Exhibit 2
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SECURITIES PURCHASE AGREEMENT
by and between
MICRO INVESTMENT, LLC
and
MICRO THERAPEUTICS, INC.
May 25, 2001
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TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE OF SECURITIES................................1
1.1. First Issuance of Common Stock.................................1
1.2. Second Issuance of Common Stock................................2
1.3. Closings and Closing Dates.....................................3
1.4. Guarantee......................................................4
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................4
2.1. Corporate Organization.........................................4
2.2. Subsidiaries...................................................5
2.3. Capitalization.................................................5
2.4. Corporate Proceedings, etc.....................................6
2.5. Consents and Approvals.........................................6
2.6. Absence of Defaults, Conflicts, etc............................6
2.7. Reports and Financial Statements...............................7
2.8. Absence of Certain Developments................................7
2.9. Compliance with Law............................................8
2.10. Litigation.....................................................9
2.11. Material Contracts.............................................9
2.12. Absence of Undisclosed Liabilities.............................9
2.13. Change in Ownership............................................9
2.14. Employees.....................................................10
2.15. Tax Matters...................................................10
2.16. Employee Benefit Plans........................................11
2.17. Intellectual Property.........................................11
2.18. Software......................................................13
2.19. Title to Tangible Assets......................................13
2.20. Condition of Properties.......................................13
2.21. Insurance.....................................................14
2.22. Transactions with Related Parties.............................14
2.23. Interest in Competitors.......................................14
2.24. Registration Rights...........................................14
2.25. Private Offering..............................................15
2.26. Brokerage.....................................................15
2.27. Illegal or Unauthorized Payments; Political Contributions.....15
2.28. Takeover Statute; Rights Plan.................................15
2.29. Nasdaq Compliance.............................................16
2.30. Reporting Status..............................................16
2.31. No Manipulation of Stock......................................16
2.32. Accountants...................................................16
2.33. Transfer Taxes................................................16
2.34. Investment Company............................................16
2.35. Listing.......................................................16
2.36. Material Facts................................................17
(i)
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR................17
SECTION 4. ADDITIONAL AGREEMENTS OF THE PARTIES..........................18
4.1. Resale of Securities..........................................18
4.2. Covenants Pending Closing.....................................18
4.3. Further Assurance.............................................19
4.4. Board Nominees................................................19
4.5. Subscription Right............................................19
4.6. Indemnity.....................................................21
4.7. Consents and Approvals; Proxy; Xxxx-Xxxxx Filings.............22
4.8. Use of Proceeds...............................................22
4.9. Investor Consents.............................................23
4.10. Takeover Statute..............................................23
4.11. Rights Agreement Inapplicable.................................23
4.12. No Solicitation...............................................23
4.13. Registration Rights...........................................25
4.14. Registration and Listing......................................26
4.15. Employee Matters..............................................26
SECTION 5. INVESTOR's CLOSING CONDITIONS.................................27
5.1. Representations and Warranties................................27
5.2. Compliance with Agreement.....................................27
5.3. Injunction....................................................27
5.4. Counsel's Opinion.............................................27
5.5. Adverse Development...........................................28
5.6. Voting Agreement..............................................28
5.7. Directors.....................................................28
5.8. Bylaws........................................................28
5.9. Listing of the Shares.........................................28
5.10. Nasdaq Trading................................................28
5.11. Consents and Approvals; Xxxx-Xxxxx............................29
5.12. Liens.........................................................29
5.13. Officer's Certificate.........................................29
5.14. Secretary's Certificate.......................................29
5.15. Approval of Proceedings.......................................29
SECTION 6. COMPANY CLOSING CONDITIONS....................................30
6.1. Representations and Warranties................................30
6.2. Compliance with Agreement.....................................30
6.3. Investor's Certificates.......................................30
6.4. Injunction....................................................30
6.5. Consents and Approvals; Xxxx Xxxxx............................30
SECTION 7. COVENANTS.....................................................31
7.1. Financial and Business Information............................31
7.2. Inspection....................................................32
(ii)
7.3. Confidentiality...............................................32
7.4. Conduct of Business and Maintenance of Existence..............32
7.5. Compliance with Laws..........................................32
7.6. Insurance.....................................................33
7.7. Keeping of Books..............................................33
7.8. Lost, etc. Certificates Evidencing Shares (or Shares
of Common Stock); Exchange....................................33
SECTION 8. INTERPRETATION OF THIS AGREEMENT..............................33
8.1. Terms Defined.................................................33
8.2. Accounting Principles.........................................37
8.3. Directly or Indirectly........................................37
8.4. Governing Law.................................................37
8.5. Paragraph and Section Headings................................38
SECTION 9. MISCELLANEOUS.................................................38
9.1. Notices.......................................................38
9.2. Expenses and Taxes............................................38
9.3. Reproduction of Documents.....................................39
9.4. Termination and Survival......................................39
9.5. Successors and Assigns........................................39
9.6. Entire Agreement; Amendment and Waiver........................39
9.7. Severability..................................................40
9.8. Limitation on Enforcement of Remedies.........................40
9.9. Counterparts..................................................41
Exhibit A Certificate of Incorporation
Exhibit B Bylaws
Exhibit C Registration Rights Provisions
Exhibit D Opinion of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
Exhibit E Voting Agreement
(iii)
MICRO THERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of May 25, 2001
TO THE INVESTOR WHOSE NAME APPEARS
ON THE SIGNATURE PAGE HERETO
Ladies and Gentlemen:
Micro Therapeutics, Inc., a Delaware corporation (the "Company"), hereby
agrees with Micro Investment, LLC (the "Investor") as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
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1.1. First Issuance of Common Stock
------------------------------
(a) Initial First Closing Shares. Subject to the terms and conditions set
forth in this Agreement and to the conditions set forth in Section 1.3(a), and
in reliance upon the Company's and the Investor's representations set forth
below, on the First Closing Date (as defined below), the Company shall sell to
the Investor, and the Investor shall purchase from the Company, the number of
shares of the Company's Common Stock, par value $0.001 per share (the "Common
Stock"), set forth on Schedule 1.1(a) (collectively, the "Initial First Closing
Shares") at the aggregate cash purchase price(the "Initial First Closing
Purchase Price") set forth thereon. The sale and purchase of the Initial First
Closing Shares shall be effected on the First Closing Date by the Company
executing and delivering to the Investor, duly registered in the Investor's name
or in the name of its nominee or other designee designated in writing to the
Company at least one day prior to the First Closing Date, a duly executed stock
certificate evidencing the Initial First Closing Shares being purchased by it,
against delivery by the Investor to the Company of the Initial First Closing
Purchase Price, by wire transfer of immediately available funds to such account
as the Company shall designate in writing.
(b) Additional First Closing Shares. No later than the third Business Day
following the expiration of the Existing Preemptive Rights in accordance with
their terms or the Company's receipt of notice as to the number of shares with
respect to which the Existing Preemptive Rights will be exercised, the Company
shall sell to the Investor, and the Investor shall purchase from the Company,
such portion (if any) of the number of shares set forth on Schedule 1.1(b) as
shall not have been purchased in connection with the First Closing pursuant to
the Existing Preemptive Rights (the "Additional First Closing Shares"), at a
cash purchase price equal to $3.75 per share (the aggregate purchase price paid
for the Additional First Closing Shares, the "Additional First Closing Purchase
Price"). The sale and purchase of the Additional First Closing Shares, if any,
shall be effected by the Company executing and delivering to the Investor, duly
registered in the Investor's name or in the name of its nominee or other
designee designated in writing to the Company, a duly executed stock certificate
evidencing the Additional First Closing Shares being purchased by it, against
delivery by the Investor to the Company of the Additional First Closing Purchase
Price, by wire transfer of immediately
available funds to such account as the Company shall designate in writing.
"First Closing Shares" means the aggregate of the Initial First Closing Shares
and the Additional First Closing Shares, if any. "First Closing Purchase Price"
means the aggregate of the Initial First Closing Purchase Price and the
Additional First Closing Purchase Price, if any.
1.2. Second Issuance of Common Stock
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(a) Subject to the terms and conditions set forth in this Agreement and to
the conditions set forth in Section 1.3(b), and in reliance upon the Company's
and the Investor's representations set forth below, on the Second Closing Date
(as defined below), the Company shall sell to the Investor, and the Investor
shall purchase from the Company, the number of shares of its Common Stock set
forth on Schedule 1.2 (the "Original Second Closing Shares," and together with
First Closing Shares and the Additional Second Closing Shares (as defined
below), if any, the "Shares") at the aggregate cash purchase price (the
"Original Second Closing Purchase Price," and together with the First Closing
Purchase Price and the Additional Second Closing Purchase Price (as defined
below), if any, the "Purchase Price") set forth thereon. "Second Closing Shares"
means the aggregate of the Original Second Closing Shares and the Additional
Second Closing Shares, if any. "Second Closing Purchase Price" means the
aggregate of the Original Second Closing Purchase Price and the Additional
Second Closing Purchase Price, if any.
(b) Notwithstanding the foregoing, in the event that any of the Existing
Preemptive Rights are exercised, or in the event that any rights, options,
warrants or convertible securities are exercised or converted prior to the
Second Closing Date such that the Investor would hold less than fifty and
twenty-four hundredths percent (50.24%) of the total Common Stock of the Company
outstanding as of the Second Closing Date after giving effect to the purchases
and sales of the First Closing Shares and Original Second Closing Shares as
provided above, then:
(i) the number of Second Closing Shares shall be increased (such
additional Second Closing Shares, the "Additional Second Closing Shares")
such that, taking into account any additional Existing Preemptive Rights
with respect to such Additional Second Closing Shares, immediately
following the Second Closing Date the Investor shall hold a number of
shares of Common Stock of the Company equal to fifty and twenty-four
hundredths percent (50.24%) of the total Common Stock of the Company then
outstanding;
(ii) the aggregate Second Closing Purchase Price shall be increased
(such increase, the "Additional Second Closing Purchase Price") in an
amount equal to the Second Closing Per Share Price multiplied by the number
of Additional Second Closing Shares. The "Second Closing Per Share Price"
means the price per Second Closing Share such that the aggregate Purchase
Price, divided by the aggregate number of Shares, equals $5.56; and
(iii) subject to the terms and conditions set forth in this Agreement
and to the conditions set forth in Section 1.3(b), and in reliance upon the
Company's and the Investor's representations set forth below, on the Second
Closing Date (as defined below),
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the Company shall sell to the Investor, and the Investor shall purchase
from the Company, the Additional Second Closing Shares at the Additional
Second Closing Purchase Price.
(c) The sale and purchase of the Second Closing Shares shall be effected on
the Second Closing Date by the Company executing and delivering to the Investor,
duly registered in the Investor's name or in the name of its nominee or other
designee designated in writing to the Company at least one day prior to the
Second Closing Date, a duly executed stock certificate evidencing the Second
Closing Shares being purchased by it, against delivery by the Investor to the
Company of the Second Closing Purchase Price by wire transfer of immediately
available funds to such account as the Company shall designate in writing.
(d) Assuming that no rights (other than the Existing Preemptive Rights),
options, warrants or convertible securities are exercised or converted prior to
the Second Closing Date, in no event will the Second Closing Per Share Price be
less than $5.92 or greater than $6.00. By way of illustration:
(i) if the Existing Preemptive Rights are exercised in full (and there
are no other rights, options, warrants or convertible securities are
exercised or converted prior to the Second Closing Date), then the number
of Additional Second Closing Shares shall be 1,120,608; the number of
Second Closing Shares shall be 9,212,307 (i.e., the sum of the Original
Second Closing Shares and the Additional Second Closing Shares); the number
of Shares shall be 11,040,986; the Second Closing Per Share Price shall be
$5.92 (i.e., the Second Closing Per Share Price resulting in the aggregate
Purchase Price divided by the aggregate number of Shares equaling $5.56, or
$61,394,403.69/11,040,986 = $5.56); and
(ii) if the Existing Preemptive Rights are not exercised (and there
are no other rights, options, warrants or convertible securities are
exercised or converted prior to the Second Closing Date), then the number
of Additional Second Closing Shares shall be zero; the number of Second
Closing Shares shall be 8,091,699 (i.e., the number of Original Second
Closing Shares); the number of Shares shall be 10,078,314; the Second
Closing Per Share Price shall be $6.00 (i.e., the Second Closing Per Share
Price resulting in the aggregate Purchase Price divided by the aggregate
number of Shares equaling $5.56, or $56,000,000.25/10,078,314 = $5.56).
1.3. Closings and Closing Dates
--------------------------
(a) First Closing. The closing of the transactions contemplated by Section
1.1(a) (the "First Closing") shall take place at 10:00 A.M., New York City time,
on the third Business Day following the date on which the last to be fulfilled
or waived of the conditions set forth in Section 5 and Section 6 hereof
pertaining to the First Closing Date shall have been fulfilled or waived in
accordance with this Agreement, or on such earlier date as may be mutually
agreed by the Company and the Investor (the "First Closing Date"), at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx, 787 Seventh Avenue, New York, New York, or
such other location as the Investor and the Company shall mutually select.
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(b) Additional First Closing. The closing of the transactions contemplated
by Section 1.1(b) (the "Additional First Closing") shall take place at 10:00
A.M., New York City time, on the date specified therein (the "Additional First
Closing Date"), at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 787 Seventh Avenue,
New York, New York, or such other location as the Investor and the Company shall
mutually select. All conditions that must be fulfilled or waived on or prior to
the First Closing must be fulfilled or waived on or prior to the Additional
First Closing.
