can be no assurance that the Company's competitors
will not succeed in developing technologies, procedures or products that are
more effective or economical than those being developed by the Company or that
would render the Company's technology and proposed products obsolete or
noncompetitive. Furthermore, in connection with the commercial sale of its
products, the Company will also be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which the Company has no
experience.
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NO MANUFACTURING EXPERIENCE; DEPENDENCE ON THIRD PARTIES. The Company's
current strategy is to exclusively license its ophthalmology products. As of the
date of this Prospectus, the Company has not entered into any agreement to
license or otherwise commercially market any of its products. If the Company
does not enter into such licensing arrangements, it will need to engage in the
manufacture and marketing of its products. The Company has no volume
manufacturing capacity or experience in manufacturing medical devices or other
products. To be successful, the Company's proposed products must be manufactured
in commercial quantities in compliance with regulatory requirements at
acceptable costs. Production in clinical or commercial-scale quantities will
involve technical challenges for the Company. If the Company is unable or elects
not to pursue collaborative arrangements with other companies to manufacture
certain of its potential products, the Company will be required to establish
manufacturing capabilities. Establishing its own manufacturing capabilities
would require significant scale-up expenses and additions to facilities and
personnel. There can be no assurance that the Company will be able to obtain
necessary regulatory approvals on a timely basis or at all. Delays in receipt of
or failure to receive such approvals or loss of previously received approvals
would have a material adverse effect on the Company. There can be no assurance
that the Company will be able to develop clinical or commercial-scale
manufacturing capabilities at acceptable costs or enter into agreements with
third parties with respect to these activities. The Company's dependence upon
third parties for the manufacture of its products may adversely affect the
Company's profit margins and the Company's ability to develop and deliver such
products on a timely basis. Moreover, there can be no assurance that such
parties will perform adequately, and any failures by third parties may delay the
submission of products for regulatory approval, impair the Company's ability to
deliver products on a timely basis, or otherwise impair the Company's
competitive position and any such failure could have a material adverse effect
on the Company.
NO MARKETING OR SALES EXPERIENCE. If the Company does not enter into
any licensing arrangements, it will undertake the marketing and sale of its own
products. In such event, the Company intends to market and sell its products in
the United States and certain foreign countries, if and when regulatory approval
is obtained, through a direct sales force or a combination of a direct sales
force and distributors. The Company currently has no marketing organization and
has never sold a product. Establishing sufficient marketing and sales capability
will require significant resources. There can be no assurance that the Company
will be able to recruit and retain skilled sales management, direct salespersons
or distributors, or that the Company's marketing or sales efforts will be
successful. To the extent that the Company enters into distribution arrangements
for the sale of its products, the Company will be dependent on the efforts of
third parties. There can be no assurance that such efforts will be successful.
RISK OF PRODUCT LIABILITY LITIGATION; POTENTIAL UNAVAILABILITY OF
INSURANCE. The testing, manufacture, marketing and sale of medical devices
entails the inherent risk of liability claims or product recalls. As a result,
the Company faces a risk of exposure to product liability claims and/or product
recalls in the event that the use of its current or future potential products
are alleged to have caused injury. There can be no assurance that the Company
will avoid significant liability in spite of the precautions taken to minimize
exposure to product liability claims. Prior to the commencement of clinical
testing, the Company intends to procure product liability insurance. It is
expected that such insurance will be in the amounts of $1 million per claim with
an annual aggregate limit of $20 million. After any commercialization of its
products, the Company will seek to obtain an appropriate increase in its
coverage. There can, however, be no assurance that adequate insurance coverage
will be available at an acceptable cost, if at all. Consequently, a product
liability claim, product recall or other claims with respect to uninsured
liabilities or in excess of insured liabilities could have a material adverse
effect on the Company.
SURGICAL RISKS. There can be no assurance that the Company's products
will be successful in providing reliable surgical corrections. As with all
surgical procedures, the procedures for which the Company's products are
intended entail certain inherent risks, including defective equipment or human
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error, infection or other injury resulting in partial or total loss of vision.
Such injury could expose the Company to product liability or other claims. The
Company believes competing products have the same risks and have experienced a
small number of these situations without undue impact on the commercial
prospects of such products. There can be no assurance that the Company's product
liability insurance in effect from time to time will be sufficient to cover any
such claim in part or in whole. Any such claim could adversely impact the
commercialization of the Company's products and could have a material adverse
effect on the Company.
NO ASSURANCE OF FDA AND OTHER REGULATORY APPROVAL. As medical devices,
the Company's keratomes are subject to regulation by the FDA under the Federal
Food, Drug, and Cosmetic Act (the "FD&C Act") and implementing regulations.
Pursuant to the FD&C Act, the FDA regulates, among other things, the
development, manufacture, labeling, distribution, and promotion of keratomes in
the United States. If the Company fails to enter into licensing arrangements, it
will be required to pursue FDA approval of or permission to market its products
at its own cost.
The process of obtaining required regulatory clearances or approvals
can be time-consuming and expensive, and compliance with the FDA's Good
Manufacturing Practices regulations and other regulatory requirements can be
burdensome. Moreover, there can be no assurance that the required regulatory
clearances will be obtained, and such clearances, if obtained, may include
significant limitations on the uses of the product in question. In addition,
changes in existing regulations or guidelines or the adoption of new regulations
or guidelines could make regulatory compliance by the Company more difficult in
the future. The failure to comply with applicable regulations could result in
fines, delays or suspensions of clearances, seizures or recalls of products,
operating restrictions and criminal prosecutions, and would have a material
adverse effect on the Company.
Distribution of the Company's products in countries outside the United
States may be subject to regulation in those countries. Foreign regulatory
requirements vary widely from country to country. In addition, export sales of
medical devices that have not received FDA marketing clearance are generally
subject to FDA export permit requirements. There can be no assurance that the
Company will be able to obtain the approvals necessary to market its products
outside the United States.
INTERNATIONAL SALES AND OPERATIONS RISKS. The Company currently plans
to initially sell its products to customers and conduct operating activities
outside of the United States. A number of risks are inherent in international
transactions. International sales and operations may be limited or disrupted by
the imposition of the regulatory approval process, government controls, export
license requirements, political instability, price controls, trade restrictions,
changes in tariffs or difficulties in staffing and managing international
operations. Foreign regulatory agencies have or may establish product standards
different from those in the United States, and any inability to obtain foreign
regulatory approvals on a timely basis could have an adverse effect on the
Company. Additionally, the Company may be adversely affected by fluctuations in
currency exchange rates, increases in duty rates and difficulties in obtaining
export licenses. There can be no assurance that the Company will be able to
successfully commercialize its products in any foreign market.
NO DIVIDENDS. The Company has paid no dividends on the Common Stock
since its inception and does not intend to pay dividends on the Common Stock in
the foreseeable future. Other than dividend obligations on Preferred Stock, any
earnings which the Company may realize in the foreseeable future will be
retained to finance the growth of the Company.
ADVERSE IMPACT ON COMMON STOCK OF ISSUANCE OF PREFERRED STOCK;
ANTI-TAKEOVER PROVISIONS. As of the date of this Prospectus, the Board of
Directors of the Company has issued 110,000 shares of Preferred Stock and has
the authority to issue up to 890,000 additional shares of preferred stock in one
or more series and to determine the number of shares in each series, as well as
the designations, preferences, rights and qualifications or restrictions of
those shares, without any further vote or action by
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the stockholders of the Company. The rights of holders of Common Stock are, will
be subject to, and may be adversely affected by, the rights of the holders of
the shares of Preferred Stock or any other series of preferred stock that may be
issued in the future, including that the market price of the Common Stock may be
adversely affected by the issuance of any other series of preferred stock with
voting and/or distribution rights superior to those of the Common Stock. The
issuance of any series of preferred stock could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law. In general,
this statute prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
NO ASSURANCE OF CONTINUING PUBLIC TRADING MARKET. The Common Stock and
the IPO Warrants are currently quoted on the OTC Bulletin Board. There can be no
assurance that such trading market will be sustained. The OTC Bulletin Board is
an unorganized, inter-dealer, over-the-counter market which provides
significantly less liquidity than established stock exchanges or the Nasdaq
National Market, and quotes for stocks included on the OTC Bulletin Board are
not listed in the financial sections of newspapers as are those for established
stock exchanges and the Nasdaq National Market. Therefore, prices for securities
traded solely on the OTC Bulletin Board may be difficult to obtain and
purchasers of the securities offered hereby may be unable to resell such
securities at any price. In the event the Company's securities do not continue
to be quoted on the OTC Bulletin Board, quotes for the Company's securities may
be included in the "pink sheets" for the over-the-counter market.
RISK OF LOW-PRICED SECURITIES. The Commission has adopted regulations
which generally define a "penny stock" to be any equity security that has a
market price (as defined in the regulations) of less than $5.00 per share and
that is not traded on a national stock exchange, the Nasdaq SmallCap Market or
the Nasdaq National Market. If the Company's securities are included on the OTC
Bulletin Board and are trading at less than $5.00 per security, such securities
may become subject to rules of the Commission that impose additional sales
practice requirements on broker-dealers effecting transactions in penny stocks.
In most instances, unless the purchaser is either (i) an institutional
accredited investor, (ii) the issuer, (iii) a director, officer, general partner
or beneficial owner of more than 5% of any class of equity security of the
issuer of the penny stock that is the subject of the transaction or (iv) an
established customer of the broker-dealer, the broker-dealer must make a special
suitability determination for the purchaser of such securities and have received
the purchaser's prior written consent to the transaction. Changes currently
proposed by the NASD and subject to approval by the Commission would allow only
those companies that report their current financial information to the
Commission, banking, or insurance regulators to be quoted on the OTC Bulletin
Board. Also, broker-dealers would be required to review current financial
statements on a company they are recommending on an OTC Bulletin Board
transaction, and the proposed changes would further require that prior to the
actual purchase of an OTC Bulletin Board security, investors receive a standard
disclosure statement emphasizing the differences between OTC securities and
other market-listed securities. Additionally, for any transaction involving a
penny stock, the rules of the Commission require, among other things, the
delivery, prior to the transaction, of a disclosure schedule prepared by the
Commission relating to the penny stock market and the risks associated
therewith. The broker-dealer also must disclose the commissions payable to both
the broker-dealer and its registered representative and current quotations for
the securities. Finally, among other requirements, monthly statements must be
sent to the purchaser of the penny stock disclosing recent price information for
the penny stock held in the purchaser's account and information on the limited
market in penny stocks. Consequently, the penny stock rules may affect the
ability of a purchaser to resell the securities offered hereby.
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INFLUENCE BY CURRENT STOCKHOLDER. Assuming payment in cash of the
exercise price of the Placement Agent's Warrant and the exercise in full of each
of the IPO Warrants, the Placement Agent's Warrants, the Underwriter's Option
and the IPO Warrants underlying the Underwriter's Option, Dr. Gordon will own
1,591,687 shares of Common Stock, representing approximately 29.8% of the issued
and outstanding shares (without giving effect to 330,550 shares of Common Stock
reserved for issuance pursuant to outstanding options under the Company's stock
option plan and 97,389 shares of Common Stock reserved for issuance pursuant to
certain outstanding warrants). Accordingly, Dr. Gordon may be able to influence
the election of all the Company's directors and the affairs of the Company. Dr.
Gordon's influence over the affairs of the Company could have the effect of
delaying or preventing a change of control of the Company.
FUTURE SALE OF UNREGISTERED SECURITIES; REGISTRATION RIGHTS. Assuming
payment in cash of the exercise price of the Placement Agent's Warrant and the
exercise in full of each of the IPO Warrants, the Placement Agent's Warrants,
the Underwriter's Option and the IPO Warrants underlying the Underwriter's
Option, the Company will have outstanding 5,333,705 shares of Common Stock. As
of the date of this Prospectus, options to purchase 330,550 shares of Common
Stock have been granted pursuant to the stock option plan and additional
warrants to purchase 97,389 shares of Common Stock have also been granted.
