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Exhibit 10.13
UROSURGE, INC.
NOTE AND WARRANT AGREEMENT
This Agreement is made effective as of May 26, 1998, among UroSurge,
Inc., a Delaware corporation (the "Company"), with its principal office at 0000
Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000 and the Investors set forth on the
signature pages hereto (collectively, the "Investors").
1. Sale and Issuance of the Notes and the Warrants.
1.1 Loan and Issuance of Notes. The Investors severally agree,
on the terms of and subject to the conditions specified in this Agreement, to
lend to the Company up to the sum set forth on the signature page of this
Agreement. Each Investor's loan shall be evidenced by a subordinated promissory
note (the "Note") dated as of the Closing Date in the form attached hereto as
Exhibit A. These Notes, together with the other notes issued pursuant to this
Agreement, are collectively referred to as the "Notes."
1.2 Warrants. At the Closing, the Company shall issue to each
Investor a Stock Purchase Warrant (the "Warrant") dated as of the Closing Date
in the form attached hereto as Exhibit B to purchase a number of the class
and/or series of shares of the Company's capital stock issued in the Next
Financing (as defined in the Note). The capital stock expected to be issued in
the Next Financing is Common Stock of the Company. These Warrants, together with
the other stock purchase warrants issued pursuant to this Agreement, are
collectively referred to as the "Warrants." The securities for which the
Warrants are exercisable are referred to as the "Exercise Stock." The Notes and
the Warrants and the Exercise Stock, are collectively referred to as the
"Securities."
1.3 Place and Date of Closing. The closing of these
transactions (the "Closing") will be held at the offices of Wilson, Sonsini,
Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx at 10:00 a.m. on
the date hereof, or at such other time and place as the parties shall mutually
agree (the "Closing Date").
1.4 Delivery. At the Closing, the Company shall deliver to
each Investor a Note in the principal amount set forth on the signature page
hereof and a Warrant to purchase shares of the Company's capital stock. At the
Closing, each Investor shall deliver the amount of such Investor's loan as set
forth on the signature page hereof.
1.6 Subsequent Loans. The Company may request on three
occasions that each Investor loan to the Company additional funds equal to up to
the difference between each Investor's loan commitment set forth on the
signature pages hereto less the amount of each Investor's initial and any
subsequent loans. Each such request shall be made by giving thirty (30) days'
prior written notice and shall request that the Investors loan the Company an
aggregate amount of at least $1,000,000.00.
Any such additional loans shall be made by each Investor on a pro rata basis
based on the relationship that each Investor's loan commitment (set forth on the
signature page hereto) bears to the aggregate loan commitments of all of the
Investors.
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2. The Company's Representations and Warranties.
The Company hereby represents and warrants to the Investors as follows:
2.1 Organization and Standing. The Company is a corporation
duly organized and validly existing under, and by virtue of, the laws of
Delaware and is in good standing under such laws. The Company has the requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in which the failure to be so
qualified would have a materially adverse impact on the business or financial
condition of the Company taken as a whole.
2.2 Corporate Power. The Company will have at the Closing Date
all requisite legal and corporate power to execute and deliver this Agreement,
to sell and issue the Notes and the Warrants hereunder, to issue the Warrant
Shares upon exercise of the Warrants, to issue the Warrant Shares and to carry
out and perform its obligations under the terms of this Agreement.
2.3 Subsidiaries. The Company has no subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any other corporation, association or business entity.
2.4 Authorization. All corporate action on the part of the
Company, its directors and shareholders necessary for the sale and issuance of
the Notes and Warrants and the performance of the Company's obligations under
this Agreement, the Notes and the Warrants will be taken prior to the Closing.
This Agreement, each Investor's Note and each Investor's Warrant are valid,
binding and enforceable obligations of the Company, subject to applicable
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditor's rights and to the availability of the remedy of
specific performance. The execution and delivery of the Agreements, the Notes
and the Warrants and the performance by the Company of their respective terms do
not violate, conflict with or result in a material breach of (i) the Company's
Articles of Incorporation, as amended through the Closing Date; (ii) the
Company's Bylaws; (iii) any judgment, order or decree of any court or arbitrator
to which the Company is a party; or (iv) any contract, undertaking, indenture or
other agreement or instrument by which the Company is now bound or to which it
is now a party. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or arbitrator or
government agency or instrumentality. Except for notices required or permitted
to be filed with certain state and federal securities commissions, which notices
the Company agrees to file on a timely basis, the execution, delivery and
performance by the Company of this Agreement, the Notes and the Warrants in
compliance with their respective provisions do not require any governmental
consent or approval.
