VIDAMED, INC.
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made as of September 22,
1997 (the "Agreement Date"), by and between VidaMed, Inc., a Delaware
corporation (the "Company") with its principal office at 00000 Xxxxxxxx Xxxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000, and the purchasers set forth on Exhibit A hereto
(individually a "Purchaser" and collectively the "Purchasers").
Section 1
Purchase and Sale of Common Stock and Warrants
1.1 Purchase and Sale of Common Stock. Each Purchaser, severally and
not jointly, agrees to purchase from the Company, and the Company agrees to
issue and sell to such Purchaser, the number of shares (the "Shares") of Common
Stock, $0.001 par value (the "Common Stock") of the Company set forth on
opposite such Purchaser's name on Exhibit A hereto. The purchase price for one
Share of Common Stock (the "Purchase Price") pursuant to this Agreement shall be
$4.75.
1.2 Issuance of Warrants. The Company shall issue to each Purchaser a
warrant (individually a "Warrant" and collectively the "Warrants") exercisable
for one fourth (1/4) of the number of Shares purchased by such Purchaser. Each
Warrant, the form of which is attached hereto as Exhibit B, entitles the
registered holder thereof to purchase Common Stock at a price of $6.33 per
share, subject to adjustment in certain circumstances, commencing on the date
hereof until three years from the Closing (as defined below). The Shares, the
Warrants and the shares of Common Stock issuable upon exercise of the Warrants
(the "Warrant Shares") are herein collectively referred to as the "Securities."
Section 2
Closing Date; Delivery
2.1 Closing Date. The completion of the purchase and sale of the Shares
and the Warrants will be held at such place and time agreed upon by the
Placement Agent (as defined below) and the Company, and the Purchasers will
receive prior notification of the Closing by facsimile, telex, cable or by other
means deemed appropriate by the Company (the "Closing"). The date of the Closing
is hereinafter referred to as the "Closing Date."
2.2 Delivery. At the Closing, the Company will deliver to each
Purchaser the certificates evidencing the Shares and Warrants purchased by such
Purchaser as shown on Exhibit A and an opinion of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, counsel to the Company, in the form of Exhibit C. Such delivery shall be
against payment of the Purchase Price for the Shares by wire transfer of
immediately available funds to the Company's bank account (in accordance with
instructions furnished by the Company).
Section 3
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing as a domestic corporation under the laws of
said state, and has the requisite corporate power and authority to own its
properties and to carry on its business as now being conducted. Other than as
disclosed in the SEC Documents (as defined below), the Company has no
subsidiaries or direct or indirect ownership in any firm, corporation or
business which either, individually or in the aggregate, is material to the
business of the Company. The Company is qualified to do business and is in good
standing as a foreign corporation in every jurisdiction in which its ownership
of property or conduct of business requires it so to be qualified and in which
the failure to so qualify would have a material adverse effect on the financial
condition or business of the Company.
3.2 Corporate Power; Authorization. The Company has all requisite legal
and corporate power and authority and has taken all requisite corporate action
to duly authorize, execute and deliver this Agreement, to sell and issue the
Shares and the Warrants and to carry out and perform all of its obligations
under and contemplated by this Agreement. This Agreement has been duly exe cuted
and delivered by an authorized officer of the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the enforcement of creditors' rights
generally.
3.3 Issuance and Delivery. The Shares and the Warrants have been duly
authorized, and, when issued and delivered in compliance with this Agreement,
will be duly and validly issued and delivered and will be outstanding, fully
paid, nonassessable and free and clear of all pledges, liens, encumbrances and
restrictions, and will conform to the description thereof contained in the Regis
tration Statement (or incorporated by reference therein). The Warrant Shares
have been duly authorized and reserved for issuance upon exercise of the
Warrants, and such shares, when issued upon such exercise in accordance with the
terms of the Company's Certificate of Incorporation and the Warrants,
respectively, and when the price is paid upon exercise of the Warrants, shall be
fully paid and non-assessable. No preemptive rights, or other rights to
subscribe for or purchase, exist with respect to the issuance and sale of the
Securities by the Company pursuant to this Agreement. No stockholder of the
Company has any right (which has not been waived or has not expired by reason of
lapse of time following notification of the Company's intent to file the
Registration Statement) to require the Company to register the sale of any
securities owned by such holder under the Securities Act of 1933, as amended
(the "Securities Act"), in the Registration Statement. No further approval or
authority of the stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Securities to be sold by the Company
as contemplated herein.
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3.4 SEC Documents; Financial Statements; Subsequent Events. The Company
has filed in a timely manner all documents that the Company was required to file
with the Securities and Exchange Commission ("SEC") under Sections 13, 14(a) and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
during the twelve (12) months preceding the date of this Agreement and all rules
and regulations thereunder. As of their respective filing dates, all docu ments
filed by the Company with the SEC (the "SEC Documents") complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act"), as applicable and all rules and
regulations thereunder. None of the SEC Documents con tained, as of their
respective dates, any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the cir cumstances under which they were made, not
misleading, and such SEC Documents, when read as a whole, do not contain any
untrue statements of a material fact and do not omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Documents (the "Financial Statements") comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto. The Financial Statements
have been prepared in accordance with United States generally accepted
accounting principles consistently applied and fairly present the financial
position of the Company and any subsidiaries at the dates thereof and the
results of the Company's operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal adjustments).
Subsequent to the date of the Company's most recently filed SEC Documents, the
Company, effective September 5, 1997, has repriced all outstanding stock options
having an exercise price in excess of $4.813 to a new exercise price of $4.813
per share. In addition, by virtue of the transactions contemplated by this
Agreement, the number of shares of Common Stock issuable pursuant to certain
outstanding warrants of the Company will increase by approximately 10,000 shares
and the exercise price under such warrants will be correspondingly adjusted.
3.5 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agree ment except for (a)
the filing of a Form D with respect to the issuance of the Securities with the
SEC and (b) the filing of a Nasdaq National Market Notification Form (pursuant
to Rule 10b-17 promul gated under the Exchange Act) with the Nasdaq National
Market, each of which will be filed in a timely manner.
