EXHIBIT 10.3
NOTE PURCHASE AGREEMENT dated as of August 4, 1998, among DIAMETRICS
MEDICAL, INC., a Minnesota corporation (the "Company") and each of the persons
whose signatures appear under the heading "Purchasers" on the signature pages
hereto (each, a "Purchaser" and collectively, the "Purchasers").
The Company desires to issue and sell an aggregate of $7,300,000
principal amount of 7% Convertible Secured Notes due 2003 substantially in the
form of Exhibit 1 attached hereto. The Notes (defined below) will be convertible
at the option of the holders thereof into shares of Common Stock (the
"Conversion Shares") at a conversion price of $8.40 per share, subject to
adjustment. The Notes will be offered and sold to the Purchasers without being
registered under the Securities Act of 1933, as amended, in reliance upon an
exemption therefrom.
Holders (including subsequent transferees) shall have registration
rights as set forth in the Common Stock Purchase Agreement (defined below) for
so long as the Conversion Shares are Registrable Securities (as defined in the
Common Stock Purchase Agreement).
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified below:
"Affiliate" of any person means (i) any person that, directly or
indirectly, is in control of, is controlled by, or is under common control with
such person or (ii) any person who is a director or officer (A) of such person,
(B) of any Subsidiary of such person or (C) of any person described in clause
(i) above. For purposes of this definition, control of a person means the power,
direct or indirect, to direct or cause the direction of the management and
policies of such person whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company or any committee of
such Board of the Company duly authorized to act for such Board.
"Business Day" means each day other than a Saturday, a Sunday or any
other day on which banking institutions in the State of Minnesota are authorized
or obligated by law or executive order to be closed.
"Capitalized Lease Obligations" means all monetary obligations of the
Company or any Subsidiary under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as capitalized leases, and, for
purposes of this Agreement and the documents referred to herein, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Closing" and "Closing Date" have the meanings specified in Section
7.1.
"Common Stock" means the common stock of the Company, par value $.01
per share.
"Common Stock Purchase Agreement" means that certain Common Stock
Purchase Agreement dated June 30, 1998 by and among the Company and the
purchasers signatory thereto relating, among other things, to the issuance of
2,142,858 shares of Common Stock and warrants for the purchase of an additional
714,286 shares of Common Stock.
"Company" has the meaning specified in the preamble.
"Consolidated Tangible Net Worth" means consolidated net worth less
goodwill and intangible assets, as shown on the latest audited consolidated
balance sheet of the Group from time to time filed with the Securities and
Exchange Commission.
"Conversion Shares" has the meaning specified in the preamble.
"Conversion Price" has the meaning specified in Section 5.6.
"Current Market Price" means the average of the last reported sale
prices per share for the ten consecutive Trading Days (as defined below)
preceding the date of such computation. The last reported sale price for each
day shall be (i) the last sale price, or the closing bid price if no sale
occurred, of the Common Stock on the principal securities exchange on which the
Common Stock is listed, (ii) if not listed as described in clause (i), the last
reported sale price of the Common Stock on the Automated Quotation System of the
National Association of Securities Dealers, Inc. (the "NASDAQ System"), or any
similar system of automated dissemination of quotations of securities prices
then in common use, if so quoted, or (iii) if not quoted as described in clauses
(i) or (ii), the mean of the high and low bid quotations for the Common Stock as
reported by the National Quotation Bureau Incorporated if at least two
securities dealers have inserted bid quotations for the Common Stock on at least
five of the ten preceding days. If the Common Stock is quoted on a national
securities or central market system, in lieu of a market or quotation system
described above, the last reported sale price shall be determined in the manner
set forth in clause (iii) of the preceding sentence if bid and asked quotations
are reported but actual transactions are not, and in the manner set forth in
clause (i) of the preceding sentence if actual transactions are reported. If
none of the conditions set forth above is met, the last reported sale price of
the Common Stock on any day or the average of such last reported sales prices
for any period shall be the fair market value of such class of stock as
determined by a member firm of the New York Stock Exchange, Inc. selected by the
Company. As used herein the term "Trading Days" means (x) if the Common Stock is
quoted on the NASDAQ System or any similar system of automated dissemination of
quotations of securities prices, days on which trades may be made on such
system, or (y) if not quoted as described in clause (x), days on which
quotations are reported by the National Quotation Bureau Incorporated, or (z) if
the Common
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Stock is listed or admitted for trading on any national securities exchange,
days on which such national securities exchange is open for business.
"Debt" of any person means, without duplication, all (i) liabilities or
obligations, direct and contingent, which liabilities or obligations would, in
accordance with GAAP, be included in determining total liabilities as shown on
the liability side of a balance sheet of such person at the date as of which
Debt is to be determined, including, without limitation, (a) contingent
liabilities which, in accordance with such principles, would be set forth in a
specific dollar amount on the liability side of such balance sheet, and (b)
Capitalized Lease Obligations of such person, (ii) liabilities or obligations of
others for which such person is directly or indirectly liable, by way of
Guarantee or otherwise whether or not such liabilities would, in accordance with
GAAP, be included in determining total liabilities as shown on a balance sheet,
including, without limitation, obligations in respect of interest rate exchange,
swap, cap and other agreements or arrangements designed to provide protection
against fluctuation in interest rates, (iii) liabilities or obligations secured
by Liens on any assets of such person, whether or not such liabilities or
obligations shall have been assumed by it, (iv) liabilities and obligations of
such person, direct or contingent, with respect to letters of credit issued for
the account of such person and bankers acceptances created for such person and
(v) any amendments, renewals, extensions, modifications, refundings or
refinancings of any obligation or indebtedness described in clauses (i) through
(iv) above.
"Default" means any event that is, or after passage of time or the
giving of notice (or both) would be, an Event of Default.
"Default Interest" means interest in accordance with Section 3.2 of the
Note.
"Detachable Warrant" or "Detachable Warrants" has the meaning specified
in Section 4.4.
"DML" means Diametrics Medical, Ltd., an English company.
"Equity Interest" means any and all shares, interests (beneficial or
otherwise), participations, or other equivalents (however designated) in a
person, and any and all warrants, options or other rights to acquire any of the
foregoing.
"Event of Default" means any event specified in Section 8.1 of this
Agreement, continued for the period of time, if any, and after the giving of the
notice, if any, designated in such Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar or successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
"Exchange Ratio" means the relationship expressed as a ratio of the
number of shares of common stock of a surviving corporation to be received by
the holders of Common Stock in
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exchange for each share of Common Stock pursuant to a type of merger or
consolidation described in Section 4.4(a) hereof.
"GAAP" means generally accepted accounting principles as of the date of
this Agreement consistently applied and in accordance with past practices.
"Governmental Authority" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or other court or arbitrator, in each case whether of the United States or a
foreign jurisdiction.
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing any Debt or other obligation of any
other person and any obligation, direct or indirect, contingent or otherwise of
such person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such other person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Holder" means each person in whose name a Note is registered on the
Register or who is a registered holder of any Conversion Shares or the holder of
a Detachable Warrant, as the case may be.
"Indemnified Persons" has the meaning specified in Article XII.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind whatsoever (including any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of any
financing statement under the Uniform Commercial Code in any jurisdiction in
connection with the creation of a security interest).
"NASDAQ" or "NASDAQ System" have the meanings specified in the
definition of Current Market Price.
"Notes" means the Notes, substantially in the form of Exhibit 1 hereto,
executed and delivered pursuant to Section 4.1 hereof. The term "Note" or
"Notes" as used herein shall include each note delivered pursuant to any
provision of this Agreement and each note delivered in substitution or exchanged
for any such note, in any case which is at the time outstanding.
"Officer" of any corporation means the Chairman of the Board, the
President, any Vice President (regardless of designation), the Treasurer, the
Secretary, the Assistant Secretary or the Assistant Treasurer of such
corporation.
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"Officer's Certificate" means a certificate signed in the name of the
Company by its Chairman of the Board, its President, one of its Vice Presidents
or its Treasurer.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof or any other entity.
"Purchaser" or "Purchasers" has the meaning specified in the preamble.
"Redemption Date" has the meaning specified in Section 4.3.
"Redemption Event" means (i) the sale of all or substantially all of
the Company's assets to a person or any group (as defined in clause (iii) of
this definition) of persons in a single transaction or a series of transactions,
(ii) the consummation of any consolidation or merger involving the Company
pursuant to which (A) the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly-owned subsidiary in which
all of the Common Stock outstanding immediately prior to the effectiveness
thereof is changed into or exchanged for the same consideration) or (B) the
Common Stock is converted into cash, securities and other property, except, in
the case of each of the immediately preceding clauses (A) and (B), a
consolidation or merger involving the Company pursuant to which the holders of
the issued and outstanding Common Stock immediately prior to such transaction
own or control, directly or indirectly, a majority of the common stock of the
continuing or surviving corporation immediately following such consolidation or
merger, or (iii) any person or any persons acting together which would
constitute a "group" for the purposes of Section 13(d) of the Exchange Act,
together with any affiliates thereof, shall beneficially own (as defined in Rule
13d-3 of the Exchange Act) or control, directly or indirectly, at least 50% of
the total Voting Power of all classes of Equity Interests entitled to vote
generally in the election of directors of the Company.
"Register" means the register maintained pursuant to Section 11.3.
"SEC" means the Securities and Exchange Commission or any other
Governmental Authority at the time administering the Securities Act or the
Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended, and any
similar or successor federal statute, and the rules and regulations of the SEC
thereunder all as of the same may be in effect at the time.
"Security Documents" means a mortgage of shares executed by the Company
in favor of the Holders or their agent or trustee for their benefit in form and
substance reasonably satisfactory to the Purchasers, together with any other
security documents or instruments from time to time executed by the Company in
connection with its obligations hereunder.
"Subsidiary" of any person (a "Parent") means any corporation or other
entity at least a majority of the outstanding Voting Power of which is at the
time owned or controlled directly or indirectly by the Parent, or one or more
Subsidiaries or by the Parent and one or more
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Subsidiaries. Unless the context otherwise requires all references to a
Subsidiary or Subsidiaries shall refer to those of the Company.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to Tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs duties, tariffs, and
similar charges.
"Trading Day" has the meaning specified in the definition of Current
Market Price.
"Voting Power" means voting securities or other voting interests
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors or persons performing
substantially equivalent tasks and responsibilities.
"Warrant Registration Rights Agreement" means the registration rights
agreement to be dated the Closing Date, substantially in the form of Exhibit 2
hereto, relating to the Detachable Warrants.
In this Agreement and the Notes the singular includes the plural and
the plural the singular; words importing any gender include the other genders;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments shall be deemed to include all amendments thereto or changes therein
entered into in accordance with their respective terms but only to the extent to
which such amendments or changes are not prohibited by the terms of this
Agreement; references to persons include their permitted successors and assigns;
"including" means including, without limitation; "or" is not exclusive; "day"
means a calendar day unless otherwise specified; and an accounting term not
otherwise defined has the meaning assigned to it, and all determinations
involving any such term required to be made herein shall be made, in accordance
with GAAP.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the date hereof and as of the Closing Date, the Company
represents and warrants to each of the Purchasers as follows:
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Section 2.1 Incorporation by Reference of the Company's Representations
and Warranties in the Common Stock Purchase Agreement. All of the
representations and warranties of the Company set forth in Section 4 of that
certain Common Stock Purchase Agreement are hereby incorporated by reference for
the benefit of the Purchasers as if set forth herein in full.
Section 2.2 Exemption from Registration. The purchase and sale of the
Notes pursuant hereto are exempt from the registration requirements of the
Securities Act. No form of general solicitation or general advertising was used
by the Company in connection with the offer and sale of the Notes, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as the
Notes have been issued and sold by the Company within the six-month period
immediately prior to the date hereof. The Company agrees that neither it, nor
anyone acting on its behalf, will offer the Notes so as to bring the issuance
and sale of the Notes within the provisions of Section 5 of the Securities Act
nor offer any similar securities for issuance or sale to, or solicit any offer
to acquire any of the same from, or otherwise approach or negotiate with respect
thereto with, anyone if the sale of the Notes and any such securities would be
integrated as a single offering for the purposes of the Securities Act,
including, without limitation, Regulation D thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
As of the date hereof and as of the Closing Date, each Purchaser
severally (but not jointly) represents and warrants to the Company as follows:
Section 3.1 Private Placement. (a) Each Purchaser understands and
acknowledges that the Company has informed such Purchaser that:
(i) the Notes have not been registered under the Securities
Act and the Notes, any securities into which the Notes are converted or any
securities issued upon redemption of the Notes must be held indefinitely unless
they are subsequently registered under the Securities Act or such sale is
permitted pursuant to an available exemption from such registration requirement;
(ii) the offering and sale of the Notes is intended to be
exempt from registration under the Securities Act by virtue of the provisions of
Section 4(2) of the Securities Act; and
(iii) there is no existing public or other market for the
Notes and there can be no assurance that any Purchaser will be able to sell or
dispose of the Notes.
(b) Each Purchaser represents and warrants to the Company
that:
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(i) the Notes to be acquired by it pursuant to this Agreement
are being acquired for its own account not as a nominee or agent for any other
person and without a view to the distribution of such Notes or any interest
therein in violation of the Securities Act;
(ii) the Purchaser is an "Accredited Investor" as such term is
defined in Regulation D under the Securities Act and has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Notes, and such Purchaser is
capable of bearing the economic risks of such investment; and
(iii) the Purchaser has been provided, to its satisfaction,
the opportunity to ask questions concerning the terms and conditions of the
offering and sale of the Notes has had all such questions answered to its
satisfaction and has been supplied all additional information deemed necessary
by it to verify the accuracy of the information furnished to it.
