EXHIBIT 4.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY REGISTRATION UNDER SUCH SECURITIES ACTS OR
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
WARRANT NO. C-2
STOCK PURCHASE WARRANT
THIS WARRANT is issued this 6th day of June, 1997, by Cardiac Control
Systems, Inc., a Delaware corporation (the "Company"), to SIRROM CAPITAL
CORPORATION, a Tennessee corporation ("Sirrom")(Sirrom and any subsequent
assignee or transferee, are hereinafter referred to collectively as "Holder" or
"Holders").
1. Issuance of Warrant. For and in consideration of Sirrom granting its
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consent under Section 4.5 of that certain Loan and Security Agreement and the
related Secured Promissory Note, each dated as of March 31, 1995, pursuant to
which the Company borrowed $1,500,000 from Sirrom (respectively, the "Note" and
the "Loan Agreement"), to the Company incurring indebtedness of up to $3,500,000
from Coast Business Credit (R) ("Coast"), pursuant to a Loan and Security
Agreement of even date herewith (the "Coast Loan"), and in that connection
agreeing to subordinate its security interest in certain collateral under the
Loan Agreement in order that the Company might grant to Coast a first priority
security interest in certain assets of the Company as set forth in the Consent
of Sirrom dated June 6, 1997, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company hereby
grants to Holder the right to purchase Fifty Thousand (50,000) shares of the
Company's common stock, $.10 par value (the "Common Stock").
2. Term. The shares of Common Stock issuable upon exercise of this
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Warrant are hereinafter referred to as the "Shares." This Warrant shall be
exercisable at any time and from time to time from the date hereof until June 6,
2002 (the "Expiration Date").
3. Price. The exercise price per share for which all or any of the Shares
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may be purchased pursuant to the terms of this Warrant shall be Five Dollars and
no cents ($5.00), in further consideration of Sirrom granting its consent to the
incurrence of additional indebtedness pursuant to the Coast Loan and
subordinating its security interest in certain of its collateral under the Loan
Agreement, as described in Section 1 above, and such other good and valuable
consideration as has been received by the Company.
4. Exercise. This Warrant may be exercised by the Holder hereof (but only
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on the conditions hereinafter set forth) as to all or any increment or
increments of the Shares then subject to exercise under Section 1 above upon
delivery of written notice of intent to exercise in substantially the form of
the "Notice of Exercise" attached hereto as Annex A, to the Company at the
following address: 0 Xxxxxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxx 00000, or at such
other address as the Company shall designate in a written notice to the Holder
hereof, together with this Warrant and either (i) a certified or cashier's check
payable to the Company for the aggregate purchase price of the Shares so
purchased or (ii) the surrender, as noted on the Notice of Exercise, of Shares
having a value on the date of exercise equal to the aggregate purchase price
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of the Shares so purchased. Upon exercise of this Warrant as aforesaid, the
Company shall, as promptly as practicable, and in any event within fifteen (15)
business days thereafter, execute and deliver to the Holder of this Warrant a
certificate or certificates for the total number of whole Shares for which this
Warrant is being exercised in such names and denominations as are requested by
such Holder. If this Warrant shall be exercised with respect to less than all of
the Shares, the Holder shall be entitled to receive a new Warrant covering the
number of Shares in respect of which this Warrant shall not have been exercised,
which new Warrant shall in all other respects be identical to this Warrant. The
Company covenants and agrees that it will pay when due any and all state and
federal issue taxes which may be payable in respect of the issuance of this
Warrant or the issuance of any Shares upon exercise of this Warrant; provided,
however, that the Company shall have no liability for any state or federal
income taxes which may be payable by Holder upon income recognized by Holder as
a result of the exercise of this Warrant.
5. Covenants and Conditions. The above provisions are subject to the
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following:
(a) Neither this Warrant nor the Shares have been registered under the
Securities Act of 1933 (the "Securities Act") or any state securities laws
("Blue Sky Laws"). This Warrant has been acquired for investment purposes
and not with a view to distribution or resale and may not be pledged,
hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such
Warrant under the Securities Act and such applicable Blue Sky Laws, or (ii)
an opinion of counsel reasonably satisfactory to the Company that
registration is not required under the Securities Act or under any
applicable Blue Sky Laws. Transfer of the Shares issued upon the exercise
of this Warrant shall be restricted in the same manner and to the same
extent as the Warrant and, if required by applicable securities laws, the
certificates representing such Shares shall bear substantially the
following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable. The Company shall at all times reserve and keep available
for issuance upon the exercise of this Warrant such number of authorized
but unissued shares of Common Stock as will be sufficient to permit the
exercise in full of this Warrant.
