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EXHIBIT 4.4
INCONTROL, INC.
STOCK PURCHASE AGREEMENT
DATED
AS OF
APRIL 20, 1998
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CONTENTS
1. Purchase and Sale of Stock ......................................... 1
1.1 Purchase and Sale ........................................... 1
1.2 Purchase Price .............................................. 1
2. Closing ............................................................ 1
2.1 Closing Date ................................................ 1
2.2 Delivery .................................................... 1
3. Representations and Warranties of the Company ...................... 1
3.1 Organization, Good Standing and Qualification ............... 1
3.2 Capitalization .............................................. 2
3.3 Authorization, Due Execution and Validity ................... 2
3.4 Valid Issuance of Stock ..................................... 2
3.5 Governmental Consents ....................................... 2
3.6 Litigation .................................................. 3
3.7 Employee Compensation Plans ................................. 3
3.8 Compliance With Other Instruments ........................... 3
3.9 Disclosure .................................................. 3
3.10 SEC Reports, Financial Statements ........................... 4
3.11 Compliance With Laws ........................................ 4
3.12 Private Offering ............................................ 5
3.13 Changes ..................................................... 6
3.14 Certain Fees ................................................ 6
4. Representations and Warranties of the Investors .................... 6
4.1 Authorization ............................................... 6
4.2 Exemption from Registration ................................. 7
4.3 Purchase Entirely for Own Account ........................... 7
4.4 Investment Experience ....................................... 7
4.5 Access to Information ....................................... 7
4.6 Restricted Securities ....................................... 8
4.7 Residency ................................................... 8
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4.8 Legends ..................................................... 8
5. Registration Rights ................................................ 8
6. Conditions of Investors' Obligations at the Closing Date ........... 8
6.1 Representations and Warranties .............................. 9
6.2 Performance ................................................. 9
6.3 Compliance Certificate ...................................... 9
6.4 Secretary's Certificate ..................................... 9
6.5 Proceedings and Documents ................................... 9
6.6 Opinion of Company Counsel .................................. 9
6.7 Authorizations .............................................. 9
6.8 Convertible Preferred Closing ............................... 10
7. Conditions of the Company's Obligations at the Closing Date ........ 10
7.1 Representations and Warranties .............................. 10
7.2 Exemption ................................................... 10
7.3 Performance ................................................. 10
8. Entire Agreement; Governing Law .................................... 10
9. Notice ............................................................. 10
10. Amendments ......................................................... 11
11. Expenses ........................................................... 11
12. Counterparts ....................................................... 11
EXHIBIT A Schedule of Investors
EXHIBIT B Information Provided to the Investors
EXHIBIT C Registration Rights
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 20, 1998, between INCONTROL,
INC., a Delaware corporation (the "Company"), and the investors listed on
Exhibit A hereto (collectively, the "Investors" and individually, an
"Investor").
1. PURCHASE AND SALE OF STOCK
1.1 PURCHASE AND SALE
Upon the terms and subject to the conditions of this Agreement, the
Company shall sell and issue to each Investor, and each Investor shall purchase
from the Company, severally and not jointly, the number of shares of Common
Stock of the Company (the "Shares") specified opposite of such Investor's name
on the Schedule of Investors attached hereto as Exhibit A.
1.2 PURCHASE PRICE
The price per Share shall be $6.25.
2. CLOSING
2.1 CLOSING DATE
The closing of the sale and purchase of the Shares shall be held at 1:00
p.m., on April 20, 1998 (the "Closing Date").
2.2 DELIVERY
At the Closing, subject to the terms and conditions hereof, the Company
shall deliver to each Investor a certificate, representing the Shares to be
purchased by such Investor from the Company, dated the Closing Date, against
payment of the purchase price therefor by wire transfer.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investors as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware and has all requisite
corporate power and authority to own its properties and carry on its business as
currently conducted and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to so qualify would have a material
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adverse effect on its financial condition, results of operations, business,
properties or prospects. The Company has previously provided the Investors with
complete and correct copies of its Restated Certificate of Incorporation and its
Amended and Restated Bylaws as in effect on the date of this Agreement.
