EXHIBIT 4.9
ANGEION CORPORATION
0000 XXXXXXXXX XXXXX
XXXXXXXX XXXX, XX 00000
7 1/2% Senior Convertible Notes due 2003
SUBSCRIPTION AGREEMENT
As of April 3, 1998
TO THE SUBSCRIBER NAMED ON THE SIGNATURE PAGE HEREOF:
Ladies and Gentlemen:
Angeion Corporation, a Minnesota corporation (the "COMPANY"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $22,150,000
aggregate principal amount of its 7 1/2% Senior Convertible Notes due 2003 (the
"NOTES"). The Notes shall be substantially in the form set out in Exhibit A to
the indenture (the "INDENTURE"), between the Company and U.S. Bank National
Association, as trustee (the "TRUSTEE"), attached hereto as Exhibit 1, and
entitled to the benefits of a registration rights agreement (the "REGISTRATION
RIGHTS AGREEMENT") between the Company and you, attached hereto as Exhibit 2, in
each case with such changes therefrom, if any, as may be approved by you and the
Company. Certain capitalized terms used in this Agreement are defined in the
Confidential Private Placement Memorandum dated March 12, 1998 (the "PRIVATE
PLACEMENT MEMORANDUM"); references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing (as defined below) provided for in Section 3, Notes in the principal
amount specified opposite your name in Schedule A at the purchase price of 100%
of the principal amount thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate subscription agreements and
registration rights agreements (the "Other Agreements") identical with this
Agreement and the Registration Rights Agreement with each of the other investors
named in Schedule A (the "Other Investors"), providing for the sale at such
Closing to each of the Other Investors of Notes in the principal amount
specified opposite their name in Schedule A. Your obligation hereunder and the
obligations of the Other Investors under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other Agreement
and no liability to any Person for the performance or non-performance by any
Other Investor thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Investors shall occur at the offices of Milbank, Tweed, Xxxxxx & XxXxxx, 0
Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000-0000, at 10:00 a.m., New York time, at
a closing (the "CLOSING") on April 14, 1998 or on such other Business Day
thereafter on or prior to April 30, 1998 as may be agreed upon by the Company
and you and the Other Investors. At the Closing, the Company will deliver to you
the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $1,000 as you may request) dated
the date of the Closing and registered in your name (or in the name of your
nominee), against delivery to the Company of the purchase price therefor by wire
transfer of immediately available funds. If at the Closing the Company shall
fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not have
been satisfied, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the satisfaction, prior to or at the Closing, of
the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and in all material respects at the time of the
Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied in all material
respects with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing. Neither the
Company nor any Subsidiary (as defined below) shall have entered into any
transaction since the date of the Private Placement Memorandum that would have
been prohibited by the Indenture had the Indenture applied since such date.
4.3. COMPLIANCE CERTIFICATES.
(a) Officers' Certificate. The Company shall have delivered to you a
certificate signed by two executive officers of the Company (an "OFFICERS'
CERTIFICATE"), dated the date of the Closing, certifying that the conditions
specified in Sections 4.1, 4.2 and 4.7 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes, this Agreement, the Registration Rights Agreement, the Other
Agreements and the Indenture and the reservation of shares of Common Stock
issuable upon the conversion of the Notes.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing, from Xxxxxxxx & Xxxxxxxx LLP, special
counsel for the Company, Xxxxxxxxxxx Xxxxx & Xxxxxxxx, special Minnesota counsel
for the Company and Xxxxxx Xxxxxxxx, corporate counsel for the Company, covering
in the aggregate the matters set forth in Exhibit 3 and covering such other
matters incident to the transactions contemplated hereby as you or your counsel
may reasonably request (and the Company hereby instructs its counsel to deliver
such opinion to you). Such counsel may limit such opinions to the laws of New
York, California and Minnesota and the federal laws of the United States.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, (ii) not violate any applicable law or regulation (including, without
limitation, Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject you to any tax, penalty or liability under
or pursuant to any applicable law or regulation, which law or regulation was not
in effect on the date hereof. If requested by you, you shall have received an
Officers' Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.6. PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.7. CHANGES IN CORPORATE STRUCTURE.