The Company has granted certain piggyback registration rights to certain
of its existing stockholders with respect to 703,595 shares of Common Stock. The
holders of all of such shares have agreed to waive such registration rights
through November 6, 1998. Shares of Common Stock issuable upon exercise of stock
options granted under the stock option plan may be registered under the
Securities Act commencing August 6, 1998 or such earlier date as consented to by
the underwriter of the IPO. The sale or the availability for sale of any or all
of such shares of Common Stock could have an adverse effect on the market price
of the Common Stock prevailing from time to time.
DEPRESSIVE EFFECT ON MARKET PRICE OF OUTSTANDING SECURITIES RESULTING
FROM FUTURE EXERCISE OF OPTIONS AND WARRANTS. Sales of Common Stock upon
exercise of outstanding options and warrants may have a depressive effect on the
price of the Company's securities and the issuance of additional shares of
Common Stock upon the exercise of outstanding options, the IPO Warrants, the
Placement Agent's Warrant, the Underwriter's Option, the IPO Warrants underlying
the Underwriter's Option or otherwise will also dilute the proportionate
ownership of the then current stockholders of the Company.
CONTINGENT ISSUANCE OF ADDITIONAL SHARES. The Company has outstanding the
IPO Warrants, the Placement Agent's Warrant and the Underwriter's Option. If
each of the IPO Warrants, the Placement Agent's Warrant, the Underwriter's
Option and IPO Warrants underlying the Underwriter's Option are exercised in
full (and in the case of the Placement Agent's Warrants, the exercise price is
paid in cash), the issuance of 1,647,425 additional shares of Common Stock
offered hereby would result. The price which the Company may receive for the
Common Stock issued upon exercise of such securities may be less than the market
price of the Common Stock at the time of such exercise. For the life of such
securities, the holders are given the opportunity to profit from a rise in the
market price for the Common Stock. So long as such securities are not exercised,
the terms under which the Company could obtain additional equity may be
adversely affected. Moreover, the exercise of such securities might be expected
to occur at a time when the Company would, in all likelihood, be able to obtain
capital by a new offering of its securities on terms more favorable than those
provided by such outstanding securities. Additionally, should all or
substantially all of such outstanding securities be exercised, the resulting
increase in the number of shares of Common Stock in the trading market may have
an adverse effect on the market price of Common Stock.
REDEMPTION OF IPO WARRANTS. The IPO Warrants are subject to redemption at
a price of $0.01 per IPO Warrant upon 30 days prior written notice, provided
that the closing bid
15
<PAGE>
price of the Common Stock for any 10 consecutive trading days within a period of
30 trading days ending within five days prior to the date of the notice of
redemption exceeds $13.00. In the event the Company exercises the right to
redeem the IPO Warrants, a holder would be forced either to exercise the IPO
Warrant or accept the redemption price.
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE
THE WARRANTS. Holders of the IPO Warrants will be able to exercise such warrants
only if a current prospectus relating to the Common Stock underlying such
warrants is then in effect, and only if such Common Stock is qualified for sale
or exempt from qualification under applicable state securities law of the state
in which the holders of such IPO Warrants reside.
The IPO Warrants are separately transferable. Although the Units were
not knowingly sold to purchasers in jurisdictions in which the Units were not
registered or otherwise qualified for sale, purchasers may buy IPO Warrants in
the after market in, or may move to, jurisdictions in which the shares
underlying the IPO Warrants are not so registered or qualified during the period
that the IPO Warrants are exercisable. In this event, the Company would be
unable to issue shares of Common Stock to those persons desiring to exercise the
IPO Warrants, and holders of IPO Warrants would have no choice but to attempt to
sell the IPO Warrants in a jurisdiction where such sale is permissible or allow
them to expire unexercised.
USE OF PROCEEDS
If the IPO Warrants, the Placement Agent's Warrant, the Underwriter's
Option and the IPO Warrants underlying the Underwriter's Option are exercised in
full (and the exercise price of the Placement Agent's Warrant is $7.47 and such
exercise price is paid in cash rather than by means of a cashless exercise
provision set forth in the Placement Agent's Warrant), of which there can be no
assurance, the Company could realize up to $14,249,352, before deducting the
estimated expenses related to this offering. The Company currently intends to
use any proceeds it may receive for working capital and general corporate
purposes, including research and development.
DESCRIPTION OF SECURITIES
The following description of the IPO Warrants is a summary and is
subject to and qualified in its entirety by the detailed provisions of the
Warrant Agreement, which is an exhibit to the Registration Statement of which
this Prospectus forms a part.
Each IPO Warrant entitles the holder thereof to purchase, until 5:00
p.m. on November 6, 1999, at a price of $10.00, one share of Common Stock,
unless such IPO Warrant is redeemed by the Company prior to such expiration
date. The exercise price of the IPO Warrants and the number of shares of Common
Stock or other securities or property to be obtained upon exercise of the IPO
Warrants, are subject to adjustment under certain circumstances, including, but
not limited to, certain sales by the Company of its shares of Common Stock for a
price per share less than the then market price of the Common Stock, or issuance
by the Company of any shares of its Common Stock as a dividend, or subdivision
or combination of the Company's outstanding shares of Common Stock into a
greater or lesser number of shares.
The IPO Warrants are redeemable by the Company in whole but not in part
for $.01 per IPO Warrant, upon 30 days' prior written notice, if the market
price of the Common Stock equals or exceeds $13.00 per share. In the event that
the Company gives notice of its intention to redeem the IPO Warrants, holders
would be forced to exercise their IPO Warrants or accept the redemption price.
For purposes of redemption, market price means (i) the average closing bid price
for any 10 consecutive trading days within a period of 30 consecutive trading
days, ending within five days of the date of the notice of
16
<PAGE>
redemption, of the Common Stock as reported by the OTC Bulletin Board or (ii)
the average of the last reported sale price for the 10 consecutive business days
ending within five days of the date of the notice of redemption, on the primary
exchange on which the Common Stock is traded, if the Common Stock is traded on a
national securities exchange.
The IPO Warrants may be exercised by completing and signing the
appropriate notice of exercise form attached to the IPO Warrant and mailing or
delivering it (together with the IPO Warrant) to Continental Stock Transfer &
Trust Company of New York, New York, the Warrant Agent (the "Warrant Agent") in
time to reach the Warrant Agent prior to the time fixed for termination or
redemption of the IPO Warrants, accompanied by payment of the full exercise
price therefor.
Holders of the IPO Warrants are not entitled to vote, receive
dividends, or exercise any of the rights of the holders of shares of Common
Stock for any purpose until the IPO Warrants have been duly exercised and
payment of the IPO Warrant exercise price has been made. The IPO Warrants are
currently quoted on the OTC Bulletin Board.
In connection with the IPO, the Company sold, for a nominal
consideration, the Underwriter's Options for the purchase of 107,143 Units to an
affiliate of the underwriter. Each of the Underwriter's Options is exercisable
to purchase one Unit, at $6.72 at any time during a period of four years which
began August 6, 1997. The securities constituting each Unit, one share of Common
Stock and IPO Warrant, trade separately. The exercise price of the Underwriter's
Option and the number of Units covered thereby are subject to adjustment to
protect the holders against dilution in certain events.
PLAN OF DISTRIBUTION
The IPO Warrants issuable upon exercise of the Underwriter's Option,
the Common Stock issuable upon conversion of the Preferred Stock and the Common
Stock issuable upon exercise of each of the IPO Warrants, the Placement Agent's
Warrant, the Underwriter's Option and the IPO Warrants underlying the
Underwriter's Option may be sold from time to time by the holders thereof or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made in any one or more transactions (which may involve block transactions) on
the OTC Bulletin Board, or any exchange on which the IPO Warrants or Common
Stock, as the case may be, may then be listed, in the over-the-counter market or
otherwise in negotiated transactions or a combination of such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The holders of IPO Warrants
underlying the Underwriter's Option, the Common Stock issuable upon conversion
of the Preferred Stock and the Common Stock issuable upon exercise of each of
the IPO Warrants, the Placement Agent's Warrant and the IPO Warrants underlying
the Underwriter's Option may effect such transactions by selling such securities
to or through broker-dealers, and such broker-dealers may sell such securities
as agent or may purchase such securities as principal and resell them for their
own account. Such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the holders and/or
purchasers of the IPO Warrants underlying the Underwriter's Option, the Common
Stock issuable upon conversion of the Preferred Stock and the Common Stock
issuable upon exercise of each of the IPO Warrants, the Placement Agent's
Warrant and the IPO Warrants underlying the Underwriter's Option for whom they
may act as agent (which compensation may be in excess of customary commissions).
In connection with such sales, the holders and any participating brokers or
dealers may be deemed to be "underwriters" as defined in the Securities Act.
17
<PAGE>
The Company has also agreed to pay to the underwriter of the IPO, a fee
in the amount of 8.0% of the exercise price of any of the IPO Warrants exercised
beginning as of August 6, 1997, if (a) the market price of the Common Stock on
the date the IPO Warrant is exercised is greater than the exercise price of the
IPO Warrant, (b) the exercise of the IPO Warrant is solicited by an NASD member
and such NASD member is designated in writing by the holder of such IPO Warrant
as the soliciting broker, (c) the IPO Warrant is not held in a discretionary
account, (d) disclosure of the compensation arrangement is made upon the sale
and exercise of the IPO Warrants, (e) soliciting by such NASD member of the
exercise of the IPO Warrant is not in violation of Regulation M promulgated
under the Exchange Act, and (f) solicitation of the exercise is in compliance
with the regulations and rules of the NASD.
EXPERTS
The financial statements for the periods ended December 31, 1996 and
December 31, 1997 incorporated by reference in this Prospectus and elsewhere in
the registration statement have been audited by Rosenberg Rich Baker Berman &
Company, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
LEGAL MATTERS
Certain legal matters in connection with the legality of the securities
offered hereby have been passed upon for the Company by Kelley Drye & Warren
LLP, 101 Park Avenue, New York, New York 10178, and Two Stamford Plaza, 281
Tresser Boulevard, Stamford, Connecticut 06901.
* * * * *
18
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON
HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO MEDJET INC.
ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO 1,647,425
CHANGE IN THE AFFAIRS OF THE COMPANY Shares
SINCE THE DATE HEREOF OR THAT THE Common Stock
INFORMATION CONTAINED HEREIN IS ($.001 par value)
CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
--------------------
107,143
Class A Redeemable Common
Stock Purchase Warrants
TABLE OF CONTENTS PROSPECTUS
PAGE
Available Information................. 3
Incorporation of Certain Documents
by Reference....................... 3
Special Note Regarding Forward-Looking
Information........................ 4
The Company........................... 4
Risk Factors.......................... 8
Use of Proceeds....................... 16
Description of Securities............. 16
Plan of Distribution.................. 17
Experts............................... 18
Legal Matters......................... 18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
AMOUNT TO
TYPE OR NATURE OF EXPENSE BE PAID
------------------------- ---------
SEC registration fee.................................. $ 4,593
Accounting fees and expenses*......................... 1,000
Legal fees and expenses*.............................. 40,000
Miscellaneous*........................................ 1,407
-------
Total* .......................................... $47,000
=======
- ----------------
*Estimated
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pursuant to Section 102(b)(7) of the General Corporation Law of the
State of Delaware (the "GCL"), Article SEVENTH of the Company's Amended and
Restated Certificate of Incorporation eliminates the personal liability of the
Company's directors to the Company and its stockholders except for liabilities
related to breach of duty of loyalty, actions not in good faith and certain
other liabilities. Section 145 of the GCL, permits a corporation to indemnify
certain persons, including officers and directors and former officers and
directors, and to purchase insurance with respect to liabilities arising out of
their capacity or status as officers and directors. Such law provides further
that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which officers and directors may be entitled under the
corporation's certificate of incorporation, by-laws, any agreement or otherwise.
The By-Laws of the Company require it to indemnify to the full extent
permitted by the GCL, any person who is made or threatened to be made, a party
to an action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he is or was a director or officer of
the Company or serves or served as a director, officer, partner, trustee,
fiduciary, employee or agent of any other enterprise or organization at the
Company's request.
II-1
<PAGE>
ITEM 16. EXHIBITS
(a) The exhibits listed below have been filed as part of this
Registration Statement.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
3.1 - Amended and Restated Certificate of Incorporation, as
amended.
4.1 - Specimen common stock certificate of the Registrant. (1)
4.2 - Warrant Agreement dated as of August 6, 1996 by and between
the Company and Continental Stock Transfer & Trust Company.(2)
4.3 - Form of certificate evidencing the IPO Warrants (included in
Exhibit 4.2).
