Exhibit 7(b)1
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SECURITIES PURCHASE AGREEMENT
among
THE XXXXX X. XXXXXXX LIVING TRUST
and
XXXXXX X. XXXXXX
Dated as of August 13, 2001
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 13,
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2001, among The Xxxxx X. Xxxxxxx Living Trust, a California trust (the
"Seller"), and Xxxxxx X. Xxxxxx (the "Purchaser").
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WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller 100,000 shares (the "Shares") of common stock (the
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"Common Stock") of CardioDynamics International Corporation, a California
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corporation (the "Company"), no par value per share (such shares being
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collectively referred to herein as the "Shares") in accordance with the terms
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and conditions set forth herein; and
WHEREAS, with regard to the shares of Common Stock to be sold by the Seller
to the Purchaser hereunder, the Purchaser, the Company and certain other parties
who are also purchasing shares of Common Stock from Seller (the Purchaser and
such other parties who are purchasing Common Stock from the Seller are
collectively referred to herein as the "Purchasers") are entering into a
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Registration Rights Agreement, dated as of the date of this Agreement, in the
form of Exhibit A (the "Registration Rights Agreement").
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NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Closing and Settlement Date. Subject to the terms and conditions set
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forth in this Agreement, the Seller shall sell to the Purchaser and the
Purchaser shall purchase the Shares in exchange for a purchase price equal to
the product of (a) (i) the average closing price of the Common Stock on Nasdaq
or, if not then traded on Nasdaq, on a Subsequent Market on which the Common
Stock is then traded, for the twenty (20) Trading Days immediately preceding,
but excluding, the Closing Date (as defined herein), multiplied by (ii) 0.90,
multiplied by (b) the aggregate number of Shares (the "Purchase Price"). The
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closing (the "Closing") of the transactions contemplated herein shall occur at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, on the execution date of this Agreement, with
payment and delivery of the Shares to occur on the Settlement Date (as defined
below). The date of the Closing is hereinafter referred to as the "Closing
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Date."
1.2 The Closing Date. As a condition precedent to each of the parties'
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obligations hereunder, on the Closing Date, the Company and the parties shall
deliver or shall cause to be delivered the following:
(A) the Company shall deliver to the Purchaser (i) a Registration
Rights Agreement, in the form of Exhibit A, executed by the Company and dated as
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of the date hereof between the Company and the Purchasers and (ii) the Transfer
Agent Instructions, in the form of Exhibit B, executed by the Company and
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delivered to and acknowledged by the Company's transfer agent (the "Transfer
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Agent Instructions");
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(B) the Seller shall deliver to the Purchaser (i) this Agreement,
executed by the Seller (ii) the escrow agreement ("Escrow Agreement"), dated as
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of the date hereof among the Seller, the Purchasers, California Bank & Trust and
Xxxxx & Xxxxxxxxxx (the "Escrow Agent"), executed by the Seller;
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(C) the Purchaser shall deliver (i) to the Seller, this Agreement
executed by the Purchaser, (ii) to the Company, a Registration Rights Agreement,
executed by the Purchaser, (iii) to the Escrow Agent, the Purchase Price, in
United States dollars in immediately available funds by wire transfer; provided
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that such funds shall be disbursed in accordance with the terms of the Escrow
Agreement; and (iv) to the Seller and the Escrow Agent, the Escrow Agreement
executed by the Purchaser;
(D) each of California Bank & Trust, the Company and the Escrow Agent
shall deliver to the Purchasers and Seller, the Escrow Agreement executed by
such party; and
(E) the Company shall deliver to the Purchasers the Registration
Rights Agreement executed by the Company.
1.3 The Settlement Date. On or prior to the tenth Trading Day following
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the delivery of the Purchase Price to the Escrow Agent (the "Settlement Date")
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(A) the Seller shall cause to be delivered to the Purchaser a stock certificate,
registered in the name of the Purchaser, representing the Shares and (B) in
accordance with the terms of the Escrow Agreement, the Escrow Agent shall
disburse the Purchase Price in United States dollars in immediately available
funds by wire transfer.
1.4 [Intentionally omitted.]
1.5 Certain Defined Terms.
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"Affiliate" means, with respect to any Person, any other Person that
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directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
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respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
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correlative to the foregoing.
"Business Day" shall mean any day except Saturday, Sunday and any day
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which shall be a legal holiday or a day on which banking institutions in Chicago
or California are authorized or required by law or other governmental action to
close.
"Commission" means the United States Securities and Exchange
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Commission.
"Nasdaq" means the Nasdaq National Market.
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"Person" means an individual or corporation, partnership, trust,
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incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
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"Subsequent Market" shall mean any of the New York Stock Exchange,
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American Stock Exchange, Inc. or Nasdaq Small Cap Market.
"Trading Day" means a day on which the shares of Common Stock are
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traded on the Nasdaq or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on the Nasdaq or a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the shares of Common Stock are not quoted on the OTC Bulletin
Board, a day on which the shares of Common Stock are quoted in the over-the-
counter market as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting prices);
provided, that in the event that the shares of Common Stock are not listed or
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quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
Business Day.
1.6 Representations and Warranties of the Purchaser. The Purchaser
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represents and warrants to the Seller as follows:
(a) Consents; Authority. No consents, waivers or approvals from, or
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notification of or filings with, any governmental authority or other Person are
required for the Purchaser to enter into this Agreement. All actions on the
part of the Purchaser necessary for the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been taken. Each of this Agreement, the Registration Rights Agreement and the
Escrow Agreement has been duly executed by the Purchaser, and when delivered by
the Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
(b) Investment Intent. The Purchaser is acquiring the Shares as
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principal for its own account, for investment purposes only and not with a view
to or for distributing or reselling such Shares or any part thereof. The
Purchaser is acquiring the Shares hereunder in the ordinary course of its
business. The Purchaser does not have, or plan to enter into, any agreement,
arrangement or understanding, directly or indirectly, with any Person to sell,
transfer, grant participations in or distribute the Shares.
(c) Purchaser Status. At the time the Purchaser was offered the
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Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act").
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(d) Experience of the Purchaser. The Purchaser, either alone or
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together with its representatives, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
(e) Ability of the Purchaser to Bear Risk of Investment. The
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Purchaser is able to bear the economic risk of its investment in the Shares and
can afford the complete loss of such investment.
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(f) Access to Information. The Purchaser acknowledges that it has
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reviewed all necessary information concerning the Company and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Seller and the Company concerning
the terms and conditions of the offering of the Shares and the merits and risks
of investing in the Shares; and (ii) the opportunity to obtain such additional
information which the Seller possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) General Solicitation. The Purchaser is not purchasing the Shares
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as a result of or subsequent to any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(h) Reliance. The Purchaser understands and acknowledges that (i)
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Shares are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Seller will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to and
acknowledges such reliance.
(i) No Conflicts; Advice. The Purchaser's investment in the Shares
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does not and will not conflict with or violate any term or provision of any
instrument, agreement, law, regulation, order or decree to which the Purchaser
or any of its properties is a party or is subject. The Purchaser acknowledges
that it has not relied on the Seller or any of its officers, directors,
affiliates, employees, representatives or agents for any tax, legal, financial,
investment or other advice. In regard to such considerations, the Purchaser has
relied on the advice of, or has consulted with, only its own tax, legal,
financial, investment and other advisors.
(j) Brokers, Etc. No finder, broker, agent, financial advisor or
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other intermediary acted on behalf of the Purchaser in connection with the
offering of the Shares or the negotiation or consummation of this Agreement or
any of the transactions contemplated hereby.
(k) Compliance With Law. The Purchaser's trading and distribution
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activities with respect to the Shares will be in compliance with all applicable
state and federal securities laws, rules and regulations (including, without
limitation, Regulation M) and the rules and regulations of the Nasdaq Stock
Market. Neither the Purchaser nor any of its affiliates (as that term is
defined in Rule 405 of the Securities Act) (i) has entered, nor will any of them
enter, into any agreement or other arrangement to effect any short sale of any
of the Shares, or (ii) take, directly or indirectly, any action designed to
cause or that would result in, or which constitutes or that might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
1.7 Representations and Warranties of the Seller. The Seller hereby
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represents and warrants to the Purchaser as follows:
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(a) Authorization: Enforcement. The Seller has the requisite power
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and authority to enter into and to consummate the transactions contemplated by
each of this Agreement and the Escrow Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by the Seller and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Seller and no further action is required by the Seller. This
Agreement and the Escrow Agreement have been duly executed by the Seller and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their terms.
(b) No Liens on Seller's Shares. As of the Settlement Date the Seller
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will be the sole beneficial owner of the Shares and the Seller will deliver to
the Purchaser valid title to the Shares free and clear of all liens, pledges,
encumbrances, security interests, and other restrictions. The Shares are not
the subject of any shareholders' or similar agreement granting any right of
first offer, right of first refusal or preemptive right or restricting in any
way the right of Seller to transfer the Shares to the Purchaser hereunder.
(c) No Conflicts. The execution, delivery and performance of this
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Agreement and the Escrow Agreement by the Seller and the consummation by the
Seller of the transactions contemplated hereby do not and will not (i) conflict
with or violate any provision of the Seller's organizational or charter
documents (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement or other instrument or other understanding to which
the Seller is a party or by which any property or asset of the Seller is bound
or affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Seller is subject (including, without limitation, federal
and state securities laws and regulations), or by which any property or asset of
the Seller is bound or affected.
(d) Consents and Approvals. The Seller is not required to obtain any
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consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Seller of this Agreement and the Escrow
Agreement, other than reports of beneficial ownership to applicable governmental
authorities.
(e) Private Offering. Assuming the accuracy of the representations
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and warranties of the Purchaser set forth in Section 1.6, the offer and sale of
the Shares to the Purchaser as contemplated hereby are exempt from the
registration requirements of the Securities Act. Neither the Seller nor any
Person acting on its behalf has taken or is, to the knowledge of the Seller,
contemplating taking any action which could subject the offering or sale of the
Shares to the registration requirements of the Securities Act including, without
limitation, soliciting any offer to buy or sell the Shares by means of any form
of general solicitation or advertising.
(f ) Certain Fees. Except for certain fees payable by the Seller as
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set forth in Schedule 1 hereto, no fees or commissions will be payable by the
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Seller to any broker, financial
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advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement or the
Escrow Agreement.
