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EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 1 day of December, 1996, by and among Zevex International, Inc., a
Nevada corporation (hereinafter referred to as the "Company") and Xxxxxx and
Xxxxxx, a partnership composed of Xxxx Xxxxxx and Xxxx Xxxxxx, (hereinafter
referred to as "BH"), on the following:
PREMISES
A. The Company is interested in raising capital through the sale of
up to 500,000 shares of its common stock, par value $0.001 per share (the
"Common Stock") and 500,000 common stock purchase warrants (the "Warrants") a
copy of which is attached hereto as exhibit "A," to purchase shares of Common
Stock at an exercise price of $3.50 per share. The shares of Common Stock and
the Warrants will be sold for an aggregate price of $2.50 per share of Common
Stock and Warrant.
B. BH has engaged in preliminary discussions with the Company regarding
the purchase of the shares of Common Stock and the Warrants which would be
offered and sold in a transaction or transactions complying with exemptions from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), as well as under the securities laws of certain states.
C. The Company and BH want to set forth their understanding as to the
terms and conditions of the purchase by BH of the shares of Common Stock and
Warrants.
AGREEMENT
BASED, upon the foregoing premises, which are incorporated herein by
this reference, and for and in consideration of the mutual promises and
covenants hereinafter set forth, and other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, it is agreed as follows:
ARTICLE 1
PURCHASE OF COMMON STOCK AND WARRANTS
1.01 Purchase and Sale of Common Stock and Warrants. BH agrees to
purchase from the Company and the Company agrees to sell to BH 500,000 shares of
Common Stock and 500,000 Warrants for a purchase price of $2.50 per share of
Common Stock and Warrant. BH, at its option, may purchase the shares of Common
Stock and Warrants in an entity or entities that it shall create which may
contain partners, members or shareholders; provided that, all such individuals
or entities who are members, shareholders or partners of such entity shall
themselves meet certain suitability and accredited investor standards which, if
such entity did not exist, would allow them to purchase shares of Common Stock
and Warrants directly from the Company without adversely affecting the
exemption(s) from the registration requirements of the Securities Act relied
upon in this transaction.
1.02. Closing Date. The offer and sale of the shares of Common Stock
and Warrants shall be consummated within sixty (60) days of the date the
Company delivers the private placement memorandum to BH as set forth herein.
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1.03 Closing Events.
(a) The Company Deliveries. Subject to fulfillment or waiver of the
conditions set forth in herein, the Company shall deliver to BH or such other
entities as BH shall designate at closing all the following:
(i) A certificate of good standing from the secretary of
State of Nevada, issued as of a date within five days prior to the
Closing Date, certifying that the Company is in good standing as a
corporation in the State of Nevada;
(ii) Copies of the resolutions of the Company's board of
directors authorizing the execution and performance of this Agreement
and the contemplated transactions including the issuance of the shares
of Common Stock and the Warrants, certified by the secretary or an
assistant secretary of the Company as of the closing date; and
(iii) Certificates for 500,000 shares of restricted Common
Stock and 500,000 Warrants in the names of BH, its assigns, or such
other names and amounts as BH shall designate;
In addition to the above deliveries, the Company shall take all steps and
actions as BH may reasonably request or as may otherwise be reasonably
necessary to consummate the transactions contemplated hereby.
(b) BH Deliveries. Subject to fulfillment or waiver of the
conditions set forth in herein, BH shall deliver to the Company at closing all
the following:
(i) A cashier or bank checks in the amount of $1,250,000;
and
(ii) Signed subscription and suitability documents by all
persons and entities who have purchased shares of the Common
Stock and Warrants.
In addition to the above deliveries, BH shall take all steps and
actions as the Company may reasonably request or as may otherwise be
reasonably necessary to consummate the transactions contemplated hereby.
1.04 Termination.
(a) BH shall have the right to terminate this Agreement by giving
notice as hereinafter specified if:
(i) The Company shall have failed or been unable to comply
with any of the terms, conditions or provisions of this Agreement on the
part of the Company to be performed, complied with or fulfilled within
the respective times herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by
the BH in writing.
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(ii) BH believes in its sole judgment that any
adverse changes have occurred in the management of the Company
or that material adverse changes have occurred in the financial
condition or obligations of the Company.
(b) The Company shall have the right to terminate this
Agreement by giving notice as hereinafter specified if either Xxxx
Xxxxxx or Xxxx Xxxxxx are currently or have ever been subject to the so
called "Bad Boy" disqualification provisions of the Securities Act,
regulation A, rule 262(c), (d), (e), or (f).
(c) The parties shall be able to terminate this Agreement
upon the mutual consent of the board of directors of the Company and of
Xxxx Xxxxxx and Xxxx Xxxxxx the partners of BH.
In the event of termination pursuant to this paragraph (c) of Section
1.04, no obligation, right, or liability shall arise hereunder, and each
party shall bear all of the expenses incurred by it in connection with
the negotiation, preparation, and execution of this Agreement and the
transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF THE COMPANY
As an inducement to, and to obtain the reliance of BH in connection
with its purchase of the shares of Common Stock and Warrants, the Company
represents and warrants as follows:
2.01 Private Offering. The offer, offer for sale, and sale of the
shares of Common Stock and Warrants have not been and will not be registered
with the Securities and Exchange Commission (the "Commission"). The shares of
Common Stock and Warrants shall be offered for sale and sold pursuant to the
exemptions from the registration requirements of Section 5 of the Securities
Act provided by Sections 3(b) and/or 4(2) thereof. The Company shall, insofar
as its own actions are concerned, conduct the offer and sale in compliance with
the requirements of Regulation D of the general rules and regulations under the
Securities Act, and the Company will file appropriate notices of the offer and
sale on Form D with the Securities and Exchange Commission.
2.02 Approval of Agreement. The Company has full corporate power,
authority, and legal right and has taken, or will take, all action required by
law, its articles of incorporation, bylaws, and otherwise to execute and
deliver this Agreement and to consummate the transactions herein contemplated
including the issuance of the shares of Common Stock and Warrants. The board of
directors of the Company has authorized and approved the execution, delivery,
and performance of this Agreement and the transactions contemplated hereby
including the issuance of the shares of Common Stock and the Warrants.
2.03 Legal Right. To the best knowledge of the Company, the
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a material breach or violation of any of the
terms and provisions of, or constitute a default under, any statute (except
federal and state securities laws, compliance with which is elsewhere provided
for in particular detail), indenture, mortgage or other agreement or instrument
to which the Company is a party or by which it is bound by any
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order, rule or regulation directed to the Company or its affiliates by any
court or governmental agency or body having jurisdiction over them; and no
other consent, approval, authorization or action is required for the
consummation of the transactions herein contemplated other than such as have
been obtained.
2.04 Validly Issued. The Common Stock, when issued, will be duly
authorized, validly and legally issued, and non-assessable.