3.6 Exempt Transactions. Subject to the accuracy of the Purchasers'
representations and warranties in Section 4 of this Agreement, the offer, sale
and issuance of the Securities in conformity with the terms of this Agreement
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act and from the registration or qualification requirements of
the laws of any applicable state or United States jurisdiction.
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3.7 No Material Adverse Change. Except as otherwise disclosed herein,
since June 30, 1997, there have not been any changes in the assets, liabilities,
financial condition, business or operations of the Company from that reflected
in the Financial Statements except (i) changes in the ordinary course of
business which have not been, either individually or in the aggregate,
materially adverse, (ii) the Company's continued incurrence of operating losses
and negative cash flow, which have occurred at a rate not materially in excess
of the rate at which operating losses and negative cash flows were incurred from
January 1, 1996 to June 30, 1997 and (iii) a possible one-time charge for
restructuring operations in the United Kingdom of approximately $1.0 to $2.0
million.
3.8 Intellectual Property. The Company owns or possesses adequate
rights to use all patents, patent rights, inventions, trademarks, trade names,
copyrights, licenses, governmental authorizations, trade secrets and know-how
that are used or necessary for the conduct of its business as described in the
SEC Documents; except as described in the SEC Documents, neither the Com pany
nor any of its subsidiaries has received any notice of, or has any knowledge of,
any infringe ment of or conflict with asserted rights of others with respect to
any patent, patent right, invention, trademarks, trade names, copyrights,
licenses, governmental authorizations, trade secret or know-how that,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the Company and
its subsidiaries considered as a whole.
3.9 Authorized Capital Stock. The authorized capital stock of the
Company conforms, as of the dates for which such information is given, in all
material respects to the statements relating thereto contained in the SEC
Documents. The issued and outstanding shares of capital stock of the Company
have been duly authorized, validly issued and are fully paid and nonassessable;
except as set forth or referred to in the SEC Documents, no warrants, options or
other rights to purchase, agreements or other obligations to issue, or
agreements or other rights to convert any obligation into, any shares of capital
stock of the Company have been granted or entered into by the Company. All of
the above securities of the Company were issued in compliance with all
applicable federal and state securities laws and were not issued in violation of
or subject to any preemptive rights or other rights to subscribe for or purchase
securities. No holder of any security of the Company is entitled to any
preemptive or similar rights to purchase any securities of the Company.
3.10 Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Company's knowledge, threatened
against the Company or any of its properties before or by any court or
arbitrator or any governmental body, agency or official in which there is a rea
sonable likelihood (in the judgment of the Company) of an adverse decision that
(a) would have a material adverse effect on the Company's properties or assets
or the business of the Company as presently conducted or proposed to be
conducted or (b) would impair the ability of the Company to perform in any
material respect its obligations under this Agreement. The Company is not in
default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality which, individually or in the aggregate,
would have a material adverse effect on the assets, properties or business of
the Company.
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3.11 Preemptive and Registration Rights. There are no preemptive
rights, rights of first refusal, repurchase rights or any other right of the
Company or any third party as to the Securities which have not been satisfied or
waived, and except as provided in this Agreement, the Company has not granted or
agreed to grant any registration rights that would be applicable to the
registration for resale of the Securities pursuant to the Registration
Statement, as defined in and contemplated by Section 7.1 hereof, to any person
or entity which have not been satisfied or waived.
3.12 Compliance With Other Instruments The business and operations of
the Company have been and are being conducted in accordance with all applicable
laws, rules and regulations of all governmental authorities, except for such
violations of applicable laws, rules and regulations which would not,
individually or in the aggregate, have a material adverse effect on the assets,
prop erties, financial condition or business of the Company. Neither the
execution and delivery of, nor the performance or compliance with, this
Agreement and the transactions contemplated hereby, will, with or without the
giving of notice or the passage of time, (i) result in any breach of, or
constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to, any agreement
or other instrument to which the Company is a party or by which it or any of its
properties, assets or rights is bound or effected, except for such breach or
default or the imposition of any such lien or encumbrance which, either
individually or in the aggre gate, would not have a material adverse effect on
the assets, properties, financial condition or busi ness of the Company or (ii)
violate the Certificate of Incorporation or Bylaws of the Company, or any law,
rule regulation, judgment, order or decree. The Company is not in violation of
its Certi ficate of Incorporation or Bylaws nor in violation of, or in default
under, any lien, indenture, xxxx xxxx, lease, agreement, instrument, commitment
or arrangement, except for such defaults which would not, individually or in the
aggregate, have a material adverse effect on the assets, properties, financial
condition or business of the Company, or subject to any restriction which would
prohibit the Company from entering into or performing its obligations under the
Agreement.
3.13 Brokers or Finders. To the knowledge of the Company and except for
claims of Musket Research, Inc. (the "Placement Agent") in connection with this
transaction, no person, firm or corporation has or will have, as a result of any
act or omission of the Company, any right, interest or valid claim against the
Purchasers for any commission, fee or other compensation as a finder or broker
in connection with the transactions contemplated by this Agreement. The fees and
com missions payable to the Placement Agent shall be paid by the Company and the
Company shall indemnify and hold each Purchaser harmless for any claims made by
the Placement Agent concerning the purchase of the Securities.
3.14 Compliance with Environmental Laws. Except as disclosed in the SEC
Documents, the Company is not in violation of any applicable statute, law or
regulation relating to the environ ment or occupational health and safety, and,
to the best of the Company's knowledge, no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
To the best of the Company's knowledge, the Company does not have any material
liability to any governmental authority or other third party arising under or as
a result of any such past or existing statute, law or regulation.
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3.15 No Implied Representations. All of the Company's representations
and warranties are contained in this Agreement and no other representations or
warranties by the Company shall be implied.
3.16 Contracts. The contracts so described in the SEC Documents or
incorporated by reference therein are in full force and effect on the date
hereof, except for contracts the termination or expiration of which would,
individually or in the aggregate, not have a material adverse effect on the
business, properties or assets of the Company, and neither the Company nor any
of its subsidiaries, nor to the Company's knowledge, any other party is in
breach of or default under any of such contracts.
