EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of July 9,
1999 is made by and among Endocardial Solutions, Inc., a Delaware corporation,
with headquarters located at 0000 Xxxxxx Xxxx, Xx. Xxxx, Xxxxxxxxx (the
"COMPANY"), and the investors named on the signature pages hereto, together with
their permitted transferees (the "INVESTORS").
RECITALS:
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investors desire, upon the terms and conditions stated in this
Agreement, to purchase shares of the Company's Common Stock, for an aggregate
purchase price of $9,999,999.00. The purchase price per share of the Common
Stock is $9.00.
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
under which the Company has agreed to provide certain registration rights under
the Securities Act, the rules and regulations promulgated thereunder and
applicable state securities laws.
D. The capitalized terms used herein and not otherwise defined have
the meanings given them in Article 9 hereof.
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investors hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 PURCHASE AND SALE OF SECURITIES. At the Closing, subject to the
terms of this Agreement and the satisfaction or waiver of the conditions set
forth in Articles VI and VII hereof, the Company will issue and sell to each
Investor, and each Investor will (on a several and not a joint basis) purchase
from the Company, the number of shares of Common Stock set forth beneath such
Investor's name on the signature pages hereof.
1.2 PAYMENT. Each Investor will pay the purchase price for the number
of Securities set forth beneath its name on the signature pages hereof, by wire
transfer of immediately available funds in accordance with the Company's written
wire instructions, upon delivery by the Company to each Investor of certificates
representing the Securities so purchased by such
Investor and the Company will deliver such certificates against delivery of the
purchase price as described above.
1.3 CLOSING DATE. Subject to the satisfaction or waiver of the
conditions set forth in Articles VI and VII hereof, the Closing will take place
at 10:00 a.m. Minneapolis Time on June 30, 1999 or at another date or time
agreed upon by the parties to this Agreement (the "CLOSING DATE"). The Closing
will be held at the offices of Xxxxxx & Whitney LLP, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx or at such other place as the parties agree.
ARTICLE II
INVESTOR'S REPRESENTATIONS AND WARRANTIES
Each Investor represents and warrants to the Company, severally and solely
with respect to itself and its purchase hereunder and not with respect to any
other Investor, that:
2.1 INVESTMENT PURPOSE. The Investor is purchasing the Securities for
its own account and not with a present view toward the public sale or
distribution thereof, except pursuant to sales registered or exempted from
registration under the Securities Act; provided, however, that by making the
representation herein, the Investor does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
2.2 ACCREDITED INVESTOR STATUS. The Investor is an "accredited
investor" as defined in Rule 501(a) of Regulation D.
2.3 RELIANCE ON EXEMPTIONS. The Investor understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
2.4 INFORMATION. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company, and materials relating to the offer and sale of the Securities,
that have been requested by the Investor or its advisors, if any. The Investor
and its advisors, if any, have been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence investigation
conducted by Investor or any of its advisors or representatives modify, amend or
affect the Investor's right to rely on the Company's representations and
warranties contained in Article III below. The Investor acknowledges and
understands that its investment in the Securities involves a significant degree
of risk, including the risks reflected in the SEC Documents.
2.5 GOVERNMENTAL REVIEW. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
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2.6 TRANSFER OR RESALE. The Investor understands that:
(a) except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the Securities Act
or any applicable state securities laws and, consequently, the Investor may have
to bear the risk of owning the Securities for an indefinite period of time
because the Securities may not be transferred unless (i) the resale of the
Securities is registered pursuant to an effective registration statement under
the Securities Act; (ii) the Investor has delivered to the Company an opinion of
counsel (in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (iii) the Securities are sold or transferred pursuant to Rule 144
or (iv) the Securities are sold or transferred to an affiliate (as defined in
Rule 144) of the Investor;
(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(c) except as set forth in the Registration Rights Agreement,
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
2.7 LEGENDS. The Investor understands that until (a) the Securities may
be sold by the Investor under Rule 144(k) or (b) such time as the resale of the
Securities have been registered under the Securities Act as contemplated by the
Registration Rights Agreement, the certificates representing the Securities will
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
The legend set forth above will be removed and the Company will issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article V hereof.