(g) Solicitation Materials. Neither the Seller nor any Person acting
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on the Seller's behalf has solicited any offer to buy or sell the Shares by
means of any form of general solicitation or advertising.
(h) Disclosure. The Seller confirms that neither it nor any other
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Person acting on its behalf has provided the Purchaser or its agents or counsel
with any information that constitutes or might constitute material non-public
information. The Seller understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions with respect
to the Shares.
ARTICLE II
OTHER AGREEMENTS OF THE PARTIES
2.1 Transfer Restrictions: Legend.
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(a) The Purchaser acknowledges that Shares may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer
of Shares other than pursuant to an effective registration statement, except as
otherwise set forth herein, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a "Purchaser" under this Agreement, the Registration Rights Agreement and the
Escrow Agreement.
(b) The Purchaser acknowledges that until the Shares are registered
pursuant to an effective registration statement or may otherwise be disposed of
pursuant to an available exemption from (including, without limitation, under
Rule 144(k) promulgated under the Securities Act) or in a transaction not
subject to the registration requirements of the Securities Act, the following or
similar legend shall appear on the stock certificates representing the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE "SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE
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SECURITIES OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
2.2 Indemnification.
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(a) The Seller agrees to indemnify and hold harmless the Purchaser and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Purchaser Indemnitee," and collectively, the "Purchaser Indemnitees")
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against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and expenses) (collectively,
"Purchaser's Losses") which may be suffered or incurred by any Purchaser
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Indemnitee as a result of a breach of any representation, warranty or covenant
made by the Seller in this Agreement or the Escrow Agreement.
(b) The Purchaser agrees to indemnify and hold harmless the Seller and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Seller Indemnitee," and collectively, the "Seller Indemnitees")
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against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and other expenses) (collectively,
"Seller's Losses") which may be suffered or incurred by any Seller Indemnitee as
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a result of any breach of any representation, warranty, or covenant made by the
Purchaser in this Agreement or the Escrow Agreement.
(c) In case any proceeding (including, without limitation, any
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to this Section, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
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indemnity may be sought (the "Indemnifying Party") in writing of the occurrence
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of the facts and circumstances giving rise to such claim. The failure of any
Person to deliver the notice required by this Section 2.2 shall not in any way
affect the Indemnifying Party's indemnification obligation hereunder except and
only to the extent that the Indemnifying Party is actually prejudiced thereby.
In case any such proceeding shall be brought against any Indemnified Party and
it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Indemnified Party and shall pay as incurred the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel or pay its own expenses.
Notwithstanding the foregoing, the Indemnifying Party shall pay as incurred the
fees and expenses of the counsel retained by the Indemnified Party in the event
(i) the Indemnifying Party and the Indemnified Party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceedings (including, without limitation, any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent (which
consent may not be unreasonably withheld) but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment and the Indemnifying Party shall obtain a full
release of the Indemnified Party.
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ARTICLE III
MISCELLANEOUS
3.1 Fees and Expenses. Each party hereto shall pay the fees and expenses
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of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
3.2 Entire Agreement: Amendments. This Agreement, together with any
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Exhibits or Schedules hereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
3.3 Notices. Any and all notices or other communications or deliveries
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required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (California time)
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 6:30 p.m. (California time) on any
date and earlier than 11:59 p.m. (California time) on such date, (iii) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Seller:
If by U.S. Mail: The Xxxxx X. Xxxxxxx Living Trust
Xxxxxxx Enterprises
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
If by Courier: The Xxxxx X. Xxxxxxx Living Trust
c/o Del Mar Country Club, 0000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
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With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
If to the Purchaser: To the address set forth under the
Purchaser's name on the signature
pages hereto
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
3.4 Amendments: Waivers. No provision of this Agreement may be waived or
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amended except in a written instrument signed, in the case of an amendment, by
the parties or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
3.5 Headings. The headings herein are for convenience only, do not
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constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
3.6 Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of the parties and their successors and permitted assigns.
Neither the Seller nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser or the
Seller, respectively. This provision shall not limit the Purchaser's right to
transfer the Shares in accordance with Section 2.1(a).
3.7 No Third-Party Beneficiaries. This Agreement is intended for the
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benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
3.8 Governing Law. All questions concerning the construction, validity,
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enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the courts of the State
of California or in the federal courts of the United States for the Central
District of California (the "California Courts"). Each party hereto hereby
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irrevocably submits to the jurisdiction of the California Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including, without
limitation, with respect to the enforcement of any provision
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of this Agreement), and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper or that such California Courts are inconvenient or will be an improper
forum for such proceeding. Each party hereto (on behalf of itself and its
affiliates, agents, officers, directors and employees) hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (on behalf of
itself and its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
3.9 Survival. The representations, warranties, agreements and covenants
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contained herein shall survive the Closing Date until the earlier to occur of
(i) one year after the Closing Date or (ii) the date on which all the Shares
shall have been resold in accordance with Section 2.1.
3.10 Execution. This Agreement may be executed in two or more
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counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
3.11 Severability. In the event that any court of competent jurisdiction
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shall determine that any provision, or any portion thereof, contained in this
Agreement is unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall be the
interpreted as if such provision were so excluded and shall nevertheless remain
in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By: /s/ Xxxx Xxxxxxx Xxxxxxx
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Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Address for Notice:
Xxxxxx X. Xxxxxx
0000 X. Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
With a copy to: Xxxx Xxxxxxx
c/x XxXxxxxxx Advisors International
IMG Center, Suite 100, 0000 Xxxx 0xx
Xxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
11
Schedule 1
----------
Schedule of Fees Payable by Seller
----------------------------------
1. The Seller shall pay to the Company a fee equal to 3.5% of the aggregate
gross purchase price paid by all Purchasers to the Seller in accordance with
this Agreement and the other agreements executed and delivered concurrently
herewith between the Seller and the Purchasers not party to this Agreement in
regard to the purchase and sale of shares of Common Stock.
12
EXHIBIT 7(b)2
================================================================================
SECURITIES PURCHASE AGREEMENT
among
THE XXXXX X. XXXXXXX LIVING TRUST
and
XXXXXX XXXXXXX
Dated as of August 13, 200l
================================================================================
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 13,
---------
2001, among The Xxxxx X. Xxxxxxx Living Trust, a California trust (the
"Seller"), and Xxxxxx Xxxxxxx (the "Purchaser").
---------
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller 35,000 shares (the "Shares") of common stock (the
------
"Common Stock") of CardioDynamics International Corporation, a California
------------
corporation (the "Company"), no par value per share (such shares being
-------
collectively referred to herein as the "Shares") in accordance with the terms
------
and conditions set forth herein; and
WHEREAS, with regard to the shares of Common Stock to be sold by the Seller
to the Purchaser hereunder, the Purchaser, the Company and certain other parties
who are also purchasing shares of Common Stock from Seller (the Purchaser and
such other parties who are purchasing Common Stock from the Seller are
collectively referred to herein as the "Purchasers") are entering into a
----------
Registration Rights Agreement, dated as of the date of this Agreement, in the
form of Exhibit A (the "Registration Rights Agreement").
--------- -----------------------------
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Closing and Settlement Date.
Subject to the terms and conditions set forth in this Agreement, the Seller
shall sell to the Purchaser and the Purchaser shall purchase the Shares in
exchange for a purchase price equal to the product of (a) (i) the average
closing price of the Common Stock on Nasdaq or, if not then traded on Nasdaq, on
a Subsequent Market on which the Common Stock is then traded, for the twenty
(20) Trading Days immediately preceding, but excluding, the Closing Date (as
defined herein), multiplied by (ii) 0.90, multiplied by (b) the aggregate number
of Shares (the "Purchase Price"). The closing (the "Closing") of the
--------------
transactions contemplated herein shall occur at the offices of Xxxxxx, Xxxx &
Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
on the execution date of this Agreement, with payment and delivery of the Shares
to occur on the Settlement Date (as defined below). The date of the Closing is
hereinafter referred to as the "Closing Date."
------------
1.2 The Closing Date. As a condition precedent to each of the parties'
----------------
obligations hereunder, on the Closing Date, the Company and the parties shall
deliver or shall cause to be delivered the following:
(A) the Company shall deliver to the Purchaser (i) a Registration
Rights Agreement, in the form of Exhibit A, executed by the Company and dated as
---------
of the date hereof between the Company and the Purchasers and (ii) the Transfer
Agent Instructions, in the form of
1
Exhibit B, executed by the Company and delivered to and acknowledged by the
---------
Company's transfer agent (the "Transfer Agent Instructions");
---------------------------
(B) the Seller shall deliver to the Purchaser (i) this Agreement,
executed by the Seller (ii) the escrow agreement ("Escrow Agreement"), dated as
---------------
of the date hereof among the Seller, the Purchasers, California Bank & Trust and
Xxxxx & Xxxxxxxxxx (the "Escrow Agent"), executed by the Seller,
------------
(C) the Purchaser shall deliver (i) to the Seller, this Agreement
executed by the Purchaser, (ii) to the Company, a Registration Rights Agreement,
executed by the Purchaser, (iii) to the Escrow Agent, the Purchase Price, in
United States dollars in immediately available funds by wire transfer, provided
--------
that such funds shall be disbursed in accordance with the terms of the Escrow
Agreement; and (iv) to the Seller and the Escrow Agent, the Escrow Agreement
executed by the Purchaser,
(D) each of California Bank & Trust, the Company and the Escrow Agent
shall deliver to the Purchasers and Seller, the Escrow Agreement executed by
such party; and
(E) the Company shall deliver to the Purchasers the Registration
Rights Agreement executed by the Company.
1.3 The Settlement Date. On or prior to the tenth Trading Day following
-------------------
the delivery of the Purchase Price to the Escrow Agent (the "Settlement Date")
---------------
(A) the Seller shall cause to be delivered to the Purchaser a stock certificate,
registered in the name of the Purchaser, representing the Shares and (B) in
accordance with the terms of the Escrow Agreement, the Escrow Agent shall
disburse the Purchase Price in United States dollars in immediately available
funds by wire transfer.
1.4 [Intentionally omitted.]
1.5 Certain Defined Terms.
---------------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Business Day" shall mean any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in Chicago or
California are authorized or required by law or other governmental action to
close.
