Exhibit 99.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is made and entered into as
of July 10, 2000 by and among CardioDynamics International Corporation, a
California corporation (the "Company"), those parties listed on the signature
page hereof as "Selling Shareholders" (who are referred to individually as a
"Selling Shareholder" and collectively as the "Selling Shareholders") and those
parties listed on the signature page hereof as "Investors" (who are referred to
individually as an "Investor" and collectively as the "Investors").
In consideration of the above recitals and the mutual covenants made
herein, the parties hereby agree as follows:
1. Sale of Common Stock; Closing; Delivery.
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A. Purchase and Sale of Common Stock. Subject to the terms and
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conditions hereof, the Company will issue and sell and the Selling Shareholders
will sell to each Investor, and each Investor will purchase from the Company and
the Selling Shareholders, at the Closing (as defined below) the number of shares
("Shares") of common stock, without par value, ("Common Stock") of the Company
set forth opposite each Investor's name on its signature page hereto at a per
Share purchase price equal to the lower of (i) $5.59 or (ii) the average of the
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daily closing prices of the Common Stock over a ten (10) day trading period
ending the trading day preceding the Initial Closing (as defined below). The
Company and the Selling Shareholders are offering for sale on a "best efforts"
basis, an aggregate minimum purchase price of $17,000,000.00 (the "Minimum
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Offering Amount"), up to an aggregate maximum purchase price of $27,950,000.00
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(the "Maximum Offering Amount").
B. Deposit of Funds. All funds received from Investors and accepted
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by the Company will be deposited into a Company account with Imperial Bank (the
"Deposit Account"). The funds will be withdrawn from the Deposit Account only
upon the satisfaction of certain conditions, including the deposit of at least
the Minimum Offering Amount in the Deposit Account on or before July 14, 2000
(the "Initial Closing"); provided, however, that the Initial Closing may be
extended to July 21, 2000 by the Company. All payments received by the Company
prior to the Initial Closing shall be held in the Deposit Account in trust for
the benefit of the Investors pending the Initial Closing.
C. Closing. Subject to the deposit of the Minimum Offering Amount in
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the Deposit Account, the Initial Closing shall take place at the offices of
counsel for the Company at Pillsbury Madison & Sutro LLP, 000 Xxxx Xxxxxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx at 10:00 a.m., PDT, or such other time(s) and
place(s) as the Company and Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. and Gruntal &
Co., L.L.C. (the "Placement Agents"), shall agree; provided, however, that the
Initial Closing shall take place on or before July 14, 2000, unless extended by
the Company to no later than July 21, 2000. In the event that additional funds
are raised subsequent to the Initial Closing, one or more later closings may be
held until the Maximum Offering Amount of Shares is sold or until July 21, 2000,
whichever is earlier. The Initial Closing and the date any subsequent closings
are hereinafter referred to as the "Closing".
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D. Delivery. Subject to the terms and conditions of this Agreement,
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at each Closing, the Company and the Selling Shareholders will deliver to each
Investor a stock certificate representing the Shares to be purchased by such
Investor against payment of the purchase price therefor by wire transfer of
immediately available funds submitted to the Deposit Account in accordance with
instructions to be provided to the Investors by the Placement Agents.
2. Representations and Warranties of Investors. Each Investor
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represents and warrants, severally and not jointly with any other Investors, to
the Company and to the Selling Shareholders that:
A. Authorization. This Agreement constitutes the valid and legally
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binding obligation of such Investor, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency and similar
laws affecting the enforcement of creditors' rights generally and equitable
remedies, and except as indemnity provisions in the enforcement of Section 5 of
this Agreement (relating to registration rights) may be limited by law, and such
Investor (if an individual) is over 18 years of age, and such Investor has full
legal capacity, power and authority to enter into and be bound by this
Agreement.
B. Purchase for Own Account for Investment. Such Investor is
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purchasing the Shares for investment purposes only and not with a view to, or
for sale in connection with, a distribution of the Shares within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). Such Investor has
no present intention of selling or otherwise disposing of all or any portion of
the Shares in violation of the Securities Act.
C. Access to Information. Such Investor has had an opportunity to
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ask questions of the Company's representatives concerning the Company, its
present and prospective business, assets, liabilities and financial condition
that such Investor reasonably considers important in making the decision to
purchase the Shares.
D. Understanding of Risks. Such Investor is fully aware of: (i) the
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highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares, and the
restrictions on the transferability of the Shares (e.g., that such Investor may
not be able to sell or dispose of the Shares, or use them as collateral for
loans); and (iv) the tax consequences of investment in the Shares.
E. Investor's Qualifications. Such Investor is an "accredited"
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investor as defined under Rule 501 of Regulation D promulgated under the
Securities Act. Such Investor is aware of the general business and financial
circumstances of the Company and, by reason of such Investor's business or
financial experience, such Investor is capable of evaluating the merits and
risks of this investment and is financially capable of bearing a total loss of
this investment.
F. Compliance with Securities Laws. Such Investor understands and
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acknowledges that, in reliance upon the representations and warranties made by
such Investor herein, the offering and sale of the Shares are not being
registered with the U.S. Securities and Exchange Commission ("SEC" or
"Commission") under the Securities Act, but instead are being issued under an
exemption from the registration requirements of the Securities Act.