Section 3.2 Transferees Bound. Each Purchaser understands and
acknowledges with the Company that the Company will not issue or transfer any
Notes, any securities into which the Notes are converted or any securities
issued upon redemption of the Notes unless the person to whom they are being
issued or transferred shall first state in a writing deposited with the
secretary of the Company the provisions of Section 3.1 hereof.
ARTICLE IV
SALE; REPAYMENT AND REDEMPTION
Section 4.1 Sale of the Notes. At the Closing, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Purchaser, and
each Purchaser agrees to purchase from the Company the principal amount of Notes
set forth opposite such Purchaser's name on Schedule 1 attached hereto at a
purchase price of 100% of such principal amount, payable by wire transfer of
same day funds on the Closing Date as provided in Section 7.1. The obligations
of each Purchaser shall be several and not joint and no Purchaser shall be
liable for the acts or omissions of any other Purchaser.
Section 4.2 Interest on the Notes. Subject to applicable law, interest
on each Note and Default Interest shall accrue and be payable as provided in
such Note.
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Section 4.3 Redemption Event.
(a) Upon the occurrence of a Redemption Event each Holder
shall have the right to require that the Company repurchase all or any portion
of such Holder's Notes (equal to $1,000 or any integral multiple thereof) at a
repurchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (the "Redemption
Date"), in accordance with Section 4.3(b).
(b) Within five days following any Redemption Event, the
Company shall mail a notice to each Holder stating:
(i) that a Redemption Event has occurred and that such Holder
has the right to require the Company to redeem such Holder's Notes at a
repurchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase;
(ii) the circumstance and relevant facts regarding such
Redemption Event;
(iii) the Redemption Date (which shall be no earlier than five
days nor later than ten days from the date such notice is mailed); and
(iv) the instructions determined by the Company consistent
with this Section, that a Holder must follow in order to have its Notes
repurchased.
(c) Holders electing to have a Note or Notes repurchased will
be required to surrender such Note or Notes, with an appropriate form duly
completed, to the Company at the address specified in the notice at least two
Business Days prior to the Redemption Date. Holders will be entitled to withdraw
their election if the Company receives not later than three Business Days prior
to the Redemption Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note which was
delivered for redemption by the Holder and a statement that such Holder is
withdrawing his election to have such Note redeemed.
(d) On the Redemption Date, all Notes redeemed by the Company
under this Section shall be delivered to the Company for cancellation, and the
Company shall pay the redemption price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
Section 4.4 Non-Cash Mergers or Consolidations. (a) In addition to, and
not in limitation of, the rights of the Holders pursuant to Section 4.3 above,
upon the occurrence of a merger or consolidation which constitutes a Redemption
Event pursuant to which the holders of Common Stock receive non-cash
consideration consisting of Equity Interests, Holders who exercise their rights
pursuant to Section 4.3 shall also receive detachable warrants (the "Detachable
Warrants") issued by the surviving corporation substantially in the form
attached hereto as Exhibit 3 to purchase for each $1,000 in principal amount of
the Notes that amount of Equity Interests of the surviving corporation equal to
that amount of Equity Interests received in the merger or consolidation in
respect of one share of Common Stock multiplied by a fraction
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where the numerator is 1000 and the denominator is the Conversion Price then in
effect. The exercise price of the Detachable Warrants per unit of Equity
Interests shall be equal to $1,000 divided by the number of units of Equity
Interests receivable per $1,000. The term of the Detachable Warrants shall be
equal to the remaining term of the Notes immediately prior to the consummation
of the merger or consolidation giving rise to the rights of the Holders under
this Section 4.4. Holders of the Detachable Warrants shall have the registration
rights set forth in the Warrant Registration Rights Agreement. The delivery to
the Holders of a legal, valid and enforceable Warrant Registration Rights
Agreement shall be a non-waivable closing condition of the Company in any
transaction entitling the Holders to receive Detachable Warrants pursuant
hereto.
(b) Upon the occurrence of a Redemption Event described in
Section 4.4(a), the Company shall supplement the notice to be provided to
Holders under Section 4.3(b) above, to include the following additional
information:
(i) that the Redemption Event which has occurred entitles the
Holders to receive Detachable Warrants pursuant to Section 4.4(a) of this
Agreement;
(ii) the number of Detachable Warrants to which each Holder is
entitled per $1,000 of face amount of Notes outstanding;
(iii) the then current exercise price of the Detachable
Warrants per share of common stock of the surviving corporation; and
(iv) instructions determined by the Company consistent with
Section 4.4 hereof, that a Holder must follow in order to receive the Detachable
Warrants to which the Holder is entitled and the Warrant Registration Rights
Agreement.
(c) Holders electing to receive the Detachable Warrants
pursuant to Section 4.4(a) hereof must comply with the requirements of Section
4.3 with respect to the redemption of their Notes, and such Holders shall
receive the Detachable Warrants and Warrant Registration Rights Agreements
concurrently with their receipt of the redemption price pursuant to Section
4.3(c) against surrender to the Company of the Notes to be redeemed.
(d) In the event that the consideration for a merger or
consolidation which constitutes a Redemption Event is a combination of cash and
non-cash consideration, then the percentage of the aggregate dollar amount of
outstanding principal and accrued interest on the Notes for which Holders may
receive Detachable Warrants pursuant to Section 4.4(a) shall be equal to that
percentage of the total merger or consolidation consideration to be received by
holders of the common stock represented by the non-cash portion of such
consideration.
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ARTICLE V
CONVERSION
Section 5.1 Conversion. Subject to and upon compliance with the
provisions of this Article V and subject to Section 4.4 hereof, the Holder of
any Notes shall have the right, at its option, at any time, to convert any Note
or any portion of the principal amount thereof which is $1,000 or an integral
multiple of $1,000 into fully paid and nonassessable shares of Common Stock at
the conversion price of $8.40 per share of Common Stock subject to adjustment as
set forth below, by surrendering the Notes to be converted, in the manner
provided in Section 5.2.
Section 5.2 Exercise of Conversion Rights. In order to exercise the
conversion privilege, the Holder of the Notes to be converted shall surrender
the Notes to the conversion agent designated for such purpose by written notice
to the Holders of such Notes by the Company (which may be the Company itself),
with the Notice of Election to Convert in the form included in Exhibit 4 hereto,
duly completed and signed, at the principal office of the conversion agent.
Unless the shares issuable on conversion are to be issued in the same name as
the name in which the surrendered Notes are registered, each Note surrendered
for conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Company, duly executed by the Holder or its duly authorized
attorney. If the Company fails to designate a conversion agent, the conversion
agent shall be the Company.
Section 5.3 Surrender of Notes; Delivery of Shares. As promptly as
practicable after the surrender by a Holder of the Notes in accordance with this
Section 5.3, and in any event within five Trading Days after such surrender, the
Company shall issue and shall deliver at the office of the conversion agent to
the Holder, or on its written order, (a) a certificate or certificates for the
number of full shares of Common Stock or other securities issuable upon the
conversion of those Notes in accordance with the provisions of this Article V,
(b) the amount of cash required to be paid for any fractional interest in
respect of a share of Common Stock or other security arising upon the conversion
as provided in Section 5.5 and (c) cash in the amount of all accrued and unpaid
interest on the Notes surrendered up to and including the date conversion shall
have been deemed to be effective pursuant to Section 5.4.
Section 5.4 Effective Date of Conversion. Each conversion shall be
deemed to have been effected immediately prior to the close of business on the
date on which all of the conditions specified in Section 5.2 above shall have
been satisfied, and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Common Stock or other securities represented by those certificates at
such time on such date and such conversion shall be at the Conversion Price (as
hereinafter defined) in effect at such time on such date, unless the stock
transfer books of the Company shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date upon
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which all of the conditions specified in Section 5.2 shall have been satisfied.
All shares of Common Stock delivered upon conversion of the Notes will upon
delivery be duly and validly issued and fully paid and nonassessable, free of
all liens and charges, not subject to any preemptive rights and in accordance
with applicable securities laws. Upon the surrender of the Notes to be
converted, such Notes shall no longer be deemed to be outstanding and all rights
of a Holder with respect to the Notes surrendered for conversion shall
immediately terminate except the right to receive the Common Stock or other
securities, cash or other assets as herein provided. In the event of any Note
which is converted in part only, upon such conversion the conversion agent shall
execute and deliver to or on the order of the Holder thereof, at the expense of
the Company, a new Note or Notes of authorized denomination in principal amounts
equal to the unconverted portion of such Note.
Section 5.5 Fractional Shares. No fractional shares or securities
representing fractional shares of Common Stock shall be issued upon conversion
of Notes. Any fractional interest in a share of Common Stock resulting from
conversion of a Note shall be paid in cash (computed to the nearest cent) based
on the Current Market Price of the Common Stock on the Trading Day next
preceding the day of conversion.
Section 5.6 Conversion Price. For purposes of this Article V, the
conversion price shall be $8.40 in principal amount of the Notes per share of
Common Stock subject in each case to adjustment as provided below (the
"Conversion Price")s.
Section 5.7 Adjustment of Conversion Price. (a) In case the Company
shall (i) pay a dividend or make a distribution on its Common Stock in shares of
its Common Stock, (ii) subdivide its outstanding Common Stock into a greater
number of shares, or (iii) combine its outstanding Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such event
shall be adjusted so that the Holder of any Note thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock of
the Company which it would have owned or have been entitled to receive after the
happening of such event had the Note been converted immediately prior to the
happening of such event. An adjustment made pursuant to this Section 5.7(a)
shall become effective immediately after the record date in the case of a
dividend or distribution except as provided in Section 5.7(f), and shall become
effective immediately after the effective date in the case of subdivision or
combination. If any dividend or distribution is not paid or made, the Conversion
Price then in effect shall be appropriately readjusted.
(b) In case the Company shall issue rights or warrants to all
holders of its Common Stock entitling them (for a period expiring within 45 days
after the record date mentioned below) to subscribe for or purchase Common Stock
at a price per share less than the Current Market Price of the Common Stock at
the record date for the determination of stockholders entitled to receive the
rights or warrants, the Conversion Price in effect immediately prior to the
issuance of such rights or warrants shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of issuance of the rights or warrants by a fraction of which the
numerator shall be the number of
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shares of Common Stock outstanding on the date of issuance of the rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares of Common Stock so offered would purchase at the then
Current Market Price per share of Common Stock, and of which the denominator
shall be the number of shares of Common Stock outstanding on the date of
issuance of the rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase. The adjustment provided for
in this Section 5.7(b) shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately, except as provided
in Section 5.7(f) below after such record date. In determining whether any
rights or warrants entitle the holders of the Common Stock to subscribe for or
purchase shares of Common Stock at less than the Current Market Price, and in
determining the aggregate offering price of the shares of Common Stock so
offered, there shall be taken into account any consideration received by the
Company for such rights or warrants, the value of such consideration, if other
than cash, to be determined by the Board (whose determination, if made in good
faith, shall be conclusive). If any or all of such rights or warrants are not so
issued or expire or terminate without having been exercised, the Conversion
Price then in effect shall be appropriately readjusted.
(c) In case the Company shall distribute to all holders of its
Common Stock any shares of capital stock of the Company (other than Common
Stock) or evidences of indebtedness or assets (excluding cash dividends or
distributions paid from retained earnings of the Company) or rights or warrants
to subscribe for or purchase any of its securities (excluding those referred to
in Section 5.7(b)) then, in each such case, the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of the distribution by
a fraction of which the numerator shall be the Current Market Price of the
Common Stock on the record date mentioned below less the then fair market value
(as determined by the Board, whose determination, if made in good faith, shall
be conclusive) of the portion of the capital stock or assets or evidences of
indebtedness so distributed, or of the rights or warrants so distributed, with
respect to one share of Common Stock, and of which the denominator shall be the
Current Market Price of the Common Stock on the record date. Such adjustment
shall become effective immediately, except as provided in Section 5.7(f), after
the record date for the determination of shareholders entitled to receive such
distribution. If any such distribution is not made or if any or all of such
rights or warrants expire or terminate without having been exercised, the
Conversion Price then in effect shall be appropriately readjusted.
(d) No adjustment in the Conversion Price shall be required
unless such adjustment would require a change of at least 1% in the Conversion
Price; provided, however, that any adjustments which by reason of this Section
5.7(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment; and provided, further, that adjustments
shall be required and made in accordance with the provisions of this Article V
(other than this Section 5.7(d)) not later than such time as may be required in
order to preserve the tax free nature of a distribution to the holders of shares
of Common Stock. All calculations under this Article V shall be made to the
nearest cent or to the nearest one hundredth of a share, as the case may be.
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(e) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the conversion agent an officers'
certificate setting forth the Conversion Price after the adjustment and setting
forth a brief statement of the facts requiring the adjustment, which certificate
shall be conclusive evidence of the correctness of the adjustment if such
adjustment has been made in good faith. Promptly after delivery of the
certificate, the Company shall prepare a notice of the adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which the adjustment becomes effective and shall mail the notice of such
adjustment of the Conversion Price to the Holder of each Note at its last
address as shown on the Register.
(f) In any case in which this Section 5.7 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of the event (i) issuing to the
Holder of any Note after the record date and before the occurrence of the event
the additional shares of Common Stock issuable upon the conversion by reason of
the adjustment required by the event over and above the Common Stock issuable
upon such conversion before giving effect to the adjustment and (ii) paying to
the holder any amount in cash in lieu of any fractional share pursuant to
Section 5.5 above.
