PURCHASE AGREEMENT
THIS AGREEMENT is made as of the ____ day of January, 1997, by and
between CardioDynamics International Corporation (the "Company"), a corporation
organized under the laws of the State of California, with its principal offices
at 0000 Xxxxxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 and the
purchaser whose name and address is set forth on the signature page hereof (the
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Purchaser agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES.
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of up to an aggregate of ___________ shares of the common
stock (the "Common Stock"), no par value, of the Company (the "Shares").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES. On the Closing
Date (as defined in Section 3), the Company, subject to the terms of this
Agreement, will sell to the Purchaser the number of Shares indicated below, and
the Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, the aggregate number of such Shares (at the purchase
price) shown below:
Number of Price Per
Shares to be Share In Aggregate
Purchased Dollars Price
------------ --------- ---------
$ $
The Company proposes to enter into this same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects to
complete sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement
Agent" shall mean EVEREN Securities, Inc.
SECTION 3. DELIVERY OF THE SHARES AT THE CLOSING. The completion of
the purchase and sale of the Shares (the "Closing") shall occur at the offices
of Stroock & Stroock & Xxxxx, Seven Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on
January __, 1997, at 10:00 a.m., Eastern Time, or at such other place and time
(the "Closing Date") to be agreed upon by the Company and the Placement Agent
and of which the Purchasers will be notified by facsimile transmission or
otherwise.
At the Closing, the Company shall deliver to the Purchaser one or more
stock certificates registered in the name of the Purchaser, or in such nominee
name(s) as designated by the Purchaser, representing the number of Shares set
forth in Section 2 above. The name(s) in which the stock certificates are to be
registered are set forth in the Stock Certificate Questionnaire attached hereto
as part of Appendix I. The Company's obligation to complete the purchase and
sale of the Shares and deliver such stock certificate(s) to the Purchaser at the
Closing shall be subject to the following conditions, any one or more of which
may be waived by the Company (which waiver, in the case of (c) below, shall be
in an express writing): (a) receipt by the Company of New York Clearing House
funds in the full amount of the purchase price for the Shares being purchased
hereunder; (b) completion of the purchases and sales under the Agreements with
Other Purchasers; and (c) the accuracy of the representations and warranties
made by the Purchasers and the fulfillment of those undertakings of the
Purchasers to be fulfilled prior to the Closing. The Purchaser's obligations
hereunder are expressly not conditioned on the purchase by any or all of the
Other Purchasers of the Shares that they have agreed to purchase from the
Company. The Purchaser's obligation to accept delivery of such stock
certificate(s) and to pay for the Shares evidenced thereby shall be subject to
the accuracy in all material respects of the representations and warranties made
by the Company herein and the fulfillment in all material respects of those
undertakings of the Company to be fulfilled prior to Closing, including the
following:
LEGAL OPINION. Prior to and as a condition to the Closing, the
Company will cause Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel to the Company
("Company Counsel"), to deliver its legal opinion to the Placement Agent
reasonably satisfactory to the Placement Agent and counsel to the Placement
Agent. Such opinion shall also state that each of the Purchasers may rely
thereon as though it were addressed directly to such Purchaser.
CERTIFICATE. Prior to and as a condition to the Closing, the Company
will deliver a certificate of the Company executed by the Chairman of the Board
or President and the chief Financial or Accounting Officer of the Company, to be
dated the Closing Date in form and substance satisfactory to the Placement Agent
to the effect that the representations and warranties of the Company set forth
in Section 4 are true and correct as of the date of this Agreement and are true
and correct in all material respects as of the Closing Date, and the Company has
complied
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with all the agreements and satisfied all the conditions to be performed or
satisfied by it on or prior to such Closing Date.
COMFORT LETTER. Prior to and as a condition to the Closing, the
Company will cause Xxxxxxxx & Co., certified public accountants to the Company
(the "Accountants") to deliver a comfort letter to the Placement Agent
reasonably satisfactory to the Placement Agent and counsel to the Placement
Agent. Such comfort letter will state that each of the Purchasers may rely
thereon as though it were addressed directly to such Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the Purchaser
as follows:
4.1. ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to
conduct its business as currently conducted.