3.2 CAPITALIZATION
The authorized capital of the Company consists of 40,000,000 shares of
common stock (the "Common Stock") and 10,000,000 shares of preferred stock,
400,000 shares of which are designated as Series A Participating Cumulative
Preferred Stock and 8,710 shares of which are designated as Series B Convertible
Preferred Stock. As of the date of this Agreement, no shares of the Series A
Participating Cumulative Preferred Stock (which are issuable upon exercise of
certain preferred stock purchase rights associated with shares of the Company's
Common Stock), 7,500 shares of the Series B Convertible Preferred Stock and
18,845,415 shares of the Common Stock are issued and outstanding. In addition,
102,901 shares of Common Stock are subject to outstanding warrants to purchase
shares of Common Stock, 3,873,490 shares of Common Stock are reserved for
issuance upon the exercise of stock options granted or to be granted under the
Company's 1990 Restated Stock Option Plan, 1994 Stock Option Plan for
Nonemployee Directors and 1996 Stock Option Plan for Nonemployee Directors and
3,769,000 shares of Common Stock are reserved for issuance upon conversion of
the Series B Convertible Preferred Stock.
3.3 AUTHORIZATION, DUE EXECUTION AND VALIDITY
The Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the transactions
contemplated herein, the performance of all obligations of the Company hereunder
and the authorization, issuance and delivery of the Shares being sold hereunder
have been taken or will be taken prior to the Closing. This Agreement has been
duly executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its terms.
3.4 VALID ISSUANCE OF STOCK
The Shares, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable and free of any liens or encumbrances, and will be
free of restrictions on transfer, except as set forth herein and subject to
limitations promulgated under Rule 144 and Regulation D of the rules promulgated
pursuant to the Securities Act of 1933, as amended (the "Act"), and will be
issued in compliance with all applicable state and federal securities laws. The
outstanding shares of Common Stock of the Company are all duly and validly
authorized and issued, fully paid and nonassessable and were issued in
compliance with all applicable state and federal securities laws.
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3.5 GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, regional,
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.
3.6 LITIGATION
There is no action, suit, claim, proceeding or investigation pending or,
to the Company's knowledge, currently threatened against the Company that
relates to or challenges the legality, validity or enforceability of this
Agreement or the Shares, or that could either individually or in the aggregate
have a material adverse effect on the financial condition, results of
operations, business, properties or prospects of the Company. The Company is not
a party to or subject to the provisions of any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality that could have a
material adverse effect on its financial condition, results of operations,
business, properties or prospects.
3.7 EMPLOYEE COMPENSATION PLANS
The Company is not a party to or bound by any currently effective
employment agreement, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
agreement, except for the Company's 1990 Restated Stock Option Plan, the
Company's 1994 Stock Option Plan for Nonemployee Directors and 1996 Stock Option
Plan for Nonemployee Directors and such other agreements as would be required to
be disclosed in the SEC Documents (as such term is defined below).
3.8 COMPLIANCE WITH OTHER INSTRUMENTS
The Company is not in violation of any provision of its Restated
Certificate of Incorporation or its Amended and Restated Bylaws or in violation
or default of any provision of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound, or any provision of any
federal or state statute, rule or regulation applicable to the Company, which
violation or default would adversely affect the legality, validity, or
enforceability of this Agreement or have a material adverse effect on its
financial condition, results of operations, business, properties or prospects.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in any such violation or
default or require any consent under or be in conflict with or constitute, with
or without the passage of time and giving of notice, either a violation or
default under any such provision, instrument, judgment, order, writ, decree or
contract, or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company.
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3.9 DISCLOSURE
The Company has provided the Investors, its representatives and legal
counsel with all the information set forth on Exhibit B attached hereto and has
provided the opportunity to ask and have answered satisfactorily, questions of
the Company. Neither this Agreement, the exhibits hereto, nor any certificate or
material prepared by the Company for the benefit of the Investors at the Closing
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made herein or therein not misleading.
3.10 SEC REPORTS, FINANCIAL STATEMENTS
The Company has furnished the Investors with a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by the Company with the Securities and Exchange Commission (the "SEC")
since December 31, 1997 (the "SEC Documents"), which are all the documents
(other than registration statements on Form S-8 of the SEC) that the Company has
been required to file or has filed with the SEC. As of their respective dates,
the SEC Documents complied with the requirements of the Act, or the Securities
Exchange Act of 1934, as amended, as applicable, and the rules and regulations
of the SEC thereunder, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, as in effect at the time
of filing, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present, subject,
in the case of unaudited financial statements, to normal recurring audit
adjustments, the financial position of the Company and its consolidated
subsidiaries at the dates thereof and the results of their operations and
changes in financial position for the periods then ended. Except to the extent
reflected or reserved against in the financial statements of the Company as of
and for the fiscal year ended December 31, 1997, the Company does not have any
material liabilities or other obligations (including contingent liabilities and
obligations) except (i) liabilities and obligations incurred in the ordinary
course of business since December 31, 1997 or (ii) that would not be required to
be reflected or reserved against in the consolidated balance sheet of the
Company prepared in accordance with generally accepted accounting principles
applied on a consistent basis.
3.11 COMPLIANCE WITH LAWS
(a) The Company has complied, and is in compliance with, all
federal, state, county, local and foreign laws, rules, regulations, ordinances,
decrees and orders applicable to the operation of its business, to its
employees, or to the real property and the personal property that it owns or
leases (the "Property"), the failure to comply with which
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would, individually or in the aggregate, have a material adverse effect on the
business, assets or operations of the Company, including, without limitation,
all such laws, rules, ordinances, decrees and orders relating to antitrust,
consumer protection, currency exchange, environmental protection, equal
opportunity, health, occupational safety, pension, securities and
trading-with-the-enemy matters. The Company has not received any notification of
any asserted present or past unremedied failure by the Company to comply with
any of such laws, rules, ordinances, decrees or orders.
(b) The Company is not in violation of any applicable building,
zoning, environmental or other law, ordinance or regulation in respect of any of
its real property employed in its operations or its plant, structures or
operations. No such law, ordinance or regulation would reasonably be expected to
prevent the use of substantially all of such real property for the conduct
thereon of the business of the Company as currently conducted.
(c) The Company is not in violation of, and has not violated, in
connection with the ownership, use, maintenance or operation of its Property or
the conduct of its business, any applicable federal, state, county, local or
foreign statutes, laws, regulations, guidances, rules, ordinances, codes,
licenses, permits, judgments, writs, decrees, injunctions or orders of any
governmental entity relating to environmental (air, water, groundwater, soil,
noise and odor) matters, including all other applicable environmental
requirements where such violation might have a material adverse impact on the
Company's business, business prospects, assets, operations or condition
(financial or other).
(d) The Company has made all filings and given all notices to
governmental authorities and obtained all necessary ordinances, registrations,
declarations, approvals, orders, trademarks, patents, tradenames, licenses,
consents, qualifications, certificates, permits and authorizations from any
foreign, Federal, state or local government or governmental agency or department
to own or lease its properties and to conduct its business as currently
conducted, the absence or failure of which would have a material adverse effect
on the Company. All such authorizations, ordinances, consents, approvals,
waivers, orders, trademarks, patents, tradenames, licenses, consents,
qualifications, certificates and permits are in full force and effect and are
not the subject of any pending or, to the Company's knowledge, any threatened
attack by appeal or direct proceeding or otherwise.
3.12 PRIVATE OFFERING
Neither the Company nor any person acting on its behalf has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security (as defined in the Act) that is or may be
integrated with the sale of the Shares in a manner that would require the
registration of the Shares under the Act within the six months preceding the
date of this Agreement; neither the Company nor any person acting on its behalf
has offered or sold or will offer or sell any Shares by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under the
Act. Subject in part to the truth and accuracy of each Investor's
representations set forth in this Agreement, the offer,
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sale and issuance of the Shares as contemplated by this Agreement are exempt
from the registration requirements of the Act, and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemptions.
3.13 CHANGES
Since December 31, 1997 there has not been:
(a) Any change in the assets, liabilities, financial condition,
or operating results of the Company from that reflected in the Company's
financial statements dated as of December 31, 1997, except changes in the
ordinary course of business that have not been, in the aggregate, materially
adverse;
(b) Any damage, destruction or loss (whether or not covered by
insurance) that has materially and adversely affected, or may materially and
adversely affect, the business, financial position, results of operations,
prospects or properties of the Company;
(c) Any change in the accounting methods or practices followed by
the Company;
(d) Any material debt obligation or liability (whether absolute
or contingent) incurred by the Company (whether or not presently outstanding)
except (i) current liabilities incurred, and obligations under agreements
entered into, in the ordinary course of business and (ii) obligations or
liabilities entered into or incurred in connection with the execution of this
Agreement; or
(e) Any sale, lease, abandonment or other disposition by the
Company of any real property or, other than in the ordinary course of business,
of any equipment or other operating properties or, other than in the ordinary
course of business, any sale, assignment, transfer, license or other disposition
by the Company of any intellectual property or other intangible asset.
3.14 CERTAIN FEES
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the sale of the Shares to
the Investors.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents and warrants that:
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4.1 AUTHORIZATION
This Agreement constitutes a valid and legally binding obligation of the
Investor, enforceable in accordance with its terms. The Investor has full power
and authority to execute, deliver and perform its obligations under this
Agreement and to own the Shares.
4.2 EXEMPTION FROM REGISTRATION
The Investor has been advised that the none of the Shares proposed to be
purchased by the Investor hereunder is being registered under the Act and the
rules and regulations of the SEC promulgated thereunder, or applicable state
securities laws, but is being offered and sold pursuant to exemptions from such
laws, and that the Company's reliance upon such exemptions is predicated in part
on the Investor's representations contained herein. The Investor acknowledges
that the Company is relying in part upon the Investor's representations and
warranties contained herein for the purpose of qualifying the offer and sale of
the Shares proposed to be offered and sold hereunder for applicable exemptions
from registration or qualification pursuant to federal or state securities laws,
rules and regulations.
4.3 PURCHASE ENTIRELY FOR OWN ACCOUNT
The Shares to be received by the Investor will be acquired for
investment for the Investor's own account, not as a nominee or agent, and not
with a view to the distribution of any part thereof, and the Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same in a manner contrary to the Act or any applicable state
securities law, and the Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person with respect to any of the
Shares.
4.4 INVESTMENT EXPERIENCE
The Investor is an investor in securities of companies in the
development stage, qualifies as an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated by the SEC that meets the requirements of
Rule 501(a)(1), (2), (3), or (7) of said Regulation D, is purchasing shares in
an aggregate amount of at least $1,000,000, and acknowledges that the Shares are
a speculative risk. The Investor is able to fend for itself in the transactions
contemplated by this Agreement, can bear the economic risk of its investment
(including possible complete loss of such investment) for an indefinite period
of time and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the investment in the
Shares. The Investor represents it has not been organized for the purpose of
acquiring the Shares.
4.5 ACCESS TO INFORMATION
The Investor believes that it has been furnished such information as it
deems necessary to evaluate an investment in the Shares, including the
information as set forth on Exhibit A
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attached hereto. The Investor has been given access to sufficient information
regarding the Company including, in particular, the current financial condition,
results of operations, business, properties, management and prospects of the
Company and the risks associated therewith and has utilized such access to its
satisfaction for the purpose of obtaining information or verifying information,
and particularly, the Investor has either attended or been given reasonable
opportunity to attend a meeting with representatives of the Company for the
purpose of asking questions of, and receiving answers from, such representatives
concerning the terms and conditions of the offering of the Shares and to obtain
any additional information, to the extent reasonably available. The foregoing,
however, does not limit or modify the representations and warranties of the
Company is Section 3 of this Agreement of the right of the Investor to rely
thereon.
4.6 RESTRICTED SECURITIES
The Investor realizes that none of the Shares proposed to be purchased
by the Investor hereunder has been registered under the Act and that all of such
Shares are characterized under the Act as "restricted securities" and therefore
cannot be sold or transferred unless subsequently registered under the Act or an
exemption from such registration is available. In this connection, the Investor
represents that it is familiar with Rule 144 of the SEC, as presently in effect,
and understands the resale limitations imposed thereby and by the Act.
4.7 RESIDENCY
For purposes of the Company's compliance with applicable state and
foreign securities laws, the Investor represents that it is a bona fide resident
of, and/or is domiciled in the state of California.
4.8 LEGENDS
It is understood that the certificates evidencing the Shares may bear
legends in substantially the following form:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the 'Act'), or applicable state
securities law, and no interest therein may be sold, distributed, assigned,
offered, pledged or otherwise transferred unless (i) there is an effective
registration statement under the Act and applicable state securities laws
covering any such transaction involving said securities, (ii) this corporation
receives an opinion of legal counsel for the holder of these securities
reasonably satisfactory to this corporation stating that such transaction is
exempt from registration or (iii) this corporation otherwise satisfies itself
that such transaction is exempt from registration."
5. REGISTRATION RIGHTS
The terms of the Registration Rights attached hereto as Exhibit C are
hereby incorporated into and made a part of this Agreement as if fully set forth
herein.
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6. CONDITIONS OF INVESTORS' OBLIGATIONS AT THE CLOSING DATE
The obligations of the Investors under Section 1 hereof are subject to
the fulfillment, on or before the Closing Date of each of the following
conditions, unless waived by the Investors:
6.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in Section 3
hereof shall be true in all material respects on and as of the Closing Date.
6.2 PERFORMANCE
The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing Date.
6.3 COMPLIANCE CERTIFICATE
The Chief Executive Officer of the Company shall have delivered to the
Investors a certificate stating that the conditions specified in Sections 6.1,
6.2, 6.7 and 6.8 hereof have been fulfilled.
6.4 SECRETARY'S CERTIFICATE
The Investors shall have received a certificate, dated the Closing Date,
signed by the secretary of the Company and certifying (a) that attached thereto
is a true, complete and correct copy of (i) the Company's Restated Certificate
of Incorporation and Amended and Restated Bylaws and (ii) resolutions duly
adopted by the Board of Directors of the Company authorizing the execution and
delivery of this Agreement and the issuance of the Shares, (b) the incumbency of
officers executing this Agreement, and (c) that attached thereto is a specimen
of the stock certificate for the Common Stock.
6.5 PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings in connection with the transactions
contemplated at the Closing Date and all documents incident thereto shall be
reasonably satisfactory to the Investors and the Investors' counsel.
6.6 OPINION OF COMPANY COUNSEL
The Investors shall have received from Xxxxxxx Coie, counsel for the
Company, an opinion, dated as of the Closing Date, in form and substance
satisfactory to the Investors.
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6.7 AUTHORIZATIONS
All authorizations, approvals, or permits, if any, of any governmental
authority or regulatory body of the United States or any state that are required
in connection with the lawful issuance and sale of the Shares pursuant to this
Agreement shall be duly obtained and effective as of the Closing Date.
6.8 CONVERTIBLE PREFERRED CLOSING
The Company shall have closed the sale of $7.5 million of its Series B
Convertible Preferred Stock.
7. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING DATE
The obligations of the Company under this Agreement are subject to the
fulfillment on or before the Closing Date of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Investors contained in Section
4 hereof shall be true in all material respects on and as of the Closing Date.
7.2 EXEMPTION
The offer and sale of the Shares to the Investors pursuant to this
Agreement shall be exempt from registration under the Act, and the Company shall
have received from Xxxxxxx Coie an opinion, dated the Closing Date, to such
effect.
7.3 PERFORMANCE
The Investors shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing Date.
8. ENTIRE AGREEMENT; GOVERNING LAW
This Agreement and the other documents delivered at the Closing
constitute the full and entire understanding and agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements
with respect to the subject matter hereof. This Agreement shall be governed by
and construed under the laws of the state of Washington as applied to agreements
among Washington residents entered into and to be performed entirely within the
state of Washington.
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9. NOTICE
Unless otherwise provided, any notice desired or required to be given
hereunder shall be in writing given by personal delivery or certified or
registered mail, telegram or confirmed facsimile transmission, addressed to such
party at its address listed on the signature page of this Agreement, or to such
other address as any party shall have previously designated by such a notice.
The effective date of any notice or request shall be three days from the date it
is sent by the addressor with charges prepaid so long as it is in fact received
within five days, or when successful transmission is confirmed if sent by
facsimile, or when personally delivered.
10. AMENDMENTS
Any term of this Agreement may be amended and the observance of any term
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Investors.
11. EXPENSES
Irrespective of whether the Closing is effected, the Company shall pay
all costs and expenses that it incurs with respect to the negotiation,
execution, delivery, and performance of this Agreement. If the Closing is
effected, the Company shall, at the Closing, reimburse the reasonable fees of
Pillsbury, Madison & Sutro LLP, special counsel to the Investors, not to exceed
$15,000, and shall, upon receipt of a xxxx therefor, reimburse out-of-pocket
expenses of such special counsel.
12. COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
INCONTROL, INC.
By /s/ Xxxx X. Xxxxxxx
----------------------------------------
Its Chief Executive Officer
------------------------------------
Address: 0000 -- 000xx Xxxxxx X.X.
Xxxxxxx, XX 00000
Fax: (000) 000-0000
"INVESTORS"
CHARTER GROWTH CAPITAL L.P.
By /s/ X. Xxxx Xxxxx
----------------------------------------
Its General Partner
-------------------------------------
CHARTER GROWTH CAPITAL CO. -
INVESTMENT FUND L.P.
By /s/ X. Xxxx Xxxxx
----------------------------------------
Its General Partner
-----------------------------------
CGC INVESTORS L.P.
By /s/ X. Xxxx Xxxxx
----------------------------------------
Its General Partner
------------------------------------
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EXHIBIT A
SCHEDULE OF INVESTORS
Name Aggregate Purchase Price No. of Shares
---- ------------------------ -------------
Charter Growth Capital L.P. $1,978,800 316,608
Charter Growth Capital Co.- $388,762.50 62,202
Investment Fund L.P.
CGC Investors L.P. $132,437.50 21,190
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EXHIBIT B
INFORMATION PROVIDED TO THE INVESTORS
1. Annual Report of the Company on Form 10-K for the year ended
December 31, 1997.
2. Annual Report of the Company to stockholders for the year ended
December 31, 1997.
3. Proxy Statement, dated March 27, 1998, relating to the 1998 annual
meeting of stockholders of the Company.
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EXHIBIT C
REGISTRATION RIGHTS
1. REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS
As used in this Agreement, the following terms not otherwise defined in
the Agreement shall have the following respective meanings:
"Commission" shall mean the United States Securities and Exchange
Commission.
"Holder" shall mean the Investor.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement with the
Commission in compliance with the Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Section 1 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company and of one special counsel to the Holder, and blue sky fees and
expenses.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of the Shares by the
Holder.
"Shelf Period" shall mean the period commencing 90 days after the
Closing Date and ending on the date one year from the Closing Date.
1.2 SHELF REGISTRATION
The Company shall cause a registration statement to be declared
effective by the Commission prior to or upon commencement of the Shelf Period
with respect to all the Shares held by the Holder (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws) and to maintain the registration effective until the earlier of
(i) the expiration of the Shelf Period or (ii) the time at which the Shares of
the Holder have been sold or distributed (such period, the "Selling Period"). If
at any time during the Shelf Period the Company shall notify the Holder in a
writing signed by the President of the Company that there exists material
nonpublic information which must be disclosed in order for the registration
statement not to be false or misleading, then the Company may require that no
sales may be made under the registration statement until such time as disclosure
is made.
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The Company shall use its best efforts to cause such disclosure to be made as
soon as practicable, but in any event no later than 45 days after such written
notice to the Holder.
1.3 EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with registrations
pursuant to Section 1.2 shall be borne by the Company. All Selling Expenses
relating to securities registered on behalf of the Holder shall be borne by the
Holder on the basis of the number of Shares registered and sold.
1.4 REGISTRATION PROCEDURES
In the case of registration effected by the Company pursuant to this
Section 1, the Company will keep the Holder advised in writing as to the
initiation of registration and as to the completion thereof. At its expense the
Company will:
(a) Registration Statement. Prepare and file with the Commission
a registration statement with respect to the Shares held by the Holder and use
its best efforts to cause such registration statement to become and remain
effective for the Selling Period;
(b) Amendments. Prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Copies. Furnish to the Holder such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as the Holder or such underwriters may reasonably
request in order to facilitate the public offering of such securities.