3.17 Properties. The Company has good and marketable title to all the
properties and assets reflected as owned in the financial statements included in
the SEC Documents, subject to no lien, mortgage, pledge, charge or encumbrance
of any kind except (i) those, if any, reflected in such financial statements, or
(ii) those which are not material in amount and do not adversely affect the use
made and promised to be made of such property by the Company and its
subsidiaries. The Company and any applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company and the
subsidiaries. Except as disclosed in the SEC Documents, the Company owns or
leases all such properties as are necessary to its operations as now conducted
or as proposed to be conducted.
3.18 Compliance. The Company has not been advised, and has no reason to
believe, that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business; except where failure to be so in compliance
would not materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries.
3.19 Taxes. The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and have paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of any
tax deficiency which has been or might be asserted or threatened against the
Company or its subsidiaries which could materially and adversely affect the
business, operations or properties of the Company and its subsidiaries.
3.20 Transfer Taxes. On the Closing Date, 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 Securities to be sold to the Purchasers hereunder
will be, or will have been, fully paid or provided for by the Company and all
laws imposing such taxes will be or will have been complied with fully.
3.21 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.22 Insurance. Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insur-
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ance covering all real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full force
and effect.
3.23 Contributions. Neither the Company nor any of its subsidiaries
has, directly or indirectly, at any time during the last five years (i) made any
unlawful contribution to any candidate for public office, or failed to disclose
fully any contribution in violation of law, or (ii) made any payment to any
federal or state governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
Section 4
Representations, Warranties and Covenants of the Purchasers
Each Purchaser, severally and for itself only, hereby represents and
warrants to the Company as follows:
4.1 Authorization. (i) The Purchaser has all requisite legal and
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agree ment, to purchase the Securities
to be purchased by it and to carry out and perform all of its obliga tions under
this Agreement; and (ii) this Agreement constitutes the legal, valid and binding
obliga tion of the Purchaser, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally.
4.2 Investment Experience. The Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. The Purchaser has such
business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Securities.
4.3 Investment Intent. The Purchaser is purchasing the Securities for
its own account as principal, for investment purposes only, and not with a
present view to, or for, resale, distribution or fractionalization thereof, in
whole or in part, within the meaning of the Securities Act. The Pur chaser
understands that its acquisition of the Securities has not been registered under
the Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Purchaser's investment intent as
expressed herein. The Purchaser has completed or caused to be completed the
Purchaser Questionnaire attached hereto as Appendix I for use in preparation of
the Registration Statement (as defined below), and the responses provided
therein shall be true and correct as of the Closing Date and will be true and
correct as of the effective date of the Registration
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Statement. The Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares, the Warrants and the
Warrant Shares except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder.
4.4 Registration or Exemption Requirements. The Purchaser further
acknowledges and understands that the Securities may not be resold or otherwise
transferred except in a transaction registered under the Securities Act or
unless an exemption from such registration is available. The Purchaser
understands that the certificate(s) evidencing the Securities will be imprinted
with a legend that prohibits the transfer of such securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the transaction is so exempt.
4.5 Restriction on Short Sales. The Purchaser represents and warrants
to and covenants with the Company that the Purchaser has not engaged and will
not engage in any short sales of the Company's Common Stock prior to the
effectiveness of the Registration Statement, except to the extent that any such
short sale is fully covered by shares of Common Stock of the Company owned by
such Purchaser other than the Shares or the Warrant Shares.
4.6 No Legal, Tax or Investment Advice. The Purchaser understands that
nothing in this Agreement or any other materials presented to the Purchaser in
connection with the purchase of the Securities constitutes legal, tax or
investment advice. The Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
con nection with its purchase of the Securities and understands that Musket
Research Associates (the "Placement Agent") has acted as placement agent for the
Company and not in any of the foregoing capacities on behalf of the Purchaser.
Section 5
Conditions to Closing of Purchasers
The obligation of each Purchaser to purchase the Shares and the
Warrants at the Closing is subject to the fulfillment as of the Closing Date of
the following conditions:
5.1 Representations and Warranties. The representations and warranties
made by the Company in Section 3 hereof shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.
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5.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
5.3 Compliance Certificate. The President or Chief Financial Officer of
the Company shall have delivered to the Purchasers and the Placement Agent a
certificate, dated as of the Closing Date, certifying that the conditions
specified in Sections 5.1 and 5.2 have been fulfilled and stating that since
June 30, 1997, there shall have been no material adverse change in the assets,
liabilities, financial condition, business or operations of the Company from
that reflected in the Financial State ments except (i) changes in the ordinary
course of business which have not been, either individually or in the aggregate,
materially adverse and (ii) the Company's continued incurrence of operating
losses and negative cash flow which have occurred at a rate not materially in
excess of the rate at which operating losses and negative cash flows were
incurred from January 1, 1996 to June 30, 1997 and (iii) a possible one-time
charge for restructuring operations in the United Kingdom of approximately $1.0
to $2.0 million.
5.4 Nasdaq Listing. The Shares and the Warrant Shares shall have been
approved for listing on the Nasdaq National Market upon notice of issuance.
5.5 Legal Opinion of Company Counsel. Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
counsel to the Company, shall have delivered a legal opinion, addressed to the
Purchasers, in the form attached as Exhibit C hereto.
5.6 Minimum Sale. The Company shall have obtained gross proceeds of at
least $10 million from the sale of the Shares and Warrants at the Closing.
5.7 Closing Date. The Closing shall have occurred on or prior to
September 24, 1997.
Section 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares and the Warrants
at the Closing to a Purchaser is subject to the fulfillment or waiver of the
following conditions:
6.1 Representations and Warranties. The representations and warranties
made by such Purchaser in Section 4 hereof shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of such date.
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6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by such Purchaser on or prior to the Closing Date
shall have been performed or complied with in all material respects.
Section 7
Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 Registration Requirements.