2.05 Warrants' Designations. The Warrants when issued will contain
(i) the right to receive one share of Common Stock at an exercise price of
$3.50 for a period of five years from the date of issuance; (ii) standard
"piggy back" registration rights which provide the holder of the Warrant the
right to have shares of Common Stock issuable on exercise of the Warrants
included in any registration statement the Company should file with the
Securities and Exchange Commission during any time the Warrants are
exercisable; and (iii) the right to transfer the Warrants, subject to
compliance with applicable federal and state securities laws.
2.06 Organization. The Company has been duly organized and is now,
and always during the period of the offer and sale will be, a validly existing
corporation under the laws of the state of Nevada, lawfully qualified to
conduct the business for which it was organized and which it proposes to
conduct. The Company will always during the period of the offer and sale of the
shares of Common Stock and Warrants be qualified to conduct business as a
foreign corporation in each jurisdiction where the nature of its business
requires such qualification.
2.07 Capitalization. The Company has an authorized capitalization of
5,000,000 shares of Common Stock, $0.001 par value. The Company currently has
1,495,716 shares of Common Stock issued and outstanding and no shares of Common
Stock reserved for issuance pursuant to outstanding warrants. There are 94,800
outstanding options, and no outstanding warrants or other rights to purchase
securities, the Company, to the best of its knowledge, has not made any
intentional or reckless violations of the anti-fraud provisions of the federal
securities laws, rules or regulations promulgated there under or the laws,
rules or regulations of any jurisdiction wherein such securities transactions
or solicitations occurred.
2.08 Integration. The Company:
(a) To the best of its knowledge has not offered, offered to
sell, offered for sale or sold any other securities (as hereinafter
defined) the offer, offer to sell, offer for sale or sale of which would
be "integrated" under the standards of existing published rules and
regulations under the Securities Act with the offers, offers to sell,
offers for sale or sales of the Common Stock and Warrant proposed to be
made by the Company pursuant hereto in determining whether a public
offering of the shares of Common Stock and Warrants has been made so as
to render the exemptions provided by Section 3(b) or 4(2) of the
Securities Act unavailable with respect to the proposed offer and sale
of the shares of Common Stock and Warrants hereunder; and
(b) To the best of its ability shall not offer, offer to sell,
offer for sale or sell any shares of Common Stock, Warrants or other
securities except and to the extent any such offer, offer to sell, offer
for sale or sale, shall not render unavailable the exemptions from
registration and
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qualification requirements of applicable federal and state securities
laws relied upon with respect to the offer and sale of the shares of
Common Stock and Warrants contemplated by this Agreement.
The term "Other Securities" as used elsewhere herein refers to
the offers, offers for sale, offers to sell and sales of any Common
Stock or any other securities of the Company other than any offers,
offers to sell, offers for sale, or sales of the shares of Common Stock
and Warrants to be made by or through the Company hereunder.
2.09 Administrative Action. The Company will notify you immediately
and confirm the notice in writing of the issuance by the Commission or by any
state securities administration of any stop order suspending the effectiveness
of any qualification of the shares of Common Stock and Warrants for sale or
enjoining the offer or sale of the shares of Common Stock and Warrants or of
the initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any such stop order and, if any
such stop order shall at any time be issued, to obtain the lifting thereof at
the earliest possible moment.
2.10 Financial Statements.
(a) The Company's financial statements for the dates and
years ended December 31, 1995, and 1994, and for the dates and periods
ended September 31, 1996, and 1995, present fairly the financial
position, the results of operations and cash flows of the Company. The
Company did not have, as of the date of any such balance sheets, except
as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto prepared in accordance
with generally accepted accounting principles, and all assets reflected
therein present fairly the assets of the Company, in accordance with
generally accepted accounting principles. The Company maintains and will
continue to maintain a standard system of accounting established and
maintained in a manner permitting the preparation of financial
statements in accordance with generally accepted accounting principles.
The financial statements have been presented in accordance with the
requirements of regulation S-B, item 310 promulgated by the Securities
and Exchange Commission (the "Commission") regarding the form, content
and requirements for financial presentation to be filed with the
Commission.
(b) To the best knowledge of the Company, the books and
records, financial and otherwise, of the Company are in all material
respects complete and correct and have been maintained in accordance
with sound business and bookkeeping practices so as to accurately and
fairly reflect, in reasonable detail, the transactions and dispositions
of the assets of the Company. The Company has maintained a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions have been and are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit the preparation of financial statements
in conformity with generally accepted accounting principles or any other
criteria applicable to such statements and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to
any differences.
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(c) The Company has filed or will have filed as of the Closing
Date all tax returns required to be filed by it from inception to the Closing
Date. All such returns and reports are accurate and correct in all material
respects, except for returns or reports that are not material or that would not
create an adverse effect. The Company has no liabilities with respect to the
payment of any federal, state, county, local, or other taxes (including any
deficiencies, interest, or penalties) accrued for or applicable to the period
ended on the date of the most recent unaudited balance sheet of the Company,
except to the extent reflected on such balance sheet and adequately provided
for, and all such dates and years and periods prior thereto and for which the
Company may at said date have been liable in its own right or as transferee of
the assets of, or as successor to, any other corporation or entity, except for
taxes accrued but not yet due and payable, and no deficiency assessment or
proposed adjustment of any such tax return is pending, proposed or
contemplated. Proper and accurate amounts of taxes have been withheld by or on
behalf of the Company with respect to all compensation paid to employees of the
Company for all periods ending on or before the date hereof, and all deposits
required with respect to compensation paid to such employees have been made, in
complete compliance with the provisions of all applicable federal, state, and
local tax and other laws. None of such income tax returns has been examined or
is currently being examined by the Internal Revenue Service, and no deficiency
assessment or proposed adjustment of any such return is pending, proposed, or
contemplated. The Company has not made any election pursuant to the provisions
of any applicable tax laws (other than elections that relate solely to methods
of accounting, depreciation, or amortization) that would have a material
adverse affect on the Company, its financial condition, its business as
presently conducted or proposed to be conducted, or any of its properties or
material assets. There are no tax liens upon any of the assets of the Company.
There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return of the Company.
2.11 Absence of Certain Changes of Events. Except as set forth in
this Agreement since the date of the Company balance sheet for its most
recently completed fiscal quarter in 1996:
(a) Except as disclosed on a separate schedule, there has
not been (i) any material adverse change in the business, operations,
properties, level of inventory, assets, or condition of the Company or (ii) any
damage, destruction, or loss to the Company (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions of the Company.