2.8 AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of the
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Investor and are valid and binding agreements of the Investor enforceable in
accordance with their terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and the application of general principles of equity.
2.9 RESIDENCY. The Investor is a resident of the jurisdiction set forth
immediately below such Investor's name on the signature pages hereto.
2.10 ACKNOWLEDGEMENTS REGARDING PLACEMENT AGENT. Purchaser acknowledges
that U.S. Bancorp Xxxxx Xxxxxxx Inc. is acting as placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. Purchaser further
acknowledge that the Placement Agent has acted solely as placement agent in
connection with the offering of the Securities by the Company, that the
information and data provided to Purchaser in connection with the transactions
contemplated hereby have not been subjected to independent verification by the
Placement Agent, and that the Placement Agent makes no representation or
warranty with respect to the accuracy or completeness of such information, data
or other related disclosure material. Purchaser further acknowledges that in
making its decision to enter into this Agreement and purchase the Securities it
has relied on its own examination of the Company and the terms of, and
consequences, of holding the Securities. Purchaser further acknowledges that the
provisions of this Section 2.10 are for the benefit of, and may be enforced by,
the Placement Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that:
3.1 ORGANIZATION AND QUALIFICATION. The Company is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. The Company is duly
qualified to do business and is in good standing in every jurisdiction in which
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect.
3.2 AUTHORIZATION; ENFORCEMENT. (a) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement and the Registration Rights Agreement, to consummate the
transactions contemplated hereby and thereby and to issue the Securities in
accordance with the terms hereof and thereof; (b) the execution, delivery and
performance of this Agreement and the Registration Rights Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation the issuance of the Securities) have been
duly authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board or Directors, or its shareholders is
required; (c) this Agreement and the Registration Rights Agreement have been
duly executed by the Company; and (d) each of this Agreement and the
Registration Rights Agreement constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
subject to the effect of
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any applicable bankruptcy, insolvency, reorganization, or moratorium or similar
laws affecting the rights of creditors generally and the application of general
principles of equity.
3.3 CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of (a) 40,000,000 shares of Common Stock, of which
9,052,449 shares are issued and outstanding, 1,800,000 shares are reserved for
issuance under the Company's employee and director stock option plans, 200,000
are reserved for issuance pursuant to the Company's employee stock purchase
plan, and 678,831shares are reserved for issuance pursuant to securities (other
than securities issued under the foregoing plans) exercisable for, or
convertible into or exchangeable for shares of Common Stock; (b) 10,000,000
shares of preferred stock, par value $0.01 per share, of which no shares are
designated and none are issued and outstanding. All of such outstanding shares
of capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable. No shares of capital stock of the Company,
including the Securities issuable pursuant to this Agreement, are subject to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or encumbrances imposed through the actions or failure to act of
the Company. Except as disclosed in SCHEDULE 3.3 and except for the transactions
contemplated hereby, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into, exercisable
for, or exchangeable for any shares of capital stock of the Company, or
arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company; (ii) there are no agreements or
arrangements (other than the Registration Rights Agreement) under which the
Company is obligated to register the sale of any of its securities under the
Securities Act and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Securities. The Company has furnished to the Investors true and correct
copies of the Company's Certificate of Incorporation, as amended, as in effect
on the date hereof, the Company's By-laws as in effect on the date hereof and
the terms of all securities convertible into or exercisable for Common Stock of
the Company and the material rights of the holders thereof in respect thereto.
3.4 ISSUANCE OF SECURITIES. The Securities are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, free from all taxes, liens, claims, encumbrances
and charges with respect to the issue thereof, will not be subject to preemptive
rights or other similar rights of stockholders of the Company, and will not
impose personal liability on the holders thereof.
3.5 NO CONFLICTS; NO VIOLATION.
(a) The execution, delivery and performance of this Agreement and
the Registration Rights Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) conflict with or result
in a violation of any provision of the Certificate of Incorporation or By-laws
or (ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a
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default) under, or give to others any rights of termination, amendment
(including without limitation, the triggering of any anti-dilution provision),
acceleration or cancellation of, any agreement, indenture, patent, patent
license, or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
U.S. federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or by which any property or asset of the
Company is bound or affected (except for such conflicts, breaches, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect).
