EXHIBIT 1.1
DRAFT
-----
9/20/95
1,800,000 SHARES/1/
BIO-VASCULAR, INC.
COMMON STOCK
PURCHASE AGREEMENT
------------------
____________, 1995
XXXXX XXXXXXX INC.
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Gentlemen:
Bio-Vascular, Inc., a Minnesota corporation (the "Company"), proposes to
sell to you (the "Underwriter") an aggregate of 1,800,000 shares (the "Firm
Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of the
Company. The Firm Shares consist of 1,800,000 authorized but unissued shares of
Common Stock to be issued and sold by the Company. The Company has also granted
to the Underwriter an option to purchase up to 270,000 additional shares of
Common Stock on the terms and for the purposes set forth in Section 3 hereof
(the "Option Shares"). The Firm Shares and any Option Shares purchased pursuant
to this Purchase Agreement are herein collectively called the "Securities."
The Company hereby confirms its agreement with respect to the sale of the
Securities to the Underwriter.
1. Registration Statement. A registration statement on Form S-3 (File
No. 33-62199) with respect to the Securities, including a preliminary form of
prospectus, has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations ("Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder and has been filed with the Commission; one or
more amendments to such registration statement have also been so prepared and
have been, or will be, so filed. Copies of such registration statement and
amendments and each related preliminary prospectus have been delivered to you.
------------------------
/1/Plus an option to purchase up to 270,000 additional shares to cover over-
allotments.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, it will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. Such registration
statement as amended at the time it is or was declared effective by the
Commission, including a registration statement (if any) filed pursuant to Rule
462(b) of the Rules and Regulations increasing the size of the offerings
registered under the Act, and, in the event of any amendment thereto after the
effective date and prior to the First Closing Date (as hereinafter defined),
such registration statement as so amended (but only from and after the
effectiveness of such amendment), including the information deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule
430A(b), if applicable, is hereinafter called the "Registration Statement." The
prospectus included in the Registration Statement at the time it is or was
declared effective by the Commission is hereinafter called the "Prospectus,"
except that if any prospectus filed by the Company with the Commission pursuant
to Rule 424(b) of the Rules and Regulations or any other prospectus provided to
the Underwriter by the Company for use in connection with the offering of the
Securities (whether or not required to be filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations) differs from
the prospectus on file at the time the Registration Statement is or was declared
effective by the Commission, the term "Prospectus" shall refer to such differing
prospectus from and after the time such prospectus is filed with the Commission
or transmitted to the Commission for filing pursuant to such Rule 424(b) or from
and after the time it is first provided to the Underwriter by the Company for
such use. The term "Preliminary Prospectus" as used herein means any preliminary
prospectus included in the Registration Statement prior to the time it becomes
or became effective under the Act and any prospectus subject to completion as
described in Rule 430A of the Rules and Regulations. Any reference herein to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as such documents are modified or
superseded by such Registration Statement, Preliminary Prospectus or Prospectus.
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Underwriter as follows:
(i) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing thereof, did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; except
that the foregoing shall not apply to statements in or omissions from any
Preliminary Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter specifically for
use in the preparation thereof.
-2-
(ii) As of the time the Registration Statement (or any post-effective
amendment thereto) is or was declared effective by the Commission, upon the
filing or first delivery to the Underwriter of the Prospectus (or any
supplement to the Prospectus) and at the First Closing Date and Second
Closing Date (as hereinafter defined), (A) the Registration Statement and
Prospectus (in each case, as so amended and/or supplemented) will conform
or conformed in all material respects to the requirements of the Act and
the Rules and Regulations, (B) the Registration Statement (as so amended)
will not or did not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (C) the Prospectus (as so
supplemented) will not or did not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they are or were made, not misleading; except that the foregoing
shall not apply to statements in or omissions from any such document in
reliance upon, and in conformity with, written information furnished to the
Company by the Underwriter specifically for use in the preparation thereof.
If the Registration Statement has been declared effective by the
Commission, no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceeding for that purpose has been
initiated or, to the Company's knowledge, threatened by the Commission.
(iii) The consolidated financial statements of the Company,
together with the notes thereto, set forth or incorporated by reference in
the Registration Statement and Prospectus comply in all material respects
with the requirements of the Act and fairly present the consolidated
financial condition of the Company and its consolidated subsidiary as of
the dates indicated and the results of operations and changes in cash flows
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(subject, in the case of unaudited financial statements, to normal year-end
adjustments which in the opinion of management are not material, and except
as otherwise stated therein); and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be
included in the Registration Statement or Prospectus. Each of Coopers &
Xxxxxxx L.L.P. and Deloitte & Touche LLP, each of which has expressed its
opinion with respect to certain of the financial statements and schedules
filed as a part of the Registration Statement and included in the
Registration Statement and Prospectus, are independent public accountants
as required by the Act and the Rules and Regulations.
(iv) Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation. Each of the Company and its subsidiaries
has full corporate power and authority to own its properties and conduct
its business as currently being carried on and as described in the
Registration Statement and Prospectus, and is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which it
owns
-3-
or leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have a
material adverse effect upon its business, condition (financial or
otherwise) or properties, taken as a whole.
(v) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or material obligations,
direct or contingent, or entered into any material transactions, other than
in the ordinary course of business consistent with past practice, or
declared or paid any dividends or made any distribution of any kind with
respect to its capital stock; and there has not been any change in the
capital stock (other than a change in the number of outstanding shares of
Common Stock due to the issuance of shares upon the exercise of outstanding
options or warrants or pursuant to employee benefit plans referred to or
incorporated by reference in the Registration Statement), or any material
increase in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital
stock, of the Company or any of its subsidiaries (other than pursuant to
employee benefit plans referred to or incorporated by reference in the
Registration Statement), or any material adverse change, or any development
involving a prospective material adverse change, in the general affairs,
condition (financial or otherwise), business, key personnel, property,
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole.
(vi) Except as set forth in the Prospectus, there is not pending or,
to the knowledge of the Company, threatened or contemplated, any action,
suit or proceeding to which the Company or any of its subsidiaries is a
party before or by any court or governmental agency, authority or body, or
any arbitrator, which might result in any material adverse change in the
condition (financial or otherwise), business, prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole.
(vii) There are no contracts or documents of the Company or any of its
subsidiaries that are required to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations that have not been so
filed.
(viii) Each of this Agreement and the Underwriter Warrants (as
hereinafter defined) has been duly authorized, executed and delivered by
the Company, and constitutes a valid, legal and binding obligation of the
Company, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity. The execution, delivery and
performance of this Agreement and the Underwriter Warrants and the
consummation of the transactions herein and thereunder contemplated will
not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute,
-4-
any agreement or instrument to which the Company is a party or by which it
is bound or to which any of its property is subject, the Company's charter
or by-laws, or any order, rule, regulation or decree of any court or
governmental agency or body having jurisdiction over the Company or any of
its properties; no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement or the Underwriter
Warrants or for the consummation of the transactions contemplated hereby or
thereby including the issuance or sale of the Securities by the Company and
the issuance of the shares of Common Stock upon exercise of the Underwriter
Warrants, except such as may be required under the Act or state securities
or blue sky laws; and the Company has full power and authority to enter
into this Agreement and the Underwriter Warrants and to authorize, issue
and sell the Securities as contemplated by this Agreement and the shares of
Common Stock as contemplated by the Underwriter Warrants.
