EXHIBIT B
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is made this 6th
day of June 1999 (the "Effective Date"), by and between Diametrics Medical,
Inc., a Minnesota corporation, with its principal place of business at 0000
Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (the "Company"), and Hewlett-Packard
Company (the "Purchaser").
BACKGROUND
A. The Company desires to sell 1,357,143 shares of its common stock
("Common Stock") and a warrant (in substantially the form of EXHIBIT A hereto)
to purchase 452,381 shares of its Common Stock and the Purchaser desires to
purchase the same, each on the terms and subject to the conditions set forth
herein.
B. The Company and the Purchaser are concurrently executing a Distribution
Agreement (the "Distribution Agreement").
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
Section 1. Authorization and Issuance of the Securities. Subject to the
terms and conditions of this Agreement, the Company has authorized the issuance
and delivery to the Purchaser of 1,357,143 shares of its Common Stock (the
"Shares") and a warrant to purchase in the aggregate an additional 452,381
shares of its Common Stock (the "Warrants) in substantially the form of EXHIBIT
A hereto.
Section 2. Agreement to Sell and Purchase the Securities. At the Closing,
the Company will sell to the Purchaser, and the Purchaser will acquire from the
Company, for a purchase price of $9,500,000 (the "Price"), the Shares and the
Warrants.
Section 3. Closing and Delivery.
3.1 Closing. The closing of the purchase and sale of the Shares and
the Warrants pursuant to this Agreement (the "Closing") shall be held as soon as
practicable after the satisfaction or waiver of all other conditions to Closing
set forth in Sections 8 and 9 hereof, at the offices of Xxxxxx & Whitney LLP,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, or on such other date and
place as may be agreed to by the Company and the Purchaser. The date upon which
the Closing occurs is herein referred to as the "Closing Date".
3.2 Delivery of the Shares and the Warrants. At the Closing, the
Company shall deliver to the Purchaser an executed stock certificate registered
in the name of the Purchaser, or in such nominee name as designated by the
Purchaser, representing the Shares purchased by the
Purchaser, together with an executed Warrant registered in the name of the
Purchaser, representing the number of shares of Common Stock issuable upon the
exercise of the Warrant. Also at the Closing, the Purchaser shall pay to the
Company the Price.
Section 4. Representations and Warranties of the Company. Except as set
forth on the Schedule of Exceptions attached hereto as EXHIBIT B, the Company
hereby represents and warrants as of the date hereof to the Purchaser as
follows:
4.1 Organization and Standing. Each of the Company and its
Subsidiary (as hereinafter defined in this Section 4.1) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its organization, has full corporate power and
authority to own or lease its properties and conduct its business as presently
conducted, and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary (except where the failure to be so qualified would not have a material
adverse effect on the business, properties, financial condition or results or
operations of the Company or its Subsidiary). Other than Diametrics Medical,
Ltd., formerly known as Biomedical Sensors, Ltd., (the "Subsidiary"), the
Company has no subsidiaries or equity interest in any other entity.
4.2 Corporate Power; Authorization. The Company has all requisite
corporate power, and has taken all requisite corporate action, to execute and
deliver this Agreement and the Warrants, to sell and issue the Shares and the
Warrants, to issue the shares issuable upon exercise of the Warrants (the
"Warrant Shares") and to carry out and perform all of its obligations hereunder
and thereunder. Each of this Agreement and the Warrants constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally, and (iii) as rights to indemnity or contributions
hereunder may be limited by federal or state securities laws or principles of
public policy. The execution and delivery of this Agreement and the Warrants do
not, and the performance of this Agreement and the Warrants and the compliance
with the provisions hereof and thereof and the issuance, sale and delivery of
the Shares, the Warrants and the Warrant Shares by the Company will not,
conflict with, or result in a breach or violation of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien pursuant to the terms of, the Articles of Incorporation
or Bylaws of the Company or any statute, law, rule or regulation applicable to
the Company or its Subsidiary, or any state or federal order, judgment or decree
applicable to the Company or its Subsidiary, or any indenture, mortgage, lease
or other agreement or instrument to which the Company or its Subsidiary or any
of the properties of such person is subject, except such as would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company or its Subsidiary.
4.3 Issuance and Delivery of the Shares and Warrant Shares; Grant of
the Warrants. The Shares, when issued and paid for in compliance with the
provisions of this
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Agreement, will be validly issued, fully paid and nonassessable and issued in
compliance with all applicable federal and state securities laws. Further, the
Shares, when issued and paid for in compliance with the provisions of this
Agreement, will not be subject to preemptive, co-sale, right of first refusal or
any other similar rights of the shareholders of the Company or any liens or
encumbrances. In addition, the Warrant Shares when issued and paid for in
accordance with the terms of the Warrants will be validly issued, fully paid and
nonassessable, and will not be subject to preemptive, co-sale, right of first
refusal or any other similar rights of the shareholders of the Company or any
liens or encumbrances, other than those created by the Purchaser or arising
under federal or state securities laws. The Company has not granted any
registration rights which are still in effect with respect to its securities
other than the registration rights set forth herein. Issuance of the Shares, the
Warrants and the Warrant Shares or any of them does not and will not constitute
a default under or give rise to a right of termination, cancellation,
restriction or acceleration of any right or obligation of the Company or its
Subsidiary or a loss of any benefit to which the Company or its Subsidiary is
entitled under any provision of any agreement, contract or other instrument
binding upon or applicable to the Company or its Subsidiary or any of the
properties, assets, licenses, franchises, permits or other similar
authorizations of either of them.
4.4 SEC Documents; Financial Statements. The Company has filed in a
timely manner all documents that it was required to file with the Securities and
Exchange Commission ("SEC") under Sections 13, 14(a) and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), during the 36 months
preceding the date of this Agreement. As of their respective filing dates (or,
if amended, when amended), all documents filed by the Company with the SEC,
whether under the Exchange Act or under the Securities Act of 1933, as amended
(the "Securities Act"), during such 36-month period (the "SEC Documents")
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be. None of the SEC Documents as of their
respective dates contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company and
its Subsidiary included in the SEC Documents (the "Financial Statements") comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the consolidated
financial position of the Company and its Subsidiary at the dates thereof and
the results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring adjustments
and the absence of footnotes). There is no material liability or commitment of
the Company or its Subsidiary that is required to be reflected in the Financial
Statements which is not reflected in the most recent Financial Statements except
commitments made since the date of such Financial Statements in the ordinary
course of business. There have not been any changes in the assets, liabilities,
financial condition or operations of the Company or its Subsidiary from those
reflected in the most recent Financial Statements, except changes in the
ordinary course of business that have not had and are not reasonably expected to
have a material adverse effect on the business, properties, financial condition
or results of operations of the Company or its Subsidiary.
