EXHIBIT 2.1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
by and among
THE INVESTORS NAMED HEREIN
and
MICRO THERAPEUTICS, INC.
September 3, 2002
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TABLE OF CONTENTS
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SECTION 1. PURCHASE AND SALE OF SECURITIES...................................... 4
1.1. Issuance of Common Stock............................................. 4
1.2. Closings and Closing Dates........................................... 5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 6
2.1. Corporate Organization............................................... 6
2.2. Subsidiaries......................................................... 6
2.3. Capitalization....................................................... 7
2.4. Corporate Proceedings, etc........................................... 7
2.5. Consents and Approvals............................................... 8
2.6. Absence of Defaults, Conflicts, etc.................................. 8
2.7. Reports and Financial Statements..................................... 8
2.8. Absence of Certain Developments...................................... 9
2.9. Compliance with Law.................................................. 9
2.10. Litigation........................................................... 10
2.11. Absence of Undisclosed Liabilities................................... 10
2.12. Change in Ownership.................................................. 11
2.13. Employment Matters................................................... 11
2.14. Tax Matters.......................................................... 12
2.15. Intellectual Property................................................ 12
2.16. Title to Tangible Assets............................................. 12
2.17. Insurance............................................................ 12
2.18. Transactions with Related Parties.................................... 13
2.19. Interest in Competitors.............................................. 13
2.20. Registration Rights.................................................. 13
2.21. Private Offering..................................................... 13
2.22. Brokerage............................................................ 14
2.23. Takeover Statute; Rights Plan........................................ 14
2.24. Nasdaq Compliance.................................................... 14
2.25. Reporting Status..................................................... 14
2.26. No Manipulation of Stock............................................. 14
2.27. Accountants.......................................................... 14
2.28. Transfer Taxes....................................................... 15
2.29. Investment Company................................................... 15
2.30. Listing.............................................................. 15
2.31. Other Representations and Warranties................................. 15
2.32. Material Facts....................................................... 15
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR....................... 15
SECTION 4. ADDITIONAL AGREEMENTS OF THE PARTIES................................. 16
4.1. Resale of Securities................................................. 16
4.2. Covenants Pending Closing............................................ 17
4.3. Further Assurance.................................................... 17
4.4. Indemnity............................................................ 17
4.5. Consents and Approvals; Proxy........................................ 18
4.6. Use of Proceeds...................................................... 19
4.7. Takeover Statute..................................................... 19
4.8. Rights Agreement Inapplicable........................................ 19
4.9. Registration Rights.................................................. 19
4.10. Registration and Listing............................................. 20
4.11. Private Offering..................................................... 20
SECTION 5. INVESTORS' CLOSING CONDITIONS........................................ 20
5.1. Representations and Warranties....................................... 20
5.2. Compliance with Agreement............................................ 21
5.3. Injunction........................................................... 21
5.4. Counsel's Opinion.................................................... 21
5.5. Adverse Development.................................................. 21
5.6. Stockholder Approval................................................. 21
5.7. Closing of Acquisition............................................... 21
5.8. Listing of the Shares................................................ 22
5.9. Nasdaq Trading....................................................... 22
5.10. Officer's Certificate................................................ 22
5.11. Secretary's Certificate.............................................. 22
5.12. Approval of Proceedings.............................................. 22
SECTION 6. COMPANY CLOSING CONDITIONS........................................... 22
6.1. Representations and Warranties....................................... 23
6.2. Compliance with Agreement............................................ 23
6.3. Investors' Certificates.............................................. 23
6.4. Injunction........................................................... 23
6.5. Stockholder Approval................................................. 23
6.6. Closing of Acquisition............................................... 23
6.7. Special Committee Approval........................................... 24
SECTION 7. INTERPRETATION OF THIS AGREEMENT..................................... 24
7.1. Terms Defined........................................................ 24
7.2. Accounting Principles................................................ 26
7.3. Directly or Indirectly............................................... 27
7.4. Governing Law........................................................ 27
7.5. Paragraph and Section Headings....................................... 27
SECTION 8. MISCELLANEOUS........................................................ 27
8.1. Notices.............................................................. 27
8.2. Expenses and Taxes................................................... 28
8.3. Reproduction of Documents............................................ 28
8.4. Termination and Survival............................................. 28
8.5. Successors and Assigns............................................... 29
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8.6. Entire Agreement; Amendment and Waiver................................. 29
8.7. Severability........................................................... 29
8.8. Limitation on Enforcement of Remedies.................................. 29
8.9. Counterparts........................................................... 29
Exhibit A Certificate of Incorporation
Exhibit B Bylaws
Exhibit C Registration Rights Provisions
Exhibit D Opinion of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
-iii-
MICRO THERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of September 3, 2002
TO THE INVESTORS WHOSE NAMES APPEAR
ON THE SIGNATURE PAGES HERETO
Ladies and Gentlemen:
Micro Therapeutics, Inc., a Delaware corporation (the "Company"),
hereby agrees with the investors named on the signature pages hereto, including
any investors who become parties hereto after the date hereof pursuant to
Section 4.12 below (each, an "Investor" and collectively, the "Investors") as
follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
1.1. Issuance of Common Stock
(a) Subject to the terms and conditions set forth in this
Agreement and to the conditions set forth in Section 1.2, and in reliance upon
the Company's and the Investors' representations set forth below, on the First
Closing Date (as defined below), the Company shall sell to each Investor, and
each Investor shall purchase from the Company, the number of shares of the
Company's Common Stock, par value $0.001 per share (the "Common Stock"), set
forth next to such Investor's name on Schedule 1.1(a) (collectively, the "First
Closing Shares") at an aggregate cash purchase price (the "First Closing
Purchase Price") equal to the number of First Closing Shares being purchased by
such Investor multiplied by the Per Share Purchase Price. For purposes of this
Agreement, "Per Share Purchase Price" shall mean the higher of (i) $0.05 plus
the closing price of the Common Stock on the Nasdaq Stock Market on the last
trading day prior to the date of this Agreement or (ii) the number obtained by a
fraction (x) the numerator of which shall be the sum of the closing price of the
Common Stock on the Nasdaq Stock Market for each of (A) the ten consecutive
trading days ending on and including the last full trading day prior to the time
of the public announcement of the execution of the Acquisition Agreement, and
(B) the five consecutive trading days immediately following the time of the
public announcement of the execution of the Acquisition Agreement (for
clarification, if the public announcement of the execution of the Acquisition
Agreement occurs prior to the opening of the market on a trading day, or during
a trading day while the market is open, then such day shall be attributed to
subsection (B) above, and if the public announcement of the execution of the
Acquisition Agreement occurs following the close of the market on a trading day,
then such day shall be attributed to subsection (A) above) and (y) the
denominator of which shall be fifteen (15); provided, however, that in no event
shall the Per Share Purchase Price be higher than the product of 1.2 multiplied
by the average of the closing price of the Common Stock on the Nasdaq Stock
Market for the ten consecutive trading days ending on and including the last
full trading day prior to the time of the public announcement of the execution
of the Acquisition Agreement. The sale and purchase of the First Closing Shares
shall be effected on the First Closing Date by the Company executing and
delivering to each Investor, duly registered in such Investor's name or in the
name of its nominee or other designee designated in writing to the
Company at least one day prior to the First Closing Date, a duly executed stock
certificate evidencing the First Closing Shares being purchased by it, against
delivery by such Investor to the Company of the First Closing Purchase Price, by
wire transfer of immediately available funds to such account as the Company
shall designate in writing. Notwithstanding the foregoing, in the event that the
sale and issuance of all of the First Closing Shares can not be consummated
without the Company obtaining stockholder approval for the issuance of the First
Closing Shares, then the number of First Closing Shares being purchased by each
Investor shall be proportionally reduced to equal the maximum aggregate number
of First Closing Shares that can be sold and issued by the Company without
having to obtain stockholder approval, and any First Closing Shares that can not
be sold and issued to any Investor for the reasons described in this Section
1.1(a) shall be purchased by such Investor on the Second Closing Date (as
defined below) and shall be deemed to be Second Closing Shares (as defined
below).
(b) Subject to the terms and conditions set forth in this
Agreement and to the conditions set forth in Section 1.2, and in reliance upon
the Company's and the Investors' representations set forth below, on the Second
Closing Date (as defined below), the Company shall sell to each Investor, and
each Investor shall purchase from the Company, the number of shares of its
Common Stock set forth next to such Investor's name on Schedule 1.1(b) together
with any First Closing Shares which could not be purchased by such Investor for
the reasons described in Section 1.1(a) (the "Second Closing Shares," and
together with First Closing Shares, the "Shares") at an aggregate cash purchase
price (the "Second Closing Purchase Price," and together with the First Closing
Purchase, the "Purchase Price") equal to the number of Second Closing Shares
multiplied by the Per Share Purchase Price. The sale and purchase of the Second
Closing Shares shall be effected on the Second Closing Date by the Company
executing and delivering to each Investor, duly registered in such Investor's
name or in the name of its nominee or other designee designated in writing to
the Company at least one day prior to the Second Closing Date, a duly executed
stock certificate evidencing the Second Closing Shares being purchased by it,
against delivery by such Investor to the Company of the Second Closing Purchase
Price by wire transfer of immediately available funds to such account as the
Company shall designate in writing.