(ix) All of the issued and outstanding shares of capital stock of the
Company, including the outstanding shares of Common Stock, are duly
authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities, and the holders thereof are not
subject to personal liability by reason of being such holders; the
Securities which may be sold hereunder by the Company have been duly
authorized and, when issued, delivered and paid for in accordance with the
terms hereof, will have been validly issued and will be fully paid and
nonassessable, and the holders thereof will not be subject to personal
liability by reason of being such holders; the shares of Common Stock to be
issued upon exercise of the Underwriter Warrants have been reserved for
issuance and duly authorized and, when issued and paid for pursuant to the
terms of such Underwriter Warrants, will be validly issued and will be
fully paid and nonassessable, and the holders thereof will not be subject
to personal liability by reason of being such holders; and the capital
stock of the Company, including the Common Stock, conforms to the
description thereof in the Registration Statement and Prospectus under the
caption "Description of Capital Stock". Except as set forth in the
Registration Statement or in the Prospectus, there are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction upon
the voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument to which
the Company is a party or by which the Company is bound. Except as set
forth in the Registration Statement or in the Prospectus, neither the
filing of the Registration Statement nor the offering or sale of the
Securities or the Underwriter Warrants as contemplated by this Agreement or
of the shares of Common Stock as contemplated by the Underwriter Warrants
gives rise to any rights, other than those which have been waived, for or
relating to the registration of any shares of Common Stock or other
securities of the Company and no such rights otherwise exist. All of the
issued and outstanding shares of capital stock of each of the Company's
subsidiaries have been duly and validly authorized and issued and are fully
paid and nonassessable, and the Company owns of record and beneficially,
free and clear of any security interests,
-5-
claims, liens, proxies, equities or other encumbrances, all of the issued
and outstanding shares of such stock. Except as described in the
Registration Statement and the Prospectus, there are no options, warrants,
agreements, contracts or other rights in existence to purchase or acquire
from the Company or any subsidiary of the Company any shares of the capital
stock of the Company or any subsidiary of the Company. The Company has an
authorized and outstanding capitalization as set forth in the Registration
Statement and the Prospectus under the caption "Capitalization".
(x) The Company and each of its subsidiaries holds all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or self-regulatory body
("Permits") required for the conduct of its business except those Permits
the absence of which would not have a material adverse effect on the
condition (financial or otherwise), business, prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole. The Company is operating in compliance in all material respects
with such Permits and all such Permits are valid and in full force and
effect. The Company and each of its subsidiaries is in compliance with all
applicable federal, state, local and foreign laws, regulations, orders and
decrees except where noncompliance would not have a material adverse effect
on the condition (financial or otherwise), business, prospects, net worth
or results of operations of the Company and its subsidiaries, taken as a
whole.
(xi) The Company and its subsidiaries have good and marketable title
to all property described in the Registration Statement and Prospectus as
being owned by them, in each case free and clear of all liens, claims,
security interests or other encumbrances except such as are described in
the Registration Statement and the Prospectus; the property held under
lease by the Company and its subsidiaries is held by them under valid,
subsisting and enforceable leases with only such exceptions with respect to
any particular lease as do not interfere in any material respect with the
conduct of the business of the Company or its subsidiaries, taken as a
whole.
(xii) The Company and each of its subsidiaries owns or possesses all
patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service xxxx registrations, copyrights, licenses,
inventions, know-how, trade secrets and rights ("Intellectual Property
Rights") necessary for the conduct of the business of the Company and its
subsidiaries as currently carried on or intended to be carried on and as
described in the Registration Statement and Prospectus except where the
failure to possess such Intellectual Property Rights would not in the
aggregate have an adverse effect on the condition (financial or otherwise),
business, prospects, net worth or results of operations of the Company and
its subsidiaries, taken as a whole; the expiration of any patents,
trademarks, service marks, tradenames, trademark registrations, copyrights
and licenses would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company except as stated in the Registration Statement and
Prospectus; except as described in the
-6-
Prospectus, no name which the Company or any of its subsidiaries uses and
no other aspect of the business of the Company or any of its subsidiaries
involves or gives rise to any infringement of or conflict with, or license
or similar fees for, any patents, patent applications, trademarks, service
marks, tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets or other similar rights of
others material to the business or prospects of the Company and neither the
Company nor any of its subsidiaries has received any notice alleging any
such infringement, license or fee.
(xiii) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws, or in breach of or
otherwise in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note, indenture,
loan agreement or any other material contract, lease or other instrument to
which it is subject or by which any of them may be bound, or to which any
of the material property or assets of the Company or any of its
subsidiaries is subject where such breach or default could have a material
adverse effect on the condition (financial or otherwise), business,
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, which breach or default has not been
waived.
(xiv) The Company and its subsidiaries have filed all federal, state,
local and foreign income and franchise tax returns required to be filed and
are not in default in the payment of any taxes which were payable pursuant
to said returns or any assessments with respect thereto, other than any
which the Company or any of its subsidiaries is contesting in good faith.
(xv) The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Securities other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Act or the Securities
Exchange Act of 1934 to be distributed by the Company.
(xvi) The Securities have been approved for quotation upon notice of
issuance on the Nasdaq National Market.
(xvii) Other than the subsidiaries of the Company listed in Exhibit
21 to the Company's Annual Report on Form 10-K for the year ended October
31, 1994, the Company owns no capital stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust or
other entity.
(xviii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets;
-7-
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xix) Other than as contemplated by this Agreement, the Company has
not incurred any liability for any finder's or broker's fee or agent's
commission in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(xx) Neither the Company nor any of its affiliates is presently doing
business with the government of Cuba or with any person or affiliate
located in Cuba.
(xxi) The Company maintains insurance, which is in full force and
effect, of the types and in the amounts adequate, in its reasonable
opinion, for its business and in line with the insurance maintained by
similar companies and businesses.
(xxii) The documents incorporated by reference in the Prospectus, at
the time they were or hereafter are filed with the Commission, complied or
when so filed will comply, as the case may be, in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, and, when read
together and with the other information in the Prospectus and as such
documents may be modified or superseded by the Prospectus, did not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were or are made, not misleading.
(b) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriter shall be deemed a representation and
warranty by the Company to the Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Firm Shares to the Underwriter, and the
Underwriter agrees to purchase from the Company the number of Firm Shares set
forth opposite the name the Underwriter in Schedule I hereto. The purchase
price for each Firm Share shall be $____ per share.
The Firm Shares will be delivered by the Company to you for your
account against payment of the purchase price therefor by certified or official
bank check or other next day funds payable to the order of the Company at the
offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx
-8-
Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as
may be mutually acceptable, at 9:00 a.m., Minneapolis time, on the third full
business day following the date hereof, or at such other time as you and the
Company determine, such time and date of delivery being herein referred to as
the "First Closing Date." [**The Firm Shares, in definitive form and in such
denominations and registered in such names as you may request upon at least two
business days' prior notice to the Company, will be made available for checking
and packaging at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be
mutually acceptable, at least one business day prior to the First Closing Date.]
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company with respect to 270,000 Option Shares, hereby grants to the Underwriter
an option to purchase all or any portion of the Option Shares at the same
purchase price as the Firm Shares, for use solely in covering any over-
allotments made by the Underwriter in the sale and distribution of the Firm
Shares. The option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the effective date of this Agreement upon notice
(confirmed in writing) by the Underwriter to the Company setting forth the
aggregate number of Option Shares as to which the Underwriter is exercising the
option, the names and denominations in which the certificates for the Option
Shares are to be registered and the date and time, as determined by the
Underwriter, when the Option Shares are to be delivered, such time and date
being herein referred to as the "Second Closing" and "Second Closing Date",
respectively; provided, however, that the Second Closing Date shall not be
earlier than the First Closing Date nor earlier than the second business day
after the date on which the option shall have been exercised. If the option is
exercised, the obligation of the Underwriter shall be to purchase from the
Company up to an aggregate of 270,000 Option Shares. No Option Shares shall be
sold and delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company to you for your
account against payment of the purchase price therefor by certified or official
bank check or other next day funds payable to the order of the Company at the
offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually acceptable at
9:00 a.m., Minneapolis time, on the Second Closing Date. [**The Option Shares
in definitive form and in such denominations and registered in such names as you
have set forth in your notice of option exercise, will be made available for
checking and packaging at the office of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be
mutually acceptable, at least one business day prior to the Second Closing
Date.]
