EXHIBIT 3
INVESTMENT AGREEMENT
DATED AS OF JANUARY 23, 1998
AMONG INTEGRAMED AMERICA, INC.
AND
XXXXXX XXXXXXX VENTURE PARTNERS III, L.P.,
XXXXXX XXXXXXX VENTURE INVESTORS III, L.P.
AND
THE XXXXXX XXXXXXX VENTURE PARTNERS ENTREPRENEUR FUND, L.P.
CONFORMED COPY
INVESTMENT AGREEMENT
dated as of
January 23, 1998
among
XXXXXX XXXXXXX VENTURE PARTNERS III, L.P.,
XXXXXX XXXXXXX VENTURE INVESTORS III, L.P.,
THE XXXXXX XXXXXXX VENTURE PARTNERS
ENTREPRENEUR FUND, L.P.,
and
INTEGRAMED AMERICA, INC.
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions
Section 1.1. Definitions...................................................27
ARTICLE 2
Purchase and Sale
Section 2.1. Purchase and Sale.............................................31
Section 2.2. Closing.......................................................31
Section 2.3. Legending of Securities.......................................31
ARTICLE 3
Representations and Warranties of the Company
Section 3.1. Corporate Existence and Power.................................32
Section 3.2. Corporate Authorization.......................................32
Section 3.3. Governmental Authorization....................................33
Section 3.4. Non-contravention.............................................33
Section 3.5. Capitalization................................................33
Section 3.6. Subsidiaries..................................................34
Section 3.7. SEC Filings...................................................34
Section 3.8. Financial Statements..........................................35
Section 3.9. Absence of Certain Changes....................................35
Section 3.10. No Undisclosed Material Liabilities..........................36
Section 3.11. Litigation...................................................37
Section 3.12. Compliance with Laws.........................................37
Section 3.13. Finders' Fees................................................37
Section 3.14. Employee Benefit Plans.......................................37
Section 3.15. Taxes........................................................38
Section 3.16. Environmental Matters........................................39
ARTICLE 4
Representations and Warranties of the Funds
Section 4.1. Organization..................................................40
Section 4.2. Power and Authorization.......................................40
Section 4.3. Governmental Authorization....................................41
Section 4.4. Non-contravention.............................................41
Section 4.5. Finders' Fees.................................................41
Section 4.6. Purchase for Investment.......................................41
Section 4.7. Disclosure of Information.....................................41
Section 4.8. Restricted Securities.........................................41
ARTICLE 5
Covenants of the Company
Section 5.1. Notices of Certain Events.....................................42
Section 5.2. Registration Rights...........................................42
Section 5.3. Access to Book and Records....................................42
ARTICLE 6
Covenants of The Funds
Section 6.1. Notices of Certain Events.....................................43
Section 6.2. Agreement to Provide Information..............................43
ARTICLE 7
Covenants of the Company and the Funds
Section 7.1. Filings; Consents.............................................43
ARTICLE 8
Additional Covenants
Section 8.1. Board Representation; Committees..............................43
Section 8.2. Reports.......................................................44
Section 8.3. Pre-emptive Rights............................................44
Section 8.4. Voting Arrangements...........................................45
ARTICLE 9
Termination
Section 9.1. Grounds for Termination.......................................46
Section 9.2. Effect of Termination.........................................46
ARTICLE 10
Miscellaneous
Section 10.1. Notices......................................................46
Section 10.2. Survival.....................................................47
Section 10.3. Amendments and Waivers.......................................48
Section 10.4. Expenses.....................................................48
Section 10.5. Successors and Assigns.......................................48
Section 10.6. Governing Law................................................48
Section 10.7. Counterparts; Third Party Beneficiaries......................48
Section 10.8. Public Announcements.........................................48
Section 10.9. Entire Agreement; Exhibits...................................49
Section 10.10. Headings.....................................................49
Exhibit A Registration Rights Agreement
Exhibit B Form of Warrant
INVESTMENT AGREEMENT
AGREEMENT dated as of January 23, 1998 among Xxxxxx Xxxxxxx
Venture Partners III, L.P., a Delaware limited partnership ("MSVP III Fund"),
Xxxxxx Xxxxxxx Venture Investors III, L.P., a Delaware limited partnership
("Employee Fund") and The Xxxxxx Xxxxxxx Venture Partners Entrepreneur Fund,
L.P., a Delaware limited partnership ("Entrepreneur Fund") and IntegraMed
America, Inc., a Delaware corporation (the "Company").
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. (a) The following terms, as
used herein, have the following meanings:
"1933 Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Balance Sheet" means the audited consolidated balance sheet of
the Company and the Subsidiaries as of December 31, 1996.
"Balance Sheet Date" means December 31, 1996.
"beneficial ownership" and "beneficially own" shall be
determined in accordance with Rules 13d-3 and 13d-5 under the 1934 Act.
"Benefit Arrangement" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or
medical benefits, disability benefits, worker's compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance or
other benefits) that (i) is not an Employee Plan, (ii) is entered into,
maintained, administered or contributed to, as the case may be, by the Company
or any of its Affiliates and (iii) covers any employee or former employee of
the Company or any Subsidiary of the Company.
"Closing Date" means the date of the Closing.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the Common Stock of the Company, par value
$.01 per share.
"Common Stock Plan" means any present or future Employee Plan,
employment agreement, restricted stock, stock option, stock purchase or
dividend reinvestment plan or other similar type of plan or arrangement of the
Company which provides for the issuance of equity securities or options or
rights to purchase equity securities of the Company.
"Convertible Securities" means any securities convertible into
or exercisable for Voting Securities.
"Employee Plan" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Company or any of its
Affiliates and (iii) covers any employee or former employee of the Company or
any Subsidiary of the Company.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, and the rules and
regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity which,
together with such entity, would be treated as a single employer under Section
414 of the Code.
"Fund" means each or any of the MSVP III Fund, the Employee Fund
and the Entrepreneur Fund.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset. For the
purposes of this Agreement, a Person shall be deemed to own subject to a Lien
any property or asset which it has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such property or asset.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations
of the Company and the Subsidiaries, taken as a whole.
"MSVP" means the program of investment funds comprising the
MSVP III Fund, the Employee Fund and the Entrepreneur Fund.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Registration Rights Agreement" means the Registration Rights
Agreement among the parties hereto attached as Exhibit A hereto.
"Restricted Securities" means the shares of Common Stock and any
other securities or rights convertible into or exercisable (whether immediately
or otherwise) for such Common Stock, including the Warrants, in each case
purchased by the Funds pursuant to this Agreement.
"Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means (i) any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding on amounts paid to or by any Person, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount imposed by
any governmental authority (a "Taxing authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) liability of any Person
for the payment of any amounts of the type described in (i) as a result of
being a member of any affiliated, consolidated, combined or unitary group or
being a party to any agreement or arrangement whereby liability of a Person for
payments of such amounts was determined or taken into account with reference
to the liability of any other Person for any period, and (iii) liability of any
Person for the payment of any amounts of the type described in (i) as a result
of any express or implied obligation to indemnify any other Person.
"Total Voting Power" means the aggregate number of votes which
may be cast by holders of outstanding Voting Securities.
"Voting Securities" means all securities of the Company
entitled, in the ordinary course, to vote in the election of Directors of the
Company.
"Warrants" means the 240,000 warrants of the Company,
substantially in the form of Exhibit B hereto, to purchase shares of Common
Stock to be issued to the Funds hereunder.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
Accredited Investor 4.6
Company Securities 3.5(b)
Closing 2.2
Company 10-K 3.7(a)
Company 10-Q 3.7(a)
Fund Nominee 8.1(a)
Pre-emptive Rights Notice 8.3
Proxy Materials 3.7
Purchase Price 2.1
Shares 2.1
Subsidiary Securities 3.6(b)
ARTICLE 2
Purchase and Sale
Section 2.1. Purchase and Sale. Upon the terms and subject to
the conditions of this Agreement, the Company agrees to sell and the Funds
agree to purchase from the Company for an aggregate purchase price of
$5,500,000 (the "Purchase Price") (a) 3,235,294 shares of Common Stock (the
"Shares") and (b) the Warrants. The actual number of Shares and Warrants that
each Fund will purchase shall be determined by the Funds at Closing.
The Purchase Price shall be paid in accordance with Section 2.2.
Section 2.2. Closing. The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices of Xxxxx Xxxx
& Xxxxxxxx in New York City at 1:00 p.m. EST on January 23, 1998 or at such
other time or place as the parties may agree. At the Closing:
(a) The Company shall deliver to each Fund (i) one or more
certificates for the Shares, registered in the name of such Fund and
representing the number of the Shares to be purchased by such Fund and (ii)
one or more certificates for the Warrants, registered in the name of such Fund
and representing the number of the Warrants to be purchased by such Fund; and
(b) Each Fund shall deliver to the Company an amount equal to
the number of the Shares to be purchased by such Fund at the Closing multiplied
by $1.70 per share for an aggregate amount equal to the Purchase Price in
immediately available funds by wire transfer to an account of the Company
designated by the Company, by notice to each Fund, no later than two business
days prior to the Closing.
Section 2.3. Legending of Securities. All securities to be
issued to each Fund by the Company hereunder shall bear the following legend:
"The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or securities laws of any
state and may not be offered, sold, transferred or otherwise
disposed of except in compliance therewith."
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to each Fund as of the date
hereof and as of the Closing Date that:
Section 3.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a Material Adverse Effect. The
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect. The Company has heretofore delivered to each Fund true and complete
copies of the certificate of incorporation and bylaws of the Company as
currently in effect.
Section 3.2. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement are within the
Company's corporate powers and have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement constitutes a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, except as the indemnification under the Registration
Rights Agreement may be limited by applicable law and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and by equitable principles.
(b) The Shares, when issued and delivered to and paid for by
each Fund pursuant to this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares is not subject to any
preemptive or similar rights, except as set forth in this Agreement. The
shares of Common Stock reserved for issuance upon exercise of the Warrants
have been duly authorized by the Company and reserved for issuance upon such
exercise and, when issued upon such exercise in accordance with the terms of
the Warrants, will have been validly issued, fully paid and non-assessable,
and such shares of Common Stock will be free of preemptive rights or similar
rights except as set forth in this Agreement.
(c) The Warrants, when executed and delivered in accordance
with the terms of this Agreement, will constitute a valid and binding
obligation of the Company.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the Warrants
require no action by or in respect of, or filing with, any governmental body,
agency, or official other than (i) compliance with any applicable requirements
of the 1934 Act; (ii) compliance with any applicable existing requirements of
the Nasdaq Stock Market; and (iii) any action or filing as to which the
failure to make or obtain would not, individually or in the aggregate, have a
Material Adverse Effect.
Section 3.4. Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the Warrants do not and will
not (i) violate the certificate of incorporation or bylaws of the Company or
any Subsidiary; (ii) assuming compliance with the matters referred to in
Section 3.3, violate any applicable law, rule, regulation, judgment,
injunction, order or decree; (iii) constitute a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of the Company or any Subsidiary or to a loss of any benefit to
which the Company or any Subsidiary is entitled under, any agreement or other
instrument binding upon the Company or any Subsidiary or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary; or (iv) result in the creation or imposition of any material Lien
on any asset of the Company or any Subsidiary.
Section 3.5. Capitalization. (a) The authorized capital
stock of the Company consists of (i) 25,000,000 shares of Common Stock, of
which 17,432,730 shares are issued and outstanding as of January 15, 1998,
(ii) 3,165,644 shares of preferred stock, $1.00 par value, of which: (A)
2,500,000 shares are undesignated; (B) 665,644 shares are designated as Series
A Cumulative Convertible of which 165,644 were issued or outstanding as of
January 15, 1998; (iii) warrants outstanding to purchase 775,427 shares of
Common Stock as of January 15, 1998; and (iv) options outstanding to purchase
1,420,602 shares of Common Stock as of January 15, 1998 (including a grant of
options to purchase 175,000 shares of Common Stock which is subject to
stockholder approval increasing the number of shares authorized under the
plan). All outstanding shares of Common Stock and any other class of capital
stock of the Company have been duly authorized and are validly issued, fully
paid and nonassessable.
(b) Except as set forth in Section 3.5(a), there are no
outstanding (i) shares of capital stock or Voting Securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or Voting Securities of the Company or (iii) except as set forth
on Schedule 3.5(b), warrants, options or other rights to acquire from the
Company, or other obligations of the Company to issue, any capital stock,
Voting Securities or securities convertible into or exchangeable for capital
stock or Voting Securities of the Company (the items in clauses 3.5(b)(i),
(ii) and (iii) being referred to collectively as the "Company Securities").
There are no outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Company Securities.
Section 3.6. Subsidiaries. (a) Each Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a Material Adverse Effect, is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a Material Adverse Effect. All
Subsidiaries and their respective jurisdictions of incorporation are
identified on Schedule 3.6(a).