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4.5 Intellectual Property. (a) Each of the Company and its
Subsidiary has sufficient title and ownership of all material patents, patent
rights, inventions, trademarks, service marks, copyrights, trade secrets,
proprietary rights, processes and know-how (collectively, "Intellectual
Property") owned or used by it or that are necessary for the conduct of its
business as presently conducted and believes it can obtain, on commercially
reasonable terms, any additional rights necessary for its business as proposed
to be conducted, and the Intellectual Property does not, and will not, conflict
with or constitute an infringement of the rights of others;
(b) There are no outstanding options, licenses (whether to or
from the Company) or agreements of any kind relating to the Intellectual
Property described in paragraph (a) of this Section 4.5 or granting rights to
any other person to manufacture, license, produce, assemble, market or sell
products or services derived or derivable from the Intellectual Property of the
Company or its Subsidiary, nor is the Company or its Subsidiary bound by or a
party to any options, licenses or agreements of any kind with respect to the
Intellectual Property of any other person or entity;
(c) Neither the Company nor its Subsidiary has received any
communications alleging that such person or any of its employees has violated or
infringed or, by conducting its business as proposed, would violate or infringe,
any of the Intellectual Property of any other person or entity;
(d) Neither the Company nor its Subsidiary is aware that any
of its employees is obligated under any contract (including licenses, covenants,
or commitments of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would interfere
with the use of such employee's best efforts to promote the interests of the
Company or its Subsidiary with respect to the Intellectual Property of the
Company or its Subsidiary or otherwise or that would conflict with the business
of the Company or its Subsidiary as proposed to be conducted; and
(e) Neither the execution nor delivery of this Agreement, nor
the carrying on of the business of the Company or its Subsidiary by the
employees of such person, nor the conduct of the business of the Company or its
Subsidiary as proposed, will, to the Company's knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, any contract, covenant, or instrument under which any of such
employees is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of the employees of the Company or
its Subsidiary (or people such person currently intends to hire) made prior to
their employment by such person.
4.6 Properties. The Company and its Subsidiary have good and valid
title to all of the properties and assets reflected as owned by the Company or
its Subsidiary in the Financial Statements, free and clear of all material
liens, mortgages (statutory or otherwise), security interests, pledges, claims
or encumbrances except those, if any, disclosed in the Financial Statements. The
Company and its Subsidiary hold their leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation to
the business of the Company or its
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Subsidiary. The Company and its Subsidiary own or lease all of such properties
as are necessary to its operations as now conducted.
4.7 Capitalization. The authorized capital stock of the Company
consists of 35,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock. There are 24,176,205 shares of Common Stock and no shares of Preferred
Stock outstanding as of the Effective Date, and, excluding the exercise of
vested options and warrants outstanding at the discretion of the holder thereof
and shares purchased through the Company's existing employee stock purchase
plan, immediately prior to the Closing, 24,176,205 shares of Common Stock and no
shares of Preferred Stock will be outstanding. The certificates evidencing the
Shares and the Warrant Shares will be in due and proper legal form and will be
duly authorized for issuance by the Company. All of the issued and outstanding
securities of the Company have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with federal, state
and other applicable laws and were issued without violation of any preemptive,
co-sale or other right. Except as otherwise disclosed in the SEC Documents and
in the Financial Statements, there is no outstanding option, warrant, agreement
or other right calling for the issuance or redemption of, and there is no
commitment, plan or arrangement to issue or redeem, any securities of the
Company. The Company does not have any binding agreement with respect to the
acquisition or purchase of the securities of or owned by any person or entity or
the acquisition of the business, assets or liabilities of any person or entity,
and the Company does not have any agreement or understanding with respect to the
disposition or sale of its business, or any of its material assets or property.
4.8 Litigation. There is no pending or, to the Company's knowledge,
threatened, action, suit or other proceeding to which the Company or its
Subsidiary is a party or to which the property or assets of the Company or its
Subsidiary is subject which might result in a material adverse effect on the
business, properties, financial condition or results of operations of the
Company or its Subsidiary.
4.9 No Defaults. Neither the Company nor its Subsidiary is in
violation or default of any provisions of its Articles of Incorporation or
Bylaws, or any organizational documents, or in breach 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 which violation, default
or breach would have a material adverse effect on the business, properties,
financial condition or results of operations of the Company or its Subsidiary,
and there does not exist any state of facts which constitutes an event of
default on the part of the Company or its Subsidiary as defined in such
documents or which, with notice or lapse of time or both, would constitute such
an event of default.
4.10 Material Agreements. Each of the Company and its Subsidiary is
a party to all agreements that are necessary for the conduct of the business of
such person as presently conducted and all such agreements are currently in
effect. Neither the Company nor its Subsidiary is in breach of any provision of
any such agreement where such breach would have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company or its Subsidiary.
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4.11 Governmental Consents; Compliance With Law. No consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, or local
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement except for
(i) any filings required by state securities laws and (ii), if required, the
filing of a notification and report form under the United States
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each of the Company and its Subsidiary is conducting business in
compliance in all material respects with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including
but not limited to, all applicable local, state and federal environmental laws
and regulations.
4.12 Insurance. Each of the Company and its Subsidiary maintains
insurance of the types and in the amounts generally deemed adequate for its
business covering all risks customarily insured against, all of which insurance
is in full force and effect.
4.13 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.14 Taxes. Each of the Company and its Subsidiary has filed all
necessary federal, state, local, and foreign income and franchise tax returns
and has paid or accrued all taxes shown as due thereon except for such taxes as
are being contested in good faith, and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
or its Subsidiary which would have a material adverse effect on the business,
properties, financial condition or results of operations of the Company or its
Subsidiary.
4.15 Listing. The Company's Common Stock is traded on The Nasdaq
National Market.
4.16 Broker's Fee. The Company represents that there are no brokers
or finders entitled to compensation by the Company or its Subsidiary in
connection with any of the transactions referred to or contemplated hereby, and
shall indemnify the Purchaser for any such fees for which the Company or its
Subsidiary is responsible.
4.17 Business Combination Act. As contemplated by Minnesota
Statutes, Section 302A.673, the Company has formed a committee composed of all
of the Board's disinterested directors, which Committee has approved the
acquisition of Common Stock to be made pursuant to this Agreement on the Closing
Date and thereafter in the open market, in private purchases or otherwise, and,
accordingly, Section 302A.673 does not impose any limitation of a "business
combination" between the Company and the Purchaser.
