EXHIBIT 10.1
EXECUTION COPY
STOCK OPTION AGREEMENT dated as of May 21,
1997 (the "Agreement"), by and between
BIOPSYS MEDICAL, INC., a Delaware corporation
("Issuer"), and XXXXXXX & XXXXXXX, a New
Jersey corporation ("Grantee").
RECITALS
A. Issuer, Grantee and Palisades Merger Corp., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Sub"), have entered
into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"; defined terms used but not defined herein have the
meanings set forth in the Merger Agreement), providing for, among other
things, the merger of Sub with and into Issuer, with Issuer becoming the
surviving corporation in the Merger and a wholly owned subsidiary of
Grantee; and
B. As a condition and inducement to Grantee's willingness to
enter into the Merger Agreement, Grantee has requested that Issuer agree,
and Issuer has agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 1,970,511 (as adjusted as set forth herein)
shares (the "Option Shares") (provided that the amount of the Option Shares
shall upon timely issuance be adjusted to equal 19.9% of the then issued
and outstanding shares) of Common Stock, par value $.001 per share ("Issuer
Common Stock"), of Issuer at a purchase price of the Per Share Price (as
adjusted as set forth herein) per Option Share (the "Purchase Price");
provided, however, that, notwithstanding anything herein to the contrary,
if Grantee receives in the aggregate an amount equal to the excess, if any,
of (i) the sum of the proceeds (net of any commissions or similar costs)
received by Grantee in connection with any sales or other dispositions of
Option Shares and any dividends received by Grantee on Option Shares over
(ii) the sum of (x) the product of the Purchase Price times the number of
Option Shares acquired by Grantee pursuant to the Option and (y) $9
million, then an amount equal to such excess shall be promptly paid by
Grantee to Issuer.
2. Exercise of Option. (a) Grantee may exercise the Option, with
respect to all (but not less than all) of the Option Shares at any one
time, subject to the provisions of Section 2(c), after the occurrence of
any event as a result of which the Grantee is entitled to receive the
Termination Fee pursuant to Section 5.08(b) of the Merger Agreement (a
"Purchase Event"); provided, however, that (i) except as provided in the
last sentence of this Section 2(a), the Option will terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective
Time, (B) 12 months after the first occurrence of a Purchase Event and (C)
termination of the Merger Agreement in accordance with its terms prior to
the occurrence of a Purchase Event, unless, in the case of clause (C),
Grantee has or may have the right to receive a Termination Fee following
such termination upon the occurrence of certain events, in which case the
Option will not terminate until the later of (x) six months following the
time such Termination Fee becomes payable and (y) the expiration of the
period in which the Grantee has or may have such right to receive a
Termination Fee, and (ii) any purchase of Option Shares upon exercise of
the Option will be subject to compliance with the HSR Act and the obtaining
or making of any consents, approvals, orders, notifications or
authorizations, the failure of which to have obtained or made would have
the effect of making the issuance of Option Shares illegal (the "Regulatory
Approvals").
(b) In the event that Grantee wishes to exercise the Option, it
will send to Issuer a written notice (an "Exercise Notice"; the date of
which being herein referred to as the "Notice Date") to that effect which
Exercise Notice also specifies the number of Option Shares, if any, Grantee
wishes to purchase pursuant to this Section 2(b), the number of Option
Shares, if any, with respect to which Grantee wishes to exercise its
Cash-Out Right (as defined herein) pursuant to Section 6(c), the
denominations of the certificate or certificates evidencing the Option
Shares which Grantee wishes to purchase pursuant to this Section 2(b) and a
date not earlier than three business days nor later than 20 business days
from the Notice Date for the closing of such purchase (an "Option Closing
Date"). Any Option Closing will be at an agreed location and time in New
York, New York on the applicable Option Closing Date or at such later date
as may be necessary so as to comply with clause (ii) of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein,
any exercise of the Option and purchase of Option Shares shall be subject
to compliance with applicable laws and regulations, which may prohibit the
purchase of all
the Option Shares specified in the Exercise Notice without first obtaining
or making certain Regulatory Approvals. In such event, if the Option is
otherwise exercisable and Grantee wishes to exercise the Option, the Option
may be exercised in accordance with Section 2(b) and Grantee shall acquire
the maximum number of Option Shares specified in the Exercise Notice that
Grantee is then permitted to acquire under the applicable laws and
regulations, and if Grantee thereafter obtains the Regulatory Approvals to
acquire the remaining balance of the Option Shares specified in the
Exercise Notice, then Grantee shall be entitled to acquire such remaining
balance. Issuer agrees to use its reasonable efforts to assist Grantee in
seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a
Regulatory Approval required for the purchase of any Option Shares will not
be issued or granted or (ii) such Regulatory Approval has not been issued
or granted within six months of the date of the Exercise Notice, Grantee
shall have the right to exercise its Cash-Out Right pursuant to Section
6(c) with respect to the Option Shares for which such Regulatory Approval
will not be issued or granted or has not been issued or granted.