2.5 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial
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governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement, except for
the filing pursuant to Section 25102(f) of the California Corporate Securities
Law of 1968, as amended, and the rules thereunder, which filing will be effected
within 15 days of the sale of the Notes and Warrants hereunder.
2.6 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The Company is not
a party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or arbitrator or government agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate.
3. Representations, Warranties of the Investors. Each Investor, for
that Investor alone, represents and warrants to the Company upon the acquisition
of the Note and the Warrant and upon exercise of the Warrant as follows:
3.1 Binding Obligation. Each of this Agreement, the Note and
the Warrant issued to the Investor is a valid, binding and enforceable
obligation of the Investor, subject to applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditor's rights and to the availability of the remedy of specific performance.
3.2 Investment Experience. The Investor is either an
accredited investor within the meaning of Regulation D prescribed by the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), or (by virtue of the Investor's experience in evaluating
and investing in private placement transactions of securities in companies
similar to the Company) the Investor is capable of evaluating the merits and
risks of the Investor's investment in the Company and has the capacity to
protect the Investor's own interests.
3.3 Investment Intent. The Investor is acquiring the
Securities for investment for the Investor's own account and not with a view to,
or for resale in connection with, any distribution thereof. The Investor
understands that the Securities have not been registered under the Act by reason
of a specific exemption from the registration provisions of the Act that depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein.
3.4 Rule 144. The Investor acknowledges that the Securities
must be held indefinitely unless subsequently registered under the Act, or
unless an exemption from such registration is available. The Investor is aware
of the provisions of Rules 144 and 144A promulgated under the Act that permit
limited resale of securities purchased in a private placement subject to the
satisfaction of certain conditions.
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3.5 Discussions with Management. The Investor has had an
opportunity to discuss the Company's business, management, and financial affairs
with the Company's management and to review the Company's facilities.
3.6 Transfer Among Affiliates. Without in any way limiting the
representations set forth in this Section 3, an Investor may transfer all or any
portion of the Securities to its partners or affiliated funds if the Company and
its counsel are satisfied that the transfer is exempt from the registration
requirements of federal and applicable state securities laws.
4. Conditions to Closing.
4.1 Conditions to Obligations of the Investors. Each
Investor's obligations at the Closing are subject to the fulfillment, on or
prior to the Closing Date, of all of the following conditions, any of which may
be waived in whole or in part by the Investor:
(a) The representations and warranties made by the
Company in Section 2 shall be true and correct when made, on the Closing Date
and on the effective date of each subsequent loan with the same force and effect
as if they had been made on and as of the same date.
(b) Except for the notices required or permitted to
be filed after the Closing Date with certain federal and state securities
commissions, the Company shall have obtained all governmental approvals required
in connection with the lawful sale and issuance of the Securities.
(c) At the Closing, the sale and issuance by the
Company, and the purchase by the Investor, of the Securities shall be legally
permitted by all laws and regulations to which the Investor or the Company is
subject.
(d) All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents and
instruments incident to such transaction shall be reasonably satisfactory in
substance and form to the Investor.
4.2 Conditions to Obligations of the Company. The Company's
obligation to issue and sell the Securities at the Closing is subject to the
fulfillment, to the Company's satisfaction on or prior to the Closing Date, of
the following conditions, any of which may be waived in whole or in part by the
Company:
(a) Except for the notices required or permitted to
be filed after the Closing Date with certain federal and state securities
commissions, the Company shall have obtained all governmental approvals required
in connection with the lawful sale and issuance of the Securities.
(b) At the Closing, the sale and issuance by the
Company, and the purchase by the Investor, of the Securities shall be legally
permitted by all laws and regulations to which the Investor or the Company is
subject.
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5. Registration Rights.