4.18 Disclosure. No representation or warranty of the Company
contained in this Agreement or in the schedule of exceptions or in any
bring-down certificate requested to be delivered to the purchaser at closing
contains or will contain any untrue statement of a material fact or omit to
state a material fact required to make the statements therein not misleading.
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Section 5. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants as of the date hereof to the Company as follows:
5.1 Investment Purposes.
(a) The Purchaser acknowledges that the Shares and the
Warrants are being issued in reliance upon the exception from the registration
requirements of the Securities Act provided by Section 4(2) thereof and as such
the Shares and the Warrants will be "restricted securities" within the meaning
of Rule 144.
(b) The Purchaser is acquiring the Shares and the Warrants
pursuant to this Agreement in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of such Shares or Warrants or any arrangement or understanding with any
other persons regarding the distribution of such Shares or Warrants except in
each case as conforms with all applicable requirements of the Securities Act,
applicable blue sky laws and all rules and regulations promulgated thereunder.
(c) 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 securities
purchased hereunder except in compliance with the Securities Act, applicable
blue sky laws, and the rules and regulations promulgated thereunder.
(d) The Purchaser has, in connection with its decision to
acquire the Shares and the Warrants, relied with respect to the Company and its
affairs solely upon the SEC Documents and the other information delivered to the
Purchaser by the Company as described in Section 4.4 above and the
representations and warranties of the Company contained herein.
(e) The Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
(f) 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. Upon the execution and
delivery of this Agreement by the Purchaser, this Agreement shall constitute a
valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally, including any specific performance, and (iii) as to those
provisions of Section 10 relating to indemnity or contribution.
5.2 No Advice. The Purchaser understands that nothing in this
Agreement or any other materials presented to the Purchaser in connection with
the acquisition of the Shares and the Warrants constitutes legal, tax or
investment advice to the Purchaser. The Purchaser has consulted such legal, tax
and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares and the Warrants.
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5.3 Restriction on Transfer. The Purchaser understands that: (a)
other than to a person directly or indirectly controlling, controlled by, or in
common control with, the Purchaser (any such person, an "Affiliate"), neither
the Shares nor the Warrants will be transferable in the absence of a
registration under the Securities Act or an exemption therefrom or in the
absence of compliance with any term of this Agreement; (b) the Company may
provide stop transfer instructions to its transfer agent with respect to the
Shares and the Warrants in order to enforce the restrictions contained in this
Section 5.3 and (c) each certificate representing Shares shall be in the name of
the Purchaser and shall bear substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY ONLY BE SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF BY PURCHASER IF
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR
QUALIFIED UNDER ANY APPLICABLE STATE OR OTHER SECURITIES LAWS,
UNLESS THE COMPANY DETERMINES THAT EXEMPTION FROM SUCH REGISTRATION
REQUIREMENT IS AVAILABLE."
5.4 Broker's Fee. The Purchaser represents that there are no brokers
or finders entitled to compensation by the Purchaser in connection with any of
the transactions referred to herein or contemplated hereby, and shall indemnify
the Company for any such fees for which the Purchaser is responsible.
Section 6. Covenants of the Parties.
6.1 Access to Information. For a period beginning on the Effective
Date and continuing until the Closing, the Company shall afford to the Purchaser
and its agents and representatives full access, at reasonable times and in a
reasonable manner, to all of its premises, facilities, properties, books and
records and shall make its directors, officers, agents reasonably available to
confer with the Purchaser and its agents and representatives. The Purchaser
shall have the right to make copies, extracts and summaries of all such reports,
books, records and information, subject, however, to any obligations of the
Company to any other persons. The Company shall notify the Purchaser of any
material change in the business of the Company or in its operations or
properties, or of any governmental complaints, investigations or hearings (or
communications indicating the same may be contemplated) or of the institution,
continuation or threat of any litigation involving the Company or any affiliate
of the Company or any of its assets, and will keep the Purchaser informed of
such events.
6.2 Maintenance of Listing. For so long as the Company is obligated
to register Registrable Securities as provided in Section 10, the Company will
use its reasonable best efforts to maintain its listing on The Nasdaq National
Market or a national securities exchange, as defined in the Exchange Act.
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6.3 Filings. The parties shall consult and fully cooperate with and
provide assistance to each other in preparing and filing as soon as practicable
all consents, approvals and authorizations necessary or advisable to be made or
obtained from any third party or governmental agency in order to consummate the
transactions contemplated hereby.
6.4 Purchase Right. During the period ending on the date two years
after the Closing Date (the "Two-Year Period"), the Company shall not issue any
additional shares of Common Stock or preferred stock (other than pursuant to (1)
employee/director compensation plan(s), including options, approved by a
majority of the independent directors of the Company, (2) options, warrants and
convertible debt outstanding on the Effective Date, (3) warrants granted in
connection with commercially standard credit/financing arrangements approved by
a majority of the board of directors and exercisable, in aggregate, into no more
than the number of shares representing 5% of the outstanding Common Stock on the
Effective Date and (4) after complying with the provisions of Sections 6.7 and
6.8, lock-up or option agreements in connection with a definitive acquisition
agreement referred to in Section 6.7 and 6.8) unless (A) the Purchaser has first
been offered (subject to the preemptive rights of the "Purchasers" under the
Preferred Stock Purchase Agreement referred to in Section 9.6 to maintain their
pro rata ownership in the Company) the right to purchase such shares (i) under
terms and conditions at least as favorable to the Purchaser as those proposed to
be offered to any third party or (ii) if such shares are proposed to be sold in
an underwritten public offering, under terms and conditions at least as
favorable to the Purchaser as those proposed to be offered in the public
offering and (B) the Purchaser does not accept such offer within ten-business
days after the date of such offer. In addition, during the Two-Year Period the
Company shall not without the Purchaser's consent issue additional shares of
Common Stock or preferred stock to any person (other than the Purchaser) in an
amount which would, when aggregated with the Common Stock or preferred stock
owned by such person, provide such person with more than 20% of the fully
diluted voting power of the Company. For the purposes of this Agreement, (i)
"voting power" means the ownership of shares of capital stock of the Company
entitling the holder to vote for the election of directors generally, (ii) any
calculation of the percentage of "voting power" shall be based (both in the
numerator and denominator) on the number of shares possessing such voting power
actually outstanding without regard to warrants, options or convertible
securities and (iii) any calculation of the percentage of "fully diluted voting
power" shall be based (both in the numerator and denominator) on the number of
shares possessing such voting power that would be outstanding giving effect to
the exercise or conversion of warrants, options and convertible securities.
