As filed with the Securities and Exchange Commission on April 18, 2000
Registration Statement No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Novoste Corporation
(Exact name of Registrant as specified in its charter)
Florida 59-2787476
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3809 Steve Reynolds Blvd. THOMAS D. WELDON
Norcross, Georgia 30093 Chairman
(770) 717-0904 Novoste Corporation
(Address, including zip code, 3890 Steve Reynolds Blvd.
and telephone number, including area Norcross, Georgia 30093
code, of registrant's (770) 717-0904
principal executive offices) (Address, including zip code,
and telephone number,
including area code,
of agent for service)
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with copies to:
SETH I. TRUWIT, ESQ.
Dorsey & Whitney LLP
250 Park Avenue
New York, NY 10177
(212) 415-9200
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended ("the Securities Act") check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Securities to be Amount to Proposed Maximum Proposed Maximum Aggregate Amount of
Registered(1) be Registered Offering Price(2) Offering Price(2) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, $.01 par value........... 1,650,000 $43.95315 $72,522,697 $19,146
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</TABLE>
(1) One preferred stock purchase right will attach to and trade with each
share of common stock sold in the offering. These rights are also covered
by this registration statement and the value attributable to them, if any,
is reflected in the market price of the common stock.
(2) Estimated solely for purposes of calculating the registration fee, based
upon the average of the high and low sales prices of the common stock on
the Nasdaq National Market on April 12, 2000, pursuant to Rule 457(c)
under the Securities Act.
This Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, Dated April 18, 2000
PRELIMINARY PROSPECTUS
1,650,000 Shares
Novoste Corporation
COMMON STOCK
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The shareholders listed in this prospectus are offering an aggregate of
1,650,000 shares of our common stock. The common stock offered by this
prospectus was sold to the selling shareholders in transactions exempt from
registration under the Securities Act. We will not receive any of the proceeds
from the sale of this common stock.
The shares of common stock being offered by the selling shareholders may
be sold from time to time in transactions on the Nasdaq National Market, in the
over-the-counter market or in negotiated transactions. The selling shareholders
directly, or through agents or dealers designated from time to time, may sell
the common stock offered by them at fixed prices, at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices.
Our common stock is listed on the Nasdaq National Market under the symbol
"NOVT." On April 13, 2000, the last reported sale price of the common stock on
the Nasdaq National Market was $43.625 per share.
-----------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 7.
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The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
-----------
[ ], 2000
<PAGE>
TABLE OF CONTENTS
Page
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Special Note Regarding Forward-Looking Statements........................ 2
Where You Can Find More Information About Us ............................ 3
Our Company.............................................................. 4
Risk Factors............................................................. 7
Use of Proceeds.......................................................... 17
Selling Shareholders..................................................... 18
Plan of Distribution..................................................... 19
Legal Matters............................................................ 19
Experts.................................................................. 19
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In this prospectus, "Novoste," the "company," "we," "us," and "our" refer
to Novoste Corporation.
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Novoste(TM), Beta-Cath(TM), (beta)-Cath(TM), Beta-Rail(TM),
(beta)-Rail(TM) and the Cross Design logo are our trademarks.
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Our Company," "Risk Factors" and elsewhere
in this prospectus constitute forward-looking statements. These statements
involve known and unknown risks, uncertainties, and other factors that may cause
our or our industry's actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, those listed
under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of such
terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.
Moreover, neither we nor any other person assumes responsibility for the
accuracy and completeness of such statements. We undertake no obligation to
update or revise any of the forward-looking statements, whether as a result of
new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed herein may
not occur.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the Commission at the Public Reference Room at the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call 1-800-SEC-0330 for further information concerning the
Public Reference Room. The Commission also makes these documents available on
its web site at http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended, relating to the common stock
offered by this prospectus. This prospectus constitutes a part of the
registration statement but does not contain all of the information set forth in
the registration statement and its exhibits. For further information, we refer
you to the registration statement and its exhibits.
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring you to another document we have filed with the Commission. The
information incorporated by reference is an important part of this prospectus
and information that we file later with the Commission will automatically update
and supersede this information. We incorporate by reference the following:
o The description of common stock contained in the Registration
Statement on Form 8-A filed with the Commission on May 15, 1996;
o The description of rights to purchase preferred shares contained in
the Registration Statement on Form 8-A filed with the Commission on
November 5, 1996;
o The amended description of rights to purchase preferred shares
contained in the Registration Statement on Form 8-A/A filed with the
Commission on August 3, 1999.
o Annual Report on Form 10-K for the fiscal year ended December 31,
1999 filed with the Commission of February 18, 2000;
o Current Report on Form 8-K filed with the Commission on March 14,
2000;
o The Proxy Statement for the Annual Meeting of Shareholders to be
held on May 11, 2000 filed with the Commission on April 7, 2000;
o Current Report on Form 8-K filed with the Commission on April 7,
2000; and
o Any future filings we make with the Commission until the selling
shareholders sell all of the common stock offered by them pursuant
to the prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or telephone number:
Novoste Corporation
3890 Steve Reynolds Blvd.
Norcross, Georgia 30093
(telephone no. 770-717-0904)
Attention: Cheryl Johnson, Vice President,
Investor Relations and Business Development
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OUR COMPANY
The Beta-Cath(TM) System
Novoste has developed the Beta-Cath System, a hand-held device designed to
deliver beta, or shallow penetration, radiation to the site of a treated
blockage in a coronary artery with the objective of reducing the likelihood of
restenosis - the renarrowing of a previously treated artery. We recently
announced statistically significant results from one of our three pivotal
clinical trials of the Beta-Cath System and submitted an initial pre-market
approval application to the FDA on April 14, 2000. In August 1998, we qualified
to apply CE marking to the Beta-Cath System, a requirement to sell our device in
most of Western Europe, and in 1999 had sales of approximately $1.8 million in
Europe and certain other countries.
Restenosis is the major limitation of percutaneous transluminal coronary
angioplasty or PTCA, a procedure used by interventional cardiologists to open
blocked coronary arteries. In 1999 physicians performed approximately 770,000
PTCA procedures in the United States and approximately 730,000 PTCA procedures
abroad. Studies have shown that 30% to 50% of patients experience restenosis
within six months after PTCA. Restenosis often requires one or more additional
revascularization procedures to reopen blocked vessels. These procedures include
repeat PTCA, which has an average cost of $20,000 in the United States, and
coronary artery bypass graft surgery, or CABG, which has an average cost of
$45,000 in the United States. It is estimated that more than $3 billion is spent
annually in the United States on revascularization procedures.
In response to the high rate of restenosis following PTCA, the placement
of coronary stents, metal implants that prop open a coronary artery, has grown
rapidly. In 1999, stents were used in approximately 75% of the PTCA procedures
performed worldwide. However, studies have shown that restenosis still occurs in
approximately 20% to 30% of the patients who receive stents. This is commonly
referred to as "in-stent" restenosis. Patients with "in-stent" restenosis often
experience recurrent restenosis and as a result are prone to multiple
revascularization procedures.
We believe that the Beta-Cath System may be effective in reducing the
incidence of restenosis following PTCA and stent placement and in treating
"in-stent" restenosis, thereby reducing the need for additional costly hospital
procedures.
Our Clinical Trials
In March 2000,we announced results from our STents and Radiation Therapy
or START Trial, our pivotal clinical trial designed to study the safety and
effectiveness of the Beta-Cath System for treating "in-stent" restenosis. The
primary endpoint of the trial was the incidence of an additional
revascularization procedure in the previously treated artery or "target vessel
revascularization" within eight months. In addition, a follow-up angiogram eight
months after the initial treatment was performed to observe the treated artery
to determine whether restenosis has recurred. We enrolled 476 patients at 50
clinical sites in North America and Europe.
The START Trial results showed the following statistically significant
results for patients with "in-stent" restenosis treated with the Beta-Cath
System when compared to patients treated with placebo:
o a 34% reduction in the rate of target vessel revascularization or
TVR;
o the rate of restenosis decreased by 66% at the stented portion of
the treated artery;
o the rate of restenosis decreased by 36% at a longer section of the
artery, beyond that treated with radiation or revascularization
methods, and
o the rate of major adverse cardiac events decreased by 31%.
4
<PAGE>
Our second pivotal trial, the START 40 Trial, was designed to seek
approval for a longer radiation source train, a 40 millimeter source train,
compared to the 30 millimeter source train predominantly used in the START
Trial. We believe this longer source train may be helpful in addressing clinical
concerns over the possibility of "geographic miss" during a vascular
brachytherapy procedure. Geographic miss is the failure to deliver the intended
radiation dose to the entire length of the balloon-injury area either due to (1)
poor alignment of the radiation source train or (2) using a radiation source
train shorter than the injury. We completed enrollment into the START 40 Trial
in October 1999 and expect to release the results from this Trial no later than
the fourth quarter of 2000.
In our third pivotal trial, the Beta-Cath System Trial, we are seeking to
determine the safety and effectiveness of the Beta-Cath System in conjunction
with either stand-alone balloon angioplasty or stent placement performed during
the radiation procedure. The primary endpoint of this trial is TVR within eight
months. This Trial also provides for a follow-up angiogram eight months after
treatment with the Beta-Cath System to determine whether restenosis has
occurred. We completed enrollment in this trial in September 1999, having
enrolled 1,456 patients at 59 clinical sites, principally in the United States.
