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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): October 7, 1997
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North American Scientific, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-26670 51-0366422
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File number) Identification No.)
7435 Greenbush Avenue, North Hollywood, CA 91605
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 503-9201
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Former name or former address, if changed since last report
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Item 5. OTHER EVENTS
On October 7, 1997, the Company entered into an Exclusive Manufacturing
and Supply Agreement with RadioMed Corporation, a Delaware corporation, for
the manufacture of products utilizing ion implantation technology. Ion
implantation technology allows for the implantation of radioisotopes into
certain medical devices, for use in the treatment of cancer. Pursuant to the
agreements with RadioMed, the Company will be the exclusive manufacturer for
all of RadioMed's requirements for such products in North America. In
addition, on October 7, 1997 the Company made a loan to RadioMed in the form
of a 10% convertible subordinated note, which matures 10 years after
issuance. The initial term of the Exclusive Manufacturing and Supply
Agreement with RadioMed is for the period of time the Company maintains an
investment of at least 50% of the value of the note, and for one year
thereafter. Copies of the Exclusive Manufacturing and Supply Agreement and
the Note Purchase Agreement are attached hereto as Exhibits 10.1 and 10.2
respectively.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 7, 1997 NORTH AMERICAN SCIENTIFIC, INC.
(Registrant)
By: /s/ L. Michael Cutrer
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Name: L. Michael Cutrer
Title: President, Chief Executive Officer
and Director
(Principal Executive, Financial and
Accounting Officer)
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INDEX
Exhibit
Number Description of Document
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10.1 Exclusive Manufacturing and Supply Agreement dated October 7, 1997
between North American Scientific, Inc. and RadioMed Corporation.
10.2 Note Purchase Agreement dated October 7, 1997 between North
American Scientific, Inc. and RadioMed Corporation.
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EXHIBIT 10.1
EXCLUSIVE MANUFACTURING AND SUPPLY AGREEMENT
THIS EXCLUSIVE MANUFACTURING AND SUPPLY AGREEMENT ("Agreement"), dated as
of October 7, 1997 is entered into by and between NORTH AMERICAN SCIENTIFIC,
INC., a Delaware corporation ("NASI"), and RADIOMED CORPORATION, a Delaware
corporation ("RADIOMED"), with reference to the following facts:
RECITALS:
A. NASI is licensed under Nuclear Regulatory Commission ("NRC")
regulations as a manufacturer of products containing radioactive isotopes and
possesses capabilities for the manufacture, safe handling and distribution of
such products; and
B. RADIOMED possesses certain proprietary information involving the use
of radioactive isotopes in medical products and the use of ion implantation for
introducing radioactive isotopes into such products;
C. NASI has made a $500,000 convertible loan to RADIOMED as of the date
of this Agreement, which funds RADIOMED intends to utilize to create
manufacturing capacity for the products described herein, including the purchase
of ion implantation machines; and
D NASI wishes to become the exclusive North American manufacturer of
products designed and specified by RADIOMED and/or its customers which utilize
ion implantation in their manufacture and RADIOMED wishes to utilize NASI as the
exclusive North American manufacturer of such products.
AGREEMENTS:
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NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS
Unless the context in which used requires a different meaning or
interpretation, the following words and phrases shall have the meanings set
forth below:
1.1 AFFILIATE. A Person or entity that directly or indirectly through one
or more intermediaries Controls, is Controlled by, or is under common Control
with, the designated party, but only for as long as such Control relationship
exists.
1.2 ANCILLARY PRODUCTS. Instruments, supplies and materials manufactured
by or for RADIOMED that are designed or are suitable for use in connection
with the use of the Product in the Field of Use, including (by way of example
and not in limitation), drapes, wipes, catheters, needles, templates and the
like.
1.3 ANTICIPATED REQUIREMENTS. RADIOMED'S projected purchases of the
Product as set forth in the forecasts provided by RADIOMED to NASI pursuant to
Section 4.6 of this Agreement.
1.4 APPLICABLE REGULATORY REQUIREMENTS. Any statute, law, ordinance,
rule, regulation, requirement, order or decree promulgated by (a) any federal,
state or local government or any agency or instrumentality thereof having
jurisdiction over the manufacture, shipment, handling, use, storage or disposal
of medical devices or radioactive materials, and (b) any government, or any
agency or instrumentality of the government, of any foreign country or a
political subdivision of a foreign country into which the Product is shipped or
in which the Product is sold.
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1.5 COMMERCIAL SALES. A sale of a RADIOMED Product to a Customer in the
ordinary course of business (excluding sales of samples or for education and
training purposes) after the Product is Commercially Available.
1.6 COMMERCIALLY AVAILABLE. The existence of production capacity
sufficient to satisfy RADIOMED's anticipated requirements for the Product during
the first Sales Year.
1.7 CONFIDENTIAL INFORMATION. All information of a confidential or
proprietary nature disclosed by RADIOMED to NASI or by NASI to RADIOMED in
connection with or pursuant to this Agreement. As used in this Agreement,
"Confidential Information" shall not include any information or data disclosed
to a party (the "Recipient") that (a) was in the Recipient's lawful possession
prior to the Recipient's receipt of the same pursuant to this Agreement, (b) at
the time of the disclosure is or thereafter becomes, through no act or failure
to act on the part of the Recipient, known within the industry or part of the
public domain, (c) was furnished to the Recipient by a Third Party without
breaching any confidentiality or nondisclosure agreements to which such Third
Party was subject, or (d) was independently developed by the Recipient without
reference to or reliance upon such Confidential Information.
1.8 CONTROL. With respect to any Person or group of Persons, possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise, including (a) in the case of a
corporation, ownership of more than fifty percent (50%) of the shares of stock
entitled to vote for the election of directors and, (b) in the case of any other
business entity, ownership of more than fifty percent (50%) of the beneficial
interest in capital or profits.
1.9 COST. Direct labor, direct material, indirect labor and salaries
reasonably allocated to Ion Implantation Processing, and overhead related to the
cost of facilities, exclusive of wages and salaries, reasonably related to Ion
Implantation Processing, including the cost of maintaining NRC and/or State
licensure and safety regulations as they pertain to RADIOMED's
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products only, in each case in accordance with NASI's accounting policies
consistently applied and generally accepted accounting principles.
1.10 CUSTOMER. Any Person to whom RADIOMED delivers one or more units of
the Product pursuant to a purchase order received by NASI from RADIOMED, whether
such purchase order was submitted directly by the purchaser or on behalf of the
purchaser by RADIOMED or any other Person.
1.11 DEFECTIVE PRODUCT. Product that was not manufactured and produced in
accordance with or that otherwise fails to conform to the Product
Specifications.
1.12 DOCUMENTED COST. The sum of (a) the price paid by RADIOMED to NASI for
units of the Product purchased by RADIOMED pursuant to this Agreement plus (b)
taxes, freight and insurance paid by RADIOMED in order to take possession of
such Product FOB NASI's factory.
1.13 EFFECTIVE DATE. The date of execution of this Agreement.
1.14 FDA. The United States Food and Drug Administration.
1.15 FIELD OF USE. Any application involving the treatment of malignant
tissue, intervascular irradiation, or irradiation of tissue to minimize or
prevent cellular growth or regrowth or otherwise aid in the treatment of
disease.
1.16 FORCE MAJEURE. The occurrence of an act of God or other events beyond
the reasonable ability of the party affected thereby to control, including, but
not limited to, wars or insurrections, strikes, fires, vandalism, floods,
earthquakes, work stoppages, embargoes, labor shortages, lack of materials or
other similar circumstances.
1.17 GEOGRAPHIC MARKET AREA. North America.
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1.18 IMPROVEMENT. Any change in the Product that enhances the performance
of the Product or that makes it easier to manufacture, distribute, store, use or
dispose of.
1.19 INSOLVENT. With respect to any Person: (a) the filing of an
application by a Person for, or such Person's consent to, the appointment of a
trustee, receiver, or custodian of its other assets; (b) the entry of an order
for relief with respect to a Person in proceedings under the United States
Bankruptcy Code, as amended or superseded from time to time; (c) the making by a
Person of a general assignment for the benefit of creditors; (d) the entry of an
order, judgment, or decree by any court of competent jurisdiction appointing a
trustee, receiver, or custodian of the assets of a Person unless the proceedings
and the person appointed are dismissed within ninety (90) days; or (e) the
failure by a Person generally to pay his or her debts as the debts become due
within the meaning of Section 303(h)(1) of the United States Bankruptcy Code, as
determined by the Bankruptcy Court, or the admission in writing of such Person
of its inability to pay its debts as they become due.
1.20 INVOLUNTARY BUSINESS DISRUPTION. An interruption in the marketing and
distribution activities of RADIOMED caused by, resulting from or attributable to
(a) the failure or inability of RADIOMED or its vendors to supply components or
Technology necessary to produce the Product, (b) absence of a requisite permit,
approval or license or other governmental authorization necessary in order to
market and sell the Product for use in the Field of Use in the United States
without violating the laws of the state in which such sale is proposed to be
made, or (c) the occurrence of an event of Force Majeure.
1.21 ION IMPLANTATION PROCESSING. Use of the Technology for the
manufacture of Product.
1.22 NET SELLING PRICE. The actual end-user price for Product provided to a
Customer, less sales taxes, cost of shipping insurance, cost of freight, cost of
packing, and other transportation charges, but only if such taxes, costs and
charges are expressly stated and separately invoiced or may be readily
determined by acceptable accounting practices.
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1.23 NOTE. The 10% Convertible Secured Subordinated Note due 2007 in the
principal amount of $500,000 made in favor of NASI by RADIOMED.
1.24 PERSON. Any individual, partnership, association, joint stock company,
joint venture, corporation, limited liability company, trust, unincorporated
organization or governmental entity, or any agency or political subdivision, or
economic unit thereof.
1.25 PRODUCT. Either radioactive sources, or medical devices provided by
RADIOMED or its Customers, into which a radioactive isotope is incorporated by
ion beam implantation processing. Product shall not include products which are
directly competitive with NASI's existing product line.
1.26 PRODUCT SPECIFICATIONS. The product specifications, quality control
tests and inspection procedures for the Product that are to be set forth in each
order supplied by RADIOMED and provided to NASI prior to manufacturing of each.
1.27 PROPORTIONATE SHARE. The ratios in which RADIOMED and NASI shall share
(a) the costs and expenses of certain actions or proceedings under Section 10 of
this Agreement and (b) any recoveries resulting therefrom, if both parties elect
to participate in any such actions or proceedings. Each party's Proportionate
Share shall be the percentage obtained by multiplying 100% by a fraction, (a)
the numerator of which is the lost profits attributable to lost sales of the
Product by such party and (b) the denominator of which is the aggregate lost
profits of both parties attributable to lost sales of the Product.
1.28 SALES YEAR. The twelve (12)-month period commencing on the Effective
Date, and each subsequent twelve (12)-month period commencing on the one year
anniversary of the Effective Date.
1.29 TECHNOLOGY. Any proprietary invention, development or improvement, and
any trade secret, "know-how," proprietary manufacturing formula, process,
procedure, method or technique, whether or not patentable or registerable, now
or hereafter owned by or licensed to
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RADIOMED to the extent that such technology is reasonably relevant to the
manufacture of the Product.
1.30 THIRD PARTY. Any person other than a legal entity that is a party to
this Agreement. As used in this Agreement, "Third Party" shall include agents
and employees of a party to this Agreement.
1.31 TRANSFER PRICE. The price at which Product is sold by NASI to
RADIOMED hereunder.
2. GRANT OF MANUFACTURING AND SUPPLY RIGHTS
2.1 SCOPE OF MANUFACTURING AND SUPPLY RIGHTS. Subject to Section 4.1
herein and the other provisions of this Agreement, RADIOMED hereby grants to
NASI an exclusive license to use the Technology for the sole purpose of
manufacturing in the Geographic Market Area 100% of RADIOMED's requirement for
Products for use in the Field of Use in the Geographic Market Area. In
addition, RADIOMED hereby grants to NASI an exclusive license to use the
Technology for the sole purpose of manufacturing in the United States such
portion of RADIOMED's requirement for Products for use outside the Geographic
Market Area as RADIOMED may request. The licenses granted in this Section 2.1
shall continue for so long as NASI holds at least 50% of the original value of
the Note (or equivalent in dollar value of the Note in Series A Preferred Stock
or Common Stock of the Company) and for one Sales Year thereafter.
2.1.1 Provided that this Agreement has not previously been terminated
by either party, the term of this Agreement may be extended for an additional
three (3) Sales Years by mutual consent of the parties.
2.1.2 As long as NASI holds manufacturing rights in the Geographic
Market Area under the provisions of 2.1 above, RADIOMED, at its sole option, may
order Products from NASI for delivery outside the Geographic Market Area and
NASI agrees to accept such orders, subject to the other provisions of this
Agreement. Should RADIOMED, in its sole discretion,
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conclude that a manufacturing facility in a territory outside of the North
America is in its best interests, then it shall so inform NASI and NASI shall
have the right to propose to RADIOMED in writing within 60 days after receipt of
notice the terms under which it would agree to manufacture Products for RADIOMED
in that territory. The parties shall negotiate in good faith for a period of 30
days any proposal made by NASI hereunder. Whether or not the parties reach
agreement within such 30 day period, neither party shall nave any further
obligation pursuant to this Section 2.1. Notwithstanding the foregoing, if
RADIOMED, with approval of its Board of Directors, executes a collaboration
agreement of any sort with a foreign company which provides that company the
right to manufacture in a territory outside the Geographic Market Area, then
such right-to-negotiate shall not apply.
2.2 SUBLICENSES. The rights granted hereunder are personal to NASI and may
not be assigned or sublicensed except that NASI may grant a sublicense to any
Affiliate of NASI for as long as (a) NASI continues to own at least eighty
percent (80%) of the voting and beneficial ownership interest of such Affiliate
during the term of such license, and (b) such sublicense is on terms and
conditions consistent with this Agreement, in a written form previously
reasonably agreed to by RADIOMED and NASI, and expressly provides that it shall
terminate simultaneously with the termination of this Agreement.