(c) Second Closing. The closing of the transactions contemplated by Section
1.2 (the "Second Closing" and, together with the First Closing, the "Closings"
and each, a "Closing") shall take place at 10:00 A.M., New York City time, on
the third Business Day following the date on which the last to be fulfilled or
waived of the conditions set forth in Section 5 and Section 6 hereof pertaining
to the Second Closing Date shall have been fulfilled or waived in accordance
with this Agreement, or on such earlier date as may be mutually agreed by the
Company and the Investor (the "Second Closing Date"), at the offices of Xxxxxxx
Xxxx & Xxxxxxxxx, 787 Seventh Avenue, New York, New York, or such other location
as the Investor and the Company shall mutually select.
1.4. Guarantee
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Warburg, Xxxxxx Equity Partners, L.P. hereby guarantees the obligation of
the Investor, in accordance with the terms of this Agreement, to purchase the
Shares from the Company and to pay the Purchase Price therefor.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Investor that, except as set
forth on the correspondingly numbered section of the Disclosure Schedule
delivered to the Investor in connection herewith or as disclosed in the Company
SEC Reports (as defined herein) filed prior to the date hereof:
2.1. Corporate Organization
----------------------
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Attached hereto as
Exhibits A and B, respectively, are true and complete copies of the Certificate
of Incorporation and Bylaws of the Company, as amended through the date hereof
(collectively, the "Organizational Documents").
(b) The Company has all requisite power and authority and has all necessary
approvals, licenses, permits and authorization to own its properties and to
carry on its business as now conducted. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.
(c) The Company has filed all necessary documents to qualify to do business
as a foreign corporation in, and the Company is in good standing under the laws
of each jurisdiction in which the conduct of the Company's business or the
nature of the property owned requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the business,
properties, assets, liabilities, profits, results of operations or
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condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole (a "Material Adverse Effect").
2.2. Subsidiaries
------------
The Company has no Subsidiaries and no interests or investments in any
partnership, trust or other entity or organization. Each company listed on
Schedule 2.2 that is a Subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its properties and to conduct its business and is duly registered, qualified and
authorized to transact business and is in good standing in each jurisdiction in
which the conduct of its business or the nature of its properties requires such
registration, qualification or authorization; all of the issued and outstanding
capital stock of each Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable, and is owned by the Company free and clear of any
mortgage, pledge, lien, encumbrance, security interest, claim or equity.
2.3. Capitalization
--------------
(a) On the date hereof, the authorized capital stock of the Company
consists of 20,000,000 shares of its Common Stock and 5,000,000 shares of
preferred stock, par value $0.001 per share (the "Preferred Stock"), consisting
of 170,000 shares which have been designated as Series A Preferred Stock. The
issued and outstanding shares of capital stock of the Company consists of
9,982,989 shares of Common Stock, and no shares of Preferred Stock.
(b) All the outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and non-assessable, and were issued
in accordance with the registration or qualification requirements of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom. Upon issuance, sale and delivery as contemplated by this
Agreement, and with respect to the Second Closing Shares, approval by the
requisite vote of the stockholders of the Company, the Shares will be duly
authorized, validly issued, fully paid and non-assessable shares of the Company,
free and clear of any and all security interests, pledges, liens, charges,
claims, options, restrictions on transfer, preemptive or similar rights, proxies
and voting or other agreements, or other encumbrances of any nature whatsoever,
except for those provided for herein and other than restrictions on transfer
imposed by federal or state securities laws.
(c) Except for the conversion rights which attach to the warrants, options
and convertible securities which are listed on Schedule 2.3, on the Closing
Dates, there will be no shares of Common Stock or any other equity security of
the Company issuable upon conversion, exchange or exercise of any security of
the Company or any Subsidiary nor will there be any rights, options, calls or
warrants outstanding or other agreements to acquire shares of Common Stock nor
will the Company be contractually obligated to purchase, redeem or otherwise
acquire any of its outstanding shares. Except as set forth on Schedule 2.3, (i)
no stockholder of the Company is entitled to any preemptive or similar rights to
subscribe for shares of capital stock of the Company, (ii) no stockholder of the
Company has any rights, contractual or otherwise, to designate members of the
Company's Board of Directors, other than in accordance with the
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DGCL, and (iii) there are no stockholder, voting or other agreements relating to
the rights and obligations of the Company's stockholders.
2.4. Corporate Proceedings, etc.
---------------------------
The Company has authorized the execution, delivery, and performance of this
Agreement and each of the transactions and agreements contemplated hereby. No
other corporate action (other than the approval by the requisite vote of the
stockholders of the Company with respect to the Second Closing Shares) is
necessary to authorize such execution, delivery and performance of this
Agreement, and upon such execution and delivery this Agreement shall constitute
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and general principles of
equity. The Company has authorized the issuance and delivery of the Shares in
accordance with this Agreement (subject to the approval by the requisite vote of
the stockholders of the Company with respect to the Second Closing Shares).
2.5. Consents and Approvals
----------------------
The execution and delivery by the Company of this Agreement, the issuance
of any of the Shares, the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby do not require the Company or any of its Subsidiaries to obtain any
consent, approval, clearance or action of, or make any filing, submission or
registration with, or give any notice to, any Person or judicial authority.
2.6. Absence of Defaults, Conflicts, etc.
------------------------------------
(a) The execution and delivery of this Agreement by the Company does not,
and the fulfillment of the terms hereof by the Company, and the issuance, sale
and delivery of the Shares will not, result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
modification of, or permit the acceleration of rights under or termination of,
any material Contract of the Company or any of its Subsidiaries (collectively
the "Key Agreements and Instruments"), or the Organizational Documents, or
(subject to the approval by the requisite vote of the Company's stockholders
with respect to the Second Closing) any law, ordinance, standard, judgment, rule
or regulation of any court or federal, state or foreign regulatory board or body
or administrative agency having jurisdiction over the Company or any of its
Subsidiaries or over their respective properties or businesses.
(b) Neither the Company nor any of its Subsidiaries is in default under or
in violation of (and no event has occurred and no condition exists which, upon
notice or the passage of time (or both), would constitute a default under) (i)
the Organizational Documents, (ii) any Key Agreement and Instrument, (iii) any
license, permit or authorization to which the Company or any Subsidiary is a
party or by which any of them may be bound or (iv) any order, writ, injunction
or decree of any court or any Federal, state, municipal or other domestic or
foreign
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governmental department, commission, board, bureau, agency or instrumentality
except, in the case of clause (ii), for defaults or violations which would not
have a Material Adverse Effect.
2.7. Reports and Financial Statements
--------------------------------
The Company has furnished the Investor with true and complete copies of the
Company's (i) Annual Reports on Form 10-KSB for the fiscal years ended December
31, 1998, December 31, 1999 and December 31, 2000, as amended, as filed with the
SEC, (ii) Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001,
as filed with the SEC, (iii) proxy statements related to all meetings of its
stockholders (whether annual or special) held since January 1, 1999, and (iv)
all other reports filed with or registration statements declared effective by
the SEC since January 1, 1999, except registration statements on Form S-8
relating to employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the SEC since
that date (clauses (i) through (iv) being referred to herein collectively as the
"Company SEC Reports"). The Company has timely made all filings required under
the Exchange Act during the 12 months preceding the date of this Agreement. As
of their respective dates, the Company SEC Reports were duly filed and complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports. As of their respective dates,
the Company SEC Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in the Company
SEC Reports comply as to form in all material respects with applicable
accounting requirements of the Securities Act and with the published rules and
regulations of the SEC with respect thereto. The financial statements included
in the Company SEC Reports (i) have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated therein or in the notes thereto), (ii) present fairly, in all
material respects, the financial position of the Company and its Subsidiaries as
at the dates thereof and the results of their operations and cash flow for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments and any other adjustments
described therein and the fact that certain information and notes have been
condensed or omitted in accordance with the Exchange Act and the rules
promulgated thereunder, and (iii) are in all material respects in accordance
with the books of account and records of the Company except as indicated
therein.
2.8. Absence of Certain Developments
-------------------------------
Since December 31, 2000, there has been no (i) change or event which could
reasonably be expected to have a Material Adverse Effect, (ii) declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of the Company, (iii) issuance of capital stock (other than
pursuant to the exercise of options, warrants, or convertible securities
outstanding at such date) or options, warrants or rights to acquire capital
stock (other than the rights granted to the Investor hereunder), (iv) material
loss, destruction or damage to any property of the Company or any Subsidiary,
whether or not insured, (v) acceleration or prepayment of any indebtedness for
borrowed money or the refunding of any
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such indebtedness, (vi) labor trouble involving the Company or any Subsidiary or
any material change in their personnel or the terms and conditions of
employment, (vii) waiver of any valuable right in favor of the Company or any
Subsidiary, (viii) loan or extension of credit to any officer or employee of the
Company or any Subsidiary or (ix) acquisition or disposition of any material
assets (or any contract or arrangement therefor), or any other material
transaction by the Company or any Subsidiary otherwise than for fair value in
the ordinary course of business.
2.9. Compliance with Law
-------------------
(a) Neither the Company nor any of its Subsidiaries is in material
violation of any laws, ordinances, governmental rules or regulations to which it
is subject, including without limitation laws or regulations relating to the
environment or to occupational health and safety, and no material expenditures
are or will be required in order to cause its current operations or properties
to comply with any such law, ordinances, governmental rules or regulations.
(b) The Company and its Subsidiaries have all licenses, permits, franchises
or other governmental authorizations necessary to the ownership of their
property or to the conduct of their respective businesses, which if violated or
not obtained might have a Material Adverse Effect. Neither the Company nor any
Subsidiary has finally been denied any application for any such licenses,
permits, franchises or other governmental authorizations necessary to its
business.
(c) The Company and its Subsidiaries manufacture and distribute and for the
past three years have manufactured and have distributed their products in all
material respects in accordance with all applicable rules and regulations of the
United States Food and Drug Administration ("FDA") (including the "Good
Manufacturing Practices" and the "Medical Device Reporting" regulations) and the
Company's quality control procedures in effect at the time of manufacture. All
of the products currently sold by the Company and its Subsidiaries in the United
States (i) are under FDA-approved investigational studies, or (ii) have been
approved or cleared for sale by the FDA and all other applicable federal and
state regulatory agencies. All of the products currently sold by the Company and
its Subsidiaries outside the United States have, to the best knowledge of the
Company, been approved or cleared for sale by the appropriate foreign regulatory
agencies. Neither the Company nor any Subsidiary has received any notice from
the FDA or any other federal, state or foreign regulatory agency questioning its
manufacturing practices or threatening to revoke or curtail any product
clearance or approval, and the Company is not aware of any intent to deliver any
such notice. Schedule 2.9 contains a complete list of all products manufactured
or marketed by the Company and its Subsidiaries, including those which require
the approval of, or premarket notification to, or listing with the FDA or any
other United States federal or state or foreign governmental agency or bureau
under any existing law, regulation or policy, specifying the type of approval,
premarket notification or listing required and the reference number or
identification of each currently effective approval, notice and registration.
Except as disclosed on Schedule 2.9, none of the products identified in Schedule
2.9 have been the subject of any voluntary or involuntary recall or any
governmental investigation other than routine inspections of the Company's
facilities and all United States and international regulatory approvals or
premarket notifications therefor are owned by and registered in the name of the
Company or one of its Subsidiaries and are in full force and effect.
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2.10. Litigation
----------
There is no legal action, suit, arbitration or other legal, administrative
or other governmental investigation, inquiry or proceeding (whether federal,
state, local or foreign) pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any Subsidiary or any of their
respective properties, assets or businesses. After reasonable inquiry of its
officers and employees, the Company is not aware of any fact which might result
in or form the basis for any such action, suit, arbitration, investigation,
inquiry or other proceeding. Neither the Company nor any Subsidiary is subject
to any order, writ, judgment, injunction, decree, determination or award of any
court or of any governmental agency or instrumentality (whether federal, state,
local or foreign).
2.11. Material Contracts
------------------
Schedule 2.11 sets forth a true and complete list of each Key Agreement and
Instrument other than Contracts filed as an exhibit to a Company SEC Report.
Each Key Agreement and Instrument and any other Contract filed as an exhibit to
a Company SEC Report, is valid, binding and enforceable against the Company or
such Subsidiary and, to the Company's best knowledge, the other parties thereto,
in accordance with its terms, and in full force and effect on the date hereof.
2.12. Absence of Undisclosed Liabilities
----------------------------------
Neither the Company nor any of its Subsidiaries has any debt, obligation or
liability (whether accrued, absolute, contingent, liquidated or otherwise,
whether due or to become due, whether or not known to the Company) arising out
of any transaction entered into at or prior to either Closing, or any act or
omission at or prior to either Closing, or any state of facts existing at or
prior to either Closing, including taxes with respect to or based upon the
transactions or events occurring at or prior to either Closing, and including,
without limitation, unfunded past service liabilities under any pension, profit
sharing or similar plan, except liabilities disclosed in the Company's Form
10-KSB for the fiscal year ended December 31, 2000, as amended, current
liabilities incurred since December 31, 2000, obligations under agreements set
forth on Schedule 2.11 and obligations under agreements entered into in the
usual and ordinary course of business, none of which (individually or in the
aggregate) could have a Material Adverse Effect.