5.1 Grant of Rights. The Company hereby grants to the
Investor, with respect to the "Registrable Securities" (as defined below) the
Registration Rights set forth in the Company's Restated Investors Rights
Agreement entered into in connection with the Company's June 1997 financing (as
the same may be have been amended to date). Each Investor hereby agrees to be
bound by and subject to the Restated Investors Rights Agreement. For purposes
hereof, Registrable Securities shall mean the Common Stock issued or issuable
upon exercise of the Warrants. Notwithstanding the foregoing, unless agreed to
by an Investor, lockup agreements entered into with managing underwriters in
connection with the Company's initial registered firm commitment underwritten
public offering will not be applicable to shares of Company Common Stock
purchased in such offering or in the open, public trading market.
5.2 Acceptance by Investors. Each Investor accepts the grant
of registration rights in the Restated Investors Rights Agreement and hereby
agrees to be bound by and subject to the aforementioned sections of the Restated
Investors Rights Agreement.
6. Miscellaneous.
6.1 Waivers and Amendments. With the written consent of the
record holders of more than 50% of the principal amount of Notes then
outstanding, the obligations of the Company and the rights of the holders of the
Securities under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such waiver or supplemental agreement shall reduce
the aforesaid percentage of the principal amount of Notes the holders of which
are required to consent to any waiver or supplemental agreement; provided,
further, that no such waiver or supplemental agreement shall change the
principal or the maturity date of the Notes without the written consent of the
holders of the Notes. Upon the effectuation of each such waiver, consent,
agreement, amendment or modification the Company shall promptly give written
notice thereof to the record holders of the Securities who have not previously
consented thereto in writing. Neither this Agreement nor any provisions hereof
may be changed, waived, discharged or terminated orally, but only by a signed
statement in writing.
6.2 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
6.3 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Investor and
the Closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other
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instrument delivered by or on behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder as of the date of such
certificate or instrument.
6.4 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
6.5 Entire Agreement. This Agreement (including the exhibits
attached hereto) and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof.
6.6 Notices, etc. All notices and other communications
required or permitted hereunder shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, electronic mail, overnight
delivery service or U.S. mail, in which event it may be mailed by first-class,
certified or registered, postage prepaid, addressed (a) if to an Investor, at
such Investor's address set forth on the signature page of this Agreement, or at
such other address as such Investor shall have furnished the Company in writing,
or, until any such holder so furnishes an address to the Company, then to and at
the address of the last holder of such Securities who has so furnished an
address to the Company, or (b) if to the Company, at its address set forth at
the beginning of this Agreement, or at such other address as the Company shall
have furnished to the Investor and each such other holder in writing.
6.7 Separability of Agreements; Severability of this
Agreement. The Company's agreement with each Investor is a separate agreement
and the sale of the Securities to each Investor is a separate sale; provided,
however, that this Agreement shall not become effective until such time as each
Investor has executed this Agreement. If any provision of this Agreement shall
be judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
6.8 Termination. This Agreement shall terminate on the earlier
of (i) October 31, 1998 or (ii) the closing of the Company's initial firm
commitment underwritten public offering.
6.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Note and Warrant
Agreement to be duly executed and delivered as of the day and year first written
above.
THE COMPANY: UROSURGE, INC.
By: _____________________________
Xxxxxx X. Xxxxx,
Vice President and
Chief Financial Officer
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THE INVESTORS:
ALLSTATE INSURANCE COMPANY
By:____________________________
Amount of Initial Loan: $ 524,160.00
Amount of Loan Commitment: $ 873,600.00
CTC ILLINOIS TRUST COMPANY,
as Trustee for the Allstate Retirement Plan
By:____________________________
Amount of Initial Loan: $ 28,800.00
Amount of Loan Commitment: $ 48,000.00
CTC ILLINOIS TRUST COMPANY,
as Trustee for the Agents Pension Plan
By:____________________________
Amount of Initial Loan: $ 23,040.00
Amount of Loan Commitment: $ 38,400.00
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MEDICAL SCIENCE PARTNERS, L.P.
By _____________________, its
General Partner
By:____________________________
Amount of Initial Loan: $ 897,000.00
Amount of Loan Commitment: $ 1,495,000.00
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MEDTRONIC ASSET MANAGEMENT, INC.