(c) On the First Closing Date, the Company will issue and sell to the
Underwriter or its designees, consistent with all applicable state and federal
securities laws and regulations and all applicable regulations of the National
Association of Securities
-9-
Dealers, Inc. ("NASD"), warrants, substantially in the form attached hereto as
Exhibit A, for the purchase of an aggregate of 90,000 shares of Common Stock, at
a price equal to $.001 per share of Common Stock covered thereby (the
"Underwriter Warrants"). The Underwriter Warrants shall have an exercise price
per share equal to the market price of the Common Stock on the date immediately
preceding the date hereof (the "Pricing Date"), provided, however, that if the
market price on the Pricing Date is less than the purchase price for each Firm
Share hereunder, then the exercise price per share shall be the purchase price
of the Firm Share. The Underwriter Warrants shall be exercisable over a four-
year period commencing one-year from the date of this Agreement. "Market price"
for purposes of this paragraph 4(c) shall mean, if the Common Stock is traded on
the Nasdaq National Market, the closing price of the Common Stock on the Nasdaq
National Market, or, if the Common Stock is otherwise traded in the over-the-
counter market, the closing bid price. The Underwriter Warrants shall be
dated, executed and delivered as of the First Closing Date.
4. Covenants. The Company covenants and agrees with the Underwriter as
follows:
(i) If the Registration Statement has not already been declared
effective by the Commission, the Company will use its best efforts to cause
the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify you
promptly of the time when the Registration Statement or any post-effective
amendment to the Registration Statement has become effective or any
supplement to the Prospectus has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement or
Prospectus or additional information; if the Company has elected to rely on
Rule 430A of the Rules and Regulations, the Company will file a Prospectus
containing the information omitted therefrom pursuant to such Rule 430A
with the Commission within the time period required by, and otherwise in
accordance with the provisions of, Rules 424(b) and 430A of the Rules and
Regulations; the Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the
Securities by you; and the Company will not file any amendment or
supplement to the Registration Statement or Prospectus to which you shall
reasonably object by notice to the Company after having been furnished a
copy a reasonable time prior to the filing.
(ii) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement,
of the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any such purpose; and the Company will promptly
-10-
use its best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such a stop order should be issued.
(iii) Within the time during which a prospectus relating to the
Securities is required to be delivered under the Act, the Company will
comply as far as it is able with all requirements imposed upon it by the
Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance
of sales of or dealings in the Securities as contemplated by the provisions
hereof and the Prospectus. If during such period any event occurs as a
result of which the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the Act,
the Company will promptly notify you and will amend the Registration
Statement or supplement the Prospectus (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.
(iv) The Company will cooperate with you and your counsel in
qualifying the Securities for sale under the securities laws of such
jurisdictions as you reasonably designate and to continue such
qualifications in effect so long as required for the distribution of the
Securities, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a general
consent to service of process in any state.
(v) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all exhibits), each
Preliminary Prospectus, the Prospectus, and all amendments and supplements
to such documents, in each case as soon as available and in such quantities
as you may from time to time reasonably request.
(vi) During a period of five years commencing with the date hereof,
the Company will furnish to you copies of all periodic and special reports
furnished to the stockholders of the Company and all information, documents
and reports filed with the Commission, the NASD, the Nasdaq National Market
or any securities exchange.
(vii) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than 15 months
after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a 12-month period beginning
after the effective date of the Registration Statement that shall satisfy
the provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
-11-
(viii) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming
effective under the provisions of Section 8(a) hereof or is terminated,
will pay or cause to be paid (A) all expenses incurred in connection with
the delivery to the Underwriter of the Securities, (B) all expenses and
fees (including, without limitation, fees and expenses of the Company's
accountants and counsel but, except as otherwise provided below, not
including fees of the Underwriter's counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the Registration
Statement (including the financial statements therein and all amendments,
schedules, and exhibits thereto), the Securities, each Preliminary
Prospectus, the Prospectus, and any amendment thereof or supplement
thereto, and the printing, delivery, and shipping of this Agreement and
other underwriting documents, including Blue Sky Memoranda, (C) all filing
fees and fees and disbursements of the Underwriter's counsel incurred in
connection with the qualification of the Securities for offering and sale
by the Underwriter or by dealers under the securities or blue sky laws of
the states and other jurisdictions which the Underwriter shall designate in
accordance with Section 4(a)(iv) hereof, (D) the fees and expenses of any
transfer agent or registrar, (E) the filing fees incident to any required
review by the NASD of the terms of the sale of the Securities, (F) listing
fees, if any, and (G) all other costs and expenses incident to the
performance of its obligations hereunder that are not otherwise
specifically provided for herein. If the sale of the Securities provided
for herein is not consummated by reason of action by the Company pursuant
to Section 8(a) hereof which prevents this Agreement from becoming
effective, or by reason of any failure, refusal or inability on the part of
the Company to perform any agreement on its part to be performed, or
because any other condition of the Underwriter's obligations hereunder
required to be fulfilled by the Company is not fulfilled, the Company will
reimburse the Underwriter for all out-of-pocket disbursements (including
fees and disbursements of counsel) incurred by the Underwriter in
connection with its investigation, preparing to market and marketing the
Securities or in contemplation of performing their obligations hereunder.
The Company shall not in any event be liable to the Underwriter for loss of
anticipated profits from the transactions covered by this Agreement.
(ix) The Company will apply the net proceeds from the sale of the
Securities to be sold by it hereunder substantially in accordance with the
purposes set forth in the Prospectus under the caption "Use of Proceeds".
(x) The Company will not, without the prior written consent of the
Underwriter, offer for sale, sell, contract to sell, grant any option for
the sale of or otherwise issue or dispose of any Common Stock or any
securities convertible into or exchangeable for, or any options or rights
to purchase or acquire, Common Stock, except to the Underwriter pursuant to
this Agreement and pursuant to the Company's 1988 Employee Incentive Stock
Option Plan and the Directors Stock Option Plan, for a
-12-
period of 90 days after the commencement of the public offering of the
Securities by the Underwriter.
(xi) The Company either has caused to be delivered to you or will
cause to be delivered to you prior to the effective date of the
Registration Statement a letter from each of the Company's directors and
officers stating that such person agrees that he or she will not, without
the prior written consent of the Underwriter, offer for sale, sell,
contract to sell or otherwise dispose of any shares of Common Stock or
rights to purchase Common Stock for a period of 90 days after commencement
of the public offering of the Securities by the Underwriter.
(xii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities.
(xiii) Other than as contemplated by this Agreement, the Company will
not incur any liability for any finder's or broker's fee or agent's
commission in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(xiv) The Company will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution of the
Securities by the Underwriter if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba. Such
information will be provided within 90 days after the commencement thereof
or after a change occurs with respect to previously reported information.
5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy, as of the date hereof and at
each of the First Closing Date and the Second Closing Date (as if made at such
Closing Date), of and compliance with all representations, warranties and
agreements of the Company contained herein, to the performance by the Company of
its respective obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., Minneapolis time, on the date of this Agreement, or such later
time and date as you shall approve and all filings required by Rule 424 and Rule
430A of the Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereof shall have been issued; no proceedings for the issuance of such an order
shall have been initiated or threatened; and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your satisfaction.