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G. Restrictions on Transfer. Such Investor understands that such
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Investor may not transfer any of the Shares without registration under the
Securities Act unless, in the opinion of counsel to the Company, an exemption
from such registration requirement is available. Such Investor has also been
advised that an exemption from registration may not be available or may not
permit such Investor to transfer all or any of the Shares in the amounts or at
the times proposed by such Investor.
H. Rule 144. In addition, such Investor has been advised that (i)
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SEC Rule 144 ("Rule 144") promulgated under the Securities Act, which permits
certain limited sales of unregistered securities, is not presently available due
to the holding periods required thereunder and (ii) in any event, Rule 144
requires that the Shares be held for a minimum of one year, and in certain cases
two years, after they have been purchased and paid for (within the meaning of
Rule 144) before they may be resold under Rule 144. Such Investor understands
that Rule 144 may indefinitely restrict transfer of the Shares if such Investor
is an "affiliate" of the Company and "current public information" about the
Company (as defined in Rule 144) is not publicly available.
I. Legends and Stop-Transfer Orders. Such Investor understands that
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certificates or other instruments representing any of the Shares acquired by
such Investor may bear legends substantially similar to the following, in
addition to any other legends required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
UNLESS THE SECURITIES ARE SOLD PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
In order to ensure and enforce compliance with the restrictions imposed by
applicable law and those referred to in the foregoing legend, or elsewhere
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent with respect to any certificate or other instrument representing
the Shares. Any legend endorsed on a certificate pursuant to this Subsection
(I) and the related stop transfer instructions with respect to such securities
shall be removed, and the Company shall issue a certificate without such legend
to the holder thereof, if the offering and sale of such securities are
registered under the Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available, if such legend may be properly
removed under the terms of Rule 144 promulgated under the Securities Act or if
such holder provides the Company with an opinion of counsel for such holder,
reasonably satisfactory
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to legal counsel for the Company, to the effect that a sale, transfer or
assignment of such securities may be made without registration.
J. Restriction on Sales, Short Sales and Hedging Transactions. Such
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Investor will not, prior to the effectiveness of the registration statement to
be filed pursuant to Section 5 of this Agreement, sell, offer to sell, solicit
offers to buy, dispose of, loan, pledge, or grant any right with respect to
(collectively, a "Disposition") the Common Stock of the Company, nor will such
Investor engage in any hedging or other transaction which is designed to or
could reasonably be expected to lead to or result in a Disposition of Common
Stock of the Company by the Investor or any other person or entity. Such
prohibited hedging or other transactions would include, without limitation,
effecting any short sale or having in effect any short position (whether or not
such sale or position is "against the box" and regardless of when such position
was entered into) or any purchase, sale or grant of any right (including without
limitation any put or call option) with respect to the Common Stock of the
Company or with respect to any security (other than a broad-based market basket
or index) that includes, relates to or derives any significant part of its value
from the Common Stock of the Company.
3. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Investors that as of the date hereof, except as
set forth in this Section, or on the Schedule of Exceptions attached hereto as
Exhibit A (the "Schedule of Exceptions"), with any disclosure thereon being
deemed disclosure with respect to all relevant subsections hereof, which
exceptions will be deemed to be representations and warranties as if made
hereunder:
A. Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
California. The Company has all necessary corporate power and authority to own
its assets and to carry on its business as now being conducted and presently
proposed to be conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which its
ownership or leasing of assets, or the conduct of its business, makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company and its
subsidiaries considered as a whole.
B. Requisite Power and Authorization. The Company has all necessary
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corporate power and authority to execute and deliver this Agreement, to issue
the Shares and to carry out the provisions of this Agreement. All corporate
action on the part of the Company required for the lawful execution and delivery
of this Agreement and the issuance and delivery of the Shares has been taken.
Upon execution and delivery, this Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforcement may be limited by insolvency and similar laws affecting the
enforcement of creditors' rights generally and equitable remedies, and except as
the indemnity provisions of Section 5 of this Agreement (relating to
registration rights) may be limited by law. The Shares, when issued in
compliance with the provisions of this Agreement, will be duly authorized and
validly issued, fully paid, non-assessable and issued in compliance with federal
securities laws and the securities laws of other applicable jurisdictions. No
shareholder of the Company or other person has any preemptive or similar right
with respect to the Shares.
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C. Disclosure Documents. The Company has furnished to each Investor
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the Company's Confidential Private Placement Memorandum dated May 23, 2000 (the
"Offering Memorandum") and, upon request, all documents that the Company was
required to file, which it represents and warrants it did timely file, with the
SEC under Sections 13 or 14(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since November 30, 1998 (such filed documents
being referred to collectively as the "SEC Documents"). As of their respective
filing dates, or such later date on which such reports were amended, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act. The Offering Memorandum and the SEC Documents as of their
respective dates, or such later date on which such reports were amended, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
financial statements included in the Offering Memorandum and the SEC Documents
(the "Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. Except as may be indicated in the notes to the
Financial Statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC, the Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
D. Capital Stock. The authorized capital stock of the Company
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consists of 50,000,000 shares of Common Stock and 18,000,000 shares of preferred
stock without par value. As of June 30, 2000, there were 42,210,393 shares of
Common Stock issued and outstanding and no shares of preferred stock issued and
outstanding. All outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable. As of June 30, 2000,
(a) 4,859,503 shares of Common Stock were reserved for future issuance pursuant
to options granted or which may be granted under the Company's stock option
plans or other stock options, and (b) 2,522,170 shares of Common Stock were
reserved for future issuance pursuant to outstanding warrants. Except as set
forth above, the Company has no outstanding securities convertible into or
exchangeable for Common Stock and there are no contracts, rights, options or
warrants to purchase or otherwise acquire Common Stock or securities convertible
into or exchangeable for Common Stock. Since June 30, 2000, the Company has not
issued any shares of capital stock or any options, warrants or other rights with
respect thereto except for shares issued upon exercise of options, warrants and
rights, as set forth above. The Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options or other rights to acquire
its capital stock. The Company is not party to any voting or similar agreement
or proxies relating to the voting of shares of its capital stock and is not
aware of any such agreements or proxies to which it is not a party, except as
may be contemplated by this Agreement.
