SERIES E PREFERRED STOCK PURCHASE
AGREEMENT
SERIES E
PREFERRED STOCK PURCHASE AGREEMENT
|
|
1
|
|
Company Disclosure
Schedule
|
|
|
|
|
|
|
|
2
|
|
Purchaser Disclosure
Schedule
|
|
|
A
|
|
Amended and Restated Articles of
Incorporation
|
|
|
|
|
|
|
|
B
|
|
Form of Warrant
|
|
|
|
|
|
|
|
C
|
|
Form of Voting Agreement
|
|
|
|
|
|
|
|
D
|
|
Form of OEM Agreement
|
|
|
|
|
|
|
|
E
|
|
Form of Right of First Refusal and
Co-Sale Agreement
|
|
|
|
|
|
|
|
F
|
|
Form of Confidentiality and
Inventions Agreement
|
|
|
|
|
|
|
|
G
|
|
Form of Distribution
Agreement
|
|
|
|
|
|
|
|
H
|
|
Form of Legal Opinion
|
|
|
|
|
|
|
|
I
|
|
Stock Option Summary
|
SERIES E PREFERRED STOCK PURCHASE
AGREEMENT
THIS SERIES E
PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”),
is made as of February 11, 2008 by and between TechniScan, Inc., a
Utah corporation (the “Company”), and Esaote, S.p.A., a
company organized under the laws of the Republic of Italy (the
“Purchaser”).
NOW, THEREFORE,
the parties hereto hereby agree as follows:
1.
Authorization and Sale of Preferred Stock and Warrants
.
1.1
Authorization . The Company has duly authorized (a) the
sale and issuance of up to 20,000,000 shares of its Series E
Preferred Stock (the “Series E Preferred Stock”),
(b) the issuance of such shares of Common Stock of the Company
(the “Common Stock”) to be issued upon conversion of
the shares of Series E Preferred Stock, and (c) the sale
and issuance of up to 1,500,000 warrants to purchase shares of the
Common Stock. The Series E Preferred Stock and the Common
Stock have the rights, preferences, privileges and restrictions set
forth in the Company’s Amended and Restated Articles of
Incorporation (the “Amended Articles”) in the form
attached hereto as Exhibit A.
1.2
Sale of Preferred Stock and Warrants . Subject to the terms
and conditions hereof, the Purchaser desires to purchase and the
Company agrees to sell up to 10,000,000 shares of the Series E
Preferred Stock (the “Shares”) at a price of $0.90 per
Share and warrants to purchase up to 1,500,000 shares of the Common
Stock, at an exercise price of $0.75 per share, in the form
attached hereto as Exhibit B (the “Warrants”). At
the Initial Closing, the Company shall issue and sell to the
Purchaser, and the Purchaser agrees to purchase, 3,333,334 Shares
and 500,000 Warrants. The Purchaser or its assignee pursuant to
Section 9.3 may purchase, at its sole discretion, up to
3,333,333 Shares and 500,000 Warrants at each of the Second and
Third Closings pursuant to the terms and conditions of this
Agreement.
1.3
Purchase Price . The total aggregate purchase price for the
Shares and the Warrants, if Purchaser exercises its full rights to
purchase Shares and Warrants at each Closing, is $9,000,000. The
Purchaser has hereby delivered and paid concurrently herewith
$3,000,000, being the amount required to purchase 3,333,334 Shares
and 500,000 Warrants at the Initial Closing, $2,000,000 of such
amount has been paid in cash, and $1,000,000 has been paid in the
form of an account credit under the OEM Agreement (as defined
herein), pursuant to which the Company may purchase engineering and
design support, prototype equipment and supplies at costs set forth
in the OEM Agreement.
2.
Closings: Delivery . The purchase of Shares and Warrants
hereunder shall take place in three separate closings (each, a
“Closing”), as set forth below:
2.1
Initial Closing . The closing of the purchase and sale of
the initial 3,333,334 Shares and 500,000 Warrants hereunder (the
“Initial Closing”) shall be held at the
1
offices of
TechniScan, Inc., at 1011 East Murray Holladay Road., Salt Lake
City, Utah, 84117, within 10 calendar days of the date that
(i) all documents contemplated by this Agreement have been
completed, and (ii) other investors (excluding Purchaser) have
subscribed, and paid, for a minimum of 1,111,112 shares of
Series E Preferred Stock ($1,000,000) in accordance with
Section 2.6 of this Agreement, or at such other time and place
as is mutually agreed to by the parties hereto; provided, however,
that the Initial Closing shall not be held later than
February 29, 2008.