2.13. Change in Ownership
-------------------
Neither the purchase of the Shares by the Investor nor the consummation of
the transactions contemplated by this Agreement will result in (i) any material
adverse change in the business operations of the Company or any of its
Subsidiaries, (ii) the acceleration of the vesting of any outstanding option,
warrant, call, commitment, agreement, conversion right, preemptive right or
other right to subscribe for, purchase or otherwise acquire any of the shares of
the capital stock of the Company or any of the stock of the Company or any of
its Subsidiaries, or debt securities of the Company or any of its Subsidiaries
(collectively "Commitments", and each individually a "Commitment"), (iii) any
obligation of the Company to grant, extend or enter into
-9-
any Commitment, or (iv) any right in favor of any Person to terminate or cancel
any Key Agreement or Instrument.
2.14. Employees
---------
(a) The Company and its Subsidiaries are in full compliance with all laws
regarding employment, wages, hours, equal opportunity, collective bargaining and
payment of social security and other taxes except to the extent that
noncompliance would not, in the aggregate, have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is engaged in any unfair labor
practice or discriminatory employment practice and no complaint of any such
practice against the Company or any Subsidiary has been filed or, to the best of
the Company's knowledge, threatened to be filed with or by the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
administrative agency, federal or state, that regulates labor or employment
practices, nor is any grievance filed or, to the best of the Company's
knowledge, threatened to be filed, against the Company or any Subsidiary by any
employee pursuant to any collective bargaining or other employment agreement to
which the Company or any Subsidiary is a party or is bound. The Company and its
Subsidiaries are in compliance with all applicable foreign, federal, state and
local laws and regulations regarding occupational safety and health standards
except to the extent that noncompliance will not have a Material Adverse Effect,
and have received no complaints from any foreign, federal, state or local agency
or regulatory body alleging violations of any such laws and regulations. (b) The
employment of all Persons and officers employed by the Company or any of its
Subsidiaries is terminable at will without any penalty or severance obligation
of any kind on the part of the employer. All sums due for employee compensation
and benefits and all vacation time owing to any employees of the Company or any
of its Subsidiaries have been duly and adequately accrued on the accounting
records of the Company and its Subsidiaries. All employees of the Company or any
of its Subsidiaries are either United States citizens or resident aliens
specifically authorized to engage in employment in the United States in
accordance with all applicable laws.
(c) The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted.
(d) The Company is not aware that any officer or key employee, or that any
group of key employees, intends to terminate their employment with the Company,
nor does the Company have a present intention to terminate the employment of any
of the foregoing.
2.15. Tax Matters
-----------
There are no federal, state, county or local taxes due and payable by the
Company or any of its Subsidiaries which have not been paid. The provisions for
taxes on the audited and unaudited balance sheets described in Section 2.7 are
sufficient for the payment of all accrued and unpaid federal, state, county and
local taxes of the Company whether or not assessed or
-10-
disputed as of the respective dates of such balance sheets. The Company and its
Subsidiaries have duly filed all federal, state, county and local tax returns
required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year. Neither
the Company nor any of its Subsidiaries has been subject to a federal or state
tax audit of any kind.
2.16. Employee Benefit Plans
----------------------
The Company and its Subsidiaries have no employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974) covering
former or current employees of the Company or any of its Subsidiaries, or under
which the Company or any of its Subsidiaries has any obligation or liability
other than withholding obligations. Schedule 2.16 lists all plans, contracts,
bonuses, commissions, profit-sharing, savings, stock options, insurance,
deferred compensation, severance, employment, change in control agreements or
arrangements and other similar fringe or employee benefits covering former or
current employees of the Company or any of its Subsidiaries or under which the
Company or any of its Subsidiaries has any obligation or liability (each, a
"Benefit Arrangement"). True and complete copies of all Benefit Arrangements
have been provided to the Investor prior to the date hereof or, for any Benefit
Arrangement not in writing, a complete description thereof is set forth on
Schedule 2.16. The Benefit Arrangements are and have been administered in
substantial compliance with their terms and with the requirements of applicable
law. All payments to current or former employees of the Company or any of its
Subsidiaries pursuant to the Benefit Arrangements are and have been fully
deductible under the Code.
2.17. Intellectual Property
---------------------
(a) The Company and its Subsidiaries own all right, title and interest in
and to, or have a valid and enforceable license to use all the Intellectual
Property used by them in connection with their respective businesses, which
represents all intellectual property rights necessary to the conduct of their
businesses as now conducted and presently contemplated. The Company and its
Subsidiaries are in compliance with all contractual obligations relating to the
protection of such of the Intellectual Property as they use pursuant to license
or other agreement. To the best knowledge of the Company, there are no conflicts
with or infringements of any Intellectual Property by any third party. To the
best knowledge of the Company, the conduct of the business of the Company and
its Subsidiaries as currently conducted or contemplated does not conflict with
or infringe any proprietary right of any third party. There is no claim, suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary: (i) alleging any such conflict or
infringement with any third party's proprietary rights; or (ii) challenging the
Company's or any Subsidiary's ownership or use of, or the validity or
enforceability of any Intellectual Property.
(b) Schedule 2.17(b) sets forth a complete and current list of
registrations/patents or applications pertaining to the Intellectual Property
("Listed Intellectual Property") and the owner of record, date of application or
issuance and relevant jurisdiction as to each. Except as set forth on Schedule
2.17(b), all Listed Intellectual Property is owned by the Company or a
Subsidiary, free and clear of security interests, liens, encumbrances or claims
of any nature. All Listed Intellectual Property is valid, subsisting, unexpired,
in proper form and
-11-
enforceable and all renewal fees and other maintenance fees that have fallen due
on or prior to the effective date of this Agreement have been paid. No Listed
Intellectual Property is the subject of any proceeding before any governmental,
registration or other authority in any jurisdiction, including any office action
or other form of preliminary or final refusal of registration. Except as set
forth on Schedule 2.17(b), the consummation of the transactions contemplated
hereby will not alter or impair any Intellectual Property.
(c) Schedule 2.17(c) sets forth a complete list of all agreements relating
to the Intellectual Property or to the right of the Company or a Subsidiary to
use of the proprietary rights of any third party. Other than as provided in such
agreements, the Company and its Subsidiaries are not under any obligation to pay
royalties or other payments in connection with any agreement, nor restricted
from assigning their rights respecting Intellectual Property nor will the
Company or any Subsidiary otherwise be, as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations under
this Agreement, in breach of any agreement relating to the Intellectual
Property.
(d) Except as set forth on Schedule 2.17(d), no present or former employee,
officer or director of the Company or any Subsidiary, or agent or outside
contractor of the Company or any Subsidiary, holds any right, title or interest,
directly or indirectly, in whole or in part, in or to any Intellectual Property.
(e) To the Company's knowledge: (i) none of the Intellectual Property has
been used, disclosed or appropriated to the detriment of the Company or any
Subsidiary for the benefit of any Person other than the Company; and (ii) no
employee, independent contractor or agent of the Company or any Subsidiary has
misappropriated any trade secrets or other confidential information of any other
Person in the course of the performance of his or her duties as an employee,
independent contractor or agent of the Company or any Subsidiary.
(f) To the Company's knowledge, any programs, modifications, enhancements
or other inventions, improvements, discoveries, methods or works of authorship
relating to or derived from the Intellectual Property of the Company ("Works")
that were created by employees of the Company or any Subsidiary were made in the
regular course of such employees' employment or service relationships with the
Company or its Subsidiary using the Company's or the Subsidiary's facilities and
resources and, as such, constitute works made for hire. Each such employee who
has created Works or any employee who in the regular course of his employment
may create Works and all consultants have signed an assignment or similar
agreement with the Company or the Subsidiary confirming the Company's or the
Subsidiary's ownership or, in the alternative, transferring and assigning to the
Company or the Subsidiary all right, title and interest in and to such programs,
modifications, enhancements or other inventions including copyright and other
intellectual property rights therein.
(g) Each of the employees of the Company or its Subsidiaries has executed
an agreement relating to nondisclosure of inventions and the nondisclosure of
information.
-12-
2.18. Software
--------
(a) To the Company's knowledge, neither the Company's nor any Subsidiary's
transmission, reproduction, use, display or modification of its Internet Web
site (including, framing and linking web site content) or other practices
infringe or violate any proprietary or other right of any other Person and, to
the Company's knowledge, no claim relating to such infringement or violation is
threatened or pending.
(b) The operating and applications computer software programs and databases
owned or used by the Company and its Subsidiaries that are material to the
conduct of their business as now conducted and as presently contemplated to be
conducted (collectively, the "Software") are listed on Schedule 2.18. The
Company and its Subsidiaries owns or has valid licenses to use, reproduce,
modify, distribute and sublicense all copies of the Software, and neither the
Company nor any Subsidiary has sold, licensed, leased or otherwise transferred
or granted any interest or rights in or to any portion thereof. To the knowledge
of the Company, none of the Software used by the Company or any Subsidiary, nor
any use thereof, conflicts with, infringes upon or violates any intellectual
property or other proprietary right of any other Person and, to the knowledge of
the Company, no claim, suit, action or other proceeding with respect to any such
infringement or violation is threatened or pending. The Company and its
Subsidiaries have taken the steps reasonably necessary to protect its right,
title and interest in and to the Software, including, without limitation, the
execution of appropriate confidentiality agreements.
(c) The Company and its Subsidiaries possess or have access to the original
and all copies of all documentation and all source code or password protected
code, as applicable for all the Software they own. Upon consummation of the
transactions contemplated by this Agreement, the Company and its Subsidiaries
will continue to own all the Software owned by them, free and clear of all
claims, liens, encumbrances, obligations and liabilities and, with respect to
all agreements for the lease or license of Software which require consents or
other actions as a result of the consummation of the transactions contemplated
by this Agreement in order for the Company or its Subsidiaries to continue to
use and operate such Software after the First Closing Date or the Second Closing
Date, as the case may be, the Company and its Subsidiaries will have obtained
such consents or taken such other actions so required.
2.19. Title to Tangible Assets
------------------------
The Company and its Subsidiaries have good title to their properties and
assets and good title to all their leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than or resulting
from taxes which have not yet become delinquent and minor liens and encumbrances
which do not in any case materially detract from the value of the property
subject thereto or materially impair the operations of the Company and its
Subsidiaries and which have not arisen otherwise than in the ordinary course of
business.
2.20. Condition of Properties
-----------------------
All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company and its Subsidiaries are in good
operating condition and
-13-
repair, are reasonably fit and usable for the purposes for which they are being
used, are adequate and sufficient for the Company's or such Subsidiary's
business and conform in all material respects with all applicable ordinances,
regulations and laws.
2.21. Insurance
---------
The Company and its Subsidiaries and their respective properties are
insured in such amounts, against such losses and with such insurers as are
prudent when considered in light of the nature of the properties and businesses
of the Company and its Subsidiaries. Schedule 2.21 sets forth a true and
complete listing of the insurance policies of the Company and its Subsidiaries
as in effect on the date hereof, including in each case the applicable coverage
limits, deductibles and the policy expiration dates. No notice of any
termination or threatened termination of any of such policies has been received
and such policies are in full force and effect.
2.22. Transactions with Related Parties
---------------------------------
Except as set forth on Schedule 2.22, neither the Company nor any
Subsidiary is a party to any agreement with any of the Company's directors,
officers or stockholders or any Affiliate or family member of any of the
foregoing under which it: (i) leases any real or personal property (either to or
from such Person), (ii) licenses technology (either to or from such Person),
(iii) is obligated to purchase any tangible or intangible asset from or sell
such asset to such Person, (iv) purchases products or services from such Person
or (v) has borrowed money from or lent money to such Person. Neither the Company
nor any Subsidiary employs as an employee or engages as a consultant any family
member of any of the Company's directors, officers or stockholders. To the best
knowledge of the Company, there exist no agreements among stockholders of the
Company to act in concert with respect to their voting or holding of Company
securities.
2.23. Interest in Competitors
-----------------------
Neither the Company nor any of its officers or, to the best of its
knowledge, directors, has any interest, either by way of contract or by way of
investment (other than as holder of not more than 2% of the outstanding capital
stock of a publicly traded Person) or otherwise, directly or indirectly, in any
Person other than the Company that (i) provides any services or designs,
produces or sells any product or product lines or engages in any activity
similar to or competitive with any activity currently proposed to be conducted
by the Company or any of its Subsidiaries or (ii) has any direct or indirect
interest in any asset or property, real or personal, tangible or intangible, of
the Company.
2.24. Registration Rights
-------------------
Except as provided pursuant to Section 4.13, the Company will not, as of
the First Closing Date or the Second Closing Date, be under any obligation to
register any of its securities under the Securities Act.
-14-
2.25. Private Offering
----------------
Neither the Company nor anyone acting on its behalf has sold or has offered
any of the Shares for sale to, or solicited offers to buy from, or otherwise
approached or negotiated with respect thereto with, any prospective purchaser,
other than the Investor. Neither the Company nor anyone acting on its behalf
shall offer the Shares for issue or sale to, or solicit any offer to acquire any
of the same from, anyone so as to bring the issuance and sale of such Shares
within the provisions of Section 5 of the Securities Act. Based upon the
representations of the Investor set forth in Section 3, the offer, issuance and
sale of the Shares and the shares of Common Stock issuable upon conversion of
the Shares are and will be exempt from the registration and prospectus delivery
requirements of the Securities Act, and have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws.
2.26. Brokerage
---------
There are no claims for brokerage commissions or finder's fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement made by or on behalf of the Company and the Company
agrees to indemnify and hold the Investor harmless against any costs or damages
incurred as a result of any such claim.