(b) The Company has not (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare or make,
any payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the aggregate
are extraordinary or material considering the business of the Company; (iv) made
any material change in its method of management, operation, or accounting; (v)
entered into any other material transactions outside normal business operations;
(c) Except as disclosed on a separate schedule, the Company
has not (i) granted or agreed to grant any options, warrants, or other rights
for its stocks, bonds, or other corporate securities calling for the issuance
thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent)
except liabilities
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incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent balance sheet of
the Company and current liabilities incurred since that date in the
ordinary course of business; (iv) sold or transferred, or agreed to sell
or transfer, any of its assets, properties, or rights (except assets,
properties, or rights not used or useful in its business which, in the
aggregate have a value of less than $5,000 or canceled, or agreed to
cancel, any debts or claims (except debts and claims which in the
aggregate are of a value of less than $5,000); (v) made or permitted any
amendment or termination of any contract, agreement, or license to which
it is a party if such amendment or termination is material, considering
the business of the Company; or (vi) issued, delivered, or agreed to
issue or deliver any stock, bonds, or other corporate securities
including debentures (whether authorized and unissued or held as
treasury stock); and
(d) To the best knowledge of the Company, it has not become
subject to any law or regulation which materially and adversely affects,
or in the future may adversely affect, the business, operations,
properties, assets, or condition of the Company.
2.12 Title and Related Matters. Except as provided herein,
disclosed on a separate schedule attached hereto or disclosed in the most
recent balance sheet of the Company and the notes thereto, the
Company has good and marketable title to all of its properties, inventory,
interests in properties, and assets, which are reflected in the most recent
balance sheet of the Company or acquired after that date (except properties,
interests in properties, and assets sold or otherwise disposed of since such
date in the ordinary course of business), free and clear of all mortgages,
liens, pledges, charges, or encumbrances, except (i) statutory liens or claims
not yet delinquent; and (ii) such imperfections of title and easements as do
not, and will not, materially detract from, or interfere with, the present or
proposed use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties.
2.13 Litigation and Proceedings. Except as otherwise disclosed
herein, to the best knowledge of the Company there are no actions, suits, or
proceedings pending or, to the knowledge of the Company, threatened by or
against the Company or affecting the Company, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind. The Company does not have any knowledge of
any default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
2.14 Material Contract Defaults. The Company, to the best of its
knowledge, is not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material
to the business, operations, properties, assets, or condition of the Company,
and there is no event of default or other event which, with notice or lapse of
time or both, would constitute a default in any material respect under any such
contract, agreement, lease, or other commitment in respect of which the Company
has not taken adequate steps to prevent such a default from occurring.
2.15 Compliance with Laws and Regulations. The Company, to the best
of its knowledge, has all licenses, franchises, permits, and other governmental
authorizations that are legally required to enable it to conduct its business
in all material respects as conducted on the date of this Agreement. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental
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body is required in connection with the execution and delivery by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby. The Company has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability for the Company.
2.16 Insurance. All of the insurable properties of the Company are
insured for full replacement value (subject to reasonable deductibles) against
losses due to fire and other casualty, with extended coverage, and other risks
customarily insured against by persons operating similar properties in the
localities where such properties are located and under valid and enforceable
policies issued by insurers of recognized responsibility. Such policy or
policies containing substantially equivalent coverage will be outstanding and
in full force at the Closing Date, as hereinafter defined.
2.17 Commission Filings. The Company, to the best of its knowledge,
has furnished or will furnish prior to closing a true and complete copy of each
statement, report, registration statement, and other filings filed with the
Commission by the Company since December 31, 1994, and, prior to the closing,
the Company will have furnished the Company with true and complete copies of
any additional documents filed with the Commission by the Company (collectively
referred to as the "Commission Documents"). In addition, the Company has made
or will make available all exhibits to the Commission documents filed and will
promptly make available to BH all exhibits required to be filed as exhibits to
the Commission Documents filed prior to the closing. All documents required to
be filed as exhibits to the Commission Documents have been so filed, and all
material contracts so filed as exhibits are in full force and effect, except
those which have expired in accordance with the terms, and neither the Company
nor any of its subsidiaries is in default thereunder. As of their respective
filing dates, the Commission Documents complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the Securities Act, and none of the Commission
Documents contained any untrue statements of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed
Commission Document.
2.18 Intellectual Property. All patents, patent applications,
trademarks, trade secrets, knowhow, software and technical data (collectively
referred to as the "Intellectual Property") owned by the Company constitutes
all of the intellectual property, whether or not owned by the Company used by
it to any material extent in the conduct of the business in which it is
presently engaged. None of such Intellectual Property has been assigned,
transferred or licensed to or from any third party and the validity or
enforceability of such Intellectual Property as used in the conduct of such
business has not been challenged by others in any proceeding or dispute about
which the Company has received written notice in writing, nor is there any
pending or, to the best knowledge of the Company, threatened litigation or
proceeding challenging any of their right to use any such Intellectual
Property. The consummation of the transactions contemplated by this Agreement
will not adversely affect the Company's rights to the Intellectual Property.
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ARTICLE III
CONDITION PRECEDENT TO OBLIGATION OF BH
The obligations of the BH under this Agreement are subject to the
satisfaction, at or before the closing date, of the following conditions:
3.01 Offering Documents. The Company will prepare a private placement
memorandum setting forth a description of the Company, risk associated with an
investment in the Company and a description of the securities to be purchased.
The private placement memorandum will not do not contain any untrue statements
of any material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
3.02 Filings. The Company will cause to be prepared, executed and
timely filed with respect to the offer and sale of the shares of Common Stock
and Warrants one or more notices on Form D with the appropriate office of the
Commission and will take all action necessary to comply with Rule 503 of the
general rules and regulations under the Securities Act regarding the filing of
notice(s) of sales.
3.03 State Compliance. The Company will use its best efforts to
either take all necessary action and file all necessary forms and documents in
order to qualify or register the shares of Common Stock and Warrants for sale as
BH shall from time to time request or will take any necessary action and file
any and all forms which are required to obtain an exemption from such
qualification or registration in such states as BH and the Company mutually
agree upon including filing a form D with the appropriate federal and state
securities agencies.
3.04 Additional Documentation. The Company will promptly provide BH
for delivery to all members, partners or shareholders in any entity that BH
forms to purchase the shares of Common Stock and Warrants any additional
information, documents, and instruments or assist in the preparation of any
documents or instruments which BH or the Company deem necessary to comply with
the rules, regulations, and judicial and administrative interpretations
respecting compliance with exemptions or qualifications and registration
requirements in those states where XX xxxxx necessary.
3.05 Expenses. The Company shall bear the expenses incurred in
qualifying or otherwise clearing the shares of Common Stock and Warrants under
the securities or blue sky laws of the States of Arizona and Utah, including
the fees and charges of such states and the cost of preparing a Blue Sky
Memorandum with respect thereto, setting forth the states in which such
registration and/or qualification or other clearance has been completed and
specifying any and all conditions thereto. From time to time BH may request a
review to reflect the registration and/or qualification requirements in
additional states and after such review may request the Company to register or
qualify the offer and sale of the shares of Common Stock and Warrants in such
states; provided that, all cost and expenses associated with the review of such
states and any subsequent qualification or registration in such state other
than Arizona or Utah shall be born by BH.