1.2. Closings and Closing Dates
(a) First Closing. The closing of the transactions contemplated
by Section 1.1(a) (the "First Closing") shall take place at 10:00 A.M., New York
City time, on the later to occur of (a) September 30, 2002; and (b) the third
Business Day following the date on which the last to be fulfilled or waived of
the conditions set forth in Section 5 and Section 6 hereof pertaining to the
First Closing Date shall have been fulfilled or waived in accordance with this
Agreement, or on such earlier date as may be mutually agreed by the Company and
the Investors (the "First Closing Date"), at the offices of Xxxxxxx Xxxx &
Xxxxxxxxx, 787 Seventh Avenue, New York, New York, or such other location as the
Investors and the Company shall mutually select.
(b) Second Closing. The closing of the transactions contemplated
by Section 1.1(b) (the "Second Closing" and, together with the First Closing,
the "Closings" and each, a "Closing") shall take place at 10:00 A.M., New York
City time, on the third Business Day following the date on which the last to be
fulfilled or waived of the conditions set forth in Section 5 and Section 6
hereof pertaining to the Second Closing Date shall have been fulfilled or
waived in accordance with this Agreement, or on such earlier date as may be
mutually agreed by the Company and the Investors (the "Second Closing Date"), at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 787 Seventh Avenue, New York, New York,
or such other location as the Investors and the Company shall mutually select.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Investor that, except
as set forth on the correspondingly numbered section of the Disclosure Schedule
delivered to the Investors in connection herewith or as disclosed in the Company
SEC Reports (as defined herein) filed prior to the date hereof:
2.1. Corporate Organization
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Attached hereto as
Exhibits A and B, respectively, are true and complete copies of the Certificate
of Incorporation and Bylaws of the Company, as amended through the date hereof
(collectively, the "Organizational Documents").
(b) The Company has all requisite power and authority and has all
necessary approvals, licenses, permits and authorization to own its properties
and to carry on its business as now conducted. The Company has all requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
(c) The Company has filed all necessary documents to qualify to
do business as a foreign corporation in, and the Company is in good standing
under the laws of each jurisdiction in which the conduct of the Company's
business or the nature of the property owned requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
business, properties, assets, liabilities, profits, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole (a "Material Adverse Effect").
2.2. Subsidiaries
Except as set forth in the Company SEC Reports, the Company has no
Subsidiaries and no interests or investments in any partnership, trust or other
entity or organization. Each company listed in the Company SEC Reports that is a
Subsidiary of the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its properties and
to conduct its business and is duly registered, qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
registration, qualification or authorization; all of the issued and outstanding
capital stock of each Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable, and is owned by the Company free and clear of any
mortgage, pledge, lien, encumbrance, security interest, claim or equity.
2.3. Capitalization
(a) On the date hereof, the authorized capital stock of the
Company consists of 35,000,000 shares of its Common Stock and 5,000,000 shares
of preferred stock, par value $0.001 per share (the "Preferred Stock"),
consisting of 170,000 shares which have been designated as Series A Preferred
Stock. The issued and outstanding shares of capital stock of the Company
consists of 20,383,918 shares of Common Stock, and no shares of Preferred Stock.
(b) All the outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and non-assessable, and
were issued in accordance with the registration or qualification requirements of
the Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom. Upon issuance, sale and delivery as contemplated by this
Agreement, and with respect to the Second Closing Shares, approval by the
requisite vote of the stockholders of the Company, the Shares will be duly
authorized, validly issued, fully paid and non-assessable shares of the Company,
free and clear of any and all security interests, pledges, liens, charges,
claims, options, restrictions on transfer, preemptive or similar rights, proxies
and voting or other agreements, or other encumbrances of any nature whatsoever,
except for those provided for herein and other than restrictions on transfer
imposed by federal or state securities laws.
(c) Except for the conversion rights which attach to the
warrants, options and convertible securities which are listed on Schedule 2.3,
on the Closing Dates, there will be no shares of Common Stock or any other
equity security of the Company issuable upon conversion, exchange or exercise of
any security of the Company or any Subsidiary nor will there be any rights,
options, calls or warrants outstanding or other agreements to acquire shares of
Common Stock nor will the Company be contractually obligated to purchase, redeem
or otherwise acquire any of its outstanding shares. Except as set forth on
Schedule 2.3, (i) no stockholder of the Company is entitled to any preemptive or
similar rights to subscribe for shares of capital stock of the Company, (ii) no
stockholder of the Company has any rights, contractual or otherwise, to
designate members of the Company's Board of Directors (the "Board"), other than
in accordance with the DGCL, and (iii) there are no stockholder, voting or other
agreements relating to the rights and obligations of the Company's stockholders.
2.4. Corporate Proceedings, etc.
The Company has authorized the execution, delivery, and performance
of this Agreement and each of the transactions and agreements contemplated
hereby. No other corporate or stockholder action (other than the approval by the
requisite vote of the Company's stockholders in connection with the issuance of
the Second Closing Shares) is necessary to authorize such execution, delivery
and performance of this Agreement, and upon such execution and delivery this
Agreement shall constitute the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
and general principles of equity. The Company has authorized the issuance and
delivery of the Shares in accordance with this Agreement and, except for
approval by the requisite vote of the Company's stockholders in connection with
the issuance of the Second Closing Shares and any stockholder approval that may
be required under
the Nasdaq Marketplace Rules (as contemplated by Section 5.6 of this Agreement),
no further corporate or stockholder action is required in connection with such
issuance and delivery.
2.5. Consents and Approvals
The execution and delivery by the Company of this Agreement, the
issuance of any of the Shares, the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby do not require the Company or any of its Subsidiaries to obtain any
consent, approval, clearance or action of, or make any filing, submission or
registration with, or give any notice to, any Person or judicial authority,
except for the confirmation or approval referred to in Section 5.6 hereof, which
such confirmation or approval the Company shall use its best efforts to obtain
by November 15, 2002.
2.6. Absence of Defaults, Conflicts, etc.
(a) The execution and delivery of this Agreement by the Company
does not, and the fulfillment of the terms hereof by the Company, and the
issuance, sale and delivery of the Shares will not, result in a breach of any of
the terms, conditions or provisions of, or constitute a default under, or result
in the modification of, or permit the acceleration of rights under or
termination of, any material Contract of the Company or any of its Subsidiaries
(collectively the "Key Agreements and Instruments"), or the Organizational
Documents, or (subject to the approval by the requisite vote of the Company's
stockholders in connection with the issuance of the Second Closing Shares) any
law, ordinance, standard, judgment, rule or regulation of any court or federal,
state or foreign regulatory board or body or administrative agency having
jurisdiction over the Company or any of its Subsidiaries or over their
respective properties or businesses.
(b) Neither the Company nor any of its Subsidiaries is in default
under or in violation of (and no event has occurred and no condition exists
which, upon notice or the passage of time (or both), would constitute a default
under) (i) the Organizational Documents, (ii) any Key Agreement and Instrument,
(iii) any license, permit or authorization to which the Company or any
Subsidiary is a party or by which any of them may be bound or (iv) any order,
writ, injunction or decree of any court or any Federal, state, municipal or
other domestic or foreign governmental department, commission, board, bureau,
agency or instrumentality except, in the case of clause (ii), for defaults or
violations which would not have a Material Adverse Effect.
2.7. Reports and Financial Statements
The Company has furnished the Investors with true and complete
copies of the Company's (i) Annual Reports on Form 10-KSB for the fiscal years
ended December 31, 1999, December 31, 2000 and December 31, 2001, as amended, as
filed with the SEC, (ii) Quarterly Report on Form 10-QSB for the quarters ended
March 31, 2002 and June 30, 2002, as filed with the SEC, (iii) proxy statements
related to all meetings of its stockholders (whether annual or special) held
since January 1, 2000, and (iv) all other reports filed with or registration
statements declared effective by the SEC since January 1, 2000, except
registration statements on Form S-8 relating to employee benefit plans, which
are all the documents (other than preliminary material) that the Company was
required to file with the SEC since that date (clauses (i) through (iv) being
referred to herein collectively as the "Company SEC Reports"). The Company has
timely made all filings required under the Exchange Act during the 12 months
preceding the date of this Agreement. As of their respective dates, the Company
SEC Reports were duly filed and complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Company SEC
Reports. As of their respective dates, the Company SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports comply as to form
in all material respects with applicable accounting requirements of the
Securities Act and with the published rules and regulations of the SEC with
respect thereto. The financial statements included in the Company SEC Reports
(i) have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis (except (A) as may be
indicated therein or in the notes thereto, or (B) in the case of unaudited
interim financial statements, to the extent they may not include footnotes or
may be condensed or summary statements), (ii) present fairly, in all material
respects, the financial position of the Company and its Subsidiaries as at the
dates thereof and the results of their operations and cash flow for the periods
then ended subject, in the case of the unaudited interim financial statements,
to normal year-end audit adjustments and any other adjustments described therein
and the fact that certain information and notes have been condensed or omitted
in accordance with the Exchange Act and the rules promulgated thereunder, and
(iii) are in all material respects in accordance with the books of account and
records of the Company except as indicated therein.