6.5 Open Market Purchases. The Purchaser shall have the right to
increase its ownership in the Company through open market transactions or in
block transactions from existing shareholders, subject to applicable provisions
of the Minnesota Business Corporation Act, Minnesota Statutes, Chapter 302A. To
the extent the Company opts out of the provisions of Minnesota Statutes, Section
302A.671 ("Control Share Acquisition Act") with respect to any shareholder or
potential shareholder of the Company, the Company shall similarly and at the
same time opt out with respect to the Purchaser.
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6.6 Change of Control. During the period ending three years after
the Closing Date, and so long as the Purchaser owns at least three percent of
the voting power of the Company, the Company shall not implement any shareholder
rights plan or poison pill.
6.7 Non-Solicitation. During the Two-Year Period, the Company shall
not seek or encourage any Takeover Proposal from any person other than the
Purchaser unless the Company's board of directors in good faith has determined,
after receiving the advice of a nationally recognized investment bank and the
Company's outside legal counsel, that there has been a sustained and substantial
deterioration in the Company's business that requires the Company's board of
directors to seek a sale of the business because the Company lacks any other
practical alternative (a "Required Sale Situation"). For purposes of this
Agreement, "Takeover Proposal" means any proposal for a merger (other than a
reincorporation or reorganization which does not change the outstanding
ownership of the Company) or business combination of the Company or any of its
Subsidiaries or any proposal or offer to acquire in any manner, directly or
indirectly, a 33% or greater equity interest in, a 33% or greater portion of the
voting securities of, or a 33% or greater portion of the assets of the Company
and its Subsidiaries taken as a whole. If a Takeover Proposal (the "First
Proposal") is presented during a Required Sale Situation, the Company shall
provide the Purchaser with the details of the First Proposal (including price,
terms and the identity of the offeror) and ten-business days to respond with a
counter proposal before the Company may accept the First Proposal or enter into
any lock-up/break-up agreement with respect thereto. If the Purchaser agrees to
meet the First Proposal (as to price and terms) within such initial ten-business
day period, then the Company may, for an additional ten-business day period
thereafter, solicit a superior proposal (based on price and terms) (the "Second
Proposal") to the First Proposal. In the event that a Second Proposal is
presented within such second ten-business day period, the Company shall provide
the Purchaser with the details of the Second Proposal (including price, terms
and the identity of the offeror). The Company may not accept such Second
Proposal (or enter into any lock-up/break-up agreement with respect thereto)
during an additional ten-business day period. If the Purchaser offers a superior
proposal (based on price and terms) to the Second Proposal (the "Topping Bid")
within such third ten-business day period, the Company shall enter into a
definitive acquisition agreement with the Purchaser on the basis of such Topping
Bid, which definitive agreement shall not provide for a "superior
offer/fiduciary out" and shall require, at the Purchaser's election, a
shareholder vote even in the face of a subsequent competing offer, unless
otherwise prohibited by law. If the Purchaser fails to offer a Topping Bid
within such third ten-business day period, the Company may accept the Second
Proposal. If the Company is permitted to accept a First Proposal or a Second
Proposal but fails to consummate the transaction contemplated thereby within 180
days after it is permitted to accept such Proposal, the provisions of this
Section 6.7 shall be once again complied with AB INITIO. Any definite
acquisition agreement entered into pursuant to the First Proposal or the Second
Proposal need not provide for a "superior offer/fiduciary out" and may require a
shareholder vote even in the face of a subsequent competing offer, unless
otherwise prohibited by law.
6.8 Third-Party Unsolicited Offer. If during the Two-Year Period a
person other than the Purchaser presents the Company with any unsolicited
Takeover Proposal (the "First Proposal"), the Company shall provide the
Purchaser with the details of the First Proposal (including price, terms and the
identity of the offeror) and ten-business days to respond with a counter
proposal
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before the Company may accept the First Proposal or enter into any
lock-up/break-up agreement with respect thereto. If the Purchaser agrees to meet
the First Proposal (as to price and terms) within such initial ten-business day
period, then the Company may, for an additional ten-business day period
thereafter, solicit a superior proposal (based on price and terms) (the "Second
Proposal") to the First Proposal. In the event that a Second Proposal is
presented within such second ten-business day period, the Company shall provide
the Purchaser with the details of the Second Proposal (including price, terms
and the identity of the offeror). The Company may not accept such Second
Proposal (or enter into any lock-up/break-up agreement) during an additional
ten-business day period. If the Purchaser offers a superior offer (based on
price and terms) to the Second Proposal (the "Topping Bid") within such third
ten-business day period, the Company shall enter into a definitive acquisition
agreement (including appropriate lock-up/break-up agreement) with the Purchaser
on the basis of such Topping Bid and such agreement shall not provide for a
"superior offer/fiduciary out" and shall require, at the Purchaser's election, a
shareholder vote even in the face of a subsequent competing offer, unless
otherwise prohibited by law. If the Purchaser fails to offer a Topping Bid
within such third ten-business day period, the Company may accept the Second
Proposal. If the Company is permitted to accept a First Proposal or a Second
Proposal but fails to consummate the transaction contemplated thereby within 180
days after it is permitted to accept such Proposal, the provisions of this
Section 6.8 shall be once again complied with AB INITIO. Any definite
acquisition agreement entered into pursuant to the First Proposal or the Second
Proposal need not provide for a "superior offer/fiduciary out" and may require a
shareholder vote even in the face of a subsequent competing offer, unless
otherwise prohibited by law.
6.9 Break-Up Fee/Termination. If the Purchaser agrees to meet a
First Proposal under Section 6.7 or 6.8 above (but does not provide a Topping
Bid) and the Company enters into a definitive acquisition agreement with a third
party within 180 days of the expiration of the Two-Year Period, the Company
shall pay the Purchaser 3% of the value of the transaction. The provisions of
Section 6.7 and 6.8 shall terminate and be of no further force unless the
Purchaser owns 14% of the voting power of the Company by the close of business
on November 30, 2000.
6.10 Governance. The number of directors comprising the Company
Board of Directors shall be not less than seven and not more than nine. The
Purchaser shall be entitled to nominate one director to the Company's Board of
Directors, except that such right shall be suspended to the extent the
Purchaser's ownership falls below 3% of the voting power of the Company and in
that event the Purchaser shall cause any director so nominated and elected to
resign. At any time the Purchaser obtains 18% of the voting power of the
Company, the Purchaser shall be entitled to nominate one additional director to
the Company's Board of Directors, except such right shall be suspended to the
extent the Purchaser's ownership falls below 18% of the voting power of the
Company because of the sale of Common Stock owned by it or is otherwise falls
below 15% of the voting power of the Company and in that event the Purchaser
shall cause one of its two directors so nominated and elected to resign. As long
as the Purchaser holds Common Stock having at least 18% of the voting power of
the Company, the Purchaser shall be entitled to nominate that number of
directors (rounded to the nearest whole) proportionate to its voting power in
the Company. So long as 20% or more of the Company's voting power is owned by
persons who are not affiliates of the Company or the Purchaser, the Company
shall have at least three independent directors. If the
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Purchaser is entitled to nominate one or more directors, the board of directors
of the Company shall use its reasonable best efforts to cause such nominee(s) to
be elected to the board of directors.