4.2. AUTHORIZED CAPITAL STOCK. Except as disclosed in or
contemplated by the Private Placement Memorandum (as defined below), the Company
has authorized and outstanding capital stock as set forth in the Private
Placement Memorandum; the issued and outstanding shares of the Company's Common
Stock have been duly authorized and validly issued, are 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 conform to
the description thereof included in the Private Placement Memorandum. Except as
contemplated in the Private Placement Memorandum, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The
description of the Company's stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised thereunder,
included in the Private Placement Memorandum accurately and fairly presents in
all material respects, the information shown with respect to such plans,
arrangements, options and rights.
4.3. ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares to be
sold by the Company have been duly authorized and, when issued, delivered and
paid for in the manner set forth in this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable, and will conform to the
description thereof included in the Private Placement Memorandum. No preemptive
rights or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Shares by the Company pursuant to this Agreement.
Except as disclosed in the
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Private Placement Memorandum, no shareholder of the Company has any right which
has not been waived to require the Company to register the sale of any shares
owned by such shareholder under the Securities Act of 1933, as amended (the
"Securities Act"), in the Registration Statement. No further approval or
authority of the shareholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares to be sold by the Company as
contemplated herein.
4.4. DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company has full legal right, power and authority to enter into the Agreements
and perform the transactions contemplated hereby. The Agreements have been duly
authorized, executed and delivered by the Company. The making and performance
of the Agreements by the Company and the consummation of the transactions herein
contemplated will not violate any provision of the articles of incorporation or
bylaws, or other organizational documents, of the Company, and will not conflict
with, result in the breach or violation of, or constitute, either by itself or
upon notice or the passage of time or both, a default under any material
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company is a party or by which the Company or
its properties may be bound or affected, any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
any of its properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement, except for compliance with the
Blue Sky laws applicable to the offering of the Shares. Upon their execution
and delivery, the Agreements will constitute valid and binding obligations of
the Company and the respective Purchasers, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Company in Section 7.3
hereof may be legally unenforceable.
4.5. ACCOUNTANTS. The Accountants, who have expressed or will express
their opinion with respect to the audited financial statements and schedules
included in the Private Placement Memorandum and those to be incorporated by
reference in the Registration Statement, are independent accountants as required
by the Securities Act and the rules and regulations promulgated thereunder (the
"Rules and Regulations").
4.6. NO DEFAULTS. The Company is not in violation or default of any
provision of its articles of incorporation or
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bylaws, or other organizational documents, or is not in breach of or default
with respect to any provision of any agreement, judgment, decree, order,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of its properties are
bound; and there does not exist any state of fact which constitutes an event of
default on the part of the Company as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of default
except such breaches and defaults which individually or in the aggregate would
not be material to the Company.
4.7. CONTRACTS. The contracts described in the Private Placement
Memorandum are in full force and effect on the date hereof; and, to the best of
the Company's knowledge, neither the Company nor any other party is in breach of
or default under any of such contracts except such breach or default which
individually or in the aggregate would not be material to the Company.
4.8. NO ACTIONS. There are no legal or governmental actions, suits
or proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company is or may be a party or of which property owned or leased by
the Company is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might, individually
or in the aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
prospects of the Company, and no labor disturbance by the employees of the
Company exists or, to the best knowledge of the Company, is imminent. The
Company is neither a party to nor subject to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental body that would have a material effect on the conduct of
its business as described in the Private Placement Memorandum.
4.9. PROPERTIES. The Company has good and valid title to all the
properties and assets reflected as owned by it in the financial statements
included in the Private Placement Memorandum or incorporated by reference
therein, subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such financial statements, or (ii) those
which are not material in amount and do not adversely affect the use made and
promised to be made of such property by the Company. The Company holds its
leased properties under valid and binding leases, except as would not reasonably
be expected to have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company. Except
as disclosed in the Private Placement Memorandum or incorporated by reference
therein, the Company owns or leases all such properties as are necessary to its
operations as now conducted.
