STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
March 8, 1993, is made by and between IOMED, Inc., a Utah corporation (the
"Company") and The CIT Group/Venture Capital, Inc., a New Jersey corporation
("CIT").
A. The Company desires to issue and sell to CIT, and CIT
desires to purchase from the Company, shares of the Company's common stock,
$.001 par value (the "Common Stock"), and rights to acquire additional shares of
the Common Stock, on the terms and subject to the conditions set forth in this
Agreement
Accordingly, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK AND COMMON STOCK RIGHTS
1.1 Common Stock. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as defined below) the Company
agrees to sell to CIT, and CIT agrees to purchase from the Company, the number
of shares of Common Stock set forth below CIT's name on the signature page of
this Agreement. At the Closing, title to such shares of Common Stock shall pass
to CIT, who, as record and beneficial owner, shall thereafter be entitled to all
rights with respect to its ownership of such shares.
1.2 Common Stock Rights.
(a) Each share of Common Stock purchased by CIT
hereunder shall be accompanied by a contingent right (a "Common Stock Right") to
receive from the Company on March 8. 1994, automatically, without any further
action being required on the part of CIT and without the payment of any
consideration in addition to the Purchase Price (as defined below), the
Applicable Number (as defined below) of newly issued shares of Common Stock, in
the event, but only in the event, that the closing of an initial public offering
of the Company's Common Stock that meets the conditions set forth in Section
1.2(b) below has not occurred prior to such date.
(b) Each Common Stock Right shall automatically
terminate and cease to be of any further force and effect, without any liability
on the part of the company or any of its officers or directors, upon the closing
of the initial public offering of the Company's Common Stock in which the
Company receives proceeds (net of any underwriting discounts and commissions but
prior to the deduction of any other offering expenses) in excess of $5,000,000
and in which the public offering price is not less than $2.00 per share (as
adjusted to reflect stock splits, combinations or the like).
(c) As used herein, "Applicable Number" shall be the
number of shares equal to the product of one Dollar ($1.00) divided by the
"Conversion Price." The "Conversion Price" shall initially be One Dollar
($1.00); provided, however, that in the event that, on or before March 8, 1994,
the Company shall issue shares of its Common Stock, options or warrants thereon,
or securities convertible into or exchangeable for its Common Stock, in a
transaction the primary purpose of which is to raise capital for a price per
share (the "Subsequent Issue Price") less than the Conversion Price in effect
immediately prior to such issuance, the Conversion Price shall be adjusted by
multiplying such conversion Price by a fraction (1) the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of shares so issued
would purchase at such Conversion Price, and (2) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such shares of Common Stock so issued or sold.
(d) For purposes of determining a new Conversion
Price pursuant to Section 1.2(c) above, shares of Common Stock issuable upon the
exercise or conversion of outstanding securities of the Company which are, by
their terms, exercisable or convertible into Common Stock shall be taken into
account but only to the extent that (i) such securities have been exercised,
converted or exchanged or (ii) the consideration to be paid upon such exercise
or conversion per share of underlying Common Stock is less than (including zero)
or equal to the Conversion Price.
(e) No fractional shares shall be issuable upon
maturity of the Common Stock Rights held by CIT. In lieu thereof, the Company
shall round up to the nearest whole number of shares the aggregate number of
shares issuable upon maturity of the Common Stock Rights held by CIT.
(f) The number of shares of Common Stock issuable
upon maturity of the Common Stock Rights shall be equitably adjusted to account
for any stock splits, combinations or the like.
1.3 No Rights as Shareholder. The Common Stock Rights shall
not entitle CIT to any rights as a shareholder of the Company until such time,
if ever, that shares of Common Stock are issued to CIT pursuant to the maturity
of such Common Stock Rights.
1.4 Purchase Price. The purchase price for the Common Stock
and the accompanying Common Stock Rights being purchased hereunder shall be Two
Dollars ($2.00) per unit (the "Purchase Price"), each unit consisting of one
share of Common Stock and one Common Stock Right.