(g) In addition to the adjustments set forth in subsections
(a), (b) and (c) above, the Company will be permitted to make such reductions in
the Conversion Price as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the holders of the shares of Common Stock.
(h) In the event that the provisions of this Section 5.7 fail
as a result of an unintentional oversight to provide expressly for the
adjustment of the Conversion Price or the number of shares of Common Stock
issuable upon conversion under circumstances that, based upon the purposes and
intentions expressed in this Article V, would otherwise have been addressed, the
Board of Directors of the Company shall, in good faith cause an equitable
adjustment to be made to the Conversion Price or the number of shares of Common
Stock issuable upon conversion to correct such an oversight.
Section 5.8 Notice of Certain Corporate Action. If:
(a) the Company shall declare a dividend (or any other
distribution) on the Common Stock (other than a dividend in cash out of retained
earnings); or
(b) the Company shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any shares
of any class or any other rights or warrants; or
(c) there shall be any reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock); or
- 14 -
(d) there shall be a consolidation or merger involving the
Company or sale of all or substantially all of the Company's property and assets
(except a merger or other reorganization in which the Company shall be the
surviving corporation or a consolidation, merger or sale with a wholly-owned
subsidiary); or
(e) there shall be a voluntary or an involuntary dissolution,
liquidation or winding up of the Company; or
(f) any other action shall occur which would give rise to an
adjustment to the Conversion Price or the number of shares of Common Stock
issuable upon conversion.
then the Company shall cause to be filed with the conversion agent, and shall
cause to be mailed to the Holders of Notes then outstanding at their addresses
as shown on the Register, at least 25 days before any record date or other date
set for definitive action), a notice stating (i) the date on which a record is
to be taken for the purpose of the dividend, distribution or rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to the dividend, distribution or rights or
warrants are to be determined or (ii) the date on which the reclassification,
consolidation, merger, statutory share exchange, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon the reclassification, consolidation, merger, statutory share
exchange, sale, transfer, dissolution, liquidation or winding up. Such notice
shall also set forth such facts as shall indicate the effect of such action (to
the extent such effect may be known at the date of such notice) on the
Conversion Price and the kind and amount of the shares of stock and other
securities and property deliverable upon exercise of the conversion rights set
forth in this Article V. Failure to give any such notice or any defect in the
notice shall not affect the legality or validity of the proceedings described in
this Section 5.8.
Section 5.9 Company to Reserve Stock. The Company covenants that it
will at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued shares of Common Stock or its
issued shares of Common Stock held in its treasury, or both, for the purpose of
effecting conversions of the Notes, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding Notes not theretofore
converted. For purposes of this Section 5.9, the number of shares of Common
Stock which shall be deliverable upon the conversion of all outstanding Notes
shall be computed as if at the time of computation all the outstanding Notes
were held by a single Holder.
Section 5.10 Validly Issued; etc. Before taking any action which would
cause an adjustment reducing the Conversion Price below the then par value (if
any) of the shares of Common Stock deliverable upon conversion of the Notes, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock at the adjusted Conversion Price.
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Section 5.11 Taxes on Conversion. The Company will pay any and all
documentary stamp or similar issue or transfer Taxes payable in respect of the
issue or delivery of shares of Common Stock on conversion of the Notes pursuant
hereto.
Section 5.12 Reclassification, Consolidation, Merger or Sale. In case
of any reclassification or change of outstanding shares of Common Stock (other
than a change in par value, or as a result of a subdivision or combination), or
in case of any consolidation of the Company with, or merger of the Company with
or into, any other entity that results in a reclassification, change,
conversion, exchange or cancellation of outstanding shares of Common Stock or
any sale or transfer of all or substantially all of the assets of the Company,
each Holder of Notes then outstanding shall have the right thereafter to convert
the Notes held by the Holder into the kind and amount of securities, cash and
other property which the Holder would have been entitled to receive upon such
reclassification, change, consolidation, merger, sale or transfer if the holder
had held the Common Stock issuable upon the conversion of the Notes immediately
prior to the reclassification, change, consolidation, merger, sale or transfer.
ARTICLE VI
COVENANTS OF THE COMPANY
From the date hereof until all Notes issued pursuant hereto are no
longer outstanding, the Company covenants with the Purchasers and the Holders as
follows. These covenants are in addition to the covenants set forth in the Notes
themselves.
Section 6.1 Use of Proceeds. The Company shall use the net proceeds
received by it from the sale of Notes solely for the purpose of repaying in full
the Company's obligations to Howmedica, Inc. under that certain currently
outstanding Senior Secured Fixed Rate Loan Note due November 4, 2002. To the
extent that the net proceeds from the sale of the Notes are insufficient to
fully discharge the Howmedica Note, the Company shall use other funds available
to it to do so.
Section 6.2 Notice of Default. The Company shall furnish to the
Holders, promptly upon becoming aware of the existence of any condition or event
which constitutes a Default, written notice specifying the nature and period of
existence thereof and the action which the Company is taking or proposes to take
with respect thereto.
Section 6.3 SEC Reports; Information. (a) The Company shall file with
the SEC and, within 15 days thereafter, make available to the Holders, copies of
the annual report and of the information, documents and other reports specified
in Sections 13, 14 and 15(d) of the Exchange Act as being required of issuers
subject to the reporting requirements contained therein so long as the Notes are
outstanding (whether or not the Company would be required to file such reports
with the SEC in the absence of the requirements of this Section 6.3(a)). In
addition, the Company shall, upon the request of a Holder, provide a prospective
purchaser of the Notes with
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any reports or information required to permit the sale of the Notes to a
Qualified Institutional Buyer pursuant to Rule 144A under the Securities Act.
(b) The Company shall promptly provide such other information
concerning the business, properties or financial condition of the Company and
its Subsidiaries as the Purchaser or any Holder may reasonably request, it being
understood that if the Company is bound by a confidentiality obligation with
respect to such information or if the Company provides information which the
Company notifies the receiving party in writing is confidential, the Holder
receiving such information will also hold it confidential exercising the same
degree of care that it exercises for its own confidential information.
Section 6.4 Authorizations and Approvals. The Company shall and shall
cause its Subsidiaries to promptly obtain, from time to time at their own
expense, all such governmental and third party licenses, authorizations,
consents, permits and approvals as may be required to enable the Company to
comply in all material respects with its obligations under this Agreement and
the Notes.
Section 6.5 Payment of Principal and Interest. The Company covenants
and agrees that it will duly and promptly pay or cause to be paid the principal
of, and interest on, each of the Notes at the place or places, at the respective
times and in the manner provided in this Agreement and the Notes and that it
will comply with each and every of the other obligations set forth in the Notes.
In addition, following a Default or an Event of Default the Company shall pay,
upon demand therefor, all of the costs and expenses of the Holders (and any of
them) incurred in collecting any amounts payable under the Notes. All payments
shall be made by check or electronic wire transfer of immediately available
United States funds.
Section 6.6 Corporate Existence. The Company and its Subsidiary shall
do or cause to be done all things necessary to preserve and keep in full force
and effect the corporate existence of each of them, in accordance with its
respective organizational documents (as the same may be amended from time to
time) and its rights (charter and statutory), licenses and franchises; provided,
however, that neither the Company nor its Subsidiary shall be required to
preserve any such right, license or franchise if the Company's Board shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the Holders.
Section 6.7 Negative Covenants. So long as any amounts are owing under
this Note, neither the Company nor any of its Subsidiaries shall after the date
of this Agreement, without the written consent of the holders of at least 50.1%
in aggregate principal amount of all of the Notes issued pursuant to the Note
Purchase Agreement and outstanding, take any act to create, incur, assume,
guarantee or become liable, contingently or otherwise, on any Debt for borrowed
money except:
(i) the Company and/or its Subsidiaries (on a consolidated
basis) may incur unsecured Debt not in existence on the date of this Agreement
provided that the aggregate amount
- 17 -
of such Debt at any time outstanding does not exceed $1,000,000, it being
understood that unsecured repayment obligations in respect of commercial letters
of credit obtained in the ordinary course of business to pay trade payables
shall not count against such limit;
(ii) the Company and/or its Subsidiaries (on a consolidated
basis) may incur Debt from commercial banks solely for working capital needs and
secured solely by accounts receivable, provided the aggregate amount of such
working capital loans at any time outstanding does not exceed $5,000,000;
(iii) the Company and/or its Subsidiaries may incur Debt
secured by other Liens on its property only (i) under its credit facilities in
existence on the date of this Agreement within the limits of such facilities as
disclosed pursuant to the Schedule of Exceptions to Common Stock Purchase
Agreement, (ii) for Capitalized Lease Obligations, (iii) in favor of suppliers
of goods or equipment in the ordinary course of business, if the Liens granted
to such suppliers extend in each case only to such supplier and only for the
unpaid portion of the purchase price of the goods or equipment so supplied.
ARTICLE VII
CLOSING; CONDITIONS OF THE PURCHASERS' OBLIGATIONS
Section 7.1 Closing. Upon satisfaction of the conditions set forth
herein, each Purchaser shall pay the purchase price for the Note or Notes to be
purchased by such Purchaser on such Closing Date (as hereinafter defined) by
wire transfer of immediately available funds to the account designated by the
Company against delivery to each Purchaser of such Note or Notes issued in such
denominations as the Purchaser may request (the "Closing"). The Closing shall
take place at the same time and place as the "Closing" pursuant to the Common
Stock Purchase Agreement. The date on which the Closing occurs is referred to
herein as the "Closing Date".
Section 7.2 Conditions of the Purchaser's Obligations. The obligation
of each Purchaser to purchase and pay for the Notes to be purchased by it
hereunder on the Closing Date is subject to the satisfaction or waiver in
writing of each of the following conditions:
(a) Representations and Warranties; No Default. The
representations and warranties of the Company set forth in Article II shall be
true 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 Purchasers 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
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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 and no Default or Event of Default shall have
occurred and be continuing.
(b) Notes, Security Documents and Share Certificates for DML
The Purchasers shall have received the Notes, and all of the Security Documents
(including without limitation a duly executed mortgage of shares in form and
substance satisfactory to the Purchasers), all certificates representing
outstanding shares of stock of DML, duly endorsed in blank) and an opinion of
English counsel acceptable to the Purchasers in form and substance reasonably
satisfactory to the Purchasers with respect to the validity and priority of the
Liens created by and granted pursuant to the Security Documents.
(c) Closing Papers; Opinions. The Purchasers shall have
received the following, addressed to them and in form and substance reasonably
satisfactory to them:
(i) certified copies of the resolutions adopted by the Board
of the Company authorizing the execution, delivery and performance of this
Agreement, the Notes, the Security Documents and each of the other agreements,
instruments and transactions contemplated hereby and by the Notes, together with
certified copies of the resolutions adopted by a committee of disinterested
members of the Board approving the same and dated prior to the date of the
Common Stock Purchase Agreement;
(ii) certified copies of the certificate of incorporation and
By-laws of each of the Company and each of its Subsidiaries as in effect on the
Closing Date;
(iii) 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;
(iv) Officers' Certificates, dated as of the Closing Date of
the Company to the effect set forth in clause (a) of this Section 7.2; and
(v) the opinion of Xxxxxx & Xxxxxxx LLP, counsel for the
Company addressed to the Purchasers substantially in the form attached as
Exhibit F to the Common Stock Purchase Agreement.
(d) Documentation; Legal Matters, etc. All matters relating to
this Agreement, the Notes and the transactions contemplated hereby and thereby
and the legal and organizational structure of the Company and its Subsidiaries
shall be reasonably satisfactory from a legal point of view to the Purchasers
and their counsel, and the Purchasers shall have received such additional
certificates, legal opinions and other documentation as they may have reasonably
requested with respect to this Agreement, the Notes and the transactions
contemplated hereby and thereby, such legal and organizational structure and
compliance with the provisions of this Agreement, and
- 19 -
applicable law, including federal and state securities. All corporate and other
proceedings taken or to be taken in connection with the issuance of the Notes,
the transactions contemplated hereby and thereby and all documents incident
hereto and thereto shall be reasonably satisfactory in form and substance to the
Purchasers and their counsel and the Purchasers shall have received such other
documents relating to the transactions contemplated by this Agreement as the
Purchasers may have reasonably requested.
(e) Requisite Approvals. The Company shall have obtained all
requisite consents of or approvals from federal, state and any other
Governmental Authority and any other person necessary to consummate the
transactions contemplated by this Agreement and issue the Notes and permit the
utilization of the proceeds of the Notes as described herein.
(f) Compliance with Law; Margin Regulations. The issuance of
the Notes and the use of proceeds thereof as contemplated herein, shall not, in
the reasonable judgment of the Purchasers, violate any law or regulation or any
order or decree of any court or government instrumentality applicable to any
Purchaser or `the Company. After giving effect to the purchase of the Notes and
the use of proceeds thereof as contemplated hereby, the purchase of the Notes
shall not, in the reasonable judgment of the Purchasers, be prohibited by any
applicable law or governmental regulations (including Regulations G, T, U and X
of the Board of Governors of the Federal Reserve System).
(g) Satisfaction of the Howmedica Note; Discharge of Liens.
The Purchasers shall have received evidence satisfactory to the Purchasers that
the Howmedica Note has been fully satisfied, that all Liens granted by the
Company with respect thereto have been fully discharged, and that any stock
transfer powers granted with respect to the shares of DML have been cancelled.
