UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
MEDJET INC.
(Name of Issuer)
COMMON STOCK, $.001 PAR VALUE
(Title of Class of Securities)
58501K - 107
(CUSIP Number)
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
RICHARD GROSSMAN
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
PF, WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,989,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,989,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
1,989,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
33.8 %
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
ORIN HIRSCHMAN
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
PF, WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
98,800
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,885,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 98,800
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,885,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
1,983,800
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
33.7%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
ADAM SMITH CAPITAL MANAGEMENT LLC
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,352,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,352,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
1,352,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
25.7%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
ADAM SMITH INVESTMENT PARTNERS, L.P.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,352,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,352,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
1,352,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [_]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
25.7%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
DIAMOND CAPITAL MANAGMENT INC.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 208,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
208,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
208,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
5.1%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
ADAM SMITH INVESTMENTS, LTD.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 208,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
208,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
208,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
5.1%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
ADAM SMITH & COMPANY, INC.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
SC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 325,000
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
325,000
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
325,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
7.7%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
BD,CO
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
RICHARD AND ANA GROSSMAN JTWROS
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
PF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
104,000
NUMBER OF -------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH -------------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH: 104,000
-------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
-------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
104,000
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11.
2.6%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
This Statement on Schedule D relates to the shares of Common Stock, $.001
par value per share (the "Shares"), of Medjet Inc., a Delaware corporation (the
"Company"), into which shares of Series B Convertible Preferred Stock are
convertible, and which warrants are exercisable to purchase. The principal
executive offices of the Company are located at 1090 King Georges Post Road,
Suite 301, Edison, New Jersey 08837.
Item 2. Identity and Background.
(a) This Statement is filed by Richard Grossman and Orin Hirschman by
virtue of their beneficial ownership of Shares, directly and indirectly as the
owners of each of Adam Smith & Company, Inc. ("ASC"), Adam Smith Capital
Management LLC ("ASCM"), and Diamond Capital Management Inc. ("DCM"); by DCM by
virtue of being the Investment Manager of Adam Smith Investments, Ltd., a
British Virgin Islands corporation ("ASI"); by ASCM, by virtue of being the sole
general partner of Adam Smith Investment Partners, L.P. ("ASIP"); and by ASC,
ASI and ASIP by virtue of their direct beneficial ownership of Shares. By virtue
of the relationships described above, each of Richard Grossman and Orin
Hirschman may be deemed to possess indirect beneficial ownership of the Shares
held by each entity. The directors of ASI are F.M.C. Limited and S.C.S. Limited,
which are subsidiaries of Insinger Trust (BVI) Limited, all of which are British
Virgin Islands corporations. Richard Grossman and Orin Hirschman are the only
officers and directors of ASC and DCM, and the only member-managers of ASCM.
This Statement is filed by Richard and Ana Grossman JTWROS, by virtue of their
direct beneficial ownership of Shares.
(b) The principal executive offices of ASC, ASCM, ASIP and DCM, and the
business address of each of Richard Grossman and Orin Hirschman, are located at
101 East 52nd Street, New York, New York 10022. The principal executive office
of ASI is c/o Insinger Trust (BVI) Limited, Tropic Isle Building, P.O. Box 438,
Road Town, Tortola, British Virgin Islands.
(c) ASC is a registered broker-dealer, ASCM manages ASIP, and DCM manages
ASI and other investment vehicles. ASI and ASIP are investment vehicles. Each of
Richard Grossman and Orin Hirschman's principal business is acting as an officer
and/or director of ASC, ASCM, and DCM.
(d) None of the Reporting Persons has been convicted in a criminal
proceeding in the past five years (excluding traffic violations or similar
misdemeanors).
(e) During the past five years, none of the Reporting Persons was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws of finding any
violation with respect to such laws.
(f) ASC is a New York corporation, ASCM is a New York limited liability
company, DCM is a New York corporation, ASI is a British Virgin Islands
corporation, and ASIP is a New York limited partnership. Richard Grossman, Ana
Grossman, and Orin Hirschman are citizens of the United States.
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
ASIP acquired 10,400 units ("Units"), each consisting of one share of Series B
Convertible Preferred Stock (the "Series B Preferred"), convertible into one
hundred Shares, and one hundred warrants ("Warrants"), each immediately
exercisable to purchase one Share at an exercise price of $3.50 per Share, for a
total of $1,300,000. ASI acquired 1,600 Units for a total of $200,000. Richard
and Ana Grossman JTWROS acquired 800 Units for a total of $100,000. Orin
Hirschman acquired 760 Units for a total of $95,000. All of such Units were paid
for out of the working capital of the respective entity (or personal funds of
the respective individual or joint tenants, as the case may be) and purchased
from the Company pursuant to a Subscription Agreement dated December 3, 1999.
ASC acquired warrants to purchase 500,000 Shares at an exercise price of $3.50
per Share, issued as a fee pursuant to an investment banking agreement with the
Company dated December 3, 1999 (the "Investment Banking Agreement").
Item 4. Purpose of Transaction.
Each of Richard Grossman, Ana Grossman, Orin Hirschman, ASC, ASI, and ASIP
acquired the securities that are the subject of this Schedule 13D (the
"Securities") for investment only.
Pursuant to an agreement dated January 28, 2000 (the "Settlement Agreement"),
the Company returned 35% of the purchase price paid for the acquired Units to
each of ASIP, ASI, Richard and Ana Grossman JTWROS, and Orin Hirschman, and each
of ASIP, ASI, Richard and Ana Grossman JTWROS, Orin Hirschman, and ASC returned
35% of the acquired Units to the Company. In connection with the Settlement
Agreement, the Investment Banking Agreement was cancelled.
Depending upon future evaluations of the Company's investments and prospects,
and upon future developments (including, but not limited to, market for the
Company's securities, the effective yield on the company's securities,
availability of funds, alternative uses of funds, and money, stock market and
general economic conditions), each of the Reporting Persons may from time to
time purchase additional securities of the Company, or dispose of all or a
portion of the securities of the Company that it holds, in open market or
privately-negotiated transactions or otherwise.
Item 5. Interest in Securities of the Issuer.
(a) Richard Grossman may be deemed the indirect beneficial owner of
1,989,000 Shares, including 832,000 Shares issuable on conversion of the Series
B Preferred and 1,157,000 Shares issuable upon exercise of the Warrants,
representing beneficial ownership of 33.8% of the Shares deemed outstanding by
the Company as of December 3,1999.
<PAGE>
Orin Hirschman is the direct beneficial owner of 98,800 Shares, including 49,400
Shares issuable on conversion of the Series B Preferred and 49,400 Shares
issuable upon exercise of the Warrants, and may be deemed the indirect
beneficial owner of 1,885,000 Shares, including 780,000 Shares issuable on
conversion of the Series B Preferred and 1,105,000 Shares issuable upon exercise
of the Warrants representing beneficial ownership of 33.7% of the Shares deemed
outstanding by the Company as of December 3,1999. Richard and Ana Grossman
JTWROS are the direct beneficial owners of 104,000 Shares, including 52,000
Shares issuable on conversion of the Series B Preferred and 52,000 Shares
issuable upon exercise of the Warrants, representing beneficial ownership of
2.6% of the Shares deemed outstanding by the Company as of December 3, 1999. ASI
is the direct beneficial owner of 208,000 Shares, including 104,000 Shares
issuable on conversion of the Series B Preferred and 104,000 Shares issuable
upon exercise of the Warrants, representing beneficial ownership of 5.1% of the
Shares deemed outstanding by the Company as of December 3, 1999. DCM may be
deemed the indirect beneficial owner of 208,000 Shares, representing beneficial
ownership of 5.1% of the Shares deemed outstanding by the Company as of December
3, 1999. ASC is the direct beneficial owner of 325,000 Shares, including 325,000
Shares issuable upon exercise of the Warrants, representing beneficial ownership
of 7.7% of the Shares deemed outstanding by the Company as of December 3,1999.
ASIP is the direct beneficial owner of 1,352,000 Shares including 676,000 Shares
issuable on conversion of the Series B Preferred and 676,000 Shares issuable
upon exercise of the Warrants, representing beneficial ownership of 25.7% of the
Shares deemed outstanding by the Company as of December 3, 1999. ASCM may be
deemed the indirect beneficial owner of 1,352,000 Shares, representing
beneficial ownership of 25.7% of the Shares deemed outstanding by the Company as
of December 3, 1999.
