1
Exhibit 4.5
UROHEALTH SYSTEMS, INC.
Warrants to Purchase Common Stock
WARRANT REGISTRATION RIGHTS AGREEMENT
April 10, 1997
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
UROHEALTH Systems, Inc. (the "Company"), a Delaware
corporation, proposes to issue and sell to Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the
"Purchaser"), upon the terms set forth in a purchase agreement, dated April 3,
1997 (the "Purchase Agreement"), among the Purchaser and the Company and the
Guarantors named therein, 110,000 units (the "Units") consisting of the
Company's 12.5% Subordinated Notes due 2004 and warrants to purchase common
stock, $.001 par value per share, of the Company (such warrants, the
"Warrants"). As an inducement to the Purchaser to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Purchaser
thereunder, the Company agrees with the Purchaser, (i) for the benefit of the
Purchaser and (ii) for the benefit of the Holders (as defined below) from time
to time of the Warrants and the common shares (the "Warrant Shares") of the
Company initially issuable upon conversion of the Warrants (the Warrants,
together with the Warrant Shares, the "Registrable Securities"), as follows:
2
1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement, in respect of the Units. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Commission" means the United States Securities and Exchange
Commission.
"DTC" means The Depository Trust Company.
"Effectiveness Period" (i) with respect to the Warrant Shelf
Registration Statement (as defined), has the meaning set forth in Section 2(b)
hereof and (ii) with respect to the Common Shelf Registration Statement (as
defined), means the period from the effectiveness thereof through and including
the earlier of (a) April 1, 2004 and (b) the date when, in the written opinion
of counsel to the Company, all outstanding Warrant Shares held by Persons that
are not affiliates of the Company may be resold without registration under the
Securities Act pursuant to Rule 144(k) thereunder or any successor provision
thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2
3
"Holders" means the Persons with a beneficial interest in the
Warrants or Warrant Shares, as applicable.
"Majority Holders" means, with respect to the Warrants and the
Warrant Shares, respectively, the Holders of a majority of the aggregate amount
of outstanding Warrants or Warrant Shares, respectively.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering, if any, as set forth in Section 6 hereof.
"Officer's Certificate" means a certificate signed by any one
of the Chairman, any Vice Chairman, any Chief Executive Officer, any Senior Vice
President or the Chief Financial Officer.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
3
4
"Shelf Registration Statement" means a shelf registration
statement of the Company pursuant to the provisions of Section 2 hereof filed
with the Commission which covers some or all of the Registrable Securities, as
applicable, on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Underwriter" means any underwriter of Registrable Securities
in connection with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION. (a) The Company shall (i) within 60
days following the date of original issuance (the "Issue Date") of the Warrants,
file with the Commission a Shelf Registration Statement (the "Warrant Shelf
Registration Statement") relating to the offer and sale of the Warrants by the
Holders from time to time in accordance with the methods of distribution elected
by the Majority Holders and set forth in the Warrant Shelf Registration
Statement and, thereafter, (ii) use its best efforts to cause the Warrant Shelf
Registration Statement to be declared effective under the Securities Act within
150 days following the Issue Date; provided, however, that no Holder shall be
entitled to have the Warrants held by it covered by the Warrant Shelf
Registration unless such Holder is in compliance with Section 3(l) hereof. The
Company shall be deemed not to have used its best efforts to cause the Warrant
Shelf Registration Statement to be declared effective unless the Company
determines in good faith that any actions taken to do so (i) would violate any
applicable law to which it was then subject or (ii) would require the Company to
disclose an otherwise confidential, material financing, acquisition, disposition
or other corporate transaction and management
4
5
shall have determined in good faith as evidenced by an Officers' Certificate
that such disclosure is not in the best interest of the Company and its
shareholders; provided, however, that no delay in such effectiveness pursuant to
clause (i) or (ii) above may exceed 45 days.
(b) The Company shall use its best efforts (i) to keep the
Warrant Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders for a period of
three years from the date the Warrant Shelf Registration Statement is declared
effective or such shorter period that will terminate upon the earlier of (A)
when all the Warrants covered by the Warrant Shelf Registration Statement have
been sold pursuant to the Warrant Shelf Registration Statement or (B) when, in
the written opinion of counsel to the Company, all outstanding Warrants held by
persons that are not affiliates of the Company may be resold without
registration under the Securities Act pursuant to Rule 144(k) under the
Securities Act or any successor provision thereto (in any such case, such period
being called the "Effectiveness Period") and (ii) after the effectiveness of the
Warrant Shelf Registration Statement, promptly upon the request of any Holder to
take any action reasonably necessary to register the sale of any Warrants of
such Holder and to identify such Holder as a selling securityholder.