(b) The Company is not in violation of its Certificate of
Incorporation, By-laws or other organizational documents and the Company is not
in default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any agreement, indenture or instrument
to which the Company is a party or by which any property or assets of the
Company is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company is not conducting its business in violation of any
law, ordinance or regulation of any governmental entity, the failure to comply
with which would, individually or in the aggregate, have a Material Adverse
Effect.
(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement, in each case in accordance with the terms hereof
or thereof, or to issue and sell the Securities in accordance with the terms
hereof. Except as set forth in SCHEDULE 3.6, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is not in violation of the listing requirements of
Nasdaq.
3.6 SEC DOCUMENTS, FINANCIAL STATEMENTS. Since December 31, 1997, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference therein,
being hereinafter referred to herein as the "SEC DOCUMENTS"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
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dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with U.S.
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities incurred in the
ordinary course of business subsequent to March 31, 1999, and liabilities of the
type not required under generally accepted accounting principles to be reflected
in such financial statements. Such liabilities incurred subsequent to March 31,
1999, are not, in the aggregate, material to the financial condition or
operating results of the Company.
3.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC
Documents, since March 31, 1999, there has been no material adverse change in
the assets, liabilities, business, properties, operations, financial condition,
prospects or results of operations of the Company.
3.8 ABSENCE OF LITIGATION. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its officers or
directors acting as such that could, individually or in the aggregate, have a
Material Adverse Effect.
3.9 INTELLECTUAL PROPERTY RIGHTS. The Company owns or possesses the
licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names and copyrights necessary to enable it to
conduct its business as now operated (the "INTELLECTUAL PROPERTY"), There is no
claim or action or proceeding pending or, to the Company's knowledge, threatened
that challenges the right of the Company with respect to any Intellectual
Property.
3.10 TAX STATUS. Except as set forth on SCHEDULE 3.10, the Company has
made or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith, and has
set aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. To the knowledge of the Company, there are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. Except as set forth on SCHEDULE 3.10, none of the Company's
tax returns is presently being audited by any taxing authority.
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3.11 ENVIRONMENTAL LAWS. The Company (i) is in compliance with all
applicable foreign federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where, in
each of the three foregoing clauses, the failure to so comply would have,
individually or in the aggregate, a Material Adverse Effect
3.12 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the issuance of the Securities to the Investors. The issuance
of the Securities to the Investors will not be integrated with any other
issuance of the Company's securities (past, current or future) for purposes of
the Securities Act or any applicable rules of Nasdaq.
3.13 NO BROKERS. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except for dealings with U.S. Bancorp Xxxxx Xxxxxxx Inc., whose commissions and
fees will be paid for by the Company.
3.14 INSURANCE. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company is engaged.
3.15 EMPLOYMENT MATTERS. The Company is in compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours
except where failure to be in compliance would not have a Material Adverse
Effect.
3.16 INVESTMENT COMPANY STATUS. The Company is not and upon consummation
of the sale of the Securities will not be an "investment company," a company
controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
ARTICLE IV
COVENANTS
4.1 BEST EFFORTS. Each party will use its best efforts to satisfy in a
timely fashion each of the conditions to be satisfied by it under Articles VI
and VII of this Agreement.
4.2 FORM D; BLUE SKY LAWS. The Company will file a Notice of Sale of
Securities on Form D with respect to the Securities, as required under
Regulation D, and to provide a copy thereof to each Investor promptly after such
filing. The Company will, on or before the Closing Date, take such action as it
reasonably determines to be necessary to qualify the Securities for sale to the
Investors under this Agreement under applicable securities (or "blue sky") laws
of the
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states of the United States (or to obtain an exemption from such qualification),
and will provide evidence of any such action so taken to the Investors on or
prior to the date of the Closing. The Company will file with the SEC a Current
Report on Form 8-K disclosing this Agreement and the transactions contemplated
hereby within 10 business days after the Closing Date.