We expect to announce the results of this trial no later than the fourth quarter
of 2000.
As is typical for patients receiving stent placement, the patients in the
stent placement subgroup of the Beta-Cath System Trial received anti-platelet
therapy to prevent stent thrombosis, a condition that can lead to acute closure
of the treated artery. Before vascular brachytherapy studies were conducted,
stent thrombosis typically occurred within 30 days of treatment in a small
percentage of patients receiving stent placement. However, there were incidences
of stent thrombosis reported in the Beta-Cath System Trial, such that the
patients developed the condition later following their treatment than what is
normally observed. As a result, in November 1998, we modified the Trial protocol
for the stent placement subgroup to extend the anti-platelet therapy from two
weeks to 60 days following stent placement and to provide for additional
follow-up contact with these patients in the second, third and fourth months
after treatment. On April 27, 1999 we announced approval of our intention to
increase patient enrollment in the stent placement subgroup of the Trial by up
to 300 more patients and to extend the anti-platelet therapy to a minimum of 90
days following stent placement. These changes were made based upon a
recommendation made by the Data Safety and Monitoring Board (DSMB) at its March
1999 meeting. Based on its review of the available data set, including the
incidence of major adverse cardiac events, the DSMB proposed these changes to
ensure sufficient data to evaluate the safety and effectiveness of the Beta-Cath
System with the revised anti-platelet therapy protocol. For comparison, there
were no incidents of late stent thrombosis observed in the START Trial.
We submitted an application to the FDA on April 14, 2000 to obtain
approval to market the Beta-Cath System, with a 30 millimeter radiation source
train, for treating "in-stent" restenosis in coronary arteries. Assuming
positive results in the START 40 Trial, we intend to make an additional
submission to the FDA to obtain approval to market the Beta-Cath System using a
40 millimeter radiation source train. Assuming positive results in the Beta-Cath
System Trial, we intend to make an additional submission to the FDA to obtain
approval to market the Beta-Cath System with the objective of reducing the
likelihood of restenosis following stand-alone balloon angioplasty or first-time
stent placement.
European Marketing and Distribution
In August 1998, we qualified to apply CE marking to the Beta-Cath System,
a requirement to sell our device in most of Western Europe. We believe that we
are currently the only company to have qualified for CE marking for a radiation
medical device designed to reduce the rate of coronary restenosis. We have
staffed an organization in Europe, generally using a direct sales force for the
larger European markets and independent distributors for other European markets.
In 1999, we had sales of approximately $1.8 million in selected European and
certain other countries.
5
<PAGE>
Our Objective
Our objective is to become the leader in the development and sale of
radiation devices for the reduction of restenosis, a new treatment concept
commonly referred to as vascular brachytherapy.
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Novoste was incorporated in Florida in January 1987 and was capitalized
and commenced operations in May 1992. Our European operations are conducted
through four wholly-owned subsidiaries, Novoste SA/NV in Belgium, Novoste BV in
The Netherlands, Novoste GmbH in Germany and Novoste SAS in France. Our
executive offices are located at 3890 Steve Reynolds Boulevard, Norcross,
Georgia 30093 (telephone no. 770-717-0904).
6
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones facing our
company. Additional risks not presently known to us or that we currently deem
immaterial may also impair our business operations.
Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks and you may lose all or
part of your investment.
This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
We depend on the successful development and commercialization of the Beta-Cath
System.
We have not yet successfully commercialized any product in the United
States and have only started to actively sell the Beta-Cath System in Europe,
the Middle East and certain Asian countries in 1999. We anticipate that for the
foreseeable future we will be solely dependent on the successful development and
commercialization of the Beta-Cath System. Our failure to commercialize the
Beta-Cath System would have a material adverse effect on our business, financial
condition and results of operations.
The Beta-Cath System will require further development and clinical
testing, as well as regulatory approval, before we can market it in the United
States. Our development efforts and clinical testing may not be successful. In
addition, we may be unable to:
o show the safety and effectiveness of the Beta-Cath System in
appropriate human clinical trials;
o obtain regulatory approval of the Beta-Cath System;
o manufacture the Beta-Cath System in commercial quantities at
acceptable costs;
o gain any significant degree of market acceptance of the Beta-Cath
System among physicians, patients and/or health care payors; or
o demonstrate that the Beta-Cath System is an attractive and
cost-effective alternative or complement to other procedures,
including coronary stents, competing vascular brachytherapy devices,
or other competitive technologies.
Commercialization of the Beta-Cath System in Europe is subject to certain
additional risks. Physicians in Europe are generally less receptive to and
slower to adopt new medical devices and technologies than physicians in the
United States due to various factors, including the influence of national health
care policies and reimbursement strategies of health care payors. We may never
achieve significant revenue from sales in Europe or ever achieve or sustain
profitability in our European operations. Our sales in 1999 aggregated
approximately $1.8 million.
Because the Beta-Cath System is our sole near-term product focus, we could
be required to cease operations if it is not successfully developed or
commercialized.
7
<PAGE>
We have a limited operating history; we have a history of losses and we expect
future losses through at least the year 2001.
We have a limited history of operations. Since we commenced operations in
May 1992, we have been primarily engaged in developing and testing our Beta-Cath
System. We have generated only limited revenue and do not have experience in
manufacturing, marketing or selling our products in quantities necessary for
achieving profitability.
At December 31, 1999, we had accumulated a deficit of approximately $83.2
million since we commenced operations in 1992. The commercialization of the
Beta-Cath System and other new products, if any, will require substantial
additional development, clinical, regulatory, manufacturing, sales and marketing
and other expenditures. We expect our operating losses to continue through at
least 2001 as we continue to expand our product development, clinical trials and
marketing efforts. We may never commercialize the Beta-Cath System or any other
product or achieve profitability.
Clinical testing of the Beta-Cath system has not been completed, and there can
be no assurance of its safety or its effectiveness.
The safety and effectiveness of the Beta-Cath System has not yet been
determined by the FDA. We have reached the primary endpoint, eight month patient
follow-up, in one trial, and are currently conducting two additional
multi-center human clinical trials of the Beta-Cath System to further evaluate
its safety and effectiveness. We completed enrollment in the START Trial in
April 1999, having enrolled 476 patients at 50 sites, principally located in the
United States. In March 2000, we announced statistically significant results
from the START Trial. In June 1999, we initiated the START 40 Trial and
enrollment was completed on October 1999 with a total of 206 patients enrolled.
At September 30, 1999 we completed enrollment in both the stand-alone balloon
angioplasty and stent placement subgroups of the Beta-Cath System Trial and
enrolled a total of 1,456 patients at 59 clinical sites.
We recently announced results from the START Trial, which demonstrated
that beta radiation had a significant treatment effect on all clinical and
angiographic endpoints. The START Trial results formed the basis for the
application that we submitted to the FDA on April 14, 2000 to request approval
to market the Beta-Cath System for treating "in-stent" restenosis. Although the
application has been submitted, the FDA may determine that the data from the
START Trial does not demonstrate the safety and effectiveness of the Beta-Cath
System and is not adequate to support our application to the FDA for pre-market
approval. The FDA could delay approval pending results from the START 40 Trial
in order to assess the impact on geographic miss and pending results from the
Beta-Cath System Trial in order to assess whether the incidence of late
thrombosis has been satisfactorily resolved by extended anti-platelet therapy.
The START 40 Trial and the Beta-Cath System Trial require follow-up
examinations with patients after eight months. Various factors, including
performing follow-up examinations on patients, could delay completion of the
START 40 Trial or the Beta-Cath System Trial for an indeterminate amount of
time. The data from the START 40 Trial or the Beta-Cath System Trial, if
completed, may not demonstrate the safety and effectiveness of the Beta-Cath
System and may not be adequate to support the application we made to the FDA for
pre-market approval of the Beta-Cath System. In particular, we cannot be sure
that (1) the incidence of late stent thrombosis seen in the Beta-Cath System
Trial will be adequately addressed by the antiplatelet therapy protocol
modification, (2) the incidence of geographic miss, seen in our BRIE registry
trial conducted in Europe and other trials by our competitors, will be addressed
by more focused physician training and technique and the use of longer radiation
sources or (3) the doses used will provide optimal results.
If the Beta-Cath System does not prove to be safe and effective in our
clinical trials, our business, financial condition and results of operations
will be materially adversely affected. In addition, the clinical trials may
identify significant technical or other obstacles to obtaining necessary
regulatory approvals. Because vascular brachytherapy in human coronary arteries
is a relatively new treatment, the long-term effects on patients are not known
and likely will not be known for several years. As a result, even if our current
clinical trials indicate the Beta-Cath System is safe and effective over an
eight-month period, we cannot be sure that the Beta-Cath System will be safe and
effective over the long term.
8
<PAGE>
There can be no assurance that we will receive the required regulatory
approvals.
United States Pre-Market Approvals
We will not be able to commence marketing or commercial sales of the
Beta-Cath System in the United States unless we receive pre-market approval from
the FDA. Our application seeking approval to market the Beta-Cath System in the
United States to treat "in-stent" restenosis was submitted to the FDA on April
14, 2000 and is based upon the patient data generated in the START Trial.
We do not anticipate FDA approval to market the Beta-Cath System in the United
States for any indication any earlier than one year after the FDA accepts our
application for filing. The FDA could require that we submit results from our
START 40 Trial and our Beta-Cath System Trial prior to considering our initial
application for approval of our device in treating "in-stent" restenosis.