2.2
Second Closing . Purchaser shall have the right to purchase
up to 3,333,333 additional Shares and 500,000 additional Warrants
for $3,000,000 at a second Closing (the “Second
Closing”), within 30 days of receipt by the Company of
its first 510(k) approval from the US Food and Drug Administration
(the “FDA”) with respect to the breast imaging system
currently under development by the Company (the “Imaging
System”).
2.3
Third Closing . Purchaser shall have the right to purchase
up to 3,333,333 additional Shares and 500,000 additional Warrants
for $3,000,000 at a third Closing (the “Third
Closing”), within 30 days from the Company’s
completion of the manufacturing of the first clinical model of the
Imaging System and the shipment of the first three Imaging Systems
to sites for clinical testing and/or commercial use, provided that
the Company has also received the second 510(k) approval from the
FDA with respect to the Imaging System. For purposes of this
Section 2.3, the “second 510(k) approval” shall
cover an automated reflection system with handheld probe, and
custom array and transmission for refraction correction, and this
clearance shall add transmission speed of sound data for correction
of the reflection image. Notwithstanding the foregoing, Purchaser
may purchase Shares and Warrants at the Third Closing despite the
non-occurrence of the above condition(s), provided that Purchaser
will have purchased a total of at least 7,777,778 Shares (including
the Shares purchased at the Third Closing) prior to
December 31, 2008.
2.4
Conditions of the Second and Third Closings .
(a)
Notice . The Company shall notify Purchaser as soon as
practicable upon, but in no event more than ten (10) days
after, the occurrence of the conditions set forth in
Sections 2.2 and 2.3 above.
(b)
Representations and Warranties . The representations and
warranties made by the Company in Section 3 hereof shall be
true, correct and complete in all respects as of the Second Closing
or Third Closing, as applicable, with the same force and effect as
if they had been made on and as of the date of the Second or Third
Closing, as applicable. The Company shall provide an
officer’s bring-down certificate confirming the
representations and warranties contained herein at the Second
Closing and the Third Closing or, if applicable, written
documentation to Purchaser of any material changes to the
Disclosure Schedule attached to this Agreement as of the date of
the Second Closing and Third Closing, as applicable; provided,
however, that Purchaser shall not be obligated to provide Purchaser
with written documentation of any change that was previously
disclosed to the Board of Directors of the Company so long as the
director designated by Purchaser was present at such
meeting.
2
(c)
Second Closing Minimum . In the event that Purchaser fails
to purchase at least 1,111,111 Shares at the Second Closing,
Purchaser shall not receive Warrants at the Second and Third
Closings and Purchaser’s right to purchase Shares at the
Third Closing shall be limited to the number of Shares actually
purchased at the Second Closing.
(d)
Termination of Rights . Subject to Section 8.2 hereof,
if Purchaser has not purchased at least 7,777,778 Shares before
December 31, 2008, pursuant to its rights to invest at the
Initial Closing, the Second Closing and the Third Closing, the
Protective Provisions (as set forth and defined in the Amended
Articles), and the right of first refusal set forth in
Section 5 of the Rights Agreement (as defined herein), shall
each terminate.
(e)
Right to Receive Warrants . In order to receive 500,000
Warrants at the Second Closing, Purchaser must elect to purchase at
least 1,111,111 Shares at the Second Closing. In order to receive
500,000 Warrants at the Third Closing, Purchaser must have
purchased a total of at least 7,777,778 Shares (including Shares
purchased at the Third Closing) prior to December 31,
2008.
2.5
Delivery . Subject to the terms of this Agreement, at each
Closing, the Company will deliver to the Purchaser the Warrants and
the certificates representing the number of Shares being purchased
by the Purchaser, which certificates shall be registered in the
name of the Purchaser, against payment in full by the Purchaser of
the purchase price therefore by check or such other form of payment
as shall be mutually agreed upon by the Purchaser and the Company,
payable to the order of the Company.