2.27. Illegal or Unauthorized Payments; Political Contributions
---------------------------------------------------------
Neither the Company or any of its Subsidiaries nor, to the best of the
Company's knowledge (after reasonable inquiry of its officers and directors),
any of the officers, directors, employees, agents or other representatives of
the Company or any of its Subsidiaries or any other business entity or
enterprise with which the Company or any Subsidiary is or has been affiliated or
associated, has, directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
to any political organization, or the holder of or any aspirant to any elective
or appointive public office except for personal political contributions not
involving the direct or indirect use of funds of the Company or any of its
Subsidiaries.
2.28. Takeover Statute; Rights Plan
-----------------------------
Based in part on the representations of the Investor set forth in Section
3(g) hereof, the Investor is not, as a result of its execution and delivery of
this Agreement, the performance of its obligations hereunder or the acquisition
of the Shares, an "interested stockholder" prohibited from entering into a
business combination with the Company or any subsidiary pursuant to Section 203
of the DGCL. No other Takeover Statute is applicable to the transactions
contemplated hereby. The Board has approved this Agreement and the transactions
contemplated hereby as contemplated by Section 1(a)(iii) of the Rights
Agreement. As a result, as a consequence of this Agreement and the transactions
contemplated hereby, (i) the Investor shall not be an "Acquiring Person" within
the meaning of the Rights Agreement, (ii) a "Triggering Event" (as defined in
the Rights Agreement) shall not have occurred and (iii) the Rights (as defined
in the Rights Agreement) shall not separate from the Common Stock as a result of
any of the transactions contemplated hereby.
-15-
2.29. Nasdaq Compliance
-----------------
The Company's Common Stock is registered pursuant to Section 12(g) of the
Exchange Act, and is listed on The Nasdaq National Market (the "Nasdaq Stock
Market"), and except as set forth on Schedule 2.29, the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq Stock Market. The issuance of the
First Closing Shares does not require stockholder approval, including, without
limitation, pursuant to the Nasdaq Marketplace Rules.
2.30. Reporting Status
----------------
The Company is currently eligible to register the resale of Common Stock in
a secondary offering on a registration statement on Form S-3 under the
Securities Act.
2.31. No Manipulation of Stock
------------------------
The Company has not taken and will not, in violation of applicable law,
take any action outside the ordinary course of business designed to or that
might reasonably be expected to cause or result in unlawful manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
2.32. Accountants
-----------
PricewaterhouseCoopers LLP have advised the Company that they are, and to
the best knowledge of the Company they are, independent accountants as required
by the Securities Act and the rules and regulations promulgated thereunder.
2.33. Transfer Taxes
--------------
On the Closing Dates, all stock transfer or other taxes (other than income
taxes) which are required to be paid in connection with the sale and transfer of
the Shares hereunder will be, or will have been, fully paid or provided for by
the Company and the Company will have complied with all laws imposing such
taxes.
2.34. Investment Company
------------------
The Company is not an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for an investment company, within the
meaning of the Investment Company Act of 1940, as amended.
2.35. Listing
-------
The Company complies with all requirements of the NASD with respect to the
issuance of the Shares and the listing thereof on the Nasdaq Stock Market.
-16-
2.36. Material Facts
--------------
(a) This Agreement, the schedules furnished contemporaneously herewith, and
the other agreements, documents, certificates or written statements furnished or
to be furnished to the Investor through the Closing Dates by or on behalf of the
Company in connection with the transactions contemplated hereby taken as a
whole, do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances in which they were made, not misleading.
Notwithstanding the foregoing, the projections and business plans furnished to
the Investor by the Company have been prepared in good faith on the basis of
reasonable assumptions consistent with earlier assumptions and represent the
Company's best estimate on the date hereof of its future performance.
(b) There is no fact which is known to the Company and which has not been
disclosed herein or otherwise by the Company to the Investor which may be
reasonably expected to have a Material Adverse Effect.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
----------------------------------------------
The Investor represents and warrants to the Company as follows:
(a) It is acquiring the Shares for its own account for investment and not
with a view towards the resale, transfer or distribution thereof, nor with any
present intention of distributing the Shares, but subject, nevertheless, to any
requirement of law that the disposition of the Investor's property shall at all
times be within the Investor's control, and without prejudice to the Investor's
right at all times to sell or otherwise dispose of all or any part of such
securities under a registration under the Securities Act or under an exemption
from said registration available under the Securities Act.
(b) It has full power and legal right to execute and deliver this Agreement
and to perform its obligations hereunder.
(c) It is a validly existing limited liability company, duly organized
under the laws of the State of Delaware.
(d) It has taken all action necessary for the authorization, execution,
delivery, and performance of this Agreement and its obligations hereunder, and,
upon execution and delivery by the Company, this Agreement shall constitute the
valid and binding obligation of the Investor, enforceable against the Investor
in accordance with its terms, except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and general principles of
equity.
(e) There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Investor and the
Investor agrees to indemnify and hold the Company harmless against any costs or
damages incurred as a result of any such claim.
-17-
(f) It has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its investment in the
Company as contemplated by this Agreement, and is able to bear the economic risk
of such investment for an indefinite period of time. It has been furnished
access to such information and documents as it has requested and has been
afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares contemplated hereby. It is an
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act.
(g) As of the date hereof, without giving effect to the transactions
contemplated hereby, the Investor does not beneficially own (within the meaning
of Rule 13d-3 under the Exchange Act) any shares of Common Stock of the Company.
The Investor shall promptly notify the Company in the event that such number of
shares beneficially owned by the Investor changes prior to the Second Closing
Date, other than by way of the purchase of Shares pursuant to this Agreement.
SECTION 4. ADDITIONAL AGREEMENTS OF THE PARTIES
------------------------------------
4.1. Resale of Securities
--------------------
(a) The Investor covenants that it will not sell or otherwise transfer the
Shares except pursuant to an effective registration under the Securities Act or
in a transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder.
(b) Until the Shares are registered pursuant to Section 4.13 hereof, the
certificates evidencing the Shares will bear the following legend reflecting the
foregoing restrictions on the transfer of such securities:
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be transferred
except pursuant to an effective registration under the Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Act and the rules and
regulations promulgated thereunder."
4.2. Covenants Pending Closing
-------------------------
Pending either Closing, the Company will conduct and will cause its
Subsidiaries to conduct their respective businesses in the ordinary course, and
will not, and will not permit any of its Subsidiaries to, without the Investor's
prior written consent, take any action which would result in any of the
representations or warranties contained in this Agreement not being true at and
as of the time immediately after such action, or in any of the covenants
contained in this Agreement becoming incapable of performance. The Company will
promptly advise the Investor of any action or event of which it becomes aware
which has the effect of making incorrect any of such representations or
warranties or which has the effect of rendering any of such covenants incapable
of performance.
-18-
4.3. Further Assurance
-----------------
Each of the parties shall execute such documents and other papers and take
such further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby. Each such party
shall use its reasonable efforts to fulfill or obtain the fulfillment of the
conditions to either Closing as promptly as practicable.
4.4. Board Nominees
--------------
(a) From and after the First Closing Date until the Second Closing Date,
and for so long as the Investor Owns at least 10% of the outstanding shares of
Common Stock of the Company, (i) the number of directors that shall constitute
the entire Board of Directors of the Company (the "Board") shall not exceed six
(6) and (ii) the Company shall nominate and use its best efforts to cause to be
elected and to cause to remain as a director on the Board one (1) person
designated by the Investor (an "Investor Director"). Any vacancy created by the
death, disability, retirement or removal of any such individual may be filled by
the Investor. As of the First Closing Date, the Investor Director shall be Xxxx
X. Xxxxxxx.
(b) From and after the Second Closing Date, and for so long as the Investor
Owns at least 10% of the outstanding shares of Common Stock of the Company, the
number of directors that shall constitute the entire Board shall not exceed
seven (7). From and after the Second Closing Date, the Company shall nominate
and use its best efforts to cause to be elected and to cause to remain as
directors on the Board (A) as long as the Investor Owns at least 5%, but less
than 10% of the outstanding shares of Common Stock of the Company, one Investor
Director; (B) as long as the Investor Owns at least 10%, but less than 20% of
the outstanding shares of Common Stock of the Company, two (2) Investor
Directors; (C) as long as the Investor Owns at least 20%, but less than 30% of
the outstanding shares of Common Stock of the Company, three (3) Investor
Directors; and (D) as long as the Investor Owns at least 30% of the outstanding
shares of Common Stock of the Company, four (4) Investor Directors. Any vacancy
created by the death, disability, retirement or removal of any such individual
may be filled by the Investor. As of the Second Closing Date, the Investor
Directors shall be Xxxx X. Xxxxxxx, Xxxxxxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxx
and Xxxx Xxxxxxx.
(c) From and after the First Closing Date, and for so long as the Investor
Owns at least 10% of the outstanding shares of Common Stock of the Company, at
least one Investor Director shall be a member of each committee of the Board,
whether existing on the First Closing Date or formed at any time thereafter.
4.5. Subscription Right.
-------------------
(a) If at any time after the date hereof, the Company proposes to issue
equity securities of any kind (for these purposes, the term "equity securities"
shall include, without limitation, Common Stock, any warrants, options or other
rights to acquire equity securities and debt securities convertible into equity
securities) of the Company (other than the issuance of shares of Common Stock
(i) to the Investor or its Affiliates, (ii) upon conversion of any convertible
instruments of the Company outstanding on the First Closing Date, (iii) in the
ordinary course to employees, directors, consultants or advisors to the Company,
as approved by
-19-
the Board, pursuant to an existing employee stock option plan (including the
Company's 1996 Stock Incentive Plan, which is being amended to increase the
total number of shares reserved for issuance thereunder to 3,250,000 shares at
the Company's 2001 Annual Meeting of Stockholders to be held May 31, 2001),
stock bonus plan, stock purchase plan or other management equity program, such
issuances not to exceed the amounts set forth in Schedule 2.8 prior to the
Second Closing Date, (iv) subsequent to the Second Closing Date, in connection
with any stock split or stock dividend of the Company or (vi) subsequent to the
Second Closing Date, to vendors or customers or to other persons in similar
commercial situations, as approved by the Board) then, as to the Investor, the
Company shall:
(1) give written notice setting forth in reasonable detail (1) the
designation and all of the terms and provisions of the securities proposed
to be issued (the "Proposed Securities"), including, where applicable, the
voting powers, preferences and relative participating, optional or other
special rights, and the qualification, limitations or restrictions thereof
and interest rate and maturity; (2) the price and other terms of the
proposed sale of such securities; (3) the amount of such securities
proposed to be issued; and (4) such other information as the Investor may
reasonably request in order to evaluate the proposed issuance; and
(2) offer to issue to the Investor upon the terms described in
subparagraph (i) above a portion of the Proposed Securities (the
"Subscription Securities") equal to a percentage determined by dividing (x)
the number of shares of Common Stock Owned by the Investor, by (y) the
total number of shares of Common Stock beneficially owned (within the
meaning of Rule 13d-3 under the Exchange Act) by all holders of Common
Stock, options or convertible securities immediately preceding the issuance
of the Proposed Securities.
(b) The Investor must exercise its purchase rights hereunder within ten
(10) days after receipt of such notice from the Company. To the extent that the
Company offers two or more securities in units, the Investor must purchase such
units as a whole and will not be given the opportunity to purchase only one of
the securities making up such unit.
(c) Upon the expiration of the offering periods described above, the
Company will be free to sell such Subscription Securities that the Investor has
not elected to purchase during the ninety (90) days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to the Investor. Any Subscription Securities offered or sold by the
Company after such 90 day period must be reoffered to the Investor pursuant to
this Section 4.5.
(d) The election by the Investor not to exercise its subscription rights
under this Section 4.5 in any one instance shall not affect its right (other
than in respect of a reduction in its percentage holdings) as to any subsequent
proposed issuance. Any sale of such securities by the Company without first
giving the Investor the rights described in this Section 4.5 shall be void and
of no force and effect.
(e) Injunctive Relief. The Company and the Investor hereby declare that it
is impossible to measure in money the damages which will accrue to the parties
hereto by reason of
-20-
the failure of any party to perform any of its obligations set forth in this
Section 4.5. Therefore, the Company and the Investor shall have the right to
specific performance of such obligations, and if any party hereto shall
institute any action or proceeding to enforce the provisions hereof, each of the
Company and the Investor hereby waives the claim or defense that the party
instituting such action or proceeding has an adequate remedy at law.
(f) Termination. The Subscription Rights set forth in this Section 4.5
shall terminate at such time as the Investor Owns less than 10% of the
outstanding shares of Common Stock of the Company.
4.6. Indemnity
---------
(a) The Company agrees to indemnify and hold the Investor, its members and
its Affiliates and each of their respective officers, directors, partners,
members, employees and agents, and each person who controls the Investor or any
of its members (within the meaning of the Exchange Act) (the "Indemnified
Parties") harmless against any and all losses, liabilities, damages, expenses
and other costs ("Losses") arising from any actual or threatened claims brought
against the Company or such Indemnified Parties in connection with or arising
out of entering into this Agreement and the transactions contemplated hereby or
any other legal, administrative or other proceeding arising out of the
transactions contemplated hereby, other than such Losses which are judicially
determined to have resulted from (i) the gross negligence or willful misconduct
of the Investor or such other Indemnified Party or (ii) the breach by the
Investor of any of the terms of this Agreement.