Except as specified in the Private Placement Memorandum, the Company
shall not have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any substantial
part of the liabilities of any other entity, at any time following the date of
the most recent financial statements contained in or incorporated by reference
in the Private Placement Memorandum.
4.8. COMFORT LETTERS.
(a) You shall have received a letter (the "Initial Letter") of KPMG
Peat Marwick LLP, addressed to the Company and the Placement Agents and dated
the date hereof, in form and substance satisfactory to you and the Placement
Agents.
(b) You shall have received a letter of KPMG Peat Marwick, LLP,
addressed to the Company and the Placement Agents and dated the date of the
Closing (i) confirming that they are independent public accountants with respect
to the Company and the Subsidiaries within the meaning of Rule 101 of the Code
of Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Private Placement Memorandum, as
of a date not more than three business days prior to the date of such letter),
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered in the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter.
4.9. PROCEEDINGS AND DOCUMENTS.
The Indenture, the Registration Rights Agreement, the Other
Agreements and the Notes shall have been duly authorized, executed and delivered
by the Company and the other parties thereto. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you, and you shall have received all such counterpart originals
or certified or other copies of such documents as you may reasonably request.
4.10. AUTHORIZATION FOR LISTING ON NASDAQ.
The Common Stock issuable upon conversion of the Notes shall have
been authorized for listing on the Nasdaq National Market ("NASDAQ") and trading
in the Common Stock of the Company on Nasdaq shall not have been suspended by
the Commission or Nasdaq.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that except as disclosed
in the Private Placement Memorandum and Schedule B attached hereto:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota, and is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company, Angellan (as defined below) and the Subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT"). The Company has the corporate
power and authority to own or hold under lease the properties it purports to own
or hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this
Agreement, the Indenture, the Registration Rights Agreement, the Other
Agreements and the Notes, to issue the Common Stock issuable upon the conversion
of the Notes and to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement, the Indenture, the Registration Rights Agreement,
the Other Agreements, the Notes and the Common Stock issuable upon conversion
thereof have been duly authorized by all necessary corporate action on the part
of the Company. Assuming that each of this Agreement, the Other Agreements, the
Indenture and the Registration Rights Agreement has been duly authorized,
executed and delivered by, and constitutes the legal, valid and binding
obligation of, the Trustee and the other party thereto, as the case may be, each
of this Agreement, the Other Agreements, the Indenture and the Registration
Rights Agreement constitutes, and upon execution and delivery thereof each of
the Notes will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
and, when issued upon conversion, each of the shares of Common Stock will be
validly issued, fully paid and non-assessable and the Board of Directors has
duly and validly adopted a resolution reserving such shares for issuance upon
conversion.
5.3. DISCLOSURE.
(a) The Company has delivered to you and each Other Investor a copy
of the Private Placement Memorandum relating to the transactions contemplated
hereby. The Private Placement Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of the
Company and its Subsidiaries. Except as disclosed in the Private Placement
Memorandum and Schedule B attached hereto, this Agreement, the Private Placement
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and the financial statements contained in or incorporated by reference or
accompanying the Private Placement Memorandum, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All documents incorporated by
reference in the Private Placement Memorandum that were filed under the Exchange
Act comply in all material respects with the applicable requirements of the
Exchange Act and the rules thereunder in effect as of the date of the filing.
Except as disclosed in the Private Placement Memorandum, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements, since July 31, 1997, there has been no change in the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company, Angellan or any Subsidiary except changes that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Private Placement Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
(b) No event or circumstance has occurred or exists with respect to
the Company, Angellan or any Subsidiary or their respective condition (financial
or otherwise), business, properties, results of operations or prospects, which,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed.
(c) None of the Company, Angellan or any Subsidiary has any
liabilities or obligations which are material, individually or in the aggregate,
and which are not disclosed in Commission filings, other than those incurred in
the ordinary course of the Company's, Angellan's or such Subsidiarys' respective
businesses since July 31, 1997, and which, individually or in the aggregate,
have had or are likely to have a Material Adverse Effect.