2.6
Additional Investors . The Company shall be authorized to
issue up to 10,000,000 shares of Series E Preferred Stock to
investors other than Purchaser who agree to be bound by terms and
conditions acceptable to Purchaser.
3.
Representations and Warranties of the Company .
The
Company hereby represents and warrants to the Purchaser
that:
3.1
Organization and Standing . The Company is a corporation
duly organized and validly existing under the laws of the State of
Utah, is in good standing under such laws and is qualified to do
business in Utah. The Company has all requisite power and authority
to own, operate and/or lease its properties and assets and to
conduct its business as presently conducted and as proposed to be
conducted. The Company is qualified or licensed and in good
standing as a foreign corporation in all jurisdictions where the
nature of its business or property makes such qualification or
licensing necessary and the failure to be so qualified or licensed
could materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the
Company. True, complete and accurate copies of the Company’s
Articles of Incorporation, Bylaws and all amendments to each to
date have been delivered to the Purchaser, or to counsel for the
Purchaser, and the Company has provided such Purchaser or counsel
with copies of the minutes of all meetings, and all consents in
lieu of meetings, of the Board of Directors and stockholders of the
Company. Prior to the Initial Closing, the Company shall have
properly filed the Amended Articles with the Utah Department of
Commerce, Division of Corporations and
3
Commercial Code
(the “Utah Division of Corporations”) and the same
shall be in full force and effect.
(a) At
the Initial Closing, the authorized capital stock of the Company
will be 57,416,837 shares of Common Stock, par value $.001 per
share, and 28,525,570 shares of preferred stock, par value $.001
per share (“Preferred Stock”); of such authorized
shares of capital stock of the Company, 15,621,752 shares of Common
Stock, and 8,525,570 shares of Series D Preferred Stock will
be issued and outstanding immediately prior to the Initial Closing.
All prior series of Preferred Stock, designated as series A through
C, have heretofore been converted into Common Stock. As of the
Initial Closing, the Company will be authorized to issue 20,000,000
shares of Series E Preferred Stock. As of the Initial Closing,
there are a maximum of 6,666,667 and a minimum of 4,444,444 shares
of Common Stock reserved for issuance under the Company’s
Employee Stock Option Plan, 3,450,639 of which are subject to
outstanding option grants. In addition to the up to 1,500,000
Warrants to be granted at the Initial Closing, the Second Closing
and the Third Closing, there will be 3,303,896 Common Stock
purchase warrants outstanding immediately prior to the Initial
Closing. Schedule 3.2(a) sets forth a list of all holders of
Common Stock, Preferred Stock, warrants, options, convertible debt
and any other security, derivative (whether or not exercisable or
in the money) or instrument convertible into equity in the Company
(collectively, the “Company Securities”), as well as
the amounts and form of Company Securities held by each such
holder, immediately prior to the Initial Closing.
Schedule 3.2(a) also sets forth a fully-diluted pro-forma of
the capitalization of the Company, including all Company
Securities, following the issuance of all the authorized shares of
Series E Preferred Stock. The rights, privileges and
preferences of the Company’s capital stock as of the Closings
shall be as stated in the Amended Articles and as provided under
Utah law. The Company is not subject to the registration
requirements of Section 12 of the Securities Exchange Act of
1934.
(b) All
issued and outstanding shares (i) have been, and as of the
applicable Closing will be, duly authorized, validly issued, fully
paid and nonassessable, and (ii) are and were, and as of the date
of the applicable Closing will have been, offered, issued, sold and
delivered by the Company in compliance with all applicable state
and federal laws concerning the issuance of securities.