4.3 REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. The Company's Common
Stock is registered under Section 12 of the Exchange Act. Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination. The Company currently meets, and will take all reasonably necessary
action to continue to meet, the "registrant eligibility" requirements set forth
in the general instructions to Form S-3.
4.4 EXPENSES. The Company and each Investor is liable for, and will pay,
its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses.
4.5 FINANCIAL INFORMATION. The financial statements of the Company will
be prepared in accordance with United States generally accepted accounting
principles, consistently applied, and will fairly present in all material
respects the consolidated financial position of the Company and results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). The Company will
send the following reports to each Investor until such Investor transfers,
assigns, or sells all of the Securities owned by it: (a) within ten business
days after filing with the SEC, a copy of its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; and (b)
contemporaneously with the making available or giving to the stockholders of the
Company, copies of any notices or other information the Company makes available
or gives to its stockholders.
4.6 LISTING. On or before the tenth business day after the date of this
Agreement, the Company will secure the listing of the Securities upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and, so long as any Investor owns any of the Securities, will maintain such
listing of the Securities. The Company will use its best efforts to obtain and,
so long as any Investor owns any of the Securities, maintain the listing and
trading of its Common Stock on Nasdaq, the American Stock Exchange or the New
York Stock Exchange and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
National Association of Securities Dealers, Inc. and such exchanges, as
applicable. Until an Investor transfers, assigns or sells all of the Securities
owned by it, the Company will promptly provide to each Investor copies of any
notices it receives regarding the continued eligibility of the Common Stock for
listing on Nasdaq or other principal exchange or quotation system on which the
Common Stock is listed or traded.
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4.7 COMPLIANCE WITH LAW. Until each Investor transfers, assigns or
sells all of the Securities owned by it, the Company will conduct its business
in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without limitation,
all applicable local, state and federal environmental laws and regulations, the
failure to comply with which would have a Material Adverse Effect.
4.8 NO INTEGRATION. The Company will not make any offers or sales of
any security (other than the Securities) under circumstances that would cause
the offering of Securities to be integrated with any other offering of
securities by the Company (i) for the purpose of any stockholder approval
provision applicable to the Company or its securities or (ii) for purposes of
any registration requirement under the Securities Act.
4.9 SALES BY INVESTORS. Each Investor will sell any Securities sold by
it in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Investor will make any sale, transfer or other disposition of the Securities
in violation of federal or state securities laws.
ARTICLE V
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1 ISSUANCE OF CERTIFICATES. The Company will instruct its transfer
agent to issue certificates, registered in the name of each Investor or its
nominee, for the Securities. All such certificates will bear the restrictive
legend described in Section 2.7, except as otherwise specified in this Article
V. The Company will not give to its transfer agent any instruction other than as
described in this Article V and stop transfer instructions to give effect to
Section 2.7 hereof (prior to registration of the Securities under the Securities
Act). Nothing in this Section will affect in any way the Investor's obligations
and agreement set forth in Section 2.7 hereof to comply with all applicable
prospectus delivery requirements, if any, upon resale of the Securities.
5.2 UNRESTRICTED SECURITIES. If, unless otherwise required by
applicable state securities laws, (a) the Securities represented by a
certificate have been registered under an effective registration statement filed
under the Securities Act, (b) a holder of Securities provides the Company and
the Transfer Agent with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to the effect that
a public sale or transfer of such Securities may be made without registration
under the Securities Act and such sale either has occurred or may occur without
restriction on the manner of such sale or transfer, (c) such holder provides the
Company and the Transfer Agent with reasonable assurances that such Securities
can be sold under Rule 144, or (d) the Securities represented by a certificate
can be sold without restriction as to the number of securities sold under Rule
144(k), the Company will permit the transfer of the Securities, and the Transfer
Agent will issue one or more certificates, free from any restrictive legend, in
such name and in such denominations as specified by such holder. Notwithstanding
anything herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement;
provided that such pledge will not alter the provisions of this Article V with
respect to the removal of restrictive legends.