2.3 IMPROVEMENTS OF PRODUCT. All Improvements or modifications made by
RADIOMED to the Product that are intended for use or that can be adapted for use
in the Field of Use are included in this Agreement and are subject to the
manufacturing rights granted to NASI hereunder. Ancillary Products developed or
licensed by RADIOMED shall not be covered by this Agreement.
2.4 RIGHTS TO PRODUCT IMPROVEMENTS. Subject to the provisions of Section
5.1.9 below, any Improvements to the Product developed by NASI during the term
of this Agreement shall be jointly owned by RADIOMED and NASI, but all
Improvements or modifications to Ion Implantation Processing or the Product that
are intended for use or that can be adapted for use in the Field of Use
developed by RADIOMED are included in this Agreement and are subject to the
manufacturing rights granted to NASI hereunder.
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2.5 INFRINGEMENT. Subject to the provisions of Section 5.2.6, NASI shall
not utilize ion implantation in products other than RADIOMED's Products unless
such utilization is not based upon the Technology (i.e., is based upon
commercially available technology or technology developed by an independent
third party).
3. [THIS SECTION HAS BEEN LEFT INTENTIONALLY BLANK.]
4. REQUIREMENTS AND SUPPLY
4.1 REQUIREMENTS. RADIOMED shall procure from NASI, and NASI shall
supply to RADIOMED or to Customers each month, the number of units of the
Product for which RADIOMED submits purchase orders pursuant to Sections 4.6 and
4.10, below, representing 100% of RADIOMED's requirements for Product for use in
the Field of Use in the Geographic Market Area.
4.2 SPECIFICATIONS. All Product supplied by NASI hereunder shall in all
material respects meet the Product Specifications applicable to the Product when
intended for use in the Field of Use. Prior to the manufacturing of any
Product, NASI and RADIOMED shall agree on the Product Specifications for the
Product and shall attach same as part of a written order for Product. The
Product Specifications shall constitute an integral part of the order.
4.3 TRANSFER PRICES. The Transfer Price payable by RADIOMED for the
Product shall be NASI's Cost plus 25%. Additionally, NASI shall receive 10% of
the gross margin (Net Selling Price less the sum of the Transfer Price and the
cost to RADIOMED of any RADIOMED-provided components) for the Product.
4.4 PRE-MANUFACTURING PHASE. RADIOMED shall bear the responsibility
and cost of setting up the manufacturing operation (the "Pre-Manufacturing
Phase"). During the Pre-Manufacturing Phase, NASI shall provide sufficient
"shell" building space to house RADIOMED's activities in an efficient manner, in
accordance with the projections of required space set forth in RADIOMED's
business plan. The "shell" building space shall have the following services
available at its periphery: 208V.3 phase, 4 wire plus ground, 25KVA (per
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implanter) power; water at 75 PSIG Max with a minimum pressure drop of 45 PSI
from inlet to outlet, 60-75 deg. F, closed loop cooled conditioned water; air at
90-100 PSIG, intermittent duty; dry nitrogen at 5 PSIG, intermittent duty;
ventilation at 600 CFM exhaust (per implanter) room temperature controlled to
reasonable working conditions, reasonable humidity control; and radiation
monitoring, filtering and controlled storage sufficient to meet the requirements
of NASI's NRC licensure. The facility services and equipment required within
the shell for operation of RADIOMED's manufacturing equipment shall be
specified and paid for by RADIOMED, subject only to zoning, safety, and other
legal and regulatory requirements of NASI. NASI shall provide, at RADIOMED's
request, reasonable labor and services to assist RADIOMED during the
Pre-Manufacturing Phase, and RADIOMED shall reimburse NASI for all reasonable
costs of such labor and services promptly upon NASI's submission of invoices
therefor. The Pre-Manufacturing Phase shall end when the ion implantation
facility is operational.
4.5 DUTY TO MANUFACTURE. Upon completion of the Pre-Manufacturing
Phase, NASI agrees to take responsibility for the ion implantation facility and
to manufacture Products to mutually agreed upon Product Specifications and in
accordance with forecasts provided by RADIOMED pursuant to Section 4.6 hereof.
NASI agrees to provide access to the ion implantation facility by RADIOMED
personnel for research and development activities, provided that such access
does not interfere with scheduled manufacturing activities.
4.6 SALES FORECASTS. RADIOMED will provide NASI on or before the
fifteenth (15th) day of each month a nonbinding rolling forecast of reasonably
projected Product sales for the each of the three (3) calendar months following
the month in which the forecast is prepared.
4.7 ABATEMENT. If by reason of an Involuntary Business Disruption
during the term of this Agreement, NASI (a) is unable to begin or to continue
manufacturing and supplying the Product or a material portion thereof, or (b)
would incur an unreasonable risk (as determined by an objective standard) of
civil or criminal liability by continuing to do so, then the obligation of NASI
to manufacture and supply such Product shall be suspended for a period of time
equal to such time as the Involuntary Business Disruption continues to exist.
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4.8 EXCLUSIVE REMEDY. The right granted to RADIOMED to terminate this
Agreement under Section 9 hereof, shall be the sole and exclusive remedy for the
failure of NASI to supply RADIOMED'S Anticipated Requirements, and in no event
shall NASI be liable for damages or any other amount by reason of its failure to
do so.
4.9 RIGHT OF NASI TO MANUFACTURE AND SUPPLY TO OTHERS. Subject to such
greater rights NASI shall have pursuant to Sections 5.1.2, 5.1.5 and 9.5.2
hereof, at any time after this Agreement has been terminated pursuant to Section
9 hereof, NASI shall be entitled to manufacture and distribute the Product;
provided that any Product so manufactured or distributed does not infringe on or
otherwise use RADIOMED Confidential Information or the Technology.
4.10 PURCHASE ORDERS. All purchase orders shall be submitted by RADIOMED
to NASI on the form agreed to by RADIOMED and NASI prior to manufacture under
this Agreement (a "Purchase Order"). The lead time for delivery of Products
pursuant to a Purchase Order shall be at least 30 days. Each such purchase
order shall specify by Customer name and address (a) the number of units and
activity level of the Product to be delivered to such Customer, (b) the required
delivery date, and (c) the Net Selling Price. Notwithstanding the provisions of
any such purchase order, the provisions of this Agreement shall govern the
purchase and sale of the Product between NASI and RADIOMED, and any
inconsistency or conflict between the terms set forth in any form of Purchase
Order submitted by RADIOMED with the provisions of this Agreement shall be
resolved in favor of the provisions of this Agreement. All Purchase Orders
submitted in accordance with the provisions of this Section 4.10 shall be deemed
accepted by NASI. However, NASI reserves the right to reject any Purchase Order
relating to Product which, in the exercise of NASI's reasonable discretion and
after consultation with RADIOMED, would be impossible or impracticable to fill
(in light of, for instance, the requested activity level or lead time), or could
expose NASI to an unreasonable risk of criminal or civil liability.
4.11 PACKAGING AND LABELING. The Product will be supplied in containers
meeting the Product Specifications, and will be packaged with all applicable
Product literature and instructions for use in packaging which (a) satisfies all
Applicable Regulatory Requirements governing the handling, shipment and storage
of the Product and (b) is reasonably sufficient to protect against damage during
shipping.
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4.11.1 Subject to any limitations imposed by the foregoing
requirements, the packaging design and trade dress for the Product shall conform
to RADIOMED's specifications so as to assure that such design and trade dress
are consistent with the packaging of RADIOMED's other products.
4.11.2 NASI shall include with the Product such instructions for use
and such Product information data sheets as provided by RADIOMED and shall
include in any Products shipped to Customers in kit form such instructions for
use and Product information data sheets as may be supplied by RADIOMED for such
purposes.
4.11.3 All packaging, shipping labels, instructions for use and
product information data sheets shall bear RADIOMED's trademarks, labels and
markings as RADIOMED may reasonably request. RADIOMED shall provide NASI with
camera-ready art work for all trademarks, labels or markings that RADIOMED
desires to have imprinted on all packaging and product insert data sheets, and
NASI shall not make any changes in such art work or in the specifications for
such packaging materials without the prior written consent of RADIOMED.
4.11.4 NASI shall be entitled to display its name on the Product
packaging and Product information data sheets in a manner that (i) clearly
identifies the Product as having been manufactured by NASI, and that (ii) gives
NASI's name equal prominence with RADIOMED's .
4.12 ORDER FULFILLMENT. Subject to Section 4.10, NASI will fill
all Purchase Orders submitted by RADIOMED (provided that such Purchase Order is
not in excess of 150% of the most recent Anticipated Requirements of RADIOMED
under Section 4.6), will make shipment of the Product directly to the Customer
identified in the Purchase Order within the time prescribed by Section 4.10, and
will afford all Purchase Orders for the Product received from RADIOMED equal
priority with NASI's own supply requirements. NASI will ship all orders for the
Product in the priority in which such orders were received, unless otherwise
reasonably requested by RADIOMED.
4.13 SHIPPING AND INVOICING. All Product shall be drop shipped by
NASI directly to RADIOMED's Customers FOB NASI's manufacturing plant at a date
and time
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appropriate to ensure that the Product will be delivered to the Customer at the
address specified in the purchase order on the delivery date specified in the
purchase order. Carriers and routing utilized to make such shipments shall be
selected by NASI but shall be consistent with any shipping protocols or
procedures previously established by the parties.
4.14 INVOICING. NASI shall invoice RADIOMED, 30-days net, upon
shipment of the Product. RADIOMED shall make payment of any correct invoice to
NASI.
4.15 PAYMENT. Payment of the Transfer Price for all Product
shipped to Customers shall be made by RADIOMED, whether or not RADIOMED
receives payment from the Customer, it being agreed that RADIOMED is the
customer for all Product shipped by NASI pursuant to purchase orders
submitted to NASI by RADIOMED pursuant to this Agreement. RADIOMED shall be
responsible for all billings, receivables and collections attributable to
Product sales made pursuant to purchase orders submitted to NASI by RADIOMED,
and NASI shall not be required to bear any of the risk or cost of collection
with respect to the Net Selling Price of the Product. Amounts owed to
RADIOMED due to rejections of Product or discrepancies on paid invoices will
be, at RADIOMED's option, fully credited against future invoices payable by
RADIOMED, or paid by NASI within 30 days after NASI's receipt of a debit memo
or other written request for payment from RADIOMED.
4.16 RISK OF LOSS. Delivery of the Product by NASI to RADIOMED
pursuant to this Agreement shall be complete and the risk of loss shall pass to
RADIOMED upon receipt by the carrier for shipment.
4.17 WARRANTIES OF NASI. NASI warrants to RADIOMED that:
A. The Product supplied to RADIOMED hereunder shall be
manufactured and produced in plants that have been registered with and are in
compliance with the applicable requirements of the FDA and the NRC.
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B. NASI also warrants that the Products (i) conform to
Product Specifications and (ii) have been manufactured in accordance with:
(1) applicable Good Manufacturing Practices as promulgated by the FDA; and
(2) applicable laws and regulations of the United States and each of the
fifty states in which RADIOMED is marketing and distributing the Products;
and (3) all other Applicable Regulatory Requirements.
4.18 WARRANTIES OF RADIOMED. RADIOMED warrants to NASI that the
use of the Product for its intended purpose in the Field of Use will not violate
any Applicable Regulatory Requirements in the Geographic Market Area or any
foreign markets in which NASI delivers Product.
4.19 WARRANTY DISCLAIMERS. THE LIMITED WARRANTIES SET FORTH IN
SECTIONS 4.17 AND 4.18 ABOVE, AND SECTION 7.1 BELOW, ARE THE ONLY WARRANTIES
BEING MADE BY NASI AND RADIOMED WITH RESPECT TO THE PRODUCT. ALL OTHER
WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS OR IMPLIED, CONTRACTUAL OR
STATUTORY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE ARE SPECIFICALLY EXCLUDED AND DISCLAIMED.
4.19.1 RADIOMED agrees and understands that it shall be solely
responsible for any warranties or representations made by it to its Customers
which are inconsistent with or in addition to any warranties made by NASI, and
RADIOMED shall, at its own expense, defend, indemnify and hold NASI harmless
from and against any claims thereof of any nature whatsoever in the manner and
to the extent provided by Section 8.2, below.
4.20 NONCONFORMING GOODS AND DEFECTIVE PRODUCT. RADIOMED shall
promptly advise NASI of any Product delivered to a Customer that has been or is
being rejected as Defective Product. Any such notice (a) shall be in writing,
(b) shall specify (i) the original date of sale and (ii) the shipment or lots
being rejected, and (c) shall be accompanied by appropriate information
substantiating the claim that such Product was Defective. The costs and expense
of returning Defective Product shall be borne by NASI, but NASI shall not be
responsible for the costs of Product believed to be Defective Product until it
is determined that
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the Product was Defective Product, and no Product shall be deemed to be
Defective Product until NASI has first been afforded the opportunity to inspect
the Product and to confirm that it was Defective Product.
4.21 REPLACEMENT. NASI shall promptly replace at its own cost
and expense any Defective Product that is returned to NASI or, if RADIOMED so
requests, shall credit to RADIOMED on a monthly basis an amount equal to the
Documented Cost of any such returned Product, if such Product:
4.21.1 Is Defective Product that has been properly returned by
RADIOMED or any Customer of RADIOMED.
4.21.2 Has been replaced on a no-charge basis by RADIOMED in
accordance with the established customer complaint and returned goods
policies of NASI for the return and replacement of Defective Product.
4.22 CUSTOMER COMPLAINTS. RADIOMED shall promptly refer to NASI for
review and evaluation any complaints received by it that are subject to the
provisions of Part 820 of Title 21 of the Code of Federal Regulations (Good
Manufacturing Practice for Medical Devices).
4.22.1 With respect both to complaints referred to NASI
by RADIOMED and complaints received directly by NASI from Customers:
A. NASI shall (1) give such notices, (2) conduct such
investigations, (3) maintain such records, and (4) take such other actions as
in each case are required by the FDA and any state regulatory agency having
jurisdiction with respect thereto unless NASI is contesting the matter with
the FDA or other regulatory agency in good faith and with due diligence.
B. NASI shall keep RADIOMED advised on a continuing basis
with respect to (1) the nature of such complaints, (2) the results of any
investigations conducted by it with respect thereto, and (3) the corrective
action, if any, initiated as a result of or in response
<PAGE>
thereto. RADIOMED shall treat all such information received by NASI as
Confidential Information.