E. Compliance with Other Agreements. Neither the execution and
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delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by, this Agreement, nor the issuance of the Shares has
constituted or resulted in, or will constitute or result in, a material default
under or breach or violation of any term or provision of (i) the Company's
Bylaws, Articles of Incorporation or material contracts with third parties or
(ii) state
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or federal laws, rules or regulations, writs, orders or judgments or decrees
which are applicable to the Company or its properties.
F. Intellectual Property. The Company and each of its subsidiaries
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owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits and know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) which are material to the conduct of its business as now being
conducted (collectively, "Intangibles"). Neither the Company nor any of its
subsidiaries has entered into any consent, indemnification, forbearance to xxx
or settlement agreements with respect to the validity of the Company's or such
subsidiary's ownership or right to use its Intangibles. No Intangible is the
subject of adversarial proceedings. To its knowledge, the Company has complied
with its contractual obligations relating to the protection of the Intangibles
used pursuant to licenses. To the Company's knowledge, no person is infringing
on or violating any Intangible. To the Company's knowledge, there is no
infringement of or conflict with the rights of others with respect to any
Intangibles owned or used by the Company.
G. Consents. All consents necessary for the Company to perform its
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obligations hereunder have been obtained, except for the effectiveness with the
SEC of the registration statement contemplated by Section 5. Based in part upon
the representations of the Investors in Section 2, the issuance of the Shares,
when sold pursuant to the terms of this Agreement, will be exempt from the
registration requirement of the Securities Act.
H. No Material Adverse Change. Since February 29, 2000, except as
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set forth in the Offering Memorandum or in the SEC Documents, there has not
been:
(i) any changes in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse to
the Company and its subsidiaries taken as a whole;
(ii) any material change, except in the ordinary course of
business, in the contingent obligations of the Company whether by way of
guarantee, endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of the
Company; or (iv) any declaration or payment of any dividend or other
distribution of the assets of the Company.
I. Insurance. The Company and its subsidiaries maintain such
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insurance relating to their business, operations, assets as is appropriate to
their business and operations, in such amounts and against such risks as are
customarily carried and insured against by owners of comparable businesses,
assets and operations, and such insurance coverages will be continued in full
force and effect up to and following the Closing Date other than those insurance
coverages in respect of which the failure to continue in full force and effect
could not reasonably be expected to have a material adverse effect on the
Company and its subsidiaries considered as a whole.
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J. Litigation. Except as set forth in the SEC Documents, there is no
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action, suit, proceeding or investigation pending or, to the Company's
knowledge, currently threatened against the Company.
K. No General Solicitation. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
any of the Shares.
L. No Integrated Offering. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of any of
the Shares under the Securities Act or cause the offering of any of the Shares
to be integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable shareholder approval provisions, including,
without limitation, under the rules and regulations of the National Association
of Securities Dealers Automated Quotations.
M. S-3 Registration. The Company is currently eligible to use Form
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S-3 for registration of the sale by the Investors of the Registrable Securities
(as such term is defined in Section 5 of this Agreement) and the Company has
filed and shall file all reports required to be filed by the Company with the
SEC in a timely manner so as to obtain and maintain such eligibility for the use
of Form S-3.
N. Use of Proceeds. The Company will use the proceeds from the sale
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of the Shares for substantially the same purposes in substantially the same
amounts as indicated in the Offering Memorandum.
O. Employees.
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(i) The Company is not aware that any officer or key employee,
or that any group of key employees, intends to terminate his or her employment
with the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing.
(ii) Neither the Company nor, to its knowledge, any employee of
the Company is or will be in violation of any term of any employment contract,
patent disclosure agreement or other contract or agreement because of the nature
of the business conducted by the Company or the use by any employee of his or
her best efforts with respect to such business.
(iii) None of the Company's employees belongs to any union or
collective bargaining unit.
P. Compliance with Laws. The Company is in compliance with all
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applicable statutes, laws and regulations relating to the operation of its
business and the maintenance and operation of its properties and assets,
including without limitation, those relating to the environment and occupational
health and safety, except where the failure to so comply would not have a
material adverse effect on the Company and its subsidiaries considered
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as a whole. No material expenditures are, or to the Company's knowledge will be,
required in order to comply with any existing statutes, laws and regulations.
Q. Title to Property and Assets; Leases. Except (a) as reflected in
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the SEC Documents, (b) for liens for current taxes not yet delinquent, (c) for
liens imposed by law and incurred in the ordinary course of business for
obligations not past due to carriers, warehousemen, laborers, materialmen and
the like, (d) for liens in respect of pledges or deposits under workers'
compensation laws or similar legislation, (e) for minor defects in title, none
of which, individually or in the aggregate, materially interferes with the use
of such property or (f) with respect to property or assets which are leased, the
Company has good and marketable title to its property and assets, free and clear
of all liens, mortgages, security interests, pledges or charges of any kind.