3. Payment and Delivery of Certificates. (a) At any Option
Closing, Grantee will pay to Issuer in immediately available funds by wire
transfer to a bank account designated in writing by Issuer an amount equal
to the Purchase Price multiplied by the number of Option Shares to be
purchased at such Option Closing.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will
deliver to Grantee a certificate or certificates representing the Option
Shares to be purchased at such Option Closing, which Option Shares will be
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever. If at the time of issuance of Option Shares pursuant to an
exercise of the Option hereunder, Issuer shall not have redeemed the
Rights, or shall have issued any similar securities, then each Option Share
issued pursuant to such exercise will also represent a corresponding Right
or new rights with terms substantially the same as and at least as
favorable to Grantee as are provided under the Rights Agreement or any
similar agreement then in effect.
(c) Certificates for the Option Shares delivered at an Option
Closing will have typed or printed thereon a restrictive legend which will
read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED
OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED
AS OF MAY 21, 1997, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF BIOPSYS MEDICAL, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have
been sold in reliance on and in accordance with Rule 144 under the
Securities Act or Grantee has delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to Issuer and its counsel, to the effect that such
legend is not required for purposes of the Securities Act and (ii) the
reference to restrictions pursuant to this Agreement in the above legend
will be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions
of this Agreement under circumstances that do not require the retention of
such reference.
4. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to the
expiration or termination of any required waiting period under the HSR
Act, to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Option Shares upon the exercise of the
Option terminates, shall have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant
to Section 6 upon exercise of the Option. The shares of Issuer Common
Stock to be issued upon due exercise of the Option, including all
additional shares of Issuer Common Stock or other securities which may
be issuable
upon exercise of the Option or any other securities which may be
issued pursuant to Section 6, upon issuance pursuant hereto, will be
duly and validly issued, fully paid and nonassessable, and will be
delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including without
limitation any preemptive rights of any stockholder of Issuer.
5. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
transferred or otherwise disposed of except in a transaction
registered, or exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the
event of any change in Issuer Common Stock by reason of a stock dividend,
split-up, merger, recapitalization, combination, exchange of shares, or
similar transaction, the type and number of shares or securities subject to
the Option, and the Purchase Price thereof, will be adjusted appropriately,
and proper provision will be made in the agreements governing such
transaction, so that Grantee will receive upon exercise of the Option the
number and class of shares or other securities or property that Grantee
would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event or the record date therefor,
as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, if prior to or concurrently with the
termination of the Option Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer and
Issuer will be the continuing or surviving corporation, but in connection
with such merger, the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger will be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property, or the shares of Issuer Common Stock outstanding
immediately prior to the consummation of such merger will, after such
merger, represent less than 50% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or
one of its subsidiaries, then, and in each such case, the agreement
governing such transaction will make proper provision so that the Option
will, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class
of shares or other securities or property that Grantee would have received
in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such consolidation, merger, sale, or transfer, or the
record date therefor, as applicable and make any other necessary
adjustments.
(c) If, at any time during the period commencing on a Purchase
Event and ending on the termination of the Option in accordance with
Section 2, Grantee sends to Issuer an Exercise Notice indicating Grantee's
election to exercise its right (the "Cash-Out Right") pursuant to this
Section 6(c), then Issuer shall pay to Grantee, on the Option Closing Date,
in exchange for the cancelation of the Option with respect to such number
of Option Shares as Grantee specifies in the Exercise Notice, an amount in
cash equal to the lesser of (1) $9 million and (2) such number of Option
Shares multiplied by the difference between (i) the average closing price
per share during the 20 NMS trading days commencing on the 22nd NMS trading
day immediately preceding the Notice Date, of Issuer Common Stock as quoted
on the NMS (or, if not traded on the NMS, as reported on any other national
securities exchange or national securities quotation system on which the
Issuer Common Stock is listed or quoted, as reported in The Wall Street
Journal, or, if not reported thereby, any other authoritative source) and
(ii) the Purchase Price. Notwithstanding anything to the contrary, the sum
of (A) the amount equal to the difference of clause (i) and clause (ii)(x)
of Section 1 with respect to any transfer by Grantee of the Option Shares
which were not cashed out pursuant to this Section 6(c) and (B) the amount
received by Grantee pursuant to the Cash-Out Right shall not exceed $9
million, and Grantee shall pay promptly any such excess above $9 million to
Issuer.
7. Registration Rights. Issuer will, if requested by Grantee at
any time and from time to time within three years of the exercise of the
Option, as expeditiously as possible prepare and file up to three
registration statements under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all
shares of securities that
have been acquired by or are issuable to Grantee upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by Grantee, including a "shelf" registration statement under Rule
415 under the Securities Act or any successor provision, and Issuer will
use its reasonable efforts to qualify such shares or other securities under
any applicable state securities laws. Grantee agrees to use reasonable
efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement or otherwise to be effected on a widely distributed
basis so that upon consummation thereof no purchaser or transferee will own
beneficially more than 4.9% of the then-outstanding voting power of Issuer.