Section 7. Survival of Representations, Warranties and Agreements;
Indemnification.
7.1 Survival. Notwithstanding any investigation made by any party to
this Agreement, all covenants, agreements, representations and warranties made
by the Company and the Purchaser herein and in the certificates for the
securities delivered pursuant hereto shall survive the execution of this
Agreement, the delivery to the Purchaser of the certificates representing the
Shares and the Warrants, and the payment thereof, until the fifth anniversary of
the Closing Date, except for the representations set forth in Section 4.2, 4.7
and 4.16 and the representations set forth in the first three sentences of
Section 4.3, which shall survive indefinitely, and the representations as to
taxes set forth in Section 4.14, which shall survive for the longer of (i) the
fifth anniversary of the Closing Date and (ii) the period expiring 90 days after
the expiration of the period during which a claim by the applicable taxing
authority for a deficiency or other tax adjustment would not be barred by the
statute of limitations applicable to such taxes (any such period an "Indemnity
Period").
7.2 Purchaser's Right to Indemnification. Subject to the provisions
of this Section 7, the Company hereby agrees to indemnify and hold harmless the
Purchaser and the employees, agents, directors, officers, equity holders,
successors, predecessors, assigns and affiliates of any of them (collectively,
the "Purchaser Indemnified Parties") from and against (i) any and all losses,
obligations, liabilities, damages, claims, deficiencies, costs and expenses
(including, but not limited to, the amount of any settlement entered into
pursuant hereto and all reasonable legal and other expenses incurred in
connection with the investigation, prosecution or defense of the matter but
excluding consequential damages) (collectively, "Claims"), which may be asserted
against or sustained or incurred by the Purchaser Indemnified Parties in
connection with, arising out of, or relating to (A) any breach or alleged breach
of any of the representations, warranties, agreements and covenants made by the
Company herein or in any certificate or other document delivered to any
Purchaser Indemnified Party by or on behalf of the Company in connection with
this Agreement; or (B) any false, incorrect or misleading representation or
warranty made by or on behalf of the Company herein or in any certificate or
other document delivered to any Purchaser Indemnified Party by or on behalf of
the Company in connection with this Agreement; and (ii) any and all costs and
expenses (including, but not limited to, reasonable legal expenses) incurred by
any Purchaser Indemnified Party in connection with the enforcement of its rights
under this Agreement. No claim for indemnification pursuant to this Section 7
may be commenced after the relevant Indemnity Period; provided, however, that
claims made within such Indemnity Period shall survive to the extent of the
Claim covered thereby until such Claim is finally determined and, if applicable,
paid. The parties to this Agreement acknowledge that such indemnification
provisions apply only with respect to the Shares, the Warrants, the Warrant
Shares and the shares of Common Stock issued or issuable as dividends on, or
other distributions with respect to the Shares, the Warrants and the Warrant
Shares; and any other security issued or issuable in exchange for, or in
replacement of, the Shares, the Warrants and the Warrant Shares.
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7.3 Procedure For Claims.
(a) Promptly, but in any event within 10 days after obtaining
knowledge of any claim or demand which may give rise to, or could reasonably
give rise to, a claim for indemnification hereunder (an "Indemnification
Claim"), the Purchaser, to the extent it desires to be indemnified for any
claims for any such claim or demand, shall give written notice to the Company of
such Indemnification Claim ("Notice of Claim"). A Notice of Claim shall be given
with respect to all Indemnification Claims; provided, however, that the failure
to give a timely Notice of Claim to the Company shall not relieve the Company
from any liability that it may have to the Purchaser Indemnified Parties
hereunder to the extent that the Company is not prejudiced by such failure. The
Notice of Claim shall set forth the amount (or a reasonable estimate) of the
loss, damage or expense suffered, or which may be suffered, by the Purchaser
Indemnified Party as a result of such Indemnification Claim and the aggregate
amount of all Indemnification Claims to date and a brief description of the
facts giving rise to such Indemnification Claim. The Purchaser shall furnish to
the Company such information (in reasonable detail) as the Purchaser may have
with respect to such Indemnification Claim (including copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or asserting the
same).
(b) If the claim or demand set forth in the Notice of Claim is
a claim or demand asserted by a third party (a "Third Party Claim"), the Company
shall have fifteen days (or such shorter period (but not less than ten days) if
any answer or other response or filing with respect to the pleadings served by
the third party is required prior to the fifteenth day) after the date of
receipt by the Company of the Notice of Claim (the "Notice Date") to notify the
Purchaser in writing of the election by the Company to defend the Third Party
Claim on behalf of the Purchaser Indemnified Parties.
(c) If the Company elects to defend a Third Party Claim on
behalf of the Purchaser Indemnified Parties, the Purchaser shall make available
to the Company and its agents and representatives all records and other
materials in the Purchaser's possession which are reasonably required in the
defense of the Third Party Claim and the Company shall pay any expenses payable
in connection with the defense of the Third Party Claim as they are incurred
(whether incurred by the Purchaser or the Company).
(d) If the Company has assumed control of the defense, the
Company may contest or settle the Third Party Claim on such terms as the Company
may choose, provided, however, that the Company will not have the right, without
the prior written consent of the Purchaser, to settle any such claim if such
settlement (i) arises from or is part of any criminal action, suit or proceeding
(ii) contains a stipulation to, confession of judgment with respect to, or
admission or acknowledgment of, any liability or wrongdoing on the part of any
Purchaser Indemnified Party, (iii) relates to any foreign federal, state or
local tax matters, (iv) provides for injunctive relief, or other relief other
than damages, which is binding on any Purchaser Indemnified Party, (v) does not
fully release all Purchaser Indemnified Parties with respect to the relevant
Third Party Claim or
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(vi) has any res judicata or collateral estoppel effect that could be adverse to
any Purchaser Indemnified Party.