4.4 - Unit Purchase Option dated August 6, 1996.
4.5 - Common Stock Purchase Warrant dated April 20, 1998.
5.1 - Opinion of Kelley Drye & Warren LLP regarding legality.*
23.1 - Consent of Kelley Drye & Warren LLP (included in Exhibit
5.1).*
23.2 - Consent of Rosenberg Rich Baker Berman & Company.
24.1 - Powers of Attorney executed by certain officers and directors
of the Registrant (See page II-4).
- --------------
(1) Previously filed as an exhibit to the Registrant's Registration Statement
on Form SB-2 (File No. 333-3184) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Form 8-K filed on July
21, 1998 and incorporated herein by reference.
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant 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 for such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant 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 Registrant 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.
The undersigned Registrant hereby undertakes:
II-2
<PAGE>
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to:
(a) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) Reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
(c) 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 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 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1933, as amended, the Registrant certifies that it has
reasonable ground to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the Town of Edison,
State of New Jersey, on July 22, 1998.
MEDJET INC.
By: /s/ Eugene I. Gordon
Eugene I. Gordon
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Eugene I. Gordon and Thomas M.
Handschiegel, and each of them, his true and lawful agent, proxy and
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to (i) act on, sign
and file with the Securities and Exchange Commission any and all amendments
(including post-effective amendments) to this Registration Statement together
with all schedules and exhibits thereto, (ii) act on, sign and file such
certificates, instruments, agreements and other documents as may be necessary or
appropriate in connection therewith, (iii) act on and file any supplement to any
prospectus included in this Registration Statement or any such amendment, and
(iv) take any and all actions which may be necessary or appropriate in
connection therewith, granting unto such agents, proxies and attorneys-in-fact,
and each of them, full power and authority to do and perform each and every act
and thing necessary or appropriate to be done, as fully for all intents and
purposes as he might or could do in person, hereby approving, ratifying and
confirming all that such agents, proxies and attorneys-in-fact, any of them or
any of his or their substitute or substitutes may lawfully 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 on
behalf of the Company and in the capacities and on the dates indicated.
SIGNATURES TITLE OR CAPACITIES DATE
---------- ------------------- ----
/s/ Eugene I. Gordon Chief Executive Officer and July 22, 1998
Eugene I. Gordon Chairman of the Board (Principal
Executive Officer)
/s/ Terence A. Walts President and Chief Operating July 22, 1998
Terence A. Walts Officer
/s/ Thomas M. Handschiegel Vice President - Finance and July 22, 1998
Thomas M. Handschiegel Human Resources and Secretary
(Principal Financial Officer)
____________________________ Director July __, 1998
Edward E. David, Jr.
/s/ Sanford J. Hillsberg Director July 22, 1998
Sanford J. Hillsberg
/s/ Malcolm R. Kahn Director July 22, 1998
Malcolm R. Kahn
/s/ Steve M. Peltzman Director July 22, 1998
Steve M. Peltzman
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
3.1 - Amended and Restated Certificate of Incorporation, as amended.
4.1 - Specimen common stock certificate of the Registrant.(1)
4.2 - Warrant Agreement dated as of August 6, 1996 by and between
the Company and Continental Stock Transfer & Trust Company.(2)
4.3 - Form of certificate evidencing the IPO Warrants (included in
Exhibit 4.2).
4.4 - Unit Purchase Option dated August 6, 1996.
4.5 - Common Stock Purchase Warrant dated April 20, 1998.
5.1 - Opinion of Kelley Drye & Warren LLP regarding the legality of
the securities being offered.*
23.1 - Consent of Kelley Drye & Warren LLP (included
in Exhibit 5.1).*
23.2 - Consent of Rosenberg Rich Baker Berman & Company.
24.1 - Powers of Attorney executed by certain officers and directors
of the Registrant (See page II-4).
- -----------------
(1) Previously filed as an exhibit to the Registrant's Registration Statement
on Form SB-2 (File No. 333-3184) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Form 8-K filed on July
21, 1998 and incorporated herein by reference.
* To be filed by amendment.
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MEDJET INC.
The undersigned, Eugene I. Gordon, hereby certifies that:
1. He is the President of the corporation referred to herein.
2. Such corporation is a corporation duly organized and validly existing
under the General Corporation Law of the State of Delaware, as amended (the
"Law").
3. The name of such corporation is Medjet Inc.
4. The date on which the original certificate of incorporation of such
corporation was filed with the Secretary of State of the State of Delaware is
December 16, 1993.
5. This Amended and Restated Certificate of Incorporation (i) amends the
certificate of incorporation of such corporation so as to increase the number of
shares of common stock which such Corporation has authority to issue and to
authorize the issuance of preferred stock by such corporation and (ii)
integrates into one instrument all of the provisions of such certificate of
incorporation, as so amended, which are effective and operative.
6. This Amended and Restated Certificate of Incorporation was duly adopted
on May 2, 1996, in accordance with Sections 242 and 245 of the Law and the
applicable provisions of such certificate of incorporation by an affirmative
vote of the holders of a majority of the outstanding shares of common stock of
such corporation.
7. The provisions of such certificate of incorporation, as so amended and
restated, are as follows:
FIRST: The name of the Corporation is Medjet Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Company, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is 8,000,000, of which 7,000,000 shall
be shares of common stock, par value $.001 per share (the "Common Stock"), and
1,000,000 shall be shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). Shares of the Preferred Stock may be issued in one or more
series. The number of shares included in any series of Preferred Stock and the
full or limited voting powers, if any, designations, preferences and relative,
participating, optional and other special rights, and the
<PAGE>
qualifications, limitations or restrictions, of Preferred Stock or any series of
Preferred Stock shall be stated in the resolution or resolutions providing for
the issuance of Preferred Stock or such series of Preferred Stock adopted by the
Board of Directors of the Corporation (the "Board").
FIFTH: Elections of directors need not be by ballot unless the By-Laws of
the Corporation shall so provide.
SIXTH: The Board of Directors of the Corporation may make By-Laws and from
time to time may alter, amend or repeal By-Laws.
SEVENTH: A director of the Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit.
IN WITNESS WHEREOF, the undersigned has signed this Amended and Restated
Certificate of Incorporation on this 13th day of May, 1996.
/s/ Eugene I. Gordon
-----------------------------
Eugene I. Gordon, President
ATTEST:
/s/ Thomas M. Handschiegel
- ---------------------------------
Thomas M. Handschiegel, Secretary
<PAGE>
CERTIFICATE OF DESIGNATION OF
SERIES A PREFERRED STOCK OF MEDJET INC.
----------------------------------------------
Pursuant to Section 151(a) of the General
Corporation Law of the State of Delaware
----------------------------------------------
Medjet Inc. (the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify:
FIRST: That pursuant to authority conferred upon the Board of Directors
of the Corporation by its Amended and Restated Certificate of Incorporation, and
pursuant to the provisions of Section 151(a) of the General Corporation Law of
the State of Delaware, said Board of Directors, acting pursuant to a unanimous
written consent of the Board of Directors dated December 20, 1997 and at a
meeting duly called and held on March 20, 1998, adopted the following
resolutions which remain in full force and effect as of the date hereof:
WHEREAS, the Board of Directors of the Corporation is
authorized to fix or alter the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption, the
redemption price or prices, and the liquidation preferences of any
wholly unissued classes of preferred shares, and the number of shares
constituting any such classes and the designation thereof or any of
them,
WHEREAS, the Corporation heretofore has not issued any of said
preferred shares and the Board of Directors desires to provide for the
issue of three series of preferred shares of the Corporation consisting
of an aggregate of not more than 400,000 shares of Preferred Stock, for
such three series to be designated as "Series A Preferred Stock,"
"Series B Preferred Stock" and "Series C Preferred Stock" and to fix
the rights, preferences, privileges, restrictions and other matters
relating to said Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
does hereby provide for the issue of three series of preferred shares
of the Corporation designated as "Series A Preferred Stock," "Series B
Preferred Stock" and "Series C Preferred Stock," each series
consisting of such number of shares for which the Placement Agent has
received accepted subscriptions therefor (not to exceed in the
aggregate 400,000 shares) and does hereby fix the rights, preferences,
privileges, restrictions and other matters relating to said Series A
Preferred Stock substantially as set forth on Exhibit A hereto,
provided that the Conversion Price for the Series A Preferred Stock
<PAGE>
shall be set at 85% of the Market Price (as defined) on the applicable
closing date of the sale of such series.
SECOND: That said determination of the designation and the relative
powers, preferences, rights, qualifications, limitations and restrictions
thereof, relating to the Series A Preferred Stock, was duly made by the Board of
Directors pursuant to the provisions of the Amended and Restated Certificate of
Incorporation, in accordance with the provisions of Section 151(a) of the
General Corporation Law of the State of Delaware.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-2-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Eugene I. Gordon, its President-Technology Development, as of this
20th day of April 1998.
MEDJET INC.
By:/s/ Eugene I. Gordon
---------------------------------------
Name: Eugene I. Gordon
Title: President-Technology Development
-3-
<PAGE>
EXHIBIT A
Series A Preferred Stock of Medjet Inc.
(a) Designation and Number. The designation of the series of
preferred stock fixed by this resolution shall be "Series A Preferred Stock"
(hereinafter referred to as the "Series A Preferred Stock") and the number of
shares constituting such series shall be 110,000.
(b) Voting Rights.
(i) Each holder of shares of Series A Preferred Stock shall be
entitled to vote on all matters and, except as otherwise expressly provided
herein, shall be entitled to the number of votes equal to the largest whole
number of shares of Common Stock into which such shares of Series A Preferred
Stock could be converted, pursuant to the provisions of subparagraph (d) hereof,
on the record date for the determination of the shareholders entitled to vote on
such matters or, if no such record date is established, in accordance with
Delaware law.
(ii) Each holder of shares of Common Stock shall be entitled to
one vote for each share thereof held. Except as otherwise expressly provided
herein or as required by law, the holders of Series A Preferred Stock and the
holders of Common Stock shall vote together and not as separate classes.
(c) Dividend Rights.
(i) Each issued and outstanding share of Series A Preferred
Stock shall entitle the holder of record thereof to receive, out of any funds
legally available therefor, dividends at the annual rate per share (the
"Dividend Rate") of One Dollar ($1.00), as adjusted for stock splits, stock
dividends, recapitalizations, reclassifications and similar events (together
herein referred to as "Recapitalization Events"), payable annually or otherwise
as the Board of Directors may from time to time determine in cash, Common Stock
or any combination thereof. If an Automatic Conversion Event (as hereinafter
defined) shall not have occurred on or before the six (6) month anniversary of
the Original Series A Issuance Date (as hereinafter defined), the Dividend Rate
shall increase to One Dollar and Twenty Cents ($1.20), as adjusted for
Recapitalization Events for the period beginning on the six (6) month
anniversary of the Original Series A Issuance Date and ending on the first
calendar anniversary of the Original Series A Issuance Date. Dividends and
distributions (other than those payable solely in Common Stock) may be paid, or
declared and set aside for payment, upon shares of Common Stock in any calendar
year only if dividends shall have been paid, or declared and set apart for
payment, on account of all shares of Series A Preferred Stock then issued and
outstanding, at the aforesaid rate for such calendar year.
(ii) From and after the date of original issuance by the
Corporation of the first share of Series A Preferred Stock ("Original Series A
Issuance Date"), the right to dividends upon the issued and outstanding shares
of Series A Preferred Stock shall be
<PAGE>
cumulative so that such rights shall be deemed to accrue from and after the
Original Series A Issuance Date, whether earned, or whether there be funds
legally available therefor, or whether said dividends shall have been declared;
and if such dividends in respect of any period beginning on the Original Series
A Issuance Date shall not have been declared and either paid or a sum sufficient
for the payment thereof set aside in full, the deficiency shall first be fully
paid on the Series A Preferred Stock, before any dividend or other distribution
(other than those payable solely in Common Stock) may be paid, or declared and
set apart for payment, to the holders of shares of Common Stock, and shall in
any event be paid upon conversion of the Series A Preferred Stock, in cash, or
at the election of the Corporation, partly in cash and partly in shares of
Common Stock, or all in shares of Common Stock, based upon the average closing
bid and ask prices of the Common Stock quoted on the National Association of
Securities Dealers OTC Bulletin Board for the 20-trading day period ending on
the trading day immediately prior to the date of payment. Any accumulation of
dividends on the shares of Series A Preferred Stock shall not bear interest.