(b) Each Indemnified Party under this Section 4.6 will, promptly after the
receipt of notice of the commencement of any action against such Indemnified
Party in respect of which indemnity may be sought from the Company on account of
an indemnity agreement contained in this Section 4.6, notify the Company in
writing of the commencement thereof. The omission of any Indemnified Party so to
notify the Company of any such action shall not relieve the Company from any
liability which it may have to such Indemnified Party other than pursuant to
this Section 4.6 or, unless the Company shall have been prejudiced by the
omission of such Indemnified Party so to notify the Company, pursuant to this
Section 4.6. In case any such action shall be brought against any Indemnified
Party and it shall notify the Company of the commencement thereof, the Company
shall be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Company to such Indemnified Party
of its election so to assume the defense thereof, the Company will not be liable
to such Indemnified Party under this Section 4.6 for any legal or other expense
subsequently incurred by such Indemnified Party in connection with the defense
thereof; provided, however, that (1) if the Company shall elect not to assume
the defense of such claim or action or (2) if the Indemnified Party reasonably
determines (A) that there may be a conflict between the positions of the Company
and of the Indemnified Party in defending such claim or action or (B) that there
may be legal defenses available to such Indemnified Party different from or in
addition to those available to the Company, then separate counsel for the
Indemnified Party shall be entitled to participate in and conduct the defense,
in the case of (1) and (2)(A), or such different defenses, in the case of
(2)(B), and the Company shall be liable for any reasonable legal or other
expenses incurred by the Indemnified Party in connection with the defense.
-21-
4.7. Consents and Approvals; Proxy; Xxxx-Xxxxx Filings
-------------------------------------------------
(a) From and after the date hereof, the Company shall use its best efforts
to obtain as promptly as practicable any consent or approval of any Person,
including any regulatory authority, required in connection with the transactions
contemplated hereby, including without limitation the consent of each Person set
forth on Schedule 2.5 and the consent of the Company's stockholders pursuant to
the requirements of NASD Rule 4350(i)(1)(B) and (D).
(b) In furtherance of the above, as promptly as practicable after the date
hereof, but in no event later than June 8, 2001, the Company shall prepare and
file with the SEC, and shall use all reasonable efforts to have cleared by the
SEC, a preliminary proxy statement, and as soon as practicable thereafter
(subject to applicable waiting periods under the Exchange Act and review by the
SEC) file with the SEC and promptly thereafter mail a definitive proxy statement
to the Company's stockholders (the "Proxy Statement"). The Proxy Statement shall
contain the recommendation of the Board that the Company's stockholders approve
the transactions contemplated by this Agreement in accordance with the
requirements of NASD Rule 4350(i)(1)(B) and (D). Subject to applicable law, the
Company shall promptly take all action necessary pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder and shall include in the
Proxy Statement such information with respect to the Company and its officers
and directors as is required under Section 14(f) and Rule 14f-1. The Investor
will supply the Company any information with respect to itself and its nominees,
officers, members and affiliates required by Section 14(f) and Rule 14f-1. The
Investor will be given a reasonable opportunity to review and comment on drafts
of the Proxy Statement and the Company will use its reasonable best efforts to
accept comments thereto given by the Investor and its representatives. The
Company shall promptly take all action necessary in accordance with applicable
law and its Organizational Documents to convene a meeting of the Company's
stockholders, if such meeting is required, no later than July 20, 2001 or, if
such date is impracticable due to review by the SEC, as soon as practicable
thereafter. The Company shall use its best efforts to solicit from the Company's
stockholders proxies in favor of the transactions contemplated by this Agreement
and shall take all other action necessary or, in the reasonable opinion of the
Investor, advisable to secure any vote of stockholders necessary for approval of
the transactions contemplated by this Agreement.
(c) The Company and the Investor will promptly prepare and file, or cause
to be prepared and filed, any notification or response to any request for
additional information required to be filed under the Xxxx-Xxxxx Act and the
rules and regulations promulgated thereunder with respect to the acquisition of
the Second Closing Shares.
4.8. Use of Proceeds
---------------
The proceeds received by the Company from the issuance and sale of the
Shares shall be used by the Company to provide the necessary funding for
clinical trials, working capital and other general corporate purposes.
-22-
4.9. Investor Consents
-----------------
Except for the amendment to the Company's Certificate of Incorporation
described in item (a) of Schedule 2.3 and the amendments to the Company's Bylaws
described in Section 5.8, from and after the First Closing Date, the Company
shall not, without the prior written consent of the Investor, (a) amend or
modify its Certificate of Incorporation or Bylaws, or (b) take any action that
adversely alters or changes the rights, preferences or privileges of the Common
Stock or any rights of the Investor, including without limitation, the creation,
authorization or issuance of shares of any class or series of capital stock
having voting rights, rights as to dividends or rights upon liquidation that are
senior or prior to the Common Stock.
4.10. Takeover Statute
----------------
If any Takeover Statute shall become applicable to the transactions
contemplated hereby, including without limitation any takeover provision under
the laws of the State of Delaware, the Company and the members of the Board
shall grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statue or regulation on the transactions contemplated hereby.
4.11. Rights Agreement Inapplicable
-----------------------------
If the transactions contemplated hereby or the conversion or exchange or
exercise of any of the Securities upon its terms would (a) result in the
occurrence of a "Triggering Event" under the Rights Agreement, (b) cause the
Investor to become an "Acquiring Person" as defined in the Rights Agreement or
(c) otherwise cause the exercise of any "Right" issued pursuant to the Rights
Agreement or the issuance or exercise of any "Rights Certificate" under the
Rights Agreement, the Company will promptly cause the Rights Agreement to be
duly amended to prevent any such characterization.
4.12. No Solicitation
---------------
(a) The Company shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor, agent or representative of the
Company or any Subsidiary (collectively, "Company Representatives") to, directly
or indirectly, except in connection with the Existing Preemptive Rights, (i)
solicit any offers, bids or indications of interest, or initiate negotiations or
discussions with any person other than the Investor with respect to the
financing of the Company, whether debt or equity, or the sale, license or other
transfer by the Company of any material assets of the Company, or the sale,
merger, consolidation, recapitalization or other reorganization of the Company
(each, a "Competing Transaction Proposal"); (ii) enter into any agreement,
agreement in principle, letter of intent or similar arrangement (whether or not
legally binding) relating to a Competing Transaction Proposal; (iii) furnish, or
authorize any Company Representative to furnish, any confidential information or
draft agreement concerning a Competing Transaction Proposal to any party; or
(iv) participate in any discussions or negotiations regarding, or take any other
action intended to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
-23-
Transaction Proposal. Notwithstanding the foregoing, the Board may, in response
to a Superior Offer (as defined in Section 4.12(b)) that was not solicited by
the Company or any Company Representative on or after the date hereof and that
did not otherwise result from a breach of this Section 4.12(a), (x) furnish
information with respect to the Company to any person making a Superior Offer
and (y) participate in discussions or negotiations regarding such Superior
Offer; provided, however, that prior to participating in any such discussions or
negotiations or furnishing any such information, the Company receives from such
person an executed confidentiality agreement (on terms that are not materially
less favorable to the Company than the various confidentiality agreements
executed by representatives of the Investor), a copy of the form of which shall
be provided to the Investor; and provided, further, that the Board shall
promptly, but in no event later than the day following such event, provide the
Investor with notice thereof.
(b) Except as expressly permitted by this Section 4.12, the Company shall
not: (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to the Investor, the approval or recommendation by the Board of the
Investment; (ii) approve or cause the Company to enter into any letter of
intent, agreement in principle or any legally binding acquisition agreement or
similar agreement relating to any Competing Transaction Proposal; or (iii)
approve or recommend, or propose to publicly approve or recommend, any Competing
Transaction Proposal. Notwithstanding the foregoing, if the Company has received
and wishes to accept a Superior Offer, the Company may (subject to this and the
following sentences) terminate the provisions of this Agreement relating to the
Second Closing; provided, however, that (x) at the time of such termination,
such proposal continues to be a Superior Offer, (y) the Investor has been
provided with the terms of such Superior Offer pursuant to Section 4.12(c) and
has been given the opportunity to match such terms, and has not, within three
(3) days after receiving all such terms of the Superior Offer, confirmed to the
Company that the Investor will match the terms of such Superior Offer, and (z)
the Company (A) enters into a definitive agreement with the party proposing the
Superior Offer no later than ten (10) Business Days following expiration of the
three-day period and (B) consummates a transaction with the party proposing the
Superior Offer upon terms no less favorable to the Company than the Superior
Offer within ninety (90) days following expiration of the three-day period. For
purposes of this Agreement, a "Superior Offer" means an offer from a third party
to purchase a number of shares of equity securities of the Company upon terms
and conditions such that (i) the offer is reasonably determined by the Company's
Board of Directors, after consultation with its legal and financial advisors, to
be superior to the Investment, (ii) the Board's fiduciary duties to the
Company's stockholders require it to accept such offer instead of the
Investment, (iii) the offer includes no financing condition and no conditions
more onerous or less favorable to the Company than in the Investment and (iv)
the Company's Board of Directors reasonably determines, after consultation with
its legal and financial advisors, that the offer is capable of being completed
without impediment or delay, taking into account all legal, financial,
regulatory and other aspects of the offer and the third party making such offer.
(c) The Company shall advise the Investor orally and in writing of any
Competing Transaction Proposal or Superior Offer as promptly as practicable
following receipt thereof. Such notification shall include the terms and
conditions of such Competing Transaction Proposal, and the identity of the
person making it, and the Company shall further advise the Investor orally and
in writing, as promptly as practicable following receipt thereof, of any
-24-
material modification of or material amendment to any Competing Transaction
Proposal (and the terms of such modification or amendment), or any request for
information relating to the Company or any Subsidiary in connection with a
Competing Transaction Proposal or for access to the properties, books or records
of the Company or any Subsidiary by any person that informs the Board or such
Subsidiary that it is considering making, or has made, a Competing Transaction
Proposal (including the identity of the person requesting such information or
access, as the case may be).
(d) The Company shall immediately cease, and shall cause any party acting
on its behalf to cease, and cause to be terminated any existing discussions or
negotiations with any third party conducted heretofore with respect to any of
the foregoing and shall request any such parties in possession of confidential
information about the Company or its Subsidiaries that was furnished by or on
behalf of the Company or its Subsidiaries to return or destroy all such
information in the possession of any such party or in the possession of any
agent or advisor of any such party.
(e) Notwithstanding any termination of the provisions of this Agreement
relating to the Second Closing pursuant to this Section 4.12, all other
provisions of this Agreement, including without limitation those relating to the
purchase and sale of the First Closing Shares and all representations and
warranties made by the Company in connection therewith, all covenants and
agreements of the Company in connection therewith and all agreements and other
instruments entered into in connection therewith, shall remain in full force and
effect.
(f) No Investor Director may participate in, be in attendance at, or vote
with respect to, any discussions, meetings or decisions of the Board for the
purpose of discussing or considering any Competing Transaction Proposal,
including, without limitation, any discussions regarding whether such Competing
Transaction Proposal may or may not constitute a Superior Proposal.
4.13. Registration Rights
-------------------
The Company shall file a registration statement (the "Registration
Statement") covering the Shares on behalf of the Investor and its Affiliates and
any subsequent transferee with the SEC. Such Registration Statement will be
filed as soon as practicable after the Second Closing Date or, if the Second
Closing Date shall not occur, as soon as practicable after the provisions of
this Agreement relating to the Second Closing have been terminated pursuant to
Section 4.12 or 9.4 hereof. The Company will use its reasonable best efforts to
cause the Registration Statement to become effective within 60 days of filing.
The expenses of the preparation and filing of the Registration Statement shall
be borne by the Company. Upon filing the Registration Statement, the Company
will use its reasonable best efforts to keep the Registration Statement
effective with the SEC at all times until the Investor or any transferee who
would require such registration to effect a sale of the Shares no longer holds
the Shares or can effect a sale of the Shares pursuant to Rule 144(k) under the
Securities Act, whichever is sooner. Provisions relating to the registration
rights discussed in this Section are set forth in Exhibit C hereto.
-25-
4.14. Registration and Listing
------------------------
(a) So long as the Investor Owns any Shares, the Company will cause the
Common Stock to continue at all times to be registered under Section 12(g) of
the Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules thereunder)
to terminate or suspend such reporting and filing obligations.
(b) So long as the Investor Owns any Shares, the Company shall continue the
listing or trading of the Common Stock on Nasdaq or one of the other Approved
Markets and comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the Approved Market on which the
Common Stock is listed.
(c) So long as the Investor Owns any Shares, the Company shall use its best
efforts to comply with all requirements of the NASD with respect to the issuance
of the Shares and listing thereof on the Nasdaq Stock Market.
4.15. Employee Matters
----------------
(a) From and after the date hereof, prior to the Second Closing, the
Company shall not (i) enter into or amend any employment or severance agreement
with, or grant any severance or termination pay to, any officer or director of
the Company or any Subsidiary; or (ii) hire or agree to hire any new or
additional key employees or officers.
(b) From and after the date hereof, prior to the Second Closing, except as
required to comply with applicable law, the Company shall not (i) adopt or enter
into any new Benefit Arrangement, except as disclosed on Schedule 2.16(12), (ii)
terminate, amend (except as provided in Section 4.15(c)) or increase the amount
of, or accelerate the payment or vesting of, any benefit or award or amount
payable under any Benefit Arrangement for the current or future benefit or
welfare of any current or former director, officer or employee of the Company or
any of its Subsidiaries, (iii) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee, (iv) fund,
secure payment for, grant, accrue, pay or distribute any amount or benefit under
any Benefit Arrangement whether or not existing on the date hereof, except as
expressly provided for in Schedule 2.8 hereto and except, with respect to items
(1), (4), (8) and (9) described on Schedule 2.16, in the ordinary course of
business consistent with past practice, or (v) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit
Arrangement (including the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock, or
the removal of existing restrictions in any Benefit Arrangement or awards made
thereunder), except as expressly provided for in Schedule 2.8 hereto.