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5.3 ENFORCEMENT OF PROVISION. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Investor by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Article V will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section,
that the Investor will be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to issue and sell the Securities to each
Investor at the Closing is subject to the satisfaction by such Investor, on or
before the Closing Date, of each of the following conditions. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:
6.1 The Investor will have executed this Agreement and the Registration
Rights Agreement and will have delivered those agreements to the Company.
6.2 The Investor will have delivered the purchase price for the
Securities to the Company in accordance with this Agreement.
6.3 The representations and warranties of the Investor must be true and
correct in all material respects as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a specific
date, which representations and warranties must be correct as of such date), and
the Investor will have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Investor at or prior to the Closing.
6.4 No statute, rule, regulation, executive order, decree, ruling or
injunction will have been enacted, entered, promulgated or endorsed by or in any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
ARTICLE VII
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of each Investor hereunder to purchase the Securities from
the Company at the Closing is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions. These conditions are for each
Investor's respective benefit and may be waived by any Investor at any time in
its sole discretion:
7.1 The Company will have executed this Agreement and the Registration
Rights Agreement and will have delivered those Agreements to the Investor.
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7.2 The Company will have delivered to the Investors duly executed
certificates representing the Securities in the amounts specified in Sections
1.1 hereof.
7.3 The representations and warranties of the Company must be true and
correct in all material respects as of the Closing as though made at that time
(except for representations and warranties that speak as of a specific date,
which representations and warranties must be true and correct as of such date)
and the Company must have performed and complied in all material respects with
the covenants and conditions required by this Agreement to be performed or
complied with by the Company at or prior to the Closing. The Investor must have
received a certificate or certificates dated as of the Closing Date and executed
by the Chief Executive Officer or the Chief Financial Officer of the Company
certifying as to the matters in contained in this Section 7.3 and as to such
other matters as may be reasonably requested by such Investor, including, but
not limited to, the Company's Certificate of Incorporation, By-laws, Board of
Directors' resolutions relating to the transactions contemplated hereby and the
incumbency and signatures of each of the officers of the Company who may execute
on behalf of the Company any document delivered at the Closing.
7.4 No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction will have been enacted, entered, promulgated or endorsed by
or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7.5 Trading and listing of the Common Stock on Nasdaq must not have
been suspended by the SEC or Nasdaq.
7.6 The Investors will have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Investors and in substantially the form attached hereto as
Exhibit B.
7.7 The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Investors, will have been delivered to the Company's
transfer agent and acknowledged in writing by such transfer agent.
ARTICLE VIII
INDEMNIFICATION
In consideration of each Investor's execution and delivery of this
Agreement and its acquisition of the Securities hereunder, and in addition to
all of the Company's other obligations under this Agreement and the Registration
Rights Agreement, the Company will defend, protect, indemnify and hold harmless
each Investor and each other holder of the Securities and all of their
stockholders, officers, directors, employees and direct or indirect investors
and any of the foregoing person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(regardless of whether any such Indemnitee is a party to the action for which
indemnification hereunder is
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sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by an Indemnitee as a result of, or arising
out of, or relating to (a) any breach of any representation or warranty made by
the Company herein or in any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained herein or in any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee and arising out of
or resulting from the execution, delivery, performance, breach or enforcement of
this Agreement or the Registration Rights Agreement by the Company. To the
extent that the foregoing undertaking by the Company is unenforceable for any
reason, the Company will make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law.
ARTICLE IX
DEFINITIONS
9.1 "Closing" means the closing of the purchase and sale of the
Securities under this Agreement.
9.2 "Closing Date" has the meaning set forth in Section 1.3.
9.3 "Common Stock" means the common stock, par value $.01 per share, of
the Company.
9.4 "Company" means Endocardial Solutions, Inc.
9.5 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
9.6 "Indemnified Liabilities" has the meaning set forth in Article VIII.
9.7 "Indemnitees" has the meaning set forth in Article VIII.
9.9 "Investors" means the investors whose names are set forth on the
signature pages of this Agreement, and their permitted transferees.