(c) Except
as set forth in Schedule 3.2(c), there are no outstanding
rights, subscriptions, calls, options, warrants, preemptive rights,
conversion rights or agreements granted or issued by or binding
upon the Company for the purchase or acquisition (contingent or
otherwise) from the Company of any shares of its capital stock or
any other securities, except in accordance with the terms of this
Agreement. The Company is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any security convertible into or
exchangeable for any shares of its capital stock. No holder of
Common Stock or Preferred Stock or any other security of the
Company or any other person or entity is entitled to any preemptive
right, right of first refusal or similar right as a result of the
issuance of the Shares or otherwise. Except as set forth on
Schedule 3.2(c) or as contemplated by Section 5 of this
Agreement, there is no voting trust, agreement or
arrangement
4
among any of
the beneficial holders of Common Stock or Preferred Stock of the
Company affecting or relating to the voting, issuance, purchase,
redemption, repurchase, transfer or registration for sale under the
Securities Act of 1933, as amended, of any securities of the
Company, nor is the Company a party to any such voting trust,
agreement or arrangement.
3.3
Corporate Power; Authorization . The Company has all
requisite power and authority to enter into this Agreement; the
Warrant, the Voting Agreement in the form attached hereto as
Exhibit C (the “Voting Agreement”), the OEM
Agreement in the form attached hereto as Exhibit D (the
“OEM Agreement”), the Rights of First Refusal and
Co-Sale Agreement in the form attached hereto as Exhibit E
(the “Rights Agreement”) (collectively, the
“Related Agreements”); and the other documents and
agreements contemplated herein, to sell the Shares and Warrants
hereunder, and to carry out and perform its obligations under the
terms of this Agreement, the Related Agreements and the other
documents and agreements contemplated herein. All corporate action
on the part of the Company and its officers, directors and
stockholders necessary for the authorization, execution and
delivery of this Agreement, the Related Agreements and the other
documents and agreements contemplated herein, for the performance
of the Company’s obligations hereunder, for the consummation
of the transactions contemplated herein, and for the authorization,
issuance and delivery of the Shares, Warrants and the Common Stock
issuable upon conversion of the Shares and exercise of the
Warrants, has been taken or will be taken prior to the applicable
Closing. This Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms. As of the Initial Closing, the Second Closing and the Third
Closing, as applicable, this Agreement, the Related Agreements and
the other documents and agreements contemplated herein, will have
been duly executed and delivered by the Company, and all parties
thereto (other than the Purchaser) as contemplated herein, and will
constitute legal, valid and binding obligations of the Company and
such other parties, enforceable against each of them in accordance
with their terms.
3.4
Subsidiaries . Except as set forth on Schedule 3.4, the
Company does not presently own, of record or beneficially, or
control, directly or indirectly, any capital stock or equity
interest in any corporation, association or business entity. The
Company is not, directly or indirectly, a participant in any joint
venture or partnership. The Company does not have any outstanding
advances or loans to or from any individual, partnership, joint
venture, corporation, limited liability company, trust,
unincorporated organization, government or department or agency of
a government (“Person”).
3.5
Validity of Securities . The Shares, when issued, sold and
delivered in accordance with the terms of this Agreement, will be
duly and validly issued, fully paid and nonassessable and will be
free and clear of any preemptive rights, security interests,
claims, liens or encumbrances created by the Company. The Common
Stock issuable upon conversion of the Shares, and upon exercise of
the Warrants, has been, or prior to the applicable Closing will be,
duly and validly reserved and, upon issuance in accordance with the
terms of this Agreement and the Amended Articles, will be duly and
validly issued, fully paid and nonassessable and will be free and
clear of any preemptive rights, security interests, restrictions on
transfer, claims, liens or encumbrances other than restrictions
under applicable and state securities laws.
5
3.6
Governmental Consents .
(a) No
consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or
agency on the part of the Company is or was required for the
Company’s valid execution, delivery and performance of this
Agreement or the offer, sale or issuance of the Shares and Warrants
(and the Common Stock issuable upon conversion or exercise thereof,
as applicable) or the consummation of any other transaction
contemplated hereby, except for the filing of the Amended Articles
with the Utah Division of Corporations, which shall be filed by the
Company prior to the Initial Closing, and, the filing of a notice
under Regulation D under the Securities Act of 1933, as
amended (the “Act”), and the filing of a notice of
exemption pursuant to the Utah Uniform Securities Act, as amended
(the “Utah Securities Law”), both of which shall be
filed by the Company immediately following the applicable Closing.