2.8. Absence of Certain Developments
Since July 31, 2001, except as disclosed in the Company SEC
Reports, there has been no (i) change or event which could reasonably be
expected to have a Material Adverse Effect, (ii) declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company, (iii) issuance of capital stock (other than pursuant to the
exercise of options, warrants, or convertible securities outstanding at such
date) or options, warrants or rights to acquire capital stock (other than the
rights granted to the Investors hereunder), (iv) material loss, destruction or
damage to any property of the Company or any Subsidiary, whether or not insured,
(v) acceleration or prepayment of any indebtedness for borrowed money or the
refunding of any such indebtedness, (vi) labor trouble involving the Company or
any Subsidiary or any material change in their personnel or the terms and
conditions of employment, (vii) waiver of any valuable right in favor of the
Company or any Subsidiary, (viii) loan or extension of credit to any officer or
employee of the Company or any Subsidiary or (ix) acquisition or disposition of
any material assets (or any contract or arrangement therefor) except for the
Acquisition Agreement, or any other material transaction by the Company or any
Subsidiary otherwise than for fair value in the ordinary course of business.
2.9. Compliance with Law
(a) Neither the Company nor any of its Subsidiaries is in
material violation of any laws, ordinances, governmental rules or regulations to
which it is subject, including, without limitation, laws or regulations relating
to the environment or to occupational health and safety,
and no material expenditures are or will be required in order to cause its
current operations or properties to comply with any such law, ordinances,
governmental rules or regulations.
(b) The Company and its Subsidiaries have all licenses, permits,
franchises or other governmental authorizations necessary for the ownership of
their property or for the conduct of their respective businesses, which if
violated or not obtained might have a Material Adverse Effect. Neither the
Company nor any Subsidiary has finally been denied any application for any such
licenses, permits, franchises or other governmental authorizations necessary to
its business.
(c) The Company and its Subsidiaries manufacture and distribute,
and for the past three years have manufactured and have distributed, their
products in all material respects in accordance with all applicable rules and
regulations of the United States Food and Drug Administration ("FDA") (including
the "Good Manufacturing Practices" and the "Medical Device Reporting"
regulations) and the Company's quality control procedures in effect at the time
of manufacture. All of the products currently sold by the Company and its
Subsidiaries in the United States (i) are under FDA-approved investigational
studies, or (ii) have been approved or cleared for sale by the FDA and all other
applicable federal and state regulatory agencies. All of the products currently
sold by the Company and its Subsidiaries outside the United States have, to the
best knowledge of the Company, been approved or cleared for sale by the
appropriate foreign regulatory agencies. Neither the Company nor any Subsidiary
has received any notice from the FDA or any other federal, state or foreign
regulatory agency questioning its manufacturing practices or threatening to
revoke or curtail any product clearance or approval, and the Company is not
aware of any intent to deliver any such notice. All United States and
international regulatory approvals or premarket notifications for the products
currently sold by the Company and its Subsidiaries are owned by and registered
in the name of the Company or one of its Subsidiaries and are in full force and
effect and, except as set forth on Schedule 2.9, none of the products
manufactured or marketed by the Company or its Subsidiaries have been the
subject of any voluntary or involuntary recall or any governmental investigation
other than routine inspections of the Company's facilities.
2.10. Litigation
There is no legal action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign) pending or, to the best of the
Company's knowledge, threatened against or affecting the Company or any
Subsidiary or any of their respective properties, assets or businesses. After
reasonable inquiry of its officers and employees, the Company is not aware of
any fact which might result in or form the basis for any such action, suit,
arbitration, investigation, inquiry or other proceeding. Neither the Company nor
any Subsidiary is subject to any order, writ, judgment, injunction, decree,
determination or award of any court or of any governmental agency or
instrumentality (whether federal, state, local or foreign).
2.11. Absence of Undisclosed Liabilities
Except with respect to the Acquisition, neither the Company nor any
of its Subsidiaries has any debt, obligation or liability (whether accrued,
absolute, contingent,
liquidated or otherwise, whether due or to become due, whether or not known to
the Company) arising out of any transaction entered into at or prior to either
Closing, or any act or omission at or prior to either Closing, or any state of
facts existing at or prior to either Closing, including taxes with respect to or
based upon the transactions or events occurring at or prior to either Closing,
and including, without limitation, unfunded past service liabilities under any
pension, profit sharing or similar plan, except for liabilities disclosed in the
financial statements included in the Company's SEC Reports and liabilities
incurred in the usual and ordinary course of business subsequent to June 30,
2002 and liabilities of the type not required under GAAP to be reflected in such
financial statements, none of which liabilities incurred subsequent to June 30,
2002 (individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect.
2.12. Change in Ownership
Neither the purchase of the Shares by the Investor nor the
consummation of the transactions contemplated by this Agreement will result in
(i) any material adverse change in the business operations of the Company or any
of its Subsidiaries, (ii) except as disclosed in Schedule 2.12(ii) hereto, the
acceleration of the vesting of any outstanding option, warrant, call,
commitment, agreement, conversion right, preemptive right or other right to
subscribe for, purchase or otherwise acquire any of the shares of the capital
stock of the Company or any of the stock of the Company or any of its
Subsidiaries, or debt securities of the Company or any of its Subsidiaries
(collectively "Commitments", and each individually a "Commitment"), (iii) any
obligation of the Company to grant, extend or enter into any Commitment, or (iv)
any right in favor of any Person to terminate or cancel any Key Agreement or
Instrument.
2.13. Employment Matters
(a) The Company is in compliance with all federal, state, local
and foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours except where failure to
be in compliance would not have a Material Adverse Effect. The Company is not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the Company's knowledge,
threatened, that could have a Material Adverse Effect nor is the Company aware
of any labor organization activity involving its employees. Except as disclosed
in Schedule 2.13 hereto, the Company is not aware that any officer or key
employee, or that any group of officers or key employees, intends to terminate
their employment with the Company, nor does the Company have a present intention
to terminate the employment of any of the foregoing.
(b) Except as set forth in the Company SEC Reports, the Company
and its Subsidiaries have no employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974) covering former or
current employees of the Company or any of its Subsidiaries, or under which the
Company or any of its Subsidiaries has any obligation or liability other than
withholding obligations.
(c) The transactions contemplated by this Agreement will not
cause the acceleration of the vesting of any options or other rights issued
under the Company's 1996 Stock Incentive Plan or any other similar plan,
arrangement, agreement or understanding.
2.14. Tax Matters
There are no federal, state, county or local taxes due and payable
by the Company or any of its Subsidiaries which have not been paid. The
provisions for taxes on the audited and unaudited balance sheets described in
Section 2.7 are sufficient for the payment of all accrued and unpaid federal,
state, county and local taxes of the Company whether or not assessed or disputed
as of the respective dates of such balance sheets. The Company and its
Subsidiaries have duly filed all federal, state, county and local tax returns
required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year. Neither
the Company nor any of its Subsidiaries is currently subject to a federal or
state tax audit of any kind.
2.15. Intellectual Property
The Company owns or possesses the licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights necessary to enable it to conduct its business as now
operated or as currently proposed to be operated (the "Intellectual Property").
Except as set forth in the Company SEC Reports and Schedule 2.12 to the
Acquisition Agreement (which is incorporated herein by reference), there are no
material outstanding options, licenses or agreements relating to the
Intellectual Property, nor is the Company bound by or a party to any material
options, licenses or agreements relating to the patents, patent applications,
patent rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names or copyrights of any
other person or entity. Except as set forth in Schedule 2.12 to the Acquisition
Agreement (which is incorporated herein by reference), there is no claim or
action or proceeding pending or, to the Company's knowledge, threatened that
challenges the right of the Company with respect to any Intellectual Property.
2.16. Title to Tangible Assets
The Company and its Subsidiaries have good title to their
properties and assets and good title to all their leasehold estates, in each
case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other
than or resulting from taxes which have not yet become delinquent and minor
liens and encumbrances which do not in any case materially detract from the
value of the property subject thereto or materially impair the operations of the
Company and its Subsidiaries and which have not arisen otherwise than in the
ordinary course of business.
2.17. Insurance
The Company and its Subsidiaries and their respective properties
are insured in such amounts, against such losses and with such insurers as are
prudent when considered in light of the nature of the properties and businesses
of the Company and its Subsidiaries. No notice of
any termination or threatened termination of any of such policies has been
received and such policies are in full force and effect.