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4.10. NO MATERIAL CHANGE. Since November 30, 1996 and except as
described in or specifically contemplated by the Private Placement Memorandum,
(i) the Company has not incurred any material liabilities or obligations,
indirect, or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
or which could reasonably be expected to result in a material reduction in the
future earnings of the Company; (ii) the Company has not sustained any material
loss or interference with its businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) the Company has not paid or declared any dividends or other distributions
with respect to its capital stock and the Company is not in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock of the Company (other than the sale
of the Shares hereunder), or increase in indebtedness material to the Company;
and (v) there has not been any material adverse change in the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company.
4.11. INTELLECTUAL PROPERTY. Except as disclosed in or specifically
contemplated by the Private Placement Memorandum, the Company has sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals and
governmental authorizations to conduct its businesses as now conducted; the
expiration of any trademarks, trade names, patent rights, copyrights, licenses,
approvals or governmental authorizations would not have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company; and the Company has no knowledge of any
material infringement by it of trademark, trade name rights, patent rights,
copyrights, licenses, trade secrets or other similar rights of others, and there
is no claim being made against the Company regarding trademark, trade name,
patent, copyright, license, trade secrecy or other infringement which could have
a material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company.
4.12. COMPLIANCE. The Company has not been advised, and has no
reason to believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company.
4.13. TAXES. The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of tax deficiency which has
been or might be asserted or threatened against the Company which could
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materially adversely affect the business condition (financial or otherwise),
business, results of operations or prospects of the Company.
4.14. TRANSFER TAXES. On the Closing Date, all stock transfer or
other similar taxes which are required to be paid in connection with the sale
and transfer of the Shares to be sold to the Purchaser hereunder will be, or
will have been, fully paid or provided for by the Company and all laws imposing
such taxes will be or will have been fully complied with.
4.15. INVESTMENT COMPANY. The Company is not required to register as
an "investment company" as such term is defined in the Investment Company Act of
1940, as amended.
4.16. OFFERING MATERIALS. The Company has not distributed and will
not distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Shares other than the Private Placement
Memorandum or any amendment or supplement thereto.
4.17. INSURANCE. Except as disclosed in the Private Placement
Memorandum, the Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
4.18. ADDITIONAL INFORMATION. The Company represents and warrants
that the information contained in the following documents, which the Placement
Agent has furnished to the Purchaser, or will furnish prior to the Closing, is
or will be true and correct in all material respects as of their respective
filing dates:
(a) Annual Report on Form 10-KSB for the year ended November 30,
1995;
(b) Quarterly Report on Form 10-QSB for the quarter ended August 30,
1996;
(c) the Confidential Placement Memorandum dated January 1997
containing certain summary information relating to the sale by
the Company of the Shares pursuant to the Agreements, including
all addenda and exhibits thereto (the "Private Placement
Memorandum"); and
(d) all other documents, if any, filed by the Company with the
Securities and Exchange Commission (the "Commission") since
November 30, 1995 pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
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4.19. OBSERVATION RIGHTS. The Company will afford any Purchaser that
at any time holds, and during such period of time as it continues to hold, more
than 5% of the issued and outstanding shares of Common Stock of the Company the
right to attend the meetings of its Board of Directors ("Observation Rights")
and will provide such Purchaser with notice of such meetings on the same basis
as it is required to provide to its Directors, provided that, no waiver of
notice by the Board of Directors will have the effect of waiving or canceling
any such entity's right to notice hereunder. The Company has taken all
corporate action required to afford Observation Rights to such entity.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER. (a) The Purchaser represents and warrants to, and covenants with,
the Company that: (i) the Purchaser, taking into account the personnel and
resources it can practically bring to bear on the purchase of the Shares
contemplated hereby, is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
presenting an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares; (ii) the Purchaser is
acquiring the number of Shares set forth in Section 2 above in the ordinary
course of its business and for its own account for investment (as defined for
purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the
regulations thereunder) only and with no present intention of distributing any
of such Shares or any arrangement or understanding with any other persons
regarding the distribution of such Shares; (iii) the Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares except in compliance with the Securities Act, the Rules
and Regulations and any applicable state securities or blue sky laws; (iv) the
Purchaser has completed or caused to be completed the Registration Statement
Questionnaire and the Stock Certificate Questionnaire, both attached hereto as
Appendices I and II, for use in preparation of the Registration Statement and
the answers thereto are true and correct to the best knowledge of the Purchaser
as of the date hereof and will be true and correct as of the effective date of
the Registration Statement; (v) the Purchaser has, in connection with its
decision to purchase the number of Shares set forth in Section 2 above, relied
solely upon the Private Placement Memorandum and the documents included therein
and the representations and warranties of the Company contained herein; and (vi)
the Purchaser is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act.