ARTICLE VIII
EVENTS OF DEFAULT OF NOTES
Section 8.1 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of the principal of
any of the Notes, when the same shall become due and payable, whether at stated
maturity, upon redemption, upon acceleration or otherwise, including any failure
by the Company to repurchase any of the Notes when required pursuant to Section
4.3; or
- 20 -
(b) the Company defaults in the payment of any interest upon
any of the Notes or any other amount due hereunder, when the same becomes due
and payable; or
(c) the Company fails to perform or comply in any material
respect with the covenants contained in Article 6 of this Agreement and (except
for failure in respect of Sections 6.1, 6.2, 6.5 or 6.7 for which no further
notice is required) such default or breach continues for a period of 30 days
after written notice thereof has been given to the Company; or
(d) the Company defaults in the performance or observance of
any obligation, covenant, condition or provision binding on it under the
Security Documents or fails to add shares of DML for security when required
under Section 1.2 (v) of the Notes, and, in either case, except where such
default is not capable of remedy (in which case no such notice or continuation
as is hereinafter mentioned shall be required), such default continues for 7
days after written notice thereof has been given to the Company; or
(e) the Company fails to perform or comply in any material
respect with any other covenant or agreement contained herein (other than
Article X) or in the Notes and, unless such covenant or agreement contains a
specific time for performance or a shorter notice provision (in which case it
shall govern), such failure or non-compliance continues of a period of 60 days
after written notice, or
(f) the Company fails to comply with Article X; or
(g) (i) any present or future Debt of the Company or any
Subsidiary for or in respect of moneys borrowed or raised in excess of $50,000
(in the aggregate determined on a consolidated basis for the Company and its
Subsidiaries) becomes (or becomes capable of being declared) due and payable
prior to its stated maturity otherwise than at the option of the Company or the
Subsidiary; or (ii) any such Debt is not paid when due or, as the case may be,
within any applicable grace period; or (iii) the Company or any Subsidiary fails
to pay when due or expressed to be due any amount payable or expressed to be
payable by it under any present or future guarantee for any moneys borrowed or
raised in excess of $50,000 (in the aggregate determined on a consolidated basis
for the Company and its Subsidiaries); or (iv) any Lien, present or future,
created or assumed by the Company or any Subsidiary becomes enforceable and the
holder thereof takes any steps to enforce it; or
(h) the Company or any Subsidiary (i) is, or is deemed for the
purposes of any law to be, unable to pay its debts as they fall due or to be
insolvent, or admits inability to pay its debts as they fall due; or (ii)
suspends making payments on all or any class of its debts or announces an
intention to do so, or a moratorium is declared in respect of any of its Debt;
or (iii) by reason of financial difficulties, begins negotiations with all or
any class of its creditors with a view to the readjustment or rescheduling of
any of its Debt; or
(i) (i) any step (including petition, proposal or convening a
meeting) is taken with a view to a composition, assignment or arrangement with
all or any class of the creditors of the
- 21 -
Company or any Subsidiary; or (ii) a meeting of the Company or any Subsidiary is
convened for the purpose of considering any resolution for (or petition for) its
winding-up or its administration or any such resolution is passed; or (iii) any
person presents a petition for the winding-up of the Company or any Subsidiary
or the grant of an administration order (unless such petition is frivolous,
vexatious or an abuse of process and (in any such case) is discharged within 60
days); or (iv) any order for the winding- up or administration of the Company or
any Subsidiary is made; or (v) any other step (including petition, proposal or
convening a meeting) is taken with a view to the rehabilitation, administration,
custodianship, liquidation, winding-up or dissolution of the Company or any
Subsidiary or any other insolvency proceedings involving the Company or any
Subsidiary; or
(j) (i) any liquidator, trustee in bankruptcy, judicial
custodian, compulsory manager, receiver, administrative receiver, administrator
or the like is appointed in respect of the Company or any Subsidiary or any part
of its assets; or (ii) the Board of the Company or any Subsidiary requests the
appointment of a liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator or the
like; or (iii) any other steps are taken to enforce any security interest over
any part of the assets of the Company or any Subsidiary unless in the case of
any Lien of any nature whatsoever, the amount secured by it is less than 5% of
Consolidated Tangible Net Worth; or
(k) any attachment sequestration, distress or execution
affects any asset of the Company or any Subsidiary and is not lifted or
discharged within 14 days or, if both the aggregate amount of the relevant claim
and the aggregate market value of all assets subject to the relevant process are
less than 5% of Consolidated Tangible Net Worth, 30 days.
(l) the Company defaults in the performance of any of its
obligations with regard to registration rights of Holders under the Common Stock
Purchase Agreement.
A Default under the Notes or under clause (e) above is not an Event of
Default until the holders of at least 50.1% in principal amount of the Notes
notify the Company of the Default and the Company does not cure such Default
within the time specified after receipt of such notice. Such notice must specify
the Default, demand that it be remedied and state that such notice is a "Notice
of Default."
Section 8.2 Acceleration. If an Event of Default with respect to the
Company occurs and is continuing, the Holders of at least 50.1% in principal
amount of the Notes upon written notice to the Company may declare the principal
of and accrued interest on all the Notes to be due and payable without
presentment, demand or protest of any kind, all of which are expressly waived by
the Company. The Holders of at least 50.1% in principal amount of the Notes, by
notice to the Company may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured (except nonpayment of principal or interest
that has become due solely because of acceleration) or waived. No such
rescission shall affect any subsequent Default or impair any right arising
therefrom.
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Section 8.3 Application of Money Collected. Any money collected by any
Holder pursuant to this Article shall be applied in the following order:
FIRST: To the payment of all of the costs and expenses of
such Holder in collecting such amounts as provided
herein;
SECOND: To the payment of the amounts then due and unpaid in
respect of Interest and Default Interest; and
THIRD: To the payment of the amounts then due and unpaid in
respect of the Principal Amount.
Section 8.4 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent or subsequent assertion or employment of any other
appropriate right or remedy.
Section 8.5 Delay or Omission Not Waiver. No delay or omission of the
Holders to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Holders may be exercised from time to time, and as often as may
be deemed expedient, by the Holders.
Section 8.6 Waiver of Stay or Extension Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of any Note; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Holders but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 8.7 Waiver of Past Defaults. The Holders of at least 50.1% in
principal amount of the Notes then outstanding by notice to the Company may
waive any existing Default or Event of Default and its consequences except a
Default in the payment of the principal or interest on a Note. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any consequent right.
Section 8.8 Rights of Holders To Receive Payment. Notwithstanding any
other provision of this Agreement or the Notes, the right of any Holder to
receive payment of principal of and interest on the Notes held by such Holder,
on or after the respective due dates expressed in
- 23 -
the Notes, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
ARTICLE IX
SECURITY FOR NOTES AND REGISTRATION RIGHTS
Section 9.1 Provisions in Notes and Security Documents. The provisions
for the security for payment of the Notes and performance of the obligations
contained therein are set forth in the Notes and in the Security Documents.
Section 9.2 Incorporation by Reference of Registration Rights
Provisions. The provisions for registration rights with respect to the
Conversion Shares set forth in Section 10 of the Common Stock Purchase Agreement
are hereby incorporated by reference as if set forth herein in full and shall
constitute a covenant of the Company to the Holders hereunder.
ARTICLE X
CONSOLIDATION, MERGER AND SALE
The Company shall not merge or consolidate with any person and will not
sell, lease or convey all or substantially all of its assets to any person,
unless the Company shall be the surviving entity or the successor entity that
acquires all or substantially all of the assets of the Company or any
Subsidiary, as the case may be, shall be a corporation, partnership or limited
liability company or trust organized under the laws of the United States or a
State therein or the District of Columbia and such entity shall expressly assume
in writing all obligations of the Company under this Agreement, the Notes and,
to the extent applicable, the Common Stock Purchase Agreement. The Company shall
not and shall not permit any Subsidiary to merge or consolidate with any person
and will not sell, lease or convey all or substantially all of its assets to any
person unless immediately after giving effect to such merger, consolidation,
sale, lease or conveyance (a) no Default or Event of Default, and no event
which, after notice or lapse of time would become a Default or Event of Default,
shall have happened and be continuing and (b) the Company would be able to incur
at least $1.00 in Debt without violating the terms of any agreement or
instrument to which it is a party.
ARTICLE XI
TRANSFER OF THE NOTES
Section 11.1 Transfer of the Notes. No Holder shall sell, transfer,
assign or convey the Notes to any person unless such transfer is made pursuant
to an available exemption from registration under, or otherwise in compliance
with, the Securities Act and applicable state securities laws and the
requirements of Section 10.1 of the relevant Note have been satisfied.
- 24 -
Subject to the preceding sentence, the Holders shall not be prohibited
or limited in any respect from transferring any Note to or among Affiliates of
the Holders or pledging any such Note to a commercial bank or other
institutional lender or granting a participation in any such Note.
Each Purchaser hereby severally covenants and agrees that it will not
consent to any amendment of any participation agreement pursuant to which it
grants a participation in any Note that will amend the provision thereof
permitting such Purchaser to call or repurchase such participation at a call or
repurchase price equal to 100% of the principal amount thereof.
Section 11.2 Registration of Transfer. Each Note shall be issued in
registered form. Ownership of a Note shall be proved by the register to be
maintained pursuant to Section 11.3, and a Note shall be transferable only upon
the surrender of such Note for registration of transfer and subject to Section
3.2, duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the Holder thereof or such Holder's attorney duly authorized in
writing. Upon surrender of any Note for registration of transfer, the Company
will execute and deliver in exchange therefor a new Note, as the case may be, of
the same tenor and registered as such Holder may request. The Company may
require payment by such Holder of a sum sufficient to cover any stamp Tax or
governmental charge imposed in respect of any such transfer. Prior to due
presentment for registration or transfer of any Note, the Company or any paying
agent for the Notes, or any registrar or co-registrar for the Notes may deem and
treat the person in whose name a Note is registered as the absolute owner of
such Note for all purposes whatsoever, and none of the Company or such paying
agent, or such registrar or co-registrar shall be affected by notice to the
contrary.
Section 11.3 Register. The Company shall maintain a register of the
Holders of all the Notes issued pursuant to this Agreement. The Company will
allow any Holder of a Note to inspect and copy such list at the Company's
principal place of business during normal business hours.
ARTICLE XII
INDEMNITY
The Company agrees to indemnify each Purchaser, and its shareholders,
partners, directors, officers, employees, Affiliates and agents (collectively,
"Indemnified Persons") against, and agree to hold each such Indemnified Person
harmless from, any and all losses, claims, damages and liabilities, including
direct or derivative claims brought by any stockholder or former stockholder of
the Company and related expenses, including reasonable counsel fees and
expenses, incurred by such Indemnified Person arising out of, in any way
connected with, or as a result of (i) the consummation of the transactions
contemplated by this Agreement or the Notes, (ii) the use of any of the proceeds
of the Notes by the Company or the consummation of the transactions contemplated
by this Agreement, (iii) the performance by the parties hereto of their
respective obligations hereunder or (iv) any claim, litigation, investigation or
proceeding relating
- 25 -
to any of the foregoing, whether or not any Purchaser or any such person is a
party thereto; provided, however, that such indemnity shall not apply to any
such losses, claims, damages, liabilities or related expenses finally determined
by a court of competent jurisdiction to have arisen from the gross negligence or
willful misconduct of such Indemnified Person; provided further, however, the
indemnity set forth in this Article shall not apply to losses, claims, damages
or liabilities relating to (i) the payment or withholding of Taxes or (ii) the
actual or alleged failure by the Company to make any payment on the Notes,
whether of interest or principal or at maturity or otherwise or any other breach
by the Company of any representation, warranty or covenant under this Agreement,
the Common Stock Purchase Agreement, the Detachable Warrants or the Notes. If
any litigation or proceeding is brought against any Indemnified Person in
respect of which indemnity may be sought against the Company pursuant to this
Article, such Indemnified Person shall promptly notify the Company in writing of
the commencement of such litigation or proceeding, but the omission so to notify
the Company shall not relieve the Company, from any other obligation or
liability which it may have to any Indemnified Person otherwise than under this
Article XII unless the Company is materially prejudiced thereby. In case any
such litigation or proceeding shall be brought against any Indemnified Person
and such Indemnified Person shall notify the Company of the commencement of such
litigation or proceedings, the Company shall be entitled to participate in such
proceedings, and, after written notice to such Indemnified Person, will have the
right to assume control of any litigation for which indemnification is sought
and no settlement of any claim may be agreed to without the prior written
consent of the Company. However, any Indemnified Person shall have the right to
hire its own counsel for any reason; provided, however, that the fees and
expenses of such counsel shall be at the Indemnified Person's own expense unless
(a) the Company has agreed to pay such fees and expenses or (b) the Company
shall have failed properly to assume the defense in such action or proceeding
and employ counsel reasonably satisfactory to such Indemnified Person in any
such action or proceeding or (c) either (x) the named parties to such action or
proceeding include such Indemnified Person and the Company or such Indemnified
Person shall have been advised in writing by counsel reasonably satisfactory to
the Company that there may be one or more legal defenses available to such
Indemnified Person which are different from or in addition to those available to
the Company or (y) such Indemnified Person concludes that taking into account
the position of such Indemnified Person (or any Affiliate) as a lender to the
Company such Indemnified Person reasonably believes that it is advisable for
such Indemnified Person to employ separate counsel on its behalf, recognizing
that in such case the Company and its counsel shall remain primarily responsible
for the overall strategic control and direction of such action or proceeding. In
any case referred to in (b) or (c) above, if such Indemnified Person notifies
the Company in writing that it elects to employ separate counsel at the expense
of the Company, the Company shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Person, it being
understood, however, that the Company shall not in connection with any one such
action or proceeding, or separate but substantially similar proceedings or
related actions or proceedings arising out of the same general allegations or
circumstances be liable for the fees and expenses of more than one separate firm
of attorneys, together with appropriate local counsel (but not more than one
separate firm of attorneys per state), at a time for all Indemnified Persons.