(d) Liquidation Rights. In the event of a voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation, the
holders of record of shares of Series A Preferred Stock shall be entitled to
receive, out of the assets of the Corporation legally available therefor, Ten
Dollars ($10.00) per share of Series A Preferred Stock, plus a further amount
per share equal to dividends, if any (i) then declared and unpaid on account of
shares of Series A Preferred Stock and (ii) whether or not declared, then
accrued in accordance with the provisions of subparagraph (c)(ii) hereof before
any payment shall be made or any assets distributed to the holders of shares of
Common Stock. After payment to the holders of record of the shares of the Series
A Preferred Stock of the amounts set forth in the preceding sentence, the
remaining assets of the Corporation shall be distributed in like amounts per
share to the holders of record of Common Stock. If, upon any liquidation,
dissolution, or winding up, whether voluntary or involuntary, the assets thus
distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit payment to such holders of the full preferential amounts
aforesaid, then the entire assets of the Corporation to be distributed shall be
distributed ratably among the holders of Series A Preferred Stock.
(e) Conversion Rights.
(i) Each holder of record of shares of Series A Preferred
Stock may, at any time, upon surrender to the Corporation of the certificates
therefor at the principal office of the Corporation or at such other place as
the Corporation shall designate, convert all or any part of such holder's shares
of Series A Preferred Stock into such number of fully paid and non-assessable
shares of Common Stock (as such Common Stock shall then be constituted) equal to
the product of (A) the number of shares of Series A Preferred Stock which such
holder shall then surrender to the Corporation, multiplied by (B) the number
determined by dividing Ten Dollars ($10.00) by the Conversion Price (as
hereinafter defined) per share for the Series A Preferred Stock in effect at the
time of conversion.
(ii) All outstanding shares of Series A Preferred Stock shall
be deemed automatically converted into such number of shares of Common Stock as
are determined in accordance with subparagraph (d)(i) hereof upon the earlier of
(i) the effective
-2-
<PAGE>
date of a registration statement filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, covering the
Common Stock into which the Series A Preferred Stock may be converted or (ii)
the first anniversary of the Original Series A Issuance Date (either, an
"Automatic Conversion Event"). On or after the date of occurrence of an
Automatic Conversion Event, and in any event within 10 days after receipt of
notice, by mail, postage prepaid from the Corporation of the occurrence of such
event, each holder of record of shares of Series A Preferred Stock shall
surrender such holder's certificates evidencing such shares at the principal
office of the Corporation or at such other place as the Corporation shall
designate, and shall thereupon be entitled to receive certificates evidencing
the number of shares of Common Stock into which such shares of Series A
Preferred Stock are converted. On the date of the occurrence of an Automatic
Conversion Event, each holder of record of shares of Series A Preferred Stock
shall be deemed to be the holder of record of the Common Stock issuable upon
such conversion, notwithstanding that the certificates representing such shares
of Series A Preferred Stock shall not have been surrendered at the office of the
Corporation, that notice from the Corporation shall not have been received by
any holder of record of shares of Series A Preferred Stock, or that the
certificates evidencing such shares of Common Stock shall not then be actually
delivered to such holder.
(iii) For purposes of this Certificate of Designation:
"Conversion Price" shall mean the price at which shares of the
Common Stock shall be deliverable upon conversion of the Series A Preferred
Stock. The Conversion Price shall initially be $6.02. The Conversion Price shall
be subject to adjustment as provided below:
(A) In the event the Corporation at any time or from time to time
shall declare or pay any dividend on the Common Stock payable in
Common Stock, or effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock
(by reclassification, stock split or otherwise than by payment of
a dividend in Common Stock), then and in any such event, the
Conversion Price in effect shall be proportionately decreased:
(1) in the case of any such dividend, immediately after the close
of business on the record date for the determination of
holders of any class of securities entitled to receive such
dividend, or
(2) in the case of any such subdivision, at the close of business
on the date immediately prior to the date upon which such
subdivision becomes effective.
(B) In the event the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification orotherwise, into a
lesser number of shares of Common Stock, the Conversion
-3-
<PAGE>
Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(C) In case of any consolidation or merger of the Corporation with or
into another corporation or the conveyance of all or
substantially all of the assets of the Corporation to another
corporation, each share of Series A Preferred Stock shall
thereafter be convertible into the number of shares of stock or
other securities or property to which a holder of the number of
shares of Common Stock of the Corporation deliverable upon
conversion of such Series A Preferred Stock would have been
entitled upon such consolidation, merger or conveyance; and, in
any such case, appropriate adjustment (as determined by the Board
of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interest
thereafter of the holders of the Series A Preferred Stock, to the
end that the provisions set forth herein (including provisions
with respect to changes in and other adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be possible, in relation to any shares of stock or
other property thereafter deliverable upon the conversion of the
Series A Preferred Stock.
(D) If the Common Stock issuable upon conversion of the Series A
Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether
by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares provided for above),
the Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Series A Preferred Stock
shall be convertible into, in lieu of the number of shares of
Common Stock which the holder would otherwise have been entitled
to receive, a number of shares of such other class or classes of
stock into which the Common Stock issuable upon conversion of the
Series A Preferred Stock immediately prior to such effectiveness
would have been changed.
(iv) Whenever the Conversion Price or the amount of Common
Stock or other securities deliverable upon the conversion of Series A Preferred
Stock shall be adjusted pursuant to the provisions hereof, the Corporation shall
forthwith file, at its principal executive office and with any transfer agent or
agents for its Series A Preferred Stock and Common Stock, a statement, signed by
the Chairman of the Board, President, or one of the Vice Presidents of the
Corporation, and by its Chief Financial Officer or one of its Assistant
Treasurers, stating the newly adjusted Conversion Price and adjusted amount of
its Common Stock or other securities deliverable per share of Series A Preferred
Stock calculated to the
-4-
<PAGE>
nearest one cent and setting forth in reasonable detail the method of
calculation and the facts requiring such adjustment and upon which such
calculation is based. A copy of such statement shall be sent to each holder of
Series A Preferred Stock. Each adjustment shall remain in effect until a
subsequent adjustment hereunder is required.
(v) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series A Preferred Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the
Corporation lawfully to issue such Common Stock upon the conversion of Series A
Preferred Stock.
(vi) No fractions of shares of Common Stock shall be issued
upon conversion, but in lieu thereof the Corporation shall pay cash equal to
such fraction multiplied by the fair market value of a share of Common Stock as
determined by the Board of Directors (in accordance with paragraph (b) above).
(vii) The Corporation will not, by amendment of this
Certificate of Designation or by amendment of its Amended and Restated
Certificate of Incorporation or through any reorganization, transfer of assets,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this paragraph
(d) and in the taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the holders of the Series A Preferred
Stock against impairment.
(e) Protective Provision. So long as any shares of the Series A
Preferred Stock is outstanding, the Corporation shall not, without the
affirmative vote of the holders of record of a majority of the outstanding
shares of Series A Preferred Stock voting as a class, authorize, create or issue
any class or series of stock having any preference or priority as to dividends
or assets superior to any such preference or priority of the Series A Preferred
Stock.
(f) Pro-Rata Treatment. Except as otherwise set forth herein, each of
the shares of Preferred Stock offered and sold pursuant to the Corporation's
Confidential Private Placement Memorandum dated January 12, 1998, as such
Confidential Private Placement Memorandum has been amended and supplemented by
Supplement No. 1 dated February 27, 1998 to the Confidential Private Placement
Memorandum and Supplement No. 2 dated March 18, 1998 to the Confidential Private
Placement Memorandum, shall have the same rights, privileges and preferences.
-5-
<PAGE>
Option to Purchase
107,143 Units
MEDJET INC.
UNIT PURCHASE OPTION
Dated: August 6, 1996
THIS CERTIFIES that JUDAH WERNICK, One Battery Park Plaza, New York, NY
10005 (hereinafter sometimes referred to as the "Holder"), is entitled to
purchase from Medjet Inc., a Delaware corporation (hereinafter referred to as
the "Company"), at the prices and during the periods as hereinafter specified,
107,143 Units ("Units") consisting of the Company's common stock and warrants to
purchase the Company's common stock. Each Unit consists of one (1) share of the
Company's common stock, $.001 par value, as now constituted ("Common Stock") and
one (1) Class A Redeemable Common Stock Purchase Warrant to purchase one (1)
share of Common Stock as now constituted at an exercise price of $10.00 per
share ("Class A Warrants" or "Warrants"). The Class A Warrants are exercisable
until November 6, 1998.
The Units have been registered under a Registration Statement on Form SB-2
(File No. 333-3184) declared effective by the Securities and Exchange Commission
on August 6, 1996 (the "Registration Statement"). This Option (the "Option") to
purchase 107,143 Units (the "Option Units") was originally issued pursuant to an
underwriting agreement between the Company and Patterson Travis, Inc., as
underwriter (the "Underwriter"), in connection with a public offering of
1,071,429 Units (the "Public Units") through the Underwriter, in consideration
of $.001 per Option Unit.
Except as specifically otherwise provided herein, the Common Stock and the
Warrants issued pursuant to this Option shall bear the same terms and conditions
as described under the caption "Description of Securities" in the Registration
Statement, and the Warrants shall be governed by the terms of the Warrant
Agreement dated as of August 6, 1996 executed in connection with such public
Offering (the "Warrant Agreement"), and except that the holder shall have
registration rights under the Securities Act of 1933, as amended (the "Act"),
for the Common Stock and the Warrants included in the Units, and the shares of
Common Stock underlying the Warrants, as more fully described in paragraph 6 of
this Option. In the event of any reduction of the exercise price of the Warrants
included in the Public Units, the same percentage changes to the Warrants
included in the Option Units shall be simultaneously effected.
1. The rights represented by this Option shall be exercised at the prices,
subject to adjustment in accordance with paragraph 8 of this Option, and during
the periods as follows:
(a) Between August 6, 1997 and August 6, 2001, inclusive, the Holder shall
have the option to purchase Units hereunder at a price of $6.72 per Unit
(subject to adjustment pursuant to paragraph 8 hereof) (the "Exercise Price").
<PAGE>
(b) After August 6, 2001 (five (5) years from the Effective Date), the
Holder shall have no right to purchase any Units hereunder.
2. The rights represented by this Option may be exercised at any time
within the period above specified, in whole or in part, by (i) the surrender of
this Option (with the purchase form at the end hereof properly executed) at the
principal executive office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company); (ii) payment to the Company
of the Exercise Price then in effect for the number of Units specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any; and (iii) delivery to the Company of a duly executed agreement signed by
the person(s) designated in the purchase form to the effect that such person(s)
agree(s) to be bound by the provisions of paragraph 6 and subparagraphs (b), (c)
and (d) of paragraph 7 hereof. This Option shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately prior to the
close of business on the earliest date that both this Option is surrendered and
payment is made in accordance with the foregoing provisions of this paragraph 2,
and other provisions are complied with and the person or persons in whose name
or names the certificates for shares of Common Stock and Warrants shall be
issuable upon such exercise shall become the holder or holders of record of such
Common Stock and Warrants at that time and date. The Common Stock and Warrants
and the certificates for the Common Stock and Warrants so purchased shall be
delivered to the Holder within a reasonable time, not exceeding ten (10) days,
after the rights represented by this Option shall have been so exercised.
3. For a period of one (1) year from the Effective Date, this Option shall
not be transferred, sold, assigned, or hypothecated, except that it may be
transferred to successors of the Holder, and may be assigned in whole or in part
to any person who is an officer of the Holder during such period. After such one
(1) year period any such assignment must be accompanied by an immediate exercise
of such assigned portion of this Option. Any such assignment shall be effected
by the Holder (i) executing the form of assignment at the end hereof and (ii)
surrendering this Option for cancellation at the office or agency of the Company
referred to in paragraph 2 hereof, accompanied by a certificate (signed by an
officer of the Holder if the Holder is a corporation), stating that each
transferee is a permitted transferee under this paragraph 3 hereof; whereupon
the Company shall issue, in the name or names specified by the Holder (including
the Holder) a new Option or Options of like tenor and representing in the
aggregate rights to purchase the same number of Units as are purchasable
hereunder.