With respect to the property and assets it leases, the Company holds a valid
leasehold interest free of any liens, mortgages, security interests, pledges or
charges of any kind (subject to clauses (a) through (e) above).
R. Tax Matters. The Company has timely filed all tax returns and
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reports as required by law. The Company has paid all taxes and other assessments
due pursuant to such returns or pursuant to any assessment received by it, other
than those contested by it in good faith, except where the failure to pay such
taxes would not have a material adverse effect on the Company and its
subsidiaries considered as a whole. The provision for taxes of the Company as
shown in the Financial Statements, to the Company's knowledge, is adequate for
taxes due or accrued as of the date thereof.
S. Nasdaq Listing. The Common Stock is listed on the Nasdaq National
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Market. There are no proceedings to revoke such listing. The sale of the Shares
in accordance with the terms of this Agreement will not violate the Nasdaq
rules.
4. Representations and Warranties of the Selling Shareholders. Each
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Selling Shareholder represents and warrants severally to each of the Investors
that:
A. Power and Authority. Such Selling Shareholder has full power
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(corporate and other) to enter into this Agreement and to sell, assign, transfer
and deliver to the Investors the Shares to be sold by such Selling Shareholder
hereunder in accordance with the terms of this Agreement; the execution and
delivery of this Agreement have been duly authorized by all necessary corporate
action of such Selling Shareholder; and this Agreement has been duly executed
and delivered by such Selling Shareholder.
B. Attorney in Fact. Such Selling Shareholder has duly executed and
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delivered a power of attorney and custody agreement (with respect to such
Selling Shareholder, the "Power of Attorney" and the "Custody Agreement,"
respectively), each in the form heretofore delivered to the Placement Agents,
appointing Xxxxxxxxxx X. Xxxxxxx such Selling Shareholder's attorney in fact
(the "Attorney in Fact") with authority to execute, deliver and perform this
Agreement on behalf of such Selling Shareholder and appointing Xxxxxxx X. Xxxxxx
as custodian thereunder (the "Custodian"). Certificates in negotiable form,
endorsed in blank or accompanied by blank stock powers duly executed, with
signatures appropriately guaranteed, representing the Shares to be sold by such
Selling Shareholder hereunder have been deposited with the Custodian pursuant to
the Custody Agreement for the purpose of delivery pursuant to
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this Agreement. Such Selling Shareholder has full power (corporate and other) to
enter into the Custody Agreement and the Power of Attorney and to perform its
obligations under the Custody Agreement. The Custody Agreement and the Power of
Attorney have been duly authorized by all necessary corporate action of such
Selling Shareholder and, assuming due authorization, execution and delivery by
the Custodian, are the legal, valid, binding and enforceable instruments of such
Selling Shareholder. Such Selling Shareholder agrees that each of the Shares
represented by the certificates on deposit with the Custodian is subject to the
interests of the Investors hereunder, that the arrangements made for such
custody, the appointment of the Attorney in Fact and the right, power and
authority of the Attorney in Fact to execute and deliver this Agreement, to
agree on the price at which the Shares (including such Selling Shareholder's
Shares) are to be sold to the Investors, and to carry out the terms of this
Agreement, are to that extent irrevocable and that the obligations of such
Selling Shareholder hereunder shall not be terminated, except as provided in
this Agreement or the Custody Agreement, by any act of such Selling Shareholder,
by operation of law or otherwise, whether in the case of any individual Selling
Shareholder by the death or incapacity of such Selling Shareholder, in the case
of a trust or estate by the death of the trustee or trustees or the executor or
executors or the termination of such trust or estate, or in the case of a
corporate or partnership Selling Shareholder by its liquidation or dissolution
or by the occurrence of any other event. If any individual Selling Shareholder,
trustee or executor should die or become incapacitated or any such trust should
be terminated, or if any corporate or partnership Selling Shareholder shall
liquidate or dissolve, or if any other event should occur, before the delivery
of such Shares hereunder, the certificates for such Shares deposited with the
Custodian shall be delivered by the Custodian in accordance with the respective
terms and conditions of this Agreement as if such death, incapacity,
termination, liquidation or dissolution or other event had not occurred,
regardless of whether or not the Custodian or the Attorney in Fact shall have
received notice thereof.
C. Good Title. Such Selling Shareholder is the lawful owner of the
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Shares to be sold by such Selling Shareholder hereunder and upon sale and
delivery of, and payment for, such Shares, as provided herein, such Selling
Shareholder will convey good and marketable title to such Shares, free and clear
of any security interests, liens, encumbrances, equities, claims or other
defects. None of the Shares were acquired by the Selling Shareholders from
CardioDynamics Holdings, LLC.
D. No Manipulation. Such Selling Shareholder has not, directly or
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indirectly, (i) taken any action designed to cause or result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (ii) since April 30, 2000 (a)
sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Shares or (b) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company (except for the sale of Shares by the Selling Shareholders under this
Agreement).