The
- 26 -
foregoing indemnity shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated by this Agreement, the repayment of any of the
Notes, the invalidity or unenforceability of any term or provision of this
Agreement or the Notes, any investigation made by or on behalf of any
Indemnified Person or the Company, and the content or accuracy of any
representation or warranty made under this Agreement. All amounts due under this
Article XII shall be payable as incurred upon written demand therefor.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Expenses: Documentary Taxes. In the Common Stock Purchase
Agreement the Company has agreed to pay a certain amount towards the expenses of
counsel for the Purchasers, in connection with the negotiation and preparation
of the Common Stock Purchase Agreement and related documents, including this
Agreement. The Company agrees to pay in addition (a) all reasonable
out-of-pocket expenses of the Holders, including the reasonable fees and
disbursements of counsel for the Holders, all additional and subsequent
documentation contemplated hereby, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof or any Default or Event of Default or alleged
Default or Event of Default hereunder or thereunder, (b) if a Default or Event
of Default occurs, all reasonable out-of-pocket expenses incurred by the
Holders, including fees and disbursements of counsel, in connection with such
Default or Event of Default and collection and other enforcement proceedings
resulting therefrom, including, without limitation, costs and expenses incurred
in a bankruptcy case and (c) the reasonable out-of-pocket expenses of holders of
participations in Notes or Notes in connection with any waiver or consent
hereunder or any Default or Event of Default or alleged Default or Event of
Default hereunder. Notwithstanding the foregoing, (i) in any instance, the
Company will pay the reasonable fees and expenses of only one counsel and one
local counsel and (ii) if more than one Holder retains counsel and requests
reimbursement, the Company will pay reasonable fees and expenses only of counsel
(and local counsel) for the holder of the largest aggregate principal amount of
Notes outstanding. The Company shall indemnify the Holders against any transfer
Taxes, documentary Taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement and the
Notes. The obligations of the Company under this Section 13.1 shall survive
transfer by the Purchaser of the Notes.
Section 13.2 Notices. All notices and other communications pertaining
to this Agreement or the Notes 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 to have been duly 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:
- 27 -
(i) If to a Purchaser, to the address and fax numbers set
forth below its name on the signature pages hereto:
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
(i) If to the Company:
Diametrics Medical, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Chairman, CEO and President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other person or address as shall be furnished to the other party in
writing.
Section 13.3 Consent to Amendments and Waivers. The provisions of this
Agreement may be amended and the Company may take any action herein prohibited,
or omit to perform any action herein required to be performed by it, only if the
Company has obtained the written consent of 50.1% in aggregate principal amount
of the outstanding Notes; provided, however, that no amendment, modification or
waiver shall be effective unless consented to in writing by the Holder of such
Note if such amendment, modification or waiver would (a) modify any requirement
hereunder or under the Note that any specified action be taken by Holders of a
specified percentage of the principal amount of the Notes shall be effective
unless consented to by such percentage of Holders, (b) change the due date for,
or reduce the amount of, any payment or prepayment of principal of or premium or
interest on any Note (or reduce the principal amount of or rate of interest on
any Note), (c) change the place or currency of payment of principal of, or
premium or interest on any Note, or (d) impair the right to institute legal
proceedings for the
- 28 -
enforcement of any payment on or with respect to any Note on or after the
occurrence of a Redemption Event. No course of dealing between the Company and
any Purchaser or any subsequent Holder of any Note or any delay in exercising
any rights hereunder or under any Note shall operate as a waiver of any rights
of such Purchaser or any subsequent Holder. Any consideration given to any
Holder to obtain its consent shall be given pro rata to all such Holders of a
Note or Notes whether or not they give consent. Each Holder of any Note at the
time or thereafter outstanding shall be bound by any consent authorized by this
paragraph, whether or not such Note shall have been marked to indicate such
consent, but any Note issued thereafter may bear a notation referring to any
such consent. The foregoing notwithstanding, the parties hereto agree that they
will not amend, modify or supplement (i) Section 8.7 hereof or (ii) this
sentence.
Section 13.4 Parties. This Agreement shall inure to the benefit of and
be binding upon the parties hereto, each subsequent Holder and each of their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, other than the parties hereto
and their respective successors, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto, any subsequent Holder and
their respective successors, and for the benefit of no other person.
Notwithstanding the foregoing and subject to Section 3.2 of this Agreement, a
Purchaser may, without the consent of the Company grant participations in the
Notes.
Section 13.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota but without
giving effect to applicable principles of conflicts of laws to the extent that
the application of the laws of another jurisdiction would be required thereby.
Section 13.6 Replacement Notes. If any Note becomes mutilated and is
surrendered by the Holder thereof to the Company or if the Holder thereof claims
that any Note has been lost, destroyed or wrongfully taken, the Company shall
execute and deliver to such Holder a replacement Note, upon the affidavit of the
Holder thereof attesting to such loss, destruction or wrongful taking with
respect to such Note. Such affidavit shall be accepted as satisfactory evidence
of the loss, wrongful taking or destruction thereof, but a reasonable indemnity
may be required as a condition for the execution and delivery of a replacement
Note. The Company may charge the Holder of any mutilated, lost, destroyed or
wrongfully taken Note for expenses incurred by it in replacing such Note.
Section 13.7 Severability Clause. In case any provision in this
Agreement or any Note shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
Section 13.8 Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties and agreements contained in or
incorporated into this Agreement, or
- 29 -
contained in certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Purchaser or any controlling person of
any Purchaser, or by or on behalf of the Company, and shall survive delivery of
the Notes and any transfer thereof other than any such transfer subsequent to
the effectiveness of a registration statement under the Securities Act (except
with respect to any representation or warranty which the Purchasers have
knowledge is untrue and have waived in writing). The representations
incorporated by reference in Section 2.1 hereof shall be subject to the same
survival limitations as apply to them under the Common Stock Purchase Agreement
and the representations set forth in Section 2.2 shall survive indefinitely.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE COMPANY:
------------
DIAMETRICS MEDICAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Title: Chairman, President and CEO
THE PURCHASERS:
---------------
[see attached signature pages]
PURCHASER:
BCC ACQUISITION II LLC
By: THE BAY CITY CAPITAL
FUND I, L.P.
Its: Manager
By: Bay City Capital Management LLC
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name:
Title:
[This is a signature page to the Note Purchase Agreement]
PURCHASER:
XXXXXX X. XXXX REVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Trustee
[This is a signature page to the Note Purchase Agreement]
PURCHASER:
XXXXXX X. AND XXXXXX X. XXXX MEMORIAL
FOUNDATION
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice Pres. Summit Bank, Trustee
[This is a signature page to the Note Purchase Agreement]
PURCHASER:
AEOW 96, LLC
By: /s/ Will X. Xxxxxxxxx
Name: Will X. Xxxxxxxxx
Title:
[This is a signature page to the Note Purchase Agreement]
EXHIBIT 1
[Form of Convertible Senior Secured Fixed Rate Note]
EXHIBIT 2
WARRANT REGISTRATION RIGHTS AGREEMENT
This Warrant Registration Rights Agreement (this "Agreement"), dated as
of [Date], is made by and between [Purchaser of Diametrics Medical, Inc.] (the
"Company") and the Persons whose signatures appear on the signature pages hereto
as of the date hereof.
R E C I T A L S:
A. This Agreement is made pursuant to the [Name of Purchase Agreement]
dated as of the date hereof (the "Purchase Agreement") between the Company and
Diametrics Medical, Inc. ("DMI"). Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement.
B. The Purchase Agreement provides the Company's [Describe Purchase
Agreement].
C. As part of that Note Purchase Agreement dated August 4, 1998 between
DMI and the Holder(s) (as hereinafter defined), DMI agreed that, if DMI entered
into an agreement with a company similar to the Purchase Agreement, Company
would be required, as a non-waivable condition of closing of DMI to the Purchase
Agreement to (i) issue certain detachable Warrants (as defined below) to the
Holder(s) and (ii) execute this Agreement in favor of the Holder(s).
D. In order to permit DMI to close under the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement to the Holder(s).
NOW,THEREFORE, the parties hereby agree as follows:
1. Definitions. In addition to terms defined elsewhere in this Agreement, as
used in this Agreement, the following capitalized terms shall have the following
meanings:
"Common Stock" means the common stock of the Company, with a par value
of $[__] per share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar or successor federal statute and the rules and regulations of the
SEC promulgated thereunder, all as the same shall be in effect at the time.
"Holder" means any Person who executes a counterpart of this Agreement
on or after the date hereof and any Person who becomes a Holder after the date
of this Agreement pursuant to Paragraph 14(a).
"Indemnified Party" has the meaning set forth in Paragraph 8(c).
"Indemnifying Party" has the meaning set forth in Paragraph 8(c).
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof, or any other entity of any kind.
"Registered Securities" means Registrable Securities which have been
registered under the Securities Act pursuant to a registration statement filed
with and declared effective by the SEC.
"Registrable Securities" means (i) the Warrants; (ii) the shares of
Common Stock issued or issuable on exercise of the Warrants; and (iii) any other
security issued or issuable in exchange for, or in replacement of, any of the
Warrants, in each case until any such security ceases to be a Registrable
Security in accordance with Paragraph 2 hereof.
"Registration Expenses" means all expenses (excluding Selling Expenses)
incident to the Company's performance of or compliance with Paragraphs 3, and 4
of this Agreement, including without limitation all registration and filing
fees, including fees with respect to filings required to be made with any stock
exchange or the NASD, fees and expenses of compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities),
messenger, telephone and delivery expenses, and the fees and expenses of counsel
for the underwriter, costs of printing prospectuses, and fees and disbursements
of counsel for the Company and of all independent certified public accountants
of the Company (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance).
"Registration Statement" means any registration statement of the
Company which includes any of the Registrable Securities pursuant to the
provisions of this Agreement, including the prospectus included or deemed
included in the Registration Statement and all amendments and supplements to the
Registration Statement or the prospectus, including post-effective amendments,
and all exhibits to, and all materials incorporated by reference in, the
Registration Statement.
"SEC" means the United States Securities and Exchange Commission or any
similar agency then having the authority to enforce the Exchange Act or the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar or successor statute, and the rules and regulations of the SEC
promulgated thereunder, all as the same shall be in effect at the time.
"Selling Expenses"means (i) all fees and expenses of counsel and
accountants for the Holder(s), (ii) all discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities, (iii)
transfer taxes and (iv) any other expenses of the Holder(s) incident to this
Agreement (excluding Registration Expenses).
"Selling Holder(s)" has the meaning set forth in Paragraph 6(b).
"Warrant" means a warrant in the form of Exhibit A attached hereto.
2. Securities Subject to this Agreement. The securities entitled to the benefits
of this Agreement are the Registrable Securities, but such benefits shall
continue with respect to each such security only so long as such security
continues to be a Registrable Security. A security ceases to be a Registrable
Security when (a) a Registration Statement covering the sale of such Registrable
Security has been declared effective under the Securities Act and the
Registrable Security has been sold in accordance with the Registration
Statement; (b) it is distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act; (c) a new certificate
representing such security has been delivered (to the original Holder or any
subsequent transferee) by the Company free from any restrictive legend and
without issuance of stop transfer or other instructions to the Company's
transfer agent and the Holder of such security has been advised by counsel
reasonably acceptable to it that subsequent disposition of such security will
not require registration or qualification under the Securities Act then in
effect; or (d) the security has ceased to be outstanding.
3. Shelf Registration.
(a) The Company shall file within 60 days following the date hereof
with the SEC, and shall use its best efforts to cause the SEC to promptly
declare effective, a Registration Statement relating to the Registrable
Securities, which Registration Statement shall provide for the sale by the
holders thereof of the Registrable Securities from time to time on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (the "Shelf
Registration").
(b) The foregoing notwithstanding, the Company shall have the right in
order to avoid the disclosure of any corporate development that the Company is
not otherwise obligated to disclose to delay the filing of the Registration
Statement with respect to the Shelf Registration for a reasonable length of time
(a "Delay Period"); provided, that the aggregate number of days in the Delay
Period shall not exceed 30. The Company shall provide written notice to each
holder of Registrable Securities to be covered by the Shelf Registration of the
beginning and end of the Delay Period.
(c) Failure to file a Registration Statement or cause such Registration
Statement to become effective pursuant to the provisions of this Section 3 by
reason of delays caused by any of the Holder(s) in connection with their rights
set forth in Section 6(l) of this Agreement shall not result in a breach of this
Section 3.
(d) To the extent that the holders of Registrable Securities would not
be adversely effected, the Company may include other securities in such Shelf
Registration (whether for the account of the Company or otherwise, including
without limitation any securities of the Company held by security holders, if
any, who have piggyback registration rights with respect thereto) or otherwise
combine the offering of the Registrable Securities with any offering of other
securities of the Company (whether for the account of the Company or otherwise).