(c) From and after the date hereof, prior to the Second Closing, no options
will be issued to officers of the Company pursuant to the Company's 1996 Stock
Incentive Plan (the "1996 Plan") unless (i) the 1996 Plan is amended to provide
that for purposes of all options or other equity awards granted under the 1996
Plan during the period commencing on the date hereof and ending on the Second
Closing, the term "Change in Control," as defined in the 1996 Plan, shall
expressly exclude the transactions contemplated by the Second Closing, but that
if the
-26-
optionholder's employment with the Company is terminated within the twelve (12)
month period immediately following the consummation of the "Change in Control"
for any reason other than for "cause" or "voluntary resignation" (as such terms
shall be defined by the Company's Board of Directors and shall be set forth in
the agreements evidencing such options), then such options shall become fully
exercisable, (ii) any option or other award agreements pursuant to which such
options or other awards are issued contain language which reflect this amendment
to the 1996 Plan, and (iii) the number of such options does not exceed the
number of options indicated in Schedule 2.8 as to be issued prior to the Second
Closing.
SECTION 5. INVESTOR's CLOSING CONDITIONS
-----------------------------
The obligation of the Investor to purchase and pay for the Shares on the
First Closing Date and the Second Closing Date, as provided in Section 1 hereof,
shall be subject to the performance by the Company of its agreements theretofore
to be performed hereunder and to the satisfaction, prior thereto or concurrently
therewith, of the following further conditions:
5.1. Representations and Warranties
------------------------------
(a) The representations and warranties of the Company contained in this
Agreement shall be true on and as of the First Closing Date.
(b) The representations and warranties of the Company contained in this
Agreement shall be true on and as of the Second Closing Date in all material
respects (except for such representations and warranties that are qualified as
to materiality or Material Adverse Effect, which shall be true in all respects)
as though such representations and warranties were made at and as of such date,
except as otherwise affected by the transactions contemplated hereby.
5.2. Compliance with Agreement
-------------------------
The Company shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by the Company prior to or on the First Closing Date
or the Second Closing Date, as the case may be.
5.3. Injunction
----------
There shall be no effective injunction, writ, preliminary restraining order
or any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
5.4. Counsel's Opinion
-----------------
The Investor shall have received from the Company's counsel, Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx, an opinion, dated the First Closing Date or the Second
Closing date, as the case may be, substantially in the form of Exhibit D hereto.
-27-
5.5. Adverse Development
-------------------
There shall have been no developments in the business of the Company or any
of its Subsidiaries which would be reasonably expected to have a Material
Adverse Effect.
5.6. Voting Agreement
----------------
With respect to the First Closing Date only, the Company's directors and
officers set forth on Schedule 5.7 shall have executed the Voting and Proxy
Agreement, the form of which is attached as Exhibit E hereto (the "Voting
Agreement").
5.7. Directors
---------
(a) Xxxx X. Xxxxxxx shall have been elected to the Board, effective on the
First Closing Date. Xxxx X. Xxxxxxx, Xxxxxxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxx
and Xxxx Xxxxxxx shall have been elected to the Board, effective the Second
Closing Date.
(b) Xxxxxx Xxxxxxx shall have resigned from the Board, effective on the
First Closing Date. Two additional directors shall have resigned from the Board,
effective on the Second Closing Date.
5.8. Bylaws
------
(a) On or before the First Closing Date, the Bylaws of the Company shall
have been amended to provide that the number of directors on the Board shall not
exceed six (6) without the written consent of the Investor.
(b) On or before the Second Closing Date, the Bylaws of the Company shall
have been amended to provide that the number of directors on the Board shall not
exceed seven (7) without the written consent of the Investor.
5.9. Listing of the Shares
---------------------
(a) On or before the First Closing Date, the First Closing Shares shall
have been approved for listing on the Nasdaq Stock Market.
(b) On or before the Second Closing Date, the Second Closing Shares shall
have been approved for listing on the Nasdaq Stock Market.
5.10. Nasdaq Trading
--------------
From the date hereof to the Second Closing Date, trading in the Common
Stock shall not have been suspended by the SEC or the Nasdaq Stock Market, and
trading in securities generally as reported by the Nasdaq Stock Market shall not
have been suspended or limited, and the Common Stock shall not have been
delisted on the Nasdaq Stock Market.
-28-
5.11. Consents and Approvals; Xxxx-Xxxxx
----------------------------------
On or before the First Closing Date and the Second Closing Date, as the
case may be, the Company shall have obtained all consents, permits, waivers and
other authorizations necessary or appropriate for the transactions contemplated
by this Agreement to be consummated on such date, including, without limitation,
the delivery of the notices set forth on Schedule 2.5(4) on or before the First
Closing Date, the remaining consents set forth on Schedule 2.5 on or before the
Second Closing Date, and the approval, on or before the Second Closing Date, of
the requisite vote of the Company's stockholders for the issuance of the Second
Closing Shares pursuant to the requirements of NASD Rule 4350(i)(1)(B) and (D);
and any waiting period under the Xxxx-Xxxxx Act applicable to the purchase and
sale of the Second Closing Shares shall have expired or been terminated.
5.12. Liens
-----
On or before the First Closing Date, the Company shall have filed all
applicable termination statements with respect to the liens set forth on
Schedule 2.19(3), including without limitation termination statements with the
applicable secretaries of state, county authorities and the United States Patent
and Trademark Office.
5.13. Officer's Certificate
---------------------
The Investor shall have received a certificate, dated the First Closing
Date or the Second Closing Date, as the case may be, signed by each of the
President and the Chief Financial Officer of the Company, certifying that the
conditions specified in the foregoing Sections 5.1, 5.2, 5.3 and 5.5 hereof have
been fulfilled.
5.14. Secretary's Certificate
-----------------------
The Investor shall have received a certificate, dated the First Closing
Date or the Second Closing Date, as the case may be, of the Secretary of the
Company attaching (i) a true and complete copy of the Certificate of
Incorporation of the Company as filed with the Secretary of State of the State
of Delaware, with all amendments thereto, (ii) true and complete copies of the
Company's Bylaws in effect as of such date, (iii) certificates of good standing
of the appropriate officials of the jurisdictions of incorporation of the
Company and of each state in which the Company is qualified to do business as a
foreign corporation and (iv) resolutions of the Board authorizing the execution
and delivery of this Agreement and the transactions contemplated hereby, and the
issuance of the Shares.
5.15. Approval of Proceedings
-----------------------
All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to the Investor and its special counsel,
Xxxxxxx Xxxx & Xxxxxxxxx; and the Investor shall have received copies of all
documents or other evidence which they and Xxxxxxx Xxxx & Xxxxxxxxx may request
in connection with such transactions and of all records of corporate proceedings
in connection therewith in form and substance satisfactory to the Investor and
Xxxxxxx Xxxx & Xxxxxxxxx.
-29-
SECTION 6. COMPANY CLOSING CONDITIONS
--------------------------
The obligation of the Company to issue and deliver the Shares on the First
Closing Date or the Second Closing Date, as the case may be, as provided in
Section 1 hereof, shall be subject to the performance by the Investor of its
agreements theretofore to be performed hereunder and to the satisfaction, prior
thereto or concurrently therewith, of the following further conditions:
6.1. Representations and Warranties
------------------------------
(a) The representations and warranties of the Investor contained in this
Agreement shall be true on and as of the First Closing Date.
(b) The representations and warranties of the Investor contained in this
Agreement shall be true on and as of the Second Closing Date in all material
respects (except for such representations and warranties that are qualified as
to materiality or Material Adverse Effect, which shall be true in al respects)
as though such representations and warranties were made at and as of such date,
except as otherwise affected by the transactions contemplated hereby.
6.2. Compliance with Agreement
-------------------------
The Investor shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by it prior to or on the First Closing Date or the
Second Closing Date, as the case may be.
6.3. Investor's Certificates
-----------------------
The Company shall have received a certificate from the Investor, dated the
First Closing Date or the Second Closing Date, as the case may be, signed by a
duly authorized representative of the Investor, certifying that the conditions
specified in the foregoing Sections 6.1 and 6.2 hereof have been fulfilled.
6.4. Injunction
----------
There shall be no effective injunction, writ, preliminary restraining order
or any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
6.5. Consents and Approvals; Xxxx Xxxxx
----------------------------------
On or before the Second Closing Date, the Company shall have obtained the
approval of the requisite vote of the Company's stockholders for the issuance of
the Second Closing Shares pursuant to the requirements of NASD Rule
4350(i)(1)(B) and (D); and any waiting period under the Xxxx-Xxxxx Act
applicable to the purchase and sale of the Second Closing Shares shall have
expired or been terminated.
-30-
SECTION 7. COVENANTS
---------
7.1. Financial and Business Information
----------------------------------
From and after the date hereof, the Company shall deliver to the Investor
so long as the Investor Owns at least 5% of the issued and outstanding shares of
Common Stock of the Company:
(a) Monthly Statements - as soon as practicable, and in any event within 30
days after the close of each month of each fiscal year of the Company, a
consolidated balance sheet, statement of income and statement of cash flows of
the Company and any Subsidiaries as at the close of such month and covering
operations for such month, and the portion of the Company's fiscal year ending
on the last day of such month, all in reasonable detail and prepared in
accordance with GAAP, subject to audit and year-end adjustments. The Company
shall also provide comparisons of each pertinent item to the budget referred to
in subsection (b) below.
(b) Business Plans; Projections - no later than 30 days after the
commencement of each fiscal year of the Company, an annual business plan of the
Company and projections of operating results, prepared on a monthly basis for a
two-year period, and prepared on an annual basis for the succeeding three-year
period. Within 45 days of the close of the second fiscal quarter, the Company
shall provide the Investor with an update of such monthly projections. Such
business plans, projections and updates shall contain such substance and detail
and shall be in such form as is presently prepared by the Company.
(c) Audit Reports - promptly upon receipt thereof, one copy of each other
financial report and internal control letter submitted to the Company by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Company.
(d) Other Reports - promptly upon their becoming available, one copy of
each financial statement, report, notice or proxy statement sent by the Company
to stockholders generally, of each financial statement, report, notice or proxy
statement sent by the Company or any of its Subsidiaries to the SEC or any
successor agency, if applicable, of each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any Subsidiary
with, or received by such Person in connection therewith from, any domestic or
foreign securities exchange, the SEC or any successor agency or any foreign
regulatory authority performing functions similar to the SEC, of any press
release issued by the Company or any Subsidiary, and of any material of any
nature whatsoever prepared by the SEC or any successor agency thereto or any
state blue sky or securities law commission which relates to or affects in any
way the Company or any Subsidiary.
(e) Requested Information - with reasonable promptness, the Company shall
furnish the Investor with such other data and information as from time to time
may be reasonably requested.
-31-
7.2. Inspection
----------
As long as the Investor Owns at least five percent (5%) of the outstanding
Common Stock, the Company shall permit the Investor, its nominee, assignee, and
its representative to visit and inspect any of the properties of the Company and
its Subsidiaries, to examine all its books of account, records, reports and
other papers not contractually required of the Company to be confidential or
secret, to make copies and extracts therefrom, and to discuss its affairs,
finances and accounts with its officers, directors, key employees and
independent public accountants or any of them (and by this provision the Company
authorizes said accountants to discuss with the Investor, its nominees,
assignees and representatives the finances and affairs of the Company and any
Subsidiaries), all at such reasonable times and as often as may be reasonably
requested.
7.3. Confidentiality
---------------
As to so much of the information and other material furnished under or in
connection with this Agreement (whether furnished before, on or after the date
hereof, including without limitation information furnished pursuant to Sections
7.1 and 7.2 hereof) as constitutes or contains confidential business, financial
or other information of the Company or any Subsidiary, the Investor covenants
for itself and its members and officers that it will use due care to prevent its
officers, members, employees, counsel, accountants and other representatives
from disclosing such information to Persons other than their respective
authorized employees, counsel, accountants, stockholders, partners, limited
partners and other authorized representatives or from using such information
except as an Investor or for the benefit of the Company; provided, however, that
the Investor may disclose or deliver any information or other material disclosed
to or received by it should the Investor be advised by its counsel that such
disclosure or delivery is required by law, regulation or judicial or
administrative order. In the event of any termination of this Agreement prior to
the First Closing Date or Second Closing Date, as the case may be, the Investor
shall return to the Company all confidential material previously furnished to
the Investor or its officers, members, employees, counsel, accountants and other
representatives in connection with this transaction. For purposes of this
Section 7.3, "due care" means at least the same level of care that the Investor
would use to protect the confidentiality of its own sensitive or proprietary
information, and this obligation shall survive termination of this Agreement.
7.4. Conduct of Business and Maintenance of Existence
------------------------------------------------
The Company will continue to engage in business of the same general type as
now conducted by it, and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business. The Company shall require all of its employees or consultants to enter
into appropriate confidentiality agreements to protect confidential information
relating to the Company and its business, including trade secrets.
7.5. Compliance with Laws
--------------------
The Company and its Subsidiaries will comply in all material respects with
all applicable laws, rules, regulations and orders except where the failure to
comply would not have
-32-
a material adverse effect on the business, properties, operations, prospects or
financial condition of the Company.