E. Information Supplied. To the extent that any statements or
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omissions are made in the Offering Memorandum or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by such Selling Shareholder specifically for use therein, such
Offering Memorandum did, and any amendments or supplements thereto, as the case
may be, will not contain any untrue statement of a material
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fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
F. No Adverse Information. The sale by such Selling Shareholder of
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Shares pursuant hereto is not prompted by any adverse information concerning the
Company that is not set forth in the Offering Memorandum or in the SEC
Documents.
G. Consents. The sale of the Shares to the Investors by such Selling
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Shareholder pursuant to this Agreement, the compliance by such Selling
Shareholder with the other provisions of this Agreement, the Custody Agreement
and the consummation of the other transactions herein contemplated do not (i)
require the consent, approval, authorization, registration or qualification of
or with any governmental authority, except such as have been obtained or as may
be required under state securities or blue sky laws or (ii) assuming the
truthfulness of the representations and warranties made by the Investors in this
Agreement, conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which such Selling
Shareholder or any of its subsidiaries is a party or by which such Selling
Shareholder or any of its subsidiaries or any of their respective properties are
bound, or the charter documents or bylaws, if any, of such Selling Shareholder
or any of its subsidiaries or any statute or any judgment, decree, order, rule
or regulation of any court or other governmental authority or any arbitrator
applicable to such Selling Shareholder or any of its subsidiaries.
5. Registration Rights.
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A. Definitions. For purposes of this Section 5:
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(i) "Register", "registered", and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
(ii) "Registrable Securities" means all shares of Common Stock
of the Company issued or issuable or sold under this Agreement, excluding in all
cases, however, all Registrable Securities sold pursuant to Rule 144.
(iii) "Holder" means any person owning of record Registrable
Securities that have not been sold to the public, or any assignee of record of
such Registrable Securities to whom rights under this Section 5 have been
assigned in accordance with this Agreement.
B. Shelf Registration.
------------------
(i) The Company will file as soon as practicable, and in no
event later than 30 days after the final Closing, a registration statement with
the SEC under the Securities Act for the sale and distribution of all of the
Holders' Registrable Securities and thereafter shall use its best efforts to
secure the effectiveness of such registration statement as soon as practicable
thereafter.
-10-
(ii) The Company will pay all expenses incurred in connection
with any registration, qualification and compliance requested hereunder
(excluding Holders' or brokers' discounts and commissions), including without
limitation all filing, registration and qualification, printers' and accounting
fees and the fees and disbursements of counsel for the Company. The Company will
pay reasonable fees and disbursements expenses incurred in connection with any
registration, qualification and compliance requested hereunder of up to
$5,000.00 for one (1) special counsel for the Holders.
(iii) The Company will use its best efforts to cause the
registration statement to remain effective until the earliest of (a) the date
ending two years after the final Closing, (b) the date on which all the
Registrable Securities have been resold in accordance with the Securities Act or
(c) the date on which each Holder of Registrable Securities is able to sell all
of such Holder's Registrable Securities in a single three (3) month period
without registration under the Securities Act pursuant to Rule 144.
C. Company Registration.
--------------------
(i) If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders (other than pursuant to Section 5(B)), other than a registration
relating solely to employee benefit plans, or a registration relating solely to
a Rule 145 transaction, or a registration on any registration form that does not
permit secondary sales, the Company will:
a. promptly give to each Holder written notice thereof; and
b. use its best efforts to include in such registration
(and any related qualification under blue sky laws or other compliance), except
as set forth in Section 5(C)(ii) below, and in any underwriting involved
therein, all of such Holder's Registrable Securities specified in a written
request or requests received by the Company within twenty (20) days after the
written notice from the Company described in clause (a) above is given. Such
written request may specify all or a part of a Holder's Registrable Securities.
(ii) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
5(C)(i)(a). In such event, the right of any Holder to registration pursuant to
this Section 5(C) shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders of securities of the Company with registration rights to
participate therein distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 5(C), if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable Securities to
-11-
be included in, the registration and underwriting. The Company may limit, to the
extent so advised by the underwriters, the amount of securities to be included
in the registration by the Company's stockholders (including the Holders);
provided, however, that the aggregate value of Registrable Securities to be
-------- -------
included in such registration by Holders may not be so reduced to less than
fifty percent (50%) of the total amount of such securities included in such
registration without the consent of at least two-thirds (2/3) of the Holders.
The Company shall so advise all Holders and other stockholders requesting
registration pursuant to this Section 5(C) and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold for its own
account (subject to the foregoing provisions of this paragraph) and thereafter
amongst the Holders on a pro rata basis. If any Holder does not agree to the
terms of any such underwriting, such Holder shall be excluded therefrom by
written notice from the Company or the underwriter. Any Registrable Securities
or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
If shares are so withdrawn from the registration and if the number of
shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, the Company shall then
offer to all Holders who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the Holders requesting additional inclusion on a pro rata
basis.
(iii) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 5(C) prior to the
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration.
(iv) The Company will pay all expenses incurred in connection
with any registration, qualification and compliance requested hereunder
(excluding Holders' or brokers' discounts and commissions), including without
limitation all filing, registration and qualification, printers' and accounting
fees and the fees and disbursements of counsel for the Company. The Company will
pay reasonable fees and disbursements expenses incurred in connection with any
registration, qualification and compliance requested hereunder of up to
$5,000.00 for one (1) special counsel for the Holders.