(b) Except as set forth on Schedule 3.6(b), all of the outstanding
capital stock of, or other voting securities or ownership interests in, each
Subsidiary, is owned by the Company, directly or indirectly, free and clear of
any Lien and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests). There are no
outstanding (i) securities of the Company or any Subsidiary convertible into
or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary or (ii) options or other rights to
acquire from the Company or any Subsidiary, or other obligation of the Company
or any Subsidiary to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
Subsidiary (the items in clauses 3.6(b)(i) and (ii) being referred to
collectively as the "Subsidiary Securities").
Section 3.7. SEC Filings. (a) The Company has delivered to
each Fund (i) the annual report on Form 10-K for its fiscal year ended December
31, 1996 (the "Company 10-K"), (ii) its quarterly report on Form 10-Q for its
fiscal quarters ended March 31, June 30, and September 30, 1997 (each, a
"Company 10-Q"), (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the stockholders of the
Company since January 1, 1997 (the "Proxy Materials") and (iv) all of its
other reports, statements, schedules and registration statements filed with the
Commission since January 1, 1997 (the items in clauses 3.7(a)(i) through (iv)
being referred to collectively as the "SEC Reports").
(b) As of its filing date, or, if such SEC Report was amended, on
the date of filing of such amendment, each SEC Report did not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 3.8. Financial Statements. The audited consolidated
balance sheets as of December 31, 1995 and 1996 and the related audited
consolidated statements of operations and cash flows for each of the years
ended December 31, 1995 and 1996 included in the Company 10-K and the
unaudited interim consolidated balance sheet as of September 30, 1997 and the
related unaudited interim consolidated statements of operations and cash flows
for the three months ended September 30, 1997 included in the Company 10-Q, of
the Company fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the Company as of the
dates thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
Section 3.9. Absence of Certain Changes. Since the Balance
Sheet Date other than as disclosed, or provided for, in the Company 10-K, a
Company 10-Q or other SEC Report and except as set forth in Schedule 3.9, the
businesses of the Company and its Subsidiaries have been conducted in the
ordinary course consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts which has had or would reasonably be expected to have a Material Adverse
Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company or any
Subsidiary of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding security
of the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money, except in the ordinary
course of business consistent with past practices;
(e) any creation or assumption by the Company or any Subsidiary of
any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in Subsidiaries made in the ordinary course of business
consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(h) any change in any method of accounting or application thereof
by the Company or any Subsidiary, except for any such change required by
reason of a concurrent change in generally accepted accounting principles;
(i) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director, officer
or employee of the Company or any Subsidiary (or any amendment to any such
existing agreement), (B) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary, or (C) change
in compensation or other benefits payable to any director, officer or employee
of the Company or any Subsidiary pursuant to any severance or retirement plans
or policies thereof, other than in the ordinary course of business consistent
with past practices; or
(j) any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, which employees were
not subject to a collective bargaining agreement at December 31, 1996, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any employees of the Company or any Subsidiary.
Section 3.10. No Undisclosed Material Liabilities. Except as
set forth on Schedule 3.10, there are no liabilities of the Company or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability, other than:
(a) liabilities disclosed or provided for in the Balance Sheet;
(b) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate are not material, except for liabilities incurred in connection with
normal and recurring fourth quarter operations, to the Company and the
Subsidiaries, taken as a whole; and
(c) liabilities under this Agreement.
Section 3.11. Litigation. Except as set forth on Schedule
3.11, there is no action, suit, investigation or proceeding pending against,
or to the knowledge of the Company threatened against or affecting, the
Company or any Subsidiary or any of their respective properties before any
court or arbitrator or any governmental body, agency or official (i) which
would reasonably be expected to have a Material Adverse Effect or (ii) which
in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement.
Section 3.12. Compliance with Laws. Neither the Company nor
any Subsidiary is in violation of or has violated any applicable law, rule or
regulation, except for violations which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
Section 3.13. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of the Company who might be entitled to any fee or
commission in connection with the transactions contemplated by this Agreement.
Section 3.14. Employee Benefit Plans. (a) The Company has
provided the Funds with a list identifying each Employee Plan and Benefit
Arrangement.
(b) No Employee Plan (i) constitutes a Multiemployer Plan or (ii)
is maintained in connection with any trust described in Section 501(c)(9) of
the Code. Neither the Company nor any ERISA Affiliate of the Company
maintains, contributes to, or is required to contribute to nor in the past has
maintained, contributed to or been required to contribute to any plan subject
to Title IV of ERISA.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code and has been so exempt
since its creation. The Company has furnished to the Funds copies of the most
recent Internal Revenue Service determination letter with respect to each such
Employee Plan. To the Company's knowledge, each Employee Plan and Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Employee Plan or Benefit Arrangement, as applicable.
(d) Except as disclosed in Schedule 3.14, there is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company or any Subsidiary that, individually or collectively, could give rise
to the payment of any amount that would not be deductible pursuant to the
terms of Sections 162(m) or 280G of the Code.
(e) Neither the Company nor any Subsidiary maintains or contributes
to any Employee Plan which provides, or has any liability to provide life
insurance, medical or other welfare benefits to any employee upon retirement
or termination of employment, except as may be required by law.
(f) Except as disclosed in writing to the Funds since the Balance
Sheet Date, there has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its affiliates
relating to, or change in employee participation or coverage under, any
Employee Plan or Benefit Arrangement which would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement above the
level of the expense incurred in respect thereof for the fiscal year ended on
the Balance Sheet Date.
(g) Except as set forth in Schedule 3.14 or disclosed in the
Company's SEC Reports, neither the Company nor any Subsidiary is a party to or
subject to any union contract or any employment contract providing for annual
future compensation of $100,000 or more with any officer, consultant, director
or employee.
Section 3.15. Taxes. Except as disclosed in the financial
statements included in the Company 10-K (including the notes thereto) or
except as disclosed on Schedule 3.15 or except in respect of Taxes, the
liability for which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (i) all Tax returns, statements,
reports and forms required to be filed with any Taxing authority by or on
behalf of the Company or any Subsidiary (collectively, the "Returns"), on or
prior to the Closing Date have been or will be filed when due in accordance
with all applicable laws except where failure to so file would not subject the
Company or any Subsidiary to liabilities or penalties; (ii) as of the time of
filing, the Returns correctly reflected (and, as to any Returns not filed as
of the date hereof, will correctly reflect) the facts regarding the income,
business, assets, operations, activities and status of the Company and each
Subsidiary; (iii) the Company and each Subsidiary has timely paid, withheld or
made provision for all Taxes shown as due and payable on the Returns that have
been filed; (iv) neither the Company nor any Subsidiary is delinquent in the
payment of any Tax and has not requested any extension of time within which to
file or send any Return, which Return has not since been filed or sent; (v)
neither the Company nor any Subsidiary (or any member of any affiliated or
combined group of which the Company or any Subsidiary is or has been a member)
has been granted any extension or waiver of the limitation period applicable
to the assessment or collection of any Taxes payable by the Company or any
Subsidiary which will remain in effect after the Closing Date; (vi) there is no
claim, audit, action, suit, proceeding or investigation now pending or
threatened against or with respect to the Company or any Subsidiary of which
the Company is aware in respect of any Tax or assessment; and (vii) there are
no liens for Taxes upon the assets of the Company or any Subsidiary except
liens for current Taxes not yet due.