Instead of filing an additional, separate application, we may amend our initial
application relating to "in-stent" restenosis to seek pre-market approval of the
Beta-Cath System for use following PTCA and stent placement based upon the
results of the Beta-Cath System Trial. If we file such an amendment, the FDA
would restart the statutory 180-day review period for our initial application as
of the date of the filing of the amendment. Most likely, this would cause a
delay in obtaining FDA approval. Moreover, if information from the clinical
trials or from commercial use of the device does not yield positive results, the
FDA's consideration of any application we have submitted could be adversely
affected; any such application could be refused filing for substantive review,
or if filed, could be subject to requests for substantial amounts of additional
information, or ultimately could be denied approval.
The FDA may request additional data or require that we conduct further
clinical trials, either of which could delay or preclude our receipt of
pre-market approval as well as require significant additional expenditures. Such
a delay or failure to receive pre-market approval would have a material adverse
effect on our business, financial condition and results of operations and could
result in cessation of our operations. Even if we receive marketing approval
from the FDA based on the results of the START Trial, we will be limited to
marketing the Beta-Cath System for use with patients who are being treated for
"in-stent" restenosis in a single coronary artery with a 30 millimeter radiation
source train. In order to market the Beth-Cath System with a 40 millimeter
radiation source train, we will likely be required to demonstrate to the FDA
through the START 40 Trial that the Beth-Cath System is safe and effective. In
order to market the Beta-Cath System for a broader range of patients, we will
seek to expand the indications for which the Beta-Cath System can be marketed to
include patients receiving stand-alone balloon angioplasty or stent placement.
Even if we receive approval based on the results of the Beta-Cath System Trial,
we would be limited to marketing the Beta-Cath System for use with patients who
are being treated for one lesion in a single coronary artery following
stand-alone balloon angioplasty or stent placement. In order to market the
Beta-Cath System for use with (1) further product design enhancements, such as
varying lengths of the radiation source train or modifications to the catheter
or (2) with a broader range of indications, we will likely be required to
demonstrate to the FDA through additional clinical trials that the Beta-Cath
System is safe and effective with such product design enhancement(s) or in
treating a broader range of indications and the FDA must approve a pre-market
approval application, application amendment or application supplement covering
the product design enhancement(s) or the broader range of indications for the
device.
Foreign Pre-Market Approvals
Sales of the Beta-Cath System outside the United States are subject to
regulatory requirements that vary widely from country to country but generally
include pre-marketing governmental approval. The time required to obtain
approval for sale in foreign countries may be longer or shorter than required
for FDA approval, and the requirements for the conduct of clinical trials,
marketing authorization, pricing and reimbursement differ from those in the
United States. Moreover, the export of medical devices from the United States
must be in compliance with FDA regulations. In August 1998 we qualified to apply
CE marking to the Beta-Cath System, a requirement necessary to sell our device
in most of Western Europe. We are subject to continuing audit and reporting
requirements related to this marking. We may be delayed or precluded from
marketing the Beta-Cath System in other foreign countries. Foreign pre-market
and other regulatory approvals of the Beta-Cath System, if granted, may include
significant limitations on the indicated uses for which the device may be
marketed.
9
<PAGE>
Approvals to Use, Handle and Transfer Radioactive Materials
Our business involves the import, manufacture, transfer, use and disposal
of Strontium- 90 (Strontium/Yttrium), the beta-emitting radioisotope utilized in
the Beta-Cath System's radiation source train. Accordingly, manufacture,
distribution, use and disposal of the radioactive material used in the Beta-Cath
System in the United States will be subject to federal, state and/or local laws
and regulations relating to the use and handling of radioactive materials.
Specifically, we must obtain approval from the State of Georgia Department of
Natural Resources to commercially distribute our radiation sources to licensed
recipients in the United States. In addition, we must also comply with NRC,
Georgia and United States Department of Transportation regulations on the
labeling and packaging requirements for shipment of radiation sources to
hospitals or other users of the Beta-Cath System. Further, hospitals and/or
physicians in the United States may be required to amend their radiation
licenses to hold, handle and use Strontium-90 prior to receiving and using our
Beta-Cath System.
The distribution and use of the Beta-Cath System outside the United States
is subject to radiation regulatory requirements that vary from country to
country and sometimes vary within a given country. Generally, each country has a
national regulatory agency responsible for regulating the safe practice and use
of radiation in its jurisdiction. In addition, each hospital desiring to use the
Beta-Cath System is generally required to amend its license to store, handle and
receive the Strontium-90 sources in our device. Generally, these licenses are
specific to the amount and type of radioactivity utilized. In addition,
generally the use of a radiation source by a physician, either for a diagnostic
or therapeutic application, also requires a license, which again is specific to
the isotope and the clinical application.
Obtaining any of the foregoing radiation-related approvals and licenses
can be complicated and time consuming. If we or any hospital or physician is
significantly delayed in obtaining any of the foregoing approvals or any of
those approvals are not obtained, our business, financial condition and results
of operations could be materially adversely affected.
The industry in which we participate is subject to rapid technological change
and intense competition.
Competition in the medical device industry, and specifically the markets
for cardiovascular devices, is intense and characterized by extensive research
and development efforts and rapidly advancing technology. New developments in
technology could render vascular brachytherapy generally or the Beta-Cath System
in particular noncompetitive or obsolete.
Vascular brachytherapy may compete with other treatment methods designed
to improve outcomes from coronary artery procedures that are well established in
the medical community, such as coronary stents. Stents are the predominant
treatment currently utilized to reduce the incidence of coronary restenosis
following PTCA and were used in approximately 75% of all PTCA procedures
performed worldwide in 1999. Manufacturers of stents include Johnson & Johnson,
Medtronic, Inc., Guidant Corporation and Boston Scientific Corporation. Stent
manufacturers often sell many products used in the cardiac catheterization labs,
commonly referred to as cath labs, and as discussed below, certain of these
companies are developing vascular brachytherapy devices.
Other devices under development that use vascular brachytherapy include:
o a radioactive-tipped guidewire;
o a radioactive stent; and
o a radioactive fluid-filled or coated balloon.
The radiation sources being developed by our competitors vary among gamma,
beta and x-ray. The most advanced competitive approach may be represented by the
radioactive guidewire, as we are aware that:
o Johnson & Johnson submitted a pre-market approval application to the
FDA in June 1999 for its gamma guidewire system;
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o Guidant is investigating this general type of device in the pivotal
clinical trial stage in the United States; and
o Boston Scientific announced results in August 1999 from a
160-patient dose-finding study in Europe.
Many of our competitors and potential competitors have substantially
greater capital resources than we do and also have greater resources and
expertise in the area of research and development, obtaining regulatory
approvals, manufacturing and marketing. Our competitors and potential
competitors may not succeed in developing, marketing and distributing
technologies and products that are more effective than those we will develop and
market or that would render our technology and products obsolete or
noncompetitive. Additionally, many of the competitors have the capability to
bundle a wide variety of products in sales to cath labs. We may be unable to
compete effectively against such competitors and other potential competitors in
terms of manufacturing, marketing, distribution, sales and servicing.
Any product we develop that gains regulatory clearance or approval will
have to compete for market acceptance and market share. An important factor in
such competition may be the timing of market introduction of competitive
products. Accordingly, we expect the relative speed with which we can develop
products, gain regulatory approval and reimbursement acceptance and supply
commercial quantities of the product to the market to be an important
competitive factor. In addition, we believe that the primary competitive factors
for products addressing restenosis include safety, efficacy, ease of use,
reliability, suitability for use in cath labs, service and price. We also
believe that physician relationships, especially relationships with leaders in
the interventional cardiology community, are important competitive factors.
Although we believe that we are the first in the United States to have initiated
an FDA-approved human clinical trial of a radiation system for reducing the
incidence of restenosis, we may not be the first to market such a system in the
United States or to market such a system effectively.
Limitations on third-party reimbursement for the Beta-Cath System currently
exist and may continue.
The Beta-Cath System, where approved for commercial sale, will be sold
primarily to hospitals. Hospitals and physicians bill various third-party
payors, such as government health programs, private health insurance plans,
managed care organizations and other similar programs, for the health care
services provided to their patients.
If and when we receive FDA approval to market the Beta-Cath System in the
United States, third-party payors may not cover procedures using the Beta-Cath
System or, if covered, third-party payors may place certain restrictions on the
circumstances in which coverage will be available. In addition, payors may deny
reimbursement if they determine a product was not used in accordance with
established payor protocol regarding cost-effective treatment methods or was
used for an unapproved indication. Third-party payors are increasingly
challenging the prices charged for medical products and services and, in some
instances, have put pressure on medical device suppliers and health care
providers to lower their prices. We are unable to predict what changes
third-party health care payors will make in their reimbursement methodologies.
Third-party payors or health care providers may not consider the Beta-Cath
System cost-effective and may not reimburse for its usage or, if they do, may
reimburse at levels that adversely affect its market acceptance and our ability
to sell the Beta-Cath System on a profitable basis.
The cost of health care has risen significantly over the past decade, and
legislators, regulators, third-party payors and health care providers have made
and may continue to make proposals to curb these costs. Failure by hospitals and
physicians to obtain reimbursement from third-party payors, changes in
third-party payors' policies toward reimbursement for the Beta-Cath System or
legislative action could have a material adverse effect on our business,
financial condition and results of operations.