"Commission" means the United States Securities and Exchange Commission.
----------
"Nasdaq" means the Nasdaq National Market.
------
2
"Person" means an individual or corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Subsequent Market" shall mean any of the New York Stock Exchange, American
-----------------
Stock Exchange, Inc. or Nasdaq Small Cap Market.
"Trading Day" means a day on which the shares of Common Stock are traded on
-----------
the Nasdaq or on such Subsequent Market on which the shares of Common Stock are
then listed or quoted, or (b) if the shares of Common Stock are not listed on
the Nasdaq or a Subsequent Market, a day on which the shares of Common Stock are
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(c) if the shares of Common Stock are not quoted on the OTC Bulletin Board, a
day on which the shares of Common Stock are quoted in the over-the-counter
market as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided,
--------
that in the event that the shares of Common Stock are not listed or quoted as
set forth in (a), (b) and (c) hereof, then Trading Day shall mean a Business
Day.
1.6 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller as follows:
(a) Consents; Authority. No consents, waivers or approvals from, or
-------------------
notification of or filings with, any governmental authority or other Person are
required for the Purchaser to enter into this Agreement. All actions on the part
of the Purchaser necessary for the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
taken. Each of this Agreement, the Registration Rights Agreement and the Escrow
Agreement has been duly executed by the Purchaser, and when delivered by the
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
(b) Investment Intent. The Purchaser is acquiring the Shares as
-----------------
principal for its own account, for investment purposes only and not with a view
to or for distributing or reselling such Shares or any part thereof. The
Purchaser is acquiring the Shares hereunder in the ordinary course of its
business. The Purchaser does not have, or plan to enter into, any agreement,
arrangement or understanding, directly or indirectly, with any Person to sell,
transfer, grant participations in or distribute the Shares.
(c) Purchaser Status. At the time the Purchaser was offered the
----------------
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act").
--------------
(d) Experience of the Purchaser. The Purchaser, either alone or
---------------------------
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
3
(e) Ability of the Purchaser to Bear Risk of Investment. The
---------------------------------------------------
Purchaser is able to bear the economic risk of its investment in the Shares and
can afford the complete loss of such investment.
(f) Access to Information. The Purchaser acknowledges that it has
---------------------
reviewed all necessary information concerning the Company and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Seller and the Company concerning
the terms and conditions of the offering of the Shares, and the merits and risks
of investing in the Shares; and (ii) the opportunity to obtain such additional
information which the Seller possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) General Solicitation. The Purchaser is not purchasing the Shares
--------------------
as a result of or subsequent to any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement
(h) Reliance. The Purchaser understands and acknowledges that (i)
--------
Shares are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Seller will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to and
acknowledges such reliance.
(i) No Conflicts; Advice. The Purchaser's investment in the Shares
--------------------
does not and will not conflict with or violate any term or provision of any
instrument, agreement, law, regulation, order or decree to which the Purchaser
or any of its properties is a party or is subject. The Purchaser acknowledges
that it has not relied on the Seller or any of its officers, directors,
affiliates, employees, representatives or agents for any tax, legal, financial,
investment or other advice. In regard to such considerations, the Purchaser has
relied on the advice of, or has consulted with, only its own tax, legal,
financial, investment and other advisors.
(j) Brokers, Etc. No finder, broker, agent, financial advisor or
-------------
other intermediary acted on behalf of the Purchaser in connection with the
offering of the Shares or the negotiation or consummation of this Agreement or
any of the transactions contemplated hereby.
(k) Compliance With Law. The Purchaser's trading and distribution
-------------------
activities with respect to the Shares will be in compliance with all applicable
state and federal securities laws, rules and regulations (including, without
limitation, Regulation M) and the rules and regulations of the Nasdaq Stock
Market. Neither the Purchaser nor any of its affliates (as that term is defined
in Rule 405 of the Securities Act) (i) has entered, nor will any of them enter,
into any agreement or other arrangement to effect any short sale of any of the
Shares, or (ii) take, directly or indirectly, any action designed to cause or
that would result in, or which constitutes or that might reasonably be expected
to constitute, the stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of any of the Shares.
4
1.7 Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Purchaser as follows:
(a) Authorization: Enforcement. The Seller has the requisite power
--------------------------
and authority to enter into and to consummate the transactions contemplated by
each of this Agreement and the Escrow Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by the Seller and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Seller and no further action is required by the Seller. This
Agreement and the Escrow Agreement have been duly executed by the Seller and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their terms.
(b) No Liens on Seller's Shares. As of the Settlement Date the Seller
---------------------------
will be the sole beneficial owner of the Shares and the Seller will deliver to
the Purchaser valid title to the Shares free and clear of all liens, pledges,
encumbrances, security interests, and other restrictions. The Shares are not the
subject of any shareholders' or similar agreement granting any right of first
offer, right of first refusal or preemptive right or restricting in any way the
right of Seller to transfer the Shares to the Purchaser hereunder.
(c) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Escrow Agreement by the Seller and the consummation by the
Seller of the transactions contemplated hereby do not and will not (i) conflict
with or violate any provision of the Seller's organizational or charter
documents (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement or other instrument or other understanding to which
the Seller is a party or by which any property or asset of the Seller is bound
or affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Seller is subject (including, without limitation, federal
and state securities laws and regulations), or by which any property or asset of
the Seller is bound or affected.
(d) Consents and Approvals. The Seller is not required to obtain any
----------------------
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Seller of this Agreement and the Escrow
Agreement, other than reports of beneficial ownership to applicable governmental
authorities.
(e) Private Offering. Assuming the accuracy of the representations
----------------
and warranties of the Purchaser set forth in Section 1.6, the offer and sale of
the Shares to the Purchaser as contemplated hereby are exempt from the
registration requirements of the Securities Act. Neither the Seller nor any
Person acting on its behalf has taken or is, to the knowledge of the Seller,
contemplating taking any action which could subject the offering or sale of the
Shares to the registration requirements of the Securities Act including, without
limitation, soliciting any offer to buy or sell the Shares by means of any form
of general solicitation or advertising.
5
(f) Certain Fees. Except for certain fees payable by the Seller as
------------
set forth in Schedule 1 hereto, no fees or commissions will be payable by the
----------
Seller to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement or the Escrow Agreement.
(g) Solicitation Materials. Neither the Seller nor any Person acting
----------------------
on the Seller's behalf has solicited any offer to buy or sell the Shares by
means of any form of general solicitation or advertising.
(h) Disclosure. The Seller confirms that neither it nor any other
----------
Person acting on its behalf has provided the Purchaser or its agents or counsel
with any information that constitutes or might constitute material non-public
information. The Seller understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions with respect
to the Shares.
ARTICLE II
OTHER AGREEMENTS OF THE PARTIES
2.1 Transfer Restrictions: Legend.
-----------------------------
(a) The Purchaser acknowledges that Shares may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer of
Shares other than pursuant to an effective registration statement, except as
otherwise set forth herein, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a "Purchaser" under this Agreement, the Registration Rights, Agreement and the
Escrow Agreement.
(b) The Purchaser acknowledges that until the Shares are registered
pursuant to an effective registration statement or may otherwise be disposed of
pursuant to an available exemption from (including, without limitation, under
Rule 144(k) promulgated under the Securities Act) or in a transaction not
subject to the registration requirements of the Securities Act, the following or
similar legend shall appear on the stock certificates representing the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE "SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION
6
NOT SUBJECT TO, THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
2.2 Indemnification.
----------------
(a) The Seller agrees to indemnify and hold harmless the Purchaser
and its shareholders, officers, directors, employees, agents and representatives
(each, a "Purchaser Indemnitee," and collectively, the "Purchaser Indemnitees")
-------------------- ---------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and expenses) (collectively,
"Purchaser's Losses") which may be suffered or incurred by any Purchaser
------------------
Indemnitee as a result of a breach of any representation, warranty or covenant
made by the Seller in this Agreement or the Escrow Agreement.
(b) The Purchaser agrees to indemnify and hold harmless the Seller
and its shareholders, officers, directors, employees, agents and representatives
(each, a "Seller Indemnitee," and collectively, the "Seller Indemnitees")
----------------- ------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and other expenses) (collectively,
"Seller's Losses") which may be suffered or incurred by any Seller Indemnitee as
---------------
a result of any breach of any representation, warranty, or covenant made by the
Purchaser in this Agreement or the Escrow Agreement.
(c) In case any proceeding (including, without limitation, any
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to this Section, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
------------------
indemnity may be sought (the "Indemnifying Party") in writing of the occurrence
------------------
of the facts and circumstances giving rise to such claim. The failure of any
Person to deliver the notice required by this Section 2.2 shall not in any way
affect the Indemnifying Party's indemnification obligation hereunder except and
only to the extent that the Indemnifying Party is actually prejudiced thereby.
In case any such proceeding shall be brought against any Indemnified Party and
it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Indemnified Party and shall pay as incurred the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel or pay its own expenses.
Notwithstanding the foregoing, the Indemnifying Party shall pay as incurred the
fees and expenses of the counsel retained by the Indemnified Party in the event
(i) the Indemnifying Party and the Indemnified Party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceedings (including, without limitation, any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent (which
consent may not be unreasonably withheld) but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified
7
Party from and against any loss or liability by reason of such settlement or
judgment and the Indemnifying Party shall obtain a full release of the
Indemnified Party.
ARTICLE III
MISCELLANEOUS
3.1 Fees and Expenses. Each party hereto shall pay the fees and expenses
-----------------
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
3.2 Entire Agreement: Amendments. This Agreement, together with any
----------------------------
Exhibits or Schedules hereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
3.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of(i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (California time)
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 6:30 p.m. (California time) on any
date and earlier than 11:59 p.m. (California time) on such date, (iii) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Seller
If by U.S. Mail: The Xxxxx X. Xxxxxxx Living Trust
Xxxxxxx Enterprises
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
If by Courier: The Xxxxx X. Xxxxxxx Living Trust
c/o Del Mar Country Club, 0000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx, XX 00000-0000
8
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
If to the Purchaser To the address set forth under the
Purchaser's name on the signature
pages hereto
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
3.4 Amendments: Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, in the case of an amendment, by
the parties or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
3.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
3.6 Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties and their successors and permitted assigns.