4.23 SALES & USE TAXES. As between RADIOMED and NASI, RADIOMED shall
be responsible for the payment of all sales and use taxes becoming payable by
reason of its purchase of the Product from NASI and the subsequent sale of the
Product to its Customers.
5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 COVENANTS OF RADIOMED. RADIOMED covenants, warrants and represents
to NASI that:
5.1.1 SECURITY INTEREST. As security for the performance of its
obligations now or hereafter owing under this Agreement, RADIOMED, for valuable
consideration, receipt of which is acknowledged, hereby grants to NASI a first
priority security interest in RADIOMED's now owned or after acquired physical
assets (including but not limited to all inventory, supplies, raw materials,
work in process, finished goods, equipment, tools, furniture, fixtures, parts
and other goods) which are located on the premises of any manufacturing facility
owned by NASI or which are utilized by NASI in manufacturing Product for
RADIOMED pursuant to the terms of this Agreement (collectively, the
"Collateral"). RADIOMED acknowledges that NASI shall be entitled to a purchase
money security interest in the ion implantation machines and other equipment and
inventory purchased with the funds loaned by NASI to RADIOMED and evidenced by
the Note.
5.1.2 GRANT OF LICENSE TO USE TECHNOLOGY. Provided that NASI may
only exercise the rights and remedies granted hereunder after the occurrence of
an Event of Default (as defined in Section 5.1.4 below), RADIOMED hereby grants
to NASI an irrevocable nonexclusive license (exercisable without payment of
royalty or other compensation to RADIOMED) to use, assign, license or sublicense
any of the Technology (excluding patents), now or hereafter owned, licensed, or
otherwise acquired by RADIOMED. Except with respect to Technology which is not
owned by RADIOMED, no agreements hereafter acquired or agreed to
<PAGE>
or entered into by RADIOMED shall prohibit, restrict or impair the security
interest granted in Section 5.1.1 above.
5.1.3 FINANCING STATEMENTS. RADIOMED hereby agrees to execute,
deliver and pay the cost of filing any financing statement, or other notices or
instruments appropriate under applicable law, in respect of any security
interest created pursuant to this Agreement which may at any time be required to
give NASI a perfected first priority security interest in the Collateral or
which, in the opinion of NASI, may at any time be desirable. In the event that
any re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such lien or security interest, RADIOMED shall, at its cost and
expense, cause the same to be re-recorded and/or refiled at the time and in the
manner requested be NASI. RADIOMED hereby irrevocably designates NASI, its
agents, representatives and designees as agents and attorneys-in-fact for
RADIOMED to sign such financing statements, notices and other instruments on
behalf of RADIOMED.
5.1.4 DEFAULT. RADIOMED shall be in default under this Agreement
upon the happening of any of the following events or conditions (an "Event of
Default"), without demand or notice from NASI:
(a) Material failure to observe or perform or material
violation of any of RADIOMED's agreements, warranties or representations in
this Agreement which breach remains uncured for a period of not less than 60
days after written notice thereof;
(b) Failure of RADIOMED to pay when due any obligation (whether
to NASI or any other creditor), whether by maturity, acceleration or
otherwise, or any other default by RADIOMED which causes or permits
acceleration thereof, which breach remains uncured for a period of not less
than 60 days after the occurrence thereof;
(c) The occurrence or any default of event of default under the
Note Purchase Agreement entered into between NASI and RADIOMED as of the date
of this Agreement or any
<PAGE>
other agreement now or hereafter entered into between such parties which breach
remains uncured for a period of not less than 60 days after written notice
thereof; or
(d) Dissolution, termination of existence, insolvency (as
described herein), business failure, appointment of a receiver or custodian
of any part of RADIOMED'S property, assignment or trust mortgage for the
benefit of creditors by RADIOMED, the recording or existence of any lien for
unpaid taxes, the commencement of any proceeding under any bankruptcy or
insolvency laws of any state or of the United States by or against RADIOMED,
or service upon NASI of any writ, summons, or process designed to affect any
of RADIOMED'S property.
5.1.5 SECURED PARTY'S RIGHTS UPON DEFAULT. Upon an Event of
Default and at any time thereafter, NASI, without presentment, demand, notice,
protest or advertisement of any kind, may:
(a) have full power to take possession of, operate, compromise,
sell or otherwise deal with the Collateral, including without limitation the
express right to use the Collateral to manufacture and sell Product for
NASI's benefit, in its own name or in the name of RADIOMED and RADIOMED
hereby irrevocably appoints NASI its attorney-in-fact for this purpose;
(b) make all obligations from RADIOMED to NASI immediately due and
payable, without presentment, demand, protest, hearing or notice of any kind and
exercise the remedies of a secured party afforded by the Uniform Commercial Code
and other applicable law or by the terms of any agreement between RADIOMED and
NASI;
(c) take possession of the Collateral on the premises at which any
Collateral is located and sell all or part of the Collateral at a public or
private sale or retain the Collateral as payment, whether in part or in full, of
the obligation secured hereby;
(d) in the case of any sale or disposition of the Collateral,
or the realization of funds therefrom, or the retention of such Collateral by
NASI, the proceeds thereof shall first be
<PAGE>
applied to the payment of the expenses of such sale, commissions, reasonable
attorneys fees and all charges paid or incurred by NASI pertaining to said sale
or this Agreement, including any taxes or other charges imposed by law upon the
Collateral and/or the owning, holding or transferring thereof; secondly, to pay,
satisfy the foregoing items, RADIOMED hereby promises and agrees to pay any
deficiency; and/or
(e) exercise any and all other rights and remedies available to a
secured party and a creditor under applicable law.
All of the foregoing rights and remedies of NASI shall be cumulative.
5.1.6 FDA MARKETING APPROVAL. RADIOMED shall exercise due
diligence in obtaining as soon as practicable after the execution of this
Agreement and thereafter maintaining in full force and effect throughout the
term of this Agreement all FDA marketing approvals necessary to the sale and
distribution of the Product for use in the Field of Use.
5.1.7 COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS. RADIOMED
shall at all times (a) keep and maintain all records necessary or appropriate to
evidence such compliance or that are otherwise mandated by the Applicable
Regulatory Requirements, and (b) shall make such records available to NASI
(subject to the restrictions imposed by Section 5.3.6., below) and its duly
authorized representatives for inspection and copying at reasonable times during
regular business hours upon reasonable prior notice, and (c) shall promptly
comply with Applicable Regulatory Requirements of any cognizant governmental
authority pertaining to the promotion and sale of the Products.
5.1.8 COVENANT BY RADIOMED NOT TO COMPETE. Unless and until NASI's
exclusive manufacturing and supply rights are terminated pursuant to Section 9
hereof, neither RADIOMED nor any of its Affiliates shall manufacture or supply,
the Product for use in the Field of Use in violation of the exclusive
manufacturing and supply rights of NASI under this Agreement; and RADIOMED
shall not (a) license any other Person in the Geographic Market Area to
manufacture or supply the Product for use in the Field of Use, or (b) knowingly
or intentionally suffer or permit any Person to sell the Product for use in the
Field of Use in the
<PAGE>
Geographic Market Area, except that RADIOMED shall have the right to license the
manufacture of Product to an existing unaffiliated Customer for that Product
under commercially reasonable terms and conditions approved by RADIOMED's Board
of Directors.
5.1.9 MANUFACTURING MODIFICATIONS. RADIOMED shall give NASI not
less than sixty (60) days' prior written notice (or such lesser period of time
as the parties mutually agree may be reasonable under the circumstances) of any
modifications proposed to be made by RADIOMED to the manufacturing processes or
procedures for the Product or to any quality control test and/or compliance
procedures relating to the Product or the supplies and components embodied
therein, whether resulting from governmental inspection, customer complaints or
for any other reason, if any such modification will (a) cause a change in the
Product Specifications or (b) cause the Product or the procedure for its
manufacture to differ in any material respect. Such notice shall be
accompanied by a written report setting forth in reasonable detail the reasons
for and the nature of the proposed change and all relevant technical data and,
if NASI so requests, RADIOMED shall meet with NASI to explain the nature of and
the reasons for such change.
5.1.10 LABELING AND WARRANTY CLAIMS. RADIOMED shall not make any
express warranties or other claims with respect to the Product that have not
been authorized by the FDA, NRC or other applicable regulatory agency or that
are inconsistent with any labeling claims that have been approved by the FDA,
NRC or other applicable regulatory agency with respect to the Product.
5.1.11 FOREIGN REGISTRATION. If, in accordance with Section 2.1.1,
RADIOMED provides Purchase Orders to NASI for delivery of Products to foreign
markets, RADIOMED shall inform NASI in writing of any Applicable Regulatory
Requirements that are unique to a foreign country into which RADIOMED elects to
begin marketing and distribution activities and that must be satisfied as a
condition to RADIOMED'S obtaining any necessary permits, licenses or Product
registrations required for the distribution of the Product in such country.
RADIOMED shall prepare at its own cost and expense all documents necessary for
registration, sale and distribution of the Product and any Improvements thereto
for use in the Field of Use, and
<PAGE>
shall secure and maintain in full force and effect all other permits, licenses
and approvals required in order to sell the Product for use in the Field of Use
in such foreign countries.
5.2 COVENANTS OF NASI. NASI covenants to and agrees with RADIOMED that:
5.2.1 SALES CAPACITY. NASI shall train, equip and maintain
sufficient staff to effectively manufacture and supply the Product.
5.2.2 MARKETING SUPPORT. NASI shall from time to time provide such
scientific and technical information regarding the Product as RADIOMED may
reasonably request for the purpose of supporting RADIOMED's clinical study and
marketing activities, including such information as may be necessary to assist
RADIOMED in marketing the Product in kit form. In addition, NASI shall make its
technical and marketing personnel available to RADIOMED for reasonable periods
of time to provide technical support, to respond to technical inquiries, and to
participate in marketing and sales strategy sessions.
5.2.3 VENDOR'S AUDIT. NASI shall permit RADIOMED or its authorized
representatives to enter and inspect, during normal business hours, the plants
and facilities in which the Product is manufactured, packaged, labeled or held
in order to permit RADIOMED to verify that the Product is being produced in
conformity with applicable Good Manufacturing Practices and, if relevant, the
applicable Medical Device Directive of the European Commission, and that NASI is
otherwise satisfying its obligations under this Agreement.
A. During any such inspection, RADIOMED's quality control or
compliance inspectors shall be entitled to inspect the manufacturing and quality
control procedures of NASI relating to the Product, and all records relating
thereto, but:
(1) RADIOMED's access to those portions of NASI's
manufacturing and quality control procedures that NASI has designated as
proprietary to NASI shall be limited to the degree of access required in order
to satisfy the applicable requirements of the FDA; and
<PAGE>
(2) All such inspections shall be carried out in a
manner that does not unreasonably interfere with NASI's manufacturing
operations.
B. RADIOMED's employees and agents shall be required to
execute NASI's standard form confidentiality and non-disclosure agreement as
a condition to being allowed to conduct such audit.
C. RADIOMED shall not perform an audit more than once in
any Sales Year unless necessary to satisfy Applicable Regulatory Requirements
to which RADIOMED is subject. RADIOMED shall give NASI prior notice of its
intention to conduct any such audit at least five (5) business days prior to
the scheduled commencement thereof, and shall cooperate with NASI in the
scheduling of any such audit so as to minimize to the extent practicable any
disruption to NASI's business operations, but RADIOMED shall not be obligated
to postpone the conduct of such audit for more than fifteen (15) days.
D. RADIOMED shall furnish NASI with a written report of the
results of any such audit as soon as practicable after its completion, and NASI
shall promptly take any action suggested or recommended in such report to the
extent that such action is necessary to cure a default by NASI in the
performance of its obligations under this Agreement.
5.2.4 GOVERNMENTAL INSPECTIONS. NASI shall promptly notify RADIOMED
of any inspection made of its facilities or its operations by any regulatory
agency, or of those of any of its suppliers or contract manufacturers of which
it receives notice, that relates in any manner to the production, distribution
or use of the Product or any component of the Product. NASI shall promptly
advise RADIOMED of the conduct of any such inspection and the results thereof,
and shall provide RADIOMED with a copy of any written notification or report
provided to NASI by the inspecting agency. In addition, NASI shall immediately
request an unexpurgated copy of the inspection report from the inspecting
governmental agency, and, unless prohibited from doing so under applicable law,
shall forward a copy thereof to RADIOMED immediately upon its receipt.
<PAGE>
5.2.5 COMPLIANCE WITH APPLICABLE REGULATORY REQUIREMENTS. NASI
shall at all times (a) keep and maintain all records necessary or appropriate to
evidence such compliance or that are otherwise mandated by the Applicable
Regulatory Requirements, and (b) shall make such records available to RADIOMED
(subject to the restrictions imposed by Section 5.3.6 below) and its duly
authorized representative for inspection and copying at reasonable times during
regular business hours upon reasonable prior notice, and (c) shall promptly
comply with Applicable Regulatory Requirements of any cognizant governmental
authority within the United States or any of the fifty states pertaining to the
production of the Product.
5.2.6 COVENANT BY NASI NOT TO COMPETE. Unless and until exclusive
manufacturing and supply rights are terminated pursuant to Section 9 hereof,
neither NASI nor any of its Affiliates shall manufacture, supply, market or
distribute Products for use in the Field of Use in the Geographic Market Area,
except pursuant to this Agreement.
5.3 MUTUAL WARRANTIES AND COVENANTS. Each of the parties covenants to
and agrees with the other that:
5.3.1 AUTHORITY TO CONDUCT BUSINESS. It is duly organized and in
good standing under the laws of the jurisdiction in which it is incorporated and
has all requisite corporate power and authority and the permits, consents, and
qualifications necessary to operate its business as it is currently being
conducted.
5.3.2 AUTHORITY TO PERFORM AGREEMENT. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action, and does not constitute a breach by the warranting party of
its organizational documents or of any contract or agreement to which the
warranting party is a party or by which the warranting party or it assets are
bound.
5.3.3 EXCHANGE OF INFORMATION. It shall promptly furnish to the
other party a complete and correct copy of any notice, report or other
communication that it receives from the NRC, the FDA or from any other
governmental agency concerning the Product.