(b) Richard Grossman has shared power to vote or to direct the vote, and
shared power to dispose or direct the disposition, of 1,989,000 Shares of which
he may be deemed the beneficial owner. Orin Hirschman has sole power to vote or
to direct the vote, and sole power to dispose or direct the disposition, of
98,800 Shares of which he is the beneficial owner, and shared power to vote or
to direct the vote, and shared power to dispose or direct the disposition, of
1,885,000 Shares of which he may be deemed the beneficial owner. Richard and Ana
Grossman JTWROS have sole power to vote or to direct the vote, and sole power to
dispose or direct the disposition, of 104,000 Shares of which they are the
beneficial owners. ASCM has shared power to vote or to direct the vote, and
shared power to dispose or direct the disposition, of 1,352,000 Shares of which
it may be deemed the beneficial owner. ASIP has shared power to vote or to
direct the vote, and shared power to dispose or direct the disposition, of
1,352,000 Shares of which it is the beneficial owner. DCM has shared power to
vote or to direct the vote, and shared power to dispose or direct the
disposition, of 208,000 Shares of which it may be deemed the beneficial owner.
ASI has shared power to vote or to direct the vote, and shared power to dispose
or direct the disposition, of 208,000 Shares of which it is the beneficial
owner. ASC has shared power to vote or to direct the vote, and shared power to
dispose or direct the disposition, of 325,000 Shares of which it is the
beneficial owner.
(c) Except as set forth herein, none of the Reporting Persons has effected
any transaction in the Shares during the past 60 days.
(d) Not Applicable
(e) Not Applicable
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
<PAGE>
All of the Reporting Persons other than ASC, ASCM, and DCM are parties to
the Subscription Agreement dated as of December 3, 1999 (the "Subscription
Agreement"), attached hereto as Exhibit B. ASIP, ASI, Richard and Ana Grossman
JTWROS, Orin Hirschman, and ASC are parties to the Settlement Agreement dated as
of January 28, 2000, attached hereto as Exhibit C.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Joint Filing Statement
Exhibit B: Subscription Agreement dated as of December 3, 1999.
Exhibit C: Settlement Agreement dated as of January 28, 2000
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
February 9, 2000.
/s/ Richard Grossman
-------------------------------------------
Richard Grossman
RICHARD AND ANA GROSSMAN JTWROS
By: /s/ Richard Grossman
-------------------------------------------
Richard Grossman
/s/ Orin Hirschman
-------------------------------------------
Orin Hirschman
ADAM SMITH & COMPANY, INC.
By: /s/ Richard Grossman
-------------------------------------------
Richard Grossman
ADAM SMITH CAPITAL MANAGEMENT LLC
By: /s/ Richard Grossman
----------------------------------------
Richard Grossman
<PAGE>
ADAM SMITH INVESTMENT PARTNERS, L.P.
By: ADAM SMITH CAPITAL MANAGEMENT LLC
By: /s/ Richard Grossman
---------------------------------------
Richard Grossman
ADAM SMITH INVESTMENTS, LTD.
By: F.M.C. LIMITED, Corporate Directors
By: /s/ Judy Hylton
---------------------------------------
Judy Hylton
By: S.C.S. LIMITED, Corporate Directors
By: /s/ Anna Carrington
-------------------------------------------
Anna Carrington
DIAMOND CAPITAL MANAGEMENT INC.
By: /s/ Richard Grossman
--------------------------------------------
Richard Grossman
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934,
as amended, the persons named below agree to the joint filing on behalf of each
of them of a Statement on Schedule 13D (including amendments thereto) with
respect to the common stock, no par value, of Isonics Corporation, and further
agree that this Joint Filing Agreement be included as an Exhibit to such joint
filings.
In evidence thereof, the undersigned, being duly authorized, hereby execute
this Joint Filing Agreement as of January 5, 2000.
/s/ Richard Grossman
---------------------------------------------
Richard Grossman
RICHARD AND ANA GROSSMAN JTWROS
By: /s/ Richard Grossman
---------------------------------------------
Richard Grossman
/s/ Orin Hirschman
---------------------------------------------
Orin Hirschman
ADAM SMITH & COMPANY, INC.
By: /s/ Richard Grossman
---------------------------------------------
Richard Grossman
ADAM SMITH CAPITAL MANAGEMENT LLC
By: /s/ Richard Grossman
---------------------------------------------
Richard Grossman
<PAGE>
ADAM SMITH INVESTMENT PARTNERS, L.P.
By: ADAM SMITH CAPITAL MANAGEMENT LLC
By: /s/ Richard Grossman
----------------------------------------
Richard Grossman
ADAM SMITH INVESTMENTS, LTD.
By: F.M.C. LIMITED, Corporate Directors
By: /s/ Judy Hylton
----------------------------------------
Judy Hylton
By: S.C.S. LIMITED, Corporate Directors
By: /s/ Anna Carrington
-------------------------------------------
Anna Carrington
DIAMOND CAPITAL MANAGEMENT INC.
By: /s/ Richard Grossman
--------------------------------------------
Richard Grossman
<PAGE>
EXHIBIT B
MEDJET INC.
SUBSCRIPTION AGREEMENT
FOR SERIES B CONVERTIBLE PREFERRED STOCK
AND WARRANTS
SUBSCRIPTION AGREEMENT (the "Agreement") dated as of December 3, 1999 among
MEDJET INC., a Delaware corporation ("Company"), and the persons who execute
this agreement as investors (the "Investors").
WHEREAS, the Company desires to sell to the Investors, and the Investors
desire to purchase, 16,000 shares of the Company's Series B Convertible
Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"),
having the terms set forth in the Certificate of Designations of Series B
Convertible Preferred Stock attached hereto as Exhibit 1 (the "Certificate") and
1,600,000 five-year warrants, each exercisable to purchase one share of the
Company's Common Stock, par value $.001 per share, in the form attached hereto
as Exhibit 2 (the "Purchased Warrants");
WHEREAS, in connection with the completion of the offering of the Series B
Preferred Stock to the Investors, the Company has obtained an agreement from
Eugene Gordon ("Gordon") to extend the maturity on certain payment obligations
aggregating $150,000 to May 15, 2000 (the "Gordon Extension");
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Purchase and Sale of Stock.
1.1. Sale and Issuance of Purchased Securities. The Company shall sell
to the Investors and the Investors shall purchase from the Company 16,000
units, each unit consisting of one share of Series B Preferred Stock and
one hundred Purchased Warrants, at a price of $125.00 per unit, or a total
of 16,000 shares of Series B Preferred Stock (the "Purchased Shares") and
1,600,000 Purchased Warrants, for an aggregate purchase price of
$2,000,000. The Purchased Shares and Purchased Warrants are referred to
herein collectively as the "Purchased Securities". The number of Purchased
Shares and Purchased Warrants to be purchased by each Investor from the
Company is set forth opposite the name of such Investor on the signature
page hereof, subject to acceptance, in whole or in part, by the Company.
1.2. Closing. The purchase and sale of the Purchased Securities
hereunder shall take place at a closing (the "Closing"; the date on which
the Closing occurs is hereinafter referred to as the "Closing Date"). The
Closing shall take place concurrently with the execution and delivery of
this Agreement by the Investors. At the Closing:
<PAGE>
(a) each Investor shall deliver to the Company or its designees
by wire transfer, cashier's check or certified checks from a bank
acceptable to the Company, or such other method of payment as the
Company shall approve, an amount equal to the purchase price of the
portion of the Purchased Securities purchased by such Investor, as set
forth opposite its name on the signature pages hereof;
(b) the Company shall issue and deliver to each Investor (i) a
certificate or certificates for its portion of the Purchased Shares
and (ii) warrants for the portion of the Purchased Warrants to be
issued by the Company to and purchased by such Investor, as set forth
opposite such Investor's name on the signature pages hereof;
(c) the Company and the Investors shall execute and deliver a
Registration Rights Agreement in the form attached as Exhibit 3 with
respect to the Underlying Shares (as hereafter defined);
(d) the Company shall execute and deliver an investment banking
agreement with Adam Smith & Company, Inc. in the form attached as
Exhibit 4 providing for compensation of 500,000 warrants in the same
form as the Purchased Warrants (the "Investment Banking Warrants");
(e) the Company shall deliver to the Investors an Opinion of
Counsel with respect to the matters set forth on Exhibit 5;
(f) the Company and Eugene Gordon shall have entered into the
Gordon Extension;
(g) the Company shall deliver to the Investors a writing, in form
and content satisfactory to the Investors, signed by the holders of a
majority of the outstanding Common Stock of the Company by which such
holders agree, if necessary, to grant their further consent and
reapprove the recent increase in the authorized number of shares of
Common Stock to 30,000,000 shares; and
(h) Eugene Gordon shall deliver to the Investors such written
agreements and assurances with respect to any pending litigation
against the Company as the Investors reasonably request.