3.06 Approval of Counsel. Counsel for BH shall have completed a
review of the form and content of the private placement memorandum, the
Company's organization and present legal status, the Company's financial
conditions and of the legality and validity of the authorization and issuance
of the shares of Common Stock.
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3.07 Outstanding Obligations. The Company shall have performed all
of its obligations under this Agreement. All of the statements, representations
and warranties contained in this Agreement shall be complete and true.
3.08 Pending Litigation. From the date of this Agreement until the
closing, no claims or litigation shall have been instituted or threatened
against the Company for substantial amounts or which would materially adversely
affect the Company, its business or its property and no reasonable basis exists
for such claims or threats. Further, no proceeding shall have been instituted
or threatened against the Company before any regulatory body wherein an
unfavorable ruling would have a material adverse effect on the Company.
ARTICLE IV
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the closing date, of the following conditions:
4.01 Representations. BH, or any entity which it creates to
purchase the shares of Common Stock and Warrants, shall provide the Company
such representations and warrants necessary to satisfy the Company and its
counsel that BH and any partners, member or shareholder in any entity
purchasing the shares of Common Stock and Warrants meets certain suitability
requirements and that such sale will comply with exemptions from the
registration processes of the Securities Act and of certain state statutes.
ARTICLE V
SPECIAL COVENANTS
5.01 Activities of the Company.
(a) From and after the date of this Agreement until the
closing date and except as set forth herein or as permitted or
contemplated by this Agreement, the Company will:
(i) Carry on its business in substantially the same
manner as it has heretofore;
(ii) Maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iii) Perform in all material respects all of its
obligations under material contracts, leases, and instruments
relating to or affecting its assets, properties, and business;
(iv) Use its best efforts to maintain and preserve
its business organization intact, to retain its key employees,
and to maintain its relationships with its material suppliers
and customers;
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(v) Except to the extent that non compliance is not material
or adverse to the Company, duly and timely file for all taxable periods
ending on or prior to the Closing Date all federal, state, county, and
local tax returns required to be filed by or on behalf of such entity or
for which such entity may be held responsible and shall pay, or cause to
pay, all taxes required to be shown as due and payable on such returns,
as well as all installments of tax due and payable during the period
commencing on the date of this Agreement and ending on the closing date;
and
(vi) Fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and state laws
and all rules, regulations, and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement and except as provided
herein until the closing date, the Company will not:
(i) Make any change in its articles of incorporation or
bylaws;
(ii) Enter into or amend any material contract, agreement, or
other instrument, except in the ordinary course of business; and
(iii) Enter into any agreement for the sale of the Company's
securities without the prior approval of the other party.
5.02 Access to Books and Records. Until the closing date, the Company
will afford to BH and its authorized representatives full access to the
properties, books, and records of the Company in order that BH may have full
opportunity to make such reasonable investigation as it shall desire to make of
the affairs of the Company and will furnish the BH with such additional
financial and other information as to the business and properties of the
Company as BH shall from time to time reasonably request.
5.03 Piggy Back Registration Rights. If at any time during the next
five years the Company shall prepare and file a registration statement with the
Commission to register shares of its Common Stock, excluding an S-8 or S-4
registration statement, the Company agrees to register the 500,000 shares of
Common Stock to be issued hereunder as well as the shares of Common Stock
issueable on the exercise of the Warrants in such registration statement as
follows:
(a) The Company shall promptly give written notice that it
intends to file a registration statement to the holders of the shares of
Common Stock and Warrants at least 45 days prior to any such filing. The
holders of the shares of Common Stock and Warrants will have 20 days
after receipt of the notice from the Company to notify, in writing, the
Company of their desire to include in such registration statement shares
of Common Stock. The Company shall include in such registration
statement that number of shares of Common Stock requested by the holders
subject to the provisions herein.
(b) The Company will pay all expenses of such registration
statement, including, without limitation, printing charges, legal fees,
and disbursements of counsel for the Company,
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blue sky expenses, accounting fees, and filing fees, but not including legal
fees and disbursements of counsel to the Holders.
(c) If the Company, in its sole discretion, determines to file a
registration statement or registration statements during the next five years,
except for registration statements for the sole purpose of registering shares
for employees, directors or consultants of the Company, it shall take all steps
reasonably necessary to permit the registration of the shares of Common Stock
and the exercise of the Warrants and the issuance of the shares of Common Stock
pursuant to such exercise under the applicable state securities laws of those
states in which the shares of Common Stock and Warrants were issued or
originally registered or qualified for sale and issuance by the Company. The
Company will take such reasonable steps which it determines, in its sole
discretion, are necessary to permit the registration or qualification of the
shares of Common Stock and the exercise of Warrants and the issuance of the
shares of Common Stock pursuant to such exercise under the laws of any other
state in which a holder of the shares of Common Stock or Warrants then resides
on the written request to do so by such holder, but in no event shall the
Company be required to take such steps in any state other than those states in
which the shares of Common Stock and Warrants were originally qualified or
registered, and the Company shall not be obligated to execute or file any
general consent to service of process or to qualify as a foreign corporation to
do business under the laws of any such jurisdiction. Holders of shares of
Common Stock and Warrants who reside in any state where the Company cannot,
with the exercise of reasonable diligence, obtain qualification for the
exercise of the Warrants, and the issuance of the shares of Common Stock may
not, as a result thereof be able to exercise their Warrants, and the Company is
under no obligation to make such exercise possible in such circumstances. In
the event that the Company determines to proceed with the qualification of the
exercise of the Warrants and the issuance of the shares of Common Stock under
the securities laws of a particular state, then the exercise of such Warrants
shall not be effective and the shares of Common Stock shall not be issued until
such qualification becomes effective. When qualification under applicable state
securities laws is required, the Company shall take such action within ten days
following the date on which the Company first files the registration statement.
The costs of obtaining such state qualification shall be borne by the Company.
(d) The Company shall promptly notify the holders of the shares of
Common Stock and the Warrants of the effective date of any registration
statement filed by the Company and the date on which the shares of Common Stock
become qualified or registered under the state securities laws of any state in
which the Company obtains qualification or registration with respect to such
shares.
(e) Notwithstanding any provisions to the contrary contained
herein, the Company shall not be required to include any of the shares of
Common Stock in any registration statement or post-effective amendment with
respect to shares offered in any underwriting:
(i) Unless the holders of the shares of Common Stock and
Warrants agree to offer such shares of Common Stock, on the same terms
and conditions as the Company's shares of Common Stock are being
offered, and to sign an underwriting agreement in the form to be signed
by the other offerors; or
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(ii) If, in the good faith and reasonable opinion of
the managing underwriter of the offering, the sale of the shares
of Common Stock to be included would be materially detrimental
to the remainder of the offerors.