2.18. Transactions with Related Parties
Except as set forth in the Company SEC Reports, neither the Company
nor any Subsidiary is a party to any agreement with any of the Company's
directors, officers or stockholders or any Affiliate or family member of any of
the foregoing under which it: (i) leases any real or personal property (either
to or from such Person), (ii) licenses technology (either to or from such
Person), (iii) is obligated to purchase any tangible or intangible asset from or
sell such asset to such Person, (iv) purchases products or services from such
Person or (v) has borrowed money from or lent money to such Person. Neither the
Company nor any Subsidiary employs as an employee or engages as a consultant any
family member of any of the Company's directors, officers or stockholders.
Except as set forth in the Company SEC Reports, to the best knowledge of the
Company, there exist no agreements among stockholders of the Company to act in
concert with respect to their voting or holding of Company securities.
2.19. Interest in Competitors
Except for any rights the Company has under the Acquisition
Agreement and any interest held directly or indirectly by those officers and
directors set forth in the Company SEC Reports, neither the Company nor any of
its officers or, to the best of its knowledge, directors, has any interest,
either by way of contract or by way of investment (other than as holder of not
more than 2% of the outstanding capital stock of a publicly traded Person) or
otherwise, directly or indirectly, in any Person other than the Company that (i)
provides any services or designs, produces or sells any product or product lines
or engages in any activity similar to or competitive with any activity currently
proposed to be conducted by the Company or any of its Subsidiaries or (ii) has
any direct or indirect interest in any asset or property, real or personal,
tangible or intangible, of the Company.
2.20. Registration Rights
Except as set forth on Schedule 2.20 and as provided pursuant to
Section 4.9, the Company will not, as of the First Closing Date or the Second
Closing Date, be under any obligation to register any of its securities under
the Securities Act.
2.21. Private Offering
Neither the Company nor anyone acting on its behalf has sold or has
offered any of the Shares for sale to, or solicited offers to buy from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Investors. Based upon the representations of the
Investors set forth in Section 3 of this Agreement, the offer, issuance and sale
of the Shares are and will be exempt from the registration and prospectus
delivery requirements of the Securities Act, and have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws.
2.22. Brokerage
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company, and the
Company agrees to indemnify and hold the Investors harmless against any costs or
damages incurred as a result of any such claim.
2.23. Takeover Statute; Rights Plan
The Company has taken all necessary actions such that the
provisions of Section 203 of the DGCL do not and will not apply to this
Agreement or to any of the transactions contemplated hereby. No other Takeover
Statute is applicable to the transactions contemplated hereby. The Board has
approved this Agreement and the transactions contemplated hereby as contemplated
by Section 1(a)(iii) of the Rights Agreement. As a result, as a consequence of
this Agreement and the transactions contemplated hereby, (i) the Investor shall
not be an "Acquiring Person" within the meaning of the Rights Agreement, (ii) a
"Triggering Event" (as defined in the Rights Agreement) shall not have occurred
and (iii) the Rights (as defined in the Rights Agreement) shall not separate
from the Common Stock as a result of any of the transactions contemplated
hereby.
2.24. Nasdaq Compliance
The Company's Common Stock is registered pursuant to Section 12(g)
of the Exchange Act, and is listed on The Nasdaq National Market (the "Nasdaq
Stock Market"), and the Company has taken no action designed to, or which to its
knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or delisting the Common Stock from the
Nasdaq Stock Market.
2.25. Reporting Status
The Company is currently eligible to register the resale of Common
Stock in a secondary offering on a registration statement on Form S-3 under the
Securities Act.
2.26. No Manipulation of Stock
The Company has not taken and will not, in violation of applicable
law, take any action outside the ordinary course of business designed to or that
might reasonably be expected to cause or result in unlawful manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
2.27. Accountants
PricewaterhouseCoopers LLP have advised the Company that they are,
and to the best knowledge of the Company they are, independent accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder.
2.28. Transfer Taxes
On the Closing Dates, all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
transfer of the Shares hereunder will be, or will have been, fully paid or
provided for by the Company and the Company will have complied with all laws
imposing such taxes.
2.29. Investment Company
The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for an investment company,
within the meaning of the Investment Company Act of 1940, as amended.
2.30. Listing
The Company complies with all requirements of the NASD with respect
to the issuance of the Shares and the listing thereof on the Nasdaq Stock
Market. 2.31. Other Representations and Warranties
To the Company's actual knowledge, all of the representations and
warranties contained in Article II of the Acquisition Agreement are true and
correct.
2.32. Material Facts
This Agreement, the schedules furnished contemporaneously herewith,
and the other agreements, documents, certificates or written statements
furnished or to be furnished to the Investor through the Closing Dates by or on
behalf of the Company in connection with the transactions contemplated hereby
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein or
herein, in light of the circumstances in which they were made, not misleading.
Notwithstanding the foregoing, the projections and business plans furnished to
the Investor by the Company have been prepared in good faith on the basis of
reasonable assumptions consistent with earlier assumptions and represent the
Company's best estimate on the date hereof of its future performance.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Each Investor represents and warrants to the Company severally and
solely with respect to itself and its purchase hereunder and not with respect to
any other Investor as follows:
(a) It is acquiring the Shares for its own account for investment
and not with a view towards the resale, transfer or distribution thereof, nor
with any present intention of distributing the Shares, but subject,
nevertheless, to any requirement of law that the disposition of the Investor's
property shall at all times be within the Investor's control, and without
prejudice to the Investor's right at all times to sell or otherwise dispose of
all or any part of such securities under a registration under the Securities Act
or under an exemption from said registration available under the Securities Act.
(b) It has full power and legal right to execute and deliver this
Agreement and to perform its obligations hereunder.
(c) It is a resident of the jurisdiction set forth immediately
below such Investor's name on the signature pages hereto.
(d) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, and, upon execution and delivery by the Company, this Agreement shall
constitute the valid and binding obligation of the Investor, enforceable against
the Investor in accordance with its terms, except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and general
principles of equity.
(e) There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of the Investor and
the Investor agrees to indemnify and hold the Company harmless against any costs
or damages incurred as a result of any such claim.
(f) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. It has
been furnished access to such information and documents as it has requested and
has been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares contemplated hereby. It is an
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act.
(g) It hereby acknowledges that no action has been taken by the
Company, and the Company does not intend to take any action, in any jurisdiction
outside of the United States that would permit an offering of the Shares, or
possession or distribution of offering materials in connection with the issuance
of the Shares, in any jurisdiction outside of the United States. (h) It
understands that no United States federal or state agency or any other
government or governmental agency has passed upon or made any recommendation or
endorsement of the Shares or an investment therein.
SECTION 4. ADDITIONAL AGREEMENTS OF THE PARTIES
4.1. Resale of Securities
(a) Each Investor covenants that it will not sell or otherwise
transfer the Shares except pursuant to an effective registration under the
Securities Act or in a transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder.
(b) Until the Shares are registered pursuant to Section 4.9
hereof, the certificates evidencing the Shares will bear the following legend
reflecting the foregoing restrictions on the transfer of such securities:
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
transferred except pursuant to an effective registration under the
Act or in a transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an exempt transaction
under the Act and the rules and regulations promulgated
thereunder."
4.2. Covenants Pending Closing
Pending the Closings, the Company will conduct and will cause its
Subsidiaries to conduct their respective businesses in the ordinary course
(except for actions outside of the ordinary course in connection with the
Acquisition), and will not, and will not permit any of its Subsidiaries to,
without the Investor's prior written consent, take any action which would result
in any of the representations or warranties contained in this Agreement not
being true at and as of the time immediately after such action, or in any of the
covenants contained in this Agreement becoming incapable of performance. The
Company will promptly advise the Investors of any action or event of which it
becomes aware which has the effect of making incorrect any of such
representations or warranties or which has the effect of rendering any of such
covenants incapable of performance.
4.3. Further Assurance
Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby. Each
such party shall use its reasonable efforts to fulfill or obtain the fulfillment
of the conditions to either Closing as promptly as practicable.
4.4. Indemnity
(a) The Company agrees to indemnify and hold each Investor, its
members and its Affiliates and each of their respective officers, directors,
partners, members, employees and agents, and each person who controls the
Investor or any of its members (within the meaning of the Exchange Act) (the
"Indemnified Parties") harmless against any and all losses, liabilities,
damages, expenses and other costs ("Losses") arising from any actual or
threatened claims brought against the Company or such Indemnified Parties in
connection with or arising out of entering into this Agreement and the
transactions contemplated hereby or any other legal, administrative or other
proceeding arising out of the transactions contemplated hereby, other than such
Losses which are judicially determined to have resulted from (i) the gross
negligence or willful misconduct of the Investor or such other Indemnified Party
or (ii) the breach by the Investor of any of the terms of this Agreement.