All certificates shall have all necessary stock transfer tax stamps
(purchased at the expense of the Company) affixed.
The parties agree that for purposes of allocating the price paid for the
Purchased Securities, the Purchased Warrants have a nominal value.
<PAGE>
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors as follows:
2.1. Corporate Organization; Authority; Due Authorization.
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
(ii) has the corporate power and authority to own or lease its
properties as and in the places where such business is now conducted
and to carry on its business as now conducted and (iii) is duly
qualified and in good standing as a foreign corporation authorized to
do business in every jurisdiction where the failure to so qualify,
individually or in the aggregate, would have a material adverse effect
on the operations, prospects, assets, liabilities, financial condition
or business of the Company (a "Company Material Adverse Effect").
Certificates of state authorities as of a recent date evidencing such
valid existence or due qualification, as the case may be, and good
standing have been delivered to the Investors.
(b) The Company (i) has the requisite corporate power and
authority to execute, deliver and perform this Agreement and the other
agreements and warrants contemplated hereby to which it is a party
(collectively, the "Other Agreements") and to incur the obligations
herein and therein and (ii) has been authorized by all necessary
corporate action to execute, deliver and perform this Agreement and
the Other Agreements and to consummate the transactions contemplated
hereby and thereby (the "Contemplated Transactions"). This Agreement
and each of the Other Agreements is a valid and binding obligation of
the Company enforceable in accordance with its terms.
2.2. Capitalization. Immediately prior to the Closing, the authorized
capital of the Company consisted of (i) 30,000,000 shares of Common Stock,
$.001 par value per share (the "Common Stock"), of which 3,901,431 shares
of Common Stock are outstanding, and (ii) 1,000,000 shares of Preferred
Stock, $.01 par value per share, of which 16,000 shares have been
designated as Series B Convertible Preferred Stock, none of which shares
are outstanding. Immediately after the Closing the capitalization of the
Company will be as set forth on Exhibit 6. The Certificate has been duly
filed with and recorded by the Secretary of State of the State of Delaware
and proof of such filing has been delivered to the Investors. All
outstanding shares were issued in compliance with all applicable Federal
and state securities laws. Except as contemplated by this Agreement or as
set forth in the disclosure letter delivered to the Investors prior to the
execution of this Agreement (the "Company Disclosure Letter", which letter
is referenced in Exhibit 7), there are (i) no outstanding subscriptions,
warrants, options, conversion privileges or other rights or agreements to
purchase or otherwise acquire or issue any shares of capital stock of the
Company (or shares reserved for such purpose), (ii) no preemptive rights or
rights of first refusal with respect to the issuance of additional shares
of capital stock of the Company, including the Purchased Securities and the
shares of Common Stock which the Purchased Warrants and Investment Banking
Warrants are exercisable to purchase and for which the Purchased Shares are
convertible into, and (iii) no commitments or understandings (oral or
written) of the Company to issue any shares, warrants, options or other
rights. Exhibit 6 sets forth the warrants, options, convertible securities
and other stock purchase rights outstanding on the date hereof, the number
of shares of common stock issuable thereunder and the exercise or
conversion price thereof, as the
<PAGE>
case may be, (i) immediately prior to and (ii) immediately after the
Closing. To the best of the Company's knowledge, except as set forth in the
Company Disclosure Letter, none of the shares of Common Stock are subject
to any shareholders' agreement, voting trust agreement or similar
arrangement or understanding. Except as set forth in the Company Disclosure
Letter, the Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter.
2.3. Validity of Purchased Shares. The issuance of the Purchased
Shares has been duly authorized, and when issued, sold and delivered in
accordance with the terms and for the consideration expressed herein, the
Purchased Shares shall be validly issued, fully paid and non-assessable.
2.4. Common Stock Issuable upon Conversion of Purchased Shares and
Exercise of Purchased Warrants and Investment Banking Warrants. The
issuance of the shares of Common Stock (the "Underlying Shares") issuable
upon conversion of the Purchased Shares or upon exercise of the Purchased
Warrants and the Investment Banking Warrants has been duly authorized and
the Underlying Shares have been, and at all times prior to such conversion
or exercise will have been, duly reserved for issuance upon such conversion
or exercise and, when so issued, will be validly issued, fully paid and
non-assessable.
2.5. Private Offering. Neither the Company nor anyone acting on its
behalf has within the last 12 months issued, sold or offered any security
of the Company to any person or organization under circumstances that would
cause the issuance and sale of the Purchased Securities, as contemplated by
this Agreement, or the issuance of the Investment Banking Warrants to be
subject to the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). The Company agrees that neither the Company
nor anyone acting on its behalf will offer the Purchased Securities or
Investment Banking Warrants or any part thereof or any similar securities
for issuance or sale to, or solicit any offer to acquire any of the same
from, anyone so as to make the issuance and sale of the Purchased
Securities or the issuance of the Investment Banking Warrants subject to
the registration requirements of Section 5 of the Securities Act.
2.6. Brokers and Finders. The Company has not retained any investment
banker, broker or finder in connection with the Contemplated Transactions.
2.7. Subsidiaries. The Company has no Subsidiaries and does not
otherwise directly or indirectly control any other business entity. As used
in this Agreement, "Subsidiary" means any corporation or other
organization, whether incorporated or unincorporated, of which the Company
directly or indirectly owns or controls at least a majority of the
securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which the Company is a general partner or any limited
liability company of which the Company is a manager.
2.8. Other Interest. The Company does not own directly or indirectly
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity.
<PAGE>
2.9. Use of Proceeds. The Company will use the proceeds from the sale
of the Purchased Securities as set forth on Exhibit 8 attached hereto.
2.10. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the Other
Agreements by the Company do not, and the performance of this
Agreement and the Other Agreements and the consummation by the Company
of the Contemplated Transactions will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Company, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to the
Company or by which any property or asset of the Company is bound or
affected, or (iii) except as set forth in the Company Disclosure
Letter, result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, result in the loss of a material benefit under, or give to
others any right of purchase or sale, or any right of termination,
amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property
or asset of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company is a party or by
which the Company or any property or asset of the Company is bound or
affected, except, in the case of clauses (i)(y), (ii) and (iii), for
any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay consummation of any of
the Contemplated Transactions in any material respect, or otherwise
prevent the Company from performing its obligations under this
Agreement or any Other Agreement in any material respect, and would
not, individually or in the aggregate, have a Company Material Adverse
Effect. The execution and delivery of this Agreement and the Other
Agreements by the Company do not, and the performance of this
Agreement and the Other Agreements and the consummation by the Company
of the Contemplated Transactions will not, result in any material
breach of or constitute a material default (or an event which with
notice or lapse of time or both would become a material default)
under, result in the loss of a material benefit under, or give to
others any right of purchase or sale, or any right of termination,
amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property
or asset of the Company pursuant to, any Company Material Contract (as
hereafter defined).
(b) The execution and delivery of this Agreement and the Other
Agreements by the Company do not, and the performance of this
Agreement and the Other Agreements and the consummation by the Company
of the Contemplated Transactions will not, require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign
(each a "Governmental Entity") except for applicable requirements, if
any, of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or any state securities or "blue sky" laws ("Blue Sky Laws").
2.11. Compliance. Except as set forth in the Company Disclosure Letter
the Company is not in conflict with, or in default or violation of (i) any
law, rule, regulation, order, judgment or decree applicable to the Company
or by which any property or asset of the Company is
<PAGE>
bound or affected ("Legal Requirement"), or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the
Company or any property or asset of the Company is bound or affected, in
each case except for any such conflicts, defaults or violations that would
not, individually or in the aggregate, have a Company Material Adverse
Effect. The Company has not received any notice or other communication from
any Governmental Body regarding any actual or possible violation of, or
failure to comply with, any Legal Requirement. The Company has obtained all
licenses, permits, and other authorizations and have taken all actions
required by applicable law or governmental regulations in connection with
their business as now conducted, where the failure to obtain any such item
or to take any such action would have, individually or in the aggregate, a
Company Material Adverse Effect. None of the Company or, to the knowledge
of Company, any director, officer, agent, employee or other person acting
on behalf of any of the foregoing has used any corporate funds for unlawful
contributions, payments, gifts or entertainment or for the payment of other
unlawful expenses relating to political activity, or made any direct or
indirect unlawful payments to governmental or regulatory officials or
others. For purposes of this Agreement "Governmental Body" shall mean any:
(a) nation, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any governmental
division, department, agency, commission, instrumentality, official,
organization, unit, body or entity and any court or other tribunal).