(e) If the Company elects to defend a Third Party Claim, the
Purchaser Indemnified Parties shall have the right to participate in the defense
of the Third Party Claim, at the Purchaser Indemnified Parties' expense (and
without the right to indemnification for such expense under this Agreement);
provided, however, that the reasonable fees and expenses of counsel retained by
the Purchaser Indemnified Parties shall be at the expense of the Company if (A)
the use of the counsel chosen by the Company to represent the Purchaser
Indemnified Parties would present such counsel with a conflict of interest; (B)
the parties to such proceeding include both Purchaser Indemnified Parties and
the Company and there may be legal defenses available to Purchaser Indemnified
Parties which are different from or additional to those available to the
Company; (C) within ten days after being advised by the Company of the identity
of counsel to be retained to represent the Purchaser Indemnified Parties, the
Purchaser Indemnified Party affected by such claim shall have objected to the
retention of such counsel for valid reasons (which shall be stated in a written
notice to the Company), and the Company shall not have retained different
counsel reasonably satisfactory to the Purchaser Indemnified Party; or (iv) the
Company shall authorize the Purchaser Indemnified Parties to retain separate
counsel at the expense of the Company.
(f) If the Company elects to defend a Third Party Claim, and
does not defend a Third Party Claim in good faith, the Purchaser Indemnified
Parties shall have the right, in addition to any other right or remedy it may
have hereunder, at the sole and exclusive expense of the Company, to defend such
Third Party Claim; provided, however, that such expenses shall be payable by the
Company only if and when such Third Party Claim becomes payable.
(g) The Purchaser shall cooperate with the Company in the
defense of Third Party Claims. Subject to the foregoing, (i) the Purchaser
Indemnified Parties shall not have any obligation to participate in the defense
of or to defend any Third Party Claim and (ii) the Purchaser Indemnified
Parties' defense of or participation in the defense of any Third Party Claim
shall not in any way diminish or lessen the right to indemnification as provided
in this Section 7.
Section 8. Conditions to Company's Obligations at the Closing. The
Company's obligation to complete the transactions contemplated by this Agreement
shall be subject to the following conditions to the extent not waived by the
Company:
8.1 Receipt of Payment. The Company shall have received payment from
the Purchaser, by check or wire transfer, of immediately available funds in the
full amount of $9,500,000.
8.2 Consents and Approvals. Any consents, waivers, clearances,
approvals and authorizations of regulatory or governmental bodies (including,
without limitation, the expiration or termination of the waiting period under
the HSR Act) and other persons that are necessary in connection with the
consummation of the transactions contemplated by this Agreement shall have been
obtained.
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8.3 Representations and Warranties Correct. The representations and
warranties made by the Purchaser in Section 5 shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date.
Section 9. Conditions to the Purchaser's Obligation at the Closing. The
Purchaser's obligation to complete the transactions contemplated at Closing by
this Agreement shall be subject to the following conditions to the extent not
waived by the Purchaser:
9.1 Delivery of Shares. The Company shall have delivered to the
Purchaser stock certificates representing the Shares in accordance with the
terms of Section 3.2.
9.2 Warrants. The Company shall have executed and delivered Warrants
to the Purchaser in accordance with the terms of Section 3.2.
9.3 Consents and Approvals. Any consents, waivers, clearances,
approvals and authorizations of regulatory or governmental bodies and other
persons that are necessary in connection with the consummation of the
transactions contemplated by this Agreement shall have been obtained.
9.4 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 4 shall be true and correct in all
material respects (except with respect to representations and warranties that
are qualified as to materiality or material adverse effect, which
representations and warranties shall be true and correct in all respects) when
made and as of the Closing Date or any other date, if a representation or
warranty specifically refers to such other date, and the Purchaser shall have
received a certificate signed by the chief executive officer and chief financial
officer of the Company, or such other officers of the Company as agreed upon by
the parties hereto, that each of such representations and warranties is true and
correct in all material respects (except with respect to representations and
warranties that are qualified as to materiality or material adverse effect,
which representations and warranties shall be true and correct in all respects)
on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date, and that such party has performed and complied with all of its obligations
under this Agreement which are to be performed or complied with on or prior to
the Closing Date.
9.5 Certificate as to Absence of Material Adverse Effect. The
Purchaser shall have received a certificate signed by a duly authorized officer
of the Company certifying that, since the date of the Company's most recent
filing with the SEC, there have not been any changes in the assets, liabilities,
financial condition or operations of the Company or its Subsidiary, except
changes in the ordinary course of business that have not had and are not
expected to have a material adverse effect on the business, properties,
financial condition or results of operations of the Company or its Subsidiary.
9.6 Waiver of Right of Investment. The Purchaser shall have received
evidence that the Company has received written waivers pursuant to the Preferred
Stock Purchase Agreement dated January 30, 1997, between the Company and the
"Purchasers" listed on Schedule A thereto
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sufficient to waive all rights to invest under Section 7.5 thereof with respect
to the transactions contemplated by this Agreement (including without limitation
the issuance of the Shares, the Warrants and the Warrant Shares).
9.7 Opinion of Counsel. Purchaser shall receive an opinion of Xxxxxx
& Xxxxxxx LLP as to the matters set forth on Exhibit D.
9.8 Closing Papers. The Purchaser shall have received the following,
addressed to it and in form and substance reasonably satisfactory to it:
(a) certified copies of the resolutions adopted by the Board
of Directors of the Company authorizing the execution, delivery and performance
of this Agreement, the issuance of the Shares, the Warrants and each of the
other agreements, instruments and transactions contemplated hereby, together
with certified copies of the resolutions adopted by a committee of disinterested
members of the Board of Directors approving the same and dated prior to the
Effective Date;
(b) certified copies of the Articles of Incorporation and
By-laws of each of the Company and its Subsidiary as in effect on the Closing
Date; and
(c) a certificate of the Secretary of the Company dated the
Closing Date, as to the incumbency and signatures of the officers executing this
Agreement and all instruments executed pursuant hereto.
9.9 Certain Agreements. The shareholders of the Company listed on
Exhibit C shall have entered into letter agreements with the Purchaser
substantially in the form of Exhibit C-1, which letters shall provide that such
shareholders shall enter into agreements with Purchaser that provide that when
Purchaser owns shares representing 12% or more of the voting power of the
Company, they will not transfer "in block" any shares, warrants, options or
convertible securities in the Company (except to their majority controlled
financial investor affiliates) unless they have first offered the Purchaser the
right to purchase such shares, warrants, options or convertible securities under
terms and conditions no less favorable to the Purchaser than as proposed to be
offered to any third party. For purposes of the preceding sentence, "in block"
shall mean (1) shares, warrants, options or convertible securities representing
5% or more of the fully diluted voting power of the Company and (2) with respect
to transferees who (prior to the proposed transfer) are 5% shareholders, shares,
warrants, options or convertible securities representing the lower of 3% of the
fully diluted voting power of the Company or that amount which would cause such
transferee to hold more than 9% of the fully diluted voting power of the
Company. The agreements shall also provide that if Purchaser sells or otherwise
transfers shares of the Company such that its voting power represents less than
12% of the voting power of the Company or if the Purchaser is diluted such that
its voting power represents less than 10% of the voting power of the Company,
then such transfer restrictions shall be suspended. Fully diluted voting power
shall have the meaning provided in Section 6.4.