-13-
(b) The Underwriter shall not have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto, contains an untrue statement of fact which, in your opinion, is
material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries shall have
incurred any material liabilities or material obligations, direct or contingent,
or entered into any material transactions, other than in the ordinary course of
business consistent with past practice, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; and there
shall not have been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares upon
the exercise of outstanding options or warrants or pursuant to employee benefit
plans referred to or incorporated by reference in the Registration Statement),
or any material increase in the short-term or long-term debt of the Company, or
any issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the Company or any of its subsidiaries other than
pursuant to employee benefit plans referred to or incorporated by reference in
the Registration Statement, or any material adverse change or any development
involving a prospective material adverse change (whether or not arising in the
ordinary course of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole, that, in
your judgment, makes it impractical or inadvisable to offer or deliver the
Securities on the terms and in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to you the
opinion of Xxxxxxxxxxx Xxxxx & Xxxxxxxx, counsel for the Company, dated such
Closing Date and addressed to you, to the effect that:
(i) Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation. Each of the Company and its
subsidiaries has full corporate power and authority to own its properties
and conduct its business as currently being carried on and as described in
the Registration Statement and Prospectus, and is not qualified to do
business as a foreign corporation in any state, and the failure to so
qualify, considering all such cases in the aggregate, would not have a
material adverse effect upon the business, condition (financial or
otherwise) or properties of the Company and its subsidiaries, taken as a
whole.
(ii) The capital stock of the Company conforms as to legal matters to
the description thereof contained in the Prospectus under the caption
"Description of Capital
-14-
Stock." All of the issued and outstanding shares of the capital stock of
the Company have been duly authorized and validly issued and are fully paid
and nonassessable, and the holders thereof are not subject to personal
liability by reason of being such holders. The Securities to be issued and
sold by the Company hereunder have been duly authorized and, when issued,
delivered and paid for in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability by reason of
being such holders. Except as set forth in the Registration Statement or in
the Prospectus, there are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's charter, by-laws or any
agreement or other instrument known to such counsel to which the Company is
a party or by which the Company is bound. To the best of such counsel's
knowledge, except as set forth in the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights, other than those
which have been waived, for or relating to the registration of any shares
of Common Stock or other securities of the Company and no such rights
otherwise exist.
(iii) All of the issued and outstanding shares of capital stock of
each of the Company's subsidiaries have been duly and validly authorized
and issued and are fully paid and nonassessable, and, to the best of such
counsel's knowledge, the Company owns of record and beneficially, free and
clear of any security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such stock. To
the best of such counsel's knowledge, except as described in the
Registration Statement and Prospectus, there are no options, warrants,
agreements, contracts or other rights in existence to purchase or acquire
from the Company or any subsidiary any shares of the capital stock of the
Company or any subsidiary of the Company.
(iv) The Registration Statement has become effective under the Act
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission.
(v) The descriptions in the Registration Statement and Prospectus of
statutes, legal and governmental proceedings, contracts and other documents
under the captions "Risk Factors-Governmental Regulation" "-Limitations on
Third Party Reimbursement", "-Risks Associated with Human Tissue Products"
and "-Anti-Takeover Considerations", "Management's Discussion and Analysis
of Results of Operations-Overview", "Business-General", "Business-Surgical
Business-Marketing", "-Governmental Regulation", and "-Third Party
Reimbursement and Cost Containment" and "Description of Capital Stock" are
accurate in all material respects; and such counsel does not know of any
statutes or legal or governmental proceedings required to be described in
the Prospectus that are not described as required, or of any contracts or
documents of a character required to be described in the Registration
Statement or
-15-
Prospectus or included as exhibits to the Registration Statement that are
not described or included as required.
(vi) The Company has full corporate power and authority to enter into
this Agreement and the Underwriter Warrants, and this Agreement has been
duly authorized, executed and delivered by the Company and constitutes a
valid, legal and binding obligation of the Company enforceable in
accordance with its terms (except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to
general principles of equity); the execution, delivery and performance of
this Agreement and the Underwriter Warrants and the consummation of the
transactions herein and therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, rule or regulation, any agreement or instrument
required to be disclosed pursuant to Item 601 of Regulation S-K under the
Act as a material contract, the Company's charter or by-laws, or any order
or decree known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its respective properties;
and no consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Underwriter Warrants or
for the consummation of the transactions contemplated hereby and thereby,
including the issuance or sale of the Securities by the Company and the
shares of Common Stock issuable upon exercise of the Underwriter Warrants,
except such as may be required under the Act or state securities laws.
(vii) To the best of such counsel's knowledge, neither the Company
nor any of its subsidiaries is in violation of its respective charter or
by-laws.
(viii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto, comply as to form in all material
respects with the requirements of the Act and the Rules and Regulations
(except for the financial statements, schedules and other financial and
statistical data, as to which such counsel need express no opinion). On the
basis of conferences with officers of the Company, examination of documents
referred to in the Registration Statement and Prospectus and such other
procedures as such counsel deemed appropriate, nothing has come to the
attention of such counsel that causes such counsel to believe that the
Registration Statement or any amendment thereof, at the time the
Registration Statement became effective and as of such Closing Date
(including any Registration Statement Filed under Rule 462(b) of the Rules
and Regulations, if any), contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus (as of its date and as of such Closing Date), as amended or
supplemented, includes any untrue statement of material fact or omits to
state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; it being
understood that
-16-
such counsel need express no opinion as to the financial statements,
schedules or other financial or statistical data included in any of the
documents mentioned in this clause.
(ix) The Company has the full corporate power and authority to
authorize, issue and sell the shares of Common Stock issuable upon exercise
of the Underwriter Warrants. The Underwriter Warrants have been duly
authorized and when issued pursuant to the terms of this Agreement will be
duly executed and delivered by the Company and will constitute valid and
binding obligations of the Company enforceable in accordance with their
terms (except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity). The
shares of Common Stock issuable upon exercise of the Underwriter Warrants
have been duly authorized and reserved for issuance upon exercise of the
Underwriter Warrants, and upon exercise thereof and receipt by the Company
of the consideration for such shares in accordance with the terms thereof,
such shares will be validly issued, fully paid and nonassessable and the
issuance of such shares are not, and to the best of such counsel's
knowledge will not be subject to any pre-emptive rights or other rights to
subscribe for or purchase securities of the Company.
(x) Such other matters as you may reasonably request.
In rendering such opinion such counsel may rely (i) as to matters of
law other than Minnesota and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Company and its subsidiaries
provided that the extent of such reliance is specified in such opinion.
(e) On each Closing Date, there shall be furnished to you the opinion
of [**Xxxxxx and Xxxxxxxx], patent counsel for the Company, dated such Closing
Date and addressed to you, covering the matters set forth on Exhibit B hereto.
(f) On each Closing Date, there shall have been furnished to you such
opinion or opinions from Faegre & Xxxxxx P.L.L.P., counsel for the Underwriter,
dated such Closing Date and addressed to you, with respect to the formation of
the Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as you reasonably may request, and such
counsel shall have received such papers and information as they request to
enable them to pass upon such matters.
(g) On each Closing Date you shall have received letters of each of
Coopers & Xxxxxxx L.L.P. and Deloitte & Touche LLP, dated such Closing Date and
addressed to you, confirming that they are independent public accountants within
the meaning of
-17-
the Act and are in compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of the
Commission, and 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 Prospectus, as of a date not
more than five days prior to the date of such letter), the conclusions and
findings of said firm with respect to the financial information and other
matters covered by its letter delivered to you concurrently with the execution
of this Agreement, and the effect of the letter so to be delivered on such
Closing Date shall be to confirm the conclusions and findings set forth in such
prior letter.