4. The Company covenants and agrees that all shares of Common Stock which
may be issued as part of the Units purchased hereunder and the Common Stock
which may be issued upon exercise of the Warrants will, upon issuance, be duly
and validly issued, fully paid and nonassessable, and no personal liability will
attach to the holder thereof. The Company further covenants and agrees that
during the periods within which this Option may be exercised, the Company will
at all times have authorized and reserved a sufficient number of shares of its
Common Stock to provide for the exercise of this Option and that it will have
authorized and reserved a sufficient number of shares of Common Stock for
issuance upon exercise of the Warrants included in the Units.
<PAGE>
5. This Option shall not entitle the Holder to any voting, dividend, or
other rights as a stockholder of the Company.
6. (a) During the period set forth in paragraph 1(a) hereof, the Company
shall advise the Holder or its transferee, by written notice at least 30 days
prior to the filing of any post-effective amendment to the Registration
Statement or of any new registration statement or post-effective amendment
thereto under the Act covering any securities of the Company, for its own
account or for the account of others (other than a registration statement on
Form S-4 or S-8 or any successor forms thereto), and will for a period of seven
(7) years from the effective date of the Registration Statement, upon the
request of the Holder, include in any such post-effective amendment or
registration statement, such information as may be required to permit a public
offering of, all or any of the Units underlying the Option, the Common Stock, or
Warrants included in the Units or the Common Stock issuable upon the exercise of
the Warrants (the "Registrable Securities") . The Company shall supply
prospectuses and such other documents as the Holder may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Securities, use its reasonable efforts to register and qualify any of the
Registrable Securities for sale in such states as such Holder designates
provided that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or execute a general consent to service of
process in any jurisdiction in any action and do any and all other acts and
things which may be reasonably necessary or desirable to enable such Holders to
consummate the public sale or other disposition of the Registrable Securities,
and furnish indemnification in the manner provided in paragraph 7 hereof. The
Holder shall furnish information and indemnification as set forth in paragraph 7
except that the maximum amount which may be recovered from the Holder shall be
limited to the amount of proceeds received by the Holder from the sale of the
Registrable Securities. The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit the holders of Registrable Securities requested to be included in the
registration to include such securities in such underwritten offering on the
same terms and conditions as any similar securities of the Company included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering advises the holders of Registrable Securities that
the total amount of securities which they intend to include in such offering is
such as to materially and adversely affect the success of such offering, then
the amount of securities to be offered for the accounts of holders of
Registrable Securities shall be eliminated, reduced, or limited to the extent
necessary to reduce the total- amount of securities to be included in such
offering to the amount, if any, recommended by such managing underwriter or
underwriters (any such reduction or limitation in the total amount of
Registrable Securities to be included in such offering to be borne by the
holders of Registrable Securities proposed to be included therein pro rata). The
Holder will pay its own legal fees and expenses and any underwriting discounts
and commissions on the securities sold by such Holder and shall not be
responsible for any other expenses of such registration.
(b) If any 50% holder (as defined below) shall give notice to the Company
at any time during the period set forth in paragraph 1(a) hereof, to the effect
that such holder desires to register under the Act, the Units, or any of the
underlying securities contained in the Units underlying the Option under such
circumstances that a public distribution (within the meaning of the Act) of any
such securities will be involved, then the Company will promptly, but no later
than 60 days after receipt of such notice, file a post-effective amendment to
the current Registration Statement or a new registration statement pursuant to
the Act, to the end that the Unit's and/or any of the securities underlying the
Units may be publicly sold under the Act as promptly as practicable thereafter
and the Company will use its best efforts to cause such registration to become
and remain effective for a period of 120 days (including the taking of such
steps as are reasonably necessary to obtain the removal of any stop order);
provided that such holder shall furnish the Company with appropriate information
in connection therewith as the Company may reasonably request in writing. The
50% holder (which for purposes hereof shall mean any direct or indirect
transferee of such holder provided it owns at least 50% of the Option) may, at
its option, request the filing of a post-effective amendment to the current
Registration Statement or a new registration statement under the Act with
respect to the Registrable Securities on only one occasion during the term of
this Option. The Holder may at its option request the registration of any of the
securities underlying the Option in a registration statement made by the Company
as contemplated by Section 6(a) or in connection with a request made pursuant to
this Section 6(b) prior to acquisition of the Units issuable upon exercise of
the Option and even though the Holder has not given notice of exercise of the
Option. The 50% holder may, at its option, request such post-effective amendment
or new registration statement during the described period with respect to the
Units as a unit, or separately as to the Common Stock and/or Warrants included
in the Units and/or the Common Stock issuable upon the exercise of the Warrants,
and such registration rights may be exercised .by the 50% holder prior to or
subsequent to the exercise of the Option. Within ten business days after
receiving any such notice pursuant to this subsection (b) of paragraph 6, the
Company shall give notice to the other holders of the Options, advising that the
Company is proceeding with such post-effective amendment or registration
statement and offering to include therein the securities underlying the Options
of the other holders. Each holder electing to include its Registrable Securities
in any such offering shall provide written notice to the Company within twenty
(20) days after receipt of notice- from the Company. The failure to provide such
notice to the Company shall be deemed conclusive evidence of such holder's
election not to include its Registrable Securities in such offering. Each holder
electing to include its Registrable Securities shall furnish the Company with
such appropriate information (relating to the intentions of such holders) in
connection therewith as the Company shall reasonably request in writing. All
costs and expenses of such post-effective amendment or new registration
statement shall be borne by the Company, except that the holders shall bear the
fees of their own counsel and any underwriting discounts or commissions
applicable to any of the securities sold by them.
The Company shall be entitled to postpone the filing of any registration
statement pursuant to this Section 6(b) otherwise required to be prepared and
filed by it if (i) the Company is engaged in a material acquisition,
reorganization, or divestiture, (ii) the Company is currently engaged in a
self-tender or exchange offer and the filing of a registration statement would
cause a violation of Rule l0b-6 under the Securities Exchange Act of 1934, (iii)
the Company is engaged in an underwritten offering and the managing underwriter
has advised the Company in writing that such a registration statement would have
a material adverse effect on the consummation of such offering; (iv) for the
period of the financial statements called for in such filing, the Company has
only unaudited financial statements, unless the underwriter agrees that such
filing need not include audited financial statements or (v) the Company is
subject to an underwriter's lock-up as a result of an underwritten public
offering and such underwriter has refused in writing, the Company's request to
waive such lock-up. In the event of such postponement, the Company shall be
required to file the registration statement pursuant to this Section 6(b),
within 60 days of the consummation of the event requiring such postponement.
<PAGE>
The Company will use its best efforts to maintain such registration
statement or post-effective amendment current under the Act for a period of 120
days (and for up to an additional three months if requested by the Holder) from
the effective date thereof. The Company shall supply prospectuses, and such
other documents as the Holder may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities, use its best
efforts to register and qualify any of the Registrable Securities for sale in
such states as such holder designates, provided that the Company shall not be
required to qualify as a foreign corporation or a dealer in securities or
execute a general consent to service of process in any jurisdiction in any
action and furnish indemnification in the manner provided in paragraph 7 hereof.
The demand registration rights granted hereunder will expire no later than five
(5) years from the effective date of this offering.
(c) The term "50% holder" as used in this paragraph 6 shall mean the holder
of more than 50% of the Common Stock and the Warrants underlying the Option, as
if exercised, (considered in the aggregate) and shall include any owner or
combination of owners of such securities, which ownership shall be calculated by
determining the number of shares of Common Stock held by such owner or owners as
well as the number of shares then issuable upon exercise of the Warrants.
7. (a) Whenever pursuant to paragraph 6 a registration statement relating
to any shares of Common Stock or Warrants issued or issuable upon the exercise
of any Options, is filed under the Act, or is amended or supplemented, the
Company will indemnify and hold harmless each holder of the securities covered
by such registration statement, amendment, or supplement (such holder being
hereinafter called the "Distributing Holder"), and each person, if any, who
controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter,
against any losses, claims, damages, or liabilities, joint or several, to which.
the Distributing Holder, any such controlling person or any such underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any preliminary prospectus or
final prospectus constituting a-part thereof or any amendment or supplement
thereto, or. which arise out of or are based upon the 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 Distributing Holder
and each such controlling person and underwriter for any legal or other expenses
reasonably incurred by the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus, or said amendment or
supplement in reliance upon and in conformity with written information furnished
by such Distributing Holder or any other Distributing Holder, for use in the
preparation thereof; provided, further, that the indemnity with respect to any
preliminary prospectus shall not be applicable on account of any losses, claims,
damages, liabilities, or litigation arising from the sale of- such securities to
any person if the misstatement or omission was corrected in the final prospectus
related thereto but such final prospectus was not delivered by the Distributing
Holder to such person at or prior to sale of such securities.
<PAGE>
(b) Each Distributing Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed said registration
statement and such amendments and supplements thereto, each person, if any, who
controls the Company (within the meaning of the Act) and each other Distributing
Holder, if any, against any losses, claims, damages, or liabilities, joint and
several. to which the Company or any such director, officer, or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, or liabilities arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in said registration
statement, said preliminary prospectus, said final prospectus or said amendment
or supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to .be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said registration
statement, said preliminary prospectus, said final prospectus, or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer, or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action.
(c) Promptly after receipt by an indemnified party under this paragraph 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, give the
indemnifying party notice of the commencement thereof; but the omission so to
notify the indemnifying party will not unless it is prejudiced thereby relieve
it from any liability which it may have to any indemnified party otherwise than
under this paragraph 7.
(d) In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with. counsel reasonably satisfactory to such indemnified
party, and after notice from. the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this paragraph 7 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof.
8. The Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Option shall be subject to
adjustment from time to time upon the happening of certain events as follows:
<PAGE>
(a) In case the Company shall (i) declare a dividend or make a distribution
on its outstanding shares of Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares or (iii) combine or reclassify its outstanding shares of Common
Stock into a smaller number of shares, the Exercise Price in effect at the time
of the record date for such dividend or distribution or of the effective date of
such subdivision, combination or reclassification shall be adjusted so that it
shall equal the price determined by multiplying the Exercise Price by a
fraction, the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
action. Notwithstanding anything to the contrary contained in the Warrant
Agreement, in the event an adjustment to the Exercise Price is effected pursuant
to this Subsection (a) (and a corresponding adjustment to the number of Option
Units is made pursuant to Subsection (d) below), the exercise price of the
Warrants shall be adjusted so that it shall equal the price determined by
multiplying the exercise price of the Warrants by a fraction, the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such action and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
In such event, there shall be no adjustment to the number of shares of Common
Stock or other securities issuable upon exercise of the Warrants. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) In case the Company shall fix a record date for the issuance of rights
or warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock (or securities convertible into Common Stock)
at a price (the "Subscription Price") (or having a conversion price per share)
less than the current market price of the Common Stock (as defined in Subsection
(e) below) on the record date mentioned below, the Exercise Price shall be
adjusted so that the same shall equal the price determined by multiplying the
number of shares then comprising an Option Unit by the product of the Exercise
Price in effect immediately prior to the date of such issuance multiplied by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding on the record date mentioned below and the number of
additional shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered) would purchase at such current
market price per share of the Common Stock, and the denominator of which shall
be the sum of the number of shares of Common Stock outstanding on such record
date and the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible securities so offered
are convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
rights or warrants; and to the extent that shares of Common Stock are not
delivered (or securities convertible into Common Stock are not delivered) after
the expiration of such rights or warrants the Exercise Price shall be readjusted
to the Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to the holders of its
Common Stock evidences of its indebtedness or assets (excluding cash dividends
or distributions and dividends or distributions referred to in Subsection (a)
above) or subscription rights or warrants (excluding those referred to in
Subsection (b) above), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the number of shares then
comprising an Option Unit by the product of the Exercise Price in effect
immediately prior thereto multiplied by a fraction, the numerator of which shall
be the total number of shares of Common Stock outstanding multiplied by the
current market price per share of Common Stock (as defined in Subsection (e)
below), less the fair market value per share (as determined by the .Company's
Board of Directors) of said assets or evidences of indebtedness so distributed
or of such rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such current market
price per share of Common Stock. Such adjustment shall be made successively
whenever such a record date is fixed. Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
distribution.