2.12. SEC Documents.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission
(the "SEC") since its formation (collectively, the "Company Reports").
As of their respective dates, the Company Reports filed prior to or on
the date hereof (i) complied as to form in all material respects with
the applicable requirements of the Securities Act, the Exchange Act,
and the rules and regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading. The representation in clause (ii) of the preceding
sentence shall not apply to any misstatement or omission in any
Company Report filed prior to the date of this Agreement which was
superseded by a subsequent Company Report filed prior to the date of
this Agreement. Except as set forth in the Company Disclosure Letter
the Company is not a party or subject to any note, bond, mortgage,
indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal that is required to be described in or
filed as an exhibit to any Company Report and that is not described in
or filed as an exhibit to such Company Report as required by the
Securities Act or the Exchange Act, as the case may be. No event has
occurred prior to the date hereof as a consequence of which the
Company would be required to file a Current Report on Form 8-K
pursuant to the requirements of the Exchange Act as to which such a
report has not been timely filed with the SEC. Any reports, statements
and registration statements and amendments thereto (including, without
limitation, Annual Reports on Form 10-KSB, Quarterly Reports on Form
10-QSB and Current Reports on Form 8-K, as amended) filed by the
Company with the SEC after the date hereof shall be mailed to the
Investors no later than the date of such filing.
<PAGE>
(b) Each of the consolidated balance sheets of Company included
in or incorporated by reference into the Company Reports (including
the related notes and schedules) fairly presents the consolidated
financial position of the Company and the Company Subsidiaries as of
its date, and each of the consolidated statements of income, retained
earnings and cash flows of Company included in or incorporated by
reference into the Company Reports (including any related notes and
schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of the Company and the
Company Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments
which would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently
applied during the periods involved, except as may be noted therein.
The Company has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of the
Company or in the notes thereto, prepared in accordance with generally
accepted accounting principles consistently applied, except for (i)
liabilities or obligations that were so reserved on, or reflected in
(including the notes to), the consolidated balance sheet of the
Company as of September 30, 1999; (ii) liabilities or obligations
arising in the ordinary course of business since September 30, 1999;
and (iii) liabilities or obligations which would not, individually or
in the aggregate, have a Company Material Adverse Effect.
2.13. Litigation. Except as set forth in the Company Disclosure Letter
there are no claims, actions, suits, investigations, inquiries or
proceedings pending against the Company or, to the knowledge of the
Company, threatened against the Company, or any officer, director, employee
or agent thereof in his or her capacity as such, at law or in equity, or
before or by any court, tribunal, arbitrator, mediator or any federal or
state commission, board, bureau, agency or instrumentality, that,
individually or in the aggregate, are reasonably likely to have a Company
Material Adverse Effect.
2.14. Absence of Certain Changes. Except as specifically contemplated
by this Agreement or set forth in the Company Disclosure Letter, since
September 30, 1999, there has not been (i) any event, occurrence, fact,
condition, change, development or effect ("Event") that would reasonably be
expected to have a Company Material Adverse Effect; (ii) any declaration,
payment or setting aside for payment of any dividend (except to Company
wholly owned by Company) or other distribution or any redemption, purchase
or other acquisition of any shares of capital stock or securities of
Company or any Company Subsidiary; (iii) any return of any capital or other
distribution of assets to stockholders of Company or any Company Subsidiary
(except to Company wholly owned by Company); (iv) any acquisition (by
merger, consolidation, acquisition of stock or assets or otherwise) of any
person or business; (v) any other action or agreement or undertaking by
Company or any Company Subsidiary that, if taken or done on or after the
date hereof would reasonably be expected to have a Company Material Adverse
Effect; or (vi) any material change in its accounting principles, practices
or methods. Without limiting foregoing, since September 30, 1999, there has
been no Company Material Adverse Effect affecting the Company's financial
condition as of the date of this Agreement or results of operations through
the date of this Agreement which would be reflected in its audited
financial statements to be prepared for and through December 31, 1999.
<PAGE>
2.15. Taxes.
(a) The Company has filed all material tax returns and reports
required to be filed by it, or requests for extensions to file such
returns or reports have been timely filed and granted and have not
expired, and all tax returns and reports are complete and accurate in
all respects, except to the extent that such failures to file, have
extensions granted that remain in effect or be complete and accurate
in all respects, as applicable, individually or in the aggregate,
would not have a Company Material Adverse Effect. The Company has paid
all taxes shown as due on such tax returns and reports. The most
recent financial statements contained in the Company Reports reflect
an adequate reserve for all taxes payable by the Company for all
taxable periods and portions thereof accrued through the date of such
financial statements, and no deficiencies for any taxes have been
proposed, asserted or assessed against the Company that are not
adequately reserved for, except for inadequately reserved taxes and
inadequately reserved deficiencies that would not, individually or in
the aggregate, have a Company Material Adverse Effect. No requests for
waivers of the time to assess any taxes against the Company have been
granted or are pending, except for requests with respect to such taxes
that have been adequately reserved for in the most recent financial
statements contained in the Company Reports, or, to the extent not
adequately reserved, the assessment of which would not, individually
or in the aggregate, have a Company Material Adverse Effect.
(b) As used in this Section 2.15, "taxes" shall include all
Federal, state, local and foreign income, franchise, property, sales,
use, excise and other taxes, including obligations for withholding
taxes from payments due or made to any other person and any interest,
penalties or additions to tax.
2.16. Employee Benefit Plans. Except as would not, individually or in
the aggregate, have a Company Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of the current or
former employees or directors of the Company that are sponsored, maintained
or contributed to by the Company, or with respect to which the Company has
any liability, including without limitation any such plan that is an
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), are in compliance with
all applicable requirements of law, including ERISA and the Code, and (ii)
the Company has no liabilities or obligations with respect to any such
employee benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of the Company are any such liabilities or
obligations expected to be incurred. The execution of, and performance of
the transactions contemplated in, this Agreement or the other Agreements
will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit plan, policy,
arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay, bonus, golden parachute or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any employee. The only severance agreements or severance
policies applicable to the Company are the agreements and policies
specifically referred to in the Company Disclosure Letter.
2.17. Labor Matters. The Company has no material obligations,
contingent or otherwise, under any employment, severance or consulting
agreement, any collective bargaining agreement or any other contract with a
labor union or other labor or employee group. To the knowledge of Company,
as of the date of this Agreement, there are no negotiations, demands or
<PAGE>
proposals that are presently pending or overtly threatened by or on behalf
of any labor union with respect to the unionizing of employees of Company.
There is no labor strike, labor dispute, work slowdown, stoppage or lockout
actually pending or, to the knowledge of the Company, threatened against or
affecting the Company, except as would not, individually or in the
aggregate, have a Company Material Adverse Effect. There is no unfair labor
practice or labor arbitration proceeding pending or, to the knowledge of
the Company, threatened against the Company relating to its business,
except for any such proceeding which would not have a Company Material
Adverse Effect.
2.18. Contracts. Except as set forth in the Company Reports or the
Company Disclosure Letter, the Company is not a party or subject to, and
its property and assets are not bound or affected by, any of the following
(each, a "Company Material Contract"):
(a) any agreement or understanding with an affiliate of the
Company;
(b) any contract relating to the acquisition, transfer, use,
development, sharing or license of any technology or any Proprietary
Asset (as hereafter defined);
(c) any single note, bond, mortgage, indenture, contract, lease,
license, agreement, understanding, instrument, bid or proposal
pursuant to which the financial obligation of the Company thereunder
or applicable to the assets or properties of the Company subject
thereto could exceed $10,000 after the Closing Date;
(d) any single contract, bid or offer to which the Company is a
party or by which the Company is bound to provide services to third
parties which provides for recurring monthly revenues to the Company
in excess of $10,000;
(e) any contract creating or involving any agency relationship,
distribution arrangement or franchise relationship;
(f) any contract which includes any exclusivity restrictions
applicable to the Company or imposes any restriction on the Company's
right or ability (A) to compete with any person, (B) to acquire any
product or other asset or any services from any other person, to sell
any product or other asset to or perform any services for any other
person or to transact business or deal in any other manner with any
other person, or (C) develop or distribute any technology;
(g) any contract relating to the acquisition, issuance or
transfer of any securities, except as contemplated hereunder;
(h) any contract involving or incorporating any guaranty, any
pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(i) any contract creating or relating to any partnership or joint
venture or any sharing of revenues, profits, losses, costs or
liabilities;
<PAGE>
(j) any contract constituting or relating to a Government
Contract (as hereafter defined) or Government Bid (as hereafter
defined);
(k) any contract that was entered into outside the ordinary
course of business or was inconsistent with the Company's past
practices;
(l) any other Company Contract that has a term of more than 120
days and that may not be terminated by the Company (without penalty)
within 120 days after the delivery of a termination notice by the
Company; or
(m) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation
that is material to the ownership or operation of any of the Company.