(b) Each Indemnified Party under this Section 4.4 will, promptly
after the receipt of notice of the commencement of any action against such
Indemnified Party in respect of
which indemnity may be sought from the Company on account of an indemnity
agreement contained in this Section 4.4, notify the Company in writing of the
commencement thereof. The omission of any Indemnified Party so to notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Party other than pursuant to this Section
4.4 or, unless the Company shall have been prejudiced by the omission of such
Indemnified Party so to notify the Company, pursuant to this Section 4.4. In
case any such action shall be brought against any Indemnified Party and it shall
notify the Company of the commencement thereof, the Company shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party, and
after notice from the Company to such Indemnified Party of its election so to
assume the defense thereof, the Company will not be liable to such Indemnified
Party under this Section 4.4 for any legal or other expense subsequently
incurred by such Indemnified Party in connection with the defense thereof;
provided, however, that (1) if the Company shall elect not to assume the defense
of such claim or action or (2) if the Indemnified Party reasonably determines
(A) that there may be a conflict between the positions of the Company and of the
Indemnified Party in defending such claim or action or (B) that there may be
legal defenses available to such Indemnified Party different from or in addition
to those available to the Company, then separate counsel for the Indemnified
Party shall be entitled to participate in and conduct the defense, in the case
of (1) and (2)(A), or such different defenses, in the case of (2)(B), and the
Company shall be liable for any reasonable legal or other expenses incurred by
the Indemnified Party in connection with the defense.
4.5. Consents and Approvals; Proxy
(a) From and after the date hereof, the Company shall use its
best efforts to obtain as promptly as practicable any consent or approval of any
Person, including any regulatory authority, required in connection with the
transactions contemplated hereby, including without limitation, the consent of
the Company's stockholders for the issuance of the Shares.
(b) In furtherance of the above, as promptly as practicable after
the First Closing Date, but in no event later than five business days following
the First Closing Date, the Company shall prepare and file with the SEC, and
shall use all reasonable efforts to have cleared by the SEC, a preliminary proxy
statement, and as soon as practicable thereafter (subject to applicable waiting
periods under the Exchange Act and review by the SEC) file with the SEC and
promptly thereafter mail a definitive proxy statement to the Company's
stockholders (the "Proxy Statement"). Any Proxy Statement filed under this
Section 4.5(b) shall, to the extent required, contain the recommendation of the
Board that the Company's stockholders approve the transactions contemplated by
this Agreement. Subject to applicable law, the Company shall promptly take all
action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder and shall include in the Proxy Statement such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1. Each Investor will supply the Company any
information with respect to itself and its nominees, officers, members and
affiliates required by Section 14(f) and Rule 14f-1. Each Investor will be given
a reasonable opportunity to review and comment on drafts of the Proxy Statement
and the Company will use its reasonable best efforts to accept comments thereto
given by each Investor and its representatives. The Company shall promptly take
all action necessary in accordance with applicable law and its Organizational
Documents to convene a meeting of the Company's
stockholders, if such meeting is required, no later than November 15, 2002 or,
if such date is impracticable due to review by the SEC, as soon as practicable
thereafter. The Company shall use its best efforts to solicit from the Company's
stockholders proxies in favor of the transactions contemplated by this Agreement
and shall take all other action necessary or, in the reasonable opinion of the
Investors, advisable to secure any vote of stockholders necessary for approval
of the transactions contemplated by this Agreement.
4.6. Use of Proceeds
The proceeds received by the Company from the issuance and sale of
the Shares shall be used by the Company in connection with the Acquisition,
including, without limitation for the purchase price, transaction costs and
working capital for the acquired operations.
4.7. Takeover Statute
If any Takeover Statute shall become applicable to the transactions
contemplated hereby, including without limitation any takeover provision under
the laws of the State of Delaware, the Company and the members of the Board
shall grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statue or regulation on the transactions contemplated hereby.
4.8. Rights Agreement Inapplicable
If the transactions contemplated hereby or the conversion or
exchange or exercise of any of the Securities upon its terms would (a) result in
the occurrence of a "Triggering Event" under the Rights Agreement, (b) cause any
Investor to become an "Acquiring Person" as defined in the Rights Agreement or
(c) otherwise cause the exercise of any "Right" issued pursuant to the Rights
Agreement or the issuance or exercise of any "Rights Certificate" under the
Rights Agreement, the Company will promptly cause the Rights Agreement to be
duly amended to prevent any such characterization.
4.9. Registration Rights
The Company shall file a registration statement (the "Registration
Statement") covering the Shares on behalf of the Investor and its Affiliates and
any subsequent transferee with the SEC. Such Registration Statement will be
filed as soon as practicable after the Second Closing Date or, if the Second
Closing Date shall not occur, as soon as practicable after the provisions of
this Agreement relating to the Second Closing have been terminated pursuant to
Section 8.4 hereof. The Company will use its reasonable best efforts to cause
the Registration Statement to become effective within 60 days of filing. The
expenses of the preparation and filing of the Registration Statement shall be
borne by the Company. Upon filing the Registration Statement, the Company will
use its reasonable best efforts to keep the Registration Statement effective
with the SEC at all times until the Investor or any transferee who would require
such registration to effect a sale of the Shares no longer holds the Shares or
can effect a sale of the Shares pursuant to Rule 144(k) under the Securities
Act, whichever is sooner. Provisions relating to the registration rights
discussed in this Section are set forth in Exhibit C hereto.
4.10. Registration and Listing
(a) So long as any Investor Owns any Shares, the Company will
cause the Common Stock to continue at all times to be registered under Section
12(g) of the Exchange Act, will comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such reporting and filing obligations.
(b) So long as any Investor Owns any Shares, the Company shall
continue the listing or trading of the Common Stock on Nasdaq or one of the
other Approved Markets and comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Approved Market on
which the Common Stock is listed.
(c) So long as any Investor Owns any Shares, the Company shall
use its best efforts to comply with all requirements of the NASD with respect to
the issuance of the Shares and listing thereof on the Nasdaq Stock Market.
4.11. Private Offering
(a) Neither the Company nor anyone acting on its behalf shall
offer the Shares for issue or sale to, or solicit any offer to acquire any of
the same from, anyone so as to bring the issuance and sale of such Shares within
the provisions of Section 5 of the Securities Act.
(b) Notwithstanding anything to the contrary in the immediately
preceding paragraph or in Section 2.21, the Company and the Investors agree that
prior to the First Closing the Company may approach certain additional investors
meeting the criteria required of "accredited investors", as defined in Rule 501
of Regulation D under the Securities Act, regarding purchases of Shares
hereunder, provided that any such offers and sales made under this paragraph:
(a) are on the same terms set forth in this Agreement; (b) are and will be
exempt from the registration and prospectus delivery requirements of the
Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws; and (c) do not and will
not cause the exemptions from (i) the registration and prospectus delivery
requirements of the Securities Act and (ii) any state securities law
registration, permit or qualification requirements, that are available with
respect to the transactions contemplated by this Agreement to be or become no
longer available.
SECTION 5. INVESTORS' CLOSING CONDITIONS
The obligation of each Investor to purchase and pay for the Shares
on the First Closing Date and the Second Closing Date, as provided in Section 1
hereof, shall be subject to the performance by the Company of its agreements
theretofore to be performed hereunder and to the satisfaction, prior thereto or
concurrently therewith, of the following further conditions:
5.1. Representations and Warranties
(a) The representations and warranties of the Company contained
in this Agreement shall be true on and as of the First Closing Date.
(b) The representations and warranties of the Company contained in
this Agreement shall be true on and as of the Second Closing Date in all
material respects (except for such representations and warranties that are
qualified as to materiality or Material Adverse Effect, which shall be true in
all respects) as though such representations and warranties were made at and as
of such date, except as otherwise affected by the Acquisition or the
transactions contemplated hereby.
5.2. Compliance with Agreement
The Company shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by the Company prior to or on the First Closing Date
or the Second Closing Date, as the case may be.
5.3. Injunction
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
5.4. Counsel's Opinion
The Investor shall have received from the Company's counsel,
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, an opinion, dated the First Closing Date or the
Second Closing Date, as the case may be, substantially in the form of Exhibit D
hereto.
5.5. Adverse Development (a) There shall have been no developments
in the business of the Company, Dendron GmbH or any of the Company's
Subsidiaries which would be reasonably expected to have a Material Adverse
Effect.
5.6. Stockholder Approval
On or prior to the First Closing Date, the Company shall have
received any stockholder approval required in connection with the issuance and
sale of the First Closing Shares, subject to the provisions of Section 1.1(a)
above. On or prior to the Second Closing Date, the Company shall have received
any stockholder approval required in connection with the transactions
contemplated by this Agreement to occur on the Second Closing Date.
5.7. Closing of Acquisition
All of the conditions precedent to the closing of the Acquisition
shall have occurred on or prior to the First Closing Date.
5.8. Listing of the Shares
(a) On or before the First Closing Date, the First Closing Shares
shall have been approved for listing on the Nasdaq Stock Market.
(b) On or before the Second Closing Date, the Second Closing
Shares shall have been approved for listing on the Nasdaq Stock Market.
5.9. Nasdaq Trading
From the date hereof to the Second Closing Date, trading in the
Common Stock shall not have been suspended by the SEC or the Nasdaq Stock
Market, and trading in securities generally as reported by the Nasdaq Stock
Market shall not have been suspended or limited, and the Common Stock shall not
have been delisted on the Nasdaq Stock Market.