Based in part upon the truth of the representations and warranties
of the Purchaser contained in Section 4 of this Agreement, the
offer, sale and issuance of the Shares and Warrants (and of the
Common Stock issuable upon conversion or exercise thereof, as
applicable) in conformity with the terms of this Agreement are
exempt from the registration requirements of Section 5 of the
Act and from the qualification requirements of the Utah Securities
Law.
(b) The
Company has obtained all consents, approvals, licenses, permits or
authorizations (“Approvals”) of, made all declarations
or filings with, and given all notices to, all federal, state or
local governmental or public authorities or agencies which are
necessary for the continued conduct by the Company of its business
as now conducted in which the failure to so obtain, make or give
could materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the
Company. The Company is not in material violation of any such
Approval or any terms or conditions thereof. All such Approvals are
in full force and effect, have been duly issued to and fully paid
for by the holder thereof and, to the best of the Company’s
knowledge, no suspension or cancellation thereof has been
threatened. No such Approvals will in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by
this Agreement or any of the other Related Agreements contemplated
hereunder or executed herewith. Schedule 3.6(b) sets forth all
filings submitted by the Company to the FDA.
3.7
Compliance with Other Instruments and Laws . Except as
described in Schedule 3.7:
(a) The
Company is not (i) in violation or default of any provision of
its Articles of Incorporation or Bylaws, each as amended and in
effect on the date hereof and on and as of the applicable Closing;
or (ii) except as to defaults which would result in liability
or loss to the Company of $25,000 or less in the aggregate, in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in, and is not
otherwise in default under, (A) any evidence of indebtedness
for any money borrowed or any other evidence of indebtedness or any
instrument or agreement under or pursuant to which any evidence of
indebtedness for money borrowed or other evidence of indebtedness
has been issued, (B) any of the Contracts, or (C) any
other instrument, mortgage, deed of trust, loan, contract,
commitment or obligation to which it is a party or by which it is
bound or any of its properties is affected. The
6
Company has not
defaulted on, nor has it failed to make at the time contemplated,
payment of any principal of, or premium or interest on, any
indebtedness of $25,000 or more in the aggregate. Neither the
execution, delivery and performance of and compliance with this
Agreement nor the offer, issuance and sale of the Shares and
Warrants (and the Common Stock issuable upon conversion or exercise
thereof, as applicable) does or will: (i) conflict with or
violate the Articles of Incorporation or Bylaws of the Company;
(ii) conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute or default under, or
result in the creation of any lien on any of the properties or
assets of the Company pursuant to the terms of any instrument or
agreement referred to in this Section to which the Company is a
party or by which it is bound; (iii) violate any Law having
applicability to the Company or its assets; or (iv) require
the consent of, or other action by, any stockholder, trustee or any
creditor of, any lessor to or any investor in, the Company or any
other person. Neither the Company, nor, to the best of the
Company’s knowledge, any of its officers, directors,
employees or agents (or stockholders, distributors, representatives
or other persons acting on the express, implied or apparent
authority of the Company) have paid, given or received or have
offered or promised to pay, give or receive, any bribe or other
unlawful payment of money or other thing of value, any
extraordinary discount, or any other unlawful inducement, to or
from any person, business association or governmental official or
entity in the United States or elsewhere, including any regulatory
authority or health care provider, in connection with or in
furtherance of the business of the Company (including, without
limitation, any offer, payment or promise to pay money or other
thing of value (i) to any foreign official or political party
(or official thereof) for the purposes of influencing any act,
decision or omission in order to assist the Company in obtaining
business for or with, or directing business to, any Person, or
(ii) to any Person, while knowing that all or a portion of
such money or other thing of value will be offered, given or
promised to any such official or party for such purposes). The
business of the Company is not dependent upon the making or receipt
of such payments, discounts, or other inducements.