By:____________________________
Amount of Initial Loan: $ 384,000.00
Amount of Loan Commitment: $ 640,000.00
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PREMIER MEDICAL PARTNER FUND L.P.
By Premier Fund Capital Corp., its
General Partner
By:____________________________
Amount of Initial Loan: $ 237,000.00
Amount of Loan Commitment: $ 395,000.00
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SPROUT CAPITAL VII, L.P.
By ______________________, its
General Partner
By:____________________________
Amount of Initial Loan: $ 906,000.00
Amount of Loan Commitment: $ 1,510,000.00
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT, EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES, AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
UROSURGE, INC.
SUBORDINATED PROMISSORY NOTE
Coralville, Iowa
$ _____________, 1998
1. Principal.
UROSURGE, INC. (the "Company"), a Delaware corporation, for
value received, hereby promises to pay to the order of ______________________ or
holder ("Payee") in lawful money of the United States at the address of Payee
set forth below, the principal amount of____________________ ($_________), or if
less, the amount actually lent by Payee to the Company pursuant to that certain
Note and Warrant Agreement of even date herewith (the "Agreement").
The loans made by the Payee to the Company shall be as
specified on the schedule of advances following the signature page hereto. Upon
the making of a loan by the Payee, such loan shall be reflected on such
schedule.
The principal on this Note is due and payable on the earlier
of (i) October 31, 1998 or (ii) the date which is two business days following
the closing of the Company's initial firm commitment underwritten public
offering. This Note may be prepaid without penalty, in whole or in part, at any
time.
Upon payment in full of all principal payable hereunder, this
Note shall be surrendered to the Company for cancellation.
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2. Subordination.
(a) "Senior Indebtedness" means the principal of and premium,
if any, and interest on indebtedness of the Company for money borrowed from
commercial banks, equipment lessors or other financial institutions under a
secured or unsecured line of credit, term loan or equipment lease.
(b) The Company agrees and the holder of each Note, by
acceptance thereof, agrees, expressly for the benefit of the present and future
holders of Senior Indebtedness, that, except as otherwise provided herein, upon
(i) an event of default under any Senior Indebtedness, or (ii) any dissolution,
winding up, or liquidation of the Company, whether or not in bankruptcy,
insolvency or receivership proceedings, the Company shall not pay, and the
holder of such Note shall not be entitled to receive, any amount in respect of
the principal of such Note unless and until the Senior Indebtedness shall have
been paid or otherwise discharged. Upon (1) an event of default under any Senior
Indebtedness, or (2) any dissolution, winding up or liquidation of the Company,
any payment or distribution of assets of the Company, which the holder of this
Note would be entitled to receive but for the provisions hereof, shall be paid
by the liquidating trustee or agent or other person making such payment or
distribution directly to the holders of Senior Indebtedness ratably according to
the aggregate amounts remaining unpaid on Senior Indebtedness after giving
effect to any concurrent payment or distribution to the holders of Senior
Indebtedness. Subject to the payment in full of the Senior Indebtedness and
until this Note is paid in full, the holder of this Note shall be subrogated to
the rights of the holders of the Senior Indebtedness (to the extent of payments
or distributions previously made to the holders of Senior Indebtedness pursuant
to this paragraph 2(b)) to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness.
(c) This Section 2 is not intended to impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness) and the
holder of this Note, the unconditional and absolute obligation of the Company to
pay the principal on the Note or affect the relative rights of the holder of
this Note and the other creditors of the Company, other than the holders of
Senior Indebtedness. Nothing in this Note shall prevent the holder of this Note
from exercising all remedies otherwise permitted by applicable law upon default
under the Note, subject to the rights, if any, of the holders of Senior
Indebtedness in respect to cash, property or securities of the Company received
upon the exercise of any such remedy.
3. Attorneys' Fees. If the indebtedness represented by this Note or any
part thereof is collected in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for collection
after default, the Company agrees to pay, in addition to the principal payable
hereunder, reasonable attorneys' fees and costs incurred by Payee.
