EXHIBIT 10.16
INVESTMENT REPRESENTATIONS AND REGISTRATION RIGHTS
December 13, 1996
Urohealth Systems, Inc.
Five Civic Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to that certain License Agreement dated as of December
13, 1996 (the "AGREEMENT") between Urohealth Systems, Inc., a Delaware
corporation (the "COMPANY"), and Vista Medical Technologies, Inc., a Delaware
corporation ("VISTA"). Pursuant to the Agreement, Vista will license certain
technology to the Company in exchange for, among other consideration, shares of
Common Stock of the Company (the "STOCK").
Vista represents and warrants to, and agrees with, the Company as follows:
1. Vista has been advised that the issuance of the Stock to Vista
pursuant to the Agreement will not be registered with the Securities and
Exchange Commission (the "COMMISSION") under the Securities Act of 1933, as
amended ("ACT"), and, therefore, the Stock will constitute "restricted
securities" within the meaning of Rule 144 promulgated under the Act. Vista has
been advised that dispositions of the Stock, under current law, may only be made
in accordance with the provisions of Rule 144 under the Act, pursuant to an
effective registration statement under the Act or pursuant to an exemption
provided thereunder. Vista understands that the provisions of Rule 144
currently restrict sales of the Stock during the two year period after the
issuance of the Stock, and permit sales, in general, only while the Company is
subject to the requirements to file, and is filing, periodic reports under
Section 13 or 15(d) of the Securities Exchange Act of 1934, in brokers'
transactions (or transactions directly with a market maker) where the aggregate
number of shares sold at any time, together with all sales of restricted shares
of Common Stock of the Company sold for Vista's account during the preceding
three month period, does not exceed the greater of (i) one percent of the number
of shares of Common Stock of the Company outstanding or (ii) the average weekly
volume of trading in shares of Common Stock of the Company on all national
securities exchanges, and/or reported through the automated quotation system of
a registered securities association, during the four week period preceding any
such sale.
2. Vista understands that except as provided in paragraph 4 below, the
Company is under no obligation to register the sale, transfer or other
disposition of the shares of the Stock that Vista will receive under the
Agreement or to take any other action necessary in order to obtain compliance
with an exemption from registration that may be available.
Urohealth Systems, Inc.
December 13, 1996
Page 2
3. Xxxxx understands that stop transfer instructions may be given to the
Company's transfer agent with respect to the Stock and that there will be placed
on the certificates for such shares, or any substitution therefor, a legend to
the foregoing effect.
4. Vista understands that, pursuant to the terms and conditions of the
Agreement, the Company hereby grants to Vista certain rights with respect to the
registration of the Stock which it will receive under the Agreement, which
rights are as follows:
(a) PARTICIPATION REGISTRATION. Subject to paragraph (b) of this
Section 4, if the Company shall, at any time after the date hereof and on or
prior to 24 months following the date on which the Stock is issued under the
Agreement (or such earlier date on which Vista is then able to dispose of the
Stock pursuant to Rule 144 under the Act), propose the registration under the
Act of an offering of shares of Common Stock of the Company, the Company shall
give written notice as promptly as possible of such proposed registration to
Vista and will use reasonable efforts to cause to be included in the
registration statement such number of shares of the Stock owned by Vista as it
shall request (the "REQUESTED SHARES"), within 15 days after the giving of such
notice, such shares to be included, upon the same terms (including the method of
distribution) of any such offer; provided that (A) the Company shall not be
required to give notice or include the Requested Shares in any such registration
if the proposed registration is not to be made on Form S-1 or Form S-3 (or a
form similar thereto) or is primarily (i) a registration of a stock option or
compensation plan or of securities issued or issuable pursuant to any such plan,
or (ii) a registration of securities proposed to be issued in exchange for
securities or assets of, or in connection with a merger or consolidation with,
another corporation; and (B) the Company may, in its sole discretion and without
the consent of Vista, withdraw such registration statement and abandon the
proposed offering in which Vista had requested to participate.
(b) REDUCTION. Vista acknowledges and agrees that the rights granted
hereunder are subject to the existing rights of parties to that certain
Registration Rights Agreement, dated May 13, 1996, among the Company and the
stockholders identified therein (the "EXISTING REGISTRATION RIGHTS AGREEMENT"),
and the rights granted hereunder shall in no event exceed the rights of
Miscellaneous Shares (as defined in the Existing Registration Rights Agreement)
under such agreement. In the event that the Company is advised by its
investment banking firm that, in its reasonable opinion, the number of Requested
Shares will interfere with the orderly sale and distribution of the shares of
Common Stock being offered by the Company or the holders under the Existing
Registration Rights Agreement, the Company shall not be required to include the
Requested Shares in the registration.
(c) INDEMNIFICATION. The Company shall provide Vista with the usual
and customary indemnification in connection with any registration pursuant
hereto.
(d) REGISTRATION EXPENSES. The Company shall bear all reasonable
costs and expenses incurred with any registration pursuant to paragraph (a)
above, except that Vista will pay for the fees and expenses of its counsel and
its pro rata portion of the
Urohealth Systems, Inc.
December 13, 1996
Page 3
underwriters' discounts, commissions or other compensation and any applicable
transfer taxes.
(e) ASSIGNMENT. Vista shall have the right to assign the rights
granted to it hereunder in connection with the sale or transfer of all or a
portion of the Stock; provided, that such transferee receives at least 25% of
the Stock issued to Vista under the License Agreement.
(f) SUBSEQUENT REGISTRATION RIGHTS. From and after the date of this
Agreement, the Company will not, without the prior written consent of Vista,
enter into any agreement with any holder or prospective holder of securities of
the Company which would allow such holder or prospective holder to include such
securities in a registration filed under Section 4(a) or otherwise unless, under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such holder's securities will not reduce the amount of the Stock which is
included. Notwithstanding the provisions of this subparagraph (f) to the
contrary, the Company shall only be restricted in granting rights to a holder or
prospective holder which rights would give such holder priority over the
registration rights granted Vista hereunder and nothing herein shall prevent the
Company from granting demand registration rights which have a priority in
connection with any demand to a holder or prospective holder (excluding any
holder or prospective holder who is granted those rights in connection with a
joint venture between such holder and the Company or other similar corporate
partnering arrangement).
Urohealth Systems, Inc.
December 13, 1996
Page 4
Vista acknowledges that it has carefully read this letter and discussed its
requirements and other applicable limitations upon the sale, transfer or other
disposition of the shares of Common Stock to be acquired by it under the
Agreement, to the extent it felt necessary, with its counsel.
Very truly yours,
VISTA MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxx
----------------------
Name: Xxxx Xxxx
Title: President
Accepted and agreed to this
13th day of December, 1996
UROHEALTH SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