1.5 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of the Company on
March 8, 1993, or on such later date as may be mutually agreed upon by the
parties. At the Closing, the Company shall deliver to CIT one or more
certificates evidencing the shares of Common Stock being purchased by it
hereunder against receipt from CIT of a check, made payable to the Company, in
an amount equal to the Purchase Price multiplied by the number of shares of
Common Stock and accompanying Common Stock Rights being purchased by it. In
addition, at the Closing (i) the Company shall deliver to CIT completed,
executed copies of SBA Form 480 and SBA Form 652; and (ii) CIT shall have
received an executed copy of a Redemption Rights Agreement in substantially the
form attached hereto as Exhibit A.
ARTICLE II
REPRESENTATIONS,_WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents, warrants and covenants to CIT
as follows:
2.1 Organization, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Utah and is qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the failure to be so qualified would have
a material adverse effect on the business or financial condition of the Company.
2.2 Authorization, etc. The Company has full corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Company, and constitutes the valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights and by general equitable principles.
2.3 Valid Issuance. The shares of Common Stock being purchased
by CIT hereunder, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, and the shares of Common Stock,
if any, that are issued upon the maturity of the Common Stock Rights, when
issued and delivered in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable and, based in part upon the
representations of CIT in this Agreement, will be issued in compliance with
applicable state and federal securities laws.
2.4 No Violation. Neither the execution and delivery of this
Agreement by the Company nor its performance and consummation of the
transactions contemplated hereby (including the issuance of the Common Stock
underlying the Common Stock Rights) will violate (a) any provision of the
Articles of Incorporation or the Bylaws of the Company, (b) any statute or law
or any judgment, decree, order, regulation or rule of any court or governmental
agency that is applicable to the Company, or (c) any material agreement to which
the Company is a party.
2.5 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists solely of (i) 15,000,000 shares of Common
Stock, $.001 par value per share, and (ii) 4,215,618 shares of preferred stock,'
$.001 par value per share (the "Preferred stock"). Immediately following the
Closing, after giving effect to the transactions contemplated hereby (other than
the issuance of shares of Common Stock upon the maturity of the Common Stock
Rights), the issued and outstanding capital stock of the Company will consist
solely of 8,157,096 shares of Common Stock and 3,407,057 shares of Preferred
Stock. As of January 29, 1993, options to purchase 1,322,576 shares of Common
Stock, and a warrant to purchase 10,000 shares of Common Stock, were
outstanding. Except for (i) the options and warrants set forth above and (ii)
the Common Stock Rights issued hereunder and pursuant to the Stock Purchase
Agreement, dated as of February 19, 1993, by and between the Company and the
Investors named therein (the "Prior Agreement"), the Company does not have
outstanding any rights (either preemptive or other) or options to subscribe for
or purchase, or any warrants or other agreements providing for or requiring the
issuance by the Company of, any capital stock or securities convertible into or
exchangeable for its capital stock. Except for the Shareholder Agreement, dated
as of August 4, 1987, by and between the Company, Xxxxxxx X. Xxxxxxxx, Xxxxxxx
X. Xxxx and the Investors named therein, a copy of which has previously been
provided to CIT, the Company is not a party to, or aware of, any stockholders'
agreement, voting trust, proxy or similar arrangement relating to the Company or
its capital stock.
2.6 Reports and Financial Statements.
(a) CIT heretofore has been furnished with complete
and correct copies of (i) the unaudited balance sheet of the Company as of
December 31, 1992 and the related income statements and statements of cash flows
for the six months then ended, and (ii) the audited balance sheets of the
Company as of June 30, 1992 and 1991 and the related income statements and
statements of cash flows for the fiscal years then ended.
(b) Each of the financial statements referred to in
(a) above was prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods, except that the
financial statements referred to in (a)(i) above are subject to year end audit
adjustments and do not include footnotes which might be required by such
accounting principles. Each of the balance sheets included in such financial
statements fairly presents the financial condition of the Company as of the
close of business on the date thereof, and each of the statements of income
included in such financial statements fairly presents the results of operations
of the Company for the fiscal period then ended.