(c) The Company shall (i) within 270 days following the Issue
Date, file with the Commission a Shelf Registration Statement (the "Common Shelf
Registration Statement") relating to the offer and sale of the Warrant Shares
(including securities deemed registered pursuant to Rule 416 under the
Securities Act) by the Holders from time to time in accordance with the methods
of distribution elected by the Majority Holders and set forth in the Common
Shelf Registration Statement and, thereafter, (ii) use its best efforts to cause
the Common Shelf Registration Statement to be declared effective under the
Securi-
5
6
ties Act within 365 days following the Issue Date; provided, however, that no
Holder shall be entitled to have the Warrant Shares held by it covered by the
Common Shelf Registration unless such Holder is in compliance with Section 3(l)
hereof. The Company shall be deemed not to have used its best efforts to cause
the Common Shelf Registration Statement to be declared effective unless the
Company determines in good faith that any actions taken to do so (i) would
violate any applicable law to which it was then subject or (ii) would require
the Company to disclose an otherwise confidential, material financing,
acquisition or other corporate transaction and management shall have determined
in good faith as evidenced by an Officers' Certificate that such disclosure is
not in the best interest of the Company and its shareholders; provided, however,
that no delay in effectiveness pursuant to clause (i) or (ii) above may exceed
45 days. The Common Shelf Registration Statement and the Warrant Shelf
Registration Statement may be one and the same registration statement to the
extent allowed by law.
(d) The Company shall use its best efforts (i) to keep the
Common Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders during the
Effectiveness Period and (ii) after the effectiveness of the Common Shelf
Registration Statement, promptly upon the request of any Holder to take any
action reasonably necessary to register the sale of any Warrant Shares of such
Holder and to identify such Holder as a selling securityholder.
(e) During any consecutive 365-day period, the Company may
suspend the effectiveness of each of the Warrant Shelf Registration Statement
and the Common Shelf Registration Statement for up to two 45 consecutive-day
periods (except for the period immediately prior to April 1, 2004) if the Board
of Directors of the Company determines in the exercise of its reasonable
judgment that
6
7
there is a valid business purpose for such suspension and provides notice that
such determination was made to the holders of the applicable Registrable
Securities; provided, however, that in no event shall the Company be required to
disclose the business purpose for such suspension if the Company determines in
good faith that such business purpose must remain confidential.
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to the Purchaser, at least 3
business days' prior to the filing thereof with the Commission, a copy of any
Shelf Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall each use
reasonable efforts to reflect in each such document, when so filed with the
Commission, such comments as the Purchaser reasonably may propose.
(b) The Company shall take such action as may be necessary so
that (i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto (and
each report or other document incorporated therein by reference in each case)
complies in all material respects with the Securities Act and the Exchange Act
and the respective rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Shelf Registration Statement, and
any amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the
7
8
statements, in the light of the circumstances under which they were made, not
misleading.
(c) (1) The Company shall advise the Holders and, if
requested by any Holder, confirm such advice in writing:
i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective; and
ii) of any request by the Commission for
amendments or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise the Purchaser and the Holders
and, if requested by the Purchaser or any such Holder, confirm such advice in
writing of:
i) the issuance by the Commission of any stop
order suspending effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose;
ii) the receipt by the Company of any notification
with respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
iii) the happening of any event that requires the
making of any changes in any Shelf Registration Statement or Prospectus
so that, as of such date, such Shelf Registration Statement and such
Prospectus do not contain an untrue statement of a material fact and do
not omit to state a material
8
9
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made).
(d) The Company shall use its best efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Registrable
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all reports, other documents and
exhibits (including those incorporated by reference).
(f) The Company shall, during any Effectiveness Period,
deliver to each Holder of applicable Registrable Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents (except during the continuance
of any event described in Section 3(c)(2)) to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of applicable
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto during the applicable Effectiveness Period.
9
10
(g) Prior to any offering of Registrable Securities pursuant
to any Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Registrable Securities included therein and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any such Holders reasonably request in writing and do
any and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Registrable Securities covered by such Shelf
Registration Statement; provided, however, that in no event shall the Company be
obligated to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to so qualify but
for this Section 3(g), (ii) file any general consent to service of process in
any jurisdiction where it is not as of the date hereof then so subject or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in book-entry
only form, the Company shall cooperate with the Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such permitted
denominations and registered in such names as Holders may request in connection
with the sale of Registrable Securities pursuant to such Shelf Registration
Statement.