(d) Intentionally Omitted.
(e) For the purpose of any computation under Subsections (b) or (c)above,
the current market price per share of Common Stock at any date shall be deemed
to be the average of the daily closing prices for 20 consecutive business days
before such date. The closing price for each day shall be the last sale price
regular way or, in case no such reported sale takes place on such day, the
average of the last reported bid and asked prices regular way, in either case on
the principal national securities exchange on which the Common Stock is admitted
to trading or listed, or it not listed or admitted to trading on such exchange,
the average of the highest reported bid and lowest reported asked prices as
reported by NASDAQ, or other similar organization if NASDAQ is no longer
reporting such information, or if not so available, the fair market price as
determined by the Board of Directors.
<PAGE>
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least ten cents ($0.10)
in such price; provided, however, that any adjustments which by reason of this
Subsection (f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder. All
calculations under this Section 8 shall be made to the nearest cent or to the
nearest one-tenth of a share, as the case may be. Anything in this Section 8 to
the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the Exercise Price, in addition to those
required by this Section 8, as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in shares of Common Stock,
or any subdivision, reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any Federal income tax liability to the
holders of Common Stock or securities convertible into Common Stock (including
Warrants issuable upon exercise of this Option).
(g) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly, but no later than 10 days after any request for such an
adjustment by the Holder, cause a notice setting forth the adjusted Exercise
Price and adjusted number of Option Units issuable upon exercise of this Option
and, if requested, information describing the transactions giving rise to such
adjustments, to be mailed to the Holder, at the address set forth herein, and
shall cause a certified copy thereof to be mailed to its transfer agent, if any.
The Company may retain a firm of independent certified public accountants
selected by the Board of Directors (who may be the regular accountants employed
by the Company) to make any computation required by this Section 8, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (a) above, the Holder thereafter shall become entitled to
receive any shares of the Company, other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of this Option shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Subsections (a) to (f), inclusive above.
9. No adjustment pursuant to Section 8 hereof to the Exercise Price of the
Option will be made, however,
<PAGE>
(i) upon the sale or exercise of any Warrants, including without
limitation the sale or exercise of any of the Warrants comprising the
Option; or
(ii) upon the sale of any shares of Common Stock included in the Units in
the Company's initial public offering, including, without limitation,
shares sold upon the exercise of any over-allotment option granted to
the Underwriters in connection with such offering; or
(iii)upon the issuance or sale of Common Stock or Convertible Securities
(as defined in the Warrant Agreement) upon the exercise of any rights
or warrants to subscribe for or purchase, or .any options for the
purchase of, Common -Stock or Convertible Securities, whether or not
such rights, warrants, or options were outstanding on the date of the
original sale of the Warrants or were thereafter issued or sold; or
(iv) upon the issuance or sale of Common Stock upon conversion or exchange
of any Convertible Securities, whether or not any adjustment in the
Exercise Price was made or required to be made upon the issuance or
sale of such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of the original
sale of the Warrants or were thereafter issued or sold; or
(v) upon the issuance or sale of Common Stock or Convertible Securities in
a private placement unless the issuance or sale price is less than 85%
of the fair market value of the Common Stock on the date of issuance,
in which case the adjustment shall only be for the difference between
85% of the fair market value and the issue or sale price;
(vi) upon the issuance or sale of Common Stock or Convertible Securities to
(a) shareholders of any corporation which merges into the Company or
from which the Company acquires assets and some or all of the
consideration consists of equity securities of the Company, in
proportion to their stock holdings of such corporation immediately
prior to the acquisition or (b) to any corporation or person from
which the Company acquires assets but only if no adjustment is
required pursuant to any other provision of this Section 9; or
(vii)upon the issuance or sale of (i) up to 200,000 options for the
purchase Common Stock to employees, officers, directors, advisors or
consultants under the Stock Option Plan or (ii) Common Stock issued
upon the exercise of options granted under the Stock Option Plan.
<PAGE>
10. This Agreement shall be governed by and in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, Medjet Inc. has caused this Option to be signed by its
duly authorized officers under its corporate seal, and this Option to be dated
as of the date first above written.
MEDJET INC.
By:/s/Eugene I. Gordon
---------------------------------------
Its President
(Corporate Seal)
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of option)
THE UNDERSIGNED, the holder of the foregoing Option, hereby irrevocably
elects to exercise the purchase rights represented by such Option for, and to
purchase thereunder,
_____ Units of Medjet Inc., each Unit consisting of one share of $.001 Par Value
Common Stock and one Class A Redeemable Common Stock Purchase Warrant, and
herewith makes payment of $_______________ therefor, and requests that the
Warrants and certificates for shares of Common Stock be issued in the name(s)
of, and delivered to _______________________ whose address(es) is (are)
_________________________________________.
______________________________________
Dated:
<PAGE>
TRANSFER FORM
(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells, assigns, and transfers
unto _____________________________________ the right to purchase Units
represented by the foregoing Option to the extent of _____ Units, and appoints
___________________________ attorney to transfer such rights on the books of
Medjet Inc., with full power of substitution in the premises.
Dated:
By: _____________________________________
Address:
_____________________________________
_____________________________________
_____________________________________
In the presence of:
<PAGE>
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS RELATING TO SUCH SECURITIES
OR AN OPTION OF COUNSEL REASONABLY SATISFACTORY TO MEDJET INC. AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase 18,272 Shares of Common
Stock of MEDJET INC. (subject to
Adjustment as provided herein).
COMMON STOCK PURCHASE WARRANT
April 20, 1998
MEDJET INC. a corporation organized under the laws of the
State of Delaware (the "Company") hereby certifies that, for value received,
Judah Wernick, or registered assigns (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company at any time or from time to
time after the date of this Warrant and before 5:00 p.m.. New York time, on
April 19, 2002 (the "Expiration Date"), up to Eighteen Thousand Two Hundred
Seventy Two (18,272) fully paid and nonassessable shares of Warrant Stock (as
hereinafter defined), $.001 par value per share, of the Company, at a purchase
price per share equal to one hundred and ten percent (110%) of the lesser of (i)
$6.79 or (ii) the average closing bid price for the Common Stock quoted on the
National Association of Securities Dealers, Inc. OTC Bulletin Board (the "OTC
Bulletin Board") for the twenty (20) trading day period ending on the last
trading day immediately prior to an Automatic Conversion Event (as defined in
the Certificate of Designation of Series A Preferred Stock of the Company filed
by the Company with the office of the Secretary of State of the State of
Delaware on April 20, 1998) (such purchase price per share as adjusted from time
to time as herein provided is referred to herein as the "Purchase Price"). In
the event this Warrant is exercised in whole or in part prior to the occurrence
of an Automatic Conversion Event, the Purchase Price. shall be $7.47. The number
and character of such shares of Warrant Stock and the Purchase price are subject
to adjustment as provided herein.
At the option of Holder, this Warrant may be exercised in one of the
following "cashless exercise" transactions:
(a) The Holder shall have the right to convert, in whole or in
part, the Warrants (the "Conversion Right") at any time prior to the
Expiration Date, into shares of Common Stock in accordance with the
provisions of this paragraph by the Holder tendering to the Company
written notice of exercise together with advice of the delivery of an
order to a broker to sell part or all of the shares of Common Stock
underlying the Warrants, subject to such exercise notice and an
irrevocable order to and an irrevocable commitment by, such broker to
deliver to the Company (or its transfer agent) sufficient proceeds from
the sale of such shares to pay the aggregate Purchase Price of such
Warrants and any withholding taxes All documentation and procedures to
be followed in connection with such "cashless exercise" shall be
approved in advance by the Company, which approval shall be
expeditiously provided and not unreasonably withheld; or
<PAGE>
(b) Upon written notice of exercise, the Company shall deliver
to the Holder (without payment by the Holder of the aggregate Purchase
Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the value of the portion of the Warrants being
exercised at that time (determined by subtracting the aggregate
Purchase Price for the number of Warrants being exercised (in effect
immediately prior to the exercise of the Conversion Right) from the
amount obtained by multiplying the number of shares of Common Stock
underlying the Warrants to be exercised by the Fair Market Value of one
share of Common Stock immediately prior to the exercise of the
Conversion Right by (y) the Fair Market Value of one share of Common
Stock immediately prior to the exercise of the Conversion Right.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(i) The term Company shall include MEDJET INC. and
any corporation which shall succeed or assume the obligation of such
company hereunder.
(ii) The term "Common Stock" includes (i) the
Company's Common Stock, $.00l par value per share, as authorized on the
date of the Agreement, and (ii) any other securities into which or for
which any of the securities described in (i) hereof, may be converted
or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(iii) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the Holder at any time
shall be entitled to receive, or shall have received, upon exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 5
or otherwise.
(iv) The term "Warrant Stock" means the Shares of
Common Stock and Other Securities owned or to be owned upon exercise of
this Warrant and all other warrants in substantially the same form as
this Warrant issued to Judah Wernick or thereafter to its Transferees
(as hereinafter defined).
1. EXERCISE OF WARRANT.
1.1 NUMBER OF SHARES ISSUABLE ON EXERCISE. The Holder shall be entitled to
receive, upon exercise of this Warrant in whole in accordance with the terms of
subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Warrant Stock, subject to adjustment pursuant to
Section 5.
<PAGE>
1.2 FULL EXERCISE. This Warrant may be exercised in full by the
Holder by surrender of this Warrant, with the form of subscription attached as
Exhibit A hereto (the "Subscription Form") duly executed by the Holder, to the
Company at its principal office, accompanied by payment either (a) in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Warrant Stock for which
this Warrant is then exercisable by the Purchase Price then in effect or, (b)
the surrender to the Company of securities of the Company having an aggregate
Fair Market Value (as hereinafter defined) equal to the aggregate Purchase Price
of the shares of Warrant Stock being purchased upon such exercise; provided,
however, that in lieu of the method of payment under clauses (a) or (b) of this
Section 1.2, the Holder may make payment by allowing the Company to deduct from
the number of shares of Warrant Stock deliverable upon such exercise of this
Warrant a number of shares of Warrant Stock which has an aggregate Fair Market
Value determined as of the date of such exercise of this Warrant equal to the
aggregate Purchase Price for all shares of Warrant Stock as to which this
Warrant is then being exercised.
1.3 PARTIAL EXERCISE. This Warrant may be exercised in part (but not for a
fractional share) on not more than two (2)occasions by surrender of this Warrant
in the manner and at the place provided in subsection 1.2 except that the amount
payable by the Holder on such partial exercise shall be the amount obtained by
multiplying (a) the number of shares of Warrant Stock designated by the Holder
in the Subscription Form by (b) the Purchase Price then in effect. The method of
payment shall be as permitted by Section 1.2. On any such partial Exercise, the
Company, at its expense, will forthwith issue and deliver to or upon the order
of the Holder a new Warrant of like tenor, in the name of the Holder hereof or
as the Holder (upon payment by such Holder of any applicable transfer taxes),
may request, subject to compliance with applicable securities laws, representing
the number of shares of Warrant Stock for which such Warrant may still be
exercised.
1.4 FAIR MARKET VALUE. Fair Market Value of a share of Warrant Stock as of
a particular date (the "Determination Date") shall mean:
(a) If the Warrant Stock is traded on an exchange or is quoted on the
Nasdaq National Market or the Nasdaq SmallCap Market ("Nasdaq"), then the
average of the closing or last sale price, respectively, reported for the five
business days immediately preceding the Determination Date.
(b) If the Warrant Stock is not traded on an exchange or on Nasdaq but is
traded in the over-the-counter market or other similar organization (including
the OTC Bulletin Board), then the average of the closing bid and ask prices
reported for the five business days immediately preceding the Determination
Date.
(c) If the Warrant Stock is not traded as provided above, then the price
determined in good faith by the Board of Directors of the Company, provided that
(1) the basis or bases of each such determination shall be set forth in the
corporate records of the Company pertaining to meetings and other actions of
such board, and (2) such records are available to the Holder for inspection
during normal business hours of the Company upon the giving of reasonable prior
notice.