(b) The
Company is in full compliance with all Laws to which it is subject,
including but not limited to the Federal Food, Drug and Cosmetic
Act and all regulations promulgated thereunder. The Company has not
received notice of any violation (or of any investigation,
inspection, audit, or other proceeding by any Governmental
Authority involving allegations of any violation) of any Law, and
to the best of the Company’s knowledge, no investigation,
inspection, audit, or other proceeding by any Governmental
Authority involving allegations of violation of any Law is
threatened or contemplated. Relying upon the representations and
warranties of the Purchaser in Section 4 hereof with respect
to an exemption from the registration requirements of the Act and
the qualification requirements of the applicable securities laws,
neither the execution, delivery or performance of this Agreement by
the Company nor the offer, issuance, sale or delivery of the Shares
and Warrants (and the Common Stock issuable upon conversion or
exercise thereof, as applicable) does or will cause the Company to
be in violation of any statute, law or ordinance or any judgment,
decree, writ, injunction, order, award or other action of any court
or governmental authority or arbitrator or any order, rule or
regulation of any federal, state, county, municipal or other
governmental or public authority or agency. For purposes of this
Agreement, “Governmental Authority” means any court,
administrative agency, or commission or other governmental
authority or instrumentality, whether domestic or foreign,
including the FDA.
7
(c) The
Company is not a party to or bound by (nor is any of its properties
affected by) any contract or agreement, or subject to any order,
writ, injunction or decree or any action of any court or any
governmental department, commission, bureau, board or other
administrative agency or official, or any charter or other
corporate or contractual restriction which materially adversely
affects, or in the future could materially adversely affect, the
business, earnings, prospects, properties or conditions (financial
or other) of the Company or which could reasonably be interpreted
to impose any material restriction on the business operations of
the Company.
3.8
Litigation . There is no action, suit, proceeding, claim,
arbitration or investigation in any court or by or before any other
governmental or public authority or agency or any arbitrator or
arbitration panel, pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its
business, assets (real, tangible or intangible) or properties that,
either individually or in the aggregate, (a) could question
the validity or enforceability of this Agreement, the Related
Agreements and the other agreements and documents contemplated
thereby or the right of the Company to enter into any of them, or
to consummate the transactions contemplated hereby or thereby, or
(b) could adversely affect the business, earnings, prospects,
properties or condition (financial or other) of the Company, nor is
the Company aware that there is any basis for the foregoing. The
foregoing includes, without limitation, actions pending or
threatened (or any basis therefore known to the Company) involving
the prior employment of any of the Company’s employees, the
use in connection with the Company’s business of any
information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to, and none
of its assets are bound by, the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality or arbitrator or arbitration panel. There is no
action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate. Except as set
forth in Schedule 3.8, the Company is not currently involved
in any dispute with any of its current or former directors,
shareholders, employees, agents, brokers, distributors, vendors,
customers, business consultants, franchisees, franchisors,
representatives, or independent contractors.
3.9
Financial Statements . Schedule 3.9 sets forth (i)
audited financial statements, reflecting the financial performance
and condition of the Company as of and for the fiscal years ended
December 31, 2006 and December 31, 2005; and
(ii) the most recent unaudited financial statements of the
Company, reflecting financial performance and condition of the
Company as of and for the twelve months ended December 31,
2007 (all such financial statements being referred to herein
collectively as the “Financial Statements”). The
Financial Statements are true, complete, and correct and have been
prepared in accordance with generally accepted accounting
principles (“GAAP”) (subject to normal and customary
year-end adjustments that are not material for any unaudited
statements) applied on a consistent basis throughout the periods
indicated. The Financial Statements were prepared in accordance
with the books and records of the Company and present fairly,
completely and accurately the financial condition and cash flows of
the Company as of the respective dates and for the periods
indicated. The Company does not have any obligation or a liability,
individually or in the aggregate, in excess of $25,000, required to
be disclosed on a balance sheet prepared in accordance with GAAP
that is not disclosed by the Financial Statements. All financial
forecasts of the Company
8
furnished to
Purchaser were prepared by the Company in good faith on the basis
of reasonable assumptions as of the date on which such financial
forecasts were prepared.