Neither the Seller nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser or the
Seller, respectively. This provision shall not limit the Purchaser's right to
transfer the Shares in accordance with Section 2.1(a).
3.7 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
3.8 Governing Law. All questions concerning the construction, validity,
-------------
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the courts of the State
of California or in the federal courts of the United States for the Central
District of California (the "California Courts"). Each party hereto hereby
-----------------
irrevocably submits to the jurisdiction of the California Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including, without
limitation, with respect to the enforcement of any provision of this Agreement),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper or that such
California Courts are inconvenient or will be an improper forum for such
proceeding. Each party hereto (on behalf of itself and its
9
affiliates, agents, officers, directors and employees) hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (on behalf of
itself and its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
3.9 Survival. The representations, warranties, agreements and covenants
--------
contained herein shall survive the Closing Date until the earlier to occur of
(i) one year after the Closing Date or (ii) the date on which all the Shares
shall have been resold in accordance with Section 2.1.
3.10 Execution. This Agreement may be executed in two or more counterparts,
---------
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other parties, it being understood that the parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
3.11 Severability. In the event that any court of competent jurisdiction
------------
shall determine that any provision, or any portion thereof, contained in this
Agreement is unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall be the
interpreted as if such provision were so excluded and shall nevertheless remain
in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
10
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By: /s/ Xxxx Xxxxxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By:
--------------------------------
Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
____________________________________
Xxxxxx Xxxxxxx
Address for Notice:
Xxxxxx Xxxxxxx MD
0000 Xxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Facsimile No.: _________________
11
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By:______________________________
Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
_________________________________
Xxxxxx Xxxxxxx
Address for Notice:
Xxxxxx Xxxxxxx MD
0000 Xxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Facsimile No.: _______________
11
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By:_______________________________
Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By:_______________________________
Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
THE XXXXXXX FAMILY REVOCABLE TRUST
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx, as Trustee
Address for Notice:
The Fogarty Family Revocable Trust
c/o Xxxxxx Xxxxxxx MD, Trustee
0000 Xxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
11
Schedule 1
----------
Schedule of Fees Payable by Seller
----------------------------------
1. The Seller shall pay to the Company a fee equal to 3.5% of the aggregate
gross purchase price paid by all Purchasers to the Seller in accordance with
this Agreement and the other agreements executed and delivered concurrently
herewith between the Seller and the Purchasers not party to this Agreement in
regard to the purchase and sale of shares of Common Stock.
12
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx, MD
Shares: 35,000
Address: 0000 Xxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
[Signature Page to Registration Rights Agreement]
EXHIBIT 7(b)3
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
among
THE XXXXX X. XXXXXXX LIVING TRUST
and
XXXXXX X. XXXXXX
Dated as of August 13, 2001
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 13,
---------
2001, among The Xxxxx X. Xxxxxxx Living Trust, a California trust (the
"Seller"), and Xxxxxx X. Xxxxxx (the "Purchaser").
---------
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller 250,000 shares (the "Shares") of common stock (the
------
"Common Stock") of CardioDynamics International Corporation, a California
------------
corporation (the "Company"), no par value per share (such shares being
-------
collectively referred to herein as the "Shares") in accordance with the terms
------
and conditions set forth herein; and
WHEREAS, with regard to the shares of Common Stock to be sold by the Seller
to the Purchaser hereunder, the Purchaser, the Company and certain other parties
who are also purchasing shares of Common Stock from Seller (the Purchaser and
such other parties who are purchasing Common Stock from the Seller are
collectively referred to herein as the "Purchasers") are entering into a
----------
Registration Rights Agreement, dated as of the date of this Agreement, in the
form of Exhibit A (the "Registration Rights Agreement").
--------- -----------------------------
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Closing and Settlement Date. Subject to the terms and conditions set
---------------------------
forth in this Agreement, the Seller shall sell to the Purchaser and the
Purchaser shall purchase the Shares in exchange for a purchase price equal to
the product of (a) (i) the average closing price of the Common Stock on Nasdaq
or, if not then traded on Nasdaq, on a Subsequent Market on which the Common
Stock is then traded, for the twenty (20) Trading Days immediately preceding,
but excluding, the Closing Date (as defined herein), multiplied by (ii) 0.90,
multiplied by (b) the aggregate number of Shares (the "Purchase Price"). The
--------------
closing (the "Closing") of the transactions contemplated herein shall occur at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, on the execution date of this Agreement, with
payment and delivery of the Shares to occur on the Settlement Date (as defined
below). The date of the Closing is hereinafter referred to as the "Closing
-------
Date."
----
1.2 The Closing Date. As a condition precedent to each of the parties'
----------------
obligations hereunder, on the Closing Date, the Company and the parties shall
deliver or shall cause to be delivered the following:
(A) the Company shall deliver to the Purchaser (i) a Registration
Rights Agreement, in the form of Exhibit A, executed by the Company and dated as
---------
of the date hereof between the Company and the Purchasers and (ii) the Transfer
Agent Instructions, in the form of Exhibit B, executed by the Company and
---------
delivered to and acknowledged by the Company's transfer agent (the "Transfer
--------
Agent Instructions");
------------------
1
(B) the Seller shall deliver to the Purchaser (i) this Agreement,
executed by the Seller (ii) the escrow agreement ("Escrow Agreement"), dated as
-----------------
of the date hereof among the Seller, the Purchasers, California Bank & Trust and
Xxxxx & Xxxxxxxxxx (the "Escrow Agent"), executed by the Seller;
------------
(C) the Purchaser shall deliver (i) to the Seller, this Agreement
executed by the Purchaser, (ii) to the Company, a Registration Rights Agreement,
executed by the Purchaser, (iii) to the Escrow Agent, the Purchase Price, in
United States dollars in immediately available funds by wire transfer; provided
--------
that such funds shall be disbursed in accordance with the terms of the Escrow
Agreement; and (iv) to the Seller and the Escrow Agent, the Escrow Agreement
executed by the Purchaser;
(D) each of California Bank & Trust, the Company and the Escrow Agent
shall deliver to the Purchasers and Seller, the Escrow Agreement executed by
such party; and
(E) the Company shall deliver to the Purchasers the Registration
Rights Agreement executed by the Company.
1.3 The Settlement Date. On or prior to the tenth Trading Day following
-------------------
the delivery of the Purchase Price to the Escrow Agent (the "Settlement Date")
---------------
(A) the Seller shall cause to be delivered to the Purchaser a stock certificate,
registered in the name of the Purchaser, representing the Shares and (B) in
accordance with the terms of the Escrow Agreement, the Escrow Agent shall
disburse the Purchase Price in United States dollars in immediately available
funds by wire transfer.
1.4 [Intentionally omitted.]
1.5 Certain Defined Terms.
---------------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Business Day" shall mean any day except Saturday, Sunday and any day
------------
which shall be a legal holiday or a day on which banking institutions in Chicago
or California are authorized or required by law or other governmental action to
close.
"Commission" means the United States Securities and Exchange
----------
Commission.
"Nasdaq" means the Nasdaq National Market.
------
"Person" means an individual or corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
2
"Subsequent Market" shall mean any of the New York Stock Exchange,
-----------------
American Stock Exchange, Inc. or Nasdaq Small Cap Market.
"Trading Day" means a day on which the shares of Common Stock are
-----------
traded on the Nasdaq or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on the Nasdaq or a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the shares of Common Stock are not quoted on the OTC Bulletin
Board, a day on which the shares of Common Stock are quoted in the over-the-
counter market as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting prices);
provided, that in the event that the shares of Common Stock are not listed or
--------
quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
Business Day.
1.6 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller as follows:
(a) Consents; Authority. No consents, waivers or approvals from, or
-------------------
notification of or filings with, any governmental authority or other Person are
required for the Purchaser to enter into this Agreement. All actions on the
part of the Purchaser necessary for the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been taken. Each of this Agreement, the Registration Rights Agreement and the
Escrow Agreement has been duly executed by the Purchaser, and when delivered by
the Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
(b) Investment Intent. The Purchaser is acquiring the Shares as
-----------------
principal for its own account, for investment purposes only and not with a view
to or for distributing or reselling such Shares or any part thereof. The
Purchaser is acquiring the Shares hereunder in the ordinary course of its
business. The Purchaser does not have, or plan to enter into, any agreement,
arrangement or understanding, directly or indirectly, with any Person to sell,
transfer, grant participations in or distribute the Shares.
(c) Purchaser Status. At the time the Purchaser was offered the
----------------
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act").
--------------
(d) Experience of the Purchaser. The Purchaser, either alone or
---------------------------
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
(e) Ability of the Purchaser to Bear Risk of Investment. The
---------------------------------------------------
Purchaser is able to bear the economic risk of its investment in the Shares and
can afford the complete loss of such investment.
3
(f) Access to Information. The Purchaser acknowledges that it has
---------------------
reviewed all necessary information concerning the Company and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Seller and the Company concerning
the terms and conditions of the offering of the Shares and the merits and risks
of investing in the Shares; and (ii) the opportunity to obtain such additional
information which the Seller possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) General Solicitation. The Purchaser is not purchasing the Shares
--------------------
as a result of or subsequent to any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(h) Reliance. The Purchaser understands and acknowledges that (i)
--------
Shares are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Seller will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to and
acknowledges such reliance.
(i) No Conflicts; Advice. The Purchaser's investment in the Shares
--------------------
does not and will not conflict with or violate any term or provision of any
instrument, agreement, law, regulation, order or decree to which the Purchaser
or any of its properties is a party or is subject. The Purchaser acknowledges
that it has not relied on the Seller or any of its officers, directors,
affiliates, employees, representatives or agents for any tax, legal, financial,
investment or other advice. In regard to such considerations, the Purchaser has
relied on the advice of, or has consulted with, only its own tax, legal,
financial, investment and other advisors.
(j) Brokers, Etc. No finder, broker, agent, financial advisor or
------------
other intermediary acted on behalf of the Purchaser in connection with the
offering of the Shares or the negotiation or consummation of this Agreement or
any of the transactions contemplated hereby.