(i) Subject to Section 2(e), upon the occurrence of any event
contemplated by paragraph 3(c)(2)(iii) above, the Company shall promptly prepare
a post-effective amendment to any Shelf Registration Statement or an amendment
or supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Registrable Securities
included
10
11
therein, the Prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders of the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, the Holders shall suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made.
(j) If required, not later than the effective date of any
Shelf Registration Statement hereunder, the Company shall provide a CUSIP number
for the Securities registered under such Shelf Registration Statement.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to their security holders or otherwise provide in accordance with
Section 11(a) of the Securities Act as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(l) The Company may require each Holder of Registrable
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information regarding the Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably require
for inclusion in such Shelf Registration Statement and the Company may exclude
from such registration the Registrable Securities of any Holder that fails to
furnish such information within a reasonable time after receiving such request.
(m) The Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters
11
12
reasonably agree, should be included therein and to which the Company does not
reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after they are
notified of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment.
(n) The Company shall enter into such customary agreements
(including underwriting agreements in customary form) to take all other
appropriate actions in order to expedite or facilitate the registration or the
disposition of the Registrable Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures substantially identical to those set
forth in Section 5 (or such other provisions and procedures reasonably
acceptable to the Managing Underwriters, if any) with respect to all parties to
be indemnified pursuant to Section 5.
(o) The Company shall (i) make reasonably available for
inspection upon two business days' notice by the Holders of Registrable
Securities to be registered thereunder, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Holders or any such underwriter all
relevant non-privileged financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; (ii) cause the
Company's officers, directors and employees to make reasonably available for
inspection all relevant non-privileged information reasonably requested by such
Holders or any such underwriter, attorney, accountant or agent in connection
with any such Shelf Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that any information that
is designated in writing by the Company, in good faith, as confidential at the
time of delivery of such information shall be kept confidential
12
13
by such Holders or any such underwriter, attorney, accountant or agent, unless
such disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality; and provided,
further that the foregoing inspection and information gathering shall, to the
greatest extent possible, be coordinated on behalf of the Holders and the other
parties entitled thereto by one counsel designated by and on behalf of such
Holders and other parties; (iii) make such representations and warranties to the
Holders of Registrable Securities registered thereunder and the underwriters, if
any, in form, substance and scope as are customarily made by the Company to
underwriters in primary underwritten offerings and covering matters including,
but not limited to, those set forth in the Underwriting Agreement; (iv) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
Managing Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by Majority Holders and underwriters (it being agreed that
the matters to be covered by such opinion or written statement by such counsel
delivered in connection with such opinions shall include in customary form,
without limitation, as of the date of the opinion and as of the effective date
of the applicable Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then amended or supplemented,
including the documents incorporated by reference therein, of an untrue
statement of a material fact or the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (v) obtain "cold comfort" letters and updates
13
14
thereof from the independent public accountants of the Company (and, if
necessary, any other independent public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in such Shelf
Registration Statement or incorporated by reference), addressed to each such
Holder of Registrable Securities registered thereunder and the underwriters, if
any, in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings; (vi)
deliver such documents and certificates as may be reasonably requested by the
Majority Holders and the Managing Underwriters, if any, including those to
evidence compliance with Section 3(h) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 3(o) shall be performed at each closing under any underwritten
offering to the extent required thereunder.
(p) The Company will use its best efforts to cause the Warrant
Shares issuable upon conversion of the Warrants to be quoted on the Nasdaq
National Market, or any exchange upon which the Company's common stock is then
listed, on or prior to effectiveness of any Shelf Registration Statement
hereunder.
(q) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-Laws
of the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Registrable Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
assist such broker-dealer
14
15
in complying with the requirements of such Rules and By-Laws, including, without
limitation, by (A) such Rules or By-Laws, including Schedule E thereto, shall so
require, engaging a "qualified independent underwriter" (as defined in Schedule
E) to participate in the preparation of the Shelf Registration Statement
relating to such Registrable Securities and to exercise usual standards of due
diligence in respect thereto, (E) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof and (C) providing such information to such broker-dealer as may
be required in order for such broker-dealer to comply with the requirements of
the Rules of Fair Practice of the NASD.