<PAGE>
(d) If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company's charter, then all amounts to be payable per share to
Holders of the securities then comprising Warrant Stock pursuant to the charter
in the event of such liquidation, dissolution or winding up, plus all other
amounts to be payable per share in respect of the Warrant Stock in liquidation
under the charter, assuming for the purposes of this clause (d) that all of the
shares of Warrant Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5 COMPANY ACKNOWLEDGMENT. The Company will, at the time of the exercise
of this Warrant, upon the request of the Holder acknowledge in writing its
continuing obligation to afford to the Holder any rights to which the holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to the Holder any such rights.
1.6 TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or trust company
shall have been appointed as trustee for the Holder pursuant to subsection 4.2,
such bank or trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 11 and shall accept, in its own name for the
account of the Company or such successor person as may be entitled thereto, all
amounts otherwise payable to the Company or such successor, as the case may be,
on exercise of this Warrant pursuant to this Section 1.
2. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The Company agrees
that the shares of Warrant Stock purchased upon exercise of this Warrant shall
be deemed to be issued to the Holder as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within five business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as the Holder (upon
payment by such Holder of any applicable transfer taxes) may direct, subject to
compliance with applicable securities laws, a certificate or certificates for
the number of duly authorized and validly issued, fully paid and nonassessable
shares of Warrant: Stock to which the Holder shall be entitled on such exercise
plus, in lieu of any fractional share to which the Holder would otherwise be
entitled cash equal to such fraction multiplied by the then Fair Market Value of
one full share, together with any Other Securities and property (including cash,
where applicable) to which the Holder is entitled upon such exercise.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.
RECLASSIFICATION. ETC. In case at any time or from time to time, the Holders of
securities then comprising Warrant Stock shall have received, or (on or after
the record date fixed for the determination of stockholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) additional, Common Stock or Other Securities or property (other than
cash) by way of dividend, or
<PAGE>
(b) any cash (excluding cash dividends payable solely out of earnings or
earned surplus of the Company), or
(c) additional Common Stock or Other Securities or property (including
cash) by way of spin-off, split-up, reclassification, recapitalization,
combination of shares or similar corporate rearrangement, other than additional
shares of Warrant Stock issued as a stock dividend or in a stock split
(adjustments in respect of which are provided for in Section 5), then and in
each such case the Holder, on the exercise hereof as provided in Section 1,
shall be entitled to receive the amount of Common Stock and Other Securities and
property (including cash in the cases referred to in subdivisions (b) and (c) of
this Section 3) which the Holder would hold on the date of such exercise if on
the date hereof the Holder had been the holder of record of the number of shares
of Warrant Stock called for on the face of this Warrant and had thereafter,
during the period from the date hereof to and including the date of such
exercise, retained such shares and all such additional Common Stock and Other
Securities and property (including cash in the cases referred to in subdivisions
(b) and (c) of this Section 3) receivable by the Holder as aforesaid during such
period, giving effect to all adjustments called for during such period by
Section 4 and 5.
4. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
4.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any time or from
time to time the Company shall (a) effect a reorganization, (b) consolidate with
or merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction proper and adequate
provision shall be made by the Company whereby the Holder, on the exercise
hereof as provided in Section 1 at any time after the consummation of such
reorganization consolidation or merger or the effective date of such
dissolution, as the case may be shall receive in lieu of the Warrant Stock
issuable on such exercise prior to such consummation or such effective date, the
Common Stock and Other Securities and property (including cash) to which the
Holder would have been entitled upon such consummation or in connection with
such dissolution, as the case may be, if the Holder had so exercised this
warrant, immediately prior thereto, all subject to further adjustment thereafter
as provided in Sections 3 and 5.
4.2 DISSOLUTION. In the event of any dissolution of the Company following
the transfer of all or substantially all of its properties or assets in a
transaction contemplated by Section 4.1(c), the Company, simultaneously with
such dissolution, shall distribute or cause to be distributed to the Holder the
Common Stock and Other Securities and property (including cash, where
applicable) which would be receivable by the Holder it the Holder had exercised
its Warrant in full immediately prior to such dissolution, less an amount of
Common Stock Other Securities, property and cash with a value equal to the
Purchase Price.
4.3 CONTINUATION OF TERMS. Upon any reorganization, consolidation, merger
or transfer referred to in this Section 4, this Warrant shall continue in full
force and effect and the terms hereof shall be applicable to the shares of
Common Stock and Other Securities and property receivable on the exercise of
this Warrant after the consummation of such reorganization consolidation or
merger, as the case may be, and shall be binding upon the issuer of any such
Common Stock or Other Securities, including, in the case of any such transfer,
the person acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant as provided herein.
<PAGE>
5. OTHER ADJUSTMENTS.
5.1 EXTRAORDINARY EVENTS REGARDING WARRANT STOCK. In the event that the
Company shall (a) issue additional shares of the Warrant Stock as a dividend or
other distribution on outstanding Warrant Stock, (b) subdivide its outstanding
shares of Warrant Stock, or (c) combine its outstanding shares of Warrant Stock
into a smaller number of shares of Warrant Stock, then, in each such event, the
Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the numerator of
which shall be the number of shares of Warrant Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Warrant Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 5. The number
of shares of Warrant Stock that the Holder shall thereafter, on the exercise
hereof as provided in Section 1, be entitled to receive shall be increased or
decreased to a number determined by multiplying the number of shares of Warrant
Stock that would otherwise (but for the provisions of this Section 5.1) be
issuable upon such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this Section 5.1)
be in effect, and (b) the denominator is the Purchase Price in effect on the
date of such exercise.
5.2 ADJUSTMENT FOR SALE OF ADDITIONAL SHARES.
(a) Except with respect to the shares of Common Stock issuable upon
conversion of the shares of the Company's convertible preferred stock offered
for sale by the Company pursuant to the Confidential Private Placement
Memorandum dated January 12, 1998, as supplemented by Supplement No. 1 dated
February 27, 1998 to the Confidential Private Placement Memorandum and
Supplement No. 2 dated March 18, 1998 to the Confidential Private Placement
Memorandum, as the same may be from time to time be further amended or
Supplemented, if the Company shall after the date hereof issue any additional
shares of Common Stock of any class at a price per share less than the greater
of (1) the Fair Market value of such Common Stock as of the date of grant or (2)
the Purchase Price in effect immediately prior to such issuance or sale, then in
each such case the purchase Price shall be reduced to an amount determined by
multiplying the purchase Price by a fraction:
(i) the numerator of which shall be (x) the number of shares of Common
Stock of all classes outstanding (excluding treasury shares but
including Warrants, options and convertible Securities (as defined in
the Warrant Agreement dated as of August 6, 1996 executed in
connection with the company's initial public offering), on an as-if
exercised or converted basis) immediately prior to the issuance of
such additional shares of Common stock plus (y) the number of shares
of Common Stock which the Net Aggregate Consideration Per Share
received by the company for the total number of such additional shares
of Common Stock so issued would purchase at the purchase Price (prior
to adjustment), and
<PAGE>
(ii) the denominator of which shall be (x) the number of shares of Common
Stock of all classes outstanding (excluding treasury shares but
including Warrants, options and Convertible Securities, on an as-if
exercised or converted basis) immediately prior to the issuance of
such additional shares of Common stock plus (y) the number of such
additional shares of Common Stock so issued.
For purposes of this paragraph 5.2, if a part or all of the consideration
received by the Company in connection with the issuance of shares of the Common
Stock or the issuance of any of the securities described in paragraph (b) below
of this paragraph 5.2 consists of property other than cash, such consideration
shall be deemed to have the same value as is recorded on the books of the
Company with respect to receipt of such property so long as such recorded value
was determined in good faith by the Company's Board of Directors, and shall
otherwise be deemed to have a value equal to its fair market value.
(b) For the purpose of this paragraph 5.2, the issuance of any warrants,
options or other subscription or purchase rights with respect to shares of
Common Stock of any class and the issuance of any securities convertible into
shares of Common stock of any class (or the issuance of any warrants, options or
any rights with respect to such convertible securities) shall be deemed an
issuance at such time of such Common Stock if the Net Consideration Per Share
which may be received by the Company for such Common stock (as hereinafter
determined) shall be less than the Purchase Price at the time of such issuance
and, except as hereinafter provided an adjustment in the Purchase Price shall be
made upon each such issuance in the manner provided in paragraph (a) of this
paragraph 5.2 as if such Common Stock were issued at such Net Consideration Per
Share. No adjustment of the Purchase Price shall be made under this paragraph
5.2 upon the issuance of any additional shares of Common stock which are issued
pursuant to the exercise of any warrants, options or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange rights
or in any convertible securities if any adjustment shall previously have been
made upon the issuance of such warrants, options or other rights. Any adjustment
of the Purchase Price with respect to this paragraph (b) of this paragraph 5.2
shall be disregarded if, as and when the rights to acquire shares of Common
stock upon exercise or conversion of the warrants, options, rights or
convertible securities which gave rise to such adjustment expire or are canceled
without having been exercised, so that the Purchase Price effective immediately
upon such cancellation or expiration shall be equal to the Purchase Price in
effect immediately prior to the time of the issuance of the expired or canceled
warrants, options, rights or convertible securities, with such additional
adjustments as would have been made to that Purchase Price had the expired or
canceled warrants, options, rights or convertible securities not been issued. In
the event that the terms of any warrants, options other subscription or purchase
rights or convertible securities previously issued by the Company are changed
(whether by their terms or for any other reason) as to change the Net
Consideration Per share payable with respect thereto (whether or not the
issuance of such warrants, options, rights or convertible securities originally
gave rise to an adjustment of the Purchase Price), the Purchase Price shall be
recomputed as of the date of such change, so that the Purchase Price effective
immediately upon such change shall be equal to the Purchase Price in effect at
the time of the issuance of the warrants, options, rights or convertible
securities subject to such change, adjusted for the issuance thereof in
accordance with the terms thereof after giving effect to such change, and with
such additional adjustments as would have been made to that Purchase Price had
the warrants, options, rights or convertible securities been issued on such
changed terms. For purposes of this paragraph (b), the Net Consideration Per
share which may be received by the Company shall be determined as follows:
<PAGE>
(i) The Net Consideration Per Share shall mean the amount equal to the
total amount of consideration, if any, received by the Company for the
issuance of such warrants, options, rights or convertible securities,
plus the minimum amount of consideration, if any, payable to the
Company upon exercise or conversion thereof, divided by the aggregate
number of shares of Common stock that would be issued if all such
warrants, options, subscriptions, or other purchase rights or
convertible securities were exercised or converted at such net
consideration per share.
(ii) The Net Consideration Per Share which may be received by the Company
shall be determined in each instance as of the date of issuance of
warrants, options, rights or convertible securities without giving
effect to any possible future price - adjustments or rate adjustments
which may be applicable with respect to such warrants, options, rights
or convertible securities and which are contingent upon future events;
provided that in the case of an adjustment to be made as a result of a
change in terms of such warrants. options, rights or convertible
securities, the Net Consideration Per Share shall be determined as of
the date of such change.
5.3 EXCEPTIONS.
No adjustment pursuant to Section 5 hereof to the Purchase Price of the
Warrants will be made, however.
(i) upon the sale or exercise of this Warrant or any Class A Redeemable
Common Stock Purchase Warrants to purchase one (1) share of Common
Stock at a present exercise price of $10.00 per share ("Class A
Warrant"), including without limitation the sale or exercise of any of
the Class A Warrants comprising the Unit Purchase Options issued in
connection with the Company's initial public offering to Patterson
Travis, Inc., or its affiliates, associates or employees; or
(ii) upon the issuance or sale of Common Stock or Convertible Securities,
upon the exercise of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or
Convertible Securities, whether or not such rights, warrants, or
options were outstanding on the date of the original sale of this
Warrant or were thereafter issued or sold; or
(iii)upon the issuance or sale of Common Stock upon conversion or exchange
of any Convertible Securities, whether or not any adjustment in the
Purchase Price was made or required to be made upon the issuance or
sale of such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of the original
sale of the Warrants or were thereafter issued or sold; or
<PAGE>
(iv) upon the issuance or sale of Common Stock or Convertible Securities in
a private placement unless the issuance or sale price is less than 85%
of the Fair Market Value of the Common Stock on the date of issuance,
in which case the adjustment shall only be for the difference between
85% of the Fair Market Value and the issue or sale price;
(v) upon the issuance or sale of Common Stock or Convertible Securities to
(a) stockholders of any corporation which merges into the Company or
from which the Company acquires assets and some or all of the
consideration consists of equity securities of the Company, in
proportion to their stock holdings of such corporation immediately
prior to the acquisition or (b) to any corporation or person from
which the Company acquires assets but only if no adjustment is
required pursuant to any other provision of this Section 5; or
(vi) upon the issuance or sale of (a) up to 300,000 options for the
purchase Common Stock to employees, officers, directors, advisors or
consultants under the Company's 1994 Stock Option Plan, as amended
(the "Stock Option Plan") or (b) Common Stock issued upon the exercise
of options granted under the Stock Option Plan.