(f) The shareholders desiring to sell shares of Common Stock
pursuant to the registration rights granted herein shall provide the
Company with all information relating to such sale and on which the
Company shall be entitled to rely and to include such information in any
such registration statement. The holders of the shares of Common Stock
and Warrants shall indemnify and save harmless the Company (and all
other persons who may be subject to liability under the Act or
otherwise) from and against any and all claims, actions, suits,
liabilities, losses, damages, and expenses of every nature and character
(including, but not by way of limitation, all reasonable attorneys' fees
and all amounts paid in settlement of any claim, action, or suit) which
arise or result directly or indirectly from any untrue statement of a
material fact furnished by such holder in connection with such
registration or qualification, or from the failure of the holder of the
shares of Common Stock to furnish material information in connection
with the facts required to be included in such registration statement,
notification, or post-effective amendment necessary to make the
statements therein not misleading, or from any sales or offers of the
shares of Common Stock so registered after ninety (90) days from the
effective date of such registration statement or notification.
(g) All sales pursuant to any such registration statement
shall be made in accordance with the provisions of the Securities Act
and the Securities Exchange Act of 1934, as amended, and the Company
shall not be required to include any such shares of Common Stock in any
registration until it has received written assurances satisfactory in
form and substance to the Company from the shareholders offering such
shares of Common Stock that such sales shall be so conducted. On notice
to any shareholder offering shares of Common Stock covered by a
registration statement that such registration statement or prospectus
relating thereto requires revision, such holder will immediately cease
to make offers or sales pursuant to such registration statement, return
all such registration statements and prospectuses to the Company, and
not resume offers until he or she has been provided with an updated
prospectus by the Company. The Company is under no obligation to
maintain the effectiveness of any registration statement for more than
an aggregate of 90 days.
5.04 Securities Representations. BH understands and agrees that the
consummation of this Agreement including the issuance of shares of Common Stock
and Warrants as contemplated hereby, constitutes the offer and sale of
securities under the Securities Act and applicable state statutes. BH agrees
that such transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes which depend,
among other items, on the circumstances under which such securities are
acquired. In order to provide documentation for reliance upon exemptions from
the registration and prospectus delivery requirements for such transactions, BH,
or the entities it creates to purchase the securities, agrees that it will sign
appropriate representations and warrants related to its suitability to invest in
the Company, including an investment letter and suitability questionnaire.
5.05. Additional Filings. In connection with the transaction
contemplated by this Agreement, the Company and BH shall each file, with the
assistance of the other and their respective legal counsel, such notices,
applications, reports, or other instruments as may be deemed by them to be
necessary or
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appropriate in an effort to document reliance on such exemptions, and the
appropriate regulatory authority in the states where the shares of Common Stock
and Warrants will be deemed to have been offered and sold, all to the extent
and in the manner as may be deemed by such parties to be appropriate.
5.06 Legal Opinions. BH acknowledges that the basis for relying on
exemptions from registration or qualifications are factual, depending on the
conduct of the various parties, and that no legal opinion or other assurance
will be required or given to the effect that the transactions contemplated
hereby are in fact exempt from registration or qualification.
5.07 Compliance with Rule 144.
(a) The Company will use its best efforts to at all times
satisfy the current public information requirements of rule 144
promulgated under the Securities Act so that its shareholders can sell
restricted securities that have been held for two years or more or such
other restricted period as required by rule 144 as it is from time to
time amended. This covenant shall survive the closing of this Agreement.
(b) Upon being informed in writing by any person holding
restricted stock sold pursuant to this Agreement that such person
intends to sell any shares under rule 144 promulgated under the
Securities Act (including any rule adopted in substitution or
replacement thereof), the Company will certify in writing to such person
that it is compliance with rule 144 current public information
requirement to enable such person to sell such person's restricted stock
under rule 144, as may be applicable under the circumstances.
(c) If any certificate representing any such restricted
stock is presented to the Company's transfer agent for registration or
transfer in connection with any sales theretofore made under rule 144,
provided such certificate is duly endorsed for transfer by the
appropriate person(s) or accompanied by a separate stock power duly
executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is
accompanied by an opinion of counsel satisfactory to the Company and its
counsel that such transfer has complied with the requirements of rule
144, as the case may be, the Company will promptly instruct its transfer
agent to register such transfer and to issue one or more new
certificates representing such shares to the transferee and, if
appropriate under the provisions of rule 144, as the case may be, free
of any stop transfer order or restrictive legend.
5.08 New Directorships. Upon closing of the transactions
contemplated by this Agreement, a nominee of BH shall be appointed to the board
of directors of the Company to fill a currently vacant directorship, and at the
request of BH, the current board of directors of the Company may be expanded to
seven directorships with the new directorship being filled with an individual
mutually acceptable to the Company and BH. The Company's current management
shall support the nominee(s) of BH at any and all shareholder meeting where
directors are to be nominated and elected.
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5.09 Future Obligations. The Company shall upon the closing of this
Agreement:
(a) Retain as auditors to the Company a "big six"
accounting firm for purposes of auditing the Company's future financial
statements commencing with the December 31, 1997, financial statements;
(b) Create an advisory board of professional advisors who
shall be selected in conjunction with BH;
(c) Retain a public relations firm with national marketing
experience and provide a maximum annual budget of $30,000 for public
relations expense; and
(d) Require all directors to be shareholders holding at
least 5,000 shares of Common Stock unless waived by BH.
This covenant shall survive the closing of this Agreement.
5.10. Expenses of Sale. The Company will pay all expenses incident to
the performance of its obligations hereunder, including but not limited to the
fees and expenses of its counsel and accountants, the cost of preparation of a
private placement memorandum and the cost of qualifying the offer and sale of
the shares of Common Stock and Warrants in various states or obtaining an
exemption from state registration requirements.
5.11 Company's Indemnification. The Company will indemnify and hold
harmless BH and Xxxx Xxxxxx and Xxxx Xxxxxx, individually, from and against any
and all losses, claims, damages, expenses, liabilities, or actions to which any
of them may become subject under applicable law (including the Securities Act
and the Securities Exchange Act) and will reimburse them for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any claims or actions, whether or not resulting in liability, insofar
as such losses, claims, damages, expenses, liabilities, or actions arise out of
or are based upon any untrue statement or alleged untrue statement of material
fact contained in any application or statement filed with a governmental body
or arising out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary in order to
make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Company expressly for use therein. The
indemnity agreement contained herein shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of BH, Xxxx
Xxxxxx and Xxxx Xxxxxx and shall survive the consummation of the transactions
contemplated by this Agreement.