Section 3.16. Environmental Matters. (a) Except as set
forth in the Company 10-K, a Company 10-Q or other SEC Report or except as
disclosed on Schedule 3.16:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed, no investigation, action, claim, suit, proceeding
or review is pending, or, to the knowledge of the Company or any Subsidiary,
threatened by any governmental entity or other Person with respect to any
matters relating to the Company or any Subsidiary and relating to or arising
out of any Environmental Law which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(ii) the Company is in compliance with all Environmental Laws
and has, and is in compliance with, all environmental permits, except where
any noncompliance or failure to receive environmental permits could not
reasonably be expected to result in a Material Adverse Effect; and
(iii) to the Company's knowledge, there are no liabilities of,
or relating to, the Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, arising
under or relating to any Environmental Law which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, and
there are no facts, conditions, situations or set of circumstances which could
reasonably be expected to result in or be the basis for any such liability.
(b) There has been no environmental investigation, study, audit,
test, review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any property or
facility now or previously owned or leased by the Company or any Subsidiary.
(c) Neither the Company nor any Subsidiary owns or leases or has
owned or leased any real property, or conducts or has conducted any
operations, in New Jersey or Connecticut.
(d) For purposes of this Section, the following terms shall have
the meanings set forth below:
(i) "Company" and "Subsidiary" shall include any entity
which is, in whole or in part, a predecessor of the Company or any Subsidiary;
(ii) "Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants or other hazardous
substances or wastes into the environment, including without limitation
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or other hazardous
substances or wastes or the clean-up or other remediation thereof;
ARTICLE 4
Representations and Warranties of the Funds
Each Fund represents and warrants to the Company, severally as
to itself and not jointly, as of the date hereof and as of the Closing Date
that:
Section 4.1. Organization. Such Fund is organized under the
laws of the State of Delaware.
Section 4.2. Power and Authorization. The execution, delivery
and performance by such Fund of this Agreement are within the powers of such
Fund and have been duly authorized by all necessary action on the part of such
Fund. This Agreement constitutes a valid and binding agreement of such Fund
enforceable against such Fund in accordance with its terms, except as the
indemnification under the Registration Rights Agreement may be limited by
applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and by equitable
principles.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by such Fund of this Agreement require no action by
or in respect of, or filing with, any governmental body, agency or official
other than any such action or filing as to which the failure to make or obtain
would not, individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), business, assets or results of
operations of such Fund.
Section 4.4. Non-contravention. The execution, delivery and
performance by such Fund of this Agreement do not and will not (i) violate the
certificate or agreement of limited partnership of such Fund or (ii) assuming
compliance with the matters referred to in Section 4.3, violate (x) any
applicable law, rule or regulation, that, in the experience of such Fund, is
normally applicable to general business entities in relation to transactions of
the type contemplated by this Agreement or (y) any judgment, injunction, order
or decree binding on such Fund.
Section 4.5. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of such Fund who might be entitled to any fee or
commission from such Fund or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
Section 4.6. Purchase for Investment. Such Fund is acquiring
the Shares and Warrants for investment for its own account and not with a view
to, or for sale in connection with, any distribution thereof. Such Fund is an
"Accredited Investor" as such term is defined in Regulation D under the 1933
Act.
Section 4.7. Disclosure of Information. Each Fund believes
it has received all the information it considers necessary or appropriate for
deciding whether to purchase the Restricted Securities. Each Fund further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the sale of the
Restricted Securities.
Section 4.8. Restricted Securities. Each Fund understands
that the Restricted Securities it is purchasing are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities
may be resold without registration under the 1933 Act, only in certain limited
circumstances. In this connection each Fund represents that it is familiar
with Rule 144 under the 1933 Act, as presently in effect, and understands the
resale limitations imposed thereby and by the 1933 Act.
ARTICLE 5
Covenants of the Company
The Company agrees that:
Section 5.1. Notices of Certain Events. The Company shall
promptly notify each Fund of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or to its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant
to Section 3.11.
Section 5.2. Registration Rights. At any time after the first
anniversary of the Closing Date, each Fund shall have the registration rights
set forth in Exhibit A.
Section 5.3. Access to Book and Records. The Company agrees
that, after Closing and for so long as the Funds in the aggregate beneficially
own directly or indirectly at least 5% of the outstanding shares of Common
Stock, each Fund will have access on reasonable terms to the books, records and
employees of the Company and its Subsidiaries and to the provision by the
Company of all information reasonably requested by such Fund, subject to
confidentiality obligations that at the time may be owed by the Company to
third parties, to appropriate confidentiality arrangements and requirements of
law.
ARTICLE 6
Covenants of The Funds
Each Fund agrees that:
Section 6.1. Notices of Certain Events. Such Fund shall
promptly notify the Company of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; and
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement.
Section 6.2. Agreement to Provide Information. Such Fund
agrees to provide to the Company in writing all information concerning such
Fund as may be reasonably necessary for the Company to prepare the Proxy
Material and any other current or future securities or regulatory reports or
filings of the Company.
ARTICLE 7
Covenants of the Company and the Funds
The parties hereto agree that:
Section 7.1. Filings; Consents. Each party hereto agrees to
cooperate with each other in good faith and to use its reasonable best efforts
in making all required governmental filings and obtaining at the earliest
practicable date all necessary approvals and consents from governmental
entities and third parties.
ARTICLE 8
Additional Covenants
Section 8.1. Board Representation; Committees. (a) The Company
agrees that MSVP III Fund shall have the right to cause the Company to
include, as a nominee for the Company's Board of Directors recommended by the
Board, a number of Directors (rounded down to the next whole number if the
fraction referred to below is less than one-half or, if otherwise, rounded up
to the next whole number) that is equal to the product of the total number of
Directors on the Board of Directors times a fraction the numerator of which is
the aggregate number of Voting Securities owned by the Funds (assuming
conversion of securities convertible into or exercisable or exchangeable for
Voting Securities) and the denominator of which is the total number of Voting
Securities outstanding; provided that notwithstanding the foregoing, if the
Funds beneficially own less than 5% of the outstanding Voting Securities, MSVP
III Fund shall no longer have the right to designate any nominee for election
to the Company's Board of Directors (the "Fund Nominees").