5.10. Officer's Certificate
The Investor shall have received a certificate, dated the First
Closing Date or the Second Closing Date, as the case may be, signed by each of
the President and the Chief Financial Officer of the Company, certifying that
the conditions specified in the foregoing Sections 5.1, 5.2, 5.3 and 5.5 hereof
have been fulfilled.
5.11. Secretary's Certificate
The Investor shall have received a certificate, dated the First
Closing Date or the Second Closing Date, as the case may be, of the Secretary of
the Company attaching (i) a true and complete copy of the Certificate of
Incorporation of the Company as filed with the Secretary of State of the State
of Delaware, with all amendments thereto, (ii) true and complete copies of the
Company's Bylaws in effect as of such date, (iii) certificates of good standing
of the appropriate officials of the jurisdictions of incorporation of the
Company and of each state in which the Company is qualified to do business as a
foreign corporation and (iv) resolutions of the Board authorizing the execution
and delivery of this Agreement and the transactions contemplated hereby, and the
issuance of the Shares.
5.12. Approval of Proceedings
All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to the Investors and to Xxxxxxx Xxxx &
Xxxxxxxxx, special counsel to Micro Investment, LLC; and the Investors shall
have received copies of all documents or other evidence which they and Xxxxxxx
Xxxx & Xxxxxxxxx may request in connection with such transactions and of all
records of corporate proceedings in connection therewith in form and substance
satisfactory to the Investors and Xxxxxxx Xxxx & Xxxxxxxxx.
SECTION 6. COMPANY CLOSING CONDITIONS
The obligation of the Company to issue and deliver the Shares on
the First Closing Date or the Second Closing Date, as the case may be, as
provided in Section 1 hereof,
shall be subject to the performance by each Investor of its agreements
theretofore to be performed hereunder and to the satisfaction, prior thereto or
concurrently therewith, of the following further conditions:
6.1. Representations and Warranties
(a) The representations and warranties of each Investor contained
in this Agreement shall be true on and as of the First Closing Date.
(b) The representations and warranties of each Investor contained
in this Agreement shall be true on and as of the Second Closing Date in all
material respects (except for such representations and warranties that are
qualified as to materiality or Material Adverse Effect, which shall be true in
all respects) as though such representations and warranties were made at and as
of such date, except as otherwise affected by the transactions contemplated
hereby.
6.2. Compliance with Agreement
Each Investor shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by it prior to or on the First Closing
Date or the Second Closing Date, as the case may be.
6.3. Investors' Certificates
The Company shall have received a certificate from each Investor,
dated the First Closing Date or the Second Closing Date, as the case may be,
signed by a duly authorized representative of such Investor, certifying that the
conditions specified in the foregoing Sections 6.1 and 6.2 hereof have been
fulfilled.
6.4. Injunction
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
6.5. Stockholder Approval
On or prior to the First Closing Date, the Company shall have
received any stockholder approval required in connection with the issuance and
sale of the First Closing Shares, subject to the provisions of Section 1.1(a)
above. On or prior to the Second Closing Date, the Company shall have received
any stockholder approval required in connection with the transactions
contemplated by this Agreement to occur on the Second Closing Date.
6.6. Closing of Acquisition
All of the conditions precedent to the closing of the Acquisition
shall have occurred on or prior to the First Closing Date.
6.7. Special Committee Approval
On or prior to the First Closing Date, the Special Committee of the
Board established on August 19, 2002 shall have received a fairness opinion
relating to the transactions contemplated by this Agreement from an investment
banking firm chosen by the Special Committee and approved the transactions
contemplated by this Agreement.
SECTION 7. INTERPRETATION OF THIS AGREEMENT
7.1. Terms Defined
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
Acquisition: shall mean the Company's acquisition of all of the
issued and outstanding equity interests of Dendron GmbH pursuant to the
Acquisition Agreement.
Acquisition Agreement: shall mean that certain Stock Purchase
Agreement made and entered into as of the date hereof, by and among Prof. Xx.
Xxxxxxxxxx, Xx. Xxxxxxx Monstadt, Dr. med. Xxxx Xxxxxx, Augusta Krankenanstalt
GmbH, dg micromedicine GmbH, 3i Group Investments LP and Nordrhein-Westfalen
Fonds GmbH.
Affiliate: shall mean any Person or entity, directly or indirectly,
controlling, controlled by or under common control with such Person or entity.
Approved Markets: shall mean the Nasdaq Stock Market (including the
Nasdaq National Market and Nasdaq SmallCap Market), the New York Stock Exchange
or the American Stock Exchange.
Board: shall have the meaning set forth in section 2.3(c).
Business Day: shall mean a day other than a Saturday, Sunday or
other day on which banks in the State of New York are required or authorized to
close.
Closing: shall have the meaning set forth in Section 1.2.
Closing Date: shall have the meaning set forth in Section 1.2.
Code: shall mean the Internal Revenue Code of 1986, as amended.
Commitments: shall have the meaning set forth in Section 2.12.
Company SEC Reports: shall have the meaning set forth in Section
2.7.
Contract: shall mean any agreement, contract, commitment,
understanding, arrangement, restriction or other instrument to which the Company
or any of its Subsidiaries is a party, which includes any rights or obligations
thereof, or which otherwise relates to or affects any of their respective
assets, including, without limitation, any indenture, lease, mortgage, deed of
trust, loan, credit or security agreement, note or other evidence of
indebtedness, guaranty,
stockholders agreement, license, joint venture agreement, distribution
agreement, or employment, severance or consulting agreement.
DGCL: shall mean the Delaware General Corporation Law.
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended.
FDA: shall have the meaning set forth in Section 2.9(c).
First Closing: shall have the meaning set forth in Section 1.2(a).
First Closing Date: shall have the meaning set forth in Section
1.2(a).
First Closing Purchase Price: shall have the meaning set forth in
Section 1.1(a).
First Closing Shares: shall have the meaning set forth in Section
1.1(a).
GAAP: shall have the meaning set forth in Section 2.7.
Intellectual Property: shall mean all of the following, owned or
used in the current or contemplated business of the Company or any Subsidiary:
(i) trademarks and service marks, trade dress, product configurations, trade
names and other indications of origin, applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated therewith;
(ii) patentable inventions, discoveries, improvements, ideas, know-how, formula
methodology, processes, technology, software (including password unprotected
interpretive code or source code, object code, development documentation,
programming tools, drawings, specifications and data) and applications and
patents in any jurisdiction pertaining to the foregoing, including re-issues,
continuations, divisions, continuations-in-part, renewals or extensions; (iii)
trade secrets, including confidential information and the right in any
jurisdiction to limit the use or disclosure thereof; (iv) copyrights in
writings, designs software, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (v) database rights; (vi) Internet Web sites, domain names and
applications and registrations pertaining thereto and all intellectual property
used in connection with or contained in all versions of the Company's Web sites;
(vii) rights under all agreements relating to the foregoing; (viii) books and
records pertaining to the foregoing; and (ix) claims or causes of action arising
out of or related to past, present or future infringement or misappropriation of
the foregoing.
Key Agreements and Instruments: shall have the meaning set forth in
Section 2.6(a).
Losses: shall have the meaning set forth in Section 4.4(a).
Material Adverse Effect: shall have the meaning set forth in
Section 2.1(c).
NASD: shall mean National Association of Securities Dealers, Inc.
Nasdaq Stock Market: shall have the meaning set forth in Section
2.24.
Organizational Documents: shall have the meaning set forth in
Section 2.1(a).
Owns, Own, Owned: shall mean the aggregate beneficial ownership,
within the meaning of Rule 13d-3 under the Exchange Act, of the Investor and any
of its Affiliates, its current or former members and Affiliates thereof.
Person: shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
Proxy Statement: shall have the meaning set forth in Section
4.5(b).
Purchase Price: shall have the meaning set forth in Section 1.1(b).
Registration Statement: shall have the meaning set forth in Section
4.9.
Rights Agreement: shall mean the Rights Agreement, dated as of June
3, 1999, between the Company and U.S. Stock Transfer Corporation, as Rights
Agent, as amended.
SEC: shall mean the Securities and Exchange Commission.
Second Closing: shall have the meaning set forth in Section 1.2(b).
Second Closing Date: shall have the meaning set forth in Section
1.2(b).
Second Closing Purchase Price: shall have the meaning set forth in
Section 1.1(b).
Second Closing Shares: shall have the meaning set forth in Section
1.1(b).
Securities Act: shall mean the Securities Act of 1933, as amended.
Shares: shall have the meaning set forth in Section 1.1(b).
Subsidiary: shall mean a corporation of which a Person owns,
directly or indirectly, more than 50% of the Voting Stock.
Takeover Statute: shall mean any corporate takeover provision under
laws of the State of Delaware or any other state or federal "fair price",
"moratorium", "control share acquisition" or other similar antitakeover statute
or regulation.
Voting Stock: shall mean securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
7.2. Accounting Principles
Where the character or amount of any asset or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting
computation is required to be made for the purposes of this Agreement, this
shall be done in accordance with GAAP at the time in effect, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
7.3. Directly or Indirectly
Where any provision in this Agreement refers to action to be taken
by any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by such
Person.