<PAGE>
5.3.4 IMPAIRMENT OF OBLIGATION. Neither party has entered and will
not hereafter enter into any agreement, the execution or performance of which
would violate this Agreement or have an adverse effect upon its ability to
perform this Agreement.
5.3.5 ADVERSE INFORMATION. Each party will promptly notify the
other party in writing of any fact, condition or information which may hereafter
come to its attention and which may adversely affect the reliability, utility or
marketability of the Product, including but not limited to, adverse scientific
or technical studies or evaluations and threatened litigation or claims. If such
adverse information requires that corrective or protective action be taken
related to the Product, including, but not limited to, a recall, market
withdrawal, stock recovery or label clarification, the recipient of such
information will immediately notify the other of such requirement in writing,
provide the other party with complete copies of all documentation related
thereto, and provide all commercially reasonable assistance to the other party
necessary to assure that such actions are taken or such requirements are
satisfied.
5.3.6 CONFIDENTIAL INFORMATION. All Confidential Information
communicated by each party to the other pursuant to this Agreement, including
any Confidential Information gained by either of the parties or their
representatives by reason of association with the other party in connection with
the performance of any obligations under this Agreement, whether or not such
Confidential Information was directly or intentionally communicated, is and
shall at all times remain confidential.
A. Each of the parties agrees that:
(1) It shall not disclose any Confidential Information
to any other person unless specifically authorized in writing by the other party
to do so. In the event that any such written authorization to make disclosure is
given, disclosure shall be made only within the limits and to the extent of such
of authorization.
(2) It shall use its best efforts to prevent any
inadvertent disclosure of any Confidential Information to any Third Party by
using at least the same care
<PAGE>
and/or discretion that it uses with similar data of its own that it deems
confidential in the operation of its business.
B. For purposes of this Section 5.3.6, the disclosure of
Confidential Information to employees and agents of a party to this agreement
shall not be deemed to be disclosure to a Third Party provided that the
disclosure is made for purposes related to the performance by such party of its
duties and obligations under this Agreement.
5.3.7 BOOKS AND RECORDS. Each party shall at all times during the
continuance of this Agreement keep books and records in sufficient detail to
permit verification of its compliance with the terms and conditions of this
Agreement. All such books and records shall be available for inspection and
copying by the other party or its designated representative at the principal
place of business of the party keeping such books and records at reasonable
times during regular business hours for purposes reasonably related to this
Agreement.
5.3.8 FURTHER ASSURANCES. Each of the parties shall take such acts
and execute and deliver such documents and instruments as may reasonably be
requested by the other party to enable the other party to perfect any of its
rights under this Agreement, including any assignments, notices of assignment,
or other registrations with applicable domestic and foreign governmental
agencies.
6. TRADE NAMES AND TRADEMARKS
6.1 MARKS OF NASI. The provisions of this Agreement permitting or
requiring RADIOMED to place NASI'S trade name and trademark on the Product and
its packaging are not intended and shall not be construed to give RADIOMED any
interest or license in any such trademarks, trade names, labels or markings.
RADIOMED shall not make any use of NASI's name or any trade name or trademark
owned by NASI except for the purpose of marketing and selling the Product in
accordance with the provisions of this Agreement. Any uses by
<PAGE>
RADIOMED in its advertising or elsewhere of NASI's name or any trade name or
trademark owned by NASI, or any name or mark similar thereto, shall be subject
to the prior written approval of NASI in its sole discretion and shall be
governed by a separate written agreement.
6.2 MARKS OF RADIOMED. RADIOMED shall be entitled to register and use its
own trade names and trademarks for the purpose of marketing and distributing the
Product for uses within the Field of Use. Any such names and marks shall
constitute the proprietary property of RADIOMED; NASI shall not have any rights
in any such names and marks, and RADIOMED shall be entitled to continue to use
such names and marks after the expiration of NASI's exclusive manufacturing
rights under this Agreement. The provisions of this Agreement permitting or
requiring NASI to place RADIOMED's name and Marks on the Product and its
packaging are not intended and shall not be construed to give NASI any interest
or license in any such trademarks, trade names, labels or markings. Any uses by
NASI in its advertising or elsewhere of RADIOMED's name or any trade name or
trademark owned by RADIOMED, or any name or mark similar thereto, shall be
subject to the prior written approval of RADIOMED in its sole discretion and
shall be governed by a separate written agreement.
7. INFRINGEMENT CLAIMS
7.1 WARRANTIES OF RADIOMED. RADIOMED warrants and represents to NASI that
7.1.1 RADIOMED is the owner of or has the right to use all of the
Technology, and has taken all actions reasonably necessary to protect the
Technology. To the knowledge of RADIOMED, after reasonable investigation, the
business conducted or proposed to be conducted pursuant to this Agreement does
not and will not cause RADIOMED to infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, licenses, trade secrets or
other intellectual property rights of any other person or entity.
7.1.2 In the performance of this Agreement, RADIOMED will not
knowingly or willfully infringe any intellectual property rights of any Third
Party including, without limitation, any now existing or subsequently issued
patents.
<PAGE>
7.1.3 RADIOMED has no knowledge of any claims, disputes, or
litigation proceedings pending or threatened as of the Effective Date with
respect to the Product or the Technology.
7.2 CLAIMS AGAINST THIRD PARTIES. Should any actual or possible
infringement or other violation by any Third Party of any Technology come to the
attention of either party to this Agreement, such party shall promptly notify
the other party of the alleged infringement or violation. The parties hereto
shall consult with one another with a view to reaching agreement as to the best
means of eliminating the infringement or violation.
7.2.1 DISCRETIONARY LITIGATION. Should RADIOMED elect or agree to
commence litigation or other enforcement action or proceedings, then NASI shall
be entitled to elect to participate in such action or proceeding and to pay its
Proportionate Share of the costs and expense thereof and to receive its
Proportionate Share of any net recovery resulting therefrom provided that NASI
has a material interest in such proceedings or any potential recovery resulting
therefrom. If NASI is not entitled or elects not to participate in any such
action or proceeding, and if RADIOMED elects or agrees to commence litigation or
other enforcement actions or proceedings, then RADIOMED shall bear the entire
cost and expense thereof, and shall be entitled to retain the entirety of any
resulting recovery.
7.2.2 DUTY TO COOPERATE. If RADIOMED elects to initiate litigation
or other action or proceeding on account of an alleged infringement of any
Technology owned by RADIOMED, and NASI elects not to participate in prosecuting
such action or proceeding, including participation in the costs and expenses
incident thereto, NASI shall nonetheless cooperate with RADIOMED in the
prosecution of such action or proceeding provided satisfactory provisions have
been made for the reimbursement by RADIOMED of all reasonable costs and expenses
that NASI incurs in doing so.
7.3 CLAIMS BY THIRD PARTIES. Except as provided below, RADIOMED shall
defend and indemnify NASI from and against any damages, liabilities, costs and
expenses (including reasonable attorneys' fees) arising out of any claim that
any Product sold or licensed
<PAGE>
hereunder infringes a valid patent or copyright or misappropriates a trade
secret of a third party, provided that (i) NASI shall have promptly provided
RADIOMED written notice thereof, and reasonable cooperation, information, and
assistance in connection therewith, and (ii) RADIOMED shall have sole control
and authority with respect to the defense, settlement, or compromise thereof,
except that NASI, at its election, shall be entitled to be represented in any
such proceeding by independent counsel of its choosing at its own cost and
expense. Should any Product sold or licensed hereunder become or, in RADIOMED's
opinion, be likely to become the subject of an injunction preventing its use as
contemplated herein, RADIOMED may, at its option, (i) procure the right to
continue using such Product, (ii) replace or modify such Product so that it
becomes non-infringing, or (iii) if (i) and (ii) are not reasonably available to
RADIOMED, then to discontinue the marketing and distribution of such Product.
8. INSURANCE, INDEMNIFICATION AND LIMITATIONS ON LIABILITY
8.1.1 RADIOMED'S LIABILITY INSURANCE. Beginning on the Effective Date,
RADIOMED shall procure such liability insurance as shall be reasonably necessary
in light of the business proposed to be conducted. Prior to distribution of
Product under this Agreement for human use, and continuing for a period of five
(5) years from the date on which the last sale of a Product occurs, RADIOMED
shall maintain (a) product liability insurance (containing both a Vendor's
Additional Insured Endorsement and a Products Contractual Liability Endorsement)
on the Product in amounts that are consistent with the amount of products
liability insurance that are maintained by similarly situated companies selling
comparable products for similar or related purposes, but in no event less than
One Million Dollars ($1,000,000) first dollar coverage per occurrence and Five
Million Dollars ($5,000,000) in the aggregate; and (b) general business
liability insurance with minimum limits of One Million Dollars ($1,000,000)
first dollar coverage per occurrence and Five Million Dollars ($5,000,000) in
the aggregate. NASI shall be named as an additional insured in each policy of
insurance required to be maintained by NASI hereunder.
The issuer of each such policy shall be a standard company
licensed to issue insurance having a Best's rating of B+ or higher and a
policy holder surplus of not less than Twenty-Five Million Dollars
($25,000,000). Each such policy shall provide for (a) the issuance of a
reporting or tail coverage endorsement upon termination of (i) the base
policy, (ii) the
<PAGE>
production, manufacturing, marketing and sale of the Product or (iii) the
corporate existence of RADIOMED and (b) for not less than thirty (30) days'
prior written notice to NASI of any proposed change in the nature, scope or
amount of coverage. RADIOMED shall provide NASI with certificates of such
insurance and evidence of the payment of premiums therefor, promptly upon
request.
The insurance coverage required to be maintained hereunder
shall be subject to review and adjustment from time to the time at the
request of either party to limits of liability that are mutually agreeable in
order to assure a continuing level of insurance protection that, as nearly as
practicable after taking relative costs and benefits into account, is
consistent with the level of protection contemplated by the parties at the
time they execute this Agreement, but no such adjustment shall be made more
than once in any consecutive twelve-month period. Should the parties be
unable to agree with respect to the nature or amount of such insurance
coverage, then the dispute shall be resolved by an independent insurance
consultant who has not previously performed services for either party. If the
parties cannot agree on any such independent consultant, then such consultant
shall be selected by the President of the Independent Insurance Brokers
Association in Los Angeles, California.
8.1.2 NASI'S LIABILITY INSURANCE. Beginning on the Effective Date, NASI
shall procure such liability insurance as shall be reasonably necessary in light
of the business proposed to be conducted. Prior to distribution of Product
under this Agreement for human use, and continuing for a period of five (5)
years from the date on which the last sale of a Product occurs, NASI shall
maintain (a) product liability insurance (containing both a Vendor's Additional
Insured Endorsement and a Products Contractual Liability Endorsement) on the
Product in amounts that are consistent with the amount of products liability
insurance that are maintained by similarly situated companies selling comparable
products for similar or related purposes, but in no event less than One Million
Dollars ($1,000,000) first dollar coverage per occurrence and Five Million
Dollars ($5,000,000) in the aggregate; and (b) general business liability
insurance with minimum limits of One Million Dollars ($1,000,000) first dollar
coverage per occurrence and Five Million Dollars ($5,000,000) in the aggregate.
RADIOMED shall be named as an additional insured in each policy of insurance
required to be maintained by RADIOMED hereunder.
<PAGE>
The issuer of each such policy shall be a standard company licensed to
issue insurance having a Best's rating of B+ or higher and a policy holder
surplus of not less than Twenty-Five Million Dollars ($25,000,000). Each such
policy shall provide for (a) the issuance of a reporting or tail coverage
endorsement upon termination of (i) the base policy, (ii) the production,
manufacturing, marketing and sale of the Product or (iii) the corporate
existence of NASI and (b) for not less than thirty (30) days' prior written
notice to RADIOMED of any proposed change in the nature, scope or amount of
coverage. NASI shall provide RADIOMED with certificates of such insurance and
evidence of the payment of premiums therefor, promptly upon request.
The insurance coverage required to be maintained hereunder shall be
subject to review and adjustment from time to the time at the request of either
party to limits of liability that are mutually agreeable in order to assure a
continuing level of insurance protection that, as nearly as practicable after
taking relative costs and benefits into account, is consistent with the level of
protection contemplated by the parties at the time they execute this Agreement,
but no such adjustment shall be made more than once in any consecutive
twelve-month period. Should the parties be unable to agree with respect to the
nature or amount of such insurance coverage, then the dispute shall be resolved
by an independent insurance consultant who has not previously performed services
for either party. If the parties cannot agree on any such independent
consultant, then such consultant shall be selected by the President of the
Independent Insurance Brokers Association in Los Angeles, California.
8.2 INDEMNIFICATION BY RADIOMED. RADIOMED shall promptly indemnify,
defend and hold NASI (including its officers, directors, employees, and agents)
harmless from and against any and all claims by Third Parties (whether based in
contract or tort or otherwise arising by operation of law), losses, damages,
penalties, expenses, settlements, or attorneys' fees arising out of or resulting
from (i) any breach of a representation or warranty or failure to perform any
covenant or obligation of RADIOMED under this Agreement; and (ii) any written
representations or warranties made by RADIOMED regarding the Product; and (iii)
any acts or omission of RADIOMED in connection with its marketing and
distribution of the Product supplied by NASI. RADIOMED's contractual obligations
to indemnify, defend and hold NASI harmless shall extend to all such third-party
allegations or claims except to the extent that such
<PAGE>
allegations or claims have been established by a court of competent jurisdiction
or other dispute resolution tribunal (including an arbitration panel) to have
resulted from or to be attributable to the fault or negligence of RADIOMED.
8.2.1 LIMITATION ON RADIOMED'S OBLIGATION. In any action or proceeding
in which liability for personal injury resulting from the use of the Product is
alleged to exist both against NASI and RADIOMED based in whole or in part upon
theories of negligent design, negligent manufacturing, failure to warn,
defective product, product liability, strict liability or any other theory of
liability directly related to the Product:
A. If NASI so requests, RADIOMED shall be obligated by this
Section 8.2 to defend NASI, notwithstanding that allegations are also made
that NASI (a) breached a written representation or warranty given by NASI
under this Agreement or to its Customers, or (b) was negligent in connection
with its manufacturing and supply of the Product, unless RADIOMED elects to
name NASI as a cross-defendant in such action or proceeding.