7.6. Insurance
---------
The Company will maintain insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies of similar size and credit standing engaged in
similar business and owning similar properties, provided that such insurance is
and remains available to the Company at commercially reasonable rates.
7.7. Keeping of Books
----------------
The Company will keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and its Subsidiaries in accordance with GAAP.
7.8. Lost, etc. Certificates Evidencing Shares (or Shares of Common Stock);
Exchange
----------------------------------------------------------------------
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any certificate evidencing any
Shares owned by the Investor, and (in the case of loss, theft or destruction) of
an unsecured indemnity satisfactory to it, and upon reimbursement to the Company
of all reasonable expenses incidental thereto, and upon surrender and
cancellation of such certificate, if mutilated, the Company will make and
deliver in lieu of such certificate a new certificate of like tenor and for the
number of shares evidenced by such certificate which remain outstanding. The
Investor's agreement of indemnity shall constitute indemnity satisfactory to the
Company for purposes of this Section 7.8. Upon surrender of any certificate
representing any Shares for exchange at the office of the Company, the Company
at its expense will cause to be issued in exchange therefor new certificates in
such denomination or denominations as may be requested for the same aggregate
number of Shares or shares of Common Stock, as the case may be, represented by
the certificate so surrendered and registered as such holder may request. The
Company will also pay the cost of all deliveries of certificates for such shares
to the office of the Investor (including the cost of insurance against loss or
theft in an amount satisfactory to the holders) upon any exchange provided for
in this Section 7.8.
SECTION 8. INTERPRETATION OF THIS AGREEMENT
--------------------------------
8.1. Terms Defined
-------------
As used in this Agreement, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
Additional First Closing Date: shall have the meaning set forth in Section
1.3(b).
Additional First Closing Purchase Price: shall have the meaning set forth
in Section 1.1(b).
-33-
Additional First Closing Shares: shall have the meaning set forth in
Section 1.1(b).
Additional Second Closing Purchase Price: shall have the meaning set forth
in Section 1.2(b)(ii).
Additional Second Closing Shares: shall have the meaning set forth in
Section 1.2(b)(i).
Affiliate: shall mean any Person or entity, directly or indirectly,
controlling, controlled by or under common control with such Person or entity.
Approved Markets: shall mean the Nasdaq Stock Market (including the Nasdaq
National Market and Nasdaq SmallCap Market), the New York Stock Exchange or the
American Stock Exchange.
Benefits Arrangement: shall have the meaning set forth in Section 2.16.
Board: shall have the meaning set forth in section 4.4(a).
Business Day: shall mean a day other than a Saturday, Sunday or other day
on which banks in the State of New York are required or authorized to close.
Closing: shall have the meaning set forth in Section 1.3(c).
Code: shall mean the Internal Revenue Code of 1986, as amended.
Commitments: shall have the meaning set forth in Section 2.13.
Company Representative: shall have the meaning set forth in Section 4.2(a).
Company SEC Reports: shall have the meaning set forth in Section 2.7.
Company Transaction Proposal: shall have the meaning set forth in Section
4.2(a).
Contract: shall mean any agreement, contract, commitment, understanding,
arrangement, restriction or other instrument to which the Company or any of its
Subsidiaries is a party, which includes any rights or obligations thereof, or
which otherwise relates to or affects any of their respective assets, including,
without limitation, any indenture, lease, mortgage, deed of trust, loan, credit
or security agreement, note or other evidence of indebtedness, guaranty,
stockholders agreement, license, joint venture agreement, distribution
agreement, or employment, severance or consulting agreement.
DGCL: shall mean the Delaware General Corporation Law.
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended.
-34-
Existing Preemptive Rights: shall mean the respective preemptive rights of
Guidant Corporation ("Guidant") and Century Medical, Inc. ("Century"), pursuant
to the terms of their respective Convertible Subordinated Note Agreements, dated
as of November 17, 1997 and September 23, 1998, respectively, as such preemptive
rights apply to the issuance of the Shares.
FDA: shall have the meaning set forth in Section 2.9(c).
First Closing: shall have the meaning set forth in Section 1.3(a).
First Closing Date: shall have the meaning set forth in Section 1.3(a).
First Closing Purchase Price: shall have the meaning set forth in Section
1.1(b).
First Closing Shares: shall have the meaning set forth in Section 1.1(b).
GAAP: shall have the meaning set forth in Section 2.7.
Xxxx-Xxxxx Act: shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
Initial First Closing Price: shall have the meaning set forth in Section
1.1(a).
Initial First Closing Shares: shall have the meaning set forth in Section
1.1(a)
Intellectual Property: shall mean all of the following, owned or used in
the current or contemplated business of the Company or any Subsidiary: (i)
trademarks and service marks, trade dress, product configurations, trade names
and other indications of origin, applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated therewith;
(ii) patentable inventions, discoveries, improvements, ideas, know-how, formula
methodology, processes, technology, software (including password unprotected
interpretive code or source code, object code, development documentation,
programming tools, drawings, specifications and data) and applications and
patents in any jurisdiction pertaining to the foregoing, including re-issues,
continuations, divisions, continuations-in-part, renewals or extensions; (iii)
trade secrets, including confidential information and the right in any
jurisdiction to limit the use or disclosure thereof; (iv) copyrights in
writings, designs software, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (v) database rights; (vi) Internet Web sites, domain names and
applications and registrations pertaining thereto and all intellectual property
used in connection with or contained in all versions of the Company's Web sites;
(vii) rights under all agreements relating to the foregoing; (viii) books and
records pertaining to the foregoing; and (ix) claims or causes of action arising
out of or related to past, present or future infringement or misappropriation of
the foregoing.
Investment: shall mean the purchase by the Investor of, collectively, the
First Closing Shares and the Second Closing Shares, pursuant to the terms of
this Agreement.
-35-
Key Agreements and Instruments: shall have the meaning set forth in Section
2.6(a).
Listed Intellectual Property: shall have the meaning set forth in Section
2.17(b).
Losses: shall have the meaning set forth in Section 4.6(a).
Material Adverse Effect: shall have the meaning set forth in Section
2.1(c).
NASD: shall mean National Association of Securities Dealers, Inc.
Nasdaq Stock Market: shall have the meaning set forth in Section 2.29.
Organizational Documents: shall have the meaning set forth in Section
2.1(a).
Original Second Closing Purchase Price: shall have the meaning set forth in
Section 1.2(a).
Original Second Closing Shares: shall have the meaning set forth in Section
1.2(a)
Owns, Own, Owned: shall mean the aggregate beneficial ownership, within the
meaning of Rule 13d-3 under the Exchange Act, of the Investor and any of its
Affiliates, its current or former members and Affiliates therof.
Person: shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
Proposed Securities: shall have the meaning set forth in Section 4.5(a)(1).
Proxy Statement: shall have the meaning set forth in Section 4.7(b).
Purchase Price: shall have the meaning set forth in Section 1.2(a).
Registration Statement: shall have the meaning set forth in Section 4.13.
Rights Agreement: shall mean the Rights Agreement, dated as of June 3,
1999, between the Company and U.S. Stock Transfer Corporation, as Rights Agent,
as amended.
SEC: shall mean the Securities and Exchange Commission.
Second Closing: shall have the meaning set forth in Section 1.3(c).
Second Closing Date: shall have the meaning set forth in Section 1.3(c).
Second Closing Per Share Price: shall have the meaning set forth in Section
1.2(b)(ii).
-36-
Second Closing Purchase Price: shall have the meaning set forth in Section
1.2(a).
Second Closing Shares: shall have the meaning set forth in Section 1.2(a).
Securities Act: shall mean the Securities Act of 1933, as amended.
Shares: shall have the meaning set forth in Section 1.2(a).
Software: shall have the meaning set forth in Section 2.18(b).
Subscription Securities: shall have the meaning set forth in Section
4.5(a)(2).
Subsidiary: shall mean a corporation of which a Person owns, directly or
indirectly, more than 50% of the Voting Stock.
Superior Offer: shall have the meaning set forth in Section 4.12(b).
Takeover Statute: shall mean any corporate takeover provision under laws of
the State of Delaware or any other state or federal "fair price", "moratorium",
"control share acquisition" or other similar antitakeover statute or regulation.
Voting Agreement: shall have the meaning set forth in Section 5.7.
Voting Stock: shall mean securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
Works: shall have the meaning set forth in Section 2.17(f).
8.2. Accounting Principles
---------------------
Where the character or amount of any asset or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP at the
time in effect, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
8.3. Directly or Indirectly
----------------------
Where any provision in this Agreement refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
8.4. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed
entirely within such State.
-37-
8.5. Paragraph and Section Headings
------------------------------
The headings of the sections and subsections of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part thereof.
SECTION 9. MISCELLANEOUS
-------------
9.1. Notices
-------
(a) All communications under this Agreement shall be in writing and shall
be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(1) if to the Investor, at the address or facsimile number set forth
on Schedule 1.1, or at such other address or facsimile number as the
Investor may have furnished the Company in writing, with a copy to Xxxxxxx
Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (facsimile: (212)
728-8111), Attention: Xxxxxx X. Xxxxxxx, Esq.; and
(2) if to the Company, at: 2 Goodyear, Xxxxxx, XX 00000 (facsimile:
(000) 000-0000), Attention: Xxxx Xxxx, or at such other address or
facsimile number as it may have furnished the Investor in writing, with a
copy to Stradling, Yocca, Xxxxxxx & Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx Xxxxx, XX 00000 (facsimile: (000) 000-0000), Attention: Xxxxx
Xxxxxxxx, Esq. and Xxxx Xxxxxx, Esq.
(b) Any notice so addressed shall be deemed to be given: if delivered by
hand or facsimile, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
9.2. Expenses and Taxes
------------------
(a) Provided that the First Closing shall have occurred, the Company will,
upon the request of the Investor, reimburse the Investor within five Business
Days of such request for all of its reasonable out-of-pocket fees and expenses
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement and the transactions contemplated hereby, including, without
limitation, the reasonable fees and expenses of attorneys, accountants and
consultants employed in connection with the Investor's consideration,
negotiation and consummation of the transactions contemplated hereby, the
Investor's due diligence on the Company and any documentation relating to the
transactions contemplated hereby.
(b) The Company will pay, and save and hold the Investor harmless from any
and all liabilities (including interest and penalties) with respect to, or
resulting from any delay or failure in paying, stamp and other taxes (other than
income taxes), if any, which may be payable or determined to be payable on the
execution and delivery or acquisition of the Shares.
-38-
9.3. Reproduction of Documents
-------------------------
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by the Investor on the First Closing Date or
the Second Closing Date, as the case may be (except for certificates evidencing
the Shares themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to the Investor, may be reproduced
by the Investor by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and the Investor may destroy any
original document so reproduced. All parties hereto agree and stipulate that any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Investor in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
9.4. Termination and Survival
------------------------
Unless the Second Closing has occurred prior thereto, the obligations of
the parties hereto to consummate the Second Closing shall terminate on October
31, 2001 (unless such date is extended by mutual written consent).
Notwithstanding any termination of the parties' obligation to consummate the
Second Closing, all other terms of this Agreement shall remain in full force and
effect. All warranties, representations, and covenants made by the Investor and
the Company herein or in any certificate or other instrument delivered by the
Investor or the Company under this Agreement shall be considered to have been
relied upon by the Company or the Investor, as the case may be, and shall
survive all deliveries to the Investor of the Shares, or payment to the Company
for such Shares, regardless of any investigation made by the Company or the
Investor, as the case may be, or on the Company's or the Investor's behalf. All
statements in any such certificate or other instrument shall constitute
warranties and representations by the Company hereunder.
9.5. Successors and Assigns
----------------------
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties. The Company may not assign its
rights or obligations hereunder without the prior written consent of the
Investor. The Investor may assign its rights and obligations hereunder to any of
its members or Affiliates or to any Affiliates of its members.
9.6. Entire Agreement; Amendment and Waiver
--------------------------------------
This Agreement and the agreements attached as Exhibits hereto constitute
the entire understandings of the parties hereto and supersede all prior
agreements or understandings with respect to the subject matter hereof among
such parties. This Agreement may be amended, and the observance of any term of
this Agreement may be waived, with (and only with) the written consent of the
Company and the Investor.
-39-
9.7. Severability
------------
In the event that any part or parts of this Agreement shall be held illegal
or unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.
9.8. Limitation on Enforcement of Remedies
-------------------------------------
The Company hereby agrees that it will not assert against the limited
partners of any members of the Investor any claim it may have under this
Agreement by reason of any failure or alleged failure by the Investor to meet
its obligations hereunder.
-40-
9.9. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall be considered one
and the same agreement.
Very truly yours,
MICRO THERAPEUTICS, INC.