(k) Compliance With Law. The Purchaser's trading and distribution
-------------------
activities with respect to the Shares will be in compliance with all applicable
state and federal securities laws, rules and regulations (including, without
limitation, Regulation M) and the rules and regulations of the Nasdaq Stock
Market. Neither the Purchaser nor any of its affiliates (as that term is
defined in Rule 405 of the Securities Act) (i) has entered, nor will any of them
enter, into any agreement or other arrangement to effect any short sale of any
of the Shares, or (ii) take, directly or indirectly, any action designed to
cause or that would result in, or which constitutes or that might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
1.7 Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Purchaser as follows:
4
(a) Authorization: Enforcement. The Seller has the requisite power
--------------------------
and authority to enter into and to consummate the transactions contemplated by
each of this Agreement and the Escrow Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by the Seller and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Seller and no further action is required by the Seller. This
Agreement and the Escrow Agreement have been duly executed by the Seller and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their terms.
(b) No Liens on Seller's Shares. As of the Settlement Date the Seller
---------------------------
will be the sole beneficial owner of the Shares and the Seller will deliver to
the Purchaser valid title to the Shares free and clear of all liens, pledges,
encumbrances, security interests, and other restrictions. The Shares are not the
subject of any shareholders' or similar agreement granting any right of first
offer, right of first refusal or preemptive right or restricting in any way the
right of Seller to transfer the Shares to the Purchaser hereunder.
(c) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Escrow Agreement by the Seller and the consummation by the
Seller of the transactions contemplated hereby do not and will not (i) conflict
with or violate any provision of the Seller's organizational or charter
documents (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement or other instrument or other understanding to which
the Seller is a party or by which any property or asset of the Seller is bound
or affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Seller is subject (including, without limitation, federal
and state securities laws and regulations), or by which any property or asset of
the Seller is bound or affected.
(d) Consents and Approvals. The Seller is not required to obtain any
----------------------
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Seller of this Agreement and the Escrow
Agreement, other than reports of beneficial ownership to applicable governmental
authorities.
(e) Private Offering. Assuming the accuracy of the representations
----------------
and warranties of the Purchaser set forth in Section 1.6, the offer and sale of
the Shares to the Purchaser as contemplated hereby are exempt from the
registration requirements of the Securities Act. Neither the Seller nor any
Person acting on its behalf has taken or is, to the knowledge of the Seller,
contemplating taking any action which could subject the offering or sale of the
Shares to the registration requirements of the Securities Act including, without
limitation, soliciting any offer to buy or sell the Shares by means of any form
of general solicitation or advertising.
(f) Certain Fees. Except for certain fees payable by the Seller as
------------
set forth in Schedule 1 hereto, no fees or commissions will be payable by the
----------
Seller to any broker, financial
5
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement or the
Escrow Agreement.
(g) Solicitation Materials. Neither the Seller nor any Person acting
----------------------
on the Seller's behalf has solicited any offer to buy or sell the Shares by
means of any form of general solicitation or advertising.
(h) Disclosure. The Seller confirms that neither it nor any other
----------
Person acting on its behalf has provided the Purchaser or its agents or counsel
with any information that constitutes or might constitute material non-public
information. The Seller understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions with respect
to the Shares.
ARTICLE II
OTHER AGREEMENTS OF THE PARTIES
2.1 Transfer Restrictions: Legend.
-----------------------------
(a) The Purchaser acknowledges that Shares may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer
of Shares other than pursuant to an effective registration statement, except as
otherwise set forth herein, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a "Purchaser" under this Agreement, the Registration Rights Agreement and the
Escrow Agreement.
(b) The Purchaser acknowledges that until the Shares are registered
pursuant to an effective registration statement or may otherwise be disposed of
pursuant to an available exemption from (including, without limitation, under
Rule 144(k) promulgated under the Securities Act) or in a transaction not
subject to the registration requirements of the Securities Act, the following or
similar legend shall appear on the stock certificates representing the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE "SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE
6
SECURITIES OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
2.2 Indemnification.
---------------
(a) The Seller agrees to indemnify and hold harmless the Purchaser and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Purchaser Indemnitee," and collectively, the "Purchaser Indemnitees")
-------------------- ---------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and expenses) (collectively,
"Purchaser's Losses") which may be suffered or incurred by any Purchaser
------------------
Indemnitee as a result of a breach of any representation, warranty or covenant
made by the Seller in this Agreement or the Escrow Agreement.
(b) The Purchaser agrees to indemnify and hold harmless the Seller and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Seller Indemnitee," and collectively, the "Seller Indemnitees")
----------------- ------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and other expenses) (collectively,
"Seller's Losses") which may be suffered or incurred by any Seller Indemnitee as
---------------
a result of any breach of any representation, warranty, or covenant made by the
Purchaser in this Agreement or the Escrow Agreement.
(c) In case any proceeding (including, without limitation, any
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to this Section, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
-----------------
indemnity may be sought (the "Indemnifying Party") in writing of the occurrence
------------------
of the facts and circumstances giving rise to such claim. The failure of any
Person to deliver the notice required by this Section 2.2 shall not in any way
affect the Indemnifying Party's indemnification obligation hereunder except and
only to the extent that the Indemnifying Party is actually prejudiced thereby.
In case any such proceeding shall be brought against any Indemnified Party and
it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Indemnified Party and shall pay as incurred the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel or pay its own expenses.
Notwithstanding the foregoing, the Indemnifying Party shall pay as incurred the
fees and expenses of the counsel retained by the Indemnified Party in the event
(i) the Indemnifying Party and the Indemnified Party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceedings (including, without limitation, any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent (which
consent may not be unreasonably withheld) but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment and the Indemnifying Party shall obtain a full
release of the Indemnified Party.
7
ARTICLE III
MISCELLANEOUS
3.1 Fees and Expenses. Each party hereto shall pay the fees and expenses
-----------------
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
3.2 Entire Agreement: Amendments. This Agreement, together with any
----------------------------
Exhibits or Schedules hereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
3.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (California time)
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 6:30 p.m. (California time) on any
date and earlier than 11:59 p.m. (California time) on such date, (iii) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Seller:
If by U.S. Mail: The Xxxxx X. Xxxxxxx Living Trust
Xxxxxxx Enterprises
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
If by Courier: The Xxxxx X. Xxxxxxx Living Trust
c/o Del Mar Country Club, 0000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
8
With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
If to the Purchaser: To the address set forth under the
Purchaser's name on the signature
pages hereto
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
3.4 Amendments: Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, in the case of an amendment, by
the parties or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
3.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
3.6 Successors and Assigns. This Agreement shall be binding upon and
-------------- -------
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Seller nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser or the
Seller, respectively. This provision shall not limit the Purchaser's right to
transfer the Shares in accordance with Section 2.1(a).
3.7 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
3.8 Governing Law. All questions concerning the construction, validity,
-------------
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the courts of the State
of California or in the federal courts of the United States for the Central
District of California (the "California Courts"). Each party hereto hereby
-----------------
irrevocably submits to the jurisdiction of the California Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including, without
limitation, with respect to the enforcement of any provision
9
of this Agreement), and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper or that such California Courts are inconvenient or will be an improper
forum for such proceeding. Each party hereto (on behalf of itself and its
affiliates, agents, officers, directors and employees) hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (on behalf of
itself and its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
3.9 Survival. The representations, warranties, agreements and covenants
--------
contained herein shall survive the Closing Date until the earlier to occur of
(i) one year after the Closing Date or (ii) the date on which all the Shares
shall have been resold in accordance with Section 2.1.
3.10 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
3.11 Severability. In the event that any court of competent jurisdiction
------------
shall determine that any provision, or any portion thereof, contained in this
Agreement is unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall be the
interpreted as if such provision were so excluded and shall nevertheless remain
in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
10
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By: /s/ Xxxx Xxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Address for Notice:
Xxxxxx X. Xxxxxx
c/o RoundTable Healthcare Partners
000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
With a copy to: Xxxx Xxxxxxx
c/x XxXxxxxxx Advisors International
IMG Center, Suite 100, 0000 Xxxx 0xx
Xxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Xxxxx Xxxxxxxxx
c/o Prairie Capital Management
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
11
Schedule 1
----------
Schedule of Fees Payable by Seller
----------------------------------
1. The Seller shall pay to the Company a fee equal to 3.5% of the aggregate
gross purchase price paid by all Purchasers to the Seller in accordance with
this Agreement and the other agreements executed and delivered concurrently
herewith between the Seller and the Purchasers not party to this Agreement in
regard to the purchase and sale of shares of Common Stock.
12
EXHIBIT 7(b)4
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
among
THE XXXXX X. XXXXXXX LIVING TRUST
and
XXXX X. XxXXXXXX
Dated as of August 13, 2001
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 13,
-----------
2001, among The Xxxxx X. Xxxxxxx Living Trust, a California trust (the
"Seller"), and Xxxx X. XxXxxxxx (the "Purchaser").
---------
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller 100,000 shares (the "Shares") of common stock (the
------
"Common Stock") of CardioDynamics International Corporation, a California
--------------
corporation (the "Company"), no par value per share (such shares being
---------
collectively referred to herein as the "Shares") in accordance with the terms
------
and conditions set forth herein; and
WHEREAS, with regard to the shares of Common Stock to be sold by the Seller
to the Purchaser hereunder, the Purchaser, the Company and certain other parties
who are also purchasing shares of Common Stock from Seller (the Purchaser and
such other parties who are purchasing Common Stock from the Seller are
collectively referred to herein as the "Purchasers") are entering into a
----------
Registration Rights Agreement, dated as of the date of this Agreement, in the
form of Exhibit A (the "Registration Rights Agreement").
--------- ------------------------------
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Closing and Settlement Date. Subject to the terms and conditions set
---------------------------
forth in this Agreement, the Seller shall sell to the Purchaser and the
Purchaser shall purchase the Shares in exchange for a purchase price equal to
the product of (a) (i) the average closing price of the Common Stock on Nasdaq
or, if not then traded on Nasdaq, on a Subsequent Market on which the Common
Stock is then traded, for the twenty (20) Trading Days immediately preceding,
but excluding, the Closing Date (as defined herein), multiplied by (ii) 0.90,
multiplied by (b) the aggregate number of Shares (the "Purchase Price"). The
--------------
closing (the "Closing") of the transactions contemplated herein shall occur at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, on the execution date of this Agreement, with
payment and delivery of the Shares to occur on the Settlement Date (as defined
below). The date of the Closing is hereinafter referred to as the "Closing
-------
Date."