5.12 BH's Indemnification. BH will indemnify and hold harmless the
Company and its directors and officers, and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any and
all losses, claims, damages, expenses, liabilities, or actions to which any of
them may become subject under applicable law (including the Securities Act and
the Securities Exchange Act) and will reimburse them for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any claims or actions, whether or not resulting in liability, insofar
as such losses, claims, damages, expenses, liabilities, or actions arise out of
or are based upon any untrue statement or alleged untrue statement of material
fact contained in any application or
-15-
16
statement filed with a governmental body or arising out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing by BH
expressly for use therein. The indemnity agreement contained herein shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Company and shall survive the consummation of the
transactions contemplated by this Agreement.
5.13 Future Compensation. The Company will not use the funds obtained
hereunder for (i) paying any accrual or arrangement for or payment of bonuses
or special compensation of any kind or any severance or termination pay to any
present or former officer or employee; (ii) paying any increase in the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its employees whose monthly compensation exceeds $4,000; or
(iii) paying any increase in any profit-sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with their officers or directors;
5.14 Lock Up of Shares. The Company agrees to obtain a two year lock
up on the 130,000 shares of Common Stock held by Xxxx Xxxxxxxx and received by
Xx. Xxxxxxxx in relation to his sale of property to the Company. The lock up
agreement shall prevent Xx. Xxxxxxxx from selling any of the 130,000 shares of
Common Stock for a period of two years and after the two year period Xx.
Xxxxxxxx shall be permitted to sell only 25,000 shares of Common Stock during
any 90 day period. The terms and conditions of the agreement to prevent the sale
of Xx. Xxxxxxxx shares of Common Stock shall be subject to the approval of BH.
Xx. Xxxxxxxx, subject to the terms and conditions of the above "lock up," shall
be given the same "piggy back" registration rights of BH set forth in section
5.03 hereof; provided that, during all periods where Xx. Xxxxxxxx would be
subject to the above "lock up," the Company will not be obligated to include Xx.
Xxxxxxxx as a selling shareholder in any registration statement the company
files in that Xx. Xxxxxxxx would not be able to sell the shares of Common Stock
registered in such registration statement due to the "lock up." This covenant
shall survive the closing of this Agreement.
(The rest of this page intentionally left blank.)
-16-
17
ARTICLE VI
MISCELLANEOUS
6.01 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered, if sent
by facsimile or telecopy transmission or other electronic communication
confirmed by registered or certified mail, postage prepaid, or if sent by
prepaid overnight courier addressed as follows:
If to Xxxxxx and Xxxxxx, to: Xxxx Xxxxxx, President
Xxxxxx and Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: (000) 000-0000
With Copies to: Xxxxxx X. Xxxxxxx, Esq.
3090 East 0000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
If to the Company, to: Xxxx X. Xxxxxxxxxxx, President
Zevex International, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: (000) 000-0000
With copies to: A.O. "Bud" Headman, Esq.
Cohne Xxxxxxxxx & Xxxxx
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 84102
X. Xxxxxxx Weeks, Esq.
Weeks Law Firm
000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices, hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered or sent by
facsimile or telecopy transmission or other electronic communication, or one
day after the date so sent by overnight courier.
6.02 Attorney's Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
6.03 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein.
6.04 Survival; Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of six months
from the Closing Date, unless otherwise provided herein.
6.05 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
-17-
18
6.06 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and such remedies may be enforced concurrently,
and no waiver by any party of the performance of any obligation by the other
shall be construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time prior to the
Closing Date, this Agreement may be amended by a writing signed by all parties
hereto, with respect to any of the terms contained herein, and any term or
condition of this Agreement may be waived or the time for performance thereof
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.
6.07 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the Company and the Placement Agent and their successors.
Nothing expressed in this Agreement is intended to give any person other than
the persons mentioned in the preceding sentence any legal or equitable right,
remedy or claim under this Agreement. However, the representations, warranties
and indemnity, and defense obligations of the Company included in this
Agreement also inure to the benefit of any person who controls the Placement
Agent within the meaning of Section 15 of the Securities Act and the
representations, warranties and indemnities, and defense obligations of the
Placement Agent inure to the benefit of each officer and director of the
Company, and each person who controls the Company within the meaning of Section
15 of the Act.
6.08 Severability. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder hereof.
6.09 Captions. The captions or headings in this Agreement are
inserted for convenience and identification only and are not intended to
describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provisions hereof.
(The rest of this page intentionally left blank.)
-18-
19
6.10 Applicable Law. This Agreement shall be governed by and construed
and enforced under and in accordance with the laws of the state of Utah, except
to the extent any law, rule or regulation of the United States may be
applicable, in which case such federal law, rule or regulation shall control.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first above written.
Zevex International, Inc. Xxxxxx and Xxxxxx
a Nevada corporation
By: /s/ XXXX X. XXXXXXXXXXX By: /s/ XXXX XXXXXX
------------------------------ -----------------------------
Xxxx X. Xxxxxxxxxxx, President Xxxx Xxxxxx (individually and
on behalf of Xxxxxx and
Xxxxxx)
By: /s/ XXXX XXXXXX
-----------------------------
Xxxx Xxxxxx (individually and
on behalf of Xxxxxx and
Xxxxxx)
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE)
On this 1st day of December, 1996, personally appeared before me Xxxx
X. Xxxxxxxxxxx, whose identity is personally known to me and who by me duly
sworn, did say that he is the President of Zevex International, Inc. and that
said document was signed by him of behalf of said corporation by authority of
its bylaws, and said Xxxx X. Xxxxxxxxxxx acknowledged to me that said
corporation executed the same.
[SIG] XXXXXXX X. XxXXXXXX
--------------------- NOTARY PUBLIC - STATE of UTAH
NOTARY PUBLIC [SEAL] 000 XXXXXXX XXXXX
XXXXXX, XX 00000
COMM. EXPIRES 0-00-00
XXXXX XX XXXX )
xx.
XXXXXX XX XXXX XXXX)
Xx this 1st day of December, 1996, personally appeared before me Xxxx
Xxxxxx, whose identity is personally known to me and who by me duly sworn, did
say that he a partner in Xxxxxx and Xxxxxx and that said document was signed by
him of behalf of said partnership and by him individually.
[SIG] XXXXXXX X. XxXXXXXX
--------------------- NOTARY PUBLIC - STATE of UTAH
NOTARY PUBLIC [SEAL] 000 XXXXXXX XXXXX
XXXXX XX XXXXXXX ) XXXXXX, XX 00000
ss. COMM. EXPIRES 0-00-00
XXXXXX XX XXXXXXXX)
Xx this 3rd day of December, 1996, personally appeared before me Xxxx
Xxxxxx, whose identity is personally known to me and who by me duly sworn, did
say that he a partner in Xxxxxx and Xxxxxx and that said document was signed by
him of behalf of said partnership and by him individually.