(a) The Company shall, subject to receipt of necessary
information from the Purchasers, prepare and file a registration statement with
the SEC under the Securities Act as soon as reasonably practicable after the
Closing to register the resale of the Shares, the Warrants and the Warrant
Shares by the Purchasers, and the Company shall use its best efforts to secure
the effective ness of such registration statement as soon as reasonably
practicable thereafter. The Purchasers acknowledge that the Company may be
required to register the Warrants on a separate registration statement, in which
case the Company will first file a registration statement relating to the Shares
and the Warrant Shares. For purposes hereof, the term "Registration Statement"
shall refer to any and all registration statements filed for the purpose of
registering the Shares, the Warrant Shares and the Warrants, including any
prospectus(es) constituting a part thereof and together with any amendments and
supplements thereto.
(b) The Company shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder, and the Purchasers shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relat ing to the
Securities resold by the Purchasers. "Registration Expenses" shall mean all
expenses, except for Selling Expenses, incurred by the Company in complying with
the registration provisions herein described, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses
and the expense of any special audits incident to or required by any such
registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Securities.
(c) In the case of the registration effected by the Company
pursuant to these registration provisions, the Company will use its best efforts
to: (i) keep such registration effective until the earlier of (A) the fourth
anniversary of the Closing Date, (B) such date as all of the Securities have
been resold or (C) such time as all of the Securities held by the Purchasers can
be sold within a given three-month period without compliance with the
registration requirements of the Securities Act pursuant to Rule 144(k); (ii)
prepare and file with the SEC such amendments and post-effective amendments to
the Registration Statement as may be necessary to keep the Registration
Statement effective for the applicable period specified in this Section 7.1(c);
(iii) cause
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the related prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; (iv) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the sellers thereof set
forth in the Registration Statement as so amended or such prospectus as so
supplemented; (v) furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Purchaser from time to time may reasonably request, and the Company hereby
consents to the use of such prospectus or each amendment and supplement thereto
by each of the selling holders of Securities and the underwriters, if any, in
connection with the offering and sale of the Securities covered by such
prospectus or any amendment or supplement thereto; (vi) cause the Shares and the
Warrant Shares to be listed on each securities exchange and quoted on each
quotation service on which similar securities issued by the Company are then
listed or quoted and maintain the listing of the Shares and Warrant Shares;
(vii) provide a transfer agent and registrar for all Securities registered
pursuant to the Registration Statement and a CUSIP number for all such
Securities; (viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC; and (ix) file the documents required of the
Company and otherwise use its best efforts to maintain requisite blue sky
clearance in (A) all jurisdictions in which any of the Securities are originally
sold and (B) all other states specified in writing by a Purchaser, provided as
to clause (B), however, that the Company shall not be required to qualify to do
business or consent to service of process in any state in which it is not now so
qualified or has not so consented.
(d) The Company shall furnish to each Purchaser upon request a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary in order to facilitate the public sale or other
disposition of all or any of the Securities held by such Purchaser.
(e) With a view to making available to the Purchasers the
benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any
other rule or regulation of the SEC that may at any time permit a Purchaser to
sell Securities to the public without registration or pursuant to a registration
on Form S-3, 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) the fourth anniversary of the effective date of the
Registration Statement or (B) such date as all of the Securities 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 Exchange Act; and
(iii) furnish to each Purchaser upon request, as long as such Purchaser owns any
Securities, (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 most recent annual or quarterly report of the Company, and (C) such other
information as may be reasonably requested in order to avail a Purchaser of any
rule or regulation of the SEC that permits the selling of any such Securities
without registration or pursuant to such Form S-3.
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(f) The Company shall notify each Purchaser, if such Purchaser
has registered Securities in a Registration Statement which remain unsold, and
(if requested by such Purchaser) confirm such notice in writing, (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (ii) 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 the
Registration Statement or related prospectus or for additional information
relating to the Registration Statement, (iii) of the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose, (iv) 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 Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event which makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in the Registration Statement or prospectus so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any 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
omit to state any material fact or omit to state any 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, and (vi) of the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate.
(g) The Company may, upon written notice to the Purchasers of
(i) the happening of any event of the kind described in Section 7.1(f)(ii),
7.1(f)(iii), 7.1(f)(iv), 7.1(f)(v) or 7.1(f)(vi) hereof or (ii) that, in the
judgement of the Company's Board of Directors, it is advisable to suspend use of
the prospectus for a discrete period of time due to pending corporate
developments, public filings with the SEC or similar events, discontinue
disposition of Securities covered by the Registration Statement or prospectus
until copies of the supplemented or amended prospectus contemplated by Section
7.1(i) hereof are distributed to the Purchasers, or until the Purchasers are
advised in writing by the Company that the use of the applicable prospectus may
be resumed, and the Purchasers have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such prospectus. The Company shall not suspend use of a prospectus or
Registration Statement under this Section 7.1(g) for more than 30 days at a time
and more than twice in any 12-month period. Any period for which use of a
prospectus or Registration Statement is suspended under this Section 7.1(g)
shall be added to the time for which the Company is required to maintain the
effectiveness of such Registration Statement, including the prospectus
constituting a part thereof, under Section 7.1(c).
(h) The Company shall use every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of the Registration
Statement, or the lifting of any suspension
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of the qualification (or exemption from qualification) of any of the Securities
for sale in any jurisdiction, at the earliest possible moment.
(i) The Company shall, upon the occurrence of any event
contemplated by Section 7.1(f)(v) or 7.1(f)(vi) above, prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Securities 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.