(d) The Notes and the Common Stock issuable upon conversion thereof
conform and, in the case of the Common Stock issuable upon conversion of the
Notes, will conform in all material respects to the descriptions thereof
contained in the Private Placement Memorandum; and the shares of Common Stock
issued upon conversion of the Notes in the manner contemplated by the Indenture
and the Notes, will upon issue be validly issued, fully paid and non-assessable.
(e) The Registration Rights Agreement and the Indenture conform in
all material respects to the descriptions thereof contained in the Private
Placement Memorandum.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) The Company has no subsidiaries (individually a "SUBSIDIARY"
and, collectively, the "SUBSIDIARIES") other than those listed on Exhibit 21.1
to the Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1997 (the "FORM 10-K") incorporated by reference in the Private Placement
Memorandum.
(b) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
(c) Angellan Medical Systems, LLC ("ANGELLAN") is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and is duly qualified as a foreign limited
liability company and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Angellan
has the limited liability company power and authority to own or hold under lease
the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) All of the outstanding shares of capital stock of each
Subsidiary owned by the Company and its Subsidiaries have been validly issued,
are fully paid and non-assessable and are owned by the Company or another
Subsidiary free and clear of any Lien, except as otherwise disclosed in the
Private Placement Memorandum. All of the equity interests of Angellan owned by
the Company are owned by the Company free and clear of any Lien, except as
otherwise disclosed in the Private Placement Memorandum.
5.5. CAPITALIZATION.
(a) Except as described in Schedule B hereto, the authorized equity
capitalization of the Company is as set forth in the Private Placement
Memorandum, and, the Common Stock conforms in all material respects to the
description thereof contained under the heading "Description of Capital Stock"
in the Private Placement Memorandum. Except as disclosed in the Private
Placement Memorandum and Schedule B hereto, or in Commission filings, there are,
as of the date hereof, no outstanding (i) options, warrants, scrips, preemptive
rights, first offer rights, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company, Angellan or any Subsidiary, or (ii)
contracts, commitments, understandings, or arrangements by which the Company,
Angellan or any Subsidiary is or may become bound to issue, transfer, deliver,
sell, repurchase or redeem shares of capital stock of the Company, Angellan or
any Subsidiary or options, warrants, scrips, rights to subscribe to, or
commitments to purchase or acquire, any shares, or securities or rights
convertible into or exchangeable for shares, of capital stock of the Company,
Angellan or any Subsidiary.
(b) Except as disclosed in the Private Placement Memorandum and
except as provided under the Other Agreements, the Company has not, as of the
date hereof, granted or agreed to grant any registration rights with respect to
any class of its equity securities to any Person.
(c) Except as disclosed in the Private Placement Memorandum, there
are, as of the date hereof, no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of the
capital stock of the Company, and the Company is not aware of any other voting
trusts, agreements or understandings with respect to the voting of its capital
stock.
(d) Except as disclosed in the Private Placement Memorandum, neither
Angellan nor any Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement, other than this Agreement and customary
limitations imposed by corporate law statutes, restricting the ability of
Angellan or such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any Subsidiary that owns outstanding shares of capital stock or
similar equity interests of Angellan or such Subsidiary.
(e) Except as disclosed in the Private Placement Memorandum, the
Company has not entered into any contract or agreement regarding any equity
financings.
5.6. FINANCIAL STATEMENTS.
The consolidated financial statements contained in or incorporated
by reference in the Private Placement Memorandum, together with the related
notes thereto, fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates indicated and the consolidated results of their operations and cash flows
of the Company and its consolidated Subsidiaries for the periods so specified.