(b) The Company agrees to use its best efforts to increase the
size of the Board of Directors of the Company promptly after Closing by the
number of Directors as determined pursuant to Section 8.1(a) and shall appoint
as Directors of the Company (with a term expiring at the following annual
meeting of the Company's stockholders) such persons designated by MSVP III
Fund.
Section 8.2. Reports. The Company agrees that the financial
statements of the Company shall be audited as of the end of each fiscal year by
the Company's independent certified public accountants. The Company's current
independent public accountants are Price Waterhouse LLP. In the event that
Price Waterhouse LLP ceases to be the Company's accountants, the Company
agrees that its independent public accountants thereafter shall be a
nationally recognized independent certified public accounting firm.
Section 8.3. Pre-emptive Rights. (a) If the Company shall,
other than pursuant to any Excluded Issuance, issue any of its Voting
Securities or Convertible Securities, the Funds shall have the right to
purchase for cash the number or amount of such Voting Securities or
Convertible Securities on the same terms and at the same price as the issue
price of such Voting Security or Convertible Security (if such Voting Security
or Convertible Security is to be issued for consideration other than cash, at
a cash price equal to the fair market value of such non-cash consideration on
the date the Company first agrees to issue such Voting Securities or
Convertible Securities) so that, after the issuance of all such Voting
Securities or Convertible Securities, the Funds would, in the aggregate, hold
the same proportional interest of such equity securities (or, in the case of
Convertible Securities, to be outstanding upon conversion or exercise of all
such Convertible Securities) as is held by it prior to the issuance of any
such additional equity securities or Convertible Securities. An "Excluded
Issuance" means any issuance of Voting Securities or Convertible Securities
pursuant to (i) any Common Stock Plan, (ii) upon conversion of Convertible
Securities of the Company outstanding on the date hereof, (iii) upon an
offering or sale to the public registered under the 1933 Act, (iv) pursuant to
a stock dividend or stock split or other subdivision or recombination of
Voting Securities, (v) in connection with any Acquisition or financing
pursuant to an Acquisition, where the issuance is not registered at the time
of such issuance under the 1933 Act, (vi) in connection with any equipment
financing, collaborative arrangement or bank financing not intended to provide
equity financing, or (vii) any issuance pursuant to the Letter of Intent
between the Company and the Shady Grove Shareholders (as defined therein)
dated January 22, 1998, in connection with the acquisition of Shady Grove (as
defined therein). In the event the Company proposes to issue securities
subject to the provisions of this Section 8.3, the Company shall promptly
deliver written notice (a "Pre-emptive Rights Notice") of such proposed
issuance to the Funds setting forth the material terms and price. Each Fund's
right to purchase securities under this Section 8.3 with respect to any
issuance of securities shall terminate 15 days after the delivery of the
Pre-emptive Rights Notice unless the Funds elect to purchase securities
pursuant to such Notice by sending written notice to the Company prior
thereto. The rights of the Funds under this Section 8.3 shall terminate in
their entirety upon the earlier of (i) the fifth anniversary of the Closing
Date and (ii) the Fund's ownership of Voting Securities is less than 2% of the
outstanding number of Voting Securities.
(b) For the purposes of this Section 8.3, (i) the term
"Acquisition" shall mean any transaction, including, but not limited to, any
purchase of stock, assets or other business combination not intended to
provide equity financing, where the Company issues Voting Securities as
consideration at a per share value (based on the fair market value of the cash
and non-cash consideration obtained or acquired by the Company) not less than
the lower of (x) the average closing price per share of the Common Stock on
the Nasdaq Stock Market over the 10 trading days prior to the third business
day before consummation of such transaction and (y) the price as determined by
a similar market based formula set forth in the relevant transaction
agreement; and (ii) the term "fair market value" of any non-cash consideration
on the date in question shall mean the fair market value of such consideration
as mutually agreed by the Company and the Funds, or if such parties are unable
to agree, as determined by an investment banking firm mutually agreeable to
both parties. In the event that the parties are unable to agree on an
investment banking firm, then each party shall select a third investment
banking firm to determine the "fair market value" of any non-cash
consideration. The fees and expenses of such third investment banking firm
shall be borne equally by the Company and the Funds.
Section 8.4. Voting Arrangements. MSVP shall vote and cause
to be voted all Voting Securities owned by the Funds for nominees to the Board
of Directors of the Company who have been recommended by the Company's Board
of Directors.
ARTICLE 9
Termination
Section 9.1. Grounds for Termination. This Agreement may be
terminated at any time:
(a) by mutual written agreement of the Company and each Fund; or
(b) by the Funds with respect to all of their respective
obligations hereunder if the Company shall fail to nominate for election or
appoint to the Company's Board of Directors the persons designated by MSVP III
Fund pursuant to Section 8.1.
The party desiring to terminate this Agreement shall give
notice of such termination to each other party.
Section 9.2. Effect of Termination. If this Agreement is
terminated as permitted by Section 9.1, termination shall be without liability
of any party (or any stockholder, director, officer, employee, agent,
consultant or representative of such party) to the other parties to this
Agreement; provided that if such termination shall result from the willful
failure of any party to fulfill a condition to the performance of the
obligations of any other party or to perform a covenant of this Agreement or
from a willful breach by any party to this Agreement, such party shall be
fully liable for any and all damage, loss or expense incurred or suffered by
the other party or parties as a result of such failure or breach. The
provisions of Sections 10.2 and 10.4 survive any termination hereof pursuant
to Section 9.1. The provisions of Section 5.2 and the Registration Rights
Agreement (Exhibit A hereto) shall survive any termination of this Agreement
subsequent to the Closing.
ARTICLE 10
Miscellaneous
Section 10.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile transmission) and shall be given,
if to the Funds, to:
Xxxxxx Xxxxxxx Venture Partners
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: M. Xxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
if to the Company, to:
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Fax: (000) 000-0000
with a copy to:
Bachner, Tally, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
All such notices, requests and other communications shall be deemed received
on the date of receipt by the recipient thereof if received prior to 5 p.m. in
the place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt.
Section 10.2. Survival. The representations and warranties of
the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until eighteen months after the Closing Date.