4. Notices. Any notice, other communication or payment required or
permitted hereunder shall be in writing and shall be deemed to have been given
upon delivery if personally delivered or upon deposit if deposited in the United
States mail for mailing by certified mail, postage prepaid, and addressed as
follows:
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If to Payee: At the address set forth on the signature
page of the Agreement
If to Company: At the address of the Company's principal
executive office set forth on page 1 of the
Agreement.
Each of the above addressees may change its address for purposes of this
paragraph by giving to the other addressee notice of such new address in
conformance with this paragraph.
5. Acceleration. This Note shall become immediately due and payable if
(i) the Company commences any proceeding in bankruptcy or for dissolution,
liquidation, winding-up, composition or other relief under state or federal
bankruptcy laws; (ii) such proceedings are commenced against the Company, or a
receiver or trustee is appointed for the Company or a substantial part of its
property, and such proceeding or appointment is not dismissed or discharged
within 60 days after its commencement; or (iii) there is a default in any
agreement to which the Company is a party with a third party or parties
resulting in a right by such third party or parties, whether or not exercised,
to accelerate the maturity of indebtedness in an amount in excess of $100,000.
.
6. Waivers. Company hereby waives presentment, demand for performance,
notice of non-performance, protest, notice of protest and notice of dishonor. No
delay on the part of Payee in exercising any right hereunder shall operate as a
waiver of such right or any other right. This Note is being delivered in and
shall be construed in accordance with the laws of the State of California,
without regard to the conflicts of laws provisions thereof.
UROSURGE, INC.
By: ____________________________
Title:__________________________
SCHEDULE OF ADVANCES:
____________, 1998 (initial advance) $
____________, 1998 $____________________
____________, 1998 $____________________
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EXHIBIT B
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT, EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES, AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
UROSURGE, INC.
THIS CERTIFIES that, for value received, _____________________ (the
"Investor"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or prior to the close of business on the
date five (5) years after the date hereof, but not thereafter, to subscribe for
and purchase, from UROSURGE, INC., a Delaware corporation (the "Company"), a
number of shares of Common Stock determined as set forth below. The number of
shares of Common Stock issuable upon exercise of this Warrant shall equal the
sum of (i) ten (10) shares for each $1,000 that the Investor commits to loan to
the Company pursuant to the Agreement and (ii) thirty (30) shares for each
$1,000 that the Investor actually loans to the Company pursuant to the
Agreement.
The purchase price for one share of Company Common Stock under this
Warrant shall equal the per share price to public of one share of Common Stock
in the Company's initial firm commitment underwritten public offering of Common
Stock.
In the event that the Company's initial firm commitment public offering
of Common Stock is not consummated by October 31, 1998, this Warrant shall be
exercisable for shares of the Company's Series C Preferred Stock at a purchase
price of $5.00 per share.
The purchase price and the number of shares for which the Warrant is
exercisable shall be subject to adjustment as provided herein. The class and
series of shares of capital stock of the Company issuable upon exercise of this
Warrant is also subject to adjustment pursuant to Section 9 hereof.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.
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2. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the registered holder hereof, in whole or in part, at any time
before the close of business on the date five (5) years after the date hereof,
by the surrender of this Warrant and the Subscription Form annexed hereto duly
executed at the office of the Company, in Coralville, Iowa (or such other office
or agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books of
the Company), and upon payment of the purchase price of the shares thereby
purchased (by cash or by check or bank draft payable to the order of the Company
or by cancellation of indebtedness of the Company to the holder hereof, if any,
at the time of exercise in an amount equal to the purchase price of the shares
thereby purchased); whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares of Common Preferred Stock so
purchased. The Company agrees that if at the time of the surrender of this
Warrant and purchase the holder hereof shall be entitled to exercise this
Warrant, the shares so purchased shall be and be deemed to be issued to such
holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been exercised as aforesaid.