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Section 10. Registration of the Shares; Compliance With the Securities
Act.
10.1 Definitions. As used in this Section 10, the following terms
shall have the following meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(c) "Register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with applicable
state securities laws.
(d) "Registrable Securities" shall mean (i) the Shares, (ii)
the Warrant Shares, (iii) other shares of the Company purchased by Purchaser so
long as Purchaser is deemed an affiliate of the Company and provided that such
shares shall only be deemed Registrable Securities if they are included in a
registration statement together with at least 33-1/3% of the Shares, and (iv)
stock issued in respect of the stock referred to in (i), (ii) or (iii) as a
result of a stock split, stock dividend, recapitalization or combination.
Notwithstanding the foregoing, Registrable Securities shall not include
otherwise Registrable Securities (i) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, (ii)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof or (iii) the
registration rights associated with such securities have been terminated
pursuant to Section 10.9 of this Agreement.
(e) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
10.2 Requested Registration.
(a) If the Company shall receive from the Purchaser a written
request that the Company effect any registration with respect to not less than
33-1/3% of the issued and outstanding Registrable Securities held by the
Purchaser, the Company shall as soon as practicable use its reasonable best
efforts to register (including, without limitation, the execution of an
undertaking to file post-effective amendments and any other governmental
requirements) all Registrable Securities which the Purchaser requests to be
registered; provided, that the Company shall not be obligated to file a
registration statement pursuant to this Section 10.2 (i) prior to two years from
the Closing Date; (ii) within 12 months of a prior request under this Section
10.2; (iii) within 120 days following the effective date of any registered
offering of the Company's securities to the general public in which the
Purchaser shall have been able effectively to register all
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Registrable Securities as to which registration shall have been requested by the
Purchaser; (iv) in any registration having an aggregate offering price (before
deduction of underwriting discounts and expenses of sale) of less than
$7,500,000; or (v) after the Company has effected three such registrations
pursuant to this Section 10.2; provided, however, that the Company shall be
required to effect only one such registration to a transferee (other than an
affiliated entity), after permitted transfer of this Agreement, pursuant to
Section 12.6.
The Company shall file a registration statement covering
the Registrable Securities so requested to be registered as soon as practical,
but in any event within 90 days after receipt of the request of the Purchaser,
and shall use reasonable best efforts to have such registration statement
promptly declared effective by the Commission whether or not all Registrable
Securities requested to be registered can be included; provided, however, that
if the Company shall furnish to the Purchaser a certificate signed by the
President of the Company stating that in the good-faith judgment of the Board of
Directors it would be seriously detrimental to the Company and its shareholders
for such registration statement to be filed within such 90-day period and it is
therefore essential to defer the filing of such registration statement, the
Company shall have an additional period of not more than 90 days after the
expiration of the initial 90-day period within which to file such registration
statement; provided, that during such time the Company may not file a
registration statement for securities to be issued and sold for its own account.
(b) If the Purchaser intends to distribute the Registrable
Securities covered by its request by means of an underwriting, it shall so
advise the Company as a part of its request. In that event, if so requested in
writing by the Company, the Purchaser shall negotiate with an underwriter
selected by the Company with regard to the underwriting of such requested
registration. The Company and the Purchaser shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting. Notwithstanding any other provision of this Section 10.2, if
the managing underwriter advises the Purchaser in writing that marketing factors
require a limitation of the number of shares to be underwritten, the Company
shall so advise the Purchaser, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
reduced accordingly; provided, however, that securities to be included in such
registration statement as a result of piggyback registration rights as well as
any securities to be offered by the Company shall be excluded from the
registration statement prior to the exclusion of any Registrable Securities held
by the Purchaser.
10.3 Piggyback Registration.
(a) If at any time or from time to time the Company shall
determine to register any of its securities, for its own account or the account
of any of its shareholders, other than a registration relating solely to
employee benefit plans, or a registration relating solely to an SEC Rule 145
transaction, a transaction relating solely to the sale of debt or convertible
debt instruments or a registration on any form (other than Form X-0, X-0 or S-3,
or their successor forms) which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will (i) give to the
Purchaser written notice thereof as soon as practicable prior to filing the
registration statement and (ii) include
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in such registration and in any underwriting involved therein all the
Registrable Securities (except that only Shares and Warrant Shares may be
included during the two years following the Closing) specified in a written
request, made within 15 days after receipt of such written notice from the
Company by the Purchaser, except as set forth in subsection 10.3(b).
(b) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the Purchaser as a part
of the written notice given pursuant to Section 10.3(a). In such event, the
right of the Purchaser to registration pursuant to this Section 10.3 shall be
conditioned upon the Purchaser's participation in such underwriting and the
inclusion of the Purchaser's Registrable Securities in the underwriting. The
Purchaser and the Company shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this Section
10.3, if the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the managing underwriter
may limit the number of Registrable Securities to be included in the
registration and underwriting.
10.4 Expenses of Registration. All expenses incurred in connection
with the registrations pursuant to Sections 10.2 and 10.3, including without
limitation all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for the Company and expenses of any special
audits of the Company's financial statements incidental to or required by such
registration, shall be borne by the Company, except that the Company shall not
be required to pay underwriters' fees, discounts or commissions relating to
Registrable Securities or fees of a separate legal counsel of the Purchaser.