Reimbursement systems in international markets vary significantly by
country and by region within some countries, and reimbursement approvals must be
obtained on a country-by-country basis. Many international markets have
government managed health care systems that control reimbursement for new
devices and procedures. In most markets there are private insurance systems as
well as government managed systems. Reimbursement for our products may not be
available in international markets under either government or private
reimbursement systems.
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The market acceptance of vascular brachytherapy and the Beta-Cath System is
uncertain.
Even if we obtain regulatory approvals and reimbursement from third party
payors for the use of the Beta-Cath System, our device may not gain any
significant degree of market acceptance among physicians and patients. Vascular
brachytherapy is a new treatment method and has not been used to any significant
extent by physicians outside the context of clinical trials. We believe that
physicians' acceptance of vascular brachytherapy generally and the Beta-Cath
System in particular will be essential for our operations and we may not obtain
this acceptance. Even if we establish clinical effectiveness of the Beta-Cath
System, cardiologists, radiation oncologists and other physicians may elect not
to recommend vascular brachytherapy generally or the Beta-Cath System in
particular. Even if recommended, physicians may not utilize the Beta-Cath System
in a sufficient number of procedures to generate significant revenues or to
enable us to operate profitably. In addition, market acceptance of our device
could be hindered because using the Beta-Cath System currently requires the
participation not only of an interventional cardiologist, but also a radiation
oncologist appropriately credentialed to administer the radiation therapy.
We depend on the protection provided by our issued patent and pending patent
applications, which may be challenged.
With respect to the Beta-Cath System and components thereof, we received
United States Patent No. 5,683,345 on November 4, 1999, United States Patent No.
5,899,882 (which is jointly owned by us and Emory University) on May 4, 1999,
and United States Patent No. 6,013,020 on January 11, 2000. We also have filed a
related United States continuation application, and have several additional
United States applications pending covering aspects of our Beta-Cath System.
With respect to United States Patent Nos. 5,683,345; 5,899,882; and 6,013,020
and our other pending United States patent applications, we have filed, or will
file in due course, counterpart applications in the European Patent Office and
certain other countries.
Like other firms that engage in the development of medical devices, we
must address issues and risks relating to patents and trade secrets. United
States Patent Nos. 5,683,345; 5,899,882; and 6,013,020 may not offer any
protection to us because competitors may be able to design functionally
equivalent devices that do not infringe this patent. They may also be
reexamined, invalidated or circumvented. In addition, claims under our other
pending applications may not be allowed, or if allowed, may not offer any
protection or may be reexamined, invalidated or circumvented. Competitors may
have or obtain patents that will prevent, limit or interfere with our ability to
make, use or sell our products in either the United States or international
markets.
We received a letter from NeoCardia, L.L.C., dated July 7, 1995, in which
NeoCardia notified us that it is the exclusive licensee of United States Patent
No. 5,199,939, or the Dake patent, and requested that we confirm that our
products did not infringe the claims of the Dake patent. On August 22, 1995 our
patent counsel responded on our behalf that we did not infringe the Dake patent.
The United States Patent and Trademark Office later reexamined the Dake
patent. In the reexamination proceeding some of the patent claims were amended
and new claims were added. We have concluded, based upon advice of patent
counsel, that our Beta-Cath System would not infringe any claim of the Dake
patent as reexamined.
In May 1997 Guidant acquired NeoCardia together with the rights under the
Dake patent. We also understand that Guidant and Johnson & Johnson have entered
into a cross-licensing arrangement which includes the use of the Dake patent.
Guidant and Johnson & Johnson are attempting to develop and commercialize
products that may compete with the Beta-Cath System and both of those companies
have significantly greater capital resources than us. Guidant or, if permitted
by the cross-licensing arrangement with Guidant, Johnson & Johnson may sue for
patent infringement in an attempt to obtain damages from us and/or injunctive
relief restraining us from commercializing the Beta-Cath System in the United
States. If Guidant or Johnson & Johnson were successful in any such litigation,
we might be required to obtain a license under the Dake patent to market the
Beta-Cath System in the United States, if such license were available, or be
prohibited from selling the Beta-Cath System in the United States. Any of these
actions could have a material adverse effect on our business, financial
condition and results of operations, or could result in cessation of our
business.
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We have two versions of our delivery catheter: a "distal monorail"
catheter and an "over the wire" catheter. Certain United States patents held by
Guidant and Boston Scientific Corporation cover "rapid exchange" catheters.
Guidant has recently cross-licensed its patents to Johnson & Johnson. We are
currently investigating the feasibility of using the "distal monorail" version
of our delivery catheter in the United States without infringing the valid
patent rights of others. We may not be able to sell the "distal monorail"
version in the United States without a license of third party patent rights and
such a license may not be available to us on favorable terms or at all. If we
decide to proceed with the "distal monorail" version of our catheter in the
United States, we may be sued for patent infringement in an attempt to obtain
damages from us and/or injunctive relief restraining us from commercializing the
"distal monorail" version in the United States. If we were unsuccessful in any
such litigation, we might be required to obtain a license, if such license were
available, or be prohibited from selling the "distal monorail" version of our
catheter in the United States. Any of these events could have a material adverse
effect on our business, financial condition and results of operations, or could
result in cessation of our business.
The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Companies in the
medical device industry have employed intellectual property litigation to gain a
competitive advantage. There can be no assurance that we will not become subject
to patent-infringement claims or litigation or interference proceedings declared
by the United States Patent and Trademark Office to determine the priority of
inventions. The defense and prosecution of intellectual property suits, or
interference proceedings and related legal and administrative proceedings are
both costly and time-consuming. Litigation may be necessary to enforce our
patents, to protect our trade secrets or know-how or to determine the
enforceability, scope and validity of the proprietary rights of others. Any
litigation or interference proceedings will result in substantial expense to us
and significant diversion of effort by our technical and management personnel.
An adverse determination in litigation or interference proceedings to which we
may become a party could subject us to significant liabilities to third parties,
require us to seek licenses from third parties, require us to redesign our
products or processes to avoid infringement or prevent us from selling our
products in certain markets, if at all. Although patent and intellectual
property disputes regarding medical devices have often been settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include significant ongoing royalties. Furthermore,
there can be no assurance that the necessary licenses would be available to us
on satisfactory terms, if at all, or that we could redesign our products or
processes to avoid infringement. Any adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a material
adverse effect on our business, financial condition and results of operations.
We also have uncertainties with respect to the secrecy of pending patent
applications filed by others, potential loss of some of our patent and
proprietary rights relating to the Beta-Cath System in the event of our failure
to pay royalties to Emory University, and potential damages that we could suffer
through the unauthorized disclosure of information that is proprietary or
confidential to us.
Since the Beta-Cath System utilizes radioactive materials, our activities are
subject to various safety regulations.
Because our business involves the import, manufacture, distribution, use
and disposal of Strontium-90, our activities and those of our suppliers and
distributors, as well as those of the hospitals and physicians that utilize the
Beta-Cath System, must comply with extensive state and federal radiation safety
regulations in the United States and similar laws in other countries. Violations
of these regulations and laws by us or our suppliers or distributors, or any
malfunctions of our device or errors by hospitals and physicians in
administering treatment, could result in accidental contamination or injury, as
well as unexpected remedial costs and penalties. Any such violation or incident
could adversely impact the market for our device or lead to suspension of our
trials or cessation of sales of the Beta-Cath System. Regulatory enforcement
action such as civil penalties or license suspension or revocation could
likewise lead to suspension of our trials or cessation of sales. In addition,
because vascular brachytherapy in coronary arteries is a new treatment, any
similar regulatory violations or incidents involving our competitors could delay
or erode acceptance of the therapy among physicians and patients and could
reduce the likelihood of regulatory approval of vascular brachytherapy devices
generally.
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We currently depend on a single vendor to supply radioisotopes and we could be
negatively affected by the failure or delay of this vendor.
To date, we have obtained all our beta radiation isotope requirements from
a single supplier, Bebig Isotopentechnik und Umweltdiagnostik GmbH, a German
corporation. Our supply agreement with Bebig has an initial term ending in
November 2000. During the term, we have agreed not to purchase more than 30% of
our annual radioisotope requirements from any supplier other than Bebig. In view
of the technical expertise and capital investment required to manufacture the
radioactive sources and the limited number of manufacturers of Strontium 90, it
may be difficult to find an alternate source of supply. Our business, results of
operations and financial condition could be materially adversely affected by
Bebig's failure to provide us with beta isotopes on a timely basis during the
term of the agreement or by our inability to obtain an alternative source of
supply on a timely basis and on terms satisfactory to us following any
termination of the Bebig agreement. In addition, portions of the process used to
manufacture the materials may be proprietary to Bebig. Bebig has no obligation
to make any of its know-how or technology available to us or to any alternate
source of supply, except in limited circumstances.
In October 1999, we signed a development and manufacturing supply
agreement with AEA Technologies QSA GmbH for a second source of radioactive
supply and for the development of a smaller diameter radiation source. The
agreement provides for the construction of a production line, which is expected
to be finished in February 2001. The cost of the production line is estimated at
$4 million and we have agreed to pay such costs as construction progresses. The
development of the smaller diameter source may not be successfully completed,
the new production line may not be completed on time or on budget, and the
smaller diameter source may not be manufacturable in commercial quantities.