(1) If RADIOMED elects to name NASI as a cross-defendant
in any such action or proceeding, then each party shall provide its own
defense, and each party shall be entitled to be indemnified by the other with
respect to any damages, costs or expense established by a court of competent
jurisdiction or other dispute resolution tribunal (including an arbitration
panel) to have resulted from or to be attributable to the fault or neglect of
the other party.
(2) If allegations are made against NASI in any such
action or proceeding and (i) RADIOMED does not name NASI as a cross-defendant
therein, and (ii) NASI declines to provide its own defense with respect
thereto, and (iii) NASI subsequently acknowledges, or it is determined, that
NASI is liable by reason of the facts set forth in such allegations, then, in
addition to its indemnification obligation with respect to those damages for
which it is determined to be liable, NASI shall also be liable to RADIOMED
for that portion of the costs and fees incurred by NASI in defending such
action or proceeding that is equal to NASI's percentage of liability for the
damages awarded in any such action or proceeding.
<PAGE>
8.2.2 PARTICIPATION IN AND CONTROL OF DEFENSE. If RADIOMED is obligated
to defend NASI in a lawsuit, arbitration, negotiation, or other proceeding
concerning a claim pursuant to this Agreement, NASI shall have the right to
engage separate counsel, at NASI's expense, to monitor and advise NASI about the
status and progress of the defense or to otherwise represent the interests of
NASI. To be entitled to sole control of the defense, upon request by NASI,
RADIOMED shall demonstrate, to the reasonable satisfaction of NASI, RADIOMED's
financial ability to carry out its defense obligations (and its indemnity
obligations, if any). NASI shall in any event provide such cooperation and
assistance in the conduct of any such defense as RADIOMED may reasonably
request.
8.2.3 INDEMNIFICATION BY NASI. NASI shall indemnify, defend and hold
RADIOMED (including its officers, directors, employees, and agents) harmless
from and against any and all claims by Third Parties (whether based in contract
or tort or otherwise arising by operation of law), losses, damages, penalties,
expenses, settlements, or attorneys' fees arising out of or resulting from (i)
any breach of a representation or warranty or failure to perform any covenant or
obligation of NASI under this Agreement; (ii) any written representations or
written warranties made by NASI regarding the Product; and (iii) any acts or
omission of NASI in connection with its manufacture of Product supplied by NASI.
NASI's contractual obligations to indemnify, defend and hold RADIOMED harmless
shall extend to all such third-party allegations or claims except to the extent
that such allegations or claims have been established by a court of competent
jurisdiction or other dispute resolution tribunal (including an arbitration
panel) to have resulted from or to be attributable to the fault or negligence of
RADIOMED.
8.3 LIMITATION OF LIABILITY. WITH RESPECT TO CLAIMS MADE BY ONE PARTY (A
"CLAIMANT") AGAINST THE OTHER (A "DEFENDANT") UNDER THIS AGREEMENT FOR CLAIMS
NOT ARISING OR RESULTING FROM OR BASED UPON THIRD-PARTY CLAIMS, THE DEFENDANT
SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS, IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT, REGARDLESS OF WHETHER A CLAIM AGAINST THE
DEFENDANT SOUNDS IN CONTRACT OR TORT (INCLUDING, BUT
<PAGE>
NOT LIMITED TO, ACTIONS BASED ON ANY ALLEGED JOINT OR SOLE NEGLIGENCE OR THE
DEFENDANT).
8.3.1 DEFENSE PROCEDURE. Each party shall notify the other party in
writing within ten (10) days of the assertion of any claim or discovery of any
fact upon which the notifying party intends to base a claim for defense and/or
indemnification under this Agreement. The failure to so notify the other party
shall not relieve such party of the duty to defend and indemnify the notifying
party with respect to such claim, except to the extent the defense of such claim
is actually prejudiced thereby.
9. COMMENCEMENT, TERM AND TERMINATION
9.1 COMMENCEMENT, TERM AND TERMINATION. This Agreement shall commence on
the Effective Date hereof and, unless sooner terminated as provided in this
Section 9, or extended pursuant to Section 2.1.1 hereof, this Agreement shall
continue for the term specified in Section 2.1 hereof.
9.2 CHANGE IN CONTROL. Notwithstanding the provisions of Section 9.1, in
the event of a sale of all or substantially all of the business of RADIOMED
through merger, sale of assets or otherwise, the term of this Agreement shall
extend until two years after such sale.
9.3 TERMINATION FOR CAUSE BY EITHER PARTY. Upon the occurrence of any of
the following events, any party who is not in material default in the
performance of its obligations under this Agreement shall be entitled to
terminate this Agreement by giving written notice of its intention to terminate,
specifying the effective date of termination, not less than sixty (60) days
prior to the effective date of its termination.
9.3.1 The other party (herein, a "defaulting party") has committed
a material breach of any warranty, representation, or covenant or obligation
under this Agreement, including the obligation to pay any amount owing under
this Agreement when due, and such breach remains uncured for a period of not
less than 60 days after written notice of default, specifying the nature
thereof, has been given to the defaulting party.
<PAGE>
9.3.2 The other party becomes Insolvent.
9.4 TERMINATION FOR CAUSE BY NASI. NASI may terminate this Agreement
immediately upon an Event of Default pursuant to Section 5.1.4.
9.5 RIGHTS AND DUTIES UPON TERMINATION.
9.5.1 Subject to NASI's continuing rights under certain
circumstances under Sections 5.1.2 and 5.1.5 hereof, upon termination of this
Agreement for any reason:
A. The license granted pursuant to Section 2.1 and any
sublicenses entered into by NASI shall automatically terminate.
B. Each party shall return to the providing party all
copies of any Confidential Information that was provided by one party to the
other during the course of this Agreement.
9.5.2 Upon termination of this Agreement by NASI for breach by
RADIOMED, in addition to NASI's right to begin manufacturing and distributing
the Product pursuant to Section 4.9 hereof and/or pursuant to Sections 5.1.2 and
5.1.5 hereof, NASI shall be entitled to market and sell any existing inventory
of the Product to the extent permitted by law until such inventory has been
exhausted provided that such sales are made at prices and on terms that are
consistent with RADIOMED's past practices.
9.5.3 Each party shall continue to be bound by the provisions of
this Agreement which, by their nature, extend beyond or cannot be fully
performed prior to the effective date of termination, including (a)
indemnification obligations and (b) provisions relating to the protection,
nondisclosure and restrictions on use of Confidential Information, including
any Confidentiality Agreements previously entered into by the parties.
<PAGE>
9.6 SURVIVAL OF REMEDIES. The termination of this Agreement
pursuant to this Section shall be without prejudice to any rights or any
remedies to which the terminating party is entitled, if any, due to the
material breach by one of the parties of any warranty, representation or
covenant made by the defaulting party under this Agreement.
10. GENERAL PROVISIONS
10.1 NOTICES. Any notices permitted or required hereunder shall be in
writing and shall be deemed to have been given (a) on the date of delivery if
delivery of a legible copy was made personally or by facsimile transmission, or
(b) on the third (3rd) business day after the date on which mailed by registered
or certified mail, return receipt requested, addressed to the party for whom
intended at the address set forth on the signature page of this Agreement or
such other address, notice of which is given as provided herein.
10.2 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of each of the parties and their respective heirs,
successors, assigns and legal representatives. No party hereto shall have the
right to transfer or assign its interest in this Agreement, without the prior
written authorization of the other party hereto, except that (a) either party
may freely assign this Agreement to any Affiliate and (b) either party shall
have the right to assign its rights and licenses and to delegate its duties
under this Agreement to any third party who purchases substantially all of the
business assets of the assignor or who succeeds to the business of the assignor
by reason of a merger or consolidation. The assignment by either party of any
rights under this Agreement shall not relieve the assigning party from any of
its obligations under this agreement.
10.3 FORCE MAJEURE. Neither of the parties shall be liable for any
delay or default in performing its obligations hereunder if such delay or
default is caused by Force Majeure, provided that the party so affected (a)
promptly gives written notice of the occurrence of such event and the likely
effects thereof, and (b) resumes the performance of its obligations with due
diligence as soon as practicable after the effects of any such event have been
alleviated.
<PAGE>
10.4 GOVERNING LAW. This Agreement, the construction and enforcement
of its terms, and the interpretation of the rights and duties of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware.
10.5 RESOLUTION OF DISPUTES. The parties hereto (a) mutually consent
and submit to the jurisdiction of any state or federal court of competent
jurisdiction located in the City of Los Angeles, State of California, in any
action or proceeding arising out of or relating in any manner to this Agreement
which is brought by RADIOMED, and to the jurisdiction of any state or federal
court of competent jurisdiction located in the City of Boston, Commonwealth of
Massachusetts in any action or proceeding arising out of or relating in any
manner to this Agreement which is brought by NASI, (b) each waive any claim
that any such respective state or federal court is an inconvenient forum, and
(c) each irrevocably agree that any and all actions or proceedings arising out
of or relating to this Agreement or from transactions contemplated herein shall
be exclusively heard only in such respective state or federal court.
10.6 COSTS OF ENFORCEMENT. Should any action or proceeding be
necessary to construe or enforce this Agreement, then the party prevailing in
any such action or proceeding shall be entitled to recover all court costs and
reasonable attorneys' fees, to be fixed by the court and taxed as part of any
judgment entered therein, and the costs and fees incurred in enforcing or
collecting any such judgment.
10.7 INDEPENDENT CONTRACTORS. Each of the parties to this Agreement
understands and stipulates that they are independent contractors, and that this
Agreement is not intended and shall not be construed to make either party a
partner, joint ventures, employee, agent, or legal representative of the other
party for any purpose whatsoever. Neither party is granted any right or
authority to assume or create any obligation or responsibility, express or
implied, on behalf of or in the name of the other party hereto or to bind the
other party hereto in any manner or thing whatsoever.
10.8 COMPLETE AGREEMENT. This written instrument, together with any
exhibits or appendices referred to herein, constitutes the entire understanding
of the parties with
<PAGE>
respect to subject matter of this Agreement and it may not be amended except by
an instrument in writing signed by the party alleged to he bound thereby.
IN WITNESS WHEREOF, both parties have executed this Exclusive Manufacturing and
Supply Agreement as of the date first set forth above.
NORTH AMERICAN SCIENTIFIC, INC. RADIOMED CORPORATION
By: /s/ L. Michael Cutrer By: /s/ D.C. Freeman, Jr.
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Its: President & CEO Its: Chairman & CEO
--------------------------------- --------------------------------
<PAGE>
EXHIBIT 10.2
RADIOMED CORPORATION
NOTE PURCHASE AGREEMENT
dated October 7, 1997
<PAGE>
NOTE PURCHASE AGREEMENT
-----------------------
This Agreement dated as of October __, 1997 is entered into by and among
RadioMed Corporation, a Delaware corporation (the "Company"), H. Thomas Aretz,
M.D., Raymond Bricault, Donald Freeman, Jr., Ph.D. and Piran Sioshansi, Ph.D.
(individually, an "Initial Founder" and, collectively, the "Initial Founders"),
and the entity identified on EXHIBIT A hereto (the "Purchaser").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SECURED CONVERTIBLE NOTE.
1.1 AUTHORIZATION. The Company has, or before the Closing (as
defined in Section 2) will have, duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of a Secured Convertible Note in principal
amount of $500,000 (the "Note"). The Note shall be in substantially the form
set forth in EXHIBIT B attached hereto. The Note shall be dated the date of its
issue, shall mature on October __, 2007 (the "Maturity Date"), and shall bear
interest at the rate of 10% per annum. Accrued interest shall be payable on the
Maturity Date, unless earlier converted pursuant to Section 9. Prior to
maturity, the entire principal amount of, and all accrued interest with respect
to the Note shall be convertible into shares of Series A Convertible Preferred
Stock of the Company, $.01 par value per share (the "Series A Preferred") (as
further described in Section 9 below), having the rights, restrictions,
privileges and preferences set forth in the Certificate of Amendment attached
hereto as EXHIBIT B-1 (the "Certificate of Amendment"). The Company has, or
before the Closing will have, adopted and filed the Certificate of Amendment
with the Secretary of State of the State of Delaware.
1.2 SALE OF SECURED CONVERTIBLE NOTE. Subject to the terms and
conditions of this Agreement, at the Closing the Company will sell and issue to
the Purchaser, and the Purchaser will purchase, the Note. The purchase price
for the Note purchased and sold hereunder shall be 100% of the principal amount
thereof for a purchase price of $500,000.
1.3 USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Note for research and development expenses, legal and patent expenses,
salaries and administrative costs and other working capital purposes, as further
described on EXHIBIT D. Except as otherwise provided herein, proceeds from the
sale of the Note offered hereby shall not be used for the repayment of
non-business related debts or for the payment of accrued compensation owed to
employees of, or consultants to, the Company prior to the Closing (as defined
below).
2. THE CLOSING. The closing ("Closing") of the sale and purchase of the
Note under this Agreement shall take place at the offices of Hale and Dorr LLP,
60 State Street, Boston, Massachusetts at 11:00 a.m. on October __, 1997, or at
such other time, date and place as are mutually agreeable to the Company and
counsel to the Purchaser. At the Closing, the Company
<PAGE>
shall deliver to the Purchaser the Note, registered in the name of such
Purchaser, against payment to the Company of the purchase price therefor, by
wire transfer, check, or other method acceptable to the Company. The date of
the Closing is hereinafter referred to as the "Closing Date." If at the Closing
any of the conditions specified in Section 6 shall not have been fulfilled, the
Purchaser shall, at its election, be relieved of all of its obligations under
this Agreement without thereby waiving any other rights it may have by reason of
such failure or such non-fulfillment.
3. REPRESENTATIONS OF THE COMPANY. Subject to and except as disclosed by
the Company in EXHIBIT C hereto, the Company hereby represents and warrants to
the Purchaser as follows:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
presently conducted and to enter into and perform this Agreement and to carry
out the transactions contemplated by this Agreement. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the operations or financial condition of the Company. The
Company has furnished to counsel to the Purchaser true and complete copies of
its Certificate of Incorporation and By-Laws, each as amended to date and
presently in effect.