2.7 Material Adverse Change. There has been no material
adverse change in the business, properties or financial condition of the Company
since December 31, 1992.
2.8 Other Documents. CIT heretofore has been furnished with
complete and correct copies of (i) the Articles of Incorporation and the Bylaws
of the Company, (ii) the Prior Agreement, and (iii) the Preferred Stock Purchase
Agreement, dated as of August 4, 1987, by and between the Company and the
Investors named therein.
2.9 Environmental Protection. The Company has obtained all
material permits, licenses and other authorizations that are required under
applicable federal, state and local laws including, without limitation,
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or
demand letters issued, entered, promulgated or approved thereunder relating to
pollution control or hazardous substances (the "Environmental Laws"), including,
without limitation, emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic, or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface, or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic, or hazardous substances or wastes. The Company
is in material compliance with all terms and conditions of such permits,
licenses and authorizations, and is in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws. There
is no pending or, to the best knowledge of the Company, threatened, civil or
criminal litigation, notice of violation or lien, or administrative proceeding
relating to Environmental Laws involving the Company. The Company has not, to
the best of its knowledge, transported hazardous substances or arranged for the
transportation of hazardous substances to any location which is the subject of
federal, state, provincial or local enforcement actions or other investigations
which could reasonably be expected to lead to materially adverse claims against
the Company for clean-up costs, remedial work, damages to natural resources or
personal injury.
2.10 Small Business Concern. The information provided by the
Company on SBA Forms 480 and 652 delivered in connection herewith is true and
correct as of the date of such forms.
2.11 Use of Proceeds. The proceeds from the sale of the Common
Stock issued hereby will be used solely for general corporate purposes in
connection with its primary business activity. No portion of the proceeds will
be used (i) to provide capital to a corporation licensed under the Small
Business Investment Act of 1958, as amended, or (ii) outside the United States
(except (x) to acquire abroad materials and industrial property rights for a
domestic operation or (y) for transfer to a controlled foreign subsidiary, so
long as at least 51% of the assets and activities of the Company will remain
within the United States). The Company's primary business activity does not
involve, directly or indirectly, providing funds to others, the purchase or
discounting of debt obligations, factoring or long-term leasing or equipment
with no provision for maintenance or repair, and the Company is not classified
under Major Group 65 (Real Estate) of the SIC Manual.
2.12 SBIC Compliance Information. Upon request, the Company
promptly (and in any event within 20 days of such request) will furnish to CIT
all information necessary in order to enable CIT to prepare and file SBA Form
684 and any other information requested or required by any governmental
authority asserting jurisdiction over CIT. The Company will at all times comply
with the nondiscrimination requirements of 13 C.F.R. Parts 112 and 113.
2.13 Conversion. Pursuant to a Conversion Agreement, dated as
of February 18, 1993, by and between the Company and the Investors named
therein, the promissory notes previously issued by the Company to such
Investors, in the aggregate principal amount of $750,000, have been converted
into shares of Common Stock.
2.14 Disclosure. No representation or warranty by the Company
contained in this Agreement, nor, to the best of the Company's knowledge, any
other written statement or certificate furnished to CIT pursuant hereto (when
read together and as supplemented in the second proviso below) contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made; provided, however, it is
understood that any projections or other forward-looking information contained
therein represent the Company's good faith estimate under the circumstances
based on assumptions which the Company believes are reasonable, and the Company
does not represent or warrant that such projections or future events will occur;
and provided further, that CIT acknowledges the disclosures made by IOMED with
respect to (i) the status of the onychomychosis project and (ii) the patent
issues with ALZA Corporation, and agrees that such disclosures shall constitute
supplements to the other written statements and certificates furnished to CIT
pursuant hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CIT
CIT hereby represents and warrants to the Company as follows:
3.1 It is experienced in evaluating and investing in emerging
companies such as the Company.
3.2 It is acquiring the Common Stock and the accompanying
Common Stock Rights being issued pursuant to this Agreement (collectively, the
"Securities"), for its own account and not with a view to, or for resale in
connection with, any distribution. It understands that the Securities have not
been registered under the Securities Act of 1933, as amended (the "Act"), by
reason of a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein.
3.3 It acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. It is aware of the provisions of Rule 144
promulgated under the Act and the limitations on resales of securities imposed
thereby.
3.4 It understands that no public market now exists for any of
the securities issued by the Company and that there can be no assurances that-a
public market will ever exist for the Securities.
3.5 It has had an opportunity to discuss the Company's
business, management and financial affairs with its management and an
opportunity to review the Company's facilities. It understands that such
discussions were intended to describe the aspects of the Company's business and
prospects which the Company believes to be material but were not necessarily a
thorough or exhaustive description.
3.6 It is a sophisticated investor with such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of a prospective investment in the Securities and who is
capable of bearing the economic risks of such investment.
3.7 It, both by itself and through its agents, has been solely
responsible for its "due diligence" investigation of the Company and its
management and business, for the analysis of the merits and risks of this
investment and of the fairness and desirability of the terms of the investment;
provided, however, that the representations, warranties and covenants of the
Company herein are absolute regardless of any such investigation or analysis.
3.8 It has had the opportunity to be advised by legal counsel
of its own choice in connection with the purchase of the Securities and has
either been advised by such counsel or concluded that such advice is not
required. It acknowledges that Xxxxxxxx & Xxxxxxxx is acting sole y as counsel
for the Company in connection therewith.
3.9 It acknowledges that the Common Stock issued hereunder,
including the shares of Common Stock, if any, issued upon maturity of the Common
Stock Rights, shall be endorsed with the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE
AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC
EXEMPTION FROM REGISTRATION UNDER THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER
COUNSEL ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE
"BLUE SKY" OR SIMILAR SECURITIES LAW.
The Company need not register a transfer of any of the
Securities, unless the condition specified in the foregoing legend is satisfied.
The Company may also instruct its transfer agent not to register the transfer of
any of the Securities unless the condition specified in the foregoing legend is
satisfied.
3.10 It acknowledges that in no event will all or any portion
of the Common Stock Rights acquired by it hereunder be assignable separate from
the accompanying share(s) of Common Stock.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions. As used in this Article IV:
(a) The term "Registrable Securities" means the
Common Stock issued hereunder and issuable upon maturity of the Common Stock
Rights issued hereunder, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under this
Article IV are not assigned; provided, however, that such shares of Common Stock
shall only be treated as Registrable Securities if and so long as they have not
been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction.
(b) The term "Form S-311 means such form under the
Act as i-h effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(c) The term "Holder" means CIT and any other person
or entity that acquires any Registrable Securities in compliance with Sections
3.9 and 4.6 hereof.
(d) The term "Initiating Holders" means any Holder or
Holders of not less than (i) 500,000 shares of Registrable Securities (as
adjusted for stock splits, combinations and the like), if measured prior to, the
maturity of the Common Stock Rights, or (ii) 1,000,000 shares of Registrable
Securities (as adjusted for stock splits, combinations and the like), if
measured after the maturity of the Common Stock Rights.
(e) The term "SEC" means the Securities and Exchange
commission or any successor agency thereto.