We depend on third party suppliers for substantially all of the components of
our Beta-Cath System and the failure of these suppliers to deliver in a timely
manner could affect our ability to manufacture our Beta-Cath System.
We currently rely on third party manufacturers for the supply of the
hand-held transfer device, one version of the catheter and other components of
our Beta-Cath System. The supply of these components requires a long lead time.
In addition, we could not quickly establish additional or replacement suppliers
or internal manufacturing capabilities for these components. An existing
vendor's failure to supply components in a timely manner or our inability to
obtain these components on a timely basis from another supplier could have a
material adverse effect on our ability to manufacture and therefore market the
Beta-Cath System.
We have limited sales, marketing and distribution experience which may affect
our ability to successfully commercialize the Beta-Cath System.
At present we have limited sales and marketing capability. We have staffed
an organization in Europe, generally using a direct sales force for the larger
European markets and independent distributors in other European markets. We
intend to sell our products directly in the United States. We may not be able to
recruit and train adequate sales and marketing personnel to successfully
commercialize the Beta-Cath System in the United States and internationally. The
inability to recruit or retain suitable international distributors could also
have a material adverse effect on our business, financial condition and results
of operations. We have contracted with CIS bio International to inventory,
calibrate, test and deliver the radiation sources and to provide related
licensing assistance, customer support and recovery services to hospitals in
Europe and the Middle East and intend to contract with one or more additional
market leaders on the radioisotope business to provide similar services in other
international markets. If we are unable to enter into and maintain such
distribution agreements with suitable international distributors on acceptable
terms, our business, financial condition and results of operations could be
materially adversely affected.
We have limited manufacturing experience and may encounter difficulties in
scaling-up production.
To date, we have not yet successfully commercialized the Beta-Cath System,
and our manufacturing activities have consisted of producing small quantities of
our products for use in clinical trials and our initial product launch in
Europe. To achieve profitability, the Beta-Cath System must be manufactured in
commercial quantities in
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compliance with regulatory requirements and at acceptable costs. Production in
commercial quantities will require us to expand our manufacturing capabilities
and to hire and train additional personnel. We have no experience in
manufacturing our products in commercial quantities. We may encounter
difficulties in scaling up production, including problems involving production
yields, quality control and assurance, component supply and shortages of
qualified personnel. Difficulties encountered in manufacturing scale up could
have a material adverse effect on our business, financial condition and results
of operations. Future manufacturing difficulties, which could have a material
adverse effect on our business, financial condition and results of operations,
may occur.
We may not be able to obtain adequate funding for the development of our
business in the future.
We anticipate that our losses will continue through at least the year 2001
as we expend substantial resources to fund clinical trials in support of
regulatory approvals, continue development of the Beta-Cath System and launch
our product first in Europe and then, subject to FDA approval, in the United
States. Our future liquidity and capital requirements will depend upon numerous
factors, including:
o the progress of our clinical research and product development
programs;
o the receipt of and the time required to obtain regulatory approvals
and clearances;
o the resources required to gain approvals;
o the resources we devote to the development, manufacture and
marketing of the Beta-Cath System;
o the resources required to hire and develop a direct sales force in
the United States and the key markets in Europe and develop
distributors in other markets;
o the resources needed to expand manufacturing capacity and facilities
requirements; and
o market acceptance and demand for the Beta-Cath System.
We may in the future seek to raise additional funds through bank
facilities, debt or equity offerings or other sources of capital. We believe
that our existing capital resources will be sufficient to fund us through the
second quarter of 2002, but that may prove insufficient. We cannot assure that
additional financing, if required, will be available on satisfactory terms, or
at all.
The use of our product exposes us to product liability claims; insurance
coverage may not be sufficient to cover such liability.
The use of the Beta-Cath System entails an inherent risk of adverse
effects which could result in product liability claims against us. We may not
have sufficient resources to satisfy any liability resulting from any such
claims. We maintain product liability insurance with coverage of an annual
aggregate maximum of $8 million. There can be no assurance that product
liability claims will not exceed the insurance coverage limits, that the
insurance will continue to be available on commercially reasonable terms or at
all, or that a product liability claim would not materially adversely affect our
business, financial condition or results of operations.
The loss of senior management or other key personnel could materially adversely
affect our business, financial condition and results of operation.
Our business and future operating results depend in significant part upon
the continued contributions of our key technical personnel and senior
management, many of whom would be difficult to replace. David N. Gill resigned
as Chief Operating Officer and Chief Financial Officer in March 2000 and we are
currently seeking to hire a Chief Financial Officer as well as a Vice President
of Sales. Our business and future operating results also depend in significant
part upon our ability to attract and retain a Chief Financial Officer, a Vice
President of Sales and other qualified management, manufacturing, technical,
marketing, sales and support personnel for our operations. Competition for such
personnel is intense, and we may not succeed in attracting or retaining such
personnel. The
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loss of key employees, the failure of any key employee to perform adequately or
our inability to attract and retain skilled employees, as needed, could
materially adversely affect our business, financial condition and results of
operations.
The issuance of preferred stock may adversely affect rights of common
shareholders or discourage a takeover.
Under our amended and restated articles of incorporation, our board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
and to determine the price, rights, preferences and privileges of those shares
without any further vote or action by our shareholders. The rights of the
holders of common stock will be subject to, and may be adversely affected by,
the rights of the holders of any shares of preferred stock that may be issued in
the future.
In October 1996 our board of directors authorized 1,000,000 shares of
Series A Participating Preferred Stock in connection with its adoption of a
shareholder rights plan, under which we issued rights to purchase Series A
Participating Preferred Stock to holders of the common stock. Upon certain
triggering events, such rights become exercisable to purchase common stock (or,
in the discretion of our board of directors, Series A Participating Preferred
Stock) at a price substantially discounted from the then current market price of
the common stock. Our shareholder rights plan could generally discourage a
merger or tender offer involving our securities that is not approved by our
board of directors by increasing the cost of effecting any such transaction and,
accordingly, could have an adverse impact on shareholders who might want to vote
in favor of such merger or participate in such tender offer.
While we have no present intention to authorize any additional series of
preferred stock, such issuance, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could also
have the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting stock. The preferred stock may have other
rights, including economic rights senior to the common stock, and, as a result,
the issuance thereof could have a material adverse effect on the market value of
the common stock.
We are subject to provisions in our charter and pursuant to state law which
would discourage a takeover.
The amended and restated articles of incorporation provide for a
classified board of directors, the existence of which could discourage attempts
to acquire us. Furthermore, we are subject to the anti-takeover provisions of
the Florida Business Corporation Act, the application of which would also have
the effect of delaying or preventing a merger, takeover or other change of
control of the company and therefore could discourage attempts to acquire the
company.
The price of our stock is subject to volatility and fluctuations will depend on
operating results.
The market price of our common stock could decline below the price paid to
the selling shareholders. Specific factors relating to our business or broad
market fluctuations may materially adversely affect the market price of our
common stock. The trading price of our common stock could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating results,
announcements of technological innovations, new products or clinical data
announced by us or our competitors, governmental regulatory action, developments
with respect to patents or proprietary rights, general conditions in the medical
device or cardiovascular device industries, changes in earnings estimates by
securities analysts, or other events or factors, many of which are beyond our
control. In addition, the stock market has experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many medical
device companies and which have often been unrelated to the operating
performance of such companies. Our revenue or operating results in future
quarters may be below the expectations of securities analysts and investors. In
such an event, the price of our common stock would likely decline, perhaps
substantially. During the twelve-month period ended March 31, 2000, the closing
price of our common stock ranged from a high of $48.75 per share to a low of
$11.00 per share and ended that period at $40.00 per share.
In addition, our results of operations may fluctuate significantly from
quarter to quarter and will depend upon numerous factors, including product
development efforts, actions relating to regulatory and reimbursement
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matters, progress and costs related to clinical trials, the extent to which our
products gain market acceptance, and competition. These factors may cause the
price of our stock to fluctuate, perhaps substantially.
Our system may experience problems related to the Year 2000.
As of the date of this prospectus, our systems have operated without any
apparent Year 2000 related problems and appear to be Year 2000 compliant. We are
not aware that any of our primary vendors or systems maintained by third parties
have experienced significant Year 2000 compliance problems. However, while no
such problem has been discovered as of the date of this prospectus, Year 2000
issues may not become apparent immediately and, therefore, we may be affected in
the future. We will continue to monitor the issue and work to remediate any Year
2000 issues that may arise.
USE OF PROCEEDS
All of the shares of common stock offered pursuant to this prospectus are
being offered by the selling shareholders listed under "Selling Shareholders."
We will not receive any proceeds from sales of common stock by the selling
shareholders.
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SELLING SHAREHOLDERS
The shares of common stock being offered by the selling shareholders were
sold to the selling shareholders in two separate transactions exempt from
registration under the Securities Act. Of the 1,650,000 shares, 186,500 were
sold by various shareholders who are directors or officers (or their affiliates)
of Novoste. The remainder of the shares (1,463,500 shares) were issued by
Novoste. The shares were sold on March 31, 2000 (1,500,000 shares) and April 6,
2000 (150,000 shares).
We entered into two separate Registration Rights Agreements with selling
shareholders in connection with the acquisition of the stock being offered
pursuant to this prospectus.