6. CHIEF FINANCIAL OFFICER'S CERTIFICATE AS TO ADJUSTMENTS. In each case of
any adjustment or readjustment in the shares of Warrant Stock issuable upon
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer to compute such adjustment or readjustment in accordance
with the terms of the Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Warrant Stock issued or sold or deemed to have been issued or sold, (b) the
number of shares of Warrant Stock outstanding or deemed to be outstanding, and
(c) the purchase Price and the number of shares of Warrant Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the registered
holder at such holder's last address as it appears on the books of the Company.
7. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
upon exercise of this warrant, such number of shares of Warrant Stock as are
issuable from time to time upon the exercise of this Warrant.
8. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by the Holder (the "Transferor") with respect to any or all of the
shares of Warrant Stock underlying this Warrant; provided, however, that the
following conditions have been satisfied: (x) at the time of such transfer the
Transferee (as hereinafter defined) provides to the Company in writing such
representations and warranties as the Company may reasonably request regarding
the status of the Transferee as an "accredited investor" as defined in Rule 501
promulgated under the Securities Act and (y) based solely on the representations
and warranties provided pursuant to clause (x) above, there are not, at the Lime
of the proposed transfer, more than ten holders of Warrants which are not
"accredited investors." On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") if to the Company, the Company at its expense but
with payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant or Warrants
of like tenor, in the name of the Transferor and/or the transferee(s) specified
in such Transferor Endorsement Form (each a "Transferee"), calling in the
aggregate on the face or faces thereof for the number of shares of Warrant Stock
called for on the face or faces of the Warrant so surrendered by the Transferor.
Each Transferee shall be entitled (pro rata according to the number of shares of
Warrant Stock issuable under the Transferee's new Warrant) to those benefits
accruing to the Transferor under this Warrant prior to the date of issue of such
new Warrant or Warrants.
<PAGE>
9. REGISTRATION RIGHTS; PROCEDURE; INDEMNIFICATION.
9.1 REGISTRATION RIGHTS.
(a) As soon as practicable following the initial closing or any other of
two subsequent closings relating to the sale of the Company's Convertible
Preferred Stock as contemplated by that certain Placement Agency Agreement dated
January 12, 1998 between the Company and Patterson `Travis, Inc., as amended by
a letter agreement dated March 13, 1998 between the Company and Patterson
Travis, Inc., but no later than July 20, 1998, the Company shall prepare and
file a registration statement with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), covering the Warrant Stock to the extent required to permit the sale or
other disposition of the Warrant Stock so registered by the holders use its best
efforts to thereof (collectively, the "Seller"). The Company shall use its best
efforts to cause the registration statement to remain effective for the period
ending on the earlier of the: (i) date when all shares of Warrant Stock covered
by the Registration statement have been gold; (ii) date such shares of Warrant
Stock could be sold pursuant to Rule 144(k) under the Securities Act, as Rule
144(k) may subsequently be amended, supplemented or modified, or (iii) the
Expiration Date
(b) Intentionally Omitted.
(c) Intentionally Omitted.
9.2 REGISTRATION PROCEDURES.
(a) The Company will, as expeditiously as possible:
(i) prepare and tile with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for the period specified in Section 9.1 above and comply
with the provisions of the Securities Act with respect to the
disposition of all of the Warrant Stock covered by such registration
statement in accordance with the Seller's intended method of
disposition set forth in such registration statement for such period;
<PAGE>
(ii) furnish to the Seller, and to each underwriter, if any, such number of
copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons
reasonably may request to facilitate the public sale or other
disposition of the securities covered by such registration statement;
(iii)use its best efforts to register or qualify the Seller's Warrant
Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Seller designates,
provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation or a broker of or dealer in securities in any jurisdiction
where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(iv) list the Warrant Stock covered by such registration statement
with any securities exchange market system on which the Warrant
Stock of the Company is then listed or traded.
(v) immediately notify the Seller and each underwriter,it any, at any time
when a prospectus relating to the Warrant Stock is required to be
delivered under the Securities Act, of the happening of any event of
which the Company has knowledge as a result of which such prospectus,
as then in effect, includes an untrue statement of a material fact or
omits to state a material tact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
(vi) make available for inspection by the seller, any underwriter
participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by the
Seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by the Seller, underwriter, attorney, accountant
or agent in connection with such registration statement.
(b) The seller shall provide such cooperation as the Company may request in
connection with the preparation of the Registration Statement.
9.3 EXPENSES. All expenses incurred by the Company in complying with this
Section 9, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars and costs of insurance are called "Registration
Expenses." All underwriting discounts and selling commissions applicable to the
sale of Warrant Stock, including any fees and disbursements of any special
counsel to the Seller, are called "Selling Expenses."
<PAGE>
The Company will pay all Registration Expenses in connection with the
registration statements filed under this Section 5. All selling Expenses in
connection with each registration statement under this Section 9 shall be borne
by the seller in proportion to the number of shares cold by the Seller relative
to the number of shares sold under such registration statement or as all sellers
thereunder may agree.
9.4 INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any Warrant Stock under the
Securities Act pursuant to this Section 9, the Company will indemnify and hold
harmless the Seller, each underwriter, if any, of such Warrant Stock thereunder
and each other person if any, who controls such Seller or underwriter within the
meaning of the Securities Act, from and against any losses, claims, damages or
liabilities, joint or several, to which the seller, or such underwriter or
controlling person may become subject under the Securities Act or otherwise
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Warrant Stock was registered under the Securities Act pursuant to
this Section 9, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the 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 seller, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damages liability or
action; provided, however, that the Company will not be liable to the provider
of information giving rise to any claim in any such case if and to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such Seller, the
underwriter or any such controlling person about itself in writing specifically
for use in such registration statement or prospectus; provided further that the
indemnity with respect to any preliminary prospectus shall not be applicable on
account of any losses, claims, damages, liabilities or litigation arising from
the sale of such securities to any person if the misstatement or omission was
corrected in the final prospectus related thereto but such final prospectus was
not delivered by the seller to such person at or prior to the sale of
securities.
(b) In the event of a registration of any of the Warrant Stock under the
Securities Act pursuant to Section 9, the Seller will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
from and against all losses, claims, damages or liabilities, joint or several,
to which the Company or such officer, director, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such Warrant
Stock was registered under the Securities Act pursuant to this Section 9, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material tact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided; however, that the Seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to such Seller, as such, furnished in writing to the Company by such
Seller specifically for use in such registration statement or prospectus, and
provided, further, however, that the liability of the Seller hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of the Warrant
Stock sold by the Seller under such registration statement bears to the total
public offering price of all securities sold thereunder, but not in any event to
exceed the proceeds received by the seller from the sale of Warrant Stock
covered by such registration statement.
(c) promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 9.4(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 9.4(c) if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party `to such indemnified party of its ejection so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9.4(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected;
provided. however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party or if the indemnifying
party shall not have assumed or undertaken the defense of such action with
counsel reasonably satisfactory to such indemnified party. the indemnified party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of one such separate counsel and other expenses related to
such participation to be reimbursed by the indemnifying party as incurred.
<PAGE>
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) the Seller,
or any controlling person of the Seller, makes a claim for indemnification
pursuant to this Section 9.4 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this section 9.4 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the Seller or
controlling person of the seller in circumstances for which indemnification is
provided under this Section 9.4; then, and in each such case, the Company and
the seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible for the portion represented by
the percentage that the public offering price of its securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) the seller
will not be required to contribute any amount in excess of the proceeds received
by such Seller from the sale of all such securities offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
10. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this warrant
and, in the case of any such loss, theft or destruction of this warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
11. WARRANT AGENT. The Company may, by written notice to each Holder of the
Warrant, appoint an agent having an office in New York, NY for the purpose of
issuing Warrant Stock (or Other Securities) upon exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 8, and
replacing this Warrant pursuant to Section 10, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
12. TRANSFER ON THE COMPANY BOOKS. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered Holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
13. NOTICES, ETC. All notices and other communications from the Company to
the Holder shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished td the Company in writing by
the Holder or, until the Holder furnishes to the Company an address, then to,
and at the address of, the last Holder of this Warrant who has so furnished an
address to the Company. Notices shall be deemed given 48 hours after mailing.
<PAGE>
14. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York. The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof. The invalidity or unenforceability of any other provision.
IN WITNESS WHEREOF, the Company has executed this Warrant under seal as
of the date first written above.
MEDJET INC.
By:/s/Eugene I. Gordon
-----------------------------------------
Name: Eugene I. Gordon
Title: President-Technology Development
and Chairman of the Board
Attest:
By:/s/Thomas M. Handschiegel
---------------------------------------
Name: Thomas M. Handschiegel
Title: Vice President-Finance and
Human Resources and Secretary
<PAGE>
Exhibit A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: MEDJET INC.
The undersigned, the Holder of the within Warrant, hereby irrevocably elects to
exercise this Warrant for, and to purchase thereunder, ______________ shares of
Warrant Stock of MEDJET INC. and herewith makes payment of $___________________
therefor by [delivery of a check in such amount] [hereby instructing MEDJET INC.
to deduct from the enclosed Warrant a number of shares of Warrant Stock having
an aggregate Fair Market Value equal to $_________ as of the date hereof, which
amount represents the Purchase Price for the shares for which the within Warrant
is hereby exercised, and which is equal to ______ shares of Warrant Stock], and
requests that the certificates for such shares be issued in the name of, and
delivered to ___________________ whose address is______________________________.
Dated:
_________________________________________
(Signature must conform to name of Holder
as specified on the face of the Warrant)
_________________________________________
(Address)
<PAGE>
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received. the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading "Transferees" the right
represented by the within Warrant to purchase the percentage and number of
shares of Warrant Stock of Medjet Inc. to which the within Warrant relates
specified under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of Medjet Inc.
with full power of substitution in the premises.
<TABLE>
<S> <C> <C>
- --------------------------------------- -------------------------------------- --------------------------------------
PERCENTAGE NUMBER
TRANSFEREES TRANSFERRED TRANSFERRED
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
Dated: _____________________________, 19__ ___________________________________
(Signature must conform to name
of Holder as specified on the face
of the Warrant)
Signed in the presence of:
_____________________________________ _____________________________________
(Name) (Address)
_____________________________________ _____________________________________
<PAGE>
ROSENBERG RICH
BAKER BERMAN
& COMPANY
A PROFESSIONAL ASSOCIATION OF
CERTIFIED PUBLIC ACCOUNTANTS
380 Foothill Road . P.O. Box 6483 . Bridgewater, NJ 08807-0483
908-231-1000 . FAX: 908-231-6894 . E-Mail: [email protected]
EXHIBIT 23.2
Consent of Independent Certified Public Accountant
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 our report dated March 19,
1998 except for the "SUBSEQUENT EVENT" note to the financial
statements which is dated April 13, 1998, which appears on
page 15 of the annual report on Form 10-KSB of Medjet Inc. for
the years ended December 31, 1997 and 1996, and to the
reference to our Firm under the caption "Experts" in the
Prospectus.
Rosenberg Rich Baker Berman and Company
Maplewood, New Jersey
July 17, 1998
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS . SEC PRACTICE SECTION .
PRIVATE COMPANIES PRACTICE SECTION . NATIONAL ASSOCIATED CPA FIRMS .
INDEPENDENT ACCOUNTANTS INTERNATIONAL