----
1.2 The Closing Date. As a condition precedent to each of the parties'
----------------
obligations hereunder, on the Closing Date, the Company and the parties shall
deliver or shall cause to be delivered the following:
(A) the Company shall deliver to the Purchaser (i) a Registration
Rights Agreement, in the form of Exhibit A, executed by the Company and dated as
---------
of the date hereof between the Company and the Purchasers and (ii) the Transfer
Agent Instructions, in the form of Exhibit B, executed by the Company and
---------
delivered to and acknowledged by the Company's transfer agent (the "Transfer
--------
Agent Instructions");
------------------
1
(B) the Seller shall deliver to the Purchaser (i) this Agreement,
executed by the Seller (ii) the escrow agreement ("Escrow Agreement"), dated as
-----------------
of the date hereof among the Seller, the Purchasers, California Bank & Trust and
Xxxxx & Xxxxxxxxxx (the "Escrow Agent"), executed by the Seller;
-------------
(C) the Purchaser shall deliver (i) to the Seller, this Agreement
executed by the Purchaser, (ii) to the Company, a Registration Rights Agreement,
executed by the Purchaser, (iii) to the Escrow Agent, the Purchase Price, in
United States dollars in immediately available funds by wire transfer; provided
--------
that such funds shall be disbursed in accordance with the terms of the Escrow
Agreement; and (iv) to the Seller and the Escrow Agent, the Escrow Agreement
executed by the Purchaser;
(D) each of California Bank & Trust, the Company and the Escrow Agent
shall deliver to the Purchasers and Seller, the Escrow Agreement executed by
such party; and
(E) the Company shall deliver to the Purchasers the Registration
Rights Agreement executed by the Company.
1.3 The Settlement Date. On or prior to the tenth Trading Day following
-------------------
the delivery of the Purchase Price to the Escrow Agent (the "Settlement Date")
----------------
(A) the Seller shall cause to be delivered to the Purchaser a stock certificate,
registered in the name of the Purchaser, representing the Shares and (B) in
accordance with the terms of the Escrow Agreement, the Escrow Agent shall
disburse the Purchase Price in United States dollars in immediately available
funds by wire transfer.
1.4 [Intentionally omitted.]
1.5 Certain Defined Terms.
---------------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Business Day" shall mean any day except Saturday, Sunday and any day
------------
which shall be a legal holiday or a day on which banking institutions in Chicago
or California are authorized or required by law or other governmental action to
close.
"Commission" means the United States Securities and Exchange
----------
Commission.
"Nasdaq" means the Nasdaq National Market.
------
"Person" means an individual or corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
2
"Subsequent Market" shall mean any of the New York Stock Exchange,
-----------------
American Stock Exchange, Inc. or Nasdaq Small Cap Market.
"Trading Day" means a day on which the shares of Common Stock are
-----------
traded on the Nasdaq or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on the Nasdaq or a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the shares of Common Stock are not quoted on the OTC Bulletin
Board, a day on which the shares of Common Stock are quoted in the over-the-
counter market as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting prices);
provided, that in the event that the shares of Common Stock are not listed or
--------
quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
Business Day.
1.6 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller as follows:
(a) Consents; Authority. No consents, waivers or approvals from, or
-------------------
notification of or filings with, any governmental authority or other Person are
required for the Purchaser to enter into this Agreement. All actions on the
part of the Purchaser necessary for the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been taken. Each of this Agreement, the Registration Rights Agreement and the
Escrow Agreement has been duly executed by the Purchaser, and when delivered by
the Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
(b) Investment Intent. The Purchaser is acquiring the Shares as
-----------------
principal for its own account, for investment purposes only and not with a view
to or for distributing or reselling such Shares or any part thereof. The
Purchaser is acquiring the Shares hereunder in the ordinary course of its
business. The Purchaser does not have, or plan to enter into, any agreement,
arrangement or understanding, directly or indirectly, with any Person to sell,
transfer, grant participations in or distribute the Shares.
(c) Purchaser Status. At the time the Purchaser was offered the
----------------
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act").
--------------
(d) Experience of the Purchaser. The Purchaser, either alone or
---------------------------
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
(e) Ability of the Purchaser to Bear Risk of Investment. The
---------------------------------------- ----------
Purchaser is able to bear the economic risk of its investment in the Shares and
can afford the complete loss of such investment.
3
(f) Access to Information. The Purchaser acknowledges that it has
---------------------
reviewed all necessary information concerning the Company and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Seller and the Company concerning
the terms and conditions of the offering of the Shares and the merits and risks
of investing in the Shares; and (ii) the opportunity to obtain such additional
information which the Seller possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) General Solicitation. The Purchaser is not purchasing the Shares
--------------------
as a result of or subsequent to any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(h) Reliance. The Purchaser understands and acknowledges that (i)
--------
Shares are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Seller will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to and
acknowledges such reliance.
(i) No Conflicts; Advice. The Purchaser's investment in the Shares
--------------------
does not and will not conflict with or violate any term or provision of any
instrument, agreement, law, regulation, order or decree to which the Purchaser
or any of its properties is a party or is subject. The Purchaser acknowledges
that it has not relied on the Seller or any of its officers, directors,
affiliates, employees, representatives or agents for any tax, legal, financial,
investment or other advice. In regard to such considerations, the Purchaser has
relied on the advice of, or has consulted with, only its own tax, legal,
financial, investment and other advisors.
(j) Brokers, Etc. No finder, broker, agent, financial advisor or
------------
other intermediary acted on behalf of the Purchaser in connection with the
offering of the Shares or the negotiation or consummation of this Agreement or
any of the transactions contemplated hereby.
(k) Compliance With Law. The Purchaser's trading and distribution
-------------------
activities with respect to the Shares will be in compliance with all applicable
state and federal securities laws, rules and regulations (including, without
limitation, Regulation M) and the rules and regulations of the Nasdaq Stock
Market. Neither the Purchaser nor any of its affiliates (as that term is
defined in Rule 405 of the Securities Act) (i) has entered, nor will any of them
enter, into any agreement or other arrangement to effect any short sale of any
of the Shares, or (ii) take, directly or indirectly, any action designed to
cause or that would result in, or which constitutes or that might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
1.7 Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Purchaser as follows:
4
(a) Authorization: Enforcement. The Seller has the requisite power
--------------------------
and authority to enter into and to consummate the transactions contemplated by
each of this Agreement and the Escrow Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by the Seller and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Seller and no further action is required by the Seller. This
Agreement and the Escrow Agreement have been duly executed by the Seller and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their terms.
(b) No Liens on Seller's Shares. As of the Settlement Date the Seller
---------------------------
will be the sole beneficial owner of the Shares and the Seller will deliver to
the Purchaser valid title to the Shares free and clear of all liens, pledges,
encumbrances, security interests, and other restrictions. The Shares are not
the subject of any shareholders' or similar agreement granting any right of
first offer, right of first refusal or preemptive right or restricting in any
way the right of Seller to transfer the Shares to the Purchaser hereunder.
(c) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Escrow Agreement by the Seller and the consummation by the
Seller of the transactions contemplated hereby do not and will not (i) conflict
with or violate any provision of the Seller's organizational or charter
documents (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement or other instrument or other understanding to which
the Seller is a party or by which any property or asset of the Seller is bound
or affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Seller is subject (including, without limitation, federal
and state securities laws and regulations), or by which any property or asset of
the Seller is bound or affected.
(d) Consents and Approvals. The Seller is not required to obtain any
----------------------
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Seller of this Agreement and the Escrow
Agreement, other than reports of beneficial ownership to applicable governmental
authorities.
(e) Private Offering. Assuming the accuracy of the representations
----------------
and warranties of the Purchaser set forth in Section 1.6, the offer and sale of
the Shares to the Purchaser as contemplated hereby are exempt from the
registration requirements of the Securities Act. Neither the Seller nor any
Person acting on its behalf has taken or is, to the knowledge of the Seller,
contemplating taking any action which could subject the offering or sale of the
Shares to the registration requirements of the Securities Act including, without
limitation, soliciting any offer to buy or sell the Shares by means of any form
of general solicitation or advertising.
(f) Certain Fees. Except for certain fees payable by the Seller as
------------
set forth in Schedule 1 hereto, no fees or commissions will be payable by the
----------
Seller to any broker, financial
5
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement or the
Escrow Agreement.
(g) Solicitation Materials. Neither the Seller nor any Person acting
----------------------
on the Seller's behalf has solicited any offer to buy or sell the Shares by
means of any form of general solicitation or advertising.
(h) Disclosure. The Seller confirms that neither it nor any other
----------
Person acting on its behalf has provided the Purchaser or its agents or counsel
with any information that constitutes or might constitute material non-public
information. The Seller understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions with respect
to the Shares.
ARTICLE II
OTHER AGREEMENTS OF THE PARTIES
2.1 Transfer Restrictions: Legend.
-----------------------------
(a) The Purchaser acknowledges that Shares may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer
of Shares other than pursuant to an effective registration statement, except as
otherwise set forth herein, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a "Purchaser" under this Agreement, the Registration Rights Agreement and the
Escrow Agreement.
(b) The Purchaser acknowledges that until the Shares are registered
pursuant to an effective registration statement or may otherwise be disposed of
pursuant to an available exemption from (including, without limitation, under
Rule 144(k) promulgated under the Securities Act) or in a transaction not
subject to the registration requirements of the Securities Act, the following or
similar legend shall appear on the stock certificates representing the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE "SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE
6
SECURITIES OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
2.2 Indemnification.
---------------
(a) The Seller agrees to indemnify and hold harmless the Purchaser and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Purchaser Indemnitee," and collectively, the "Purchaser Indemnitees")
-------------------- ---------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and expenses) (collectively,
"Purchaser's Losses") which may be suffered or incurred by any Purchaser
------------------
Indemnitee as a result of a breach of any representation, warranty or covenant
made by the Seller in this Agreement or the Escrow Agreement.
(b) The Purchaser agrees to indemnify and hold harmless the Seller and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Seller Indemnitee," and collectively, the "Seller Indemnitees")
----------------- ------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and other expenses) (collectively,
"Seller's Losses") which may be suffered or incurred by any Seller Indemnitee as
---------------
a result of any breach of any representation, warranty, or covenant made by the
Purchaser in this Agreement or the Escrow Agreement.