The following table sets forth information as of April 17, 2000 with
respect to the selling shareholders and the respective number of shares of
common stock beneficially owned by each selling shareholder:
<TABLE>
<CAPTION>
Shares Owned Upon
Shares Owned Shares Being Completion
Name and Address Prior to Offering Offered Of Offering
- ------------------------------------------------------------ ----------------- -------------- -----------------
<S> <C> <C> <C>
Fidelity Contrafund .......................................... 842,700 760,500 82,200
82 Devonshire Street, E20E
Boston, MA 02109
IDS Life Series Fund, Inc. - Equity Portfolio................. 250,000 250,000 --
200 AXP Financial Center
Minneapolis, MN 55474
Variable Insurance Products Fund II:
Contrafund Portfolio.......................................... 184,800 167,000 17,800
82 Devonshire Street, E20E
Boston, MA 02109
President and Fellows of Harvard College ..................... 1,007,000(1) 150,000 857,000(3)
600 Atlantic Avenue
Boston, MA 02210
Fidelity Advisor Series VII:
Fidelity Adviser Health Care Fund............................. 46,100 12,500 33,600
82 Devonshire Street, E20E
Boston, MA 02109
Essex Global High Technology Fund II (USA),
a series of Essex Qualified Purchase Funds, LLC(2)....... 3,488 3,488 --
Essex Global Life Sciences Fund
A series of Essex Specialty Pooled Funds, LP(2) ......... 9,603 9,603 --
New Discovery Fund Limited(2)................................. 24,847 24,847 --
Essex High Technology Fund, LP(2)............................. 45,335 45,335 --
Essex High Technology (Bermuda) Fund, LP(2)................... 32,029 32,029 --
Essex Performance Fund, LP(2)................................. 59,251 59,251 --
Essex High Technology Offshore II Fund, LP(2)................. 26,123 26,123 --
Permal Media and Communications Fund, LTD(2).................. 109,324 109,324 --
</TABLE>
- ----------
(1) Based upon an Amendment to Schedule 13G filed with the Commission on
February 11, 2000 by President and Fellows of Harvard College, after
giving effect to the 150,000 shares purchased on April 6, 2000 by
President and Fellows of Harvard College.
(2) Managed by Essex Investment Mgmt. Co., LLC, 125 High Street, 29th Floor,
Boston, MA 02110.
(3) Represents 5.4% of our outstanding common stock as of April 17, 2000.
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PLAN OF DISTRIBUTION
The selling shareholders may sell the common stock being offered by the
prospectus directly to other purchasers, or to or through dealers or agents. To
the extent required, a prospectus supplement with respect to the common stock
will set forth the terms of the offering of the common stock, including the
name(s) of any dealer or agents, the number of shares of common stock to be
sold, the price of the common stock, any underwriting discount or other items
constituting underwriters' compensation.
The common stock offered hereby may be sold from time to time directly by
the selling shareholders or, alternatively, through broker-dealers or agents.
Such common stock may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (1) on any
national securities exchange for quotation services on which the common stock
may be listed or quoted at the time of sale, (2) in the over-the-counter market,
(3) in transactions other than on such exchanges or services or in the
over-the-counter market, or (4) through the writing of options. In connection
with sales of the common stock, the selling shareholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
such common stock in the course of hedging the positions they assume. The
selling shareholders may also sell the common stock offered hereby short and
deliver such common stock to close out such short positions, or loan or pledge
such common stock to broker-dealers that in turn may sell such securities. Some
of the common stock offered hereby also may be sold pursuant to Rule 144 under
the Securities Act.
The selling shareholders and any such brokers, dealers or agents may be
deemed "underwriters" as that term is defined by the Securities Act.
If a dealer is used in the sale of any common stock where this prospectus
is delivered, the selling shareholders may sell such common stock to the public
at varying prices to be determined by such dealer and at the time of resale.
To the extent required, the name of the dealer and the terms of the transaction
will be set forth in the related prospectus supplement.
In connection with the sale of common stock, dealers or agents may receive
compensation from the selling shareholders or from purchasers of such common
stock for whom they may act as agents in the form of discounts, concessions, or
commissions. Agents and dealers participating in the distribution of the common
stock may be deemed to be underwriters, and any compensation received by them
and any profit on the resale of common stock by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
Pursuant to the Registration Rights Agreements entered into among us and
the selling shareholders, we have agreed to pay all costs and expenses
associated with the registration of the shares of common stock to be sold
pursuant to this prospectus under the Securities Act. In addition, the selling
shareholders may be entitled to indemnification against certain liabilities
pursuant to the Registration Rights Agreements.
LEGAL MATTERS
The validity of the issuance of shares of common stock offered by us in
this offering will be passed upon for us by Dorsey & Whitney LLP, New York, New
York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual report on form 10-K for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
19
<PAGE>
1,650,000 Shares
Novoste Corporation
Common Stock
---------------
Prospectus
---------------
__________, 2000
<PAGE>
Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with the distribution of the
securities being registered, all of which are to be paid by the Registrant, are
as follows:
Securities and Exchange Commission Registration Fee ...........$ 19,146
NASDAQ National Market Qualification Fee .................... *
----------
Printing and Engraving Expenses ............................. *
----------
Legal Fees and Expenses ..................................... *
----------
Accounting Fees and Expenses ................................ *
----------
Miscellaneous Fees and Expenses ............................. *
----------
Total ...........................................$ *
==========
* To be completed by amendment
Item 15. Indemnification of Directors and Officers
Section 607.0850 of the Florida Business Corporation Act grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions thereof. Article VI of the Registrant's
Amended and Restated Articles of Incorporation and Article VIII of the
Registrant's By-laws provide for indemnification of Registrant's directors,
officers, agents and employees to the full extent permissible under Section
607.0850 of the Florida Business Corporation Act.
Article VI of the Registration Rights Agreements dated March 28, 2000
between Registrant and certain selling stockholders and Article V of the
Registration Rights Agreement dated April 6, 2000 between Registrant and
President and Fellows of Harvard College also contain indemnification
provisions.
Registrant maintains directors' and officers' liability insurance coverage
with an aggregate policy limit of $10,000,000 of each policy year.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
- ------ -----------
4.1 Form of Specimen Common Stock Certificate of Registrant. (1)
4.2 Registration Rights Agreement dated as of March 28, 2000 by and
among Novoste Corporation and the investors listed on the signature
pages thereof. (2)
4.3 Registration Rights Agreement dated as of April 6, 2000 by and
between Novoste Corporation and the President and Fellows of Harvard
College.
4.17(a) Amended and Restated Rights Agreement, dated as of July 29, 1999,
between Novoste Corporation and American Stock Transfer & Trust
Company, which includes as Exhibit B thereto the Form of Right
Certificate.(3)
<PAGE>
4.17(b) Amended and Restated Summary of Rights to Purchase Preferred Shares
of Novoste Corporation. (3)
*5.1 Opinion of Dorsey & Whitney LLP regarding the validity of the
securities being registered.
23.1 Consent of Ernst & Young LLP, independent auditors (included on page
II-6).
*23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1).
24.1 Powers of Attorney (included in the signature page hereof).
- ----------
* To be filed by amendment
(1) Filed as same numbered Exhibit to the Registrant's Registration Statement
on Form S-1 (File No. 333-4988).
(2) Filed as Exhibit 4.20 to the Registrant's Current Report on Form 8-K filed
with the Commission on April 7, 2000.
(3) Filed as same numbered Exhibit to the Registrant's Report on Form 8-A/A
filed on August 3, 1999.
(b) Financial Statement Schedules
Schedules are omitted because they are either not required, are not
applicable or because equivalent information has been included in the financial
statements, the notes thereto or elsewhere herein.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (1)(a) and (1)(b) above do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-2
<PAGE>
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall by deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under "Item 15.
Indemnification of Directors and Officers" above, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment to the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on the 14th day of April,
2000.
NOVOSTE CORPORATION
By: /s/ William A. Hawkins
-------------------------------------
Name: William A. Hawkins
Title: President and Chief
Executive Officer
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Thomas D. Weldon and William A.
Hawkins, and each of them, with full power to act without the other, his true
and lawful attorney-in-fact and agent for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments to this Registration
Statement including without limitation any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agent, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully, for all intents and purposes, as he could or
might do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------- ------------------------------------------ -----------------
<S> <C> <C>
/s/ William A. Hawkins
- -----------------------------
William A. Hawkins Chief Executive Officer, President and Director
(principal executive officer) April 14, 2000
/s/ Allison Grier
- -----------------------------
Allison Grier Controller April 14, 2000
(principal financial and accounting
officer)
/s/ Thomas D. Weldon
- -----------------------------
Thomas D. Weldon Chairman April 14, 2000
/s/ Donald C. Harrison, MD
- -----------------------------
Donald C. Harrison, MD Director April 14, 2000
/s/ J. Stephen Holmes
- -----------------------------
J. Stephen Holmes Director April 14, 2000
/s/ Charles E. Larsen
- -----------------------------
Charles E. Larsen Director April 14, 2000
/s/ Pieter J. Schiller
- -----------------------------
Pieter J. Schiller Director April 14, 2000
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------- ------------------------------------------ -----------------
<S> <C> <C>
/s/ Stephen I. Shapiro
- -----------------------------
Stephen I. Shapiro Director April 14, 2000
/s/ Norman R. Weldon, MD
- -----------------------------
Norman R. Weldon, MD Director April 14, 2000
/s/ William E. Whitmer
- -----------------------------
William E. Whitmer Director April 14, 2000
</TABLE>
II-5
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Novoste Corporation
for the registration of 1,650,000 shares of its common stock and to the
incorporation by reference therein of our report dated February 8, 2000 with
respect to the consolidated financial statements of Novoste Corporation included
in its Annual Report (Form 10-K) for the year ended December 31, 1999, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
April 12, 2000
Atlanta, Georgia
II-6
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of April 3, 2000 (this
"Agreement"), is made by and among NOVOSTE CORPORATION, a Florida corporation,
with headquarters located at 3890 Steve Reynolds Boulevard, Norcross, GA 30093
(the "Company"), and President and Fellows of Harvard College (the "Investor").