4.2 Requested Registration.
(a) In case the Company shall receive from Initiating
Holders, at any time after the earlier of (i) one hundred eighty (180) days
following the first registered public offering of Company's Common Stock,
regardless of whether such offering meets the threshold size and per share price
levels set forth in Section 1.2 above, and (ii) March 8, 1996, a written request
that the Company effect any registration, qualification or compliance with
respect to all of the Registrable Securities then held by such Initiating
Holders, or any portion thereof the sale of which is reasonably expected to
yield gross proceeds to the Initiating Holders of at least $500,000, the Company
will:
(i) give written notice of the proposed
registration, qualification or compliance to all other Holders within ten (10)
days after receipt thereof; and
(ii) use its diligent best efforts to
effect, as soon as practicable, all such registrations, qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all of the Registrable Securities held by such Initiating
Holders, together with all of the Registrable Securities of any Holder or
Holders who joins in such request in a written request received by the Company
within thirty (30) days after such written notice is given; provided, that the
Company shall not be obligated to take any action to effect any such
registration, qualification, or compliance pursuant to this Section 4.2:
(A) In any particular jurisdiction
in which the--Company would be required to execute a general consent to service
of process, to register as a dealer, or to cause any officer or employee of the
Company to register as a salesman in effecting such registration, qualification
or compliance;
(B) Within one hundred eighty (180)
days immediately following the effective date of any registration statement
pertaining to an underwritten public offering of securities of the Company for
its own account;
(C) After the Company has effected
one (1) such registration pursuant to this Section 4.2;
(D) If the Company shall furnish to
such Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its shareholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best efforts to register, qualify or comply under this Section 4.2 shall be
deferred for a period not to exceed one hundred eighty (180) days from the date
of receipt of written request from the Initiating Holders; or
(E) If taking any such action could
result in a registration statement being declared effective within one hundred
twenty (120) days of the effective date of any registration statement filed
pursuant to Section 7.2 of that certain Preferred Stock Purchase Agreement,
dated as of August 4, 1987, by and between the Company, Motion Control, Inc. and
the investors named therein (the "Preferred Stock Purchase Agreement").
Subject to the foregoing, the Company will use its best
efforts to file a registration statement covering the Registrable Securities as
soon as practicable after receipt of the request or requests of the Initiating
Holders.
(b) The Initiating Holders shall include in their
request made pursuant to this Section 4.2 the name, if any, of the underwriter
or underwriters that such Initiating Holders would propose, with the consent of
the Company (which consent shall not be unreasonably withheld), to employ in
connection with the public offering proposed to be made pursuant to the
registration requested, and the Company shall include such information in the
written notice referred to in clause (i) of Section 4.2(a). The right of any
Holder to registration pursuant to this Section 4.2 shall be conditioned on such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting. The Company shall (together with all
Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting in the manner set forth above.
Notwithstanding any other provision of this Section 4.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities and the number of
shares of Registrable Securities that may be included in the registration and
underwriting, as determined by the underwriters, shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration.
4.3 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders a written request or requests that the Company effect
a registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request given
within twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 4.3: (i) if
the Company is not qualified as a registrant entitled to use Form S-3; (ii) if
the Holders propose to sell Registrable Securities at an aggregate sales price
to the public of less than $500,000; (iii) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance and in which
it has not already filed such a consent; (iv) if the Company has effected one
such registration pursuant to this Section 4.3 during the preceding twelve (12)
months; (v) if the Company has effected a registration on Form S-1 within the
preceding one hundred eighty (180) days, or (vi) if the date of such written
request occurs more than seven (7) years after the date hereof. Subject to the
foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of the Holders.
Registrations effected pursuant to this Section 4.3 shall not
be counted as a Request for Registration effected pursuant to Section 4.2
hereof.
4.4 Company Registration.
(a) If at any time, or from time to time, prior to
the date seven (7) years after the date hereof, the Company shall determine to
register any of its securities, either for its own account or for the account of
a security holder or holders, other than (i) a registration on Form S-1 or S-8
relating solely to employee benefit plans, or a registration on Form S-4
relating solely to an SEC Rule 145 transaction, or a registration on any other
form which does not include substantially the same information as would be
required to be included in a registration statement covering he sale of
Registrable Securities, or (ii) a registration pursuant to Sections 4.2 or 4.3
hereof, the company will:
(i) promptly give to each Holder written
notice thereof; and
(ii) include in such registration, and in any underwriting
involved therein, all the Registrable securities specified in any written
request or requests by any Holder or Holders received by the Company within
twenty (20) days after such written notice is given on the same terms and
conditions as the Common Stock, if any, otherwise being sold through the
underwriter in such registration.