3.2 CAPITALIZATION. The authorized capital stock of the Company
(immediately prior to the Closing) consists of 5,000 shares of common stock,
$0.01 par value per share (the "Common Stock"), of which 1,300 shares are
issued and outstanding, and 3,200 shares of Preferred Stock, $0.01 par value per
share, all of which shares have been designated as Series A Preferred, none of
which shares are issued or outstanding. All of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. Except as set forth in EXHIBIT C hereto or
provided in this Agreement, (i) no subscription, warrant, option, convertible
security or other right (contingent or otherwise) to purchase or acquire any
shares of capital stock of the Company is authorized or outstanding, (ii) the
Company has no obligation (contingent or otherwise) to issue any subscription,
warrant, option, convertible security or other such right or to issue or
distribute to holders of any shares of its capital stock any evidences of
indebtedness or assets of the Company, and (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof. All of the issued and outstanding shares
of capital stock of the Company have been offered, issued and sold by the
Company in compliance with applicable Federal and state securities laws.
3.3 SUBSIDIARIES, ETC. The Company has no subsidiaries and does not
own or control, directly or indirectly, any shares of capital stock of any other
corporation or any interest in any partnership, joint venture or other
non-corporate business enterprise.
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<PAGE>
3.4 STOCKHOLDER LIST AND AGREEMENTS. Attached as EXHIBIT E is a true
and complete list of the stockholders of the Company, showing the number of
shares of Common Stock or other securities of the Company held by each
stockholder as of the date of this Agreement and the consideration paid to the
Company, therefor. Except as contemplated by or disclosed in this Agreement,
there are no agreements, written or oral, between the Company and any holder of
its capital stock, or, to the best of the Company's knowledge, among any holders
of its capital stock, relating to the acquisition (including without limitation
rights of first refusal or pre-emptive rights), disposition, registration under
the Securities Act of 1933, as amended (the "Securities Act"), or voting of the
capital stock of the Company.
3.5 ISSUANCE OF NOTE. The issuance, sale and delivery of the Note in
accordance with this Agreement, and the issuance and delivery of the shares of
Series A Preferred and Common Stock issuable upon conversion of the Note and
Series A Preferred, respectively, have been, or will be on or prior to the
Closing, duly authorized by all necessary corporate action on the part of the
Company, and all such shares have been duly reserved for issuance. The Note
when so issued, sold and delivered against payment therefor in accordance with
the provisions of this Agreement, and the shares of Series A Preferred and
Common Stock issuable upon conversion of the Note and Series A Preferred,
respectively, when issued upon such conversion, will be duly and validly issued,
fully paid and non-assessable and will represent a valid and binding obligation
of the Company enforceable in accordance with its terms.
3.6 AUTHORITY FOR AGREEMENT. The execution, delivery and performance
by the Company of this Agreement, the Note, and all other agreements required to
be executed by the Company on or prior to the Closing pursuant to Section 6.4
(the "Ancillary Agreements"), and the consummation by the Company of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action. This Agreement, the Note and the Ancillary
Agreements have been duly executed and delivered by the Company and constitute
valid and binding obligations of the Company enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws relating to or
affecting the rights of creditors, generally. The execution of and performance
of the transactions contemplated by this Agreement, the Note and the Ancillary
Agreements and compliance with their provisions by the Company will not violate
any provision of law and will not conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute a default under, or
require a consent or waiver under, its Certificate of Incorporation or By-Laws
(each as amended to date) or any indenture, lease, agreement or other instrument
to which the Company is a party or by which it or any of its properties is
bound, or any decree, judgment, order, statute, rule or regulation applicable to
the Company.
3.7 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, the offer,
issuance, sale and delivery of the Note, or the other transactions to be
-3-
<PAGE>
consummated at the Closing, as contemplated by this Agreement, except such
filings as shall have been made prior to and shall be effective on and as of the
Closing. Based on the representations made by the Purchaser in Section 5 of
this Agreement, the offer and sale of the Note to the Purchaser will be in
compliance with applicable Federal and state securities laws.
3.8 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company. There is
no action, suit or proceeding, or governmental inquiry or investigation,
pending, or, to the best of the Company's knowledge, any basis therefor or
threat thereof against any of the Initial Founders which questions the validity
of this Agreement or the right of any of the Initial Founders to enter into it.
3.9 FINANCIAL STATEMENTS. The Company has furnished to the Purchaser
a complete and correct copy of the unaudited balance sheet of the Company (the
"Balance Sheet") as at June 30, 1997 (the "Balance Sheet Date"), compiled by the
Company.
3.10 ABSENCE OF LIABILITIES. Except as disclosed in EXHIBIT C, the
Company did not have, at the Balance Sheet Date, any liabilities of any type
which in the aggregate exceeded $20,000, whether absolute or contingent, which
were not fully reflected on the Balance Sheet, and, since the Balance Sheet
Date, the Company has not incurred or otherwise become subject to any such
liabilities or obligations except in the ordinary course of business and as
disclosed in EXHIBIT C.
3.11 TAXES. The Company has filed an election pursuant to
Section 1362 of the Internal Revenue Code of 1986, as amended (the "Code"), that
the Company be taxed as an S Corporation.
3.12 PROPERTY AND ASSETS. The Company has good title to all of its
material properties and assets, and, except as set forth on EXHIBIT C, none of
such properties or assets is subject to any mortgage, pledge, lien, security
interest, lease, charge or encumbrance.
3.13 INTELLECTUAL PROPERTY. Set forth on EXHIBIT C is a true and
complete list of all patents, patent applications, trademarks, service marks,
trademark and service mark applications, trade names, copyright registrations
and licenses presently used by the Company or necessary for the conduct of the
Company's business as conducted and as proposed to be conducted, as well as any
agreement under which the Company has access to any confidential information
used by the Company in its business (the "Intellectual Property Rights"). The
Company owns, or has the right to use under the agreements or upon the terms
described in EXHIBIT C, all of the Intellectual Property Rights, and has taken
all actions reasonably necessary to protect the Intellectual Property Rights.
To the knowledge of the Company, after reasonable investigation, the business
conducted or proposed by the Company does not and will not cause the Company to
infringe or violate any of the patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other intellectual property rights of any
other person or entity. The Company is not
-4-
<PAGE>
aware that any Initial Founder or other employee is obligated under any contract
(including any license, covenant or commitment of any nature), or subject to any
judgment, decree or order of any court or administrative agency, that would
conflict or interfere with (i) the performance of such Initial Founder's or
employee's duties as an officer, employee or director of the Company, (ii) the
use of such Initial Founder's or employee's best efforts to promote the
interests of the Company or (iii) the Company's business as conducted or
proposed to be conducted.
3.14 MATERIAL CONTRACTS AND OBLIGATIONS. EXHIBIT C sets forth a list
of all material agreements or commitments of any nature to which the Company is
a party or by which it is bound. All of such agreements and contracts are
valid, binding and in full force and effect.
3.15 COMPLIANCE. The Company has, in all material respects, complied
with all laws, regulations and orders applicable to its present and proposed
business and has all material permits and licenses required thereby. To the
best of the Company's knowledge, none of the Initial Founders nor any other
employee of the Company is in violation of any term of any contract or covenant
(either with the Company or with another entity) relating to employment,
patents, proprietary information disclosure, non-competition or
non-solicitation.
3.16 ABSENCE OF CHANGES. Since the Balance Sheet Date, there has been
no material adverse change, individually or in the aggregate, in the business,
assets, condition, financial or otherwise, net worth or results of operations of
the Company.
3.17 INITIAL FOUNDERS. The Initial Founders have executed and
delivered nondisclosure and assignment of invention agreements in the form of
EXHIBIT E, and all of such agreements are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to or
participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock
ledger of the Company is complete and reflects all issuances, transfers,
repurchases and cancellations of shares of capital stock of the Company.
3.20 DISCLOSURES. Neither this Agreement nor any Exhibit hereto,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading. Each projection furnished by the Company to the
Purchaser in the Business Plan of the Company dated December, 1996, as amended
on EXHIBIT D to include such projections (as so amended, the "Plan"), was
prepared in good faith based on reasonable assumptions and represents the
Company's best estimate of future
-5-
<PAGE>
results based on information available as of the date of the Plan and as of the
date of this Agreement.
3.21 SMALL BUSINESS CONCERN. The Company is a "small business
concern" as defined in Part 121 of Title 13 of the Code of Federal Regulations.
3.22 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
4. REPRESENTATIONS OF INITIAL FOUNDERS. Each of the Initial Founders
severally represents and warrants to the Purchaser as follows:
4.1 CONFLICTING AGREEMENTS. Such Initial Founder is not, as a result
of the nature of the business conducted or proposed to be conducted by the
Company or for any other reason, in violation of (i) any fiduciary or
confidential relationship, (ii) any term of any contract or covenant (either
with the Company or with another entity) relating to employment, patents,
proprietary information disclosure, non-competition or non-solicitation, or
(iii) any other contract or agreement, or any judgment, decree or order of any
court or administrative agency relating to or affecting the right of such
Initial Founder to be employed by the Company. No such relationship, term,
judgment, decree, or order conflicts with such Initial Founder's obligations to
use his best efforts to promote the interests of the Company nor does the
execution and delivery of this Agreement, nor the carrying on of the Company's
business as an officer or key employee of the Company, conflict with any such
relationship, term, judgment, decree or order.
4.2 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending or, to the best of such Initial
Founder's knowledge, threatened against such Initial Founder, and, to the best
of such Initial Founder's knowledge, there is no basis for any such action,
suit, proceeding, or governmental inquiry or investigation.
4.3 STOCKHOLDER AGREEMENTS. Except as contemplated by or disclosed
in this Agreement, such Initial Founder is not a party to and has no knowledge
of any agreements, written or oral, relating to the acquisition, disposition,
registration under the Securities Act, or voting of the capital stock of the
Company.
5. REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and
warrants to the Company as follows:
5.1 INVESTMENT. Such Purchaser is acquiring the Note, and the shares
of Series A Preferred and Common Stock into which the Note and Series A
Preferred, respectively, may be converted, for its own account for investment
and not with a view to, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or selling the same;
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and, except as contemplated by this Agreement and the Exhibits hereto, such
Purchaser has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
5.2 AUTHORITY. Such Purchaser has full power and authority to enter
into and to perform this Agreement in accordance with its terms. Such Purchaser
has not been organized, reorganized or recapitalized specifically for the
purpose of investing in the Company.
5.3 EXPERIENCE. Such Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement, has read the
Plan and has made reasonable inquiry concerning the Company, its business and
its personnel; the officers of the Company have made available to such Purchaser
any and all written information which it has requested and have answered to such
Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience in investing so as to be able
to evaluate the risks and merits of its investment in the Company and is able
financially to bear the risks thereof.
6. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligation of the
Purchaser to purchase the Note at the Closing is subject to the fulfillment, or
the waiver by such Purchaser, of each of the following conditions on or before
the Closing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty contained in Sections 3 and 4 shall be true on and as of the
Closing Date with the same effect as though such representation and warranty had
been made on and as of that date.
6.2 PERFORMANCE. The Company and each of the Initial Founders shall
have performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by the Company or such
Initial Founder prior to or at the Closing.
6.3 OPINION OF COUNSEL. The Purchaser shall have received an opinion
from Hale and Dorr LLP, counsel for the Company, dated the Closing Date,
addressed to the Purchaser, and reasonably satisfactory in form and substance to
the Purchaser, substantially in the form of EXHIBIT G hereto.
6.4 OTHER AGREEMENTS.
(a) The Stockholders' Voting Agreement attached hereto as
EXHIBIT H (the "Stockholders' Voting Agreement") shall have been executed and
delivered by the Company, by the Purchaser and by each of the Stockholders (as
defined therein). All such action shall have been taken as may be necessary to
elect a Board of Directors of the Company, effective upon the Closing, in
accordance with the Stockholders' Voting Agreement.
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(b) The Registration Rights Agreement attached hereto as
EXHIBIT I (the "Registration Rights Agreement") shall have been executed and
delivered by the Company and the Purchaser.
(c) The Right of First Refusal and Co-Sale Agreement attached
hereto as EXHIBIT J shall have been executed and delivered by the Purchaser and
the other parties named therein.
(d) The Security Agreement attached hereto as EXHIBIT K (the
"Security Agreement") shall have been executed and delivered by the Company.
(e) The Company shall have entered into an employment agreement
with Piran Sioshansi, Ph.D. and Raymond Bricault, substantially in the form
attached hereto as EXHIBIT L which Employment Agreements shall commence upon
termination of each of Dr. Sioshansi's and Mr. Bricault's employment with Spire
Corporation.
6.5 CERTIFICATES AND DOCUMENTS. The Company shall have delivered to
counsel to the Purchaser:
(a) The Certificate of Incorporation of the Company, as amended
and in effect as of the Closing Date (including the Certificate of Amendment),
certified by the Secretary of State of the State of Delaware;
(b) Certificates, as of the most recent practicable dates, as to
the corporate good standing of the Company issued by the Secretary of State of
the State of Delaware and the Secretary of the State of the Commonwealth of
Massachusetts.
(c) By-laws of the Company, certified by its Secretary or
Assistant Secretary as of the Closing Date; and
(d) Resolutions of the Board of Directors of the Company,
authorizing and approving all matters in connection with this Agreement and the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of the Company as of the Closing Date.
(e) Copies of letters of resignation tendered by Piran Sioshansi
and Raymond Bricault to the Chief Executive Officer of Spire Corporation on the
date hereof.
6.6 MINIMUM INVESTMENT. The Purchaser shall have tendered at the
Closing aggregate consideration of not less than $500,000 for the purchase of
the Note.
6.7 SUPPLY AGREEMENT. The Purchaser and the Company shall have
entered into a Supply Agreement in the form of EXHIBIT M hereto.
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6.8 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 6.1, 6.2, 6.4, 6.5, 6.6 and 6.7 of this Agreement.
6.9 OTHER MATTERS. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchaser and its counsel, and the Purchaser and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
7. CONDITION TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company under Section 1.2 of this Agreement are subject to fulfillment, or the
waiver, of the following conditions on or before the Closing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Purchaser contained in Section 5 shall be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
7.2 MINIMUM INVESTMENT. The Purchaser shall have tendered
consideration of not less than $500,000 for the purchase of the Note.