/s/ XXXXX XXXXX OFFICIAL SEAL
--------------------- XXXXX XXXXX
NOTARY PUBLIC [SEAL] Notary Public - State of Arizona
MARICOPA COUNTY
My Commission Expires Aug. 24, 1997
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20
Schedules to Stock Purchase Agreement dated November , 1996.
Section 2.08
1)130,000 Common Stock issued to Xxxx Xxxxxxxx 10/29/96, for
3.65 acres of land in Murray, Utah,
2)82,800 Employee Incentive Stock Options, issued to
employees between 10/17/90 - 9/30/96,
3)12,000 Non-Employee Stock Options issued to Directors.
Section 2.10(a)
1)As described in schedule 2.10(b).
Section 2.10(b)
1)$2,000,000 in proceeds from Murray City, Utah Adjustable
Rate Industrial Development Bond,
2)$2,024,658 Letter of Credit with Bank One Utah,
3)$2,000,000 Murray City, Utah Adjustable Rate Industrial
Development Bond, $100,000 principal plus interest due
annually,
4)$500,000 Line of Credit with Bank One Utah.
Section 2.11(a)
1)As described in schedule 2.10(b).
Section 2.11(b)
1)As described in schedule 2.10(b).
Section 2.11(c)
====================================================================
Plan Shares Shares Issued Shares Expired
Authorized or Cancelled
--------------------------------------------------------------------
1990 ISOP 60,000 60,000 4,200
--------------------------------------------------------------------
1993 ISOP 240,000 22,800 4,500
--------------------------------------------------------------------
1996 NESOP 100,000 12,000 0
====================================================================
21
Section 2.12
1)UCC filings related to transactions described in Section
2.10(b).
Section 2.13
1)Xxxxx X. Xxxxx v. ZEVEX Inc. UADD No. 97-0054 (Title VII
of the Civil Rights Act of 1964)
2)ZEVEX, Inc. v. Xxxxxxx Xxxxxxx DBA Crantec (Bad Debt
Collection)
22
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement (this "Amendment") is
entered into as of September 30, 1997 by and among Zevex International, Inc., a
Nevada corporation (the "Company") and Xxxxxx & Xxxxxx, L.L.C., a Utah limited
liability company (hereinafter referred to as "BH"), collectively referred to
hereinafter as the "Parties" or individually, a "Party."
WHEREAS the Parties hereto have previously entered into a certain
Stock Purchase Agreement, dated December 1, 1996 (the "Agreement"), wherein BH
agreed to purchase 500,000 shares of Common Stock of the Company ("Common
Stock") and warrants for an additional 500,000 shares of Common Stock;
WHEREAS BH has transferred the warrants and certain rights pursuant
thereto;
WHEREAS the parties desire to amend the Agreement in certain respects;
NOW, THEREFORE, in consideration of the mutual promises contained in
the Agreement and in this Amendment, the Parties hereto agree as follows:
1. Article V of the Agreement shall be amended in its entirety to
read as follows:
ARTICLE V
SPECIAL COVENANTS
5.01 Piggy Back Registration Rights. If at any time
during the next five years the Company shall file a registration
statement with the Commission to register shares of its Common Stock,
excluding an S-8 or S-4 registration statement, the Company agrees to
register the 500,000 shares of Common Stock to be issued hereunder as
well as the shares of Common Stock issuable on the exercise of the
Warrants in such registration statement as follows:
(a) The Company shall promptly give written notice that
it intends to file a registration statement to the holders of the
shares of Common Stock and Warrants at least 45 days prior to any such
filing. The holders of the shares and Warrants will have 20 days
after receipt of the notice from the Company to notify, in writing,
the Company of their desire to include in such registration statement
shares of Common Stock. The Company shall include in such
registration statement that number of shares of Common Stock requested
by the holders subject to the provisions herein.
(b) The Company will pay all expenses of such
registration statement, including, without limitation, printing
charges, legal fees, and disbursements of counsel for the Company,
blue sky expenses, accounting fees, and filing fees, but not including
legal fees and disbursements of counsel to the Holders.
23
(c) If the Company, in its sole discretion, determines to
file a registration statement or registration statements during the
next five years, except for registration statements for the sole
purpose of registering shares for employees, directors or consultants
of the Company, it shall take all steps reasonably necessary to permit
the registration of the shares of Common Stock and the exercise of the
Warrants and the issuance of the shares of Common Stock pursuant to
such exercise under the applicable state securities laws of those
states in which the shares of Common Stock and Warrants were issued or
originally registered or qualified for sale and issuance by the
Company. The Company will take such reasonable steps which it
determines, in its sole discretion, are necessary to permit the
registration or qualification of the shares of Common Stock and the
exercise of Warrants and the issuance of the shares of Common Stock
pursuant to such exercise under the laws of any other state in which a
holder of the shares of Common Stock or Warrants then resides on the
written request to do so by such holder, but in no event shall the
Company be required to take such steps in any state other than those
states in which the shares of Common Stock and Warrants were
originally qualified or registered, and the Company shall not be
obligated to execute or file any general consent to service of process
or to qualify as a foreign corporation to do business under the laws
of any such jurisdiction. Holders of shares of Common Stock and
Warrants who reside in any state where the Company cannot, with the
exercise of reasonable diligence, obtain qualification for the
exercise of the Warrants, and the issuance of the shares of Common
Stock may not, as a result thereof be able to exercise their Warrants,
and the Company is under no obligation to make such exercise possible
in such circumstances. In the event that the Company determines to
proceed with the qualification of the exercise of the Warrants and the
issuance of the shares of Common Stock under the securities laws of a
particular state, then the exercise of such Warrants shall not be
effective and the shares of Common Stock shall not be issued until
such qualification becomes effective. When qualification under
applicable state securities laws is required, the Company shall take
such action within ten days following the date on which the Company
first files the registration statement. The costs of obtaining such
state qualification shall be borne by the Company.
(d) The Company shall promptly notify the holders of the
shares of Common Stock and the Warrants of the effective date of any
registration statement filed by the Company and the date on which the
shares of Common Stock become qualified or registered under the state
securities laws of any state in which the Company obtains
qualification or registration with respect to such shares.
(e) Notwithstanding any provisions to the contrary
contained herein, the Company shall not be required to include any of
the shares of Common Stock in any registration statement or
post-effective amendment with respect to shares offered in any
underwriting:
2
24
(i) Unless the holders of the shares of
Common Stock and Warrants agree to offer such shares
of Common Stock, on the same terms and conditions as
the Company's shares of Common Stock are being
offered, and to sign an underwriting agreement in the
form to be signed by the other offerors; or
(ii) If, in the good faith and reasonable
opinion of the managing underwriter of the offering,
the sale of the shares of Common Stock to be included
would be materially detrimental to the remainder of
the offerors.