D. Obligations of the Company. In order to effect the registration of
--------------------------
any Registrable Securities under Section 5(B) of this Agreement, the Company
will, as expeditiously as reasonably possible (and, in no event later than 30
days after the final Closing with respect to the registration statement
described in subclause (i) of this Section 5(D)):
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and deliver such registration
statement, at the time of such filing, to each Holder.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration
-12-
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Holders such number of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are included in
such registration.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as will be reasonably requested by the
Holders, provided that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(v) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and upon such notice the Company shall use its best efforts to
promptly correct such misstatement or omission and deliver to each Holder copies
of such corrected prospectus. The Company shall have the right, upon such
notice, to suspend the delivery of prospectuses included in such registration
statement from the date of notice until the date of such correction, subject to
the limitations set forth in Section 5(H). The period during which the Company
is required to keep any registration statement filed pursuant to Section 5(B)
effective shall be extended for the amount of time required to amend such
registration statement and deliver such prospectus relating thereto.
(vi) The Company shall use its best efforts either to (i) cause
all the Registrable Securities covered by a registration statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by the registration statement on the Nasdaq National Market System or the Nasdaq
SmallCap Market for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. as such with
respect to such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section
5(D)(vi).
(vii) The Company shall promptly prepare and file with the SEC a
Current Report on Form 8-K in respect of the offer and sale of the Shares
pursuant to the terms of this Agreement.
E. Furnish Information. It will be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Section 5(B) hereof
that the selling Holders will furnish to the Company such information regarding
themselves, the Registrable Securities held
-13-
by them, and the intended method of disposition of such securities as will be
required to effect the registration of their Registrable Securities.
F. Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Section 5(B) or 5(C) hereof:
(i) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, stockholders, officers and
directors of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages, or liabilities to which they may become jointly or severally
liable under the Securities Act, the Exchange Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"):
a. any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
b. the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
c. any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder,
partner, stockholder, officer or director, underwriter or controlling person for
any legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 5(F)(i) will not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent will not be unreasonably withheld),
nor will the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, stockholder, officer, director, underwriter or controlling
person of such Holder.
(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or stockholders or any
person who controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director,
-14-
officer, stockholder or controlling person of such other Holder may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation that arises solely
as a result of written information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, partner, officer,
director, stockholder or controlling person of such other Holder in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 5(E)(ii) will not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent will not be unreasonably withheld; and
provided further, that the total amounts payable in indemnity by a Holder under
this Section 5(F)(ii) in respect of any Violation will not exceed the aggregate
proceeds (net of discounts) received by such Holder upon the sale of the Shares.
(iii) Promptly after receipt by an indemnified party under this
Section 5(E) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 5(E), deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party will
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if the indemnifying party is materially prejudiced thereby,
will relieve such indemnifying party of liability, but only to the extent that
such indemnifying party is prejudiced with respect to a specific claim.
(iv) The foregoing indemnity agreement with respect to any
prospectus shall not inure to the benefit of any Holder or underwriter, or any
person controlling such Holder or underwriter, from whom the person asserting
any losses, claims, damages or liabilities purchased Registrable Securities, if
a copy of the prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) provided by the Company
was not sent or given by or on behalf of such Holder or underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Registrable Securities to such person, and if
the prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.
(v) If the indemnification provided for in Sections 5(F)(i) or
5(F)(ii) hereof shall be unavailable to hold harmless an indemnified party in
respect of any liability under the Securities Act, then, and in each such case,
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the
-15-
indemnified party on the other in connection with the statement or omissions
that resulted in such loss, liability, claim, damage or expense as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided that in no event shall any contribution under
this subsection (v) by any Holder exceed the gross proceeds from the offering
received by such indemnifying party. No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under this
Section 5(F) will survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
G. Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, while
a public market exists for the Common Stock of the Company, the Company will:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
while the Company is reporting under the Exchange Act;
(ii) Use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(iii) So long as a Holder owns any Registrable Securities,
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act (at any time it is subject to the reporting
requirements of the Exchange Act), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing a Holder to sell any such securities without registration (at
any time the Company is subject to the reporting requirements of the Exchange
Act).
H. Notice of Intent to Sell. The Company may notify the Holder that
------------------------
the Company will refuse to permit the Holder to resell any Registrable
Securities pursuant to the registration statement for an initial period not to
exceed thirty (30) days; provided, however, that in order to exercise this
right, the Company must deliver a certificate in writing to the Holder to the
effect that a delay in such sale is necessary because a sale pursuant to such
registration statement in its then-current form would not be in the best
interests of the Company and its shareholders due to disclosure obligations of
the Company. In such event, the Company shall use its best efforts to amend the
registration statement, if necessary, and to take all other actions
-16-
reasonably necessary to allow such sale, and shall notify the Holder promptly
after it has determined that such sale has become permissible. Notwithstanding
the foregoing, the Company shall not be entitled to exercise its right to refuse
to permit a sale by any particular Holder whether pursuant to this Section 5(H)
or Section 5(D)(v) more than three (3) times in any calendar year or for more
than an aggregate of ninety (90) days in any calendar year (in addition, no
single suspension shall be for more than two (2) consecutive thirty (30) day
periods in any calendar year); provided, however, that no particular Holder will
be refused permission to sell under this Section 5(H) or Section 5(D)(v) at the
same time that another Holder is permitted to sell under the registration
statement. Each Holder hereby covenants and agrees that it will not sell any
Registrable Securities pursuant to the registration statement during the periods
the registration statement is withdrawn as set forth in this Section 5(H). The
period during which the Company is required to keep any registration statement
filed pursuant to Section 5(B) effective shall be extended for the amount of
time required to amend such registration statement and deliver such prospectus
relating thereto.