Such financial statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
5.7. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement, the Other Agreements, the Indenture, the Registration Rights
Agreement, the Notes and the issuance of Common Stock upon conversion of the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company, Angellan or any Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, license, permit, lease, corporate
charter or by-laws, or any other agreement, authorization or instrument to which
the Company, Angellan or any Subsidiary is bound or by which the Company,
Angellan or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
domestic or foreign court, arbitrator or Governmental Authority applicable to
the Company, Angellan or any Subsidiary or (iii) violate any provision of any
domestic or foreign law, ordinance, rule or regulation of any Governmental
Authority applicable to the Company, Angellan or any Subsidiary, including,
without limitation, the Food, Drug and Cosmetic Act, as amended, and the
published orders, rules and regulations of the Food and Drug Administration (the
"FDA"). The term "GOVERNMENTAL AUTHORITY" means: (a) the government of the
United States of America or any State or other political subdivision thereof, or
any jurisdiction in which the Company, Angellan or any Subsidiary conducts all
or any part of its business, or which asserts jurisdiction over any properties
of the Company, Angellan or any Subsidiary; or (b) any domestic or foreign
entity exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government, including, without
limitation, the FDA.
5.8. COMMISSION DOCUMENTS.
If requested, the Company has delivered or made available to you
true and complete copies of Commission filings (including, without limitation,
proxy information and solicitation materials). The Company has not provided to
you any information which, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the Company but
which has not been so disclosed.
5.9. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement, the Other
Agreements, the Indenture, the Registration Rights Agreement, the Notes or the
issuance of Common Stock upon conversion of the Notes, except such as may be
required (i) under the securities or blue-sky laws of the various states, and
(ii) under the Securities Act, the Trust Indenture Act or rules of the National
Association of Securities Dealers (the "NASD") in connection with the
registration of the Notes and the Common Stock issuable upon conversion thereof
under the Securities Act pursuant to the Registration Rights Agreements.
5.10. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in the Private Placement Memorandum, there
are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company, Angellan or
any Subsidiary or any property of the Company, Angellan or any Subsidiary in any
domestic or foreign court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or that could
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated by this Agreement, the Other Agreements, the
Indenture, the Registration Rights Agreement or the issuance of Common Stock
upon conversion of the Notes.
(b) None of the Company, Angellan or any Subsidiary is in default
under any term of any other agreement, authorization or instrument to which it
is a party or by which it is bound, or any order, judgment, decree or ruling of
any domestic or foreign court, arbitrator or Governmental Authority or is in
violation of any applicable domestic or foreign law, ordinance, rule or
regulation (including, without limitation, the Food, Drug and Cosmetic Act, as
amended, and the published orders, rule and regulations thereunder, and
Environmental Laws, as defined below) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.11. TAXES.
The Company, Angellan and the Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate, Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company, Angellan or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company, Angellan and the Subsidiaries
in respect of Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of the Company, Angellan and the Subsidiaries
have been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended July 31, 1997. "MATERIAL" means
material in relation to the condition (financial or otherwise), business,
properties, results of operations, or prospects of the Company, Angellan and the
Subsidiaries taken as a whole.
5.12. TITLE TO PROPERTY; LEASES.
Except as disclosed in the Private Placement Memorandum, the
Company, Angellan and the Subsidiaries have good and sufficient title to all
real properties and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects except where the failure to have such
title would not have a Material Adverse Effect; and except as disclosed in the
Private Placement Memorandum, the Company, Angellan and the Subsidiaries hold
any leased real or personal property under valid and enforceable leases.
5.13. LICENSES, PERMITS, ETC.
Except as disclosed in the Private Placement Memorandum:
(a) the Company, Angellan and the Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto (each, an "INTANGIBLE" and
collectively, the "INTANGIBLES"), that individually or in the aggregate are
material in relation to the condition (financial or otherwise), business,
properties, results of operations, or prospects of the Company, Angellan and the
Subsidiaries taken as a whole, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company,
Angellan or any Subsidiary infringes in any material respect any Intangible or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company, Angellan or any Subsidiary
with respect to any Intangible or other right owned or used by the Company,
Angellan or any Subsidiary.