The Company has made available to the Investors true and accurate copies of the
Company Material Contracts. Except as set forth in the Company Disclosure Letter
all such Company Material Contracts, are valid and binding and are or will be in
full force and effect and enforceable in accordance with their respective terms.
Except as set forth in the Company Disclosure Letter no consent of any person is
needed in order that each such Company Material Contract shall continue in full
force and effect in accordance with its terms without penalty, acceleration or
rights of early termination by reason of the consummation of the transactions
contemplated by this Agreement, except for consents the absence of which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. The Company is not in violation or breach of or
default under any such Company Material Contract, nor to the Company's knowledge
is any other party to any such Company Material Contract in violation or breach
of or default under any such Company Material Contract, in each case where such
violation or breach would give rise to a right of termination or modification.
For purposes of this Agreement "Government Bid" shall mean any quotation, bid or
proposal submitted to any Governmental Body or any proposed prime contractor or
higher-tier subcontractor of any Governmental Body. For purposes of this
Agreement "Government Contract" shall mean any prime contract, subcontract,
letter contract, purchase order or delivery order executed or submitted to or on
behalf of any Governmental Body or any prime contractor or higher-tier
subcontractor, or under which any Governmental Body or any such prime contractor
or subcontractor otherwise has or may acquire any right or interest.
2.19. Environmental Matters. As of the date of this Agreement, (i) the
Company is in compliance with all applicable Environmental Laws (as
hereinafter defined), (ii) there is no civil, criminal or administrative
judgment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the
knowledge of the Company, threatened against the Company or any of its
respective properties pursuant to Environmental Laws, and (iii) there are
no past or present Events which, reasonably may be expected to prevent
compliance with, or which have given rise to or will give rise to liability
on the part of the Company under, Environmental Laws, except, in each case,
for any deviations from the foregoing which, individually or in the
aggregate, do not and would not reasonably be expected to have a Company
Material Adverse Effect. The Company has provided or made available to the
Investors prior to the date of this Agreement true, accurate and complete
copies of all environmental
<PAGE>
reports in the possession of the Company relating to any of their
respective past or present properties. As used herein, the term
"Environmental Laws" shall mean laws relating to pollution, waste control,
the generation, presence or disposal of asbestos, hazardous or toxic wastes
or substances, the protection of the environment, environmental activity or
public health and safety.
2.20. Proprietary Assets. (a) For purposes of this Agreement
"Proprietary Assets" shall mean any: (i) patent, patent application,
trademark (whether registered or unregistered), trademark application,
trade name, fictitious business name, service mark (whether registered or
unregistered), service mark application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application, trade
secret, know-how, customer list, franchise, system, computer software,
computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (ii) right to use or exploit any of
the foregoing.
(b) The Company Disclosure Letter sets forth, with respect to
each Proprietary Asset of the Company registered with any Governmental
Body or for which an application has been filed with any Governmental
Body, (i) a brief description of such Proprietary Asset and (ii) the
names of the jurisdictions covered by the applicable registration or
application. The Company Disclosure Letter identifies and provides a
brief description of all other Proprietary Assets owned by the
Company, and identifies and provides a brief description of each
Proprietary Asset licensed to the Company by any person (except for
any Proprietary Asset that is licensed to the Company under any third
party software license generally available to the public at a cost of
less than $10,000), and identifies the license agreement under which
such Proprietary Asset is being licensed to the Company. Except as set
forth in the Company Disclosure Letter, the Company: has good, valid
and marketable title to all of the Proprietary Assets identified in
the Company Disclosure Letter (including without limitation all
Proprietary Assets used in the business of the Company and held in the
name of Eugene Gordon), free and clear of all liens and other
encumbrances; has a valid right to use all Proprietary Assets
identified in the Company Disclosure Letter; and is not obligated to
make any payment to any person for the use of any Proprietary Asset.
Except as set forth in the Company Disclosure Letter, the Company has
not developed jointly with any other person any Proprietary Asset with
respect to which such other person has any rights.
(c) The Company has taken all measures and precautions necessary
to protect and maintain the confidentiality and secrecy of all
Proprietary Assets of the Company (except Proprietary Assets whose
value would be unimpaired by public disclosure) and otherwise to
maintain and protect the value of all Proprietary Assets of the
Company. Except as set forth in the Company Disclosure Letter, the
Company has not (other than pursuant to license agreements identified
in the Company Disclosure Letter) disclosed or delivered to any
person, or permitted the disclosure or delivery to any person of, (i)
the source code, or any portion or aspect of the source code, of any
Proprietary Asset, or (ii) the object code, or any portion or aspect
of the object code, of any Proprietary Asset of the Company.
(d) Except as set forth in the Company Disclosure Letter, (i) to
the best of the knowledge of the Company, none of the Proprietary
Assets of the Company infringes or conflicts with any Proprietary
Asset owned or used by any other Person, (ii) the Company is not
infringing, misappropriating or making any unlawful use of, and the
Company has not at any time
<PAGE>
infringed, misappropriated or made any unlawful use of, or received
any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation
or unlawful use of, any Proprietary Asset owned or used by any other
Person, and (iii) to the best of the knowledge of the Company, no
other Person is infringing, misappropriating or making any unlawful
use of, and no Proprietary Asset owned or used by any other person
infringes or conflicts with, any Proprietary Asset of the Company.
(e) Except as set forth in the Company Disclosure Letter, there
has not been any claim by any customer or other person alleging that
any Proprietary Asset of the Company (including each version thereof
that has ever been licensed or otherwise made available by the Company
to any person) does not conform in all material respects with any
specification, documentation, performance standard, representation or
statement made or provided by or on behalf of the Company, and, to the
best of the knowledge of the Company, there is no basis for any such
claim.
(f) The Proprietary Assets of the Company constitute all the
Proprietary Assets necessary to enable the Company to conduct its
businesses in the manner in which such businesses have been and are
being conducted or are expected to be conducted pursuant to the
Business Plan included in the Company Disclosure Letter. Except as set
forth in the Company Disclosure Letter (i) the Company has not
licensed any of its Proprietary Assets to any person on an exclusive,
semi-exclusive or royalty-free basis, and (ii) the Company has not
entered into any covenant not to compete or contract limiting their
ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any person.
2.21. No Adverse Actions. Except as set forth in the Company
Disclosure Letter, there is no existing, pending or, to the knowledge of
the Company, threatened termination, cancellation, limitation, modification
or change in the business relationship of Company, with any supplier,
customer or other person except such as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse
Effect.
2.22. Insurance. The Company maintains with sound and reputable
insurance companies all insurance customarily maintained by comparable
companies.
2.23. Disclosure. No representation or warranty of the Company herein
and no information contained or referenced in the Company Reports or
Company Disclosure Letter contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
<PAGE>
3. Representations and Warranties of the Investors. Each Investor
represents and warrants to the Company as follows:
3.1. Authorization. When executed and delivered by such Investor, this
Agreement will constitute the valid and binding obligation of such
Investor.
4. Securities Laws.
4.1. Securities Laws Representations and Covenants of Investors.
(a) This Agreement is made with each Investor in reliance upon such
Investor's representation to the Company, which by such Investor's
execution of this Agreement such Investor hereby confirms, that the
Purchased Securities to be received by such Investor will be acquired for
investment for such Investor's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof such that
such Investors would constitute an "underwriter" under the Securities Act,
and that such Investor has no present intention of selling, granting any
participation in or otherwise distributing the Purchased Securities. By
executing this Agreement, each Investor further represents that such
Investor does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or
to any third person with respect to, any of the Purchased Securities.
(b) Each Investor understands and acknowledges that the offering of
the Purchased Securities pursuant to this Agreement will not be registered
under the Securities Act or qualified under any Blue Sky Laws on the
grounds that the offering and sale of the Purchased Securities are exempt
from registration and qualification, respectively, under the Securities Act
and the Blue Sky Laws, and that the Company's reliance upon such exemption
is predicated upon such Investor's representations set forth in this
Agreement.