(b) If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to clause (i) of Section 4.4(a). In such event the right of any Holder
to registration pursuant to this Section 4.4 shall be conditioned upon such
Holder's participation in such underwriting--and the inclusion of such Holder's
Registrable securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
(c) Notwithstanding any other provision of this
section 4.4, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter may limit
the amount of Registrable Securities to be included in the registration and
underwriting. The Company shall so advise all Holders of Registrable Securities
which would otherwise be registered and underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all of the Holders, in
proportion, as nearly as practicable, to the amounts of Registrable Securities
held by such Holders at the time of filing the registration statement. No
Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
(d) Notwithstanding any other provision of this
Section 4.4, no Holder shall be entitled to include any Registrable Securities
in a registration pursuant to this Section 4.4 if and to the extent that such
inclusion would reduce the number of shares of Registrable Securities entitled
to participate in such registration pursuant to Section 7.2, 7.3 or 7.4 of the
Preferred Stock Purchase Agreement. The Company shall so advise all Holders of
Registrable Securities which would otherwise be registered pursuant hereto but
for the foregoing sentence, and the number of shares of Registrable Securities
that may be included in the registration shall be allocated among all of the
Holders, in proportion, as nearly as practicable, to the amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement.
4.5 Expenses of Registration. All expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Article IV, including without limitation, all registration, filing and
qualification fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, accounting fees and expenses, and expenses of any
special audits incidental to or required by such registration, shall be borne by
the Company; provided, however, that the Company shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities,
or any fees for counsel to the selling shareholders.
4.6 Transfer of Registration Rights. The rights to cause the
Company to register securities granted by the Company under Sections 4.2, 4.3
and 4.4 hereof may be assigned in writing by any Holder of Registrable
Securities to a transferee or assignee of not less than fifty thousand (50,000)
shares of the Registrable Securities (as appropriately adjusted from time to
time for stock splits and the like); provided, that such transfer may otherwise
be effected in accordance with the terms of this Agreement and applicable
securities laws; and provided further, that the Company is given written notice
by such holder of Registrable Securities at the time of or within a reasonable
time after said transfer, stating the name and address of, said transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned.
4.7 "Market Stand-off" Agreement. The Holders hereby agree not
to sell or otherwise transfer or dispose of any Registrable Securities held by
them during the one hundred eighty (180) day period following the effective date
of a registration statement of the Company filed under the Act; provided that:
(a) such agreement shall only apply to the first such
registration statement of the Company including shares of Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
(b) such agreement shall not apply to any shares of
Registrable Securities that are included in such public offering in accordance
with the terms hereof; and
(c) all executive officers and directors of the
Company and all other persons with registration rights (whether or not granted
pursuant to this Agreement) enter into similar agreements.
The Company may impose stop-transfer instructions with respect
to the Registrable Securities subject to the foregoing restriction until the end
of said one hundred eighty (180) day period.
MISCELLANEOUS
5.1 Notice. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered, or express mail, postage prepaid,
and shall be deemed given when so delivered personally or by facsimile or, if
mailed, three (3) days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
IOMED, Inc.
0000 Xxxx 0000 Xxxxx, Xxxxx X
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: President
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
(ii) if to CIT, to:
The CIT Group/Venture Capital, Inc.
000 XXX Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx
with a copy to:
Xxxxxxx, Xxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxx, Esq.
5.2 Governing Law. This Agreement shall be governed by the
laws of the State of Utah, excluding the conflicts of laws provisions thereof.
5.3 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.4 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
IOMED, INC.
a Utah corporation
By: /s/ Xxx X. Xxxxxxxxxxx
Xxx X. Xxxxxxxxxxx
Chief Executive Officer
THE CIT GROUP/VENTURE CAPITAL, INC.,
a New Jersey corporation
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Its: Vice President
500,000 shares of Common Stock
500,000 Common Stock Rights