(h) On each Closing Date, there shall have been furnished to you a
certificate, dated such Closing Date and addressed to you, signed by the chief
executive officer and by the chief financial officer of the Company, to the
effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at and
as of such Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date;
(ii) No stop order or other order suspending the effectiveness of the
Registration Statement or any amendment thereof or the qualification of the
Securities for offering or sale has been issued, and no proceeding for that
purpose has been instituted or, to the best of their knowledge, is
contemplated by the Commission or any state or regulatory body; and
(iii) The signers of said certificate have carefully examined the
Registration Statement and the Prospectus, and any amendments thereof or
supplements thereto, and (A) such documents contain all statements and
information required to be included therein, the Registration Statement, or
any amendment thereof, does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented, does not include any untrue
statement of material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, (B) since the effective date of the Registration
Statement there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth, (C)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company nor any of
its subsidiaries has incurred any material liabilities or material
obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business consistent with past
practice, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock, and except as disclosed in the
Prospectus, there has not been any change in the capital stock (other than
a change in the number of outstanding shares of Common
-18-
Stock due to the issuance of shares upon the exercise of outstanding
options or warrants or pursuant to employee benefit plans referred to or
incorporated by reference in the Registration Statement), or any material
increase in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital
stock, of the Company, or any of its subsidiaries other than pursuant to
employee benefit plans referred to or incorporated by reference in the
Registration Statement, or any material adverse change or any development
involving a prospective material adverse change (whether or not arising in
the ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects, net
worth or results of operations of the Company and its subsidiaries, taken
as a whole, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the
Company or any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which might
result in any material adverse change in the condition (financial or
otherwise), business, prospects or results of operations of the Company and
its subsidiaries, taken as a whole.
(i) The Company shall have furnished to you and your counsel such
additional documents, certificates and evidence as you or they may have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel. The Company will furnish you with such
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A, if
applicable, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending against such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged
-19-
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof; and further provided, however,
that the Company shall not be liable to the Underwriter or any person
controlling such Underwriter with respect to any such untrue statement or
omission made in any Preliminary Prospectus that is corrected in the Prospectus
(or any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Securities from the Underwriter but was not
sent or given a copy of the Prospectus (as amended or supplemented) at or prior
to the written confirmation of the sale of such Securities to such person in any
case where such delivery of the Prospectus (as amended or supplemented) is
required by the Act, unless such failure to deliver the Prospectus (as amended
or supplemented) was a result of noncompliance by the Company with Section 4(v)
of this Agreement.
In addition to its other obligations under this Section 6(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(a), it will reimburse the Underwriter on a monthly basis for all
reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter shall promptly return it to the party or parties that
made such payment, together with interest, compounded daily, determined on the
basis of the prime rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to time by Norwest Bank Minnesota,
N.A. (the "Prime Rate"). Any such interim reimbursement payments which are not
made to the Underwriter within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement shall be in addition to any liabilities which the Company may
otherwise have.
(b) The Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue
-20-
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by the Underwriter specifically for
use in the preparation thereof, and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending against any such loss, claim, damage, liability or
action. This indemnity agreement shall be in addition to any liabilities which
the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party. In case any such action shall be
brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if the defendants in any such action include both the indemnified party or
parties and the indemnifying party, and the indemnified party or parties shall
have reasonably concluded that there may be legal defenses or claims available
to it or them which are different from or additional to those available to the
indemnifying party, or if there is a conflict of interest which would prevent
counsel for the indemnifying party or parties from also representing the
indemnified party or parties, and that it is advisable for the indemnified party
or parties to be represented by separate counsel, then the indemnified party or
parties shall have the right to employ a single counsel to represent the
indemnified party or the indemnified parties as a group, in which event the
reasonable fees and expenses of the separate counsel shall be borne by the
indemnifying party or parties. An indemnifying party shall not be obligated
under any settlement agreement relating to any action under this Section 6 to
which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriter on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable
-21-
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and the Underwriter on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriter on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriter, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriter and the parties' relevant intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the first sentence of
this subsection (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act; and the obligations of the
Underwriter under this Section 6 shall be in addition to any liability that the
Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director of
the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Underwriter
and the Company contained in Section 6 hereof, shall
-22-
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriter or any controlling person thereof, or
the Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Underwriter
hereunder.
8. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at 10:00 a.m., Minneapolis
time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; provided, that if the Registration Statement
is effective at the time this Agreement is executed, this Agreement shall become
effective at such time as you in your discretion shall first release the
Securities for sale to the public. For the purpose of this Section, the
Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, you or the Company may prevent
this Agreement from becoming effective without liability of any party to any
other party, except that the provisions of Section 4(viii) and Section 6 hereof
shall at all times be effective.
(b) You shall have the right to terminate this Agreement by giving
notice as hereinafter specified at any time at or prior to the First Closing
Date, and the option referred to in Section 3(b), if exercised, may be canceled
at any time prior to the Second Closing Date, if (i) the Company shall have
failed, refused or been unable, at or prior to such Closing Date, to perform any
agreement on its part to be performed hereunder, (ii) any other condition of the
Underwriter's obligations hereunder is not fulfilled, (iii) trading on the New
York Stock Exchange or the American Stock Exchange shall have been wholly
suspended, (iv) minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the New
York Stock Exchange or the American Stock Exchange, by such Exchange or by order
of the Commission or any other governmental authority having jurisdiction, (v) a
banking moratorium shall have been declared by Federal, New York or Minnesota
authorities, or (vi) there has occurred any material adverse change in the
financial markets in the United States or an outbreak of major hostilities (or
an escalation thereof) in which the United States is involved, a declaration of
war by Congress, any other substantial national or international calamity or any
other event or occurrence of a similar character shall have occurred since the
execution of this Agreement that, in your judgment, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any party to any
other party except that the provisions of Section 4(viii) and Section 6 hereof
shall at all times be effective.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section, the Company shall be
notified promptly by
-23-
you by telephone or telegram, confirmed by letter. If the Company elects to
prevent this Agreement from becoming effective, you shall be notified by the
Company by telephone or telegram, confirmed by letter.
9. Default by the Company. If the Company shall fail at the First
Closing Date to sell and deliver the number of Securities which it is obligated
to sell hereunder, then this Agreement shall terminate without any liability on
the part of any non-defaulting party.
No action taken pursuant to this Section shall relieve the Company so
defaulting from liability, if any, in respect of such default.
10. Information Furnished by Underwriter. The statements set forth in
the last paragraph of the cover page, in the first two full paragraphs on the
bottom of the inside first cover page and under the caption "Underwriting" in
any Preliminary Prospectus and in the Prospectus constitute the written
information furnished by or on behalf of the Underwriter referred to in Section
2 and Section 6 hereof.
11. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriter, shall
be mailed, telegraphed or delivered to Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000; if to the Company, shall
be mailed, telegraphed or delivered to it at 0000 Xxxxxxxxxx Xxxxxx, Xx. Xxxx,
Xxxxxxxxx 00000 Attention: President. All notices given by telegram shall be
promptly confirmed by letter. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Except as set forth in Section 6(e),
nothing in this Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable remedy or claim under or in
respect of this Agreement or any provision herein contained. The term
"successors and assigns" as herein used shall not include any purchaser, as such
purchaser, of any of the Securities from any of the several Underwriter.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
-24-
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the Company
and you in accordance with its terms.
Very truly yours,
BIO-VASCULAR, INC.
By____________________________________
[Title]
Confirmed as of the date first
above mentioned.
XXXXX XXXXXXX INC.
By___________________________________
Managing Director
-25-
SCHEDULE I
Number of
Underwriter Firm Shares(1)
----------- --------------
Xxxxx Xxxxxxx Inc. 1,800,000
_________________
(1) The Underwriter may purchase up to an additional 270,000 Option Shares, to
the extent the option described in Section 3 of the Agreement is exercised,
in the manner described in the Agreement.
EXHIBIT A
WARRANT
TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF
BIO-VASCULAR, INC.
THIS CERTIFIES THAT, for value received, Xxxxx Xxxxxxx Inc. (herein
called "Purchaser") or its registered assigns is entitled to subscribe for and
purchase from Bio-Vascular, Inc. (herein called the "Company"), a corporation
organized and existing under the laws of the State of Minnesota, at the price
specified below (subject to adjustment as noted below) at any time from and
after the first anniversary of this Warrant (the "Effective Date") to and
including the fourth anniversary date of the Effective Date, __________________
__________ (__________) fully paid and nonassessable shares of the Company's
Common Stock, par value $.01 per share (subject to adjustment as noted below).