6. Transfer of Warrant. Subject to the provisions of Section 5, this
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Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer and by the execution by such transferee of an investment
letter in a form reasonably satisfactory to the Company. Upon such
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presentation for transfer and receipt of such investment letter, the Company
shall promptly execute and deliver a new Warrant or Warrants in the form hereof
in the name of the assignee or assignees and in the denominations specified in
such instructions. The Company shall pay all expenses in connection with the
preparation, issuance and delivery of Warrants under this Section 6; provided,
however, that the Holder shall reimburse the Company for any out-of-pocket
expenses incurred by the Company in connection with such issuance.
7. Warrant Holder Not Shareholder; Rights Offering. This Warrant does not
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confer upon the Holder hereof, as such, any right whatsoever as a shareholder of
the Company. Notwithstanding the foregoing, in the event the Company should
offer to all of the Company's shareholders the right to purchase any securities
of the company, then all shares of Common Stock that are subject to this Warrant
shall be deemed to be outstanding and owned by the Holder as of the subscription
date and the Holder shall be entitled to participate in such rights offering as
if it were a shareholder.
8. Adjustment Upon Changes in Company Common Stock. The number of shares
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of Common Stock subject to this Warrant and the price per share of such shares
shall be adjusted by the Company proportionately to reflect changes in the
capitalization of the Company as a result of any recapitalization,
reclassification, stock dividend, stock split, combination of shares, exchange
of shares or any other similar change in the Company's capital structure which
affects holders of Common Stock generally. All adjustments described herein
shall be reflected on the Company's stock warrant ledger and the Holder shall
receive written notice thereof.
9. Change of Control. In the event of a merger, consolidation,
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recapitalization, combination or exchange of shares occurring after the date
hereof pursuant to which the Company is not the surviving entity, the Company
covenants that it will use its best efforts to obtain from the acquiring entity,
as a condition to the closing of such transaction or event, the right for the
Holder to exchange this Warrant, at its sole option and in lieu of exercise
hereof, for a warrant to purchase shares of the acquiring entity. The period of
exercise of such new warrant shall be equal to the remaining duration of the
exercise period of this Warrant and shall permit the Holder to purchase that
number of shares or other consideration of the acquiring entity which the Holder
would be entitled to receive as a result of such merger, consolidation,
recapitalization, combination or exchange of shares if this Warrant had been
exercised immediately prior to such merger, consolidation, recapitalization,
combination or exchange of shares (or the record date, if any, for such
transaction or event) for the same aggregate exercise price as provided for in
this Warrant.
10. Registration.
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(a) The Company agrees that, in the event that on the date of exercise
of this Warrant the Company has on file with the Securities and Exchange
Commission (the "Commission") on effective registration statement providing
for the sale of any of the Company's equity securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (an "Equity
Shelf"), the Company shall promptly amend the Equity Shelf so as to permit
the offer for sale by the Holder(s) of the Shares, from time to time
pursuant to Rule 415 under the Securities Act. The Company shall keep the
Equity Shelf effective for the Selling Period (as defined below) until the
earlier of: (i) the date that all of the Shares are sold; or (ii) the date
that the Holder(s) of the Shares holds, together with all other shares of
the Company's Common Stock beneficially owned by such Holder(s) (as defined
in Rule 13d-3 under the Securities Act of 1934, as amended) no more than
one-quarter of one percent (0.25%) of the total number of shares of Common
Stock then outstanding, (the "Selling Period"). The Company shall maintain
the effectiveness of the Debentures' Shelf during the Selling Period, and
shall amend and supplement such
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registration statement to the extent necessary to permit offers for resale
thereunder of all or any of the Shares without further registration under
the Securities Act. The Company shall bear the entire expense of the
registration, provided, however, that the Holder(s) of the Shares shall be
responsible for the fees of any counsel or other professionals retained by
the Holder, and any transfer taxes or underwriting discounts or commissions
applicable to the sale of the Shares.
(b) Notwithstanding the foregoing, the Company and the holders of the
Shares agree that if at any time after the date hereof the Company shall
propose to file a registration statement with respect to any of its Common
Stock on a form suitable for a secondary offering, it will give notice in
writing to such effect to the registered holders of the Warrant and the
Shares at least 30 days prior to such filing, and, at the written request
of any such registered holder, made within 10 days after the receipt of
such notice, will include therein at the Company's cost and expense (except
for the fees and expenses of counsel to such holders and underwriting
discounts, commissions, and filing fees, attributable to the Shares
included therein) such of the Shares as such holders shall request;
provided, however, that if the offering being registered by the Company is
underwritten and if no other outstanding Common Stock is offered thereby by
a person or entity other than the Company and if the representative of the
underwriters certifies in writing that the inclusion therein of the Shares
would materially and adversely affect the sale of the securities to be sold
by the Company thereunder, the Shares shall not be included in such
registration statement or such registration statement shall include only so
many shares as will not have such an effect.