Section 10.3. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Closing Date if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 10.4. Expenses. All costs and expenses incurred by the
parties hereto in connection with the transactions contemplated by this
Agreement shall be the responsibility of such party. Notwithstanding anything
to the contrary contained in this Section 10.4, all reasonable fees and
disbursements of the Fund's legal counsel arising in connection with the
transactions contemplated by this Agreement (up to an amount equal to $25,000)
shall be paid by the Company.
Section 10.5. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that except as expressly
provided herein no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of each other
party hereto.
Section 10.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of New York, without
regard to the conflicts of law rules of such state.
Section 10.7. Counterparts; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 10.8. Public Announcements. The Company and each Fund
shall agree on the form and content of any public announcements which shall
be made concerning this Agreement or the transactions contemplated hereby, and
neither the Company nor any Fund shall make any such public announcement
without the consent of the other, except with respect to any public
announcement or other public disclosure, to the extent either party
determines, in good faith and with the advice of counsel, such announcement
or disclosure is required by law or the rules or regulations of any exchange on
which such party's securities are listed or to avoid undue risk that the
transactions contemplated hereby will be enjoined or that such party, its
officers, directors or representatives will be liable for damages as a result
thereof.
Section 10.9. Entire Agreement; Exhibits. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, among the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by any party hereto. All exhibits hereto constitute part of this
Agreement and are expressly incorporated herein.
Section 10.10. Headings. The headings and the table of
contents appearing in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the
scope and intent of this Agreement or any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
INTEGRAMED AMERICA, INC.
By: /s/ Xxxxxx Xxxx
--------------------------------------------
Name: Xxxxxx Xxxx
Title: Chief Financial Officer
XXXXXX XXXXXXX VENTURE PARTNERS III, L.P.
By: Xxxxxx Xxxxxxx Venture Partners III, L.L.C.
its General Partner
By: Xxxxxx Xxxxxxx Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ M. Xxxxx Xxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxx
Title: General Partner
By: /s/ M. Xxxxx Xxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxx
Title: General Partner
XXXXXX XXXXXXX VENTURE INVESTORS III, L.P.
By: Xxxxxx Xxxxxxx Venture Partners III, L.L.C.
its General Partner
By: Xxxxxx Xxxxxxx Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ M. Xxxxx Xxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxx
Title: General Partner
By: /s/ M. Xxxxx Xxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxx
Title: General Partner
THE XXXXXX XXXXXXX VENTURE PARTNERS
ENTREPRENEUR FUND, L.P.
By: Xxxxxx Xxxxxxx Venture Partners III, L.L.C.
its General Partner
By: Xxxxxx Xxxxxxx Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ M. Xxxxx Xxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxx
Title: General Partner
By: /s/ M. Xxxxx Xxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxx
Title: General Partner
Exhibit A
REGISTRATION RIGHTS
ARTICLE 1
Definitions
Section 1.1. Definitions. Terms defined in the Investment
Agreement (the "Agreement") dated as of January 23, 1998 among IntegraMed
America, Inc., a Delaware corporation (the "Company"), Xxxxxx Xxxxxxx Venture
Partners III, L.P., a Delaware limited partnership ("MSVP III Fund"), Xxxxxx
Xxxxxxx Venture Investors III, L.P., a Delaware limited partnership ("Employee
Fund") and The Xxxxxx Xxxxxxx Venture Partners Entrepreneur Fund, L.P., a
Delaware limited partnership ("Entrepreneur Fund") are used herein as therein
defined. In addition, the following terms, as used herein, have the following
meanings:
"Demand Registration" means a Demand Registration as defined in
Section 2.1.
"Form S-3 Registration" means a Form S-3 Registration as
defined in Section 2.3.
"Holder" means any person or persons owning or having the right
to acquire Registerable Securities.
"Piggyback Registration" means a Piggyback Registration as
defined in Section 2.2.
"Registerable Securities" means shares of Common Stock owned
from time to time by any Fund and its partners and Affiliates, and any other
securities issued by the Company in exchange for or upon conversion of any
such securities.
"Underwriter" means a securities dealer who purchases any
Registerable Securities as principal and not as part of such dealer's
market-making activities.
ARTICLE 2
Registration Rights
Section 2.1. Demand Registration. (a) At any time after the
first anniversary of the Closing Date, Holders of at least fifty percent (50%)
of the Registerable Securities then outstanding may make up to two written
requests for registration under the 1933 Act of all or part of their
Registerable Securities (a "Demand Registration"); provided that the Company
shall not be obligated to effect a Demand Registration for Registerable
Securities (i) more than once in any 180 day period and (ii) for an aggregate
public offering price of less than $5 million and not less than an aggregate
of 1,000,000 Registerable Securities (as such number may be adjusted from time
to time for any stock split, stock dividend or other recapitalization or
reclassification). Such request will specify the number of shares of
Registerable Securities proposed to be sold and will also specify the intended
method of disposition thereof. In connection with any registration pursuant to
this Section 2.1, the Company shall give written notice of such registration
to its stockholders who have rights similar to those set forth in Section
2.02, and such notice shall offer, subject to the terms and conditions hereof,
each stockholder the opportunity to register shares as each stockholder may
request on the same terms and conditions as the Holders' shares. A
registration will not count as a Demand Registration until a registration
statement relating to such Demand Registration has become effective.
(b) If Holders so elect, the offering of such Registerable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. Holders shall have the right to appoint Xxxxxx Xxxxxxx
& Co. Incorporated ("MS & Co."), as the book-running and managing Underwriter
in connection with such offering and any additional investment bankers and
managers to be used in connection with the offering. If Holders decline their
right to appoint MS & Co. as the book-running and managing Underwriter, the
Company shall select, subject to approval by Holders of a majority of the
Registerable Securities subject to such Demand Registration, the book-running
and other managing Underwriters in connection with such offering and any
additional investment bankers and managers to be used in connection with the
offering. The Company shall be obligated to cause senior management of the
Company to participate in any "road-show" in connection with the offering.
Section 2.2. Piggyback Registration. If the Company proposes
to file a registration statement under the 1933 Act with respect to an
offering of Common Stock (i) for the Company's own account (other than a
registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the Commission) or relating solely to securities issued pursuant to
any present or future restricted stock, stock option, stock purchase or
dividend reinvestment plan or other similar type of plan of the Company which
provides for the issuance of equity securities or options or rights to
purchase equity securities of the Company), or (ii) for the account of any of
its stockholders (not including Holders), then the Company shall give written
notice of such proposed filing to each Holder as soon as practicable (but in
no event less than 15 days before the anticipated filing date), and such
notice shall offer, subject to the terms and conditions hereof, each Holder
the opportunity to register such Registerable Securities as each Holder may
request on the same terms and conditions as the Company's or such
stockholders' shares (a "Piggyback Registration").