By: /s/ Xxxx X. Xxxx
------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief
Executive Officer
ACCEPTED AND AGREED:
MICRO INVESTMENT, LLC
By: Warburg, Xxxxxx Equity Partners, L.P.,
Managing Member
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Partner
ACCEPTED AND AGREED
only as to the provisions of
Section 1.4 hereof:
WARBURG, XXXXXX EQUITY PARTNERS, L.P.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Partner
Schedule 1.1(a)
Initial First Closing
---------------------
Investor Name and Address Number of Shares Purchase Price
------------------------- ---------------- --------------
Micro Investment, LLC 1,828,679 $6,857,546.25
c/o Warburg, Xxxxxx Equity Partners, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------------------------------------------------
-1-
Schedule 1.1(b)
Additional First Closing
------------------------
Investor Name and Address Number of Shares Purchase Price
------------------------- ---------------- --------------
Micro Investment, LLC 157,936 $592,260
c/o Warburg, Xxxxxx Equity Partners, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------------------------------------------------
-2-
Schedule 1.2
Second Closing
--------------
Investor Name and Address Number of Original Second Original Second Closing
------------------------- -------------------------- ------------------------
Closing Shares Purchase Price
-------------- --------------
Micro Investment, LLC 8,091,699 $48,550,194
c/o Warburg, Xxxxxx Equity Partners, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxxxx
-------------------------------------------------------------------------------------------------
-3-
Schedule 5.7
Voting Agreement
----------------
(1) Xxxxxx Xxxxxxx
(2) Xxxx Xxxx
(3) Xxxx Xxxxx
(4) Xxx Xxxxxxxxxxxx
(5) W. Xxxxx Xxxxxxxxxxx
(6) Xxxxxx Xxxxxxx
(7) Xxxxxx Xxxxxxx
(8) Xxxxxxx XxXxxx
(9) Xxxx Xxxx
(10) Xxxxx Xxxx
-4-
Exhibit C
Registration Rights Provisions
1. Registration Procedures and Expenses.
-------------------------------------
(a) The Company shall:
(i) subject to receipt of necessary information from the Investor,
prepare and file with the SEC, as soon as practicable after the Second Closing
Date or, if the Second Closing Date shall not occur, as soon as practicable
after the provisions of the Agreement relating to the Second Closing have been
terminated pursuant to Section 4.12 or 9.4 thereof, a registration statement on
Form S-3 (the "Registration Statement") to enable the resale of the Shares by
the Investor from time to time through the automated quotation system of the
Nasdaq Stock Market or in privately-negotiated transactions;
(ii) (A) use its reasonable best efforts, subject to receipt of
necessary information from the Investor, to cause the Registration Statement to
become effective no event later than sixty (60) days after the Registration
Statement is filed by the Company, and (B) within five (5) days after the
receipt of a no review letter from the SEC, take all appropriate measures
necessary to cause the Registration Statement to become effective;
(iii) use its reasonable best efforts to prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus
which forms a part thereof (the "Prospectus") as may be necessary to keep the
Registration Statement current and effective for a period not exceeding, with
respect to the Investor's Shares, the earlier of (i) the date on which, in the
opinion of counsel to the Company, the Investor may sell all Shares then held by
the Investor in any 90-day period pursuant to Rule 144 under the Securities Act
(without restriction by the volume limitations of Rule 144(e)) or (ii) such time
as all Shares purchased by the Investor have been sold pursuant to a
registration statement under the Securities Act or pursuant to Rule 144;
(iv) furnish to the Investor with respect to the Shares registered
under the Registration Statement such number of copies of the Registration
Statement, Prospectuses (including supplemental prospectuses) and preliminary
versions of the Prospectus filed with the Securities Exchange Commission
("Preliminary Prospectuses") in conformity with the requirements of the
Securities Act and such other documents as the Investor may reasonably request,
in order to facilitate the public sale or other disposition of all or any of the
Shares by the Investor, provided, however, that unless waived by the Company in
writing, the obligation of the Company to deliver copies of Prospectuses or
Preliminary Prospectuses to the Investor shall be subject to the receipt by the
Company of reasonable assurances from the Investor that the Investor will comply
with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such Prospectuses or Preliminary Prospectuses;
(v) file documents required of the Company for normal blue sky
clearance in states reasonably specified in writing by the Investor prior to the
effectiveness of the
Registration Statement, provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(vi) bear all expenses (other than underwriting discounts and
commissions, if any) in connection with the procedures in paragraph (i) through
(v) of this Section 1 and the registration of the Shares pursuant to the
Registration Statement, including without limitation (a) registration and filing
fees with the SEC, (b) fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of Company counsel in
connection with blue sky qualifications of the Shares), (c) printing expenses,
(d) fees and expenses incurred in connection with the listing of the Shares, (e)
fees and expenses of counsel and independent certified public accountants for
the Company (including the expenses of any comfort letters), (f) the fees and
expenses of any additional experts retained by the Company in connection with
such registration, (g) fees and expenses in connection with any review of
underwriting arrangements by the National Association of Securities Dealers,
Inc., including fees and expenses of any "qualified independent underwriter,"
(h) internal Company expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
and (i) all reasonable fees and disbursements of one counsel for the Investor in
connection with such registration; and
(vii) advise the Investor, promptly after it shall receive notice or
obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
of any proceeding for that purpose; and it will promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
(b) With a view to making available to the Investor the benefits of Rule
144 (or its successor rule) and any other rule or regulation of the SEC that may
at any time permit the Investor to sell Shares to the public without
registration, the Company covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) such date as, in the opinion of counsel to the Company,
all of the Investor's Shares may be resold pursuant to Rule 144(k) or any other
rule of similar effect or (B) such date as all of the Investor's Shares shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and under the
Exchange Act; and (iii) furnish to each Investor upon request, as long as the
Investor owns any Shares, (A) a written statement by the Company that it has
complied with the reporting requirements of the Securities Act and the Exchange
Act, (B) a copy of the Company's most recent Annual Report on Form 10-KSB or
Quarterly Report on Form 10-QSB, and (C) such other information as may be
reasonably requested in order to avail the Investor of any rule or regulation of
the SEC that permits the selling of any such Shares without registration.
(c) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section 1 that the Investor shall furnish to
the Company such information regarding itself, the Shares to be sold by the
Investor, and the intended method of disposition of such securities as shall be
required to effect the registration of the Shares.
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(d) Notwithstanding anything to the contrary herein, the Registration
Statement shall cover only the Shares. In no event at any time before the
Registration Statement becomes effective with respect to the Shares shall the
Company publicly announce or file any other registration statement, other than a
registration statement on Form S-8 relating solely to employee benefit plans,
without the prior written consent of the Investor.
(e) The Company understands that the Investor disclaims being an
underwriter, but the Investor being deemed an underwriter by the SEC shall not
relieve the Company of any obligations it has hereunder.
2. Transfer of Shares After Registration; Suspension.
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(a) The Investor agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act other than transactions exempt from the
registration requirements of the Securities Act, except as contemplated in the
Registration Statement referred to in Section 1 and as described below or as
otherwise permitted by law, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding the
Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the Company
shall: (i) if deemed necessary by the Company, prepare and file from time to
time with the SEC a post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Shares being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) provide the Investor copies of any documents filed pursuant
to Section 2(b)(i); and (iii) upon request, inform the Investor that the Company
has complied with its obligations in Section 2(b)(i) (or that, if the Company
has filed a post-effective amendment to the Registration Statement which has not
yet been declared effective, the Company will notify the Investor to that
effect, will use its reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Investor pursuant to Section 2(b)(i) hereof when the amendment has become
effective).
(c) Subject to paragraph (d) below, in the event: (i) of any request by the
SEC or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to a
Registration Statement or related Prospectus or for additional information; (ii)
of the issuance by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose; or (iv) of
any event or circumstance which necessitates the making
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of any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state a 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; then the Company shall
promptly deliver a certificate in writing to the Investor (the "Suspension
Notice") to the effect of the foregoing and, upon receipt of such Suspension
Notice, the Investor will refrain from selling any Shares pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable within 30 days after delivery of a Suspension Notice to the
Investor. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Investor, the Investor
shall be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 2(c).
(d) Notwithstanding the foregoing paragraphs of this Section 2, the Company
shall not suspend the Registration Statement which causes the Investor to be
prohibited from selling Shares under the Registration Statement as a result of
such Suspension on more than two occasions of not more than 30 days each in any
twelve month period, and any such Suspension must be separated by a period of at
least thirty (30) days from a prior Suspension.
(e) Provided that a Suspension is not then in effect the Investor may sell
Shares under the Registration Statement, provided that it arranges for delivery
of a current Prospectus to the transferee of such Shares. Upon receipt of a
request therefor, the Company will provide the requested number of current
Prospectuses to the Investor and to any other parties requiring such
Prospectuses.
3. Indemnification.
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For purposes of this Section 3:
the term "Selling Stockholders" means the Investor, its respective officers
and members, and each person, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;
the term "Registration Statement" means the Registration Statement, any
Preliminary Prospectus, the final Prospectus, any exhibit, supplement or
amendment thereto or included in or relating to, and any document incorporated
by reference in, the Registration Statement (or deemed to be a part thereof)
referred to in Section 1; and
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the term "untrue statement" means any untrue statement or alleged untrue
statement, or any omission or alleged omission to state in the Registration
Statement a 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.
(a) The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which such Selling Stockholder may
become subject (under the Securities Act or otherwise) insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon (i) any untrue statement of a material fact
contained in the Registration Statement, (ii) any inaccuracy in the
representations and warranties of the Company contained in the Agreement or the
failure of the Company to perform its obligations thereunder or (iii) any
failure by the Company to fulfill any undertaking included in the Registration
Statement, and the Company will reimburse such Selling Stockholder for any legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim, provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue statement
made in such Registration Statement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Selling
Stockholder and stated to be specifically for use in preparation of the
Registration Statement.
(b) The Investor agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement of a material fact contained in the Registration Statement if such
untrue statement was made in reliance upon and in conformity with written
information furnished by or on behalf of the Investor and stated to be
specifically for use in preparation of the Registration Statement, and the
Investor will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action, proceeding
or claim. The obligation of the Investor to indemnify shall be limited to the
net amount of the proceeds received by the Investor from the sale of the Shares
pursuant to the Registration Statement.
(c) Each party entitled to indemnification under this Section 3 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded, after consultation with counsel, that there may be a
conflict of interest between the Indemnifying Party and the Indemnified Party
-5-
in such action, in which case the reasonable fees and expenses of counsel for
the Indemnified Party shall be at the expense of the Indemnifying Party), and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 3, except to the extent that the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 3 is insufficient
to or is held by a court of competent jurisdiction to be unavailable to hold
harmless an Indemnified Party under subsection (a) or (b) above in respect of
any losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the Investor on the other in connection with the statements or
omissions or other matters which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, in the case of an untrue statement, whether the untrue
statement relates to information supplied by the Company on the one hand or the
Investor on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement. The
Company and the Investor agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), the Investor shall not be required to contribute any amount in
excess of the amount by which the gross amount received by the Investor from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which the Investor has otherwise been required to pay by reason of such untrue
statement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Investor's obligations in this subsection to contribute are several in
proportion to their sales of Shares to which such loss relates and not joint.
(e) The indemnity and contribution agreements contained in this Section 3
shall remain operative and in full force and effect regardless of (a)
termination of any provision of the Agreement or any underwriting agreement, (b)
any investigation made by or on behalf of any Indemnified Person or by or on
behalf of the Company and (c) the consummation of the sale or successive resales
of the Shares.
-6-
4. Liquidated Damages Under Certain Circumstances.
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(a) If (i) the Registration Statement has not been declared effective by
the SEC by December 31, 2001, or (ii) the Registration Statement is filed and
declared effective but shall thereafter be subject to a Suspension which shall
be in effect for more than 60 days (consecutive or non-consecutive) in the
aggregate in any 12-month period, except in cases where (x) such Suspension
results from any untrue statement made in the Registration Statement in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Investor specifically for use in preparation of the
Registration Statement or (y) in the opinion of counsel to the Company, during
the entire duration of the Suspension, the Investor may sell all Shares then
held by the Investor in any 90-day period pursuant to Rule 144 under the
Securities Act (without restriction by the volume limitation of Rule 144(e))
(each such event referred to in clauses (i) and (ii), a "Registration Default"),
the Company will pay liquidated damages to the Investor in the amount of 2% of
the Purchase Price paid by the Investor to the Company for the Shares for every
30-day period the Registration Default continues. Such liquidated damages will
be payable to the Investor on demand by wire transfer of immediately available
funds or by federal funds check by the Company.
(b) Nothing herein limits the Investor's right to pursue actual damages for
the Company's failure to ensure sales can be made under the Registration
Statement or the Company's failure to ensure the Common Stock is listed or
included for quotation, as the case may be, on an Approved Market.
5. Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by the Investor, the Company will
furnish to the Investor:
(a) as soon as it is delivered to the Company's other stockholders, one
copy of (i) its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants) and (ii) if not
included in substance in the Annual Report to Stockholders, its Annual Report on
Form 10-KSB (the foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of the Investor, all exhibits excluded by
the parenthetical to subparagraph (a)(ii) of this Section 6 as filed with the
SEC and all other information that is made available to stockholders; and
(c) upon the reasonable request of the Investor, an adequate number of
copies of the Prospectuses to supply to any other party requiring such
Prospectuses; and the Company, upon the reasonable request of the Investor, will
meet with the Investor or a representative thereof at the Company's headquarters
to discuss all information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise cooperate with the Investor conducting an
investigation for the purpose of reducing or eliminating the Investor's exposure
to liability under the Securities Act, including the reasonable production of
information at the Company's headquarters; provided, that the Company shall not
be required to disclose any confidential information to or meet at its
headquarters with the Investor until and unless the
-8-
Investor shall have entered into a confidentiality agreement in form and
substance reasonably satisfactory to the Company with the Company with respect
thereto.
6. Public Statements. The Company will not issue any public statement,
press release or any other public disclosure listing Investor as one of the
purchasers of the Shares without Investor's prior written consent, except as may
be required by applicable law or rules of any exchange on which the Company's
securities are listed.