The warrant purchase price (subject to adjustment as noted below)
shall be $_________ per share.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise. The rights represented by this Warrant may be exercised
by the holder hereof, in whole or in part, by written notice of exercise
delivered to the Company prior to the intended date of exercise and by the
surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and upon payment to it by check of the purchase price for
such shares. The Company agrees that the shares so purchased shall be and are
deemed to be issued to the holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding 7 days, after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be delivered to the holder hereof
within such time.
2. Restriction on Transferability. Notwithstanding the foregoing,
however, the Company shall not be required to deliver any certificate for shares
of stock upon exercise of this Warrant except in accordance with the provisions,
and subject to the limitations, of paragraph 7 hereof and the restrictive legend
under the heading "Restriction
1
on Transfer" below. This Warrant shall not be sold, transferred, assigned or
hypothecated prior to the Effective Date except to persons who are officers of
the Purchaser, to a partnership comprised of such persons and the Purchaser, or
by operation of law.
3. Covenants of the Company. The Company covenants and agrees that
all shares which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be duly authorized and issued, fully paid and
nonassessable. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant,
a sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. Anti-Dilution Adjustments. The above provisions are however,
subject to the following:
(a) The warrant purchase price from and after the date of issuance of
this Warrant, shall be subject to adjustment from time to time as
hereinafter provided. Upon each adjustment of the warrant purchase price,
the holder of this Warrant shall thereafter be entitled to purchase, at the
warrant purchase price resulting from such adjustment, the number of shares
obtained by multiplying the warrant purchase price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant
hereto immediately prior to such adjustment and dividing the product
thereof by the warrant purchase price resulting from such adjustment.
(b) In case the Company shall (i) declare a dividend upon the Common
Stock payable in Common Stock or in any obligations or any securities of
the Company which are convertible into or exchangeable for Common Stock
(any of such obligations or securities being hereinafter called
"Convertible Securities"), or in any rights or options to purchase Common
Stock or Convertible Securities, or (ii) declare any other dividend or make
any other distribution upon the Common Stock other than out of earnings or
earned surplus, then thereafter the holder of this Warrant upon the
exercise hereof will be entitled to receive the number of shares of Common
Stock to which such holder shall be entitled upon such exercise, and, in
addition and without further payment therefor, each dividend described in
clause (i) above and each dividend or distribution described in clause (ii)
above which such holder would have received by way of dividends or
distributions if continuously since such holder became the record holder of
this Warrant such holder (i) had been the record holder of the number of
shares of Common Stock then received, and (ii) had retained all dividends
or distributions in stock or securities (including Common Stock or
Convertible Securities, or in any rights or options to purchase any Common
Stock or Convertible Securities) payable in respect of such
2
Common Stock or in respect of any stock or securities paid as dividends or
distributions and originating directly or indirectly from such Common
Stock.
(c) In case the Company shall at any time after the issuance of this
Warrant subdivide its outstanding shares of Common Stock into a greater
number of shares, the warrant purchase price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined
into a smaller number of shares, the warrant purchase price in effect
immediately prior to such combination shall be proportionately increased.
(d) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect
to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive, upon the basis and upon the terms
and conditions specified in this Warrant and in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such shares
of stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby had such reorganization, reclassification, consolidation, merger or
sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holder of this Warrant
to the end that the provisions hereof (including without limitation
provisions for adjustments of the warrant purchase price and of the number
of shares purchasable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume, by written instrument executed and
mailed to the registered holder hereof at the last address of such holder
appearing on the books of the Company, the obligation to deliver to such
holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to purchase.
(e) Upon any adjustment of the warrant purchase price, then and in
each such case the Company shall give written notice thereof, by first-
class mail, postage
3
prepaid, addressed to the registered holder of this Warrant, at the address
of such holder as shown on the books of the Company, which notice shall
state the warrant purchase price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this Warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
(f) In case at any time prior to the expiration or exercise of this
Warrant:
(i) the Company shall declare any cash dividend on its Common
Stock or any cash dividends at a rate in excess of the rate of the
last cash dividend theretofore paid;
(ii) the Company shall pay any dividend payable in stock upon
its Common Stock or make any distribution (other than regular cash
dividends) to the holders of its Common Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights;
(iv) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another corporation; or
(v) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the registered
holder of this Warrant at the address of such holder as shown on the books
of the Company, of the date on which (A) the books of the Company shall
close or a record shall be taken for such dividend, distribution or
subscription rights, or (B) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up shall
take place, as the case may be. Such notice shall also specify the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Such written
notice shall be given at least 30 days prior to the action in question and
not less than 30 days prior to the record date or the date on which the
Company's transfer books are closed in respect thereto.
4
(g) If any event occurs as to which the other provisions of this
paragraph 4 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the holder of this Warrant or of
Common Stock in accordance with the essential intent and principles of such
provisions, then this Warrant shall be adjusted in the application of such
provisions, in accordance with such essential intent and principles, so as
to protect such purchase rights as aforesaid.
(h) No fractional shares of Common Stock shall be issued upon the
exercise of this Warrant, but, instead of any fraction of a share which
would otherwise be issuable, the Company shall pay a cash adjustment (which
may be effected as a reduction of the amount to be paid by the holder
hereof upon such exercise) in respect of such fraction in an amount equal
to the same fraction of the market price per share of Common Stock as of
the close of business on the date of the notice required by paragraph 1
above. "Market price" for purposes of this paragraph 4(h) shall mean, if
the Common Stock is traded on a securities exchange or on the Nasdaq
National Market, the closing price of the Common Stock on such exchange or
the Nasdaq National Market, or, if the Common Stock is otherwise traded in
the over-the-counter market, the closing bid price, in each case averaged
over a period of 5 consecutive business days prior to the date as of which
"market price" is being determined. If at any time the Common Stock is not
traded on an exchange or the Nasdaq National Market, or otherwise traded in
the over-the-counter market, the "market price" shall be deemed to be the
higher of (i) the book value thereof as determined by any firm of
independent public accountants of recognized standing selected by the Board
of Directors of the Company as of the last day of any month ending within
60 days preceding the date as of which the determination is to be made, or
(ii) the fair value thereof determined in good faith by the Board of
Directors of the Company as of a date which is within 15 days of the date
as of which the determination is to be made.
5. Common Stock. As used herein, the term "Common Stock" shall mean
and include the Company's presently authorized Common Stock and shall also
include any capital stock of any class of the Company hereafter authorized which
shall not be limited to a fixed sum or percentage in respect of the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company; provided that the shares purchasable pursuant to this Warrant shall
include shares designated as Common Stock of the Company on the date of original
issue of this Warrant or, in the case of any reclassification of the outstanding
shares thereof, the stock, securities or assets provided for in paragraph 4(d)
above.
6. No Voting Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company.
5
7. Notice of Transfer of Warrant or Resale of Shares. The holder of
this Warrant, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant, in whole or in part, or transferring any
Common Stock issuable or issued upon the exercise hereof of such holder's
intention to do so, describing briefly the manner of any proposed transfer of
this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable or issued upon the exercise hereof. Such holder
shall also provide the Company with an opinion of counsel satisfactory to the
Company to the effect that the proposed transfer of this Warrant or disposition
of shares may be effected without registration or qualification (under any
Federal or State law) of this Warrant or the shares of Common Stock issuable
upon the exercise hereof. Upon receipt of such written notice and opinion by
the Company, such holder shall be entitled to transfer this Warrant, or to
exercise this Warrant in accordance with its terms and dispose of the shares
received upon such exercise or to dispose of shares of Common Stock received
upon the previous exercise of this Warrant, all in accordance with the terms of
the notice delivered by such holder to the Company, provided that an appropriate
legend, if any, respecting the aforesaid restrictions on transfer and
disposition may be endorsed on this Warrant or the certificates for such shares.