(b) In lieu of the cash payment set forth in paragraph 2(a)
above, the Holder shall have the right ("Conversion Right") to convert this
Warrant in its entirety (without payment of any kind) into that number of shares
of Common Stock equal to the quotient obtained by dividing the Net Value (as
defined below) of the shares issuable upon exercise of this Warrant by the Fair
Market Value (as defined below) of one share of Common Stock. As used herein,
(A) the Net Value of the Shares means the aggregate Fair Market Value of the
shares of Common Stock subject to this Warrant minus the aggregate purchase
price; and (B) the Fair Market Value of one share of Common Stock means:
(i) if the exercise occurs at a time during which the
Company's Common Stock is traded on a national securities exchange or on the
Nasdaq National Market, the Fair Market Value of one share of Common Stock means
the average last reported or closing sale price for the Company's Common Stock
on such exchange or market for the three trading days ending one business day
before the exercise of this Warrant;
(ii) if the exercise is in connection with a merger,
sale of assets or other reorganization transaction as described in Section 9(a)
below, the Fair Market Value of one share of Common Stock means the value
received by the holders of the Company's Common Stock pursuant to such Merger
Transaction; and
(iv) in all other cases, the Fair Market Value of one
share of Common Stock shall be determined in good faith by the Company's Board
of Directors.
(c) Certificates for shares purchased hereunder shall be
delivered to the holder hereof within a reasonable time after the date on which
this Warrant shall have been exercised as aforesaid. The Company covenants that
all shares of Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented by
this Warrant, be fully paid and nonassessable and free from all taxes, liens and
charges in respect of the
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issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise thereof.
6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.
The Company shall maintain at the above-mentioned office or
agency a registry showing the name and address of the registered holder of this
Warrant. This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
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9. Merger, Reclassification, etc.
(a) Merger, Sale of Assets, etc. If at any time the Company
proposes to merge with or into any other corporation, effect a reorganization,
or sell or convey all or substantially all of its assets to any other entity,
then the surviving entity shall be obligated to assume the obligations of this
Warrant and it shall be exercisable for the number of shares of stock or other
securities or property which the holder of this Warrant would have received in
the transaction if the holder had exercised the Warrant prior to the
consummation of the transaction. The exercise price shall, in such event, be
proportionately adjusted based on the exchange ratio for shares of the Company's
Common Stock in such transaction.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter be to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclas sification or other
change. If shares of the Company's Common Stock are subdivided or combined into
a greater or smaller number of shares of Common Stock, the purchase price under
this Warrant shall be proportionately reduced in case of subdivision of shares
or proportionately increased in the case of combination of shares, in both cases
by the ratio which the total number of shares of Common Stock to be outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
(c) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the purchase price under this Warrant.
(d) Authorized Shares. The Company covenants that, through the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.
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10. Miscellaneous.
(a) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.
(b) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant may have restrictions
upon its resale imposed by state and federal securities laws.
(c) Waivers and Amendments. With the consent of the Holders
(as defined below) holding rights to purchase more than fifty percent (50%) of
the shares issuable upon exercise of the then outstanding Warrants (as defined
below), the obligations of the Company and the right of the Holders may be
waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), and
with the same consent the Company may enter into a supplementary agreement for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Warrants; provided, however, that no such waiver or
supplemental agreement shall reduce the aforesaid percentage which is required
for consent to any waiver or supplemental agreement, without the consent of all
of the Holders of the then outstanding Warrants; provided, further, that no such
waiver or supplemental agreement shall change the purchase price or the number
of shares for which the Warrant is exercisable without the written consent of
the Holders. As used in this paragraph 10(c), (i) the "Warrants" shall be the
warrants issued pursuant to the Agreement of even date herewith, and (ii) the
"Holders" shall be the record holders of the Warrants.
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IN WITNESS WHEREOF, UROSURGE INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: ________, 1998
UROSURGE, INC.
By: ______________________________
Title: ______________________________
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NOTICE OF EXERCISE
To: UROSURGE, INC.
(1) The undersigned hereby elects to purchase ____________ shares of
Common Stock of UROSURGE, INC. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) Please issue a certificate of certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
-----------------------------------------------
(Name)
-----------------------------------------------
-----------------------------------------------
(Address)
(3) The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.
-------------------------- ------------------------------------------
(Date) (Signature)
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
(Please Print)
________________________________________________________________________________
Dated: _____________________, 19____.
Holder's Signature: ________________________________
Holder's Address: __________________________________
____________________________________________________
Signature Guaranteed: __________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
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