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(b) The Purchaser hereby covenants with the Company not to make any
sale of the Shares without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied, and the Purchaser
acknowledges and agrees that such Shares are not transferable on the books of
the Company unless the certificate submitted to the transfer agent evidencing
the Shares is accompanied by a separate officer's certificate: (i) in the form
of Appendix IV hereto, (ii) executed by an officer of, or other authorized
person designated by, the Purchaser, and (iii) to the effect that: (A) the
Shares have been sold in accordance with the Registration Statement, the
Securities Act and the Rules and Regulations and any applicable state securities
or blue sky laws and (B) the requirement of delivering a current prospectus has
been satisfied. The Purchaser acknowledges that there may occasionally be times
when the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the Commission
or until such time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it
will not sell any Shares pursuant to said prospectus during the period
commencing at the time at which the Company gives the Purchaser notice of the
suspension of the use of said prospectus and ending at the time the Company
gives the Purchaser notice that the Purchaser may thereafter effect sales
pursuant to said prospectus, PROVIDED, HOWEVER, that the Company will not
suspend the use of the prospectus for more than 60 consecutive days or more than
twice in any 12 month period. The Purchaser further covenants to notify the
Company promptly of the sale of all of its Shares.
(c) The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Purchaser in Section 7.3 hereof may be
legally unenforceable.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company, and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this
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Agreement, the delivery to the Purchaser of the Shares being purchased and the
payment therefor.
SECTION 7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
7.1. REGISTRATION PROCEDURES AND EXPENSES. The Company further
covenants that it shall:
(a) within 180 days after receipt of any request in the form of
Appendix III hereto, by Purchasers owning 66 2/3% of the Shares,
prepare and file with the Commission the Registration Statement
(the "Registration Statement") relating to the sale of the
Shares by the Purchaser from time to time through the automated
quotation system of The Nasdaq Small-Cap Market or The Nasdaq
National Market, in the over-the-counter market, on the
facilities of any national securities exchange on which the
Company's common stock is then traded or in privately-negotiated
transactions, PROVIDED HOWEVER, that the Company may postpone
the filing of the Registration Statement for (a) up to 60 days
if, in the good faith judgment of the Board of Directors of the
Company, the filing of any registration statement during such
60-day period would adversely affect a material proposed or
pending acquisition, merger or other extraordinary corporate
event to which the Company is or reasonably expects to be a
party, or (b) up to 60 days if the Company is not yet eligible
to file a registration statement on Form S-3 but reasonably
expects to become eligible to so file within such 60-day period.