7.2 Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Purchasers from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which the Purchasers 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 or alleged untrue statement of any
material fact contained in the Registration Statement or any prospectus
(preliminary or final), as amended on the applicable date thereof, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement or any prospectus
(preliminary or final), as amended on the applicable date thereof, and the
Company will, as incurred, reimburse the Purchasers 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 (i) an untrue statement or an omission
made in such Registration Statement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation of the Regis tration Statement, or (ii) any
untrue statement or the omission of a material fact in any prospectus that is
corrected in any subsequent prospectus that was delivered to a Purchaser prior
to the pertinent sale or sales by such Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Company 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) an untrue statement or an
alleged untrue statement of a material fact made in such Registration Statement
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser specifically for use in preparation of
the Registration Statement,
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provided, however, that a Purchaser shall not be liable in any such case for any
untrue statement or alleged untrue statement or the omission or alleged omission
that has been corrected, in writing, by such Purchaser, delivered to the Company
before the sale from which such loss occurred, or (ii) any untrue statement or
alleged untrue statement or the omission or alleged omission in any prospectus
that is corrected in any subsequent prospectus that was delivered to a Purchaser
prior to the pertinent sale or sales by such Purchaser, and such Purchaser,
severally and not jointly, will, as incurred, xxxx xxxxx the Company for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim; provided, however,
that each Purchaser's indemnification obligation shall be limited to the net
proceeds received from its sale of the Securities.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying per son pursuant to this Section 7.2,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions here
inafter stated, in case any such action shall be brought against an indemnified
person and the indemnifying person shall have been notified thereof, the
indemnifying person shall be entitled to participate therein, and, to the extent
that it shall wish, to assume the defense thereof, with counsel reasonably
satisfactory to the indemnified person. After notice from the indemnifying
person to such indemnified person of the indemnifying person's election to
assume the defense thereof, the indemnifying person shall not be liable to such
indemnified person for any legal expenses sub sequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified person for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person.
(d) If the indemnification provided for in this Section 7.2 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions 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 the 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 the Purchasers
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a Purchaser on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Purchasers 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 account of
the equitable considerations
-14-
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. Not withstanding the provisions of this subsection (d), a Purchaser
shall not be required to contribute any amount in excess of the amount by which
the net amount received by such Purchaser from the sale of the Securities to
which such loss relates exceeds the amount of any damages which such Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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. Each Purchaser's obligations in this subsection
(d) to contribute is several in proportion to its sale of Securities to which
such loss relates and not joint.
(e) The obligations of the Company and the Purchasers under
this Section 7.2 shall be in addition to any liability which the Company and the
Purchasers may otherwise have and shall extend, upon the same terms and
conditions, to directors, officers, employees and agents of the Company and the
Purchasers and to each person, if any, who controls the Company or any Purchaser
within the meaning of the Act.
7.3 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities substantially in accordance with the allocation Schedule 7.3
attached hereto.
7.4 Board Member. As soon as reasonably practicable following the
Closing, the Company will cause to be appointed to its Board of Directors an
individual designated by a majority in interest of the Investors and reasonably
acceptable to the Company.
Section 8
Restrictions on Transferability of Securities:
Compliance with Securities Act
8.1 Restrictions on Transferability. The Shares, the Warrants and the
Warrant Shares shall not be transferable in the absence of a registration under
the Securities Act or an exemption therefrom or in the absence of compliance
with any term of this Agreement.
8.2 Restrictive Legend. Each certificate representing the Securities
shall bear substantially the following legends (in addition to any legends
required under applicable securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SECURITIES
-15-
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM.
ADDITIONALLY, THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS
SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN THE PUR CHASE AGREEMENT
DATED ______________, 1997 BETWEEN THE COM PANY AND THE ORIGINAL
PURCHASER, AND NO TRANSFER OF THE SECURITIES SHALL BE VALID OR
EFFECTIVE ABSENT COMPLIANCE WITH SUCH RESTRICTIONS. ALL SUBSEQUENT
HOLDERS OF THESE SECURITIES WILL HAVE AGREED TO BE BOUND BY CERTAIN OF
THE TERMS OF THE AGREEMENT, INCLUDING SECTIONS 7.1 AND 8.3 THERE OF.
COPIES OF THE PURCHASE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE REGISTERED HOLDER OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY.
The legend contained in this Section 8.2 shall be removed from a certificate
immediately upon receipt by the Company's transfer agent of a certificate
substantially in the form annexed hereto as Appendix II.
8.3 Transfer of Securities After Registration. Each Purchaser hereby
covenants with the Company not to make any sale of the Shares, the Warrant or
the Warrant Shares except either (i) in accordance with the Registration
Statement, in which case such Purchaser covenants to comply with the requirement
of delivering a current prospectus, or (ii) in accordance with Rule 144, in
which case Purchaser covenants to comply with Rule 144, or (iii) in accordance
with another exemption from the registration requirements of the SecuritiesAct.
The legend set forth in Section 8.2 will be removed from a certificate
representing the Securities following and in connection with any sale of the
Securities pursuant to subsection (i) or (ii) hereof, but not in connection with
any sale of Shares pursuant to subsection (iii) hereof, and also will be removed
at such time that the Securities may be sold under Rule 144 without restriction
as to volume and manner of sale.
8.4 Purchaser Information. Each Purchaser covenants that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser, under the heading "Selling
Security Holders" or elsewhere, or such Purchaser's "Plan of Distribution."
Section 9
Miscellaneous
9.1 Waivers and Amendments. Neither this Agreement nor any provisions
hereof shall be waived, modified, changed or discharged or terminated except by
an instrument in writing signed by the party against whom any waiver,
modification, change, discharge or termination is sought.
-16-
9.2 Broker's Fee. The Purchasers acknowledge that the Company intends
to pay a fee to the Placement Agent in respect of the sale of the Securities to
certain of the Purchasers. Each of the parties hereto hereby represents that, on
the basis of any actions and agreements by it, there are no other brokers or
finders entitled to compensation in connection with the sale of the Units to the
Purchasers.
9.3 Governing Law. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of Delaware without any
regard to conflicts of laws principles.
9.4 Survival. The representations, warranties, covenants and agreements
made in this Agreement shall survive any investigation made by the Company or
the Purchasers and the Closing.
9.5 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement.