7.4. Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to any contrary
result otherwise required by conflict or choice of law rules.
7.5. Paragraph and Section Headings
The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof.
SECTION 8. MISCELLANEOUS
8.1. Notices
(a) All communications under this Agreement shall be in writing
and shall be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(1) if to an Investor, at the address or facsimile number set
forth next to such Investor's name on Schedule 1.1(a), or at such other
address or facsimile number as such Investor may have furnished the Company
in writing, with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000 (facsimile: (000) 000-0000), Attention: Xxxxxx X.
Xxxxxxx, Esq.; and
(2) if to the Company, at: 2 Goodyear, Xxxxxx, XX 00000
(facsimile: (000) 000-0000), Attention: Xxxxx X. Xxxxxxx, or at such other
address or facsimile number as it may have furnished the Investor in
writing, with a copy to Stradling, Yocca, Xxxxxxx & Xxxxx, 000 Xxxxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, XX 00000 (facsimile: (949)
725-4100), Attention: Xxxxx Xxxxxxxx, Esq.
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the date
of such mailing.
8.2. Expenses and Taxes
(a) Except as expressly provided otherwise in this Agreement, the
Company and each Investor is liable for, and will pay, its own expenses incurred
in connection with the negotiation, preparation, execution and delivery of this
Agreement and the other agreements to be executed in connection herewith,
including, without limitation, attorneys' and consultants' fees and expenses.
(b) Notwithstanding the provisions of Section 8.2(a) above, the
Company will pay, and save and hold each Investor harmless from any and all
liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other than income
taxes), if any, which may be payable or determined to be payable on the
execution and delivery or acquisition of the Shares.
8.3. Reproduction of Documents
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by the Investors on the Closing Dates
(except for certificates evidencing the Shares themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Investors, may be reproduced by the Investors by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and the Investors may destroy any original document so reproduced. All
parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by the Investor in the regular course of business) and
that any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence.
8.4. Termination and Survival
Unless the First Closing has occurred prior thereto, the
obligations of the parties hereto to consummate the First Closing and the Second
Closing shall terminate on October 31, 2002 (unless such date is extended by
mutual written consent of the parties hereto). Notwithstanding any termination
of the parties' obligation to consummate the Closings, all other terms of this
Agreement shall remain in full force and effect. All warranties,
representations, and covenants made by the Investors and the Company herein or
in any certificate or other instrument delivered by the Investors or the Company
under this Agreement shall be considered to have been relied upon by the Company
or the Investors, as the case may be, and shall survive all deliveries to the
Investors of the Shares, or payment to the Company for such Shares, regardless
of any investigation made by the Company or the Investors, as the case may be,
or on the Company's or the Investors' behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company hereunder. Notwithstanding the foregoing, the representations and
warranties contained in Section 2.31 shall expire upon the closing of the
Acquisition and be of no further force and effect.
8.5. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties. The Company may not assign
its rights or obligations hereunder without the prior written consent of the
Investors. Each Investor may assign its rights and obligations hereunder to any
of its members or Affiliates or to any Affiliates of its members.
8.6. Entire Agreement; Amendment and Waiver
This Agreement and the agreements attached as Exhibits hereto
constitute the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and the Investors holding a majority of the Shares; provided,
however, that, notwithstanding the foregoing, this Agreement may be amended by
the Company to include additional purchasers of Shares as "Investors" in the
manner contemplated in Section 4.11 above.
8.7. Severability
In the event that any part or parts of this Agreement shall be held
illegal or unenforceable by any court or administrative body of competent
jurisdiction, such determination shall not affect the remaining provisions of
this Agreement which shall remain in full force and effect.
8.8. Limitation on Enforcement of Remedies
The Company hereby agrees that it will not assert against the
limited partners of any members of any Investor any claim it may have under this
Agreement by reason of any failure or alleged failure by the Investor to meet
its obligations hereunder. Counterparts
8.9. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
Very truly yours,
MICRO THERAPEUTICS, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: President and Chief Executive
Officer
ACCEPTED AND AGREED:
INVESTORS:
MICRO INVESTMENT, LLC
By: Warburg, Xxxxxx Equity Partners, L.P.,
Managing Member
By: Warburg, Xxxxxx & Co.,
General Partner
By: Xxxxxxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Partner
Resident of: Delaware
Schedule 1.1(a)
First Closing
Investor Name and Address Number of Shares
------------------------- ----------------
Micro Investment, LLC $20 million divided by the Per Share
c/o Warburg, Xxxxxx Equity Partners, L.P. Purchase Price, less the number of
000 Xxxxxxxxx Xxxxxx shares of Common Stock, if any, to be
Xxx Xxxx, XX 00000 sold to "accredited investors"
Facsimile: (000) 000-0000 pursuant to Section 4.12 hereof.
Attention: Xxxxxxxxx X. Xxxxxxxxxx
------------------------------------------------------ -------------------------
Schedule 1.1(b)
Second Closing
Investor Name and Address Number of Shares
------------------------- ----------------
Micro Investment, LLC $10 million divided by the Per Share
c/o Warburg, Xxxxxx Equity Partners, L.P. Purchase Price, less the number of
000 Xxxxxxxxx Xxxxxx shares of Common Stock, if any, to
Xxx Xxxx, XX 00000 be sold to "accredited investors"
Facsimile: (000) 000-0000 pursuant to Section 4.12 hereof.
Attention: Xxxxxxxxx X. Xxxxxxxxxx
--------------------------------------------------------------------------------
Exhibit C
Registration Rights Provisions
1. Registration Procedures and Expenses.
(a) The Company shall:
(i) subject to receipt of necessary information from each
of the Investors, prepare and file with the SEC, as soon as practicable after
the Second Closing Date or, if the Second Closing Date shall not occur, as soon
as practicable after the provisions of the Agreement relating to the Second
Closing have been terminated pursuant to Section 8.4 thereof, a registration
statement on Form S-3 (the "Registration Statement") to enable the resale of the
Shares by each of the Investors from time to time through the automated
quotation system of the Nasdaq Stock Market or in privately-negotiated
transactions;
(ii) (A) use its reasonable best efforts, subject to receipt
of necessary information from each of the Investors, to cause the Registration
Statement to become effective no event later than sixty (60) days after the
Registration Statement is filed by the Company, and (B) within five (5) days
after the receipt of a no review letter from the SEC, take all appropriate
measures necessary to cause the Registration Statement to become effective;
(iii) use its reasonable best efforts to prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus which forms a part thereof (the "Prospectus") as may be necessary
to keep the Registration Statement current and effective for a period not
exceeding, with respect to the Investors' Shares, the earlier of (i) the date on
which, in the opinion of counsel to the Company, each of the Investors may sell
all Shares then held by it in any 90-day period pursuant to Rule 144 under the
Securities Act (without restriction by the volume limitations of Rule 144(e)) or
(ii) such time as all Shares purchased by the Investors have been sold pursuant
to a registration statement under the Securities Act or pursuant to Rule 144;
(iv) furnish to each of the Investors with respect to the
Shares registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses (including supplemental prospectuses) and
preliminary versions of the Prospectus filed with the SEC ("Preliminary
Prospectuses") in conformity with the requirements of the Securities Act and
such other documents as such Investor may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the Shares by
such Investor, provided, however, that unless waived by the Company in writing,
the obligation of the Company to deliver copies of Prospectuses or Preliminary
Prospectuses to any Investor shall be subject to the receipt by the Company of
reasonable assurances from such Investor that the Investor will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such Prospectuses or
Preliminary Prospectuses;
(v) file documents required of the Company for normal blue
sky clearance in states reasonably specified in writing by any Investor prior to
the effectiveness of the Registration Statement, provided, however, that the
Company shall not be required to qualify
to do business or consent to service of process in any jurisdiction in which it
is not now so qualified or has not so consented;
(vi) bear all expenses (other than underwriting discounts
and commissions, if any) in connection with the procedures in paragraph (i)
through (v) of this Section 1 and the registration of the Shares pursuant to the
Registration Statement, including without limitation (a) registration and filing
fees with the SEC, (b) fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of Company counsel in
connection with blue sky qualifications of the Shares), (c) printing expenses,
(d) fees and expenses incurred in connection with the listing of the Shares, (e)
fees and expenses of counsel and independent certified public accountants for
the Company (including the expenses of any comfort letters), (f) the fees and
expenses of any additional experts retained by the Company in connection with
such registration, (g) fees and expenses in connection with any review of
underwriting arrangements by the National Association of Securities Dealers,
Inc., including fees and expenses of any "qualified independent underwriter,"
(h) internal Company expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
and (i) all reasonable fees and disbursements of one counsel for the Investors
in connection with such registration; and
(vii) advise each of the Investors, promptly after it shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
delaying or suspending the effectiveness of the Registration Statement or of the
initiation of any proceeding for that purpose; and it will promptly use its
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(b) With a view to making available to the Investors the benefits
of Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investors to sell Shares to the public without
registration, the Company covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) such date as, in the opinion of counsel to the Company,
all of the Investors' Shares may be resold pursuant to Rule 144(k) or any other
rule of similar effect or (B) such date as all of the Investors' Shares shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and under the
Exchange Act; and (iii) furnish to each Investor upon request, as long as such
Investor owns any Shares, (A) a written statement by the Company that it has
complied with the reporting requirements of the Securities Act and the Exchange
Act, (B) a copy of the Company's most recent Annual Report on Form 10-KSB or
Quarterly Report on Form 10-QSB, and (C) such other information as may be
reasonably requested in order to avail such Investor of any rule or regulation
of the SEC that permits the selling of any such Shares without registration.