(b) use its best efforts to cause the Shares to be quoted on the
automated quotation system of The Nasdaq Small-Cap Market, The
Nasdaq National Market or the facilities of any national
securities exchange on which the Common Stock is then traded, as
soon as practicable after request for registration of the
Shares;
(c) use its best efforts, subject to receipt of necessary
information from the Purchasers, to cause the Commission to
notify the Company of the Commission's willingness to declare
the Registration Statement effective within 60 days after the
Registration Statement is filed by the Company;
(d) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep the
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Registration Statement effective until (i) such shares are sold
pursuant to the Registration Statement or (ii) the date on which
the Shares may be resold by the Purchasers without registration,
by reason of Rule 144(k) under the Securities Act or any other
rule of similar effect;
(e) furnish to the Purchaser with respect to the Shares registered
under the Registration Statement (and to each underwriter, if
any, of such Shares) such number of copies of prospectuses and
such other documents as the Purchaser may reasonably request, in
order to facilitate the public sale or other disposition of all
or any of the Shares by the Purchaser, PROVIDED, HOWEVER, that
the obligation of the Company to deliver copies of prospectuses
to the Purchaser shall be subject to the receipt by the Company
of reasonable assurances from the Purchaser that the Purchaser
will comply with the applicable provisions of the Securities Act
and of such other securities or blue sky laws as may be
applicable in connection with any use of such prospectuses;
(f) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Purchaser,
PROVIDED, HOWEVER, that the Company shall not be required to
qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so
consented;
(g) on or prior to the date on which the Registration Statement
becomes effective (the "Effective Date"), cause the Accountants
to deliver a comfort letter to the Purchasers with respect to
the Registration Statement in a form reasonably satisfactory to
the Placement Agent and counsel to the Placement Agent;
(h) on or prior to the Effective Date, cause Company Counsel to
deliver its legal opinion addressed to Purchasers in a form
reasonably satisfactory to the Placement Agent and counsel to
the Placement Agent;
(i) on or prior to the Effective Date, deliver a certificate
executed by the Chief Executive Officer and the Chief Financial
or Accounting Officer of the Company, in form and substance
satisfactory to the Placement Agent to the effect that the
representations and warranties of the Company set forth in
Section 4 hereof are true and correct with respect to the
Registration Statement as of the Effective Date and that the
Company has
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complied with all of the agreements and satisfied all of the
conditions to be performed by it on or prior to the Effective
Date; and
(j) bear all expenses in connection with the procedures in this
Section 7.1 and the registration of the Shares pursuant to the
Registration Statement, other than fees and expenses, if any, of
counsel or other advisers to the Purchaser or the Other
Purchasers or underwriting discounts, brokerage fees and
commissions incurred by the Purchaser or the Other Purchasers,
if any.
7.2. TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees
that it will not effect any disposition of the Shares or its right to purchase
the Shares that would constitute a sale within the meaning of the Securities Act
or pursuant to any applicable state securities or blue sky laws except as
contemplated in the Registration Statement referred to in Section 7.1 and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its Plan of
Distribution.
7.3. INDEMNIFICATION. For the purpose of this Section 7.3:
(i) the term "Purchaser" shall include the Purchaser and any
affiliate of such Purchaser; and
(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or
relating to the Registration Statement referred to in Section
7.1.
(a) The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law 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, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, including the prospectus, financial statements and schedules, and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434, of the rules and regulations of the Commission under
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the Securities Act (the "Regulations"), or the prospectus, in the form first
filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed
as part of the Registration Statement at the time of effectiveness if no Rule
424(b) filing is required (the "Prospectus"), or any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, or (iii) on any inaccuracy in the representations
and warranties of the Company contained in this Agreement, or any failure of the
Company to perform its express obligations hereunder, and will reimburse each
Purchaser and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Purchaser or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; PROVIDED,
HOWEVER, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon (i) an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use
therein or (ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 5 or 7.2 hereof respecting sale of the Shares,
the inaccuracy of any representations made by such Purchaser herein or any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale or
sales by the Purchaser.