4. Registration under the Securities Act: Piggy-Back Registration.
(a) Piggy-Back Registration. If at any time the Company proposes to
register for itself or any of its stockholders any of its capital stock under
the Securities Act in connection with the public offering of such securities on
a form and in a manner that would permit registration of Registrable Securities
for sale to the public under the Securities Act, then:
(i) the Company in each case will notify in writing each
Holder of the filing or intended filing of a Registration Statement in
connection therewith prior to the proposed effective date thereof;
(ii) the Company will offer each Holder the opportunity to
include in such registration all or such lesser amount of Registrable Securities
as each Holder may request. Upon the request of one or more Holder(s) given in
writing within 20 days after receipt of the notice described under clause (i)
above, the Company, subject to the provisions of Paragraph 4(b), shall cause any
of the Registrable Securities specified by such Holder to be included in the
Registration Statement; and
(iii) if the registration of which the Company gives written
notice under clause (i) above involves an underwriting, the Company shall use
its best efforts to cause the managing underwriter(s) of the proposed
underwritten offering to permit each Holder to include their Registrable
Securities in the underwriting on the same terms and conditions as similar terms
of the Company included therein.
(b) Limitations on the Company's Obligations to Effect Piggy-Back
Registration. Notwithstanding the provisions of Paragraph 4(a) above:
(i) if and to the extent that the managing underwriter(s)
advise the Company in writing that, in its good faith determination, inclusion
of the number of Registrable Securities held by Holder(s) requesting inclusion
in the Registration Statement would materially interfere with the underwriter's
ability to effectuate the registration and sale of securities proposed to be
offered and sold pursuant to the Registration Statement, the managing
underwriter(s) shall select the permissible quantity of Registrable Securities
to be sold by the Holder(s) (which may be none) by reducing the total number of
securities to be sold by the holders of securities other than Registrable
Securities and the Holder(s) on a pro rata basis; provided, however, that no
such reduction may reduce the securities being offered by the Company for its
own account. For purposes of apportionment pursuant to this Paragraph 4(b), for
any selling holder that is a partnership or a corporation, the affiliates of
such partnership or corporation shall collectively, with such holder be deemed
to be one "selling holder," and any pro rata reduction with respect to such
"selling holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by entities and individuals included in such "selling
holder"; and
(ii) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the effective date of
the applicable Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and thereupon shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration.
(c) Underwritten Offer. If the registration of which the Company gives
written notice under Paragraph 4(a)(i) above involves an underwriting, the
Company shall so advise in such written notice. In such event the right of any
Holder to registration pursuant to Paragraph 4(a) shall be conditioned upon such
Holder(s)'s participation in such underwriting and the inclusion of such
Holder's Registrable Securities in such underwriting. All Holder(s) proposing to
distribute their Registrable Securities through such underwriting shall
(together with the
Company and the other holders distributing their Registrable Securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw from the underwriting by prompt written notice to the Company
and the underwriter.
5. Registration Obligations of the Company. In connection with the filing of a
Registration Statement pursuant to Paragraphs 3 and 4 the Company shall:
(a) Use its best efforts to cause such Registration Statement to remain
in effect until the earlier of (i) the completion of the distribution of the
Registrable Securities included in the Registration Statement, and (ii) two
years after the date on which the Registration Statement is declared effective.
(b) Notify the Holder(s) whose Registrable Securities are included in
such Registration Statement (the "Selling Holder(s)") as to the filing of the
Registration Statement and of all amendments or supplements thereto filed prior
to the effective date of such Registration Statement;
(c) Notify the Selling Holder(s), promptly after the company shall
receive notice thereof, of the time when such Registration Statement became
effective or when any amendment or supplement to any prospectus forming a part
of said Registration Statement has been filed;
(d) Notify the Selling Holder(s) promptly of any request by the SEC for
the amending or supplementing of such Registration Statement or prospectus or
for additional information;
(e) During the period in which the Company is obligated to use its
reasonable best efforts to keep a Registration Statement effective pursuant to
this Paragraph 5, prepare and promptly file with the SEC and promptly notify the
Selling Holder(s) of the filing of any amendments or supplements to such
Registration Statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act, any
event with respect to the Company shall have occurred as a result of which any
such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading; and, in addition, during such
period, prepare and file with the SEC, promptly upon the Selling Holder(s)'
written request, any amendments or supplements to such Registration Statement or
prospectus which may be reasonably necessary or advisable in connection with the
distribution of the Registrable Securities;
(f) Prepare promptly upon request of the Selling Holder(s) or any
underwriters for the Selling Holder(s) made during the period in which the
Company is obligated to use its best efforts to keep a Registration Statement
effective, such amendment or amendments to such Registration Statement and such
prospectus or prospectuses as may be reasonably necessary to permit compliance
with the requirements of Section 10(a)(3) of the Securities Act;
(g) Advise the Selling Holder(s) promptly after the Company shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
suspending the effectiveness of
any such Registration Statement or amendment thereto or of the initiation or
threatening of any proceeding for that purpose, and promptly use its reasonable
best efforts to prevent the issue of any stop order or obtain its withdrawal
promptly if such stop order should be issued;
(h) Use its best efforts to qualify as soon as reasonably practicable
the Registrable Securities for sale under the securities or blue sky laws of
such states and jurisdictions within the United States as shall be reasonably
requested by the Selling Holder(s); provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business, to become subject to taxation or to file a consent to service of
process generally in any of the aforesaid states or jurisdictions;
(i) Furnish the Selling Holder(s), as soon as available, copies of any
Registration Statement and each preliminary or final prospectus, or supplement
or amendment required to be prepared pursuant hereto, all in such quantities as
the Selling Holder(s) may from time to time reasonably request;
(j) Furnish the Selling Holder(s) with copies of such opinions of
counsel and accountants' "comfort" letters as it reasonably may request with
respect to the registration of its Registrable Securities, the Registration
Statement covering such Registrable Securities and the financial statements
included therein;
(k) Apply for listing and use its best efforts to list the Registrable
Securities, if any, being registered on any national securities exchange on
which a class of the Company's equity securities is listed (and to maintain such
listing during the pendency of the relevant registration period) or, if the
Company does not have a class of equity securities listed on a national
securities exchange, apply for qualification and use its reasonable best efforts
to qualify the Registrable Securities, if any, being registered for inclusion on
the automated quotation system of the NASD (and to maintain such qualification
during the pendency of the relevant registration period);
(l) In connection with the preparation and filing of each Registration
Statement registering Registrable Securities under the Securities Act, give the
holders of Registrable Securities on whose behalf such Registrable Securities
are to be so registered and their underwriters, if any, and their respective
counsel and accountants, the opportunity to participate in the preparation of
such Registration Statement, each prospectus included therein or filed with the
SEC, and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders and such underwriters, or their respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act; and
(m) Make senior executives of the Company reasonably available to
assist the underwriters with respect to, and accompanying the underwriters on
the so-called "road show", in connection with marketing efforts for, and the
distribution and sale of Registrable Securities pursuant to a Registration
Statement in connection with an underwritten public offering.
6. Expenses. The Company will pay all Registration Expenses in connection with
registrations of Registrable Securities effected pursuant to Paragraphs 3 and 4.
All Selling
Expenses in connection with any registration effected pursuant to this Agreement
shall be borne by the Holder(s).
7. Indemnification.
(a) To the extent permitted by applicable law, the Company will
indemnify each Holder of the Registrable Securities requesting or joining in a
registration, each Person who controls such Holder within the meaning of Section
15 of the Securities Act, and each underwriter of the securities so registered
and each person who controls such underwriter, and their respective officers,
directors, partners, agents, employees and successors (each a "Section 7(a)
Indemnitee"), against all costs, expenses, demands, claims, losses, damages,
liabilities, fines and penalties (or actions in respect thereof), to which such
Section 7(a) Indemnitee may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such claims, losses, damages, liabilities,
fines and penalties arise out of or are based on any untrue statement (or
alleged untrue statement) of a material fact contained in any Registration
Statement or prospectus, or arise out of or are based upon any omission (or
alleged omission) to state therein a fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law and will reimburse each such
Section 7(a) Indemnitee for (and will make periodic advances to cover) any legal
and any other expenses reasonably incurred in connection with investigating or
defending any such demand, claim, loss, damage, liability or action promptly
after submission of supporting materials with respect to such expenses;
provided, however, that the Company shall not be required to indemnify any
Section 7(a) Indemnitee for any cost, expense, demand, claim, loss, damage,
liability, fine or penalty which arises out of or is based upon (i) any written
information provided by any such Section 7(a) Indemnitee, respectively,
expressly for inclusion in the Registration Statement or (ii) the circumstances
set forth in clause (y) of paragraph (b) below.
(b) To the extent permitted by applicable law, each Holder requesting
or joining in a registration, severally and not jointly, will indemnify the
Company, each of its officers, directors, employees, agents, successors and
controlling persons (within the meaning of Section 15 of the Exchange Act)
(each, a "Section 7(b) Indemnitee"), against all costs, expenses, demands,
claims, losses, damages, liabilities, fines and penalties (or actions in respect
thereof) to which such Section 7(b) Indemnitee may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities, fines and penalties arise out of or are based upon an
untrue statement (or alleged untrue statement) of a material fact contained in
any Registration Statement or prospectus, or arise out of or are based upon (x)
the omission (or alleged omission) to state therein a 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 any Registration
Statement or prospectus in reliance upon and in conformity with information
furnished to the Company by such Holder requesting or joining in a registration
specifically for use in the preparation thereof, or (y) any untrue statement or
alleged untrue statement of a material fact contained in, or any omission or
alleged omission of a material fact from, a prospectus if (i) a later prospectus
corrected the untrue statement or alleged untrue statement, or omission or
alleged omission, (ii) at such time the Company had advised the Holder of the
availability of the revised prospectus, and (iii) there would have been no such
liability had such
later prospectus actually been delivered to the purchaser at or prior to
confirmation of sale; provided, however, that the obligations of such Holder(s)
hereunder shall be limited to an amount equal to the proceeds to each Holder of
the Registrable Securities sold in connection with such registration.
(c) Each party entitled to indemnification under this Paragraph 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim 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 such 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 or delayed). The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of the Indemnified Party if (i) the
Indemnifying Party has agreed in writing to pay such expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such claim or
employ counsel reasonably satisfactory to the Indemnified Party, or (iii) in the
reasonable judgment of the Indemnified Party, based upon the written advice of
such Indemnified Party's counsel, representation of both parties by the same
counsel would be inappropriate due to actual or potential conflicts of interest.
In the event that the Indemnifying Party properly does not assume such defense,
the Indemnifying Party shall not be subject to any liability for any settlement
made without its prior written consent, which consent shall not be unreasonably
withheld or delayed. The failure of any Indemnified Party to give notice as
provided herein shall relieve the Indemnifying Party of its obligations under
this Paragraph 7 only to the extent that such failure to give notice shall
materially adversely prejudice the Indemnifying Party in the defense of any such
claim or any such litigation. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the prior written 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 to such claim or litigation in form and substance reasonably
satisfactory to such Indemnified Party.
8. Contribution.
(a) If the indemnification provided for in Paragraph 7 from the
Indemnifying Party is unavailable to or unenforceable by the Indemnified Party
in respect to any losses, claims, damages, liabilities or expenses referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set
forth in Paragraph 7, any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
(b) The Company and the Holder(s) agree that it would not be just and
equitable if contribution pursuant to this Paragraph 8 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(c) If Indemnification is available under Paragraph 7, the Indemnifying
Parties shall indemnify each Indemnified Party to the full extent provided in
Paragraph 7 without regard to the relative fault of the Indemnifying Party or
Indemnified Party or any other equitable consideration provided for in this
Paragraph 8.
9. Holdback Agreements.
(a) Restrictions on Public Sale by Holder of Registrable Securities. To
the extent requested by the Company and the managing underwriter with respect to
the applicable Registration Statement, each Holder whose Registrable Securities
are included in a Registration Statement filed pursuant to Paragraphs 3 and 4
hereof agrees not to effect any public sale or distribution of the issue being
registered or any similar security of the Company, including a sale pursuant to
Rule 144 or Rule 144A under the Securities Act, during the seven (7)-day period
prior to, and during the 90-day period beginning on, the effective date of such
Registration Statement, to the extent such sales may prevent the Company from
being in compliance with the Exchange Act; provided, however, that all officers
and directors of the Company enter into similar agreements. Such agreement shall
be in writing reasonably satisfactory to the Company and such managing
underwriter.
(b) Restrictions on Public Sale by the Company and Others. The Company
shall not make any public or nonpublic sale or distribution of any securities of
the same class as those being registered, or any securities convertible into or
exchangeable or exercisable for any such securities, during the seven day period
prior to, and during the 60-day period beginning on, the effective date of any
Registration Statement in which holders of Registrable Securities are
participating or the commencement of a public distribution of Registrable
Securities pursuant to any such Registration Statement (except (i) as part of
such registration or pursuant to registrations on XXX Xxxxx X-0 or S-8 or any
similar or successor form, or on any form filed in connection with an exchange
offer or an offering of securities solely to the existing stockholders or
employees of the Company or (ii) for sales or other issuances of securities
pursuant to outstanding options, warrants, rights or similar obligations).
10. Rule 144 and Stock Exchange Listings. To the extent that the Company is
subject to the filing and reporting requirements of the Securities Act and the
Exchange Act, and so long as there are Registrable Securities outstanding:
(a) The Company will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, and will take such further action as any holder of
Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 or Rule 144A under the Securities
Act, as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such information and requirements
(b) The Company will use its best efforts to avoid taking any action
which would cause the Common Stock to cease to be eligible for inclusion on
either of the NASD Automated Quotation System or for listing on any securities
exchange on which it may become listed.
11. Obligations of Holder.
(a) Each Holder of Registrable Securities included in any registration
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder, and shall otherwise use reasonable best
efforts to cooperate with the Company and any underwriter(s), as the Company may
reasonably request and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
(b) Each Holder of the Registrable Securities agrees by acquisition of
such Registered Securities that upon receipt of any notice from the Company
pursuant to Paragraph 5(g), such Holder will forthwith discontinue such Holder's
disposition of Registered Securities pursuant to the Registration Statement
relating to such Registered Securities under such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Paragraph 5(g) and if
so directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the prospectus relating to such Registered Securities at the time
of receipt of such notice.