(c) With respect to any Investor, it shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 that such Investor shall furnish to the Company such information
regarding itself, the Shares to be sold by such Investor, and the intended
method of disposition of such securities as shall be required to effect the
registration of the Shares.
(d) Notwithstanding anything to the contrary herein, the
Registration Statement shall cover only the Shares. In no event at any time
before the Registration Statement becomes effective with respect to the Shares
shall the Company publicly announce or file any other registration statement,
other than a registration statement on Form S-8 relating solely to employee
benefit plans, without the prior written consent of each of the Investors.
(e) The Company understands that each of the Investors disclaims
being an underwriter, but any Investor being deemed an underwriter by the SEC
shall not relieve the Company of any obligations it has hereunder.
2. Transfer of Shares After Registration; Suspension.
(a) Each Investor agrees that it will not effect any disposition
of the Shares or its right to purchase the Shares that would constitute a sale
within the meaning of the Securities Act other than transactions exempt from the
registration requirements of the Securities Act, except as contemplated in the
Registration Statement referred to in Section 1 and as described below or as
otherwise permitted by law, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding
itself or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall: (i) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other required
document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Shares being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (ii) provide the Investors copies of any documents
filed pursuant to Section 2(b)(i); and (iii) upon request, inform any Investor
that the Company has complied with its obligations in Section 2(b)(i) (or that,
if the Company has filed a post-effective amendment to the Registration
Statement which has not yet been declared effective, the Company will notify
such Investor to that effect, will use its reasonable efforts to secure the
effectiveness of such post-effective amendment as promptly as possible and will
promptly notify such Investor pursuant to Section 2(b)(i) hereof when the
amendment has become effective).
(c) Subject to paragraph (d) below, in the event: (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation of any proceeding for such
purpose; or (iv) of any event or circumstance which necessitates the making
of any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the Company shall
promptly deliver a certificate in writing to each Investor (the "Suspension
Notice") to the effect of the foregoing and, upon receipt of such Suspension
Notice, each Investor will refrain from selling any Shares pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable within 30 days after delivery of a Suspension Notice to the
Investors. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Investors, the
Investors shall be entitled to specific performance in the event that the
Company fails to comply with the provisions of this Section 2(c).
(d) Notwithstanding the foregoing paragraphs of this Section 2,
the Company shall not suspend the Registration Statement which causes any
Investor to be prohibited from selling Shares under the Registration Statement
as a result of such Suspension on more than two occasions of not more than 30
days each in any twelve month period, and any such Suspension must be separated
by a period of at least thirty (30) days from a prior Suspension.
(e) Provided that a Suspension is not then in effect each
Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company will provide the requested
number of current Prospectuses to each Investor and to any other parties
requiring such Prospectuses.
3. Indemnification.
For purposes of this Section 3:
the term "Selling Stockholders" means the Investors, their
respective officers and members, and each person, if any, who controls an
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act;
the term "Registration Statement" means the Registration Statement,
any Preliminary Prospectus, the final Prospectus, any exhibit, supplement or
amendment thereto or included in or relating to, and any document incorporated
by reference in, the Registration Statement (or deemed to be a part thereof)
referred to in Section 1; and
the term "untrue statement" means any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(a) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) to which such Selling Stockholder
may become subject (under the Securities Act or otherwise) insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon (i) any untrue statement of a material
fact contained in the Registration Statement, (ii) any inaccuracy in the
representations and warranties of the Company contained in the Agreement or the
failure of the Company to perform its obligations thereunder or (iii) any
failure by the Company to fulfill any undertaking included in the Registration
Statement, and the Company will reimburse such Selling Stockholder for any legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim, provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue statement
made in such Registration Statement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Selling
Stockholder and stated to be specifically for use in preparation of the
Registration Statement.
(b) Each Investor agrees to indemnify and hold harmless the
Company (and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, each officer of the Company who signs the
Registration Statement and each director of the Company) from and against any
losses, claims, damages or liabilities to which the Company (or any such
officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement of a material fact contained in the
Registration Statement if such untrue statement was made in reliance upon and in
conformity with written information furnished by or on behalf of such Investor
and stated to be specifically for use in preparation of the Registration
Statement, and such Investor will reimburse the Company (or such officer,
director or controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim. The obligation of such Investor to
indemnify shall be limited to the net amount of the proceeds received by such
Investor from the sale of the Shares pursuant to the Registration Statement.
(c) Each party entitled to indemnification under this Section 3
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any 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 that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded, after consultation with counsel, that there may be a
conflict of interest between the Indemnifying Party and the Indemnified Party
in such action, in which case the reasonable fees and expenses of counsel for
the Indemnified Party shall be at the expense of the Indemnifying Party), and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 3, except to the extent that the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 3 is
insufficient to or is held by a court of competent jurisdiction to be
unavailable to hold harmless an Indemnified Party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and such Investor on the other in
connection with the statements or omissions or other matters which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, in the case of an untrue
statement, whether the untrue statement relates to information supplied by the
Company on the one hand or such Investor on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement. The Company and the Investors agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Investor shall be
required to contribute any amount in excess of the amount by which the gross
amount received by such Investor from the sale of the Shares to which such loss
relates exceeds the amount of any damages which such Investor has otherwise been
required to pay by reason of such untrue statement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Investors obligations in this
subsection to contribute are several in proportion to their sales of Shares to
which such loss relates and not joint.
(e) The indemnity and contribution agreements contained in this
Section 3 shall remain operative and in full force and effect regardless of (a)
termination of any provision of the Agreement or any underwriting agreement, (b)
any investigation made by or on behalf of any Indemnified Person or by or on
behalf of the Company and (c) the consummation of the sale or successive resales
of the Shares.
4. Liquidated Damages Under Certain Circumstances.
(a) If (i) the Registration Statement has not been declared
effective by the SEC by March 31, 2003, or (ii) the Registration Statement is
filed and declared effective but shall thereafter be subject to a Suspension
which shall be in effect for more than 60 days (consecutive or non-consecutive)
in the aggregate in any 12-month period, except in cases where (x) such
Suspension results from any untrue statement made in the Registration Statement
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Investor specifically for use in preparation of
the Registration Statement or (y) in the opinion of counsel to the Company,
during the entire duration of the Suspension, the Investors may sell all Shares
then held by the Investors in any 90-day period pursuant to Rule 144 under the
Securities Act (without restriction by the volume limitation of Rule 144(e))
(each such event referred to in clauses (i) and (ii), a "Registration Default"),
the Company will pay liquidated damages to the Investors (in proportion to the
number of Shares then held by each Investor) in the amount of 2% of the Purchase
Price paid by the Investors to the Company for the Shares for every 30-day
period the Registration Default continues. Such liquidated damages will be
payable to each Investor on demand by wire transfer of immediately available
funds or by federal funds check by the Company.
(b) Nothing herein limits each Investor's right to pursue actual
damages for the Company's failure to ensure sales can be made under the
Registration Statement or the Company's failure to ensure the Common Stock is
listed or included for quotation, as the case may be, on an Approved Market.
5. Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by any Investor, the Company will
furnish to each such Investor:
(a) as soon as it is delivered to the Company's other
stockholders, one copy of (i) its Annual Report to Stockholders (which Annual
Report shall contain financial statements audited in accordance with generally
accepted accounting principles by a national firm of certified public
accountants) and (ii) if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-KSB (the foregoing, in each case,
excluding exhibits);
(b) upon the reasonable request of such Investor, all exhibits
excluded by the parenthetical to subparagraph (a)(ii) of this Section 5 as filed
with the SEC and all other information that is made available to stockholders;
and
(c) upon the reasonable request of such Investor, an adequate
number of copies of the Prospectuses to supply to any other party requiring such
Prospectuses; and the Company, upon the reasonable request of such Investor,
will meet with such Investor or a representative thereof at the Company's
headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and will otherwise cooperate with
such Investor in conducting an investigation for the purpose of reducing or
eliminating such Investor's exposure to liability under the Securities Act,
including the reasonable production of information at the Company's
headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with such
Investor until and unless such Investor shall have entered into a
confidentiality agreement in form and substance reasonably satisfactory to the
Company with the Company with respect thereto.
6. Public Statements. The Company will not issue any public
statement, press release or any other public disclosure listing any Investor as
one of the purchasers of the Shares without such Investor's prior written
consent, except as may be required by applicable law or rules of any exchange on
which the Company's securities are listed.