5.14. COMPLIANCE WITH ERISA.
(a) The Company and each trade or business that is treated as a
single employer together with the Company (each, an "ERISA AFFILIATE") under
Section 414 of the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time (the
"CODE"), have operated and administered employee benefit plans (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974 ("ERISA")) in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to such employee benefit plans, and
no event, transaction or condition has occurred or exists that could reasonably
be expected to result in the incurrence of any such liability by the Company or
any ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each employee benefit plan (other than multiemployer plans as such term is
defined in section 4001(a)(3) of ERISA), determined as of the end of such plan's
most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of multiemployer
plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is subject
to the prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Company in the first sentence of this Section 5.14(e) is
made in reliance upon and subject to the accuracy of your representation in
Section 6.3 as to the sources of the funds used to pay the purchase price of the
Notes to be purchased by you.
5.15. PRIVATE OFFERING BY THE COMPANY.
(a) Neither the Company nor, to the Company's best knowledge, anyone
acting on its behalf has offered the Notes or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you, the Other
Investors and not more than 107 other "accredited investors" (as defined in Rule
501(a)(1), (2), (3), (5), (6) or (7) of the Securities Act), each of which has
been offered the Notes at a private sale for investment. Neither the Company nor
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.
(b) None of the Company, its Subsidiaries or any affiliate (an
"AFFILIATE") (as defined in Rule 501(b) of Regulation D under the Securities Act
("REGULATION D")) of the Company, Angellan or the Subsidiaries, or any person
acting on its or their behalf has directly or indirectly, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) that is currently or will be
integrated with the sale of the Notes in a manner that would require the
registration of the Notes or the Common Stock issuable upon conversion thereof
under the Securities Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offering of the Notes.
5.16. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set
forth in the Private Placement Memorandum. No part of the proceeds from the sale
of the Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). As used in this Section, the terms
"MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings
assigned to them in said Regulation G.
5.17. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) The Private Placement Memorandum sets forth all outstanding
Indebtedness of the Company and the Subsidiaries as of March 11, 1998, since
which date there has been no Material change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Indebtedness of the
Company or the Subsidiaries. None of the Company, Angellan or any Subsidiary is
in default and no waiver of default is currently in effect, in the payment of
any principal or interest on any Indebtedness of the Company, Angellan or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Company, Angellan or any Subsidiary that would permit (or that with notice
or the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment
(b) Except as disclosed in the Private Placement Memorandum, none of
the Company, Angellan or any Subsidiary has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien.
5.18. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.19. STATUS UNDER CERTAIN STATUTES.
None of the Company, Angellan or any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
5.20. ENVIRONMENTAL MATTERS.
Except as disclosed in the Private Placement Memorandum, none of the
Company, Angellan or any Subsidiary is in violation of any statute, rule,
regulation, decision or order of any Governmental Authority or any domestic or
foreign court relating to the use, disposal or release of hazardous or toxic
substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, or is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim individually or in the aggregate is
reasonably expected to have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
5.21. MISCELLANEOUS.
(a) Neither the Company nor its affiliated purchasers, as defined in
Article 100 of Regulation M of the Exchange Act ("REGULATION M"), either alone
or with one or more other persons: (i) has taken, either directly or indirectly,
any action which was designed to cause or result in, or which has constituted,
or which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Notes (the "SUBJECT SECURITIES") pursuant to this Agreement or
(ii) will bid for or purchase any Subject Securities of the Company or any other
covered securities (within the meaning of Regulation M) relating to the Subject
Securities (together with the Subject Securities, the "COVERED SECURITIES"), or
attempt to induce
any person to bid for or purchase any Covered Securities, in either case, for
the purpose of creating actual or apparent active trading in, or raising the
price of the Notes, unless an exemption from Rule 102 of Regulation M is
available.
(b) The Company is subject to and in compliance in all material
respects with the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act and the Company has timely filed all reports required to be filed
thereunder within the last 12 months.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. INVESTOR QUALIFICATIONS.
You represent that (a) you are (i) an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) (an "INSTITUTIONAL ACCREDITED INVESTOR") or (ii) an individual "accredited
investor" (as defined in Rule 501(a)(5) or (6) under the Securities Act) (A)
whose individual net worth, or joint net worth with your spouse, at the time of
purchase of the Notes, exceeds $1,000,000 or (B) who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
your spouse in excess of $300,000 in each of those years and you have a
reasonable expectation of reaching the same income level in the current year,
and (b) this Agreement and the Registration Rights Agreement have been duly
authorized by all necessary corporate action on your part.