I. Holder Information. Each Holder covenants that it will promptly
------------------
notify the Company of any changes in the information set forth in the
registration statement regarding such Holder or such Holder's "Plan of
Distribution."
6. Conditions to Obligations of the Investors. The obligation of each
------------------------------------------
Investor to purchase the Shares at the Closing is subject to the fulfillment
on or prior to such Closing of the following conditions, any of which may be
waived by such Investor:
A. Representations and Warranties Correct; Performance of Obligations.
------------------------------------------------------------------
The representations and warranties made by the Company in Section 3 hereof and
the Selling Shareholders in Section 4 hereof shall be true and correct when
made, and shall be true and correct at the time of the Closing with the same
force and effect as if they had been made on and as of said date (except for the
representations and warranties in Section 3(D) with respect to capitalization
made as of June 30, 2000, which shall be true and correct as of such date); and
each of the Company and the Selling Shareholders shall have performed all
obligations and conditions herein required to be performed or observed by it
under this Agreement on or prior to the Closing.
B. Consents and Waivers. The Company and the Selling Shareholders
--------------------
shall have obtained any and all consents (including all governmental or
regulatory consents, approvals or authorizations required in connection with the
valid execution and delivery of this Agreement), permits and waivers necessary
or appropriate for consummation of the transactions contemplated by this
Agreement.
C. Compliance Certificates. The Company and the Selling Shareholders
-----------------------
shall have delivered to the Investors a certificate (in the case of the Company,
executed by the Chief Financial Officer of the Company) dated the day of the
Closing, certifying to the fulfillment of the obligations and conditions
specified in subsection (A) of this Section 6.
D. Opinions of Counsel. Investors shall have received (i) from
-------------------
Pillsbury Madison & Sutro LLP, counsel to the Company, an opinion addressed to
the Investors, dated the day of such Closing and in substantially the form
attached hereto as Exhibit B and (ii) from a
-17-
firm reasonably acceptable to the Placement Agents and Sofinov Societe
Financiere D'Innovation ("Sofinov"), as counsel to the Selling Shareholders, an
opinion addressed to the Investors, dated the day of such Closing and in form
and substance reasonably acceptable to the Placement Agents and Sofinov.
E. Minimum Purchase. The Company shall have received executed
----------------
subscription Agreements to purchase Shares with an aggregate purchase price of
not less than the Minimum Offering Amount and full payment of the purchase price
for all of the Shares to be sold at the Closing.
F. Executed Documents. The Company and the Selling Shareholders
------------------
shall have delivered (i) to the Investors executed counterparts of this
Subscription Agreement to sell Shares with an aggregate purchase price of not
less than the Minimum Offering Amount, (ii) to the Placement Agents executed
lock-up agreements in the forms attached as Exhibits C and D, (iii) to the
Custodian executed Powers of Attorney and Custody Agreements and (iv) to Sofinov
executed counterparts of the letter agreement in the form attached hereto as
Exhibit E.
G. Delivery of Stock Certificates. The Company and the Selling
------------------------------
Shareholders shall have delivered to each Investor a stock certificate
representing the Shares to be purchased by such Investor at such Closing.
H. Secretary's Certificate. The Company shall have delivered to the
-----------------------
Investors (i) copies of the (a) Company's Articles of Incorporation and Bylaws
(b) resolutions, duly adopted by the Board of Directors of the Company,
authorizing the execution, delivery and performance of this Agreement and the
documents and agreements contemplated hereby and (c) all third party and
governmental consents, approvals and filings required in connection with the
consummation of all transactions contemplated hereby and (ii) a certificate,
executed by the Secretary of the Company, dated the day of the Closing,
certifying that such Articles of Incorporation, Bylaws and resolutions are true
and correct as of the Closing.
I. Board Representation. As of the Initial Closing, Xxxxxxx Xxxxxxxx
--------------------
shall have been appointed as a member of the Board of Directors of the
Company.
J. Litigation. Except as set forth in the SEC Documents, there shall
----------
be no action, suit, proceeding or investigation pending or threatened
against the Company.
K. S-3 Registration. The Company shall be eligible to use Form S-3
----------------
for registration of the sale by the Investors of the Registrable Securities and
the Company shall have filed all reports required to be filed by the Company
with the SEC in a timely manner so as to obtain such eligibility for the use of
Form S-3.
7. Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to sell and issue and the Selling Shareholders to sell the Shares to
each Investor at each Closing is subject to the fulfillment on or prior to the
Closing of the following conditions, any of which may be waived by the Company:
A. Representations and Warranties. The representations and
------------------------------
warranties made by such Investor in Section 2 hereof shall be true and correct
when made, and shall be true and
-18-
correct at the time of the Closing with the same force and effect as if they had
been made on and as of said date.
B. Consents and Waivers. The condition set forth in subsection (B)
--------------------
of Section 6 hereof shall have been fulfilled.
C. Minimum Purchase. The Company shall have received executed
----------------
subscription Agreements to purchase Shares with an aggregate purchase price of
not less than the Minimum Offering Amount and full payment of the purchase price
for all of the Shares to be sold at the Closing.