The Company, at its own expense, will cause the prospectus included in
such registration statement to meet the requirements of the Securities Act
for a period of at least nine months after the effective date of such
registration statement.
(c) At the time any registration statement filed in accordance with
the provisions of Section 10(b) above becomes effective, and at the
effective date of any post effective amendment thereto, the Company will,
at its own expense, furnish to the holders of the shares included in such
registration statement pursuant to this Section 10, an opinion of the
Company's counsel to the effect that the registration statement and the
prospectus contained therein, and each amendment or supplement thereto, as
of their respective effective or issue dates, comply as to form in all
material respects with the requirements of the Securities Act and the rules
and regulations promulgated thereunder.
Such counsel shall also state that no facts have come to the attention
of such counsel which cause them to believe that such registration
statement, the prospectus contained therein, or any amendment or supplement
thereto, as of their respective effective or issue dates, contains any
untrue statement of any material fact or omits to state any material fact
necessary to make the statements therein not misleading (except that no
statement need be made with respect to any financial statements, notes
thereto or other financial data or other expertized material contained
therein, or any information provided for inclusion therein by the holder of
the Shares).
If for any reason the Company's counsel is unable to make such a
statement and unless the representative of the underwriters directs
otherwise, the Company shall so notify the holders of the Shares and shall
use its best efforts to remove expeditiously all impediments to the
rendering of such opinion.
(d) The Company shall promptly notify the participating holders of
Shares of the occurrence of any event as a result of which any current
prospectus included in a
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registration statement filed pursuant to this Section 10 includes any
misstatement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
(e) The Company's obligations under Section 10(b) with respect to each
holder of Shares are expressly conditioned upon such holder's furnishing to
the Company in writing such information concerning such holder and the
terms of such holder's proposed offering as the Company or the
representative of the underwriters shall reasonably request for inclusion
in the registration statement. If any registration statement including any
of the Shares is filed, the Company shall indemnify each holder thereof
(and each underwriter for such holder and each person, if any, who controls
such underwriter within the meaning of the Securities Act) from any loss,
claim, damage or liability arising out of or based upon any untrue
statement of a material fact contained in such registration statement or
any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except for any
such statement or omission based on information furnished in writing by
such holder of the shares expressly for use in connection with such
registration statement; and such holder shall indemnify the Company (and
each of its officers and directors who has signed such registration
statement, each director, each person, if any, who controls the Company
within the meaning of the Securities Act, each underwriter for the Company
and each person, if any, who controls such underwriter within the meaning
of the Securities Act) and each other such holder against any loss, claim,
damage or liability arising from any such statement or omission which was
made in reliance upon information furnished in writing to the Company by
such holder of the shares expressly for use in connection with such
registration statement.
(f) The rights of the holder of this Warrant or the Shares pursuant to
this Section 10 shall terminate on the date the Holder holds, together with
all other shares of the Company's Common Stock beneficially owned by such
Holder(s) (as defined in Rule 13d-3 under the Securities Act of 1934, as
amended) no more than one-quarter of one percent (0.25%) of the total
number of shares of Common Stock then outstanding, (the "Selling Period").
11. Certain Notices. In case at any time the Company shall propose to (i)
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declare any cash dividend upon its Common Stock; (ii) declare any dividend upon
its Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock; (iii) offer for subscription to
the holders of any shares of its Common Stock or otherwise issue, or enter into
an agreement providing for the issuance of, any additional shares of stock of
any class or other rights (other than with respect to options to purchase Common
Stock granted pursuant to stock option plans approved by stockholders of the
Company); (iv) reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell all or substantially all
of its assets to, another corporation; or (v) voluntarily or involuntarily
dissolve, liquidate or wind up of the affairs of the Company; then, in each such
case, the Company shall give, by certified or registered mail: (a) at least 20
days' prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (b) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Any
notice required by clause (a) shall also specify, in the case of any such
dividend, distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and any notice required by clause (b)
shall specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for
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securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first above written.
CARDIAC CONTROL SYSTEMS, INC.
By: /s/Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President
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