(c) Each Investor covenants that, unless the Purchased Shares, the
Purchased Warrants, the Underlying Shares or any other shares of capital
stock of the Company received in respect of the foregoing have been
registered pursuant to the Registration Rights Agreement being entered into
among the Company and the Investors, such Investor will not dispose of such
securities unless and until such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with an
opinion of counsel reasonably satisfactory in form and substance to the
Company to the effect that (x) such disposition will not require
registration under the Securities Act and (y) appropriate action necessary
for compliance with the Securities Act and any applicable state, local or
foreign law has been taken; provided, however, that an Investor may dispose
of such securities without providing the opinion referred to above if the
Company has been provided with adequate assurance that such disposition is
made in compliance with Rule 144 under the Securities Act (or any similar
or analogous rule) and any applicable state, local or foreign law.
(d) In connection with the investment representations made herein,
each Investor represents that (i) such Investor is able to fend for itself
in the Contemplated Transactions; (ii) such Investor has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of such Investor's prospective investment
<PAGE>
in the Purchased Securities; (iii) such Investor has the ability to bear
the economic risks of such Investor's prospective investment and can afford
the complete loss of such investment; (iv) such Investor has been furnished
with and has had access to such information as is in the Company Disclosure
Letter together with the opportunity to obtain such additional information
as it requested to verify the accuracy of the information supplied; and (v)
such Investor has had access to officers of the Company and an opportunity
to ask questions of and receive answers from such officers and has had all
questions that have been asked by such Investor satisfactorily answered by
the Company.
(e) Each Investor further represents by execution of this Agreement
that such Investor qualifies as an "accredited investor" as such term is
defined under Rule 501 promulgated under the Securities Act. Any Investor
that is a corporation, a partnership, a trust or other business entity
further represents by execution of this Agreement that it has not been
organized for the purpose of purchasing the Purchased Securities.
(f) By acceptance hereof, each Investor agrees that the Purchased
Shares, the Purchased Warrants, the Underlying Shares and any shares of
capital stock of the Company received in respect of the foregoing held by
it may not be sold by such Investor without registration under the
Securities Act or an exemption therefrom, and therefore such Investor may
be required to hold such securities for an indeterminate period.
4.2. Legends. All certificates for the Purchased Shares, Purchased
Warrants and the shares of Common Stock issued upon conversion or exercise
thereof, and each certificate representing any shares of capital stock of
the Company received in respect of the foregoing, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon or
otherwise and each certificate for any such securities issued to subsequent
transferees of any such certificate (unless otherwise permitted herein)
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE [SECURITIES
REPRESENTED BY THIS WARRANT] HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SHARES [WARRANTS] MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT."
In addition, such certificates shall bear any legend that, in the opinion of the
Company's counsel, is required pursuant to any state, local or foreign law
governing the Purchased Shares, the Purchased Warrants or the Underlying Shares.
5. Additional Covenants of the Company.
5.1. Reports, Information, Shares.
<PAGE>
(a) The Company shall cooperate with each Investor in supplying
such information as may be reasonably requested by such Investor to
complete and file any information reporting forms presently or
hereafter required by the SEC as a condition to the availability of an
exemption, presently existing or hereafter adopted, from the
Securities Act for the sale of any of the Purchased Shares, the
Purchased Warrants, the Underlying Shares and shares of capital stock
of the Company received in respect of the foregoing.
(b) The Company shall deliver to each Investor, contemporaneously
with delivery to other holders of Common Stock, a copy of each report
of the Company delivered to holders of Common Stock.
(c) The Company shall keep reserved for issuance a sufficient
number of authorized but unissued shares of Common Stock so that the
Purchased Warrants may be exercised to purchase, and the Purchased
Shares may be converted into, Common Stock at any time.
5.2. Expenses; Indemnification.
(a) The Company agrees to pay on the Closing Date and save the
Investors harmless against liability for the payment of any stamp or
similar taxes (including interest and penalties, if any) that may be
determined to be payable in respect of the execution and delivery of
this Agreement, the issue and sale of any Purchased Securities, the
expense of preparing and issuing the Purchased Securities, the cost of
delivering the Purchased Securities purchased by each Investor to such
Investor's home office, insured to such Investor's satisfaction, and
the costs and expenses incurred in the preparation of all certificates
and letters on behalf of the Company and of the Company's performance
and compliance with all agreements and conditions contained herein on
its part to be performed or complied with. Each Investor shall be
responsible for its out-of-pocket expenses arising in connection with
the Contemplated Transactions, including, without limitation, fees and
disbursements of counsel to the Investors and due diligence expenses
of the Investors.
(b) The Company hereby agrees and acknowledges that the Investors
have been induced to enter into this Agreement and to purchase the
Purchased Securities hereunder, in part, based upon the
representations, warranties and covenants of the Company contained
herein. The Company hereby agrees to pay, indemnify and hold harmless
the Investors and any director, officer or employee of any Investor
against all claims, losses and damages resulting from any and all
legal or administrative proceedings, including without limitation,
reasonable attorneys' fees and expenses incurred in connection
therewith (collectively, "Loss"), resulting from a breach by the
Company of any representation or warranty of the Company contained
herein or the failure of the Company to perform any covenant made
herein.
(c) As soon as reasonably practicable after receipt by an
Investor of notice of any Loss in respect of which the Company may be
liable under this Section 5.2, the Investor shall give notice thereof
to the Company. Each Investor may, at its option, claim indemnity
under this Section 5.2 as soon as a claim has been threatened by a
third party, regardless of whether an actual Loss has been suffered,
so long as counsel for such Investor shall in good faith determine
that such claim is not frivolous and that such Investor may be liable
or otherwise incur a Loss as a result thereof and shall give notice of
such determination to the Company. Each Investor
<PAGE>
shall permit the Company, at the Company's option and expense, to
assume the defense of any such claim by counsel mutually and
reasonably satisfactory to the Company and the Investors who are
subject to such claim, and to settle or otherwise dispose of the same;
provided, however, that each Investor may at all times participate in
such defense at such Investor's expense; and provided, further, that
the Company shall not, in defense of any such claim, except with the
prior written consent of each Investor subject to such claim, (i)
consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or plaintiff in
question to each Investor and its subsidiaries of a release of all
liabilities in respect of such claims, or (ii) consent to any
settlement of such claim. If the Company does not promptly assume the
defense of such claim irrespective of whether such inability is due to
the inability of the afore-described Investors and the Company to
mutually agree as to the choice of counsel, or if any such counsel is
unable to represent an investor due to a conflict or potential
conflict of interest, then an Investor may assume such defense and be
entitled to indemnification and prompt reimbursement from the Company
for its costs and expenses incurred in connection therewith, including
without limitation, reasonable attorneys' fees and expenses. Such fees
and expenses shall be reimbursed to the Investors as soon as
practicable after submission of invoices to the Company.
5.3. Information Statement. As soon as is practicable following the
Closing, the Company shall prepare and file with the SEC an information
statement regarding the recent increase in the authorized number of shares
of Common Stock of the Company. Thereafter, the Company shall furnish such
information statement to the stockholders of the Company in accordance with
the appropriate SEC rules and regulations and shall take all such other
actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable shares of Common
Stock upon the conversion and exercise in full of all Purchased Securities
from time to time outstanding.
6. Miscellaneous.
6.1. Entire Agreement; Successors and Assigns. This Agreement, the
Purchased Securities and the Registration Rights Agreement constitute the
entire contract between the parties relative to the subject matter hereof
and no party shall be liable or bound to the other in any manner by any
warranties, representations or covenants except as specifically set forth
herein. Any previous agreement among the parties with respect to the sale
of the Purchased Securities is superseded by this Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective executors, administrators, heirs, successors and
assigns of the parties. Except as expressly provided herein, nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.2. Survival of Representations and Warranties. Notwithstanding any
right of the Investors fully to investigate the affairs of the Company and
notwithstanding any knowledge of facts determined or determinable by any
Investor pursuant to such right of investigation or right of investigation,
each Investor has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company contained in this
Agreement or in any documents delivered pursuant to this Agreement. All
such representations and warranties of the Company shall survive the
execution and delivery of this Agreement and each Closing
<PAGE>
hereunder and shall continue in full force and effect for six months after
any applicable statute of limitations (taking into account any waiver or
tolling thereof) with respect to claims which may arise thereunder or
relate thereto shall have run and the provisions of this Section 6.2 shall
constitute a waiver by the Company of any such applicable statute of
limitations.