9.6 Entire Agreement. This Agreement, including all exhibits, schedules
and appendices hereto constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
9.7 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the Company or the
Purchasers, as the case may be, at their respective addresses set forth at the
beginning of this Agreement or on Schedule 1, or at such other address as the
Company or a Purchaser shall have furnished to the other party in writing. All
notices and other communications shall be effective upon the earlier of actual
receipt thereof by the person to whom notice is directed or (i) in the case of
notices and communications sent by personal delivery or telecopy, one business
day after such notice or communication arrives at the applicable address or was
successfully sent to the applicable telecopy number, (ii) in the case of notices
and communications sent by overnight delivery service, at noon (local time) on
the second business day following the day such notice or communication was sent,
and (iii) in the case of notices and communications sent by United States mail,
seven days after such notice or communication shall have been deposited in the
United States mail.
9.8 Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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9.10 Further Assurances. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.11 Expenses. The Company and each the Purchaser shall bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, except that the Company shall pay up to
$10,000 for the fees and expenses of Xxxxxxxx & Xxxxxx, special counsel to
Invesco Global Health Sciences Fund.
9.12 Currency. All references to "dollars" or "$" in this Agreement
shall be deemed to refer to United States dollars.
(Remainder of page intentionally left blank)
-18-
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
VIDAMED, INC.
a Delaware corporation
By:
-----------------------------
Title:
--------------------------
"PURCHASERS"
--------------------------------
(Print Name of Purchaser)
By:
-----------------------------
Title:
--------------------------
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EXHIBIT A
SCHEDULE OF INVESTORS
No. of Shares of No. of Shares
--------------- --------------
Name and Address Common Stock Purchase Price Subject to Warrant
---------------- ----------- ------------- ------------------
The Global Health Sciences Fund 1,052,632 $ 5,000 263,158
c/o Invesco Trust Company
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx & Co. 147,400 $ 700,150 36,850
for Xxxxxx X. Xxxxxx Employee Investment Plan
Xxxxxxx Capital Group LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Mellon Bank N.A 694,700 $3,299,825 173,675
Custodian for XXXXX - Xxxxxxx Capital for Public
Employee Retirement System of Idaho
Xxxxxxx Capital Group LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Westcoast & Co. 210,500 $ 999,875 52,625
for State of Oregon PERS/ZCG
Xxxxxxx Capital Group LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ProMed Partners, LP 55,264 $ 262,504 13,816
000 Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxx 41,364 $ 196,479 10,341
000 Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Augusta Capital Management 105,264 $ 500,004 26,316
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Securities 210,528 $1,000,008 52,632
00000 Xxxxx 00xx Xxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
--------- ---------- -------
TOTAL $
========= ========== =======
EXHIBIT B
WARRANT
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT, EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES, AN
OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock of
VIDAMED, INC.
THIS CERTIFIES that, for value received, 1 (the "Investor"), is
entitled, upon the terms and subject to the conditions hereinafter set forth, at
any time on or prior to the close of business on the date three (3) years after
the date hereof, but not thereafter, to subscribe for and purchase, from
VIDAMED, INC. a Delaware corporation (the "Company"), 3 shares of Common Stock.
The purchase price of one share of Common Stock under this Warrant shall be
$6.33 per share. The purchase price and the number of shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein. This
Warrant has been issued pursuant to a Purchase Agreement dated September __,
1997 among the Company and the Purchasers named therein (the "Purchase
Agreement"). Capitalized terms not defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.
2. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the registered holder hereof, in whole or in part, at any time
before the close of business on the date three (3) years after the date hereof,
by delivery of the Notice of Exercise form annexed hereto duly executed at the
office of the Company, in Fremont, California (or such other office or agency of
the Company as it may designate by notice in writing to the registered holder
hereof at the address of such holder appearing on the books of the Company), and
upon payment of the purchase price of the shares thereby purchased (by cash or
by check or bank draft payable to the order of the Company); whereupon the
holder of this Warrant shall be entitled to receive a certificate for the number
of shares of Common Stock so purchased. The Company agrees that if at the time
of the surrender of this Warrant and purchase the holder hereof shall be
entitled to exercise this Warrant, the shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been exercised as
aforesaid. If this Warrant should be exercised in part only, the Issuer shall,
upon surrender of this Warrant,
execute and deliver a new Warrant evidencing the rights of the holder hereof to
purchase the balance of the Warrant Shares purchasable hereunder.
(b) In lieu of the cash payment set forth in paragraph 2(a)
above, the Holder shall have the right ("Conversion Right") to convert this
Warrant in its entirety (without payment of any kind) into that number of shares
of Common Stock equal to the quotient obtained by dividing the Net Value (as
defined below) of the Shares issuable upon exercise of this Warrant by the Fair
Market Value (as defined below) of one share of Common Stock. As used herein,
(A) the Net Value of the Shares means the aggregate Fair Market Value of the
shares of Common Stock subject to this Warrant minus the aggregate exercise
price; and (B) the Fair Market Value of one share of Common Stock means:
(i) if the exercise occurs at a time during which the
Company's Common Stock is traded on a national securities exchange or on the
Nasdaq National Market or the Nasdaq Small Cap Market, the Fair Market Value of
one share of Common Stock means the average last reported or closing sale price
for the Company's Common Stock on such exchange or market for the ten (10)
trading days ending one business day before the exercise of this Warrant;
(ii) if the exercise is in connection with a merger,
sale of assets or other reorganization transaction as described in Section 9(a)
below, the Fair Market Value of one share of Common Stock means the value
received by the holders of the Company's Common Stock pursuant to such
transaction; and
(iii) in all other cases, the Fair Market Value of
one share of Common Stock shall be determined in good faith by the Company's
Board of Directors.
(c) Certificates for shares purchased hereunder shall be
delivered to the holder hereof promptly after this Warrant shall have been
exercised as aforesaid. The Company covenants that all shares of Common Stock
which may be issued upon the exercise of rights represented by this Warrant
will, upon exercise of the rights represented by this Warrant, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then Fair
Market Value shall be paid in cash to the holder of this Warrant.
4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered
-2-
for exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof.
5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company
prior to the exercise thereof.
6. Exchange and Registry of Warrant. This Warrant is exchangeable,
without charge, upon the surrender hereof by the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant of like tenor
and dated as of such exchange.