(c) In case any proceeding (including, without limitation, any
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to this Section, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
-----------------
indemnity may be sought (the "Indemnifying Party") in writing of the occurrence
------------------
of the facts and circumstances giving rise to such claim. The failure of any
Person to deliver the notice required by this Section 2.2 shall not in any way
affect the Indemnifying Party's indemnification obligation hereunder except and
only to the extent that the Indemnifying Party is actually prejudiced thereby.
In case any such proceeding shall be brought against any Indemnified Party and
it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Indemnified Party and shall pay as incurred the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel or pay its own expenses.
Notwithstanding the foregoing, the Indemnifying Party shall pay as incurred the
fees and expenses of the counsel retained by the Indemnified Party in the event
(i) the Indemnifying Party and the Indemnified Party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceedings (including, without limitation, any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent (which
consent may not be unreasonably withheld) but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment and the Indemnifying Party shall obtain a full
release of the Indemnified Party.
7
ARTICLE III
MISCELLANEOUS
3.1 Fees and Expenses. Each party hereto shall pay the fees and expenses
-----------------
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
3.2 Entire Agreement: Amendments. This Agreement, together with any
----------------------------
Exhibits or Schedules hereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
3.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (California time)
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 6:30 p.m. (California time) on any
date and earlier than 11:59 p.m. (California time) on such date, (iii) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Seller:
If by U.S. Mail: The Xxxxx X. Xxxxxxx Living Trust
Xxxxxxx Enterprises
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
If by Courier: The Xxxxx X. Xxxxxxx Living Trust
Xxxxxxx Enterprises
c/o Del Mar Country Club, 0000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
8
With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
If to the Purchaser: To the address set forth under the
Purchaser's name on the signature
pages hereto
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
3.4 Amendments: Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, in the case of an amendment, by
the parties or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
3.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
3.6 Successors and Assigns. This Agreement shall be binding upon and
-------------- -------
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Seller nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser or the
Seller, respectively. This provision shall not limit the Purchaser's right to
transfer the Shares in accordance with Section 2.1(a).
3.7 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
3.8 Governing Law. All questions concerning the construction, validity,
-------------
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the courts of the State
of California or in the federal courts of the United States for the Central
District of California (the "California Courts"). Each party hereto hereby
-----------------
irrevocably submits to the jurisdiction of the California Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including, without
limitation, with respect to the enforcement of any provision
9
of this Agreement), and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper or that such California Courts are inconvenient or will be an improper
forum for such proceeding. Each party hereto (on behalf of itself and its
affiliates, agents, officers, directors and employees) hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (on behalf of
itself and its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
3.9 Survival. The representations, warranties, agreements and covenants
--------
contained herein shall survive the Closing Date until the earlier to occur of
(i) one year after the Closing Date or (ii) the date on which all the Shares
shall have been resold in accordance with Section 2.1.
3.10 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
3.11 Severability. In the event that any court of competent jurisdiction
------------
shall determine that any provision, or any portion thereof, contained in this
Agreement is unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall be the
interpreted as if such provision were so excluded and shall nevertheless remain
in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
10
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By: /s/ Xxxx Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
/s/ Xxxx X. XxXxxxxx
---------------------------------
Xxxx X. XxXxxxxx
Address for Notice:
Xxxx X. XxXxxxxx
c/o RoundTable Healthcare Partners
000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Facsimile No.: 847-182 9215
With a copy to: Xxx Xxxxxxxxx
c/o Wealth Management Consultants
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
Xxxxx Xxxxxx
Xxxxxx, Xxxxx & Xxxx LLP
0000 Xxxxx Xxxxxxxxx Xxx., Xxxxx X00
Xxxxxxxxxxxx, XX 00000-0000
Facsimile No.: 000-000-0000
11
Schedule 1
----------
Schedule of Fees Payable by Seller
----------------------------------
1. The Seller shall pay to the Company a fee equal to 3.5% of the aggregate
gross purchase price paid by all Purchasers to the Seller in accordance with
this Agreement and the other agreements executed and delivered concurrently
herewith between the Seller and the Purchasers not party to this Agreement in
regard to the purchase and sale of shares of Common Stock.
12
Exhibit 7(b)5
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
among
THE XXXXX X. XXXXXXX LIVING TRUST
and
XXXX X. XXXXXXX
Dated as of August 13, 2001
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 13,
-----------
2001, among The Xxxxx X. Xxxxxxx Living Trust, a California trust (the
"Seller"), and Xxxx X. Xxxxxxx (the "Purchaser").
---------
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller 25,000 shares (the "Shares") of common stock (the
------
"Common Stock") of CardioDynamics International Corporation, a California
------------
corporation (the "Company"), no par value per share (such shares being
---------
collectively referred to herein as the "Shares") in accordance with the terms
------
and conditions set forth herein; and
WHEREAS, with regard to the shares of Common Stock to be sold by the Seller
to the Purchaser hereunder, the Purchaser, the Company and certain other parties
who are also purchasing shares of Common Stock from Seller (the Purchaser and
such other parties who are purchasing Common Stock from the Seller are
collectively referred to herein as the "Purchasers") are entering into a
----------
Registration Rights Agreement, dated as of the date of this Agreement, in the
form of Exhibit A (the "Registration Rights Agreement").
--------- ------------------------------
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Closing and Settlement Date. Subject to the terms and conditions set
---------------------------
forth in this Agreement, the Seller shall sell to the Purchaser and the
Purchaser shall purchase the Shares in exchange for a purchase price equal to
the product of (a) (i) the average closing price of the Common Stock on Nasdaq
or, if not then traded on Nasdaq, on a Subsequent Market on which the Common
Stock is then traded, for the twenty (20) Trading Days immediately preceding,
but excluding, the Closing Date (as defined herein), multiplied by (ii) 0.90,
multiplied by (b) the aggregate number of Shares (the "Purchase Price"). The
--------------
closing (the "Closing") of the transactions contemplated herein shall occur at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, on the execution date of this Agreement, with
payment and delivery of the Shares to occur on the Settlement Date (as defined
below). The date of the Closing is hereinafter referred to as the "Closing
-------
Date."
----
1.2 The Closing Date. As a condition precedent to each of the parties'
----------------
obligations hereunder, on the Closing Date, the Company and the parties shall
deliver or shall cause to be delivered the following:
(A) the Company shall deliver to the Purchaser (i) a Registration
Rights Agreement, in the form of Exhibit A, executed by the Company and dated as
---------
of the date hereof between the Company and the Purchasers and (ii) the Transfer
Agent Instructions, in the form of Exhibit B, executed by the Company and
---------
delivered to and acknowledged by the Company's transfer agent (the "Transfer
--------
Agent Instructions");
------------------
1
(B) the Seller shall deliver to the Purchaser (i) this Agreement,
executed by the Seller (ii) the escrow agreement ("Escrow Agreement"), dated as
-----------------
of the date hereof among the Seller, the Purchasers, California Bank & Trust and
Xxxxx & Xxxxxxxxxx (the "Escrow Agent"), executed by the Seller;
-------------
(C) the Purchaser shall deliver (i) to the Seller, this Agreement
executed by the Purchaser, (ii) to the Company, a Registration Rights Agreement,
executed by the Purchaser, (iii) to the Escrow Agent, the Purchase Price, in
United States dollars in immediately available funds by wire transfer; provided
--------
that such funds shall be disbursed in accordance with the terms of the Escrow
Agreement; and (iv) to the Seller and the Escrow Agent, the Escrow Agreement
executed by the Purchaser;
(D) each of California Bank & Trust, the Company and the Escrow Agent
shall deliver to the Purchasers and Seller, the Escrow Agreement executed by
such party; and
(E) the Company shall deliver to the Purchasers the Registration
Rights Agreement executed by the Company.
1.3 The Settlement Date. On or prior to the tenth Trading Day following
-------------------
the delivery of the Purchase Price to the Escrow Agent (the "Settlement Date")
----------------
(A) the Seller shall cause to be delivered to the Purchaser a stock certificate,
registered in the name of the Purchaser, representing the Shares and (B) in
accordance with the terms of the Escrow Agreement, the Escrow Agent shall
disburse the Purchase Price in United States dollars in immediately available
funds by wire transfer.
1.4 [Intentionally omitted.]
1.5 Certain Defined Terms.
---------------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Business Day" shall mean any day except Saturday, Sunday and any day
------------
which shall be a legal holiday or a day on which banking institutions in Chicago
or California are authorized or required by law or other governmental action to
close.
"Commission" means the United States Securities and Exchange
----------
Commission.
"Nasdaq" means the Nasdaq National Market.
------
"Person" means an individual or corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
2
"Subsequent Market" shall mean any of the New York Stock Exchange,
-----------------
American Stock Exchange, Inc. or Nasdaq Small Cap Market.
"Trading Day" means a day on which the shares of Common Stock are
-----------
traded on the Nasdaq or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on the Nasdaq or a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (c) if the shares of Common Stock are not quoted on the OTC Bulletin
Board, a day on which the shares of Common Stock are quoted in the over-the-
counter market as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting prices);
provided, that in the event that the shares of Common Stock are not listed or
--------
quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a
Business Day.
1.6 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller as follows:
(a) Consents; Authority. No consents, waivers or approvals from, or
-------------------
notification of or filings with, any governmental authority or other Person are
required for the Purchaser to enter into this Agreement. All actions on the part
of the Purchaser necessary for the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
taken. Each of this Agreement, the Registration Rights Agreement and the Escrow
Agreement has been duly executed by the Purchaser, and when delivered by the
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
(b) Investment Intent. The Purchaser is acquiring the Shares as
-----------------
principal for its own account, for investment purposes only and not with a view
to or for distributing or reselling such Shares or any part thereof. The
Purchaser is acquiring the Shares hereunder in the ordinary course of its
business. The Purchaser does not have, or plan to enter into, any agreement,
arrangement or understanding, directly or indirectly, with any Person to sell,
transfer, grant participations in or distribute the Shares.
(c) Purchaser Status. At the time the Purchaser was offered the
----------------
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act").