RECITALS:
A. In connection with the Securities Purchase Agreement dated April 3,
2000 between the Investor and the Company (the "Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to sell to the Investor 150,000 shares of the Company's Common Stock
(the "Common Shares").
B. In order to induce the Investor to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act and applicable state securities laws with respect to the
Common Shares.
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investor hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used and not otherwise defined herein have the
respective meanings given them set forth in the Purchase Agreement. In addition,
as used in this Agreement, the following terms have the following meanings:
1.1 "Common Shares" means the shares of Common Stock sold pursuant to the
Purchase Agreement.
1.2 "Investor" means the Investor and any of its transferees or assignees
who agree to become bound by the provisions of this Agreement in accordance with
Article IX hereof.
1.3 "Registrable Securities" means the Common Shares sold pursuant to the
Purchase Agreement and any shares of capital stock issued or issuable from time
to time (with any adjustments) in exchange for or otherwise with respect to the
Common Shares.
1.4 "Registration Period" means the period between the date of this
Agreement and the earlier of (i) the date on which all of the Registrable
Securities have been sold by the Initial Investors and no further Registrable
Securities may be issued in the future, or (ii) the date on which all the
Registrable Securities (in the opinion of the Investors' counsel) may be
immediately sold by the Investor without registration and without restriction
(including without limitation as to volume by each holder thereof) as to the
number of Registrable Securities to be sold, pursuant to Rule 144(k) or
otherwise.
<PAGE>
1.5 "Registration Statement" means a Registration Statement of the Company
filed under the Securities Act.
1.6 The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
statements in compliance with the Securities Act and pursuant to Rule 415 and
the declaration or ordering of effectiveness of such Registration Statement by
the SEC.
1.7 "Rule 415" means Rule 415 under the Securities Act, or any successor
Rule providing for offering securities on a continuous basis, and applicable
rules and regulations thereunder.
ARTICLE II
REGISTRATION
2.1 Mandatory Registration. The Company will use best efforts to file with
the SEC a Registration Statement on Form S-3 registering the Registrable
Securities for resale within 15 business days after the Closing Date of the
purchase of the Common Shares under the Purchase Agreement. If Form S-3 is not
available at that time, then the Company will file a Registration Statement on
such form as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Investor, which consent will not be
unreasonably withheld.
2.2 Effectiveness of the Registration Statement. The Company will use its
best efforts to cause the Registration Statement to be declared effective by the
SEC as soon as practicable after filing, and in any event no later than the 45th
day after the Closing Date (the "Required Effective Date"). However, so long as
the Company filed the Registration Statement within 15 business days after the
Closing Date, if the Registration Statement receives SEC review, then the
Required Effective Date will be the 75th day after the Closing Date. The
Company's best efforts will include, but will not be limited to, promptly
responding to all comments received from the staff of the SEC. If the Company
receives notification from the SEC that the Registration Statement will receive
no action or review from the SEC, then the Company will cause the Registration
Statement to become effective within five business days after such SEC
notification. Once the Registration Statement is declared effective by the SEC,
the Company will cause the Registration Statement to remain effective throughout
the Registration Period, except as permitted under Section 3.
2.3 Payments by the Company. If (i) at any time after effectiveness of the
Registration Statement, sales cannot be made thereunder for any reason, other
than suspension of effectiveness of the Registration Statement as described in
Section 3.6, for a period of more than 10 consecutive business days, or 30 days
in the aggregate, during any 12-month period or (ii) the Common Stock is not
listed or included for quotation on Nasdaq, Nasdaq SmallCap, the NYSE or AMEX
for more than an aggregate of 10 business days in any 12-month period, then the
Company will thereafter make cash payments to Investor as partial compensation
for such delay. The amount of the cash payment made to Investor will be equal to
1% of the purchase price paid for the Common Shares purchased by the Investor
and not previously sold by the Investor for each 30-day period following the
Effective Date that sales cannot be made under the effective Registration
Statement or the Common Stock is not listed or included for quotation on Nasdaq,
Nasdaq SmallCap, the NYSE or AMEX. These payments will be prorated on a daily
basis during each 30 day period and will be paid to Investor in cash within five
business days following the end of each month after the 10th day that sales
could not
2
<PAGE>
be made. Nothing herein limits Investor's right to pursue actual damages for the
occurrence of the events set forth in this Section 2.3.
2.4 Effect of Late Registration. If the Registration Statement has not
been declared effective by the Required Effective Date, then the Company will
make cash payments to Investor as partial compensation for such delay (the "Late
Registration Payments"). The Late Registration Payments will be equal to 1% of
the purchase price paid for the Common Shares purchased by Investor and not
previously sold by Investor for each 30-day period after the Required Effective
Date. The Late Registration Payments will be prorated on a daily basis during
each 30 day period and will be paid to the Investor in cash within five business
days after the earlier of (i) the end of each applicable 30-day period following
the Required Effective Date or (ii) the effective date of the Registration
Statement. Nothing herein limits Investor's right to pursue actual damages for
the Company's failure to file a Registration Statement or to have it declared
effective by the SEC on or prior to the Required Effective Date in accordance
with the terms of this Agreement.
2.5 Piggyback Registrations.
(a) If, at any time prior to the expiration of the Registration
Period, a Registration Statement is not effective with respect to all of the
Registrable Securities and the Company decides to register any of its securities
for its own account or for the account of others, then the Company will promptly
give the Investor written notice thereof and will use its best efforts to
include in such registration all or any part of the Registrable Securities
requested by Investor to be included therein (excluding any Registrable
Securities previously included in a Registration Statement). This requirement
does not apply to Company registrations on Form S-4 or S-8 or their equivalents
relating to equity securities to be issued solely in connection with an
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans. The Investor must
give its request for registration under this paragraph to the Company in writing
within 15 days after receipt from the Company of notice of such pending
registration. If the registration for which the Company gives notice is a public
offering involving an underwriting, the Company will so advise the Investor as
part of the above-described written notice. In that event, if the managing
underwriter(s) of the public offering impose a limitation on the number of
shares of Common Stock that may be included in the Registration Statement
because, in such underwriter(s)' judgment, such limitation would be necessary to
effect an orderly public distribution, then the Company will be obligated to
include only such limited portion, if any, of the Registrable Securities with
respect to which Investor has requested inclusion hereunder. Any exclusion of
Registrable Securities will be made pro rata among all holders of the Company's
securities seeking to include shares of Common Stock in proportion to the number
of shares of Common Stock sought to be included by those holders. However, the
Company will not exclude any Registrable Securities unless the Company has first
excluded all outstanding securities the holders of which are not entitled by
right to inclusion of securities in such Registration Statement or are not
entitled pro rata inclusion with the Registrable Securities.
(b) No right to registration of Registrable Securities under this
Section 2.5 limits in any way the registration required under Section 2.1 above.
The obligations of the Company under this Section 2.5 expire upon the earlier of
(i) the effectiveness of the Registration Statement filed pursuant to Section
2.1 above, provided that if such effectiveness is subsequently suspended or a
stop order is issued, then the obligations of the Company under this Section 2.5
will continue to be in effect, (ii) after the Company has afforded the
opportunity for the Investor to exercise registration rights under this Section
2.5 for two registrations (provided, however, that the Investor that has had
3
<PAGE>
any Registrable Securities excluded from any Registration Statement in
accordance with this Section 2.5 may include in any additional Registration
Statement filed by the Company the Registrable Securities so excluded), (iii)
when all of the Registrable Securities held by Investor may be sold by Investor
under Rule 144(k) without being subject to any volume restrictions, or (iv) the
second anniversary of the date of this Agreement.
2.6 Eligibility to use Form S-3. The Company represents and warrants that
it meets the requirements for the use of Form S-3 for registration of the sale
by the Investor of the Registrable Securities. The Company will file all reports
required to be filed by the Company with the SEC in a timely manner so as to
preserve its eligibility for the use of Form S-3.
ARTICLE III
ADDITIONAL OBLIGATIONS OF THE COMPANY
3.1 Continued Effectiveness of Registration Statement. Subject to the
limitations set forth in Section 3.6, the Company will use its best efforts to
keep the Registration Statement covering the Registrable Securities effective
under Rule 415 at all times during the Registration Period. In the event that
the number of shares available under a Registration Statement filed pursuant to
this Agreement is insufficient to cover all of the Registrable Securities
issued, the Company will (if permitted) amend the Registration Statement or file
a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover all of the Registrable Securities. The
Company will file such amendment or new Registration Statement as soon as
practicable, but in no event later than 30 business days after the necessity
therefor arises (based upon the market price of the Common Stock and other
relevant factors on which the Company reasonably elects to rely). The Company
will use its best efforts to cause such amendment or new Registration Statement
to become effective as soon as is practicable after the filing thereof, but in
no event later than 90 days after the date on which the Company reasonably first
determines (or reasonably should have determined) the need therefor.