The Company shall maintain at the above-mentioned office or agency
a registry showing the name and address of the registered holder of this
Warrant. This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
9. Early Termination, Antidilution Adjustments and Registration
Statement Adjustments.
(a) Merger, Sale of Assets, etc. In case of any consolidation
of the Company with, or merger of the Company into, any other corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and in which no change occurs in its outstanding Common Stock), or
in case of any sale or transfer of all or substantially all of the assets of the
Company, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company, except where the Company is the surviving
entity and no change occurs in its outstanding Common Stock), the corporation
formed by such consolidation or the corporation resulting from or surviving such
merger or the corporation which shall have acquired such assets or securities of
the Company, as the case may be, shall execute and deliver to the Holder
simultaneously therewith a new Warrant, satisfactory in form and substance to
the Holder, together with such other documents as the Holder may reasonably
request, entitling the Holder thereof to receive upon exercise of such Warrant
the kind and amount of shares of stock and other securities and property
receivable upon such consolidation, merger, sale, transfer, or exchange of
securities, or upon the dissolution following such sale or other transfer, by a
holder of the number of shares of Common Stock purchasable upon
-3-
exercise of this Warrant immediately prior to such consolidation, merger, sale,
transfer, or exchange. Such new Warrant shall contain the same basic other terms
and conditions as this Warrant and shall provide for adjustments which, for
events subsequent to the effective date of such written instrument, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 9. The above provisions of this paragraph (a) shall similarly apply to
successive consolidations, mergers, exchanges, sales or other transfers covered
hereby. Notwithstanding the foregoing, in the event the consideration to be paid
to holders of Company capital stock in any transaction of the nature referred to
above in this Section 9(a) (a "Transaction") consists of cash or cash
equivalents, then, provided that the Company shall have given the holder hereof
the notice required by Section 10, this Warrant shall, to the extent it has not
been exercised by the effective date of such Transaction, terminate upon the
completion of such Transaction.
(b) Dilutive Financing If at any time prior to the first
anniversary of the date of issuance of this Warrant, the Company effects a sale
of securities in a Financing Transaction (as defined below) at a purchase price
per share that is less than the per share purchase price of the Common Stock
purchased by the Purchasers pursuant to the Investment Agreement, then the
purchase price for one share of Common Stock (the "Exercise Price") pursuant to
this Warrant shall be reduced to the per share purchase price for the securities
issued in such Purchase Transaction. For purposes hereof, a Financing
Transaction shall consist of any sale or a series of sales of equity securities
or securities convertible into equity securities of the Company for aggregate
consideration of at least $500,000.00.
(c) Increase in Warrant Coverage Re: Registration Statement.
In the event that the Registration Statement relating to the Shares and the
Warrant Shares that the Company is required to file with the SEC pursuant to
Section 7.1 of the Purchase Agreement has not been declared effective by the SEC
by the 60th day following the Closing Date, the number of shares of Common Stock
of the Company issuable upon exercise of this Warrant shall, at the close of
business, Washington, D.C. time on such 60th day, be increased to an amount
equal to 1.4 times the number of shares of Common Stock of the Company issuable
upon exercise of this Warrant at the time of issuance hereof.
(d) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change. If shares of the Company's Common Stock are subdivided or combined into
a greater or smaller number of shares of Common Stock, the purchase price under
this Warrant shall be proportionately reduced in case of subdivision of shares
or proportionately increased in the case of combination of shares, in both cases
by the ratio which the total number of shares of Common Stock to be outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
-4-
(e) Cash Distributions. Except as set forth herein, no
adjustment on account of cash dividends on the Company's Common Stock or other
securities purchasable hereunder will be made to the purchase price under this
Warrant.
(f) Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company further covenants and agrees (i) that it will not, by
amendment of its Certificate of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observation or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
the Company, (ii) promptly to take such action as may be required of the Company
to permit the Holder to exercise this Warrant and the Company duly and
effectively to issue shares of its Common Stock or other securities as provided
herein upon the exercise hereof and (iii) promptly to take all action required
or provided herein to protect the rights of the Holder granted hereunder against
dilution.
(g) If the Company declares a dividend on Common Stock, or
makes a distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities convertible into
or exchangeable for Common Stock, or rights to purchase Common Stock or
securities convertible into or exchangeable for Common Stock, the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common Stock
shall be entitled to receive such dividend or distribution, in proportion to the
increase in the number of outstanding shares (and shares of Common Stock
issuable upon conversion of all such securities convertible into Common Stock)
of Common Stock as a result of such dividend or distribution, and the Exercise
Price shall be adjusted so that the aggregate amount payable for the purchase of
all the Warrant Shares issuable hereunder immediately after the record date for
such dividend or distribution shall equal the aggregate amount so payable
immediately before such record date.
(h) If the Company declares a dividend on Common Stock (other
than a dividend covered by subsection (g) above) or distributes to holders of
its Common Stock, other than as part of its dissolution or liquidation or the
winding up of its affairs, any shares of its capital stock, any evidence of
indebtedness or any cash or other of its assets (other than Common Stock or
securities convertible into or exchangeable for Common Stock), the Holder shall
receive notice of such event as set forth in Section 11 below.
(i) If the Company shall, at any time before the expiration of
this Warrant, sell all or substantially all of its assets and distribute the
proceeds thereof to the Company's stockholders, the Holder shall, upon exercise
of this Warrant have the right to receive, in lieu of the shares of Common Stock
of the Company that the Holder otherwise would have been entitled to receive,
the same kind and amount of assets as would have been issued, distributed or
paid to the Holder upon
-5-
any such distribution with respect to such shares of Common Stock of the Company
had the Holder been the holder of record of such shares of Common Stock
receivable upon exercise of this Warrant on the date for determining those
entitled to receive any such distribution. If any such distribution results in
any cash distribution in excess of the Exercise Price provided by this Warrant
for the shares of Common Stock receivable upon exercise of this Warrant, the
Holder may, at the Holder's option, exercise this Warrant without making payment
of the Exercise Price and, in such case, the Company shall, upon distribution to
the Holder, consider the Exercise Price to have been paid in full and, in making
settlement to the Holder, shall obtain receipt of the Exercise Price by
deducting an amount equal to the Exercise Price for the shares of Common Stock
receivable upon exercise of this Warrant from the amount payable to the Holder.