Section 2.3. Form S-3 Registration. (a) At any time after the
first anniversary of the Closing Date, in case the Company shall receive from
any Holder or Holders who hold in excess of one percent (1%) of the Company's
outstanding Common Stock (including the number of shares of Common Stock into
which Convertible Securities may be converted) a written request or requests
that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to the Registerable Securities owned
by such Holder with an anticipated aggregate offering price, net of discounts
and commissions, of more than $2.5 million (a "Form S-3 Registration"), the
Company will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
stockholders having registration rights, and such notice shall offer, subject
to the terms and conditions hereof, each stockholder the opportunity to
register shares as each stockholder may request on the same terms and
conditions as the Holders' shares; and
(ii) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registerable Securities as are specified in such request,
together with all or such portion of the Registerable Securities of any other
stockholders joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided that the Company shall not be obligated to honor more than two
requests for registration on Form S-3 in any one year period. Registrations
effected pursuant to this Section 2.3(a)(ii) shall not be counted as demands
for registration or registrations effected pursuant to Section 2.1.
(b) If Holder or Holders so elect, the offering of such
Registerable Securities pursuant to such Form S-3 Registration shall be in
the form of an underwritten offering. Holders shall have the right to
appoint MS & Co. as the book-running and managing Underwriter in connection
with such offering and any additional investment bankers and managers to be
used in connection with the offering. If Holders decline their right to
appoint MS & Co. as the book-running and managing Underwriter, the Company
shall select, subject to approval by Holders of a majority of the
Registerable Securities subject to such Form S-3 Registration, the book-
running and other managing Underwriters in connection with such offering
and any additional investment bankers and managers to be used in connection
with the offering. The Company shall be obligated to cause senior
management of the Company to participate in any "road-show" in connection
with the offering.
Section 2.4. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an offering
described in Section 2.01, 2.02 or 2.03 shall advise the Company that the size
of the offering that Holder, the Company and any other Persons intend to make
is such that the success of the offering would be materially and adversely
affected, then the amount of Registerable Securities to be offered for the
account of Holder shall be reduced to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount recommended
by such managing Underwriter or Underwriters; provided that (x) in the case of
a Demand Registration by Holders or Form S-3 Registration pursuant to Section
2.3 hereof, the amount of Registerable Securities to be offered for the
account of the Holder shall be reduced only after (1) the amount of securities
to be offered for the account of such other Persons has been reduced to zero,
and then (2) the amount of securities to be offered for the account of the
Company has been reduced to zero, and (y) in the case of a Piggyback
Registration (1) that is initiated by the Company for its own account and
where securities are being offered for the account of Persons other than the
Company, then the proportion by which the amount of such Registerable
Securities intended to be offered for the account of Holder is reduced shall
not exceed the proportion by which the amount of such securities intended to be
offered for the account of such other Persons is reduced, such reduction shall
be effected before any reduction of the number of securities offered for the
account of the Company, or (2) that is initiated for the account of Persons
other than the Company, the amount of Registerable Securities to be offered
for the account of the Company, if any, shall be reduced only after (A) the
amount of securities to be offered for the account of Holders has been reduced
to zero, and then (B) the amount of securities to be offered for the account of
such other Persons has been reduced to zero.
Section 2.5. General Limitations. Any Demand Registration
requested under Section 2.01 shall, if the Company is eligible to use Form S-3
(or any successor form) under the 1933 Act, be effected on a Form S-3
Registration. Notwithstanding anything to the contrary in this Article 2, the
Company shall not be obligated pursuant to Section 2.01 and Section 2.03
hereof to effect more than an aggregate of two registrations in any one year
period.
ARTICLE 3
Registration Procedures
Section 3.1. Filings; Information. Whenever a Holder requests
a Demand Registration or Form S-3 Registration, the Company will use its best
efforts to effect the registration of such Registerable Securities as quickly
as practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and file
with the Commission a registration statement on any form for which the Company
then qualifies and which counsel for the Company shall deem appropriate and
available for the sale of the Registerable Securities to be registered
thereunder in accordance with the intended method of distribution thereof, and
use reasonable best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 120 days; provided
that (i) if the Company shall furnish to Holder a certificate signed by its
Chairman, Chief Executive Officer or Chief Financial Officer stating that in
his or her good faith judgment it would be detrimental or otherwise
disadvantageous to the Company or its stockholders for such a registration
statement to be filed, or, in the case of an effective registration statement,
for sales to be effected thereunder, the Company shall have a period of not
more than 120 days within which to file such registration statement measured
from the date of receipt of the request in accordance with Section 2.1 or, in
the case of an effective registration statement, the Company shall be entitled
to require Holder to refrain from selling Registerable Securities under such
registration statement for a period of up to 120 days and (ii) the Company
shall not be obligated to file any registration statement pursuant to Sections
2.01 and Section 2.03 hereof if the Company has filed within the previous 120
days a registration statement under the 1933 Act (other than on Form S-8);
provided further that, in the case of a registration statement to be filed,
the Company shall be entitled to only one 120 day delay in any 360 day period,
and, in the case of an effective registration statement, the Company shall be
entitled to require Holder to refrain from selling Registerable Securities
under such Registration Statement for an aggregate of 120 days in any 360 day
period. If the Company furnishes a notice under this paragraph at a time when
a registration statement filed pursuant to this Agreement is effective, the
Company shall extend the period during which such registration statement shall
be maintained effective as provided in this Section 3.1(a) hereof by the
number of days during the period from and including the date of the giving of
notice under this paragraph to the date when sales under the registration
statement may recommence.
(b) The Company will, if requested, prior to filing such
registration statement or any amendment or supplement thereto, furnish to a
representative designated by Holders of a majority of the Registerable
Securities covered by such registration statement and each managing
Underwriter, if any, copies thereof, and thereafter furnish to each Holder and
each such Underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein) and the
prospectus included in such registration statement (including each preliminary
prospectus) as such Holder or such Underwriter may reasonably request in order
to facilitate the sale of the Registerable Securities.
(c) After the filing of the registration statement, the Company
will promptly notify each Holder of any stop order issued or, to the knowledge
of the Company, threatened to be issued by the Commission and take all
necessary actions required to prevent the entry of such stop order or to remove
it if entered.
(d) The Company will use its reasonable best efforts to qualify the
Registerable Securities for offer and sale under such other securities or blue
sky laws of such jurisdictions in the United States as Holders reasonably (in
light of Holders' intended plan of distribution) request; provided that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (ii) subject itself to taxation in any such jurisdiction or
(iii) generally consent to service of process in any such jurisdiction.