--------------
(d) Experience of the Purchaser. The Purchaser, either alone or
---------------------------
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
(e) Ability of the Purchaser to Bear Risk of Investment. The
---------------------------------------------------
Purchaser is able to bear the economic risk of its investment in the Shares and
can afford the complete loss of such investment.
3
(f) Access to Information. The Purchaser acknowledges that it has
---------------------
reviewed all necessary information concerning the Company and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Seller and the Company concerning
the terms and conditions of the offering of the Shares and the merits and risks
of investing in the Shares; and (ii) the opportunity to obtain such additional
information which the Seller possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) General Solicitation. The Purchaser is not purchasing the Shares
--------------------
as a result of or subsequent to any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(h) Reliance. The Purchaser understands and acknowledges that (i)
--------
Shares are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Seller will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to and
acknowledges such reliance.
(i) No Conflicts; Advice. The Purchaser's investment in the Shares
--------------------
does not and will not conflict with or violate any term or provision of any
instrument, agreement, law, regulation, order or decree to which the Purchaser
or any of its properties is a party or is subject. The Purchaser acknowledges
that it has not relied on the Seller or any of its officers, directors,
affiliates, employees, representatives or agents for any tax, legal, financial,
investment or other advice. In regard to such considerations, the Purchaser has
relied on the advice of, or has consulted with, only its own tax, legal,
financial, investment and other advisors.
(j) Brokers, Etc. No finder, broker, agent, financial advisor or
------------
other intermediary acted on behalf of the Purchaser in connection with the
offering of the Shares or the negotiation or consummation of this Agreement or
any of the transactions contemplated hereby.
(k) Compliance With Law. The Purchaser's trading and distribution
-------------------
activities with respect to the Shares will be in compliance with all applicable
state and federal securities laws, rules and regulations (including, without
limitation, Regulation M) and the rules and regulations of the Nasdaq Stock
Market. Neither the Purchaser nor any of its affiliates (as that term is
defined in Rule 405 of the Securities Act) (i) has entered, nor will any of them
enter, into any agreement or other arrangement to effect any short sale of any
of the Shares, or (ii) take, directly or indirectly, any action designed to
cause or that would result in, or which constitutes or that might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
1.7 Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Purchaser as follows:
4
(a) Authorization: Enforcement. The Seller has the requisite power
--------------------------
and authority to enter into and to consummate the transactions contemplated by
each of this Agreement and the Escrow Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by the Seller and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Seller and no further action is required by the Seller. This
Agreement and the Escrow Agreement have been duly executed by the Seller and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligations of the Seller enforceable against the Seller in
accordance with their terms.
(b) No Liens on Seller's Shares. As of the Settlement Date the Seller
---------------------------
will be the sole beneficial owner of the Shares and the Seller will deliver to
the Purchaser valid title to the Shares free and clear of all liens, pledges,
encumbrances, security interests, and other restrictions. The Shares are not
the subject of any shareholders' or similar agreement granting any right of
first offer, right of first refusal or preemptive right or restricting in any
way the right of Seller to transfer the Shares to the Purchaser hereunder.
(c) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Escrow Agreement by the Seller and the consummation by the
Seller of the transactions contemplated hereby do not and will not (i) conflict
with or violate any provision of the Seller's organizational or charter
documents (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement or other instrument or other understanding to which
the Seller is a party or by which any property or asset of the Seller is bound
or affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Seller is subject (including, without limitation, federal
and state securities laws and regulations), or by which any property or asset of
the Seller is bound or affected.
(d) Consents and Approvals. The Seller is not required to obtain any
----------------------
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Seller of this Agreement and the Escrow
Agreement, other than reports of beneficial ownership to applicable governmental
authorities.
(e) Private Offering. Assuming the accuracy of the representations
----------------
and warranties of the Purchaser set forth in Section 1.6, the offer and sale of
the Shares to the Purchaser as contemplated hereby are exempt from the
registration requirements of the Securities Act. Neither the Seller nor any
Person acting on its behalf has taken or is, to the knowledge of the Seller,
contemplating taking any action which could subject the offering or sale of the
Shares to the registration requirements of the Securities Act including, without
limitation, soliciting any offer to buy or sell the Shares by means of any form
of general solicitation or advertising.
(f) Certain Fees. Except for certain fees payable by the Seller as
------------
set forth in Schedule 1 hereto, no fees or commissions will be payable by the
----------
Seller to any broker, financial
5
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement or the
Escrow Agreement.
(g) Solicitation Materials. Neither the Seller nor any Person acting
----------------------
on the Seller's behalf has solicited any offer to buy or sell the Shares by
means of any form of general solicitation or advertising.
(h) Disclosure. The Seller confirms that neither it nor any other
----------
Person acting on its behalf has provided the Purchaser or its agents or counsel
with any information that constitutes or might constitute material non-public
information. The Seller understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions with respect
to the Shares.
ARTICLE II
OTHER AGREEMENTS OF THE PARTIES
2.1 Transfer Restrictions: Legend.
-----------------------------
(a) The Purchaser acknowledges that Shares may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer
of Shares other than pursuant to an effective registration statement, except as
otherwise set forth herein, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a "Purchaser" under this Agreement, the Registration Rights Agreement and the
Escrow Agreement.
(b) The Purchaser acknowledges that until the Shares are registered
pursuant to an effective registration statement or may otherwise be disposed of
pursuant to an available exemption from (including, without limitation, under
Rule 144(k) promulgated under the Securities Act) or in a transaction not
subject to the registration requirements of the Securities Act, the following or
similar legend shall appear on the stock certificates representing the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE "SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE
6
SECURITIES OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
2.2 Indemnification.
---------------
(a) The Seller agrees to indemnify and hold harmless the Purchaser and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Purchaser Indemnitee," and collectively, the "Purchaser Indemnitees")
-------------------- ---------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and expenses) (collectively,
"Purchaser's Losses") which may be suffered or incurred by any Purchaser
------------------
Indemnitee as a result of a breach of any representation, warranty or covenant
made by the Seller in this Agreement or the Escrow Agreement.
(b) The Purchaser agrees to indemnify and hold harmless the Seller and
its shareholders, officers, directors, employees, agents and representatives
(each, a "Seller Indemnitee," and collectively, the "Seller Indemnitees")
----------------- ------------------
against any damages, claims, losses, liabilities and expenses (including,
without limitation, reasonable counsel fees and other expenses) (collectively,
"Seller's Losses") which may be suffered or incurred by any Seller Indemnitee as
---------------
a result of any breach of any representation, warranty, or covenant made by the
Purchaser in this Agreement or the Escrow Agreement.
(c) In case any proceeding (including, without limitation, any
governmental investigation) shall be instituted involving any Person in respect
of which indemnity may be sought pursuant to this Section, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
-----------------
indemnity may be sought (the "Indemnifying Party") in writing of the occurrence
------------------
of the facts and circumstances giving rise to such claim. The failure of any
Person to deliver the notice required by this Section 2.2 shall not in any way
affect the Indemnifying Party's indemnification obligation hereunder except and
only to the extent that the Indemnifying Party is actually prejudiced thereby.
In case any such proceeding shall be brought against any Indemnified Party and
it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Indemnified Party and shall pay as incurred the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel or pay its own expenses.
Notwithstanding the foregoing, the Indemnifying Party shall pay as incurred the
fees and expenses of the counsel retained by the Indemnified Party in the event
(i) the Indemnifying Party and the Indemnified Party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceedings (including, without limitation, any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent (which
consent may not be unreasonably withheld) but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment and the Indemnifying Party shall obtain a full
release of the Indemnified Party.
7
ARTICLE III
MISCELLANEOUS
3.1 Fees and Expenses. Each party hereto shall pay the fees and expenses
-----------------
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
3.2 Entire Agreement: Amendments. This Agreement, together with any
----------------------------
Exhibits or Schedules hereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
3.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (California time)
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 6:30 p.m. (California time) on any
date and earlier than 11:59 p.m. (California time) on such date, (iii) the
Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Seller:
If by U.S. Mail: The Xxxxx X. Xxxxxxx Living Trust
Xxxxxxx Enterprises
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
If by Courier: The Xxxxx X. Xxxxxxx Living Trust
c/o Del Mar Country Club
0000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
Facsimile No.: 000-000-0000
Attn: J. Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxx
8
With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx, XX 00000-0000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
If to the Purchaser: To the address set forth under the
Purchaser's name on the signature
pages hereto
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
3.4 Amendments: Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, in the case of an amendment, by
the parties or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
3.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
3.6 Successors and Assigns. This Agreement shall be binding upon and
-------------- -------
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Seller nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser or the
Seller, respectively. This provision shall not limit the Purchaser's right to
transfer the Shares in accordance with Section 2.1(a).
3.7 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
3.8 Governing Law. All questions concerning the construction, validity,
-------------
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the courts of the State
of California or in the federal courts of the United States for the Central
District of California (the "California Courts"). Each party hereto hereby
-----------------
irrevocably submits to the jurisdiction of the California Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including, without
limitation, with respect to the enforcement of any provision
9
of this Agreement), and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper or that such California Courts are inconvenient or will be an improper
forum for such proceeding. Each party hereto (on behalf of itself and its
affiliates, agents, officers, directors and employees) hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (on behalf of
itself and its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
3.9 Survival. The representations, warranties, agreements and covenants
--------
contained herein shall survive the Closing Date until the earlier to occur of
(i) one year after the Closing Date or (ii) the date on which all the Shares
shall have been resold in accordance with Section 2.1.
3.10 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
3.11 Severability. In the event that any court of competent jurisdiction
------------
shall determine that any provision, or any portion thereof, contained in this
Agreement is unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall be the
interpreted as if such provision were so excluded and shall nevertheless remain
in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
THE XXXXX X. XXXXXXX LIVING TRUST
By: /s/ Xxxx Xxxxxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title: Co-Trustee
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Co-Trustee
PURCHASER:
/s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx
Address for Notice:
Xxxx X. Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
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Schedule 1
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Schedule of Fees Payable by Seller
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1. The Seller shall pay to the Company a fee equal to 3.5% of the aggregate
gross purchase price paid by all Purchasers to the Seller in accordance with
this Agreement and the other agreements executed and delivered concurrently
herewith between the Seller and the Purchasers not party to this Agreement in
regard to the purchase and sale of shares of Common Stock.
12