In addition to its other obligations under this paragraph (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, or any
inaccuracy in the representations and warranties of the Company in this
Agreement or failure to perform its express obligations in this Agreement, all
as described in this paragraph (a), it will reimburse each Purchaser on a
quarterly basis for all reasonable legal 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 each Purchaser 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, each Purchaser shall promptly return
it to the Company 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 Bank of America National
Trust and Savings Association, San Francisco, California (the "Prime
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Rate"). Any such interim reimbursement payments which are not made to a
Purchaser within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Purchaser will, severally and not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act, against any losses, claims,
damages, liabilities or expenses to which the Company, each of its directors,
each of its officers who signed the Registration Statement or controlling person
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Purchaser) insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any failure to comply with the covenants and
agreements contained in Sections 5 or 7.2 hereof respecting the sale of the
Shares, the inaccuracy of any representation made by such Purchaser herein or
any untrue or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or that arises 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 statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement and each
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement and each controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. In addition to its other obligations under this
paragraph (b), each Purchaser severally 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 paragraph (b) which relates to
written information furnished to the Company by or on behalf of any Purchaser,
it will reimburse the Company (and, to the extent applicable, each officer,
director or controlling person) on a quarterly basis for all reasonable legal or
other expenses incurred in connection with the investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial
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determination as to the propriety and enforceability of the Purchaser's
obligations to reimburse the Company (and, to the extent applicable, each
officer, director or controlling person) 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 Company (and, to the extent
applicable, each officer, director or controlling person) shall promptly return
it to such Purchaser together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are not
made to the Company within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which such Purchaser may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
7.3 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under
this Section 7.3 notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not, to the
extent the indemnifying party is not prejudiced as a proximate result of such
failure, relieve the indemnifying party from any liability which it may have to
any indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 7.3. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
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 party, the indemnified party or parties shall have the right to
select separate counsel, reasonably satisfactory to the indemnified party or
parties, to assume such legal defense and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed such counsel in connection with
the assumption of legal defense in accordance with the proviso to the preceding
sentence (it being understood,
-15-
however, that the indemnifying party shall be not liable for the expenses of
more than one separate counsel, approved by such indemnifying party in the case
of paragraph (a), representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of Common Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The respective relative benefits
received by the Company on the one hand and each Purchaser on the other shall be
deemed to be in the same proportion as the amount paid by such Purchaser to the
Company pursuant to this Agreement for the Shares purchased by such Purchaser
that were sold pursuant to the Registration Statement bears to the difference
(the "Difference") between the amount such Purchaser paid for the Shares that
were sold pursuant to the Registration Statement and the amount received by such
Purchaser from such sale. The relative fault of such Selling Shareholders and
each Purchaser shall be determined by reference to, among other things, whether
the untrue or alleged statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company or
by such Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in paragraph (c) of this Section 7.3, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth
in paragraph (c) of this Section 7.3 with respect to notice of commencement of
any action shall apply if a claim for
-16-
contribution is to be made under this paragraph (d); PROVIDED, HOWEVER, that no
additional notice shall be required with respect to any action for which notice
has been given under paragraph (c) for purposes of indemnification. The Company
and each Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation (even
if the Purchaser were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this
Section 7.3 are several and not joint.
7.4. TERMINATION OF CONDITIONS AND OBLIGATIONS. For each Purchaser
who is not an affiliate of the Company, the conditions precedent imposed by
Section 5 or this Section 7 upon the transferability of the Shares shall cease
and terminate as to any particular number of the Shares upon the passage of
thirty-six months from the effective date of the Registration Statement or at
such time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
7.5. INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of the
Company's Annual Report to Shareholders, within 120 days after
the end of each fiscal year of the Company), one copy of (i) its
Annual Report on Form 10-K or 10-KSB (which Annual Report shall
contain financial statements audited in accordance with
generally accepted accounting principles by the Accountants or
another reputable firm of certified public accountants), (ii)
its quarterly reports on Form 10-Q or 10-QSB, and (iv) a full
copy of the particular Registration Statement covering the
Shares (the foregoing, in each case, excluding exhibits); and
(b) upon the reasonable request of the Purchaser, a reasonable
number of copies of the prospectuses to supply to any other
party requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss all information relevant for
-17-
disclosure in the Registration Statement covering the Shares, subject to
appropriate confidentiality limitations.
SECTION 8. BROKER'S FEE. The Purchaser acknowledges that the Company
intends to pay to the Placement Agent a fee in respect of the sale of the Shares
to the Purchaser. Each of the parties hereto hereby represents that, on the
basis of any actions and agreements by it, there are no other brokers or finders
entitled to compensation in connection with the sale of the Shares to the
Purchaser.
SECTION 9. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so mailed and shall be
delivered as addressed as follows:
(a) if to the Company, to:
CardioDynamics International Corporation
0000 Xxxxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Operating Officer
with a copy so mailed to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of
this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
SECTION 10. CHANGES. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Purchaser.