(e) The Company shall, as promptly as practicable, notify each
Holder, at any time when a prospectus relating to the sale of the Registerable
Securities is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of an event requiring the preparation
of a supplement or amendment to such registration statement or prospectus so
that, as thereafter delivered to the purchasers of such Registerable
Securities, such registration statement or prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
as promptly as practicable make available to Holders and to the Underwriters
any such supplement or amendment. Each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
the preceding sentence, Holder will forthwith discontinue the offer and sale of
Registerable Securities pursuant to the registration statement covering such
Registerable Securities until receipt of the copies of such supplemented or
amended prospectus and, if so directed by the Company, Holder will deliver to
the Company all copies, other than permanent file copies then in Holder's
possession, of the most recent prospectus covering such Registerable Securities
at the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective as provided in Section 3.1(a) hereof by
the number of days during the period from and including the date of the giving
of such notice to the date when the Company shall make available to Holders
such supplemented or amended prospectus.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form and satisfactory in form and
substance to the Company in its reasonable judgment) and take such other
actions as are reasonably required in order to expedite or facilitate the sale
of such Registerable Securities.
(g) The Company will furnish to each Holder and to each managing
Underwriter, if any, a signed counterpart, addressed to each Holder and each
Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii)
a comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters delivered to such parties.
(h) The Company will make generally available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act.
(i) The Company will use its best efforts to cause all such
Registerable Securities covered by such Registration Statement to be listed on
each securities exchange on which similar securities issued by the Company are
then listed.
The Company may require each Holder promptly to furnish in
writing to the Company such information regarding such Holder, the plan of
distribution of the Registerable Securities and other information as the
Company may from time to time reasonably request or as may be legally required
in connection with such registration.
Section 3.2. Registration Expenses. In connection with any
Demand Registration, Piggyback Registration or Form S-3 Registration, the
Company shall pay the following expenses incurred in connection with such
registration (the "Registration Expenses"): (i) all filing fees with the
Commission and the National Association of Securities Dealers, (ii) fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications
of the Registerable Securities), (iii) printing expenses, (iv) the fees and
expenses incurred in connection with the listing of the Registerable
Securities, (v) fees and expenses of counsel and independent certified public
accountants for the Company (including the expenses of any comfort letters
pursuant to Section 3.1(g) hereof) and (vi) the reasonable fees and expenses
of any additional experts retained by the Company in connection with such
registration. Each Holder shall pay any underwriting fees, discounts or
commissions and the fees and expenses of counsel to the Holders of
Registerable Securities attributable to the sale of Registerable Securities of
such Holder. The Company shall pay internal Company expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties).
ARTICLE 4
Indemnification and Contribution
Section 4.1. Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Holder, its officers and directors,
and each Person, if any, who controls such Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registerable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus (including documents incorporated by
reference therein), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in
writing to the Company by or on behalf of such Holder expressly for use
therein; provided that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of such Holder if a copy
of the then current prospectus was not provided to purchaser at or prior to
the time of such purchase and such current prospectus would have cured the
defect giving rise to such loss, claim, damage or liability or for any sales
occurring during the period in which the Company is not required to keep the
registration statement effective as provided in Section 3.1(a) or after the
Company has informed such Holder under Section 3.1(e) and prior to the
delivery by the Company of any supplement or amendment to such prospectus. The
Company also agrees to indemnify any Underwriters of the Registerable
Securities, their officers and directors and each person who controls such
underwriters on substantially the same basis as that of the indemnification of
such Holder provided in this Section 4.1.
Section 4.2. Indemnification by Holder. Each Holder agrees to
indemnify and hold harmless the Company, its officers and directors, and each
Person, if any, who controls the Company within the meaning of either Section
15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the
foregoing indemnity from the Company to such Holder, but only with reference
to information furnished in writing by or on behalf of such Holder expressly
for use in any registration statement or prospectus relating to the
Registerable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each Holder also agrees to indemnify and hold
harmless Underwriters of the Registerable Securities, their officers and
directors and each person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Company provided in this
Section 4.2.
Section 4.3. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such Person (the "Indemnified Party") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party, upon the request of the
Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of
both parties by the same counsel would, in the opinion of counsel reasonably
acceptable to the Indemnifying Party, be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
Section 4.4. Contribution. If the indemnification provided
for in this Article 4 is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and each
Holder from the offering of the securities, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) but also the relative fault of the Company and each Holder in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and each Holder
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and each Holder, in each case as set forth
in the table on the cover page of the prospectus, bear to the aggregate public
offering price of the securities. The relative fault of the Company and each
Holder shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
ARTICLE 5
Miscellaneous
Section 5.1. Participations in Underwritten Registrations. No
Person may participate in any underwritten registered offering contemplated
hereunder unless such Person (a) agrees to sell its securities on the basis
provided in any underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and these Registration Rights.
Section 5.2. Rule 144. The Company covenants that it will use
best efforts to file any reports required to be filed by it under the 1933 Act
and the 1934 Act and that it will take such further action as Holders may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registerable Securities without registration under the 1933
Act within the limitation of the exemptions provided by Rule 144 under the
1933 Act, as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission. Upon the request of a
Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
Section 5.3. Holdback Agreements. (a) Each Holder agrees not
to offer, sell, contract to sell or otherwise dispose of any Registerable
Securities, or any securities convertible into or exchangeable or exercisable
for such securities, from the date of filing of a registration statement
relating to the sale of Registerable Securities through the 90 day period
beginning on the date of the first sale of Registerable Securities pursuant to
the registration statement other than the Registerable Securities to be sold
pursuant to such registration statement.
(b) The Company agrees not to offer, sell, contract to sell or
otherwise dispose of any securities similar to the Registerable Securities to
be sold pursuant hereto, or any securities convertible into or exchangeable or
exercisable for such securities, during the 14 days prior to, and during the 90
day period beginning on, the effective date of any registration statement
registering the Registerable Securities other than any shares of Common Stock
sold upon the exercise of an option or warrant or the conversion of a security
outstanding at such date or pursuant to any Common Stock Plan or issued by the
Company as consideration for an acquisition or other transaction not intended
to provide equity financing.
Section 5.4. Termination of Company Obligations. All
registration rights provided hereunder shall terminate with respect to any
Holder at such time as such Holder holds less than 5% of the outstanding
common stock and is able to sell all of its Registerable Securities under Rule
144 without registration under the 1933 Act during any single three month
period.