6.2. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or as a fiduciary for the
account of one or more pension or trust funds, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which you exercise sole investment discretion, and not with a view to
the distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand that
the Notes have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law. You
represent that you have such knowledge and experience in financial and business
matters that you are capable of evaluating the merits and risks of purchasing
the Notes. You represent that you have received a copy of the Private Placement
Memorandum and acknowledge that you have had access to such financial and other
information, and have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as you deem
necessary in connection with your decision to purchase the Notes.
6.3. SOURCE OF FUNDS
If you are an Institutional Accredited Investor, you represent that
at least one of the following statements is an accurate representation as to
each source of funds (a "SOURCE") to be used by you to pay the purchase price of
the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source (i) is a separate
account that is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to such plan and to
any participant or beneficiary of such plan (including any annuitant) are not
affected in any manner by the investment performance of the separate account or
(ii) is an insurance company general account as such term is used in PTE (as
defined below) 95-60 (issued July 12, 1995); or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption ("PTE") 00-0
(xxxxxx Xxxxxxx 00, 0000), xx (xx) a bank collective investment fund, within the
meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to
the Company in writing pursuant to this paragraph (b), no employee benefit plan
or group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names of all employee
benefit plans whose assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(e); or
(f) less than 25% of each class of "EQUITY INTERESTS" in the Source
is owned by "BENEFIT PLAN INVESTORS" (as such terms are defined in the "plan
asset" regulations promulgated by the U.S. Department of Labor at 29 C.F.R. ss.
2510.3-101); or
(g) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
7. EXPENSES, ETC.
7.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Registration
Rights Agreement, the Indenture or the Notes (whether or not such amendment,
waiver or consent becomes effective), including the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement, the Registration Rights Agreement, the
Indenture or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement, the
Registration Rights Agreement, the Indenture or the Notes, or by reason of being
a holder of any Note.
7.2. SURVIVAL.
The obligations of the Company under this Section 7 will survive the
payment or transfer of any Note, the conversion of any Note into Common Stock,
the enforcement, amendment or waiver of any provision of this Agreement, the
Registration Rights Agreement, the Indenture or the Notes, and the termination
of this Agreement.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement, the Registration Rights Agreement,
the Indenture and the Notes, the purchase or transfer by you of any Note or
portion thereof or interest therein, the payment of any Note and the conversion
of any Note into Common Stock and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement, the
Registration Rights Agreement, the Indenture and the Notes embody the entire
agreement and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
9. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or at such
other address as you or it shall have specified to the Company in
writing,
(ii) if to any other holder of any Note, to such holder
at such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at its address
set forth at the beginning hereof to the attention of Xxx Xxxxxx,
Corporate Controller, or at such other address as the Company shall
have specified to the holder of each Note in writing.
Notices under this Section 9 will be deemed given only when actually received.
10. REPRODUCTION OF DOCUMENTS.
This Agreement, the Registration Rights Agreement, the Indenture and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at the Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may destroy
any original document so reproduced. The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 10 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
11. CONFIDENTIAL INFORMATION.
For the purposes of this Section 11, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements that are
otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 11, (iii) any holder
of a Note who is bound by this Section 11, (iv) any investor to which you sell
or offer to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 11), (v) any federal
or state regulatory authority having jurisdiction over you, (vi) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, or (y) in connection with any litigation to
which you are a party to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement of (or for the protection of the rights and remedies under) your
Notes and this Agreement, the Registration Rights Agreement and the Indenture.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 11 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 11.
12. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and the Registration Rights Agreement and shall contain a confirmation
by such Affiliate of the accuracy with respect to it of the representations set
forth in Section 6. Upon receipt of such notice, wherever the word "you" is used
in this Agreement (other than in this Section 12) and the Registration Rights
Agreement, such word shall be deemed to refer to such Affiliate in lieu of you.