SECTION 11. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 12. SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and
-18-
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflicts of law principles thereof and the federal law of the United States
of America.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
CARDIODYNAMICS INTERNATIONAL CORPORATION
By:
------------------------------------------
Name:
Title:
Print or Type:
Name of Purchaser:
----------------------------------------
Address:
-----------------------------------
Telephone:
--------------------------------
Telecopier:
--------------------------------
Name of Individual representing
Purchaser:
----------------------------------------
Title of Individual representing
Purchaser:
----------------------------------------
SIGNATURE:
(by Individual representing Purchaser)
----------------------------------------
-20-
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 20 - Signature:
(i) Name, address and phone and telecopier numbers of Purchaser
(ii) Name of Individual representing Purchaser
(iii) Title of Individual representing Purchaser
(iv) Signature of Purchaser by Individual representing Purchaser
2. Appendix I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
3. Appendix II - Registration Statement Questionnaire:
In order to have the Shares included in the Registration Statement,
provide the information requested by the Registration Statement
Questionnaire.
4. Appendix III - Registration Rights Request: In order to request that
the Shares be included in the Registration Statement, provide the
information requested by the Registration Rights Request and execute
the completed Registration Rights Request.
5. Return BOTH properly completed and signed Purchase Agreements,
including the properly completed Appendix I, Appendix II and Appendix
III, to:
EVEREN Securities, Inc.
Xxx Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
B. Instructions regarding the transfer of funds for the purchase of Shares
will be sent by facsimile to the Purchaser by the Placement Agent at a
later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the buyer
(prospectuses must be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Appendix IV to the Company so
that the Shares may be properly transferred.
-2-
Appendix I
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are
to be registered in (this is the name
that will appear on your stock
certificate(s)). You may use a
nominee name if appropriate: ______________________
2. The relationship between the Purchaser
of the Shares and the Registered Holder
listed in response to item 1 above: ______________________
3. The mailing address of the Registered
Holder listed in response to item 1
above: ______________________
______________________
______________________
______________________
4. Tax Identification Number of the
Registered Holder listed in
response to item 1 above: ______________________
A-1
Appendix II
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. For use in the "Selling Shareholders" section of the Registration
Statement, please state the Purchaser's/Selling Shareholder's name exactly as it
should appear in the Registration Statement:
--------------------------------
2. Please provide the number of Shares that the Purchaser/Selling
Shareholder owns immediately after Closing, including those Shares purchased
pursuant to this Purchase Agreement and any shares purchased through other
transactions:
--------------------------------
3. Has the Purchaser/Selling Shareholder had any position, office or
other material relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
4. Does the Purchaser/Selling Shareholder intend to use an
underwriter in connection with the distribution of the Shares?
_____ Yes _____ No
If yes, please give the name of such undewriter:
________________________________________________________________________________
B-1
Appendix III
REGISTRATION REQUEST
The undersigned hereby confirms that it is the owner of _____ shares
(the "Shares") of the common stock, no par value, of CardioDynamics
International Corporation (the "Company"), all of which were purchased pursuant
to a Purchase Agreement between the undersigned and the Company dated January
__, 1997 (the "Purchase Agreement"), and hereby requests that the Company file
with the Securities and Exchange Commission a registration statement for the
resale of such shares pursuant to the Company's obligations under Section 7 of
the Purchase Agreement.
Name of Purchaser: ______________________
Name of Individual
representing Purchaser: ______________________
Title of Individual
representing Purchaser: ______________________
SIGNATURE BY:
Individual representing Purchaser: ______________________
Name:
Title:
C-1
APPENDIX IV
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly authorized
by] ___________________________________________________ [fill in official
name of institution] hereby certifies that said institution is the
Purchaser of the shares evidenced by the attached certificate, and as such,
sold such shares on _____________________ [date] in accordance with
Registration Statement number _____________________________________________
[fill in the number of or otherwise identify Registration Statement], the
Securities Act of 1933, as amended, and any applicable state securities or
blue sky laws and the requirement of delivering a current prospectus by the
Company has been complied with in connection with such sale.
Print or Type:
Name of Purchaser: ______________________
Name of Individual
representing Purchaser: ______________________
Title of Individual
representing Purchaser: ______________________
SIGNATURE BY:
Individual representing Purchaser: ______________________
D-1