10.5 Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep the
Purchaser advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense the Company will:
(a) keep such registration pursuant to Sections 10.2 and 10.3
continuously effective for a period of 120 days, or, in each case, such
reasonable period necessary to permit the Purchaser to complete the distribution
described in the registration statement relating thereto, whichever first
occurs;
(b) promptly prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to comply with the provisions
of the Securities Act, and to keep such registration statement effective for
that period of time specified in Section 10.5(a);
(c) furnish such number of prospectuses and other documents
incident thereto as the Purchaser from time to time may reasonably request;
(d) use reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction, at the earliest possible moment;
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(e) register or qualify such Registrable Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Purchaser or underwriter reasonably requires (except that the Company shall not
be required to go register or qualify in any jurisdiction in which it would be
required to execute a general consent to service of process), and keep such
registration or qualification effective during the period set forth in Section
10.5(a);
(f) cause all Registrable Securities covered by such
registrations to be listed on each securities exchange, including NASDAQ, on
which similar securities issued by the Company are then listed;
(g) cause its accountants to issue to the underwriter, if any,
comfort letters and updates thereof, in customary form and covering matters of
the type customarily covered in such letters with respect to underwritten
offerings;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Purchaser reasonably requests in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) make available for inspection by Purchaser, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) if the offering is underwritten, at the request of the
Purchaser furnish (i) an opinion of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, stating that such
registration statement has become effective under the Securities Act and that
(A) to the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus and each amendment or supplement
thereof comply as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as to
financial statements or other financial data contained therein) and (C) to such
other effects as reasonably may be requested by counsel for the underwriters and
(ii) a letter from the independent public accountants retained by the Company,
addressed to the underwriters and to such seller, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request; and
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(k) notify the Purchaser at any time a prospectus covered by
such registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
Notwithstanding any other provision of this Section 10, (i) the Company shall
not be required to file a registration statement during any period that such
filing is not permitted and (ii) the Purchaser shall suspend any sale of
Registrable Securities at the request of the Company for a period not exceeding
90 days.
10.6 Indemnification.
(a) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Sections 10.2 or 10.3, the
Company will indemnify and hold harmless the Purchaser, each underwriter of such
Registrable Securities thereunder and each other person, if any, who controls
the Purchaser or underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which the
Purchaser, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, 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, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities law
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, and will reimburse the
Purchaser, each of its officers, directors and partners, and each person
controlling the Purchaser, each such underwriter and each person who controls
any such underwriter, for any reasonable legal and any other expenses incurred
in connection with investigating, defending or settling any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage or liability arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by the
Purchaser or underwriter specifically for use therein.
(b) The Purchaser will indemnify and hold harmless the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company and each underwriter within the meaning of the Securities
Act, against all claims, losses, expenses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
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therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by the Purchaser
specifically for use therein; provided, however, the total amount for which the
Purchaser, its officers, directors and partners, and any person controlling the
Purchaser, shall be liable under this Section 10.6(b) shall not in any event
exceed the aggregate proceeds received by the Purchaser from the sale of
Registrable Securities in such registration.
(c) Each party entitled to indemnification under this Section
10.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claims as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
actual detriment to the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that the
provisions on indemnification contained in the underwriting agreement entered
into among the Purchaser, the Company and the underwriters in connection with
the underwritten public offering are in conflict with the foregoing provisions,
the provisions in the underwriting agreement shall be controlling as to the
Registrable Securities included in the public offering.
(e) If the indemnification provided for in this Section 10.6
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the
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indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, the amount the Purchaser
shall be obligated to contribute pursuant to this Section 10.6(e) shall be
limited to an amount equal to the proceeds to the Purchaser of the Restricted
Securities sold pursuant to the registration statement which gives rise to such
obligation to contribute (less the aggregate amount of any damages which the
Purchaser has otherwise been required to pay in respect of such loss, claim,
damage, liability or action or any substantially similar loss, claim, damage,
liability or action arising from the sale of such Restricted Securities).
(f) The indemnification provided by this Section 10.6 shall be
a continuing right to indemnification and shall survive the registration and
sale of any securities by any Person entitled to indemnification hereunder and
the expiration or termination of this Agreement.
10.7 Lockup Agreement. The Purchaser agrees in connection with any
registration of the Company's securities (whether or not the Purchaser is
participating in such registration), upon the request of the Company and the
underwriters managing any underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time from the effective
date of such registration as the Company and the underwriters may reasonably
specify.
10.8 Information by the Purchaser. The Purchaser included in any
registration shall promptly furnish to the Company such information regarding
the Purchaser and the distribution proposed by the Purchaser as the Company may
request in writing and as shall be required in connection with any registration
referred to herein.
10.9 Termination of Rights.
(a) The rights of the Purchaser to cause the Company to
register securities under Sections 10.2 or 10.3 shall terminate at such time as
the Purchaser is able to dispose of all of its Registrable Securities in one
three-month period pursuant to the provisions of Rule 144.
(b) Notwithstanding the provisions of Section 10.9(a), all
rights of the Purchaser under this Agreement shall terminate at 5:00 P.M.
Central time on the date five years after the Closing Date.
10.10 Covenants Relating to Rule 144. The Company will file reports
in compliance with the Securities Exchange Act of 1934, as amended, and comply
with all rules and regulations of the Commission applicable to the use of Rule
144.
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Section 11. Notices.
All notices, requests, consents and other communications hereunder shall
be in writing, shall be sent by confirmed facsimile or mailed by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, and shall be deemed given when so sent in the case of
facsimile transmission, or when so received in the case of mail or courier, and
addressed as follows:
if to the Company, to:
Diametrics Medical, Inc.
0000 Xxxxxx Xxxx
Xx. Xxxx Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Chairman, CEO and President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Whitney LLP
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
if to the Purchaser, to:
Hewlett-Packard Company
0000 Xxxxxxx Xxxxxx
Mail Stop 20 BT
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Director, Corporate Development
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Hewlett-Packard Company
0000 Xxxxxxx Xxxxxx
Mail Stop BQ
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
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Any change of an address set forth in this Section 11 may be accomplished by
means of a notice sent in accordance with the terms of this Section 11.
Section 12. Miscellaneous.
12.1 Waivers and Amendments. Neither this Agreement nor any
provision hereof may be changed, waived, discharged, terminated, modified or
amended except upon the written consent of the Company and the Purchaser.
12.2 Sections; Headings; Dollar Amounts. Unless otherwise specified,
all references in this Agreement to "Sections" shall be to Sections of this
Agreement. 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. All currency referred to herein shall be in U.S. dollars.
12.3 Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota as applied to
contracts entered into and performed entirely in Minnesota by Minnesota
residents, without regard to conflicts of law principles.
12.5 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. Delivery of an executed counterpart by facsimile
shall be the same as delivery of an original counterpart.
12.6 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, that only the rights with respect to Section 10 may be
assigned as an entirety only to the transferee of the Shares, the Warrants and
the Warrant Shares. Without limiting the foregoing, the Purchaser shall have the
right to assign prior to Closing the right to purchase the Shares and Warrants
to an affiliated entity.
12.7 Entire Agreement. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
12.8 Payment Of Fees and Expenses. Each of the Company and the
Purchaser shall bear its own expenses and legal fees incurred on its behalf with
respect to this Agreement and the transactions contemplated hereby. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
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fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
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.
DIAMETRICS MEDICAL, INC.
By /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chairman, President and Chief
Executive Officer
HEWLETT-PACKARD COMPANY
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Business Development Manager
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