8. Transferability. Subject to the provisions of paragraph 2 and
paragraph 7 hereof, this Warrant and all rights hereunder are transferable, in
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant properly
endorsed. Each taker and holder of this Warrant, by taking or holding the same,
consents and agrees that the bearer of this Warrant, when endorsed, may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company, any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered holder hereof as the owner
for all purposes.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by said holder hereof at the time of such
surrender.
9. Registration Rights.
9.1 Required Registration. If Form S-3 or any successor form ("Form
S-3") promulgated by the Securities and Exchange Commission (the "Commission")
is available for use by the Company and any record holder of holders of
Purchased Stock (as
6
defined in Section 9.6) and the Company shall receive a written request therefor
from any such record holder or holders of an aggregate of at least a majority of
the shares of Purchased Stock not theretofore registered under the Securities
Act of 1933, as amended (the "Securities Act"), and sold, the Company shall
prepare and file a registration statement on Form S-3 under the Securities Act
covering the shares of Purchased Stock which are the subject of such request and
shall use its best efforts to cause such registration statement to become
effective. In addition, upon the receipt of such request, the Company shall
promptly give written notice to all other record holders of shares of Purchased
Stock not theretofore registered under the Securities Act and sold that such
registration is to be effected. The Company shall include in such registration
statement such shares of Purchased Stock for which it has received written
requests and for which Form S-3 is available to register by such other record
holders within 30 days after the delivery of the Company's written notice to
such other record holders. The Company shall be obligated to prepare, file and
cause to become effective only one such registration statement pursuant to this
Section 9.1, and to pay the expenses associated with such registration
statement. In the event that the holders of a majority of the Purchased Stock
for which registration has been requested pursuant to this Section 9.1 determine
for any reason not to proceed with a registration at any time before a
registration statement has been declared effective by the Commission, and such
registration statement, if theretofore filed with the Commission, is withdrawn
with respect to the Purchased Stock covered thereby, and the holders of such
Purchased Stock agree to bear their own expenses incurred in connection
therewith and to reimburse the Company for the expenses incurred by it
attributable to the registration of such Purchased Stock, then the holders of
such Purchased Stock shall not be deemed to have exercised their right to
require the Company to register Purchased Stock pursuant to this Section 9.1.
If, at the time any written request for registration is received by
the Company pursuant to this Section 9.1, the Company has determined to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any of
its securities by it or any of its security holders, such written request shall
be deemed to have been given pursuant to Section 9.2 hereof rather than this
Section 9.1, and the rights of the holders of Purchased Stock covered by such
written request shall be governed by Section 9.2 hereof.
Notwithstanding the foregoing, the Company shall have the right to
defer the filing of the registration statement pursuant to this Section 9.1 or,
if such registration statement has been declared effective, the Company shall
have the right to suspend the ability of such holders to sell Purchased Stock
pursuant to such registration statement, in either case for up to no more than
90 days, if (i) in the written opinion of counsel for the Company, the Company
would thereby be required to disclose nonpublic information relating to pending
corporate developments or business transactions involving the Company or its
subsidiaries not otherwise then required by law to be publicly disclosed and
(ii) in the good faith judgment of the Company's Board of Directors, such
disclosure at such time
7
would adversely affect the Company or such corporate development or business
transaction contemplated by the Company or its subsidiaries; provided, however,
that the Company may not use this right of deferral or suspension during the
last six months of the term of this Warrant or on more than one occasion in any
12-month period; and provided, further, that the holders making a written
request to effect a registration that the Company defers pursuant hereto may, at
any time, during such deferral, withdraw such request for such registration and
thereby preserve the right provided in this Section 1 to again request such
registration.
Notwithstanding the foregoing, the Company shall not be required to
include in any registration requested pursuant to this Section 9.1 any shares of
Common Stock (or any other securities) issued upon exercise or conversion of the
Warrant and then held by any holder who is able at such time to sell all such
shares or other securities pursuant to Rule 144(k) under the Securities Act.
Without the written consent of the holders of a majority of the
Purchased Stock for which registration has been requested pursuant to this
Section 9.1, neither the Company nor any other holder of securities of the
Company may include securities in such registration if in the good faith
judgment of the managing underwriter of such public offering the inclusion of
such securities would interfere with the successful marketing of the Purchased
Stock or require the exclusion of any portion of the Purchased Stock to be
registered.
The rights granted by this Section 9.1 may be transferred to and are
exercisable by subsequent transferees of any shares of Purchased Stock, except
with respect to shares of Purchased Stock that have been registered under the
Securities Act and sold.
9.2 Incidental Registration. Each time the Company shall determine
to proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for cash
of any of its securities by it or any of its security holders (other than a
registration statement on a form that does not permit the inclusion of shares by
its security holders), the Company will give written notice of its determination
to all record holders of Purchased Stock not theretofore registered under the
Securities Act and sold no later than 30 days prior to the filing of a
registration statement with the Commission. Upon the written request of a
record holder of any shares of Purchased Stock given within 30 days after
receipt of any such notice from the Company, the Company will, except as herein
provided, cause all such shares of Purchased Stock, the record holders of which
have so requested registration thereof, to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Purchased Stock to be so registered;
provided, however, that nothing herein shall prevent the Company from, at any
time, abandoning or delaying any registration. If any registration pursuant to
this Section 9.2 shall be underwritten in whole or in part, the Company may
require that the Purchased
8
Stock requested for inclusion pursuant to this Section 9.2 be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If in the reasonable judgment of the managing
underwriter of such public offering the inclusion of all of the Purchased Stock
originally covered by a request for registration would reduce the number of
shares to be offered by the Company or interfere with the successful marketing
of the shares of stock offered by the Company, the number of shares of Purchased
Stock otherwise to be included in the underwritten public offering may be
reduced pro rata (by number of shares) among the holders thereof requesting such
registration, provided, however, that after any such required reduction, the
Purchased Stock to be included in such offering shall constitute at least 25% of
the total number of shares to be included in such offering.
The rights granted by this Section 9.2 may be transferred to and are
exercisable by subsequent transferees of any shares of Purchased Stock, except
with respect to shares of Purchased Stock that have been registered under the
Securities Act and sold.
9.3 Registration Procedures. If and whenever the Company is
required by the provisions of Sections 9.1 or 9.2 hereof to effect the
registration of shares of Purchased Stock under the Securities Act, the Company
will:
(a) prepare and file with the Commission a registration statement with
respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed nine months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such
securities, not to exceed nine months;
(c) furnish to the security holders participating in such registration
and to the underwriters of the securities being registered such number of
copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably
request in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities covered
by such registration statement under such state securities or blue sky laws
of such jurisdictions as such participating holders may reasonably request
in writing within 20 days following the original filing of such
registration statement, except that the Company shall not for any purpose
be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified;
9
(e) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) prepare and file with the Commission, promptly upon the request of
any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders
(and concurred in by counsel for the Company), is required under the
Securities Act or the rules and regulations thereunder in connection with
the distribution of the Purchased Stock by such holder;
(h) prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements
of the Securities Act or the rules and regulations thereunder, after having
been furnished with a copy thereof at least five business days prior to the
filing thereof, unless in the opinion of counsel for the Company the filing
of such amendment or supplement is reasonably necessary to protect the
Company from any liabilities under any applicable federal or state law and
such filing will not violate applicable law; and
10
(k) at the request of any such holder, furnish (i) an opinion, dated
as of the closing date, of the counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and
to the holder or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request; and (ii) letters
dated as of the effective date of the registration statement and as of the
closing date, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such underwriters and
holder or holders may reasonably request.