3.10
Absence of Certain Changes . Except as described in
Schedule 3.10, since December 31, 2006: (a) the
Company has not entered into any transaction which was not in the
ordinary course of its business; (b) there has been no
material adverse change in the business, earnings, prospects,
properties or condition (financial or other) of the Company;
(c) there has been no damage to, destruction of or loss of any
of the properties or assets of the Company (whether or not covered
by insurance) materially adversely affecting the business,
earnings, prospects, properties or condition (financial or other)
of the Company; (d) the Company has not declared or paid any
dividend or made any distribution on its capital stock, redeemed,
purchased or otherwise acquired any of its capital stock, granted
any options to purchase shares of its capital stock, or issued any
shares of its capital stock; (e) the Company has not received
notice that there has been a cancellation of an order for its
services or a loss of a customer of the Company, the cancellation
or loss of which could materially adversely affect the business,
earnings, prospects, properties or condition (financial or other)
of the Company; (f) there has been no resignation or
termination of employment of any key officer or key employee of the
Company and the Company does not know of the impending resignation
or termination of employment of any key officer or key employee of
the Company in either case; (g) there has been no labor
dispute involving the Company or any of its employees;
(h) there has been no materially adverse change in the
contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise; (i) there have
been no loans made by the Company to its employees, officers or
directors, other than travel advances and other advances made in
the ordinary course of business; (j) there has been no waiver
or compromise by the Company of a valuable right or of a debt owed
to it or amendment or change to any material contract or
arrangement of the Company; (k) there has been no sale,
assignment, or transfer of any patents, trademarks, copyrights,
trade secrets or other intangible assets or any material assets of
the Company; (l) there has been no extraordinary increase in
the compensation of any of the Company’s employees, officers
or directors and there has been no increase in the compensation of
any such employees, officers or directors who earn compensation at
an annual rate of more than $40,000; (m) there has been no
change to any method of the Company’s accounting or
accounting practice; (n) the Company has not incurred capital
expenditures, or entered into commitments therefore, other than in
the ordinary course of business; (o) the Company has not
discharged or satisfied any encumbrance or paid any obligation or
liability (absolute or contingent, matured or unmatured, known or
unknown) other than current liabilities shown in the Financial
Statements and current liabilities incurred since December 31,
2006, in the ordinary course of business; (p) there has been
no agreement or commitment by the Company to do or perform any of
the acts described in this Section 3.10 or (q) there has
been no other event or condition of any character which might
reasonably be expected either to materially adversely affect the
business, earnings, prospects, properties or condition (financial
or other) of the Company or liabilities of the Company or to impair
the ability of the Company to conduct the business now being or
proposed to be conducted by it.
3.11
Material Contracts and Commitments .
(a) Except
as set forth in Schedule 3.11, the Company has no currently
existing contract, obligation, agreement, plan, arrangement,
commitment or the like (written or
9
oral) of any
material nature (the “Contracts”), including, without
limitation, the following: (1) loans, notes, indentures, or
instruments relating to or evidencing indebtedness for borrowed
money, or mortgages, pledges, liens, security interests or other
encumbrances on any of the Company’s property or any
agreement or instrument evidencing any guaranty by the Company of
payment or performance by any other person; (2) employment,
bonus or consulting agreements, pension, profit sharing, deferred
compensation, stock bonus, retirement, stock option, stock
purchase, phantom stock or similar plans, including agreements
evidencing rights to purchase securities of the Company and
agreements among stockholders and the Company; (3) agreements
with dealers, sales representatives, brokers or other distributors,
jobbers, advertisers or sales agencies; (4) agreements with any
labor union or collective bargaining organization or other similar
labor agreements; (5) any contract or series of contracts with
the same person for the furnishing or purchase of machinery,
equipment, goods or services, including without limitation
agreements with processors and subcontractors; (6) any
indenture, agreement or other document (including private placement
brochures) relating to the sale or repurchase of securities;
(7) any joint venture contract or arrangement or other
agreement involving a sharing of profits or expenses to which the
Company is a party; (8) agreements and purchase orders with
customers; (9) agreements limiting the freedom of the Company
to compete in any line of business or in any geographic area or
with any person; (10) agreements providing for disposition of
the business, assets or shares of the Company, agreements of merger
or consolidation to which the Company is a party or letters of
intent with respect to the foregoing; (11) agreements
involving or letters of intent with respect to the acquisition of
the business, assets or shares of any other business; (12)
insurance policies; (13) license agreements; and
(14) powers of attorney. Except as provided in
Schedule 3.11, the Company is not a party to (i) any
Contract for the emplo
|