In the event that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to you all of the Notes then held by such
Affiliate, upon receipt by the Company of notice of such transfer, wherever the
word "you" is used in this Agreement (other than in this Section 12) and the
Registration Rights Agreement, such word shall no longer be deemed to refer to
such Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement and the Registration Rights
Agreement. As used in this section, "AFFILIATE" means, with respect to any
Person any other Person that directly or indirectly controls, or is under common
control with, or is controlled by, such Person. As used in this definition,
"control" (including, with their correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of power to direct or cause the
direction of the management and policies of such Person (whether through
ownership of securities or partnership or other ownership interests, contract or
otherwise), provided that, in any event, any Person which owns, directly or
indirectly, more than 10% of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or more than l0%
of the partnership or other ownership interests of any Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person.
13. MISCELLANEOUS.
13.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
13.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
13.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
13.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
13.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
13.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of New
York, without regard to the conflict of law rules thereof.
* * * * *
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
ANGEION CORPORATION
By
--------------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
Name of Subscriber
By
------------------------------
Name:
Title:
EXHIBIT 3
MATTERS TO BE COVERED IN COMPANY
COUNSEL OPINION*
1. The Company being duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and the Company
having requisite corporate power and authority to issue and sell the Notes and
Common Stock issuable upon conversion thereof and to execute and deliver the
related documents.
2. The Company being duly qualified and in good standing as a
foreign corporation in appropriate jurisdictions, except where the failure to be
duly qualified and in good standing would not have a Material Adverse Effect.
3. Due authorization and execution of the Indenture, Subscription
Agreements, Registration Rights Agreements and Notes and other documents to
which the Company is a party and such documents being legal, valid, binding and
enforceable.
4. No conflicts with charter documents, laws, orders, decrees or
agreements or documents to which the Company or Angellan is a party, and, to the
best knowledge of such counsel, no default in the observance of agreements,
statutes, orders, etc.
5. All shares of Common Stock being duly authorized and validly
issued, fully paid and non-assessable.
6. The Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
7. All consents required to issue and sell the Notes and Common
Stock issuable upon conversion thereof and to execute and deliver the documents
having been obtained.
8. To the best knowledge of such counsel, no litigation questioning
validity of documents.
9. The initial issuance of the Notes and Common Stock issuable upon
conversion thereof not requiring registration under the Securities Act of 1933,
as amended; no need to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
10. No violation of Regulations G, T or X of the Federal Reserve
Board.
11. The Company not being an "investment company", or a company
"controlled" by an "investment company", under the Investment Company Act of
1940, as amended.
12. The Company's authorized equity capitalization being as set
forth in the Private Placement Memorandum; the Common Stock conforming in all
material respects to the description thereof contained under the heading
"Description of Capital Stock" in the Private Placement Memorandum; except as
described in the Private Placement Memorandum, the holders of the outstanding
shares of capital stock of the Company not being entitled to any statutory
preemptive or, to the knowledge of such counsel after due inquiry, other rights
to subscribe for the Notes or the shares of Common Stock issuable upon
conversion thereof; the shares of Common Stock initially issuable upon
conversion of the Notes being duly and validly authorized and, when issued upon
conversion, will be validly issued, fully paid and non-assessable; and the Board
of Directors has duly and validly adopted a resolution reserving such shares of
Common Stock for issuance upon conversion. As of the date hereof, to the
knowledge of such counsel after due inquiry, except as described in the Private
Placement Memorandum, (A) there are no other outstanding shares of capital stock
of the Company and, (B) there are no outstanding options or warrants to acquire,
or any securities convertible into, any shares of capital stock of the Company.
13. The statements in the Private Placement Memorandum under the
heading "Certain United States Federal Income Tax Considerations", to the extent
that they constitute summaries of matters of law or regulation
---------------------------
* The scope and coverage of these opinions shall be the same as the
corresponding representations set forth in the Subscription Agreement.
or legal conclusions, have been reviewed by such counsel and fairly summarize
the matters described therein in all material respects; and such counsel does
not have actual knowledge of any current or pending legal or governmental
actions, suits or proceedings which would be required to be described in the
Private Placement Memorandum if the Private Placement Memorandum were a
prospectus included in a registration statement on Form S-3 which are not
described as so required.