9.4 Expenses. With respect to Sections 9.1 and 9.2 hereof (except
as otherwise provided in Sections 9.1 and 9.2), the Company shall bear the
following fees, costs and expenses: all registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company, fees and disbursements of counsel for the underwriter or underwriters
of such securities (if the Company and/or selling security holders are required
to bear such fees and disbursements), all internal Company expenses, all legal
fees and disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered are to
be registered or qualified, and the premiums and other costs of policies of
insurance against liability (if any) arising out of such public offering. Fees
and disbursements of counsel and accountants for the selling security holders,
underwriting discounts and commissions and transfer taxes relating to the shares
included in the offering by the selling security holders, and any other expenses
incurred by the selling security holders not expressly included above, shall be
borne pro rata by the selling security holders.
9.5 Indemnification.
(a) The Company will indemnify and hold harmless each holder of shares
of Purchased Stock which are included in a registration statement pursuant
to the provisions hereof, its directors and officers, and any underwriter
(as defined in the Securities Act) for such holder and each person, if any,
who controls such holder or such underwriter within the meaning of the
Securities Act, from and against, and will reimburse such holder and each
such underwriter and controlling person with respect to, any and all loss,
claim, damage, liability, cost and expense to which such holder or any such
underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities,
costs or expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances in which they were made; provided, however, that the
Company will not be liable in any such case to the extent that any
11
such loss, damage, liability, cost or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such holder,
such underwriter or such controlling person in writing specifically for use
in the preparation thereof.
(b) Each holder of shares of Purchased Stock which are included in a
registration statement pursuant to the provisions hereof will indemnify and
hold harmless the Company, its directors and officers, any controlling
person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any
underwriter with respect to, any and all loss, claim, damage, liability,
cost or expense to which the Company or any controlling person and/or any
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities, costs or expenses
arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which
they were made, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity with written
information furnished by such holder specifically for use in the
preparation thereof; provided, however that in no event shall any holder of
shares of Purchased Stock be liable under any such indemnity for any amount
in excess of the aggregate amount of proceeds such holder received from the
sale of shares of Purchased Stock pursuant to such registration statement.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 9.5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying part of the commencement
thereof, the indemnifying party shall have the right to participate in,
and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying
12
party or if there is a conflict of interest which would prevent counsel for
the indemnifying party from also representing the indemnified party, the
indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation,
unless (i) the indemnified party shall have employed counsel in accordance
with the proviso of the preceding sentence, (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice
of the commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. Notwithstanding the foregoing, nothing
in this Section 9.5 will obligate any indemnifying party, with respect to
any proceeding or related proceedings in the same jurisdiction to be liable
for the fees and expenses of more than one separate law firm at any one
time for all such indemnified parties.
9.6 Purchased Stock Special Definition. "Purchased Stock" shall
mean this Warrant, and the shares of Common Stock of the Company issuable upon
exercise of this Warrant and all shares of such Common Stock issued in exchange
or substitution therefor, whether or not such securities (other than this
Warrant) have in fact been issued, and the stock or other securities of the
Company issued in a stock split or reclassification of, or a stock dividend or
other distribution on or in substitution or exchange for, or otherwise in
connection with, any of the foregoing securities, or in a merger or
consolidation involving the Company or a sale of all or substantially all of the
Company's assets. For purposes hereof, the record holder of this Warrant shall
be treated as the record holder of the related Common Stock then issuable upon
the exercise thereof. Nothing in this Section 9.6 shall, however, be deemed to
require the Company to register this Warrant, it being understood that the
registration rights granted hereby relate only to shares of Common Stock of the
Company and securities issued in substitution or exchange therefor.
9.7 Availability of Registration Rights. The right to registration
pursuant hereto shall commence on the Effective Date shall terminate with
respect to the provisions of Section 9.1 and Section 9.2 hereof on the fourth
and sixth anniversaries, respectively, of the Effective Date.
10. Optional Conversion.
(a) In addition to and without limiting the rights of the holder of
this Warrant under the terms of this Warrant, the holder of this Warrant
shall have the
13
right (the "Conversion Right") to convert this Warrant or any portion
thereof into shares of Common Stock as provided in this paragraph 10 at any
time or from time to time after the first anniversary of the date hereof
and prior to its expiration, subject to the restrictions set forth in
paragraph (c) below. Upon exercise of the Conversion Right with respect to
a particular number of shares subject to this Warrant (the "Converted
Warrant Shares"), the Company shall deliver to the holder of this Warrant,
without payment by the holder of any exercise price or any cash or other
consideration, that number of shares of Common Stock equal to the quotient
obtained by dividing the Net Value (as hereinafter defined) of the
Converted Warrant Shares by the fair market value (as defined in paragraph
(d) below) of a single share of Common Stock, determined in each case as of
the close of business on the Conversion Date (as hereinafter defined). The
"Net Value" of the Converted Warrant shares shall be determined by
subtracting the aggregate warrant purchase price of the Converted Warrant
Shares from the aggregate fair market value of the Converted Warrant
Shares. Notwithstanding anything in this paragraph 10 to the contrary, the
Conversion Right cannot be exercised with respect to a number of Converted
Warrant Shares having a Net Value below $100. No fractional shares shall be
issuable upon exercise of the Conversion Right, and if the number of shares
to be issued in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the holder of this Warrant an amount in
cash equal to the fair market value of the resulting fractional share.
(b) The Conversion Right may be exercised by the holder of this
Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder
thereby intends to exercise the Conversion Right and indicating the number
of shares subject to this Warrant which are being surrendered (referred to
in paragraph (a) above as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or
on such later date as is specified therein (the "Conversion Date"), but not
later than the expiration date of this Warrant. Certificates for the
shares of Common Stock issuable upon exercise of the Conversion Right,
together with a check in payment of any fractional share and, in the case
of a partial exercise, a new warrant evidencing the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and
shall be delivered to the holder of this Warrant within 15 days following
the Conversion Date.
(c) In the event the Conversion Right would, at any time this Warrant
remains outstanding, be deemed by the Company's independent certified
public accountants to give rise to a material charge to the Company's
earnings for financial reporting purposes, then the Conversion Right shall
automatically terminate upon the Company's written notice to the holder of
this Warrant of such adverse accounting treatment.
14
(d) For purposes of this paragraph 10, the "fair market value" of a
share of Common Stock as of a particular date shall be its "market price",
calculated as described in paragraph 4(h) hereof.
11. Governing Law. All questions concerning this Warrant will be
governed and interpreted and enforced in accordance with the internal law of the
State of Minnesota without regard to the principles of conflicts of law thereof.
15
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and this Warrant to be dated as of
__________________, 1995.
BIO-VASCULAR, INC.
_______________________________________
Name:
Title:
RESTRICTION ON TRANSFER
The securities evidenced hereby may not be transferred without
compliance with the provisions of paragraph 7 hereof or registration under the
Securities Act of 1933, as amended.
16
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________________________ this Warrant, and
appoints _________________________________________________________________ to
transfer this Warrant on the books of the Company with the full power of
substitution in the premises.
Dated:
In the presence of:
________________________________________________
(Signature must conform in all respects to the
name of the holder as specified on the face of
this Warrant without alteration, enlargement or
any change whatsoever, and the signature must be
guaranteed in the usual manner)
17
SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
TO: Bio-Vascular, Inc. (the "Company")
The undersigned _______________________________________
Please insert Social Security or other identifying number of Subscriber:
____________________________________________
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, ______________ shares of the Common
Stock provided for therein and tenders payment herewith to the order of the
Company in the amount of $________________, such payment being made as provided
on the face of this Warrant.
The undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name:_________________________________________________
Address:______________________________________________
Deliver to:___________________________________________
Address:______________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated:
Signature:_____________________________________
Note: The signature on this Subscription Form
must correspond with the name as written upon the
face of this Warrant in every particular, without
alteration or enlargement or any change whatever.
18