(r) The Company will use its best efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by the Shelf Registration Statements contemplated hereby.
4. REGISTRATION EXPENSES. Except as otherwise provided in
Section 6, the Company shall bear all fees and expenses incurred in connection
with the performance of its obligations under Sections 2 and 3 hereof and shall
bear or reimburse the Holders for the reasonable fees and disbursements of one
firm of counsel designated by the Company and reasonably acceptable to the
Holders of a majority of the applicable Registrable Securities covered by the
applicable Shelf Registration Statement to act as counsel therefor in connection
therewith.
5. INDEMNIFICATION AND CONTRIBUTION. The Company agrees to
indemnify and hold harmless (i) the Purchaser, each Holder, each underwriter who
participates in an underwritten offering at Registrable Securities, (ii) each
person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of
15
16
the Exchange Act) any such Person (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling person"), and (iii)
the respective officers, directors, partners, employees, representatives and
agents of any of such Person or any controlling person (any person referred to
in clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person") to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, judgments, actions and expenses (including,
without limitation, and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused
by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
are caused primarily by (i) any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Indemnified Person furnished to the Company in writing by such
Indemnified Person expressly for use therein, or (ii) any untrue statement
contained in or omission from a preliminary prospectus if a copy of the
Prospectus (as then amended or supplemented, if the Company shall have furnished
to or on behalf of the Holder participating in the distribution relating to the
relevant Shelf Registration Statement any amendments or supplements thereto) was
not
16
17
sent or given by or on behalf of such Holder to the person asserting any such
losses, liabilities, claims, damages or expenses who purchased Securities, if
such is required by law at or prior to the written confirmation of the sale of
such Securities to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented). The Company shall notify the Warrant
Agent promptly of the institution, threat or assertion of any claim, proceeding,
action (including any governmental investigation) or litigation of which it or
they shall have become aware in connection with the matters addressed by this
Agreement which involves the Company or an Indemnified Person.
In connection with any Shelf Registration Statement in which a
Holder is participating, such Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and its directors and officers and each
person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Indemnified Person, but only with
reference to information relating to such Indemnified Person furnished to the
Company in writing by such Indemnified Person expressly for use in any shelf
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus. The liability of any Indemnified Person pursuant to
this paragraph shall in no event exceed the net proceeds received by such
Indemnified Person from sales of Registrable Securities giving rise to such
obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person
17
18
against whom such indemnity may be sought (the "indemnifying person") in
writing, and the indemnifying person shall have the right to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying person may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred by such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party, unless (i) the indemnifying person and the indemnified
party shall have mutually agreed in writing to the contrary, (ii) the
indemnifying person failed to assume the defense within a reasonable time after
the commencement of the action and employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both such indemnified party and the indemnifying
person or any affiliate of the indemnifying person and such indemnified party
shall have been reasonably advised by counsel that either (x) there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying person or such affiliate of the indemnifying
person or (y) a conflict may exist between such indemnified party and the
indemnifying person or such affiliate of the indemnifying person (in which case
the indemnifying person shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, that
the indemnifying person shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local firm of attorneys) for all such indemnified parties, which firm shall
be designated in writing by Indemnified Persons who sold a
18
19
majority in aggregate principal amount of Registrable Securities sold by all
such Indemnified Persons and any such separate firm for the Company its
directors, its officers and such controlling persons of the Company shall be
designated in writing by the Company. The indemnifying person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying person agrees to indemnify any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying person shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 5 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses referred to therein
(other than by reason of the exceptions provided therein), then each
indemnifying person under such paragraphs, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities,
or expenses (i) in such proportion as is appropriate to reflect the relative
benefits of the indemnified party, on the one hand, and the indemnifying
person(s), on the other, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities, or expenses or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
re-
19
20
ferred to in clause (i) above but also the relative fault of the indemnifying
person(s) and the indemnified party, as well as any other relevant equitable
considerations. The relative fault of the indemnifying person(s), on the one
hand, and any indemnified parties, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying person(s), on the one hand,
or by such indemnified parties, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
(even if such indemnified parties were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5, in no event shall any Holder
be required to contribute any amount in excess of the amount by which proceeds
received by such Holder from sales of Registrable Securities exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
20
21
The indemnity and contribution agreements contained in this
Section 5 will be in addition to any liability which the indemnifying persons
may otherwise have to the indemnified parties referred to above. The indemnified
parties' obligations to contribute pursuant to Section 5 are several in
proportion to the respective principal amount of Registrable Securities sold by
each of the indemnified parties hereunder and not joint.