6.3. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of law. Each party hereby irrevocably
consents and submits to the jurisdiction of any New York State or United
States Federal Court sitting in the State of New York, County of New York,
over any action or proceeding arising out of or relating to this Agreement
and irrevocably consents to the service of any and all process in any such
action or proceeding by registered mail addressed to such party at its
address specified in Exhibit 9. Each party further waives any objection to
venue in New York and any objection to an action or proceeding in such
state and county on the basis of forum non-conveniens. Each party also
waives any right to trial by jury.
6.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5. Headings. The headings of the sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of
this Agreement.
6.6. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal
delivery and if a fax number has been provided, upon delivery (with
answerback confirmed), addressed to a party at its address and the fax
number, if any, shown below or at such other address and fax number as such
party may designate by three days advance notice to the other party.
Any notice to the Investors shall be sent to the addresses set forth on Exhibit
9, with a copy to:
Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118,
Fax Number: (212) 594-7167
Attention: James Kardon, Esq.
Any notice to the Company shall be sent to:
Medjet Inc.
1090 King George Post Road
Suite 301
Edison, New Jersey 08837
Fax Number: (732)738-3984
Attention: Dr. Eugene Gordon, Chairman and CEO
with a copy to:
Troy & Gould Professional Corporation
1801 Century Park East, 16th Floor
Los Angeles, CA 90067
Fax Number: (310) 553-4441
Attention: Dale E. Short, Esq.
<PAGE>
6.7. Rights of Transferees. Any and all rights and obligations of
Investors herein incident to the ownership of Purchased Securities shall
pass successively to all subsequent transferees of such Purchased
Securities until extinguished pursuant to the terms hereof.
6.8. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such
provision or any other provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Purchased Securities subscribed for INVESTORS:
hereunder:
ADAM SMITH INVESTMENT PARTNERS, L.P.
By: ADAM SMITH CAPITAL
MANAGEMENT, L.L.C., General Partner
10,400 Purchased Shares and
1,040,000 Purchased Warrants By: /s/ Richard Grossman
Name: Richard Grossman
Title: Manager
ADAM SMITH INVESTMENTS, LTD.
By: F.M.C. LIMITED
1,600 Purchased Shares and By: /s/ Anna Carrington
160,000 Purchased Warrants Name: Anna Carrington
Title: Director
RICHARD AND ANA GROSSMAN JTWROS
800 Purchased Shares and By: /s/ Richard Grossman
80,000 Purchased Warrants Name: Richard Grossman
760 Purchased Shares and /s/ Orin Hirschman
76,000 Purchased Warrants Orin Hirschman
360 Purchased Shares and /s/ Paul Packer
36,000 Purchased Warrants Paul Packer
<PAGE>
ADAM-JACK M. DODICK, MD GENERAL PARTNERSHIP
By: ADAM SMITH CAPITAL
MANAGEMENT, L.L.C., General Partner
2,000 Purchased Shares and By: /s/ Richard Grossman
200,000 Purchased Warrants Name: Richard Grossman
Title: Manager
80 Purchased Shares and /s/ Hershel P. Berkowitz
8,000 Purchased Warrants Hershel P. Berkowitz
ACCEPTED AND AGREED BY:
MEDJET INC.
By: /s/ Eugene Gordon
Name: Eugene Gordon
Title: Chairman of the Board and
Chief Executive Officer
Date: December 3, 1999
<PAGE>
EXHIBITS TO THE SUBSCRIPTION AGREEMENT
Exhibit 1: Certificate of Designations of Preferences and Rights of
Series B Convertible Preferred Stock
Exhibit 2: Form of Warrants
Exhibit 3: Registration Rights Agreement
Exhibit 4: Investment Banking Agreement
Exhibit 5: Legal Opinion
Exhibit 6: Capitalization Post-Closing
Exhibit 7: Disclosure Letter
Exhibit 8: Use of Proceeds
Exhibit 9: Name, Address and Fax Number of Investors
<PAGE>
EXHIBIT C
SETTLEMENT AGREEMENT
THIS AGREEMENT made this 28 day of January, 2000, by and between Medjet
Inc. ("Medjet"), Eugene I. Gordon ("Gordon"), Adam Smith & Company, Inc. ("Adam
Smith") and the investors whose names are set forth on the signature page(s)
hereof (individually, an "Investor" and collectively, the "Investors").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Medjet and the Investors entered into a Subscription Agreement
dated as of December 3, 1999 (the "Subscription Agreement") pursuant to which
the Investors purchased an aggregate of 16,000 shares of Medjet's Series B
Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred
Stock"), and 1,600,000 five-year warrants, each exercisable to purchase one
share of the Company's Common Stock, par value $.001 per share (the "Purchased
Warrants", and collectively with the Series B Preferred Stock, the "Purchased
Securities"), for an aggregate purchase price of $2,000,000; and
WHEREAS, Gordon, the principal shareholder of Medjet, has executed and
delivered to the Investors a letter agreement dated December 3, 1999 (the
"Letter Agreement") related to the NJIT Litigation (as defined in the Letter
Agreement) and, concurrently therewith, the Investors and Gordon entered into
Joint Escrow Instructions dated December 3, 1999 (the "Joint Escrow
Instructions") with Hahn & Hessen LLP, as escrow holder ("Escrow Holder"),
pursuant to which Gordon deposited 500,000 shares of Common Stock ( the "Escrow
Shares") into escrow;
WHEREAS, Medjet and Adam Smith entered into an Investment Banking Agreement
dated as of December 3, 1999 (the "Investment Banking Agreement") pursuant to
which Medjet issued to Adam Smith as compensation 500,000 warrants (the "
Investment Banking Warrants");
WHEREAS, Medjet and Alcon Universal Ltd. ("Alcon") were parties to an
Exclusive License Agreement, dated July 22, 1998, as amended (the "Alcon
Agreement"); and
WHEREAS, Alcon has terminated the Alcon Agreement;
WHEREAS, Medjet and the Investors have decided to settle any actual or
potential claims that the Investors may have against Medjet in connection with
the acquisition by the Investors of the Purchased Securities that relate to or
arise out of the termination of the Alcon Agreement (the "Alcon Claims"); and
WHEREAS, Medjet and the Investors wish to rescind, on a pro rata basis, the
purchase of 5,600 shares of Series B Preferred Stock and 560,000 Purchased
Warrants; and
<PAGE>
WHEREAS, Medjet and Adam Smith wish to terminate the Investment Banking
Agreement and have agreed to reduce to 325,000 the number of Investment Banking
Warrants, which remaining warrants represent consideration for services rendered
to the date hereof and for the agreement hereunder to early termination of the
Investment Banking Agreement; and
WHEREAS, Gordon and the Investors wish to terminate the Letter Agreement
and the Joint Escrow Instructions; and
WHEREAS, Medjet, Gordon, Adam Smith and the Investors wish to enter into,
and duly execute, the settlement agreement and mutual releases provided for
herein;
NOW, THEREFORE, for $1.00 and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Medjet, Gordon, Adam Smith
and the Investors agree as follows:
A. RESCISSION; TERMINATION:
1. (a) Medjet and the Investors agree to rescind, on a pro rata basis (as
set forth opposite each Investor's name on the signature pages hereof), the
purchase of 5,600 shares of Series B Preferred Stock and 560,000 Purchased
Warrants (the "Rescission"), effective on January 24, 2000 (the "Rescission
Date").
(b) On the Rescission Date, (i) each Investor shall deliver to Medjet the
certificate or certificates for the Series B Preferred Stock purchased by such
Investor and the warrants for Purchased Warrants purchased by such Investor,
(ii) Medjet shall issue and deliver to each Investor a certificate or
certificates for such Investor's portion of the Series B Preferred Stock that is
not subject to rescission hereunder and warrants for such Investor's portion of
the Purchased Warrants that is not subject to rescission hereunder, and (iii)
Medjet shall deliver to each Investor or its designee by wire transfer to an
account designated by such Investor, an amount equal to the purchase price of
the rescinded portion of the Purchased Securities purchased by such Investor, as
set forth opposite such Investor's name on the signature pages hereof.
2. (a) Medjet and Adam Smith hereby terminate the Investment Banking
Agreement, and Gordon and the Investors hereby terminate the Letter Agreement
and the Joint Escrow Instructions (collectively, the "Termination"), effective
on the Rescission Date.
(b) On the Rescission Date, (i) Adam Smith shall deliver to Medjet the
warrants for 500,000 Investment Banking Warrants and (ii) Medjet shall issue and
deliver to Adam Smith warrants for 325,000 Investment Banking Warrants
3. (a) On the Rescission Date, the Escrow Holder shall deliver to Gordon
the Escrow Shares. The Investors and Gordon hereby expressly authorize and
direct the Escrow Holder to deliver the Escrow Shares to Gordon concurrently
with the consummation of the Rescission and Termination. Effective upon the
delivery of the Escrow Shares, the Escrow Holder is released from any and all
liability arising from its execution or performance of the Escrow Instruction
Letter.