Issuer will use reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 180 calendar days from
the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The
obligations of Issuer hereunder to file a registration statement and to
maintain its effectiveness may be suspended for up to 60 calendar days in
the aggregate if the Board of Directors of Issuer shall have determined
that the filing of such registration statement or the maintenance of its
effectiveness would require premature disclosure of material nonpublic
information that would materially and adversely affect Issuer or otherwise
interfere with or adversely affect any pending or proposed offering of
securities of Issuer or any other material transaction involving Issuer.
Any registration statement prepared and filed under this Section 7, and any
sale covered thereby, will be at Issuer's expense except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Grantee's counsel related thereto. Grantee will provide all information
reasonably requested by Issuer for inclusion in any registration statement
to be filed hereunder. If, during the time periods referred to in the first
sentence of this Section 7, Issuer effects an underwritten registration
under the Securities Act of Issuer Common Stock for its own account or for
any other stockholders of Issuer (other than on Form S-4 or Form S-8, or
any successor form), it will allow Grantee the right to participate in such
registration, and such participation will not affect the obligation of
Issuer to effect demand registration statements for Grantee under this
Section 7; provided that, if the managing underwriters of such offering
advise Issuer in writing that in their opinion the number of shares of
Issuer Common Stock requested to be included in such registration exceeds
the number which can be sold in
such offering at a price acceptable to Issuer's Board of Directors, Issuer
will first reduce the shares requested to be included therein by Grantee
before reducing any other shares intended to be included therein. In
connection with any registration pursuant to this Section 7, Issuer and
Grantee will provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification, and
contribution in connection with such registration.
8. Transfers. The Option Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) in an underwritten public
offering as provided in Section 7 or (ii) to any purchaser or transferee
who would not, to the knowledge of the Grantee after reasonable inquiry,
immediately following such sale, assignment, transfer or disposal
beneficially own more than 4.9% of the then-outstanding voting power of the
Issuer; provided, however, that Grantee shall be permitted to sell any
Option Shares if such sale is made pursuant to a tender or exchange offer
that has been approved or recommended by a majority of the members of the
Board of Directors of Issuer (which majority shall include a majority of
directors who were directors as of the date hereof). The Option may not be
sold, assigned, transfered or otherwise disposed of by Grantee, and any
sale, assignment, transfer or disposal shall be null and void.
9. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then traded on the NMS (or any
other national securities exchange or national securities quotation
system), Issuer, upon the request of Grantee, will promptly file an
application to have the shares of Issuer Common Stock or other securities
to be acquired upon exercise of the Option approved for trading on the NMS
(and any such other national securities exchange or national securities
quotation system) and will use reasonable efforts to obtain approval of
such application as promptly as practicable.
10. Loss or Mutilation. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation
of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancelation
of this Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date.
11. Miscellaneous. (a) Expenses. Except as otherwise provided in
the Merger Agreement, each of the parties hereto will bear and pay all
costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to
waive any provision of this Agreement, or to extend the time for
performance, will be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise will not
constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Stockholder Agreement, the Merger Agreement (including the
documents and instruments attached thereto as exhibits or schedules or
delivered in connection therewith) and the Confidentiality Agreement
(including the predecessor Secrecy Agreement dated July 17, 1996 between
the Company and a subsidiary of Parent) (i) constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement, the Stockholder Agreement, the Merger Agreement and the
Confidentiality Agreement, and (ii) except as provided in Section 8.06 of
the Merger Agreement, are not intended to confer upon any person other than
the parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and will be deemed
given if delivered
personally, telecopied (which is confirmed), or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
If to Issuer to:
Biopsys Medical, Inc.
0 Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxx
Fax: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxx, Esq.
Xxxxxxxxxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
If to Grantee to:
Xxxxxxx & Xxxxxxx
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, III, Esq.
Fax: (000) 000-0000
(g) Assignment. Neither this Agreement, the Option nor any of the
rights, interests, or obligations under this Agreement may be assigned or
delegated, in whole
or in part, by operation of law or otherwise, by Issuer or Grantee without
the prior written consent of the other. Any assignment or delegation in
violation of the preceding sentence will be void. Subject to the first and
second sentences of this Section 11(g), this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
(h) Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and Grantee will execute and deliver all other
documents and instruments and take all other actions that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(i) Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in a
Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties
hereto (i) consents to submit itself to the personal jurisdiction of any
court of the United States located in the State of Delaware or any Delaware
state court in the event any dispute arises out of this Agreement or the
transactions contemplated by this Agreement, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (iii) agrees that it will not
bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a court of the
United States located in the State of Delaware or a Delaware state court.
(j) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled
to the extent possible.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of
the day and year first written above.
BIOPSYS MEDICAL, INC.,
by /s/ Xxxxxx X. Xxx
----------------------------
Name: Xxxxxx X. Xxx
Title: President and CEO
XXXXXXX & XXXXXXX,
by /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: