THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE REOFFERED OR SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO (1) REGISTRATION OR
(2) AN OPINION OF COUNSEL FOR THE COMPANY OR OTHER COUNSEL REASONABLY ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
To Purchase Shares of Common Stock of
VIDAMED, INC.
January 4, 2000
VidaMed, Inc., a Delaware corporation (the "Company"), for value
received, hereby certifies that Medtronic Asset Management, Inc., a Minnesota
corporation, or its registered assigns (the "Holder"), is entitled, subject to
the terms set forth below, upon exercise of this Warrant to purchase from the
Company 1,590,000 shares of Common Stock, $0.001 par value, of the Company
("Common Stock"). Until adjusted as provided by the terms of this Warrant, the
exercise price per share (the "Exercise Price") shall be $1.80, which the
Company hereby represents and warrants to equal 105% of the average closing
price per share of Common Stock for the five (5) trading days ending on and
including the trading day immediately preceding the date hereof. The shares
issuable upon exercise or conversion of this Warrant as adjusted from time to
time pursuant to the provisions of this Warrant, are hereinafter referred to as
the "Warrant Shares."
This Warrant is further subject to the following provisions, terms and
conditions:
1. Term. This Warrant may be exercised by the Holder, in whole or in
part, at any time before the close of business on the date five years after the
date hereof.
2. Manner of Exercise. This Warrant may be exercised by the Holder, in
whole or in part (but not as to any fraction of a share of Common Stock), by
surrendering this Warrant, with the Exercise Form attached hereto as Exhibit A
filled-in and duly executed by such Holder or by such Holder's duly authorized
attorney, to the Company at its principal office accompanied by payment of the
Exercise Price in the amount of the Exercise Price multiplied by the number of
shares as to which the Warrant is being exercised. The Exercise Price may be
paid by in the form of a check or wire transfer of funds.
3. Conversion of Warrant.
(a) The Holder shall also have the right (the "Conversion
Right") at any time when this Warrant may be exercised to convert all
or any portion of this Warrant into such number of shares (rounded to
the nearest whole share) of Company Common Stock equal to the quotient
obtained by dividing (i) the "Aggregate Warrant Spread" as of the date
the Conversion Right is exercised, by (ii) the "Market Price of the
Common Stock" as of the date the Conversion Right is exercised. The
Conversion Right shall be exercisable at any time that this Warrant is
exercisable pursuant to Section 1 above, by surrendering this Warrant
with the Conversion Form attached hereto as Exhibit B filled-in and
duly executed by such Holder or by such Holder's duly authorized
attorney to the Company at its principal office.
(b) For purposes of this Section 3, the "Aggregate Warrant
Spread" of all or a portion of this Warrant as of a particular date
shall equal (i) the Market Price of the Common Stock multiplied by the
number of shares of Common Stock purchasable upon exercise of all or
such portion of this Warrant on such date, minus (ii) the Exercise
Price multiplied by the number of shares of Common Stock purchasable
upon exercise of all or such portion of this Warrant on such date. For
purposes of this Warrant, the "Market Price of the Common Stock" as of
a particular date shall equal: (i) if the Common Stock is traded on an
exchange or is quoted on either the Nasdaq National Market or Small-Cap
Market, then the average of the closing or last sale prices,
respectively, reported for the ten (10) trading days immediately
preceding such date, or (ii) if the Common Stock is not traded on an
exchange, the Nasdaq National Market, or the Nasdaq Small-Cap Market
but is traded in the local over-the-counter market, then the average of
the mid-points between the highest bid and lowest asked quotations for
each of the ten (10) trading days immediately preceding such date.
4. Effective Date of Exercise or Conversion. Each exercise or
conversion of this Warrant shall be deemed effective as of the close of business
on the day on which this Warrant is surrendered to the Company as provided in
Section 2 or Section 3(a) above. At such time, the person or persons in whose
name or names any certificates for Warrant Shares shall be issuable upon such
exercise or conversion shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates. Within ten (10)
days after the exercise or conversion of this Warrant in full or in part, the
Company will, at its expense, cause to be issued in the name of and delivered to
the Holder or such other person as the Holder may (upon payment by such Holder
of any applicable transfer taxes) direct: (i) a certificate or certificates for
the number of full Warrant Shares to which such Holder is entitled upon such
exercise or conversion, and (ii) unless this Warrant has expired, a new Warrant
or Warrants (dated the date hereof and in form identical hereto) representing
the right to purchase the remaining number of shares of Common Stock, if any,
with respect to which this Warrant has not then been exercised or converted.
5. Adjustments to Exercise Price. The above provisions are, however,
subject to the following:
(a) (i) If the Company shall at anytime after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, then the number of shares
of Common Stock for which this Warrant may be exercised as of
immediately prior to the subdivision, combination or record date for
such dividend payable in Common Stock shall forthwith be
proportionately decreased, in the case of combination, or increased, in
the case of subdivision or dividend payable in Common Stock.
(ii) If the Company shall at anytime after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, the Exercise Price in
effect immediately prior to the subdivision, combination or record date
for such dividend payable in Common Stock shall forthwith be
proportionately increased, in the case of combination, or decreased, in
the case of subdivision or dividend payable in Common Stock.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or share exchange, combination,
consolidation or merger of the Company with another corporation, or the
sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, share exchange, combination, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to receive upon exercise of this
Warrant upon the basis and upon the terms and conditions specified in
this Warrant and in lieu of the shares of the Common Stock of the
Company into which this Warrant could be exercisable or convertible,
such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the maximum number of shares of such stock
issuable upon exercise of this Warrant, and in any such case
appropriate provisions shall be made with respect to the rights and
interests of Holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Exercise Price and
of the number of shares purchasable upon exercise or conversion of this
Warrant) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise or conversion hereof. The Company shall
not effect any such share exchange, combination, consolidation, merger
or sale, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such share
exchange, combination, consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed to the Holder at the last address of such Holder appearing on
the books of the Company, the obligation to deliver to such Holder such
shares of stock, securities or assets which, in accordance with the
foregoing provisions, such Holder may thereafter be entitled to receive
upon exercise or conversion of this Warrant.
(c) If at anytime after the date of this Warrant the Company
distributes to all holders of Common Stock any assets (excluding
ordinary cash dividends), debt securities, or any rights or warrants to
purchase debt securities, assets or other securities (including Common
Stock), the Exercise Price shall be adjusted in accordance with the
formula:
E1 = E x (O x M) - F
---------------
O x M
where:
E1 = the adjusted Exercise Price.
E = the current Exercise Price.
M = the average market price of Common Stock
for the 30 consecutive trading days
commencing 45 trading days before the record
date mentioned below.
O = the number of shares of Common Stock
outstanding on the record date mentioned below.
F = the fair market value on the record date of the
aggregate of all assets, securities, rights or
warrants distributed. The Company's Board of
Directors shall determine the fair market
value in the exercise of its reasonable
judgment.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
the distribution.
(d) Except for (i) any securities granted, awarded or issued
by the Company prior to the date of this Warrant (and securities issued
by the Company after that date in exchange for or upon exercise of such
securities), (ii) the grant or award to Transamerica Business Credit
Corporation or its affiliates of a warrant for the purchase of not more
than 75,000 shares of the Company's Common Stock at a price per share
of not less than $0.89 in connection with the extension of the
Company's credit facility, and (iii) the issuance during each twelve
month period following the date of this Warrant of warrants, options or
other rights to purchase not more than 100,000 shares of the Company's
Common Stock (appropriately adjusted to reflect stock splits, stock
dividends, reorganizations, consolidations and provided that for the
twelve months in which the transaction referenced in (ii) occurs, the
share limit shall be reduced by the number of shares issued or issuable
pursuant to such transaction) to banks or other institutional lenders
in connection with debt financing transactions at a price per share of
not less than 60% of the last sale price of the Company's Common Stock
as reported by Nasdaq on the last trading day preceding such issuance,
if the Company should decide to issue and sell any additional shares of
capital stock of the Company, or any warrants, securities convertible
into capital stock of the Company or other rights to subscribe for or
to purchase any capital stock of the Company (all such capital stock,
warrants, securities convertible into capital stock and other rights
being hereinafter collectively referred to as "Additional Securities")
for a consideration per share less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Exercise Price shall be reduced to such
lesser price.
No adjustment of the Exercise Price, however, shall be made in
an amount less than 2% of the Exercise Price in effect on the date of
such adjustment, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any such adjustment so
carried forward, shall be an amount equal to or greater than 2% of the
Exercise Price then in effect.
For the purposes of this Section 5(d), the following
provisions (i) to (vi), inclusive, shall also be applicable:
(i) In case at any time the Company shall grant
(whether directly or by assumption in a merger or otherwise)
any rights to subscribe for or to purchase, or any options for
the purchase of, (a) Common Stock or (b) any obligations or
any shares of stock of the Company which are convertible into,
or exchangeable for, Common Stock (any of such obligations or
shares of stock being hereinafter called "Convertible
Securities") whether or not such rights or options or the
right to convert or exchange any such Convertible Securities
are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible
Securities (determined by dividing (x) the total amount, if
any, received or receivable by the Company as consideration
for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the
Company upon the exercise of such rights or options, plus, in
the case of such rights or options which relate to Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue of such
Convertible Securities and upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect
immediately prior to the time of the granting of such rights
or options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such
rights or options) be deemed to have been issued for such
price per share. No further adjustments of the Applicable
Conversion Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise
of such rights or options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) In case the Company shall issue or sell (whether
directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (x) the total
amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price
in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to
have been issued for such price per share, provided that (a)
no further adjustments of the Exercise Price shall be made
upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such
issue or sale of such Convertible Securities is made upon
exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Section 5(d)(ii), no
further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii) In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company
therefor, without deducting therefrom any expenses incurred or
any underwriting commissions, discounts or concessions paid or
allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights
or options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value
of such consideration as determined by the Board, without
deducting therefrom any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common
Stock or Convertible Securities or any rights or options to
purchase such Common Stock or Convertible Securities shall be
issued in connection with any merger or consolidation in which
the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as
determined by the Board of such portion of the assets and
business of the non-surviving corporation or corporations as
such Board shall determine to be attributable to such Common
Stock, Convertible Securities, rights or options, as the case
may be. In the event of any consolidation or merger of the
Company in which the Company is not the surviving corporation
or in the event of any sale of all or substantially all of the
assets of the Company in which the corporation is not the
surviving corporation or in the event of any sale of all or
substantially all of the assets of the Company for stock or
other securities of any other corporation, the Company shall
be deemed to have issued a number of shares of its Common
Stock for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on which
the transaction was predicated and for a consideration equal
to the fair market value on the date of such transaction of
such stock or securities of the other corporation, and if any
such calculation results in the adjustment of the Exercise
Price, the determination of the number of shares of Common
Stock issuable upon conversion immediately prior to such
merger, conversion or sale, for purposes of Section 5(b)
above, shall be made after giving effect to such adjustment of
the Exercise Price.
(iv) In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them
(a) to receive a dividend or other distribution payable in
Common Stock or in Convertible Securities, or in any rights or
options to purchase any Common Stock or Convertible
Securities, or (b) to subscribe for or purchase Common Stock
or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such rights of
subscription or purchase, as the case may be.
(v) The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common
Stock for the purpose of this Section 5(d).
(vi) Notwithstanding anything to the contrary in the
preceding provisions of this Section 5(d), no adjustments to
the Exercise Price shall be made pursuant to this Section 5(d)
after the original Holder has sold or transferred more than
eighty percent (80%) of the shares of the Company's Common
Stock purchased by such original Holder concurrently with the
issuance of this Warrant.
(e) Upon any adjustment of the Exercise Price, then and in
each such case, the Company shall give written notice thereof, by first
class mail, postage prepaid, addressed to the Holder of this Warrant at
the address of such Holder as shown on the books of the Company, which
notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares for which
this Warrant may be exercised, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based.
6. Common Stock. As used herein, the term "Common Stock" shall mean and
include the Company's presently authorized shares of common stock and shall also
include any capital stock of any class of the Company hereafter authorized which
shall not be limited to a fixed sum or percentage in respect of the rights of
the holders thereof to participate in dividends or in the distribution,
dissolution or winding up of the Company.
7. No Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company unless and until
exercised or converted pursuant to the provisions hereof.
8. Exercise or Transfer of Warrant or Resale of Common Stock. The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant, in whole or in part, or transferring any
shares of Common Stock issued upon the exercise or conversion hereof, of such
Holder's intention to do so, describing briefly the manner of any proposed
transfer. Such notice shall include an opinion of counsel reasonably
satisfactory to the Company that (i) the proposed exercise or transfer may be
effected without registration or qualification under the Securities Act of 1933,
as amended (the "Act") and any applicable state securities or blue sky laws, or
(ii) the proposed exercise or transfer has been registered under such laws. Upon
delivering such notice, such Holder shall be entitled to transfer this Warrant
or such Warrant Shares, all in accordance with the terms of the notice delivered
by such Holder to the Company, provided that an appropriate legend may be
endorsed on the certificates for such shares respecting restrictions upon
transfer thereof necessary or advisable in the opinion of counsel to the Company
to prevent further transfer which would be in violation of Section 5 the Act and
applicable state securities or blue sky laws.
If in the opinion of counsel to the Company or other counsel reasonably
acceptable to the Company the proposed transfer or disposition of this Warrant
or the Warrant Shares described in the written notice given pursuant to this
Section 8 may not be effected without registration of this Warrant or the
Warrant Shares, the Company shall promptly give written notice thereof to the
Holder within 10 days after the Company receives such notice, and such holder
will limit its activities in respect to such as, in the opinion of such counsel,
is permitted by law.
9. Covenants of the Company. The Company covenants and agrees that all
shares which may be issued upon conversion of this Warrant will, upon issuance,
be duly authorized and issued, fully paid, nonassessable and free from all
taxes, liens and charges with respect to the issue thereof. The Company further
covenants and agrees that the Company will at all times have authorized, and
reserved for the purpose of issue upon exercise hereof, a sufficient number of
shares of its Common Stock to provide for the exercise of this Warrant.
10. Certain Notices. The Holder shall be entitled to receive from the
Company immediately upon declaration thereof and at least ten (10) business days
prior to the record date for determination of shareholders entitled thereto or
to vote thereon (or if no record date is set, prior to the event), written
notice of any event which could require an adjustment pursuant to Section 5
hereof or of the dissolution or liquidation of the Company. All notices
hereunder shall be in writing and shall be delivered personally or by telecopy
(receipt confirmed) to such party (or, in the case of an entity, to an executive
officer of such party) or shall be sent by a reputable express delivery service
or by certified mail, postage prepaid with return receipt requested, addressed
as follows:
if to Medtronic, to:
Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000
with separate copies thereof addressed to:
Attention: General Counsel
FAX (000) 000-0000
Attention: Vice President, Corporate Development and Associate General
Counsel
FAX (000) 000-0000
if to the Company to:
VidaMed, Inc.
00000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President and Chief Executive Officer
FAX ( ) -
Any party may change the above-specified recipient and/or mailing
address by notice to all other parties given in the manner herein prescribed.
All notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail or delivery service).
11. Registration Rights. The Holders of this Warrant and the Warrant
Shares are entitled to the rights and benefits of all of the terms, provisions
and conditions of that certain Purchase Agreement dated of even date herewith
between the Company and Medtronic Asset Management, Inc., provided an express
sharing or assignment of such rights and benefits is made to each such Holder by
such Holder's transferor.
12. Miscellaneous.
(a) No amendment, modification or waiver of any provision of
this Warrant shall be effective unless the same shall be in writing and
signed by the holder hereof.
(b) This Warrant shall be governed by and construed in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its authorized officer and dated as of the date stated above.
VIDAMED, INC.
/s/ Xxxx X. Xxxx
By: Xxxx X. Xxxx
Title: Vice President and Chief Financial Officer
Exhibit A
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered
Holder in Order to Exercise the
Warrant
The undersigned hereby irrevocably elects to exercise the attached
Warrant to purchase, for cash pursuant to Section 2 thereof, ________________
shares of Common Stock issuable upon the exercise of such Warrant. The
undersigned requests that certificates for such shares be issued in the name of
__________________________________. If this Warrant is not fully exercised, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: _________, ______
_____________________________________
[name of registered Holder]
_____________________________________
[signature]
_____________________________________
[street address]
_____________________________________
[city, state, zip]
_____________________________________
[tax identification number]
Exhibit B
NOTICE OF CONVERSION OF WARRANT -- To Be Executed by the Registered Holder
in Order to Convert the Warrant on a
Cashless Basis
The undersigned hereby irrevocably elects to convert, on a cashless
basis, a total of ______________ shares of Common Stock otherwise purchasable
upon exercise of the attached Warrant into such lesser number of shares of
Common Stock as determined by Section 3 of the Warrant. The undersigned requests
that certificates for such shares be issued in the name of
__________________________________. If this Warrant is not fully converted, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: _________, ______
_____________________________________
[name of registered Holder]
_____________________________________
[signature]
_____________________________________
[street address]
_____________________________________
[city, state, zip]
_____________________________________
[tax identification number]