Notwithstanding the foregoing, in the event the consideration to be paid to
holders of Company capital stock in any transaction of the nature referred to
above in this Section 9(i) (an "Asset Sale Transaction") consists of cash or
cash equivalents and the consideration payable per share of Common Stock of the
Company is less than the Exercise Price hereunder, then, provided that the
Company shall have given the holder hereof the notice required by Section 10,
this Warrant shall, to the extent it has not been exercised by the effective
date of such Transaction, terminate upon the completion of such Transaction.
(j) The term "Common Stock" shall mean the Common Stock of the
Company as the same exists at September __, 1997 or as such stock may be
constituted from time to time, except that for the purpose of this Section 9,
the term "Common Stock" shall include any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company.
(k) Whenever the number of Warrant Shares or the Exercise
Price shall be adjusted as required by the provisions of this Section 9, the
Company forthwith shall file in the custody of its secretary or an assistant
secretary, at its principal office, and furnish to each Holder hereof, a
certificate prepared by its Chief Financial Officer, showing the adjusted number
of Warrant Shares and the adjusted Exercise Price and setting forth in
reasonable detail the circumstances requiring the adjustments.
(l) No adjustment in the Exercise Price in accordance with the
provisions of this Section 9 need be made if such adjustment would amount to a
change in such Exercise Price of less than $.01; provided however, that the
amount by which any adjustment is not made by reason of the provisions of this
paragraph (l) shall be carried forward and taken into account at the time of any
subsequent adjustment in the Exercise Price.
(m) If an adjustment is made under this Section 9 and the
event to which the adjustment relates does not occur, then any adjustments in
accordance with this Section 9 shall be readjusted to the Exercise Price and the
number of Warrant Shares which would be in effect had the earlier adjustment not
been made.
10. Notice of Adjustment. So long as this Warrant shall be outstanding,
(a) if the Company shall propose to pay any dividends or make any distribution
upon the Common Stock, or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or
-6-
purchase any shares of any class of Common Stock or securities convertible into
Common Stock or any other similar rights, or (c) if there shall be any proposed
capital reorganization of the Company in which the Company is not the surviving
entity, recapitalization of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or other
transfer of all or substantially all of the property and assets of the Company,
or voluntary or involuntary dissolution, liquidation or winding up of the
Company, or (d) if the Company shall give to its stockholders any notice, report
or other communication respecting any significant or special action or event,
then in such event, the Company shall give to the Holder, at least ten (10) days
prior to the relevant date described below, a notice containing a description of
the proposed action or event and stating the date or expected date on which a
record of the Company's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if any
is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such event.
11. Notice. Any notice to be given or to be served upon any party in
connection with the Warrant must be in writing and will be deemed to have been
given and received upon confirmed receipt, if sent by facsimile, or two (2) days
after it has been submitted for delivery by Federal Express or an equivalent
carrier, charges prepaid and addressed to the following addresses with a
confirmation of delivery:
If to the Company, to:
VidaMed, Inc.
Fremont, California
Attn.: ___________________________
Telephone: (510)______________
Facsimile: (510)______________
If to the Holder, to:
__________________________________
__________________________________
__________________________________
Telephone: (___)______________
Facsimile: (___)______________
Any party may, at any time by giving written notice to the other party,
designate any other address in substitution of an address established pursuant
to the foregoing to which such notice will be given.
-7-
12. Miscellaneous.
(a) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company.
(b) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant may have restrictions
upon its resale imposed by state and federal securities laws.
(c) Governing Law. This Agreement shall be governed in all
respects by and construed in accordance with the laws of the State of Delaware
without any regard to conflicts of laws principles.
(d) Successors and Assigns. Except as otherwise contemplated
hereby, this Warrant shall be binding upon and inure to the benefit of any
successors and assigns of the Company.
[remainder of page intentionally left blank]
-8-
IN WITNESS WHEREOF, VIDAMED, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: _________, 1997
VIDAMED, INC.
By: ______________________________
Title: ______________________________
-9-
NOTICE OF EXERCISE
To: VIDAMED, INC.
(1) The undersigned hereby elects to purchase ____________ shares of
Common Stock of VIDAMED, INC. pursuant to the terms of the attached Warrant, and
____ tenders herewith payment of the purchase price in full.
___ is electing to convert the Warrant on a "net exercise" basis in
accordance with Section 2(b) hereof.
[please check one of the foregoing lines]
(2) Please issue a certificate of certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
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(Name)
-----------------------------------------------
-----------------------------------------------
(Address)
(3) The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares; provided, that such representation shall not be required at such
time as the shares of Common Stock underlying this Warrant are registered under
the Securities Act of 1933.
-------------------------- ------------------------------------------
(Date) (Signature)
-10-
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
------------------------------------------------------------------------------
(Please Print)
whose address is --------------------------------------------------------------
(Please Print)
------------------------------------------------------------------------------
Dated: , 19
--------------------- ----.
Holder's Signature: --------------------------------
Holder's Address: ----------------------------------
----------------------------------------------------
Signature Guaranteed:
----------------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
-11-
EXHIBIT C
OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX
APPENDIX I
TO THE
PURCHASE AGREEMENT
VIDAMED, INC.
PURCHASER QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please provide
us with the following information regarding the Purchaser.
1. Please state your organization's name exactly as it should appear in the
Registration Statement:
---------------------------------------------
2. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates
other than as disclosed in the Prospectus included in the Registration
Statement?
Yes No
----------- -----------
If yes, please indicate the nature of any such relationship below:
---------------------------------------------
---------------------------------------------
3. Do you own any securities of the Company, other than those shares of Common
Stock or Warrants to be sold pursuant to the Registration Statement?
Yes No
----------- -----------
If yes, please indicate class of security and number of shares owned below:
---------------------------------------------
---------------------------------------------