9.10 "Material Adverse Effect" means a material adverse effect on (a)
the business, operations, assets or financial condition of the Company or (b)
the ability of the Company to perform its obligations pursuant to the
transactions contemplated by this Agreement or under the agreements or
instruments to be entered into or filed in connection herewith.
9.11 Nasdaq National Market System.
9.12 "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement and among the parties to this
Agreement, in the form attached hereto as EXHIBIT A.
9.13 "Regulation D" means Regulation D as promulgated under by the SEC
under the Securities Act.
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9.14 "Rule 144" and "Rule 144(k)" mean Rule 144 and Rule 144(k),
respectively, promulgated under the Securities Act, or any successor rule.
9.15 "SEC" means the United States Securities and Exchange Commission.
9.16 "SEC Documents" has the meaning set forth in Section 3.8.
9.17 "Securities" means the Common Stock sold pursuant to this
agreement.
9.18 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute.
ARTICLE X
GOVERNING LAW; MISCELLANEOUS
10.1 GOVERNING LAW; JURISDICTION. This Agreement will be governed by and
interpreted in accordance with the laws of the State of Minnesota without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of Minnesota with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby or thereby.
10.2 COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
10.3 HEADINGS. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
10.4 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
10.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Registration
Rights Agreement (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the
party to be charged with enforcement.
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10.6 NOTICES. Any notices required or permitted to be given under the
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and will be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally, by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications are:
If to the Company: Endocardial Solutions, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxx & Whitney LLP
Pillsbury Center South
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to an Investor: To the address set forth immediately below such
Investor's name on the signature pages hereto.
Each party will provide written notice to the other parties of any change
in its address.
10.7 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and inures
to the benefit of the parties and their successors and assigns. The Company will
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investors, and no Investor may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an accredited investor (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement. This provision does not limit the Investor's right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Investor's rights hereunder to any such transferee pursuant to the terms of this
Agreement.
10.8 THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
10.9 SURVIVAL. The representations and warranties of the Company and
the agreements and covenants set forth herein will survive the Closing
hereunder. The Company makes no representations or warranties in any oral or
written information provided to Investors, other than the representations and
warranties included herein.
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10.10 FURTHER ASSURANCES. Each party will do and perform, or cause to
be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
10.11 NO STRICT CONSTRUCTION. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
10.12 EQUITABLE RELIEF. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Investors. The Company therefore
agrees that the Investors are entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
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IN WITNESS WHEREOF, the undersigned Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
ENDOCARDIAL SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
[Signatures continued on next page]
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INVESTORS:
THE XXXXXXXX FUND, INC.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxxx
Its: Chairman
Aggregate Subscription Amount: $4,000,005
Number of Shares of Common Stock: 444,445
RESIDENCE:
ADDRESS:
The Xxxxxxxx Fund, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
[Signatures continued on next page]
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INVESTORS:
XXXXXXX VARIABLE LIFE INVESTMENT
FUND SMALL COMPANY GROWTH
By: /s/ Xxx X. XxXxx
--------------------------------
Name: Xxx X. XxXxx
Its: Vice President
Aggregate Subscription Amount: $38,160
Number of Shares of Common Stock: 4,240
RESIDENCE:
ADDRESS:
c/o Xxxxxxx Xxxxxx Investments
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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INVESTORS:
AST XXXXXX SMALL CAP FUND
By: /s/ Xxx X. XxXxx
--------------------------------
Name: Xxx X. XxXxx
Its: Vice President
Aggregate Subscription Amount: $5,353,974
Number of Shares of Common Stock: 594,886
RESIDENCE:
ADDRESS:
c/o Xxxxxxx Xxxxxx Investments
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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INVESTORS:
XXXXXXX 21ST CENTURY GROWTH FUND
By: /s/ Xxx X. XxXxx
--------------------------------
Name: Xxx X. XxXxx
Its: Vice President
Aggregate Subscription Amount: $607,860
Number of Shares of Common Stock: 67,540
RESIDENCE:
ADDRESS:
c/o Xxxxxxx Xxxxxx Investments
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
[Signatures continued on next page]
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