(f) The shareholders desiring to sell shares of Common
Stock pursuant to the registration rights granted herein shall provide
the Company with all information relating to such sale and on which
the Company shall be entitled to rely and to include such information
in any such registration statement. The holders of the shares of
Common Stock and Warrants shall indemnify and save harmless the
Company (and all other persons who may be subject to liability under
the Act or otherwise) from and against any and all claims, actions,
suits, liabilities, losses, damages, and expenses of every nature and
character (including, but not by way of limitation, all reasonable
attorneys' fees and all amounts paid in settlement of any claim,
action, or suit) which arise or result directly or indirectly from any
untrue statement of a material fact furnished by such holder in
connection with such registration or qualification, or from the
failure of the holder of the shares of Common stock to furnish
material information in connection with the facts required to be
included in such registration statement, notification, or
post-effective amendment necessary to make the statements therein not
misleading, or from any sales or offers of the shares of Common Stock
so registered after ninety (90) days from the effective date of such
registration statement or notification.
(g) All sales pursuant to any such registration statement
shall be made in accordance with the provisions of the Securities Act
and the Securities Exchange Act of 1934, as amended, and the Company
shall not be required to include any such shares of Common Stock in
any registration until it has received written assurances satisfactory
in form and substance to the Company from the shareholders offering
such shares of Common Stock that such sales shall be so conducted. On
notice to any shareholder offering shares of Common Stock covered by a
registration statement that such registration statement or
prospectuses relating thereto requires revision, such holder will
immediately cease to make offers or sales pursuant to such
registration statement, return all such registration statements and
prospectus to the Company, and not resume offers until he or she has
been provided with an updated prospectus by the Company. The Company
is under no obligation to maintain the effectiveness of any
registration statement for more than an aggregate of 90 days.
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5.02 Compliance with Rule 144.
(a) The Company will use its best efforts to at all times
satisfy the current public information requirements of rule 144
promulgated under the Securities Act so that its shareholders can sell
restricted securities that have been held for two years or more or
such other restricted period as required by rule 144 as it is from
time to time amended. This covenant shall survive the closing of this
Agreement.
(b) Upon being informed in writing by any person holding
restricted stock sold pursuant to this Agreement that such person
intends to sell any shares under rule 144 promulgated under the
Securities Act (including any rule adopted in substitution or
replacement thereof), the Company will certify in writing to such
person that it is in compliance with rule 144 current public
information requirement to enable such person to sell such person's
restricted stock under rule 144, as may be applicable under the
circumstances.
(c) If any certificate representing any such restricted
stock is presented to the Company's transfer agent for registration or
transfer in connection with any sales theretofore made under rule 144,
provided such certificate is duly endorsed for transfer by the
appropriate person(s) or accompanied by a separate stock power duly
executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is
accompanied by an opinion of counsel satisfactory to the Company and
its counsel and that such transfer has complied with the requirements
of rule 144, as the case may be, the Company will promptly instruct
its transfer agent to register such transfer and to issue one or more
new certificates representing such shares to the transferee and, if
appropriate under the provisions of rule 144, as the case may be, free
of any stop transfer order or restrictive legend.
5.03 New Directorships. BH shall have the right to
nominate one (1) person to serve as a director of the Company;
provided that such person shall be mutually satisfactory to BH and the
Company.
5.04 Future Obligations. The Company covenants to:
(a) Retain as auditors to the Company a "big six"
accounting firm for purposes of auditing the Company's future
financial statements commencing with the December 31, 1997, financial
statements;
(b) Create an advisory board of professional advisors who
shall be selected in conjunction with BH; and
(c) Retain a public relations firm with national
marketing experience and provide a maximum annual budget of $30,000
for public relations expense.
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(d) Require all directors to be either a shareholder or
option holder of the Company.
5.05 Company's Indemnification. The Company will
indemnify and hold harmless BH and Xxxx Xxxxxx and Xxxx Xxxxxx,
individually, from and against any and all losses, claims, damages,
expenses, liabilities, or actions to which any of them may become
subject under applicable law (including the Securities Act and the
Securities Exchange Act) and will reimburse them for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not
resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon any
untrue statement or alleged untrue statement of material fact
contained in any application or statement filed with a governmental
body or arising out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in
writing by the Company expressly for use therein. Subject to Section
5.07 herein, the indemnity agreement contained herein shall remain
operative and in full force and effect, regardless of any
investigation made by or on behalf of BH, Xxxx Xxxxxx and Xxxx Xxxxxx.
5.06 BH's Indemnification. BH will indemnify and hold
harmless the Company and its directors and officers, and each person,
if any, who controls the Company within the meaning of the Securities
Act, from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which any of them may become subject under
applicable law (including the Securities Act and the Securities
Exchange Act) and will reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any claims or actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon any untrue
statement or alleged untrue statement of material fact contained in
any application or statement filed with a governmental body or arising
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary in
order to make the statements therein not misleading, but only insofar
as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by BH expressly for
use therein. Subject to Section 5.07 herein, the indemnity agreement
contained herein shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Company.
5.07 Expiration of Covenants. The covenants contained in
this Article V shall expire when BH, together with Xxxx Xxxxxx, an
individual residing in the State of Utah, and Xxxx X. Xxxxxx, an
individual residing in the State of Arizona, no
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longer holds at least six and one-half percent (6.5%) of the then
outstanding voting securities of the Company.
2. BH hereby acknowledges that the previous assignment of the
warrants included only an assignment of the registration rights of such
warrants and no other rights in Article V of the Agreement.
3. This Amendment shall terminate in the event that, prior to
December 31, 1997, the Company fails to close a public offering of its Common
Stock with net proceeds to the Company of at least $15 million.
4. This Amendment is and shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors, assigns, and
personal representatives.
5. If any provision of the Amendment is deemed by a court of
competent jurisdiction to be invalid and contrary to any existing or future
law, such invalidity shall not impair the operation of the remaining provisions
of the Amendment.
6. This Amendment, together with the Agreement, constitutes the
entire agreement of the Parties with respect to the subject matter hereof and
supersedes any prior oral or written agreements with respect to the subject
matter contained herein.
7. This Amendment shall be construed in accordance with and
governed by the laws of the State of Utah without regard to the conflict of
laws.
IN WITNESS WHEREOF, the Parties have executed this Amendment to be
effective as of the date and year first written above. This Amendment may be
signed in counterparts, all of which together shall constitute one and the same
instrument.
ZEVEX INTERNATIONAL, INC.
a Nevada corporation
By: /s/ XXXX X. XXXXXXXXXXX
------------------------------------
Xxxx X. Xxxxxxxxxxx, President
XXXXXX & XXXXXX, L.L.C.
a Utah limited liability company
By: /s/ XXXX XXXXXX
-------------------------------------
Xxxx Xxxxxx, managing member
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