<PAGE>
B. MUTUAL SPECIAL RELEASES
1. Except with respect to the terms and conditions contained in this
Agreement, each Investor, as "Investor Releasor", hereby fully and forever
releases, remises, acquits and discharges Medjet, and all of Medjet's directors,
officers, shareholders, employees, servants, parents, subsidiaries, affiliates,
divisions, attorneys, insurers, assigns, successors, agents and representatives,
past and present, and any and all persons acting by, through, under or in
concert with them, as "Medjet Releasees", of and from any and all claims,
demands, actions, causes of action, debts, liabilities, rights, contracts,
obligations, duties, damages, costs, expenses or losses, of every kind and
nature whatsoever, whether at this time known or suspected, or unknown or
unsuspected, in law, equity or otherwise which such Investor Releasor ever had,
now has, or may now have, against Medjet Releasees arising out of, under or
related to the Alcon Claims.
2. Except with respect to the terms and conditions contained in this
Agreement, Medjet, as "Medjet Releasor", hereby fully and forever releases,
remises, acquits and discharges each Investor, and all of such Investor's
respective assigns, successors, heirs, executors, administrators, directors,
officers, shareholders, partners, employees, servants, parents, subsidiaries,
affiliates, divisions, attorneys, insurers, assigns, successors, agents and
representatives, past and present, and any and all persons acting by, through,
under or in concert with them, as "Investor Releasees", of and from any and all
claims, demands, actions, causes of action, debts, liabilities, rights,
contracts, obligations, duties, damages, costs, expenses or losses, of every
kind and nature whatsoever, whether at this time known or suspected, or unknown
or unsuspected, in law, equity or otherwise which Medjet Releasors ever had, now
has, or may now have, against Investor Releasees arising out of, under or
related to the Alcon Claims.
3. Except with respect to the terms and conditions contained in this
Agreement, Adam Smith, as "Adam Smith Releasor", hereby fully and forever
releases, remises, acquits and discharges Medjet, and all of Medjet's directors,
officers, shareholders, employees, servants, parents, subsidiaries, affiliates,
divisions, attorneys, insurers, assigns, successors, agents and representatives,
past and present, and any and all persons acting by, through, under or in
concert with them, as "Medjet Releasees", of and from any and all claims,
demands, actions, causes of action, debts, liabilities, rights, contracts,
obligations, duties, damages, costs, expenses or losses, of every kind and
nature whatsoever, whether at this time known or suspected, or unknown or
unsuspected, in law, equity or otherwise which Adam Smith Releasor ever had, now
has, or may now have, against Medjet Releasees arising out of, under or related
to the Investment Banking Agreement.
4. Except with respect to the terms and conditions contained in this
Agreement, Medjet, as "Medjet Releasor", hereby fully and forever releases,
remises, acquits and discharges Adam Smith, and all of Adam Smith's respective
assigns, successors, heirs, executors, administrators, directors, officers,
shareholders, partners, employees, servants, parents, subsidiaries, affiliates,
divisions, attorneys, insurers, assigns, successors, agents and representatives,
past and present, and any and all persons acting by, through, under or in
concert with them, as "Adam Smith Releasees", of and from any and all claims,
demands, actions, causes of action, debts, liabilities, rights, contracts,
obligations, duties, damages, costs, expenses or losses, of every kind and
nature whatsoever, whether at this time known or suspected, or unknown or
unsuspected, in law, equity o
<PAGE>
otherwise which Medjet Releasors ever had, now has, or may now have, against
Adam Smith Releasees arising out of, under or related to the Investment Banking
Agreement.
5. The Mutual Releases set forth in Sections B.1 and B.2 above are
specifically limited and shall apply only to the Alcon Claims. Except as
expressly set forth herein, this Agreement does not supersede, amend or modify
the Subscription Agreement or the Other Agreements (as defined in the
Subscription Agreement). The Mutual Releases set forth in Sections B.3 and B.4
above (i) are specifically limited and shall apply only to the Investment
Banking Agreement and (ii) shall not relieve either Medjet or Adam Smith of
their respective obligations under the indemnification provisions of the
Investment Banking Agreement, which shall survive the termination of the
Investment Banking Agreement and the execution and delivery of this Agreement.
The Releases set forth in Sections B.1 , B.2, B.3 and B.4 above shall only be
effective upon the Rescission and Termination being completed.
6. Effective upon the delivery of the Escrow Shares to Gordon, Gordon and
each Investor, as "Escrow Releasor", hereby fully and forever releases, remises,
acquits and discharges Escrow Holder, and all of Escrow Holder's partners,
employees, servants, affiliates, attorneys, insurers, assigns, successors,
agents and representatives, past and present, and any and all persons acting by,
through, under or in concert with them, as "Escrow Holder Releasees", of and
from any and all claims, demands, actions, causes of action, debts, liabilities,
rights, contracts, obligations, duties, damages, costs, expenses or losses, of
every kind and nature whatsoever, whether at this time known or suspected, or
unknown or unsuspected, in law, equity or otherwise which such Escrow Releasor
ever had, now has, or may now have, against Escrow Holder Releasees arising out
of, under or related to the Joint Escrow Instructions and the Escrow Shares.
C. MISCELLANEOUS
1. If any action or proceeding is brought to enforce or obtain any relief
regarding any of the terms and conditions of this Agreement, or if any action or
proceeding is brought to which this Agreement establishes a complete defense,
then the party or parties in whose favor a final, unappealed and unappealable
judgment shall be entered shall be entitled to recover from the other party or
parties named in said action or proceeding, all costs, disbursements and
expenses, including attorneys' fees, incurred in the action and any appeals
therefrom.
2. Gordon and Medjet, on the one hand, and Adam Smith and the Investors, on
the other hand, each hereby warrants and represents that such party has not
assigned or transferred, or purported to assign or transfer, to any third party
any claim, demand, or cause of action against the other party to this Agreement.
3. Each of the parties hereto represents and warrants that he, or the
person executing this Agreement on its behalf, as the case may be, is duly
authorized to do so and is empowered to bind such party to the terms of this
Agreement, and that once executed by all parties hereto, this Agreement shall be
valid and enforceable in accordance with its terms.
4. This Agreement may be executed in counterparts, each of which shall be
an original, and which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as
of the date first above written.
MEDJET INC.
By: /s/ Eugene Gordon
Name: Eugene Gordon
Title: Chairman of the Board and
Chief Executive Officer
/s/ Eugene Gordon
Eugene Gordon, as an individual
Number of Purchased Securities INVESTORS:
rescinded hereunder and
dollars returned:
ADAM SMITH INVESTMENT PARTNERS, L.P.
By: ADAM SMITH CAPITAL
MANAGEMENT, L.L.C.,
General Partner
3,640 Purchased Shares and
364,000 Purchased Warrants rescinded By: /s/ Richard Grossman
$455,000 returned Name: Richard Grossman
Title: Manager
ADAM SMITH INVESTMENTS, LTD.
560 Purchased Shares and By: F.M.C LIMITED
56,000 Purchased Warrants rescinded
$70,000 returned By: /s/ Susan V. Demers
Name: Susan V. Demers
Title: Director
RICHARD AND ANA GROSSMAN JTWROS
280 Purchased Shares and By: /s/ Richard Grossman
28,000 Purchased Warrants rescinded Name: Richard Grossman
$35,000 returned
<PAGE>
266 Purchased Shares and
26,600 Purchased Warrants rescinded /s/ Orin Hirschman
$33,250 returned Orin Hirschman
126 Purchased Shares and
12,600 Purchased Warrants rescinded /s/ Paul Packer
$15,750 returned Paul Packer
ADAM-JACK M. DODICK, MD
GENERAL PARTNERSHIP
By: ADAM SMITH CAPITAL
MANAGEMENT, L.L.C., General Partner
700 Purchased Shares and By: /s/ Richard Grossman
70,000 Purchased Warrants rescinded Name: Richard Grossman
$87,500 returned Title: Manager
28 Purchased Shares and
2,800 Purchased Warrants rescinded /s/ Hershel P. Berkowitz
$3,500 returned Hershel P. Berkowitz
ADAM SMITH & COMPANY, INC.
By: /s/ Richard Grossman
Name: Richard Grossman
Title: Vice President