7.3 SUPPLY AGREEMENT. The Purchaser and the Company shall have
entered into a Supply Agreement in the form of EXHIBIT M hereto.
8. COVENANTS OF THE COMPANY.
8.1 INSPECTION. The Company shall permit the Purchaser, or any
authorized representative thereof, to visit and inspect the properties of the
Company, including its corporate and financial records, and to discuss its
business and finances with officers of the Company, during normal business hours
following reasonable notice and as often as may be reasonably requested.
8.2 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
deliver to the Purchaser:
(a) within 120 days after the end of each fiscal year of the
Company, an audited balance sheet of the Company as at the end of such year and
audited statements of income and of cash flows of the Company for such year,
certified by certified public accountants of established national reputation
selected by the Company, and prepared in accordance with generally accepted
accounting principles;
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(b) within 45 days after the end of each fiscal quarter of the
Company, an unaudited balance sheet of the Company as at the end of such
quarter, and unaudited statements of income and of cash flows of the Company for
such fiscal quarter and for the current fiscal year to the end of such fiscal
quarter; and
(c) within 15 days after the end of each month, a monthly
operating statement.
8.3 NONDISCLOSURE AGREEMENTS. The Company shall require all persons
now or hereafter employed by the Company who have access to confidential and
proprietary information of the Company to enter into nondisclosure and
assignment of inventions agreements substantially in the form of EXHIBIT F, or
such other form as may be approved by the Board of Directors of the Company.
8.4 RESERVATION OF SHARES.
(a) The Company shall reserve and maintain a sufficient number
of shares of Series A Preferred for issuance upon conversion of the Note.
(b) The Company shall reserve and maintain a sufficient number
of shares of Common Stock for issuance upon conversion of all of the outstanding
shares of Series A Preferred.
8.5 TERMINATION OF COVENANTS. The covenants of the Company contained
in Section 8 shall terminate, and be of no further force or effect, upon the
effective date of a registration statement filed by the Company under the
Securities Act covering the Company's first public offering of Common Stock,
resulting in gross proceeds to the Company of at least $10,000,000, at a price
per share of at least $2,500 (as adjusted for stock splits, stock dividends,
recapitalizations and similar events).
9. CONVERSION OF NOTE.
9.1 OPTIONAL CONVERSION. Subject to and upon compliance with the
provisions hereof, the Purchaser shall have the right, at any time prior to the
close of business on the Maturity Date, to convert all or any part of the
principal amount of the Note, plus accrued interest thereon, into Series A
Preferred at a price of $500 per share (such price, as it may be adjusted
pursuant to Section 9.5 below, the "Conversion Price"). In order to exercise
such conversion right the holder shall surrender (in person or by mail) such
Note to the Company at its principal office at 23 Arborwood Drive, Burlington,
Massachusetts (or such other office or agency as the Company may reasonably
designate by notice in writing to the holder of such Note), together with a
written notice that the holder elects to convert such Note, or a specified
amount of principal and interest thereunder, in accordance with this Section 9.
Such notice shall also state the name or
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names (together with addresses) in which the certificate or certificates to
Series A Preferred shall be issued.
9.2 MANDATORY CONVERSION. The entire outstanding principal amount of
the Note, plus accrued interest thereon, shall automatically be converted into
fully-paid and non-assessable shares of Series A Preferred at the then effective
Conversion Price upon the consummation of an underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale by the Company of Common Stock to
the public at a price not less than $2,500 per share (as appropriately adjusted
for stock splits, stock dividends and similar events affecting the Common Stock
after the date hereof) and which results in aggregate gross proceeds to the
Company of not less than $10,000,000. The Company shall cause notice of
mandatory conversion to be mailed to the registered holder of the Note, at such
holder's address appearing in the records of the Company at least ten (10) days
prior to the date fixed for mandatory conversion of the Note. On or before the
date fixed for mandatory conversion, the holder shall surrender the Note at the
place designated in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Series A
Preferred which shall be issuable on such conversion shall be issued.
9.3 ISSUANCE OF CERTIFICATES; WHEN CONVERSION AND EXERCISE EFFECTED.
When surrendered for optional or mandatory conversion, the Company shall issue
and deliver to the holder registered in such name or names as the holder may
direct, a certificate or certificates for the number of full shares of Series A
Preferred issuable upon the conversion of such Note (or specified portion
thereof), bearing any appropriate restrictive legend. To the extent permitted
by law, such conversion or such exercise, as the case may be, shall be deemed to
have been effected and the Conversion Price shall be determined as of the close
of business on the date by which both (i) such written statement shall have been
received by the Company and (ii) such Note shall have been surrendered as
aforesaid, and at such time the rights of the holder of such Note (or specified
portion thereof) as the holder shall cease, and the person or persons in whose
name or names any certificate or certificate for shares of Series A Preferred
shall then be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Series A Preferred represented
thereby.
9.4 FRACTIONAL SHARES; ACCRUED INTEREST; PARTIAL CONVERSION.
(a) No fractional shares shall be issued upon conversion of the
Note and no payment or adjustment shall be made upon any conversion on account
of any cash dividends on the Common Stock or Series A Preferred issued upon such
conversion. If the Note is converted in part only, the Company shall, upon such
conversion, execute and deliver to the holder thereof, at the expense of the
Company, a new Note or Notes of authorized denominations in principal amount
equal to the unconverted portion of such Note and bearing interest from the date
to which interest has been paid on the Note so surrendered (other than pursuant
to the next preceding sentence hereof). If any fractional interest in a share
of Series A Preferred would,
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except for the provisions of the first sentence of this subparagraph 9.4(a), be
deliverable upon the conversion of any Note, the Company shall, in lieu of
delivering the fractional share therefor, pay to the holder surrendering such
Note an amount in cash equal to the fair market value of such fractional
interest as determined by the Board of Directors.
9.5 ADJUSTMENT OF CONVERSION PRICE.
(a) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES:
(i) SPECIAL DEFINITIONS. For purposes of this
Subsection 9.5(a), the following definitions shall apply:
(A) "OPTION" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, excluding options described in subsection 9.5(a)(i)(D)(IV) below.
(B) "ORIGINAL ISSUE DATE" shall mean October __, 1997.
(C) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued (or, pursuant to Subsection 9.5(a)(iii) below,
deemed to be issued) by the Company after the Original Issue Date, other than
shares of Common Stock issued or issuable:
(I) upon conversion of any Convertible Securities
outstanding on the Original Issue Date, or upon
exercise of any Options outstanding on the
Original Issue Date;
(II) as a dividend or distribution on Series A
Preferred Stock;
(III) by reason of a dividend, stock split, split-up or
other distribution on shares of Common Stock that
is covered by Section 9.5(b) below; or
(IV) to employees or directors of, or consultants to,
the Company pursuant to a plan adopted by the
Board
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of Directors of the Company; not to exceed 300 shares
of Common Stock; PROVIDED THAT, such number of shares
may be increased by a vote of a majority of the Board
of Directors without further amendment to this Section
9.5(a)(i)(D)(IV).
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in the
number of shares of Series A Preferred into which the Note is convertible shall
be made, by adjustment in the applicable Conversion Price thereof: (a) unless
the consideration per share (determined pursuant to Subsection 9.5(a)(v)) for an
Additional Share of Common Stock issued or deemed to be issued by the Company is
less than the applicable Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares, or (b) if prior to
such issuance, the Company receives written notice from the holder of the Note
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Shares of Common Stock.
(iii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF
COMMON STOCK.
If the Company at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 9.5(a)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) If such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, upon the exercise, conversion or exchange
thereof, the Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and
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any subsequent adjustments based thereon, shall, upon any such increase becoming
effective, be recomputed to reflect such increase insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities;
(C) Upon the expiration or termination of any unexercised
Option, the Conversion Price shall not be readjusted, but the Additional Shares
of Common Stock deemed issued as the result of the original issue of such Option
shall not be deemed issued for the purposes of any subsequent adjustment of the
Conversion Price;
(D) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Conversion Price then in effect shall
forthwith be readjusted to such Conversion Price as would have obtained had the
adjustment which was made upon the issuance of such Option or Convertible
Security not exercised or converted prior to such change been made upon the
basis of such change; and
(E) No readjustment pursuant to clause (B) or (D) above shall
have the effect of increasing the Conversion Price to an amount which exceeds
the lower of (i) the Conversion Price on the original adjustment date, or
(ii) the Conversion Price that would have resulted from any issuances of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
In the event the Company, after the Original Issue Date, amends the terms
of any Options or Convertible Securities (whether such Options or Convertible
Securities were outstanding on the Original Issue Date or were issued after the
Original Issue Date), then such Options or Convertible Securities, as so
amended, shall be deemed to have been issued after the Original Issue Date and
the provisions of this Subsection 9.5(a)(iii) shall apply.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK.
In the event the Company shall at any time after the Original Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Subsection 9.5(a)(iii), but excluding
shares issued as a stock split, split dividend or combination as provided in
Subsection 9(b), without consideration or for a consideration per share less
than the applicable Conversion Price in effect on the date of and immediately
prior to such issue, then and in such event, such Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, (A) the
numerator of which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus (2) the number of shares of Common Stock
which the aggregate consideration received or to be received by the Company for
the total number of Additional Shares of Common Stock so issued would purchase
at such Conversion
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Price; and (B) the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; PROVIDED THAT, (i) for the purpose
of this Subsection 9.5(a)(iv), all shares of Common Stock issuable upon exercise
or conversion of Options or Convertible Securities outstanding immediately prior
to such issue shall be deemed to be outstanding, and (ii) the number of shares
of Common Stock deemed issuable upon exercise or conversion of such outstanding
Options and Convertible Securities shall not give effect to any adjustments to
the conversion price or conversion rate of such Options or Convertible
Securities resulting from the issuance of Additional Shares of Common Stock that
is the subject of this calculation.
(v) DETERMINATION OF CONSIDERATION. For purposes of
this Subsection 9.5(a), the consideration received by the Company for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(A) CASH AND PROPERTY: Such consideration shall:
(I) insofar as it consists of cash, be computed at the
aggregate of cash received by the Company, excluding amounts paid or payable for
accrued interest and dividends;
(II) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the Company
for consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (I) and (II) above, as determined in
good faith by the Board of Directors.
(B) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Company for Additional Shares of Common
Stock deemed to have been issued pursuant to Subsection 9.5(a)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable
by the Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
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(y) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(vi) MULTIPLE CLOSING DATES. In the event the Company shall
issue on more than one date Additional Shares of Common Stock which are
comprised of shares of the same series or class of Preferred Stock, and such
issuance dates occur within a period of no more than 60 days, then the
Conversion Price shall be adjusted only once on account of such issuances, with
such adjustment to occur upon the final such issuance and to give effect to all
such issuances as if they occurred on the date of the final such issuance.
(b) ADJUSTMENTS FOR STOCK SPLITS, STOCK DIVIDENDS AND
COMBINATIONS.
In case the Company shall:
(A) declare a dividend on its Common Stock in shares
of Common Stock, on its Series A Preferred in shares of
Series A Preferred or on any other class or series of
capital stock of the Company ranking on liquidation prior
or in preference to the Series A Preferred ("Senior
Stock") in shares of Senior Stock,
(B) subdivide outstanding Common Stock or Series A
Preferred or Senior Stock into a larger number of shares
of Common Stock, Series A Preferred or Senior Stock, as
the case may be, by reclassification, stock split or
otherwise, or
(C) combine outstanding Common Stock, Series A
Preferred or Senior Stock into a smaller number of shares
of Common Stock, Series A Preferred or Senior Stock, as
the case may be, by reclassification or otherwise,
the number of shares of Series A Preferred issuable upon conversion of the Note
(and, if applicable, the number of shares of Common Stock issuable upon
conversion of the shares of Series A Preferred issuable upon conversion of the
Note) immediately prior to any such event shall be adjusted proportionately so
that thereafter the holder of the Note shall be entitled to receive upon
conversion of the Note the number of shares of Series A Preferred (and, upon
conversion of such Series A Preferred, the number of shares of Common Stock),
which such holder would have owned after the happening of any of the events
described above had the Note been converted into shares of Series A Preferred
immediately prior to the happening of such event, provided that the Conversion
Price shall in no event be reduced to less than the par value of the shares
issuable upon conversion. An adjustment made pursuant to this Section 9.5(b)
shall
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become effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision or combination.
(c) If, prior to maturity of the Note, the Company shall at any
time consolidate or merge with another corporation (other than a merger or
consolidation in which the Company is the surviving corporation), the registered
holder hereof will thereafter be entitled to receive, upon the conversion
hereof, the securities or property to which a holder of the number of shares of
Series A Preferred then deliverable upon the conversion hereof would have been
entitled upon such consolidation or merger, and the Company shall take such
steps in connection with such consolidation or merger as may be necessary to
ensure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or property thereafter
deliverable upon the conversion of the Note.
(d) NOTICE. In case the Company proposes to take any action
referred to in this Section 9.5, or to effect the liquidation, dissolution or
winding up of the Company, then the Company shall cause notice thereof to be
mailed to the registered holder of the Note, at such holder's address appearing
in the records of the Company, at least thirty (30) days prior to the date on
which the transfer books of the Company shall close or a record be taken for
such stock dividend or the date when such reclassification, liquidation,
dissolution or winding up shall be effective, as the case may be.
(e) STATEMENT OF ADJUSTMENT. Whenever the Conversion Price
shall be adjusted as provided in this Section 9.5 above, the Company shall
forthwith file at each office designated for the conversion of Note, a
statement, signed by the Chairman of the Board, the President, any Vice
President, the Treasurer or Secretary of the Company, showing in reasonable
detail the facts requiring such adjustment and the Conversion Price that will be
effective after such adjustment. The Company shall also cause a notice setting
forth any such adjustment to be sent by mail, first class, postage prepaid, to
the record holder of the Note at his or its address appearing in the records of
the Company. Where appropriate, such notice may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 9.5(d) hereof.