6. UNDERWRITTEN OFFERING. The Majority Holders of
Registrable Securities covered by any Shelf Registration Statement who desire
to do so may sell such Registrable Securities in an underwritten offering. In
any such underwritten offering, the investment banker or bankers and manager or
managers that will administer the offering will be selected by, and the
underwriting arrangements with respect thereto will be approved by, the
Holders of a majority of the Registrable Securities to be included in such
offering; provided, however, that such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company. No
Holder may participate in any underwritten offering contemplated hereby unless
such Holder (a) agrees to sell such Holder's Registrable Securities in
accordance with any approved underwriting arrangements and (b) completes and
executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such approved underwriting arrangements. The Holders participating in
any underwritten offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders and
shall reimburse the Company for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses incurred in
connection with such underwritten offerings. Notwithstanding the foregoing or
the provisions of Section 3(l) hereof, upon receipt of a request from the
21
22
Managing Underwriter or a representative of Holders of a majority of the
Registrable Securities outstanding to prepare and file an amendment or
supplement to any Shelf Registration Statement and Prospectus in connection with
an underwritten offering, the Company may delay the filing of any such amendment
or supplement for up to 90 days if the Company in good faith has a valid
business reason for such delay.
7. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. The Company may grant
registration rights that would permit any Person that is a third party the right
to piggyback on any Shelf Registration Statement, provided that if the Managing
Underwriter, if any, of such offering delivers an opinion to the selling Holders
that the total amount of securities which they and the holders of such piggyback
rights intend to include in any Shelf Registration Statement is so large as to
materially adversely affect the success of such offering (including the price at
which such securities can be sold), then only the amount, the number or kind of
securities to be offered for the account of holders of such piggyback rights
will be reduced to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount, number or kind recommended by the
Managing Underwriter prior to any reduction in the amount of Registrable
Securities to be included.
(b) HOLDBACK AGREEMENT. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Shelf Registration
Statement agrees, if requested by the Company or the managing underwriter or
underwriters in an underwritten offering, not to effect any private or public
sale or distribution (including a sale pursuant to Rule 144) of any of the
Registrable Securities (or any securities convertible into or ex-
22
23
changeable or exercisable for such securities) during the period beginning 10
days prior to, and ending 90 days after, the closing date of each such
underwritten offering made pursuant to a registration statement covering the
Company's convertible debentures outstanding on the date hereof and the shares
of Common Stock issuable by the Company upon conversion thereof or pursuant to
an underwritten offering in which the Company is selling shares of its Common
Stock.
(c) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the written consent of each of
the other parties hereto is obtained.
(d) NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
1. if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this Section
7(d);
2. if to the Purchaser:
Bear, ▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
23
24
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
3. if to the Company:
UROHEALTH Systems, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly given when
received.
The Purchaser or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties and the Holders, including, without the need for an express assignment
or any consent by the Company thereto, subsequent Holders of Registrable
Securities. The Company hereby agrees to extend the benefits of this Agreement
to any Holder of Registrable Securities and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
24
25
(e) COUNTERPARTS. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) SUBMISSION TO JURISDICTION. The Company agrees that any
legal suit, action or proceeding brought by any party to enforce any rights
under or with respect to this Agreement may be instituted in any state or
federal court in The City of New York, State of New York, and waives to the
fullest extent permitted by law any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and irrevocably
submits it to the non-exclusive jurisdiction of any such court in any such suit,
action or proceeding. Nothing in this Section 7(i) shall affect the right of any
party hereto or any Holder to serve process
25
26
in any manner permitted by law or limit the right of any party hereto to bring
proceedings against the Company in the courts of any jurisdiction or
jurisdictions.
(j) SECURITIES HELD BY THE COMPANY. Whenever the consent or
approval of Holders of a specified amount of any Registrable Securities is
required hereunder, Registrable Securities held by the Company or any of its
Affiliates shall not be counted in determining whether consent or approval was
given by the Holders of such required percentage.
(k) NO INCONSISTENT AGREEMENTS. The Company has not, as of the
date hereof, entered into any agreement with respect to the Registrable
Securities that is inconsistent with the rights granted to the Holders herein or
otherwise conflicts with the provisions hereof.
26
27
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
UROHEALTH SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
The foregoing Warrant Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
BEAR, ▇▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Managing Director