12. Mergers, etc. The Company shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the
surviving corporation unless the surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to include the securities
which the Holder(s) would be entitled to receive in exchange for Common Stock
under any such merger, consolidation or reorganization, provided that to the
extent such securities to be received are convertible into shares of common
stock of the issuer thereof, then any such shares of common stock or other
securities as are issued or issuable upon conversion of said convertible
securities shall also be included within the definition of "Registrable
Securities."
13. Miscellaneous.
(a) Transfer of Certain Rights. The rights granted to the Holder(s)
under this Agreement may be transferred only to a transferee who delivers to the
Company, within a reasonable time after such transfer, a written instrument by
which such transferee agrees to be bound by the applicable terms of this
Agreement. Notwithstanding the foregoing, nothing herein shall prohibit: (i) any
Holder from transferring any of its rights under this Agreement to any
wholly-owned subsidiary of such Holder or to any entity which merges or
consolidates with or acquires all or substantially all of the equity securities
or assets of such Holder, (ii) any Holder
which is a partnership from transferring any of its rights under this Agreement
to a partner of such partnership where such partner receives Registrable
Securities in a distribution from such partnership, (iii) any Holder who is an
individual from transferring any of its rights under this Agreement to such
Holder's spouse or to other relatives, or to a trust for the benefit of the
Holder, or his or her spouse or other relatives; or (iv) any trustee of a trust
which holds Registerable Securities from distributing such Registrable
Securities to the beneficiaries of such trusts; provided that any such
transferee under subparagraphs (i), (ii), (iii) or (iv) above will hold the
Registrable Securities subject to the terms and conditions of this Agreement.
Upon any transfer of the rights of a Holder permitted by and completed in
compliance with the terms of this Agreement, the transferee shall become a
"Holder" for purposes of this Agreement.
(b) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the written consent of the
Company and Holder(s) of at least a majority of the Registrable Securities
affected by such amendment, modification, supplementation, waiver or consent.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter which relates exclusively to the
rights of Holder(s) of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and which does not directly or indirectly
affect the rights of other Holder(s) of Registrable Securities may be given by
the Holder(s) of a majority of the Registrable Securities being sold by such
Holder(s), provided that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be delivered by hand,
overnight courier service, registered or certified first-class mail, return
receipt requested, or telecopier; if to a Holder, at the address set forth
opposite such Holder's name on the signature pages attached hereto or such other
address as may have been furnished to the Company in writing; if to the Company,
at 0000 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: President and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Paragraph 13(d).
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; one business day after
sent if sent by courier service.
(e) No Inconsistent Agreements. The Company shall not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
To the extent the Company on or after the date of this Agreement grants any
superior or more favorable rights or terms to any Person with respect to its
securities,
any such superior or more favorable rights or terms shall also be deemed to have
been granted simultaneously to the holders of Registrable Securities. The
Company agrees to deliver to representatives of the initial Holder(s) hereunder,
upon the request of such initial Holder(s), copies of all agreements which it
has previously entered into or become a party to, or by which it is bound, with
respect to its securities granting any registration rights to any Person which
is inconsistent with the rights granted hereunder. The rights granted to the
holders of Registrable Securities hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the securities of
the Company under any other agreements.
(f) Governing Law; Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota without
regarding to the conflict of laws provisions thereof. The parties irrevocably
agree that all actions arising directly or indirectly as a result or in
consequence of this Agreement and the transactions contemplated hereby, shall be
instituted and litigated only on federal, state or local courts sitting in the
City of Minneapolis, Minnesota and each of the parties hereby consents to the
exclusive jurisdiction and venue of any such court, and waives any objection
based on forum nonconveniens.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provisions in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement and the Purchase Agreement (and
all exhibits and/or schedules attached hereto and thereto) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities now or hereafter owned by the Holder(s).
(k) Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the date first above written.
[PURCHASER]
By: ________________________
Its: ________________________
HOLDERS:
If an individual:
___________________________
Signature
___________________________
Print Name
If an entity:
___________________________
Print Name of Entity
By: ________________________
Its: ________________________
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT 3
[PURCHASER OF DIAMETRICS MEDICAL, INC.]
[DETACHABLE] STOCK PURCHASE WARRANT
THE WARRANTS EVIDENCED HEREBY AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED OR SOLD WITHOUT REGISTRATION UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE UNDER SUCH ACT OR THE RULES OR REGULATIONS PROMULGATED
THEREUNDER.
--------- --, -----
WARRANT
To Subscribe for and Purchase Common Stock of [Purchaser of Diametrics
Medical, Inc.]
VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON JULY ___, 2003, OR IF NOT A
BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK CITY TIME, ON THE
IMMEDIATELY PRECEDING BUSINESS DAY
This certifies that, for valuable consideration, receipt of which is
hereby acknowledged, each of the "Purchasers" under the Note Purchase Agreement
by and among Diametrics Medical, Inc., a Minnesota corporation, and the
Purchasers signatories thereto, dated as of August 4, 1998 (the "Note Purchase
Agreement"), and permitted successors and assigns of any of them ("Holders"; and
each individually, a "Holder") is entitled to purchase from [Purchaser of
Diametrics Medical, Inc.], a ___________ ________________ (the "Company") up to
and including such number of fully paid and nonassessable shares of the common
stock of the Company, [____] par value (the "Common Stock") as such Holder would
have been entitled to receive had such Holder exercised its conversion rights
under Section 4.4 or Article V of the Note Purchase Agreement immediately prior
to the Redemption Event (as defined in the Note Purchase Agreement) which has
entitled such Holder to receive this Warrant (the "Number of Shares"), on the
terms set forth herein at an exercise price per share equal to $[_____] (the
"Purchase Price"). The Number of Shares and the Purchase Price may be adjusted
from time to time as described in this Warrant.
1. Exercise.
1.1 Time for Exercise. This Warrant may be exercised in whole or in
part at any time, and from time to time, during the period commencing on the
date of this Warrant and expiring on July __, 2003.
1.2. Manner of Exercise. This Warrant shall be exercised by delivering
it to the Company with the exercise form duly completed and signed, specifying
the number of shares as to which the Warrant is being exercised at that time
(the "Exercise Number"). The Holder shall simultaneously deliver to the Company
cash or a certified check or wire transfer in an amount
equal to the Exercise Number multiplied by the Purchase Price, and the Holder
shall be entitled to receive the full Exercise Number of shares of Common Stock.
1.3 Effective Date of Exercise. Promptly (but in any case within ten
(10) business days) after any exercise, the Company shall deliver to the Holder
(a) duly executed certificates in the name or names specified in the exercise
notice representing the aggregate number of shares issuable upon such exercise,
and (b) if this Warrant is exercised only in part, a new Warrant of like tenor
exercisable for the balance of the Number of Shares. Such certificates shall be
deemed to have been issued, and the person receiving them shall be deemed to be
a holder of record of such shares, as of the close of business on the date the
actions required in Section 1.2 shall have been completed or, if on that date
the stock transfer books of the Company are closed, as of the next business day.
2. Transfer of Warrants and Stock.
2.1 Transfer Restrictions. This Warrant shall be freely transferable by
the Holder in accordance with the terms hereof; provided, however, that neither
this Warrant nor the securities issuable upon its exercise may be sold,
transferred or pledged unless the Company shall have been supplied with
reasonably satisfactory evidence that such transfer is not in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws. The Company may place a legend to that effect on this
Warrant, any replacement Warrant and each certificate representing shares
issuable upon exercise of this Warrant. Subject to the satisfaction of this
condition only, this Warrant shall be freely transferable by the Holder.
2.2 Manner of Transfer. Upon delivery of this Warrant to the Company
with the assignment form duly completed and signed, the Company will promptly
(but in any case within five (5) business days) execute and deliver to each
transferee and, if applicable, the Holder, Warrants of like tenor evidencing the
rights (a) of the transferee(s) to purchase the Number of Shares specified for
each in the assignment forms, and (b) of the Holder to purchase any
untransferred portion, which in the aggregate shall equal the number of Shares
of the original Warrant. If this Warrant is properly assigned in compliance with
Section 2, it may be exercised by an assignee without having a new Warrant
issued.
2.3 Loss, Destruction of Warrant Certificates. Upon receipt of (a)
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and (b) except in the case of mutilation, an
indemnity or security reasonably satisfactory to the Company, the Company will
promptly (but in any case within five (5) business days) execute and deliver a
replacement Warrant of like tenor representing the right to purchase the same
Number of Shares.
3. Cost of Issuances. The Company shall pay all expenses, transfer taxes and
other charges payable in connection with the preparation, issuance and delivery
of stock certificates or replacement Warrants, except for any transfer tax or
other charge imposed as a result of (a) any issuance of certificates in any name
other than the name of the Holder, or (b) any transfer of the Warrant. The
Company shall not be required to issue or deliver any Stock certificate or
Warrant until it receives reasonably satisfactory evidence that any such tax or
other charge has been paid by the Holder.
4. Anti-Dilution Provisions. If any of the following events occur at any time
hereafter during the life of this Warrant, then the Purchase Price and the
Number of Shares immediately prior to such event shall be changed as described
in order to prevent dilution:
4.1 Dividends; Stock Splits Etc. In case the Company shall (a) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock, (b) subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (c) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the Number of Shares purchasable
upon the exercise of this Warrant immediately prior thereto shall be adjusted so
that the Number of Shares purchasable upon exercise of this Warrant shall be
determined by multiplying the Number of Shares theretofore purchasable upon the
exercise of this Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately following such action
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately prior thereto. Such adjustment shall be made whenever
any event listed above shall occur and shall become effective immediately after
the record date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification. If the Company declares a dividend in money on its Common
Stock and at substantially the same time offers its Stockholders a right to
purchase new shares of Common Stock from the proceeds of such dividend, or for
an amount substantially equal to such dividend, all shares of Common Stock so
issued shall for purposes hereof be deemed issued as a Stock dividend.
4.2 Issuance of Rights or Warrants to Holders. In case the Company
shall issue rights, options or warrants to all holders of its shares of Common
Stock entitling them (for a period expiring within 45 days after the record date
therefor) to subscribe for or purchase shares of Common Stock at a price per
share which is lower at the record date mentioned below than the then Current
Market Price per share of Common Stock (as hereinafter defined), the Number of
Shares thereafter purchasable upon the exercise of this Warrant shall be
determined by multiplying the Number of Shares theretofore purchasable upon
exercise of this Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares which the aggregate
offering price of the total number shares of Common Stock so offered would
purchase at the then Current Market Price per share of Common Stock.
4.3 Merger; Consolidation; Sale of Assets. In case of (a) the
consolidation or the merger of the Company, (b) the sale of all or substantially
all of the properties and assets of the Company to any Person, (c) any capital
reorganization by the Company, or (d) any voluntary or involuntary dissolution,
liquidation or winding up of the Company, this Warrant shall, after any such
event, entitle the Holder to receive upon exercise the number of shares of Stock
or other securities or property (including cash) of the Person (if applicable)
resulting from such event, which the holder of securities deliverable upon
exercise of this Warrant (at the time of such event) would have been entitled to
receive upon such event; and in any such case the provisions of Section 4 with
respect to the rights and interests thereafter of the holders of Warrants shall
be appropriately adjusted so as to be applicable, as nearly as practicable, to
any shares of Stock or other securities or any property (including cash)
thereafter deliverable upon exercise of this Warrant. The Person resulting from
such sale or consolidation or surviving such merger or to
which such sale shall be made shall execute and deliver to the Holder a
supplemental agreement as provided in Section 5.5 below. Any adjustment pursuant
to this Section 4.3 which shall be approved in good faith by the Board of
Directors of the Company pursuant to a resolution delivered to the Holder shall
be conclusive for all purposes hereof. For the purposes of this Agreement
"person" means any individual, partnership, firm, corporation, limited liability
company or partnership, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
4.4 Other Distributions. In case the Company shall distribute to all
holders of its shares of Common Stock shares of Stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or retained earnings and
dividends or distributions referred to in Section 4.1 above) or rights, options
or warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to in
Section 4.2 above), then in each case the Number of Shares thereafter
purchasable upon the exercise of this Warrant shall be determined by multiplying
the Number of Shares theretofore purchasable upon the exercise of this Warrant,
by a fraction of which the numerator shall be the Current Market Price per share
of Common Stock on the record date mentioned below in this Section 4.4 plus the
then fair value (as reasonably determined by the Board of Directors of the
Company in good faith, whose determination shall be conclusive absent manifest
error, irrespective of the accounting treatment thereof) of the portion of the
shares of Stock other than Common Stock or assets or evidences of indebtedness
so distributed or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of Common Stock,
and of which the denominator shall be the Current Market Price per share of
Common Stock on such record date. Such adjustment shall be made whenever any
such distribution is made, and shall become effective immediately after the
record date for the determination of Stockholders entitled to receive such
distribution.
4.5 Additional Adjustment of Purchase Price. Whenever the Number of
Shares purchasable upon the exercise of this Warrant is adjusted, as provided
herein, the Purchase Price payable upon exercise of this Warrant shall be
adjusted by multiplying such Purchase Price immediately prior to such adjustment
by a fraction, of which the numerator shall be the Number of Shares purchasable
upon the exercise of this Warrant immediately prior to such adjustment, and of
which the denominator shall be the Number of Shares so purchasable immediately
thereafter.