8. Miscellaneous.
-------------
A. Governing Law. This Agreement and the documents and agreements
-------------
contemplated hereby will be governed by and construed in accordance with the
internal laws of the State of California applicable to contracts made among
residents of, and wholly to be performed within, the State of California,
without regard to principles of conflict of laws or choice of laws.
B. Further Instruments. From time to time, each party hereto will
-------------------
execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
C. Successors; No Other Beneficiaries. This Agreement will be
----------------------------------
binding upon and will inure to the benefit of the executors, administrators,
legal representatives, heirs, successors, and assigns of the parties hereto;
provided, however, that (i) rights of Investors hereunder may be transferred
only in connection with (and to the transferee of) Common Stock of the Company
purchased by a Investor hereunder in accordance with the provisions of this
Agreement, (ii) any transferee of any shares of stock of the Company affected by
this Agreement to whom rights are so transferred (a "Permitted Transferee") will
be required, as a condition precedent to acquiring such shares, to agree in
writing to be bound by all the terms and conditions of this Agreement applicable
to such Permitted Transferee's transferor and (iii) upon and after such transfer
the Permitted Transferee will be deemed to be an Investor for purposes of this
Agreement. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
D. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties' signatory hereto upon such counterpart
signature by all initial parties hereto.
E. Entire Agreement. This Agreement, including and incorporating the
----------------
Schedule of Exceptions and all Exhibits attached hereto and referred to herein,
constitutes and contains the entire agreement and understanding of the parties
regarding the subject matter of this Agreement and supersedes in its entirety
any and all prior negotiations, correspondence, understandings and agreements
among the parties respecting the subject matter hereof.
-19-
F. Notices. Any notice required to be given or delivered to the
-------
Company under the terms of this Agreement shall be addressed to the Secretary of
the Company at its principal corporate offices. Any notice required to be given
or delivered to a Selling Shareholder shall be addressed to the Selling
Shareholder at the address indicated below. Any notice required to be given or
delivered to an Investor shall be addressed to the Investor at the address
indicated below or to such other address as such party may designate in writing
from time to time to the Company. Unless otherwise provided, notice required or
permitted to be given to a party pursuant to the provisions of this Agreement
will be in writing and will be effective and deemed given under this Agreement
on the earliest of (i) the date of personal delivery, or (ii) the date of
delivery by facsimile, or (iii) the business day after deposit with a nationally
recognized courier or overnight service, including Federal Express or Express
Mail, for United States deliveries or three (3) business days after such deposit
for deliveries outside of the United States, or (iv) three (3) business days
after deposit in the United States mail by registered or certified mail for
United States deliveries. All notices not delivered personally or by facsimile
will be sent with postage and other charges prepaid and properly addressed to
the party to be notified at the address set forth on the signature page, or at
such other address as such party may designate by ten (10) days' advance written
notice to the other parties hereto. All notices for delivery outside the United
States will be sent by facsimile, or by nationally recognized courier or
overnight service, including Express Mail. Any notice given hereunder to more
than one person will be deemed to have been given, for purposes of counting time
periods hereunder, on the date given to the last party required to be given such
notice.
G. Broker's Fee. Each Investor acknowledges that the Company and
------------
Selling Shareholders intend to pay a fee to the Placement Agents in respect of
the sale of the Shares to the Investors. Each of the parties hereto hereby
represents that, on the basis of any actions and agreements by it, and except
for any finders' fees to be paid out of the Placement Agents' fee, there are no
other brokers or finders entitled to compensation in connection with the sale of
the Shares to the Investors.
H. Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of the Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company, each Selling Shareholder, by Investors
holding at least fifty percent (50%) of the Registrable Securities and Sofinov.
Any amendment or waiver effected in accordance with this Section 8(H) will be
binding upon the Company, the Selling Shareholders, each Investor, and their
permitted transferees and assignees.
I. Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, such provisions will be excluded from
this Agreement to the extent unenforceable and the balance of such provisions,
and of this Agreement, will be interpreted as if such provision or part and
hereof were so excluded and will be enforceable in accordance with its terms.
J. Aggregation of Stock. All shares of Common Stock held or acquired
--------------------
by affiliated entities or persons will be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
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K. Expenses. Each party shall pay all costs and expenses that it
--------
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement and the exhibits and documents referenced herein and the
transactions contemplated hereby; provided, however, that the Company shall also
pay the reasonable costs and expenses of Xxxxxxxx Xxxxxxxxxx, special counsel
for the Investors, upon receipt of appropriate documentation but subject, in
such event, to a limit of $35,000.00 for such costs and expenses of said special
counsel in the aggregate.
L. Survival. The representations and warranties of the Company, the
--------
Selling Shareholders and the Investors contained in this Agreement shall survive
the execution and delivery of this Agreement and the Closing.
[Remainder of page left blank intentionally]
-21-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
INVESTOR:
___________________________________________ Shares Subscribed: _________
(Insert Name of Individual or Entity)
By: ______________________________________
(Signature)
Name: _____________________________________
Title: ____________________________________
Address: __________________________________
Tax ID:____________________________________
COMPANY: Shares Sold:___________________
CardioDynamics International Corporation
By: _______________________________________
(Signature)
Name: _____________________________________
Title: ____________________________________
Address: 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Chief Financial Officer
SELLING SHAREHOLDER: Shares Sold: _______________
-------------------------------------------
(Insert Name of Individual or Entity)
Address: ________________________
________________________
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