(d) Blue Sky. Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any state or jurisdiction.
(e) Notice. Notify the Holder covered by such registration
statement (at any time when a prospectus relating thereto is required to be
delivered under the Act) of the happening of any event 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.
(f) Opinion. Furnish, at the request of the Holder requesting
registration of Shares in connection with a registration pursuant to Section
1.2, (i) an opinion, dated such
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date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holder and (ii) a letter dated such date, from the independent accountants
of the Company, in form and substance as is customarily given by independent
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holder.
(h) Listing. The Company will list the Shares, prior to the
commencement of the Selling Period, on the Nasdaq National Market.
1.5 INFORMATION BY HOLDER
The Holder shall furnish to the Company such information regarding
itself, the Shares it holds and the distribution proposed by it as the Company
may reasonably request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Section 1.
1.6 INDEMNIFICATION AND CONTRIBUTION
(a) Indemnification by the Company. Upon the registration of
Shares pursuant to Section 1.2 hereof, the Company shall indemnify and hold
harmless the Holder and each underwriter, selling agent or other securities
professional, if any, that facilitates the disposition of such Shares, and each
of their respective officers and directors and each person who controls the
Holder, underwriter, selling agent or other securities professional within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities, joint or several, to which the Holder or such other persons may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Shares are to be
registered under the Act, or any prospectus contained therein or furnished by
the Company to the Holder or other such person, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company hereby agrees to
reimburse the Holder or other person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Company
shall not be liable to the Holder or other person in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or prospectus, or amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Company by the Holder or such other person expressly for use therein.
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(b) Indemnification by the Holder and any Agents and
Underwriters. The Holder agrees, as a consequence of the inclusion of the Holder
in such registration, to (i) indemnify and hold harmless the Company, its
directors, officers who sign any registration statement with respect to such
Shares and each person, if any, who controls the Company within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities to which the Company or such other
persons may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in such registration statement or prospectus, or any amendment or
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Holder, and (ii) reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 1.6,
notify such indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 1.6. In case any such action shall be brought against any indemnified
party and it shall notify an indemnifying party of the commencement thereof,
such indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, such indemnifying party shall not be liable to such indemnified
party under this Section 1.6 for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation, unless representation of such indemnifying party and such
indemnified party by the same counsel would be inappropriate due to actual or
potential conflicting interests between such parties. No indemnifying party
shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or
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claim and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) Contribution. If the indemnification provided for in this
Section 1.6 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 1.6(d) were determined by
pro rata allocation (even if the Holder or any underwriters, selling agents or
other securities professionals or all of them 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 Section 1.6(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The obligations
of the Holder and any underwriters, selling agents or other securities
professionals in this Section 1.6(d) to contribute shall be several in
proportion to the number of Shares registered, underwritten, or sold as the case
may be, by them and not joint.
(e) Notwithstanding any other provision of this Section 1.6, in
no event will (i) the Holder be required to undertake liability to any person
under this Section 1.6 for any amounts in excess of the dollar amount of the
proceeds to be received by the Holder from the sale of the Holder's Shares
(after deducting any fees, discounts and commissions applicable thereto)
pursuant to any registration statement under which such Shares are to be
registered under the Act and (ii) any underwriter, selling agent or other
securities professional be required to undertake liability to any person
hereunder for any amounts in excess of the discount, commission or other
compensation payable to such underwriter, selling agent or other securities
professional with respect to the Shares underwritten or sold by it.
(f) The obligations of the Company under this Section 1.6 shall
be in addition to any liability which the Company may otherwise have to the
Holder, underwriter, selling agent or other securities professional within the
meaning of Section 15 of the Act or
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Section 20 of the Exchange Act, and the obligations of the Holder or other such
person under this Section 1.6 shall be in addition to any liability which the
Holder or other person may otherwise have to the Company, its directors,
officers who sign any registration statement with respect to such Shares and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act. The remedies provided
in this Section 1.6 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to an indemnified party at law or in equity.
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