4.6 No De Minimis Adjustments. No adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 4.6 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 4.6 shall be made to the nearest one-twentieth of a cent or to the
nearest one-hundredth of a share, as the case may be.
4.7 Treasury Shares. For the purpose of Section 4, shares of Common
Stock or other securities held in the treasury of the Company shall not be
deemed to be outstanding, and the sale or other deposition of any shares of
Common Stock or other securities held in the treasury of the Company shall be
deemed an issuance thereof.
4.8 Corporate Action. Before taking any action which would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of this Warrant, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.
4.9 Independent Public Accountants. The certificate of a "Big Six" firm
of independent public accountants selected by the Board of Directors of the
Company shall be conclusive evidence of the correctness of any computation made
under Section 4.
4.10 Notice of Certain Events. In case at any time prior to the
expiration date of this Warrant:
(i) the Company shall authorize the granting to all the
holders of Common Stock of rights to subscribe for or purchase
any shares stock of any class or of any other rights; or
(ii) there shall be any reclassification of the Common Stock
of the (other than a subdivision or combination of its Common
Stock); or
(iii) there shall be any capital reorganization by the
Company; or
(iv) there shall be a consolidation or merger involving the
Company or sale of all or substantially all of the Company's
property assets (except a merger or other reorganization in
which Company shall be the surviving corporation or a
consolidation, merger or sale with a wholly-owned subsidiary);
or
(v) there shall be voluntary or involuntary dissolution, and
winding up by the Company or dividend or to holders of Common
Stock (other than the customary cash and stock dividends); or
(vi) any other action shall occur which would give rise to an
adjustment to the Purchase Price or the Number of Shares
hereunder,
then in any one or more of said cases, the Company shall cause to be delivered
to the Holder, at the earliest practicable time (and, in any event, not less
than 25 days before any record date or other date set for definitive action),
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or such
reorganization, sale, consolidation, merger, dissolution, liquidation or winding
up shall take place, as the case may be. Such notice shall also set forth such
facts as shall indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Purchase Price and the kind and
amount of the shares of stock and other securities and property deliverable upon
exercise of the Warrants. Such notice shall also specify the date, if known, as
of which the holders of record of the Common Stock shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their shares of the Common Stock for securities or other property (including
cash) deliverable upon such reorganization, sale, consolidation, merger,
dissolution, liquidation or winding up, as the case may be (on which date, in
the event of voluntary or involuntary dissolution, liquidation, or winding up of
the Company, other than dissolution, liquidation or winding up following a
consolidation or merger of the
Company with or into, or sale of substantially all of its assets to, another
corporation, the rights to exercise this Warrant shall terminate).
4.11 Other Securities Adjustments. If as a result of Section 4, a
Holder is entitled to receive any securities other than Common Stock upon
exercise of this Warrant, the number and purchase price of such securities shall
thereafter be adjusted from time to time in the same manner as provided pursuant
to Section 4 for Common Stock. The allocation of purchase price between various
securities shall be made in writing by the Board of Directors of the Company in
good faith at the time of the event by which the holder became entitled to
receive new securities, and a copy sent to the Holder.
4.12 Notices of Adjustments. When any adjustment is required to be made
under Section 4, the Company shall promptly (a) determine such adjustments, (b)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the adjustment; and (c) cause a copy of such
statement, together with any agreement required by Section 5.5, to be mailed to
the Holder within 10 days after the date on which the circumstances giving rise
to such adjustment occurred.
4.13 Computations and Adjustments. Upon each computation of an
adjustment under this Section 4, the Purchase Price shall be computed to the
nearest cent and the Number of Shares shall be calculated to the next highest
whole share. However, the fractional amount shall be used in calculating any
future adjustments. No fractional shares of Common Stock shall be issued in
connection with the exercise of this Warrant, but the Company shall, in the case
of the final exercise under this Warrant, make a cash payment for any fractional
shares based on the Current Market Price of the Common Stock on the date of
exercise. Notwithstanding any changes in the Purchase Price or the Number of
Shares, this Warrant, and any Warrants issued in replacement or upon transfer
thereof, may continue to state the initial Purchase Price and the Number of
Shares. Alternatively, the Company may elect to issue a new Warrant or Warrants
of like tenor for the additional shares of Common Stock purchasable hereunder
or, upon surrender of the existing Warrant, to issue a replacement Warrant
evidencing all the Warrants to which the Holder is entitled after such
adjustments.
4.14 Exercise Before Payment Date. In the event that this Warrant is
exercised after the record date for any event requiring an adjustment, but prior
to the actual event, the Company may elect to defer payment of the adjusted
amount to the Holder until the actual event occurs; provided, however, that the
Company shall deliver a due xxxx or other appropriate instrument to the Holder
transferable to the same extent as the other Securities issuable on exercise
evidencing the Holder's right to receive such additional amount upon the
occurrence of the event requiring such adjustment.
4.15 Current Market Price. "Current Market Price" means the average of
the last reported sale prices per share for the ten consecutive Trading Days (as
defined below) preceding the date of such computation. The last reported sale
price for each day shall be (i) the last sale price, or the closing bid price if
no sale occurred, of the Common Stock on the principal securities exchange on
which the Common Stock is listed, (ii) if not listed as described in clause (i),
the last reported sale price of the Common Stock on the Automated Quotation
System of the National Association of Securities Dealers, Inc. (the "NASDAQ
System"), or any similar system of automated dissemination of quotations of
securities prices then in common use, if so quoted,
or (iii) if not quoted as described in clauses (i) or (ii), the mean of the high
and low bid quotations for the Common Stock as reported by the National
Quotation Bureau Incorporated if at least two securities dealers have inserted
bid quotations for the Common Stock on at least five of the ten preceding days.
If the Common Stock is quoted on a national securities or central market system,
in lieu of a market or quotation system described above, the last reported sale
price shall be determined in the manner set forth in clause (iii) of the
preceding sentence if bid and asked quotations are reported but actual
transactions are not, and in the manner set forth in clause (i) of the preceding
sentence if actual transactions are reported. If none of the conditions set
forth above is met, the last reported sale price of the Common Stock on any day
or the average of such last reported sales prices for any period shall be the
fair market value of such class of stock as determined by a member firm of the
New York Stock Exchange, Inc. selected by the Company. As used herein the term
"Trading Days" means (x) if the Common Stock is quoted on the NASDAQ System or
any similar system of automated dissemination of quotations of securities
prices, days on which trades may be made on such system, or (y) if not quoted as
described in clause (x), days on which quotations are reported by the National
Quotation Bureau Incorporated, or (z) if the Common Stock is listed or admitted
for trading on any national securities exchange, days on which such national
securities exchange is open for business.
5. Covenants. The Company agrees that:
5.1 Reservation of Stock. During the period in which this Warrant may
be exercised, the Company will reserve sufficient authorized but unissued
securities to enable it to satisfy its obligations on exercise of this Warrant
and shall use its reasonable best efforts to cause all shares of Common Stock
issued upon the exercise of this Warrant to be listed on any exchanges on which
the Common Stock is then listed. If at any time the Company's authorized
securities shall not be sufficient to allow the exercise of this Warrant, the
Company shall take such corporate action as may be necessary to increase its
authorized but unissued securities to be sufficient for such purpose;
5.2 No Liens, etc. All securities that may be issued upon exercise of
this Warrant will, upon issuance, be validly issued, fully paid, nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
and shall be listed on any exchanges on which that class of securities is
listed;
5.3 Furnish Information. During the term of this Warrant, the Company
will promptly deliver to the Holder copies of all financial statements, reports
and proxy statements which the Company shall have sent to its stockholders
generally;
5.4 Stock and Warrant Transfer Books. Except upon dissolution,
liquidation or winding up or for ordinary holidays and weekends, the Company
will not at any time close its stock or warrant transfer books so as to result
in preventing or delaying the exercise or transfer of this Warrant; and
5.5 Merger; Consolidation or Sale of Assets of the Company. Except in
the case of a merger or consolidation where the consideration is payable
entirely in cash or obligations, the Company will not merge or consolidate with
or into any Person, or sell or otherwise transfer its property, assets and
business substantially as an entirety to a successor Person, unless the Person
resulting from such merger or consolidation (if not the Company), or such
successor Person,
shall expressly assume, by supplemental agreement reasonably satisfactory in
form to the then Majority Holders (as defined below) and executed and delivered
to the Holder, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company. "Majority Holders", as of any date, shall mean holders of this Warrant
(or replacement warrants issued pursuant hereto) and of the substantially
similar warrants issued pursuant to the Note Purchase Agreement (or replacement
warrants issued pursuant thereto) who together have rights to exercise such
warrants for a majority of the shares of the common stock of the Company
issuable upon exercise of such warrants.
6. Status of Holder.
6.1 Not a Stockholder. Unless the Holder exercises this Warrant in
writing, the Holder shall not be entitled to any rights (a) as a stockholder of
the Company with respect to the shares as to which the Warrant is exercisable
including, without limitation, the right to vote or receive dividends or other
distributions, or (b) to receive any notice of any proceedings of the Company
except as otherwise provided in this Warrant.
6.2 Limitation of Liability. Unless the Holder exercises this Warrant
in writing, the Holder's rights and privileges hereunder shall not give rise to
any liability for the Purchase Price or as a stockholder of the Company, whether
to the Company or its creditors.
7. Registration Rights. The shares purchasable upon exercisable of this Warrant
shall be Registerable Securities as defined in that certain Warrant Registration
Rights Agreement between the Company and the initial Holders signatories thereto
dated as of even date herewith (the "Registration Rights Agreement").
8. General Provisions.
8.1 Complete Agreement; Modifications. This Warrant and any documents
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. The Warrant may not be amended, altered or modified except by a writing
signed by the parties.
8.2 Cooperation. Each party hereto agrees to execute any and all
further documents and writings and to perform such other reasonable actions
which may be or become necessary or expedient to effectuate and carry out this
Warrant.
8.3 Notices. All notices under this Warrant shall be in writing and
shall be delivered by personal service or telecopy or certified mail return
receipt requested (if such service is not available, then by first class mail),
postage prepaid, to such address as may be designated from time to time by the
relevant party, and which shall initially be:
(a) If to the Company:
With a copy to:
(b) If to ___________________:
With a copy to:
Any notice sent by certified mail shall be deemed to have been given three (3)
days after the date on which it is mailed. All other notices shall be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party.
8.4 No Third-Party Benefits; Successors and Assigns. None of the
provisions of this Warrant shall be for the benefit of, or enforceable by, any
third-party beneficiary. Except as provided herein to the contrary, this Warrant
shall be binding upon and inure to the benefit of the parties, their respective
successors and permitted assigns.
8.5 Governing Law. This Warrant concerns a __________ ___________, and
all questions with respect to the Warrant and the rights and liabilities of the
parties will be governed by the laws of _____________ regardless of the choice
of law provisions of _____________ or any other jurisdiction.
8.6 Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
8.7 Severability. The validity, legality or enforceability of the
remainder of this Warrant shall not be affected even if one or more of its
provisions shall be held to be invalid, illegal or unenforceable in any respect.
8.8 Attorneys' Fees. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provisions of this Warrant or the rights
and duties of any person or entity hereunder the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the attorneys' fees and court costs incurred by reason of such
litigation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed effective as of ___________ __, ______.
[PURCHASER OF DIAMETRICS MEDICAL, INC.]
By:_______________________________
Name: _________________________
Title:__________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________ hereby sells, assigns and
transfers to the transferee named below the rights to purchase ______________ of
the Number of Shares under this Warrant, together with all rights, title and
interest therein. The rights to purchase the remaining Number of Shares shall
remain the property of the undersigned.
Dated: _____________________
[NAME OF HOLDER]
By:____________________________
(Signature)
Name:__________________________
(Please Print)
Address:_________________________
___________________________________________
Employer Identification Number, Social
Security Number or other identifying number:
TRANSFEREE:
Name:____________________________
(Please Print)
Address:____________________________
__________________________________
Employer Identification Number, Social
Security Number or other identifying number:
EXERCISE FORM
To Be Executed Upon Exercise of Warrant
The undersigned hereby exercises the Warrant with regard to ___________
shares of Common Stock and herewith makes payment of the purchase price in full.
The undersigned requests that certificate(s) for such shares and the Warrant for
any unexercised portion of this Warrant be issued to the Holder.
Dated: __________________
[NAME OF HOLDER]
By:____________________________
(Signature)
Name:__________________________
(Please Print)
Address:_________________________
___________________________________________
Employer Identification Number, Social
Security Number or other identifying number:
EXHIBIT 4
FORM OF NOTICE OF ELECTION TO CONVERT
To Be Executed Upon Exercise Of CONVERSION
OF NOTE TO SHARES OF DIAMETRICS MEDICAL, INC.
The undersigned hereby exercises its rights as Holder of the
accompanying Convertible Senior Secured Fixed Rate Note issued pursuant to the
Note Purchase Agreement referred to therein. The undersigned instructs that
obligations with respect to principal in the amount of $___________ (must be an
integral multiple of $1,000) hereby be converted into shares of Common Stock of
Diametrics Medical, Inc. pursuant to Article V of that Note Purchase Agreement.
The undersigned requests that certificate(s) for such shares and a replacement
Note for any unconverted portion of the principal amount of this Note be issued
to the Holder.
The original Note must accompany presentation of this form.
Dated:_______________________________
[NAME OF HOLDER]
By:____________________________
Name:
_______________________________
(Please Print)
Address:_________________________
_________________________________
_________________________________
Employer Identification Number, Social
Security Number or other identifying
number:
_______________________________________