(f) ADJUSTMENTS TO SERIES A PREFERRED ISSUED UPON CONVERSION OF
THE NOTE. The provisions of this Section 9.5 relate solely to any adjustments
to the Conversion Price and to the number of shares of Series A Preferred
issuable upon conversion of the Note (and, if applicable, the shares of Common
Stock issuable upon conversion of such Series A Preferred) which occur as a
result of actions taken by the Company while the Note is outstanding. Upon
conversion of the Note into shares of Series A Preferred, the provisions of this
Section 9.5 will no longer be applicable and the shares of Series A Preferred
issued upon conversion of the Note will be subject to adjustment solely in
accordance with the terms of Section 4 of the Company's Certificate of
Incorporation, as amended from time to time.
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(g) ACCRUED INTEREST. Upon the conversion of the Note, all
accrued but unpaid interest on the amount so converted up to the Conversion Date
shall be converted into additional shares of Series A Preferred on the terms set
forth herein.
(h) SECURITIES ACT OF 1933. Upon conversion of the Note, the
registered holder may be required to execute and deliver to the Company an
instrument, in form satisfactory to the Company, representing that the shares
issuable upon conversion hereof are being acquired for investment and not with a
view to distribution within the meaning of the Securities Act of 1933, as
amended.
9.6 NO PREPAYMENT OF PRINCIPAL. Except as otherwise provided herein,
the principal indebtedness represented by the Note may not be prepaid in whole
or in part, without the prior written consent of the holder of the Note.
10 TRANSFER OF NOTE; TRANSFER OF SHARES ACQUIRED UPON CONVERSION OF NOTE.
10.1 RESTRICTED SECURITIES. "Restricted Securities" means (i) the
Note, (ii) the shares of Series A Preferred issued or issuable upon conversion
of the Note; (iii) the shares of Common Stock issued or issuable upon conversion
of the Series A Preferred, (iv) any shares of capital stock of the Company
acquired by the Purchaser pursuant to the Right of First Refusal Agreement, and
(iv) any other shares of capital stock of the Company issued in respect of such
shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); PROVIDED, HOWEVER, that shares of Common
Stock which are Restricted Shares shall cease to be Restricted Securities
(i) upon any sale pursuant to the Registration Rights Agreement, Section 4(1) of
the Securities Act or Rule 144 under the Securities Act or (ii) at such time as
they become eligible for sale under Rule 144(k) under the Securities Act or an
alternative available exemption from registration under the Securities Act.
10.2 REQUIREMENTS FOR TRANSFER.
(a) Restricted Securities shall not be sold or transferred
unless either (i) they first shall have been registered under the Securities
Act, or (ii) the Company first shall have been furnished with an opinion of
legal counsel, reasonably satisfactory to the Company, to the effect that such
sale or transfer is exempt from the registration requirements of the Securities
Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by the Purchaser which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 10 to the same extent as if he were an original
Purchaser hereunder, or (ii) a transfer made in accordance with Rule 144 under
the Securities Act.
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10.3 LEGEND. Each certificate representing Restricted Securities
shall bear a legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be offered, sold or otherwise transferred, pledged or hypothecated
unless and until such shares are registered under such Act or an
opinion of counsel in form reasonably satisfactory to the Company is
obtained to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing
any Restricted Securities, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
11. SUBORDINATION.
11.1 SUBORDINATION TO SENIOR INDEBTEDNESS. The indebtedness evidenced
by the Note, and the payment of the principal thereof, and any interest thereon,
is wholly subordinated, junior and subject in right of payment, to the extent
and in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred. "Senior
Indebtedness" means the principal of, and premium, if any, and interest on
(a) all indebtedness of the Company for monies borrowed from banks, trust
companies, insurance companies and other financial institutions, including
commercial paper and accounts receivable sold or assigned by the Company to such
institutions, (b) all indebtedness of the Company for monies borrowed by the
Company from other persons or entities, (c) obligations of the Company as lessee
under leases of real or personal property, (d) principal of, and premium, if
any, and interest on any indebtedness or obligations of others of the kinds
described in (a), (b) and (c) above assumed or guaranteed in any manner by the
Company, (d) deferrals, renewals, extensions and refundings of any such
indebtedness or obligations described in (a), (b), (c) and (d) above, and
(f) any other indebtedness of the Company which the Company and the holder of
the Note may hereafter from time to time expressly and specifically agree in
writing shall constitute Senior Indebtedness.
11.2 NO PAYMENT IF DEFAULT IN SENIOR INDEBTEDNESS. No payment on
account of principal of or interest on the Note shall be made, and the Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries), if at the time of such payment or purchase or immediately
after giving effect thereto, (a) there shall exist a default in any payment with
respect to any Senior Indebtedness or (b) there shall have occurred an event of
default (other than a default in the payment of amounts due thereon) with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is outstanding, permitting the
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holders thereof to accelerate the maturity thereof, and such event of default
shall not have been cured or waived or shall not have ceased to exist.
11.3 PAYMENT UPON DISSOLUTION, ETC.
(a) In the event of any bankruptcy, insolvency, reorganization,
receivership, composition, assignment for the benefit of creditors or other
similar proceeding initiated by or against the Company or any dissolution or
winding up or total or partial liquidation or reorganization of the Company
(being hereinafter referred to as a "Proceeding"), all claims of the holder of
the Note in such Proceeding shall be deemed assigned, pro rata, to the then
holders of the Senior Indebtedness on the basis of the respective amounts of
such Senior Indebtedness held by such holder, and the holder of the Note hereby
agrees to execute all documents that such holders request in order to evidence
such assignment, PROVIDED, HOWEVER, that such assignment shall terminate upon
receipt by such holders of payment in full of all of the Senior Indebtedness.
While such assignment is in effect, the then holders of the Senior Indebtedness
shall have the exclusive right to exercise all rights of the holder of the Note
arising from their claims in the Proceeding, including but not limited to the
right to vote for a trustee and to accept or reject a proposed plan of
reorganization or composition, and the holder of the Note hereby agrees to
execute all documents requested by the then holders of the Senior Indebtedness
in order to exercise any such rights whether (at the sole discretion of such
holders) in the holder's own name or in the name of the holder of the Note.
While such assignment is in effect, the holder of the Note also agree that it
shall, upon request, and at their own expense take all reasonable actions
(including but not limited to the execution and filing of documents and the
giving of testimony in any Proceeding, whether or not such testimony could have
been compelled by process) necessary to prove the full amount of all its claims
in any Proceeding, and the holder of the Note shall not expressly, by
implication or by inaction waive any claim in any Proceeding without the written
consent of such holder.
(b) Upon payment or distribution to creditors in a Proceeding of
assets of the Company of any kind or character, whether in cash, property or
securities, all principal and interest due upon any Senior Indebtedness shall
first be paid in full, or payment thereof in full duly provided for, before the
holder of the Note shall be entitled to receive or, if received, to retain any
payment or distribution on account of the Note; and upon any such Proceeding,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holder of the Note would
be entitled except for the provisions of this Section 11 shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment or distribution, or by the holder of the Note
who shall have received such payment or distribution, directly to the holders of
the Senior Indebtedness (pro rata to each such holder on the basis of the
respective amounts of such Senior Indebtedness held by such holder) or their
representatives to the extent necessary to pay all such Senior Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the holder of the Note. In the event of any Proceeding, the holder of Note
shall be entitled to be paid one
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hundred percent (100%) of the principal amount thereof and accrued interest
thereon before any distribution of assets shall be made among the holders of any
class of shares of the capital stock of the Company in their capacities as
holders of such shares.
(c) For purposes of this Section 1(c), the words "assets" and
"cash, property or securities" shall not be deemed to include shares of Common
Stock of the Company as reorganized or readjusted, or securities of the Company
or any other person provided for by a plan of reorganization or readjustment,
the payment of which is subordinated at least to the extent provided in this
Section 11 with respect to the Note to the payment of all Senior Indebtedness
which may at the time be outstanding, if (x) the Senior Indebtedness is assumed
by the new person, if any, resulting from any such reorganization or
readjustment, and (y) the rights of the holders of Senior Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment.
11.4 SUBROGATION. Subject to payment in full of all Senior
Indebtedness, the holder of the Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of the
assets of the Company made on such Senior Indebtedness until all principal and
interest on the Note shall be paid in full; and for purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the holder of the Note would be
entitled except for the subordination provisions of this Section 11 shall, as
between the holder of the Note and the Company and/or its creditors other than
the holders of the Senior Indebtedness, be deemed to be a payment on account of
the Senior Indebtedness.
11.5 RIGHTS OF HOLDER UNIMPAIRED. The provisions of this Section 11
are and are intended solely for the purposes of defining the relative rights of
the holder of the Note and the holders of Senior Indebtedness and nothing in
this Section 11 shall impair, as between the Company and the holders of the
Note, the obligation of the Company, which is unconditional and absolute, to pay
to the holder of the Note the principal thereof and interest thereon, in
accordance with the terms of the Note, nor shall anything herein prevent the
holder of the Note from exercising all remedies otherwise permitted by
applicable law or hereunder upon default, subject to the rights set forth above
of holders of Senior Indebtedness to receive cash, property or securities
otherwise payable or deliverable to the holder of the Note.
11.6 HOLDERS OF SENIOR INDEBTEDNESS. These provisions regarding
subordination will constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Senior
Indebtedness; such provisions are made for the benefit of the holders of Senior
Indebtedness, and such holders are hereby made obligees under such provisions to
the same extent as if they were named therein, and they or any of them may
proceed to enforce such subordination. The holder of the Note shall execute and
deliver to any holder of Senior Indebtedness (a) any such instrument as such
holder of Senior Indebtedness may request in order to confirm the subordination
of the Note to such Senior Indebtedness upon the terms set forth in the Note,
and (b) any powers of attorney specifically confirming the rights of holders of
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Senior Indebtedness to enforce such subordination and all such proofs of claim,
assignments of claim and other instruments as may be requested by the holders of
Senior Indebtedness or their representatives to enforce all claims upon or in
respect of the Note.
11.7 PAYMENTS ON NOTE. Subject to Section 11.3, the Company may make
payments of the principal of, and any interest or premium on, the Note, if at
the time of payment, and immediately after giving effect thereto, (a) there
exists no default in any payment with respect to any Senior Indebtedness and
(b) there shall not have occurred an event of default (other than a default in
the payment of amounts due thereon) with respect to any Senior Indebtedness, as
defined in the instrument under which the same is outstanding, permitting the
holders thereof to accelerate the maturity thereof, other than an event of
default which shall have been cured or waived or shall have ceased to exist.
12. MISCELLANEOUS.
12.1 SUCCESSORS AND ASSIGNS. This Agreement, and the rights and
obligations of Purchaser hereunder, may be assigned by such Purchaser to any
person or entity to which the Note is transferred by such Purchaser, and such
transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company.
12.2 CONFIDENTIALITY. Each Party agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Party may obtain from the other Party pursuant to
financial statements, reports and other materials submitted by the other Party
to such Party pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or until
such information becomes known, to the public; PROVIDED, HOWEVER, that either
Party may disclose such information to its attorneys, accountants, consultants,
and other professionals to the extent necessary to obtain their services in
connection with the transaction contemplated by this Agreement; and PROVIDED
FURTHER, that the Purchaser may disclose such information (i) to any prospective
purchaser of the Note from the Purchaser as long as such prospective purchaser
agrees in writing to be bound by the provisions of this Section or (ii) to any
affiliate of the Purchaser or to a partner, shareholder or subsidiary of such
Purchaser.
12.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
12.4 NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
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If to the Company, at 23 Arborwood Drive, Burlington, Massachusetts 01803,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchaser, with a copy to Susan W.
Murley, Hale and Dorr LLP, 60 State Street, Boston, MA 02109.
If to the Purchaser, at its address set forth on EXHIBIT A, or at such
other address or addresses as may have been furnished to the Company in writing
by such Purchaser, with a copy to Allan J. Reich, D'Ancona & Pflaum, Suite 2900,
30 North La Salle Street, Chicago, IL 60602; or
If to a Founder, at his address set forth below his signature to this
Agreement.
Notices provided in accordance with this Section 12.4 shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
12.5 BROKERS. The Company, each Initial Founder and the Purchaser
(i) represents and warrants to the other parties hereto that he or it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement, and (ii) will indemnify and save the other parties harmless from
and against any and all claims, liabilities or obligations with respect to
brokerage or finders' fees or commissions, or consulting fees in connection with
the transactions contemplated by this Agreement asserted by any person on the
basis of any statement or representation alleged to have been made by such
indemnifying party.
12.6 ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
12.7 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth
in this Agreement, any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holder of the Note. Any amendment or waiver effected in
accordance with this Section 12.7 shall be binding upon the holder of the Note
(including shares of Series A Preferred and Common Stock into which such Note
and Series A Preferred, respectively, have been converted) each future holder of
all such securities and the Company. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
12.8 RECOURSE. Recourse under the Note shall be to the general assets
of the Company.
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12.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
12.10 SECTION HEADINGS. The section headings are for the convenience
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
12.11 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
12.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
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12.13 BINDING ON SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 12.1 herein, this Agreement shall be binding on successors and assigns.
COMPANY:
RADIOMED CORPORATION
By: /s/ D.C. Freeman, Jr.
--------------------------------------------
Donald Freeman, Jr., Ph.D.
Chairman and Chief Executive Officer
PURCHASER:
NORTH AMERICAN SCIENTIFIC, INC.
By: /s/ L. Michael Cutrer
--------------------------------------------
INITIAL FOUNDERS:
/s/ H. Thomas Aretz
------------------------------------------------
H. Thomas Aretz, M.D.
Address:
------------------------
------------------------
/s/ Raymond Bricault
-----------------------------------------------
Raymond Bricault
Address:
------------------------
------------------------
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/s/ D.C. Freeman, Jr.
-------------------------------------------------
Donald Freeman, Jr., Ph.D.
Address:
------------------------
------------------------
/s/ Piran Sioshansi
---------------------------------------------------
Piran Sioshansi, Ph.D.
Address:
------------------------
------------------------
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EXHIBIT A
---------
Principal Amount
Name and Address of Purchaser of Note Purchase Price
- ------------------------------- ------- --------------
North American Scientific, Inc. $500,000 $500,000
7435 Greenbush Avenue
North Hollywood, CA 91605
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