3.2 Accuracy of Registration Statement. Any Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) filed by the Company covering Registrable Securities will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading. The Company
will prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to permit
sales pursuant to the Registration Statement at all times during the
Registration Period, and, during such period, will comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
of the Company covered by the Registration Statement until the termination of
the Registration Period, or if earlier, until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement.
3.3 Furnishing Documentation. The Company will furnish to Investor whose
Registrable Securities are included in a Registration Statement, or to its legal
counsel, (a) promptly after each document is prepared and publicly distributed,
filed with the SEC or received by the Company, one copy of any Registration
Statement filed pursuant to this Agreement and any amendments thereto, each
preliminary prospectus and final prospectus and each amendment or supplement
thereto; and (b) a number of copies of a prospectus, including a preliminary
prospectus, and all amendments and
4
<PAGE>
supplements thereto, and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor. The Company will immediately notify by facsimile the
Investor whose Registrable Securities are included in any Registration Statement
of the effectiveness of the Registration Statement and any post-effective
amendment.
3.4 Additional Obligations. The Company will use its best efforts to (a)
register and qualify the Registrable Securities covered by a Registration
Statement under such other securities or blue sky laws of such jurisdictions as
Investor who holds (or has the right to hold) Registrable Securities being
offered reasonably requests, (b) prepare and file in those jurisdictions any
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain their
effectiveness during the Registration Period, (c) take any other actions
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (d) take any other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions. Notwithstanding the foregoing, the Company is not required, in
connection such obligations, to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3.4,
(ii) subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction where it has not
so consented, (iv) provide any undertakings that cause material expense or
burden to the Company, or (v) make any change in its charter or bylaws, which in
each case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its stockholders.
3.5 Underwritten Offerings. The Investor may select underwriters
reasonably acceptable to the Company for an offering pursuant to a Registration
Statement or any amendment or supplement thereto under this Agreement, and the
Company will enter into and perform its obligations under an underwriting
agreement in usual and customary form including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering.
3.6 Suspension of Registration.
(a) The Company will notify (by telephone and also by facsimile and
reputable overnight courier) the Investor who holds Registrable Securities being
sold pursuant to a Registration Statement of the happening of any event of which
the Company has knowledge as a result of which the prospectus included in the
Registration Statement as then in effect includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company will make such notification as
promptly as practicable after the Company becomes aware of the event (but in no
event, without the prior written consent of the Investor, will the Company
disclose to Investor any of the facts or circumstances regarding the event),
will promptly (but in no event more than ten business days) prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and will deliver a number of copies of such supplement or amendment to
Investor as Investor may reasonably request.
(b) Notwithstanding the obligations under Section 3.6(a), if in the
good faith judgment of the Company, following consultation with legal counsel,
it would be detrimental to the Company and its stockholders for resales of
Registrable Securities to be made pursuant to the Registration Statement due to
(i) the existence of a material development or potential material
5
<PAGE>
development involving the Company which the Company would be obligated to
disclose in the Registration Statement, which disclosure would be premature or
otherwise inadvisable at such time or would have a Material Adverse Effect upon
the Company and its stockholders, or (ii) in the good faith judgment of the
Company's Board of Directors, it would adversely affect or require premature
disclosure of the filing of a Company-initiated registration of any class of its
equity securities, the Company will have the right to suspend the use of the
Registration Statement for a period of not more than ninety days, provided,
however, that the Company may so defer or suspend the use of the Registration
Statement no more than one time in any twelve-month period.
(c) Subject to the Company's rights under this Section 3, the
Company will use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement and, if such an
order is issued, will use its best efforts to obtain the withdrawal of such
order at the earliest possible time and to notify the Investor that holds
Registrable Securities being sold (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the resolution
thereof.
(d) Notwithstanding anything to the contrary contained herein or in
the Purchase Agreement, if the use of the Registration Statement is suspended by
the Company, the Company will promptly give notice of the suspension to Investor
whose securities are covered by the Registration Statement, and will promptly
notify Investor as soon as the use of the Registration Statement may be resumed.
Notwithstanding anything to the contrary contained herein or in the Purchase
Agreement, the Company will cause the Transfer Agent to deliver unlegended
shares of Common Stock to a transferee of Investor in accordance with the terms
of the Purchase Agreement in connection with any sale of Registrable Securities
with respect to which Investor has entered into a contract for sale prior to
receipt of notice of such suspension and for which Investor has not yet settled.
3.7 Review by the Investor. The Company will permit a single firm of legal
counsel, designated by the Investor to review the Registration Statement and all
amendments and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and will not file any document in a form to which such counsel
reasonably objects, unless otherwise required by law in the opinion of the
Company's counsel. The sections of any such Registration Statement including
information with respect to the Investor, the Investor's beneficial ownership of
securities of the Company or the Investor's intended method of disposition of
Registrable Securities must conform to the information provided to the Company
by Investor.
3.8 Comfort Letter; Legal Opinion. At the request of Investor and on the
date that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement, the Company will furnish to the
Investor and the underwriters (i) a letter, dated such date, from the Company's
independent certified public accountants, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
the Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and Investor.
3.9 Due Diligence; Confidentiality.
(a) The Company will make available for inspection by Investor whose
Registrable Securities are being sold pursuant to a Registration Statement, any
underwriter
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participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by Investor or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as each Inspector reasonably deems necessary to enable the Inspector
to exercise any due diligence responsibility. The Company will cause its
officers, directors and employees to supply all information that any Inspector
may reasonably request for purposes of performing such due diligence.
(b) Each Inspector will hold in confidence, and will not make any
disclosure (except to an Investor) of, any Records or other information that the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, (iii) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement (to the
knowledge of the relevant Inspector), (iv) the Records or other information was
developed independently by an Inspector without breach of this Agreement, (v)
the information was known to the Inspector before receipt of such information
from the Company, or (vi) the information was disclosed to the Inspector by a
third party without restriction. The Company is not required to disclose any
confidential information in the Records to any Inspector unless and until such
Inspector has entered into a confidentiality agreement (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3.9. Each Investor will, upon learning
that disclosure of Records containing confidential information is sought in or
by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential. Nothing herein will be
deemed to limit the Investor's ability to sell Registrable Securities in a
manner that is otherwise consistent with applicable laws and regulations.
(c) The Company will hold in confidence, and will not make any
disclosure of, information concerning Investor provided to the Company under
this Agreement unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement (v) the information was disclosed to the Company by a third party
without restriction or (vi) Investor consents to the form and content of any
such disclosure. If the Company learns that disclosure of such information
concerning Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, the Company will give prompt notice to
Investor prior to making such disclosure and allow Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
3.10 Listing. The Company will (i) cause all of the Registrable Securities
covered by each Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) to the extent the securities
of the same class or series are not then listed on a national securities
exchange, secure the designation and quotation of all of the Registrable
Securities covered by each Registration Statement on Nasdaq and,
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without limiting the generality of the foregoing, arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. as such with respect to such Registrable Securities.
3.11 Transfer Agent; Registrar. The Company will provide a transfer agent
and registrar, which may be a single entity, for the Registrable Securities not
later than the effective date of the Registration Statement.
3.12 Share Certificates. The Company will cooperate with Investor who
holds Registrable Securities being sold and with the managing underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to a Registration Statement and will enable such certificates
to be in such denominations or amounts as the case may be, and registered in
such names as the Investor or the managing underwriter(s), if any, may
reasonably request, all in accordance with Article V of the Purchase Agreement.
3.13 Plan of Distribution. At the request of the Investor with Registrable
Securities registered pursuant to a Registration Statement, the Company will
promptly prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement, and the prospectus
used in connection with the Registration Statement, as may be necessary in order
to change the plan of distribution set forth in such Registration Statement.
3.14 Securities Laws Compliance. The Company will comply with all
applicable laws related to any Registration Statement relating to the sale of
Registrable Securities and to offering and sale of securities and with all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act, the Exchange Act
and the rules and regulations promulgated by the SEC).
3.15 Further Assurances. The Company will take all other reasonable
actions as Investor or the underwriters, if any, may reasonably request to
expedite and facilitate disposition by such Investor of the Registrable
Securities pursuant to the Registration Statement.
ARTICLE IV
OBLIGATIONS OF THE INVESTOR
4.1 Investor Information. As a condition to the obligations of the Company
to complete any registration pursuant to this Agreement with respect to the
Registrable Securities of Investor, Investor will furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as is
reasonably required by the Company to effect the registration of the Registrable
Securities. At least 10 business days prior to the first anticipated filing date
of a Registration Statement for any registration under this Agreement, the
Company will notify Investor of the information the Company requires from
Investor if the Investor elects to have any of its Registrable Securities
included in the Registration Statement. If, within three business days prior to
the filing date, the Company has not received the requested information from
Investor, then the Company may file the Registration Statement without including
Registrable Securities of Investor.
4.2 Further Assurances. Investor will cooperate with the Company, as
reasonably requested by the Company, in connection with the preparation and
filing of any Registration
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Statement hereunder, unless Investor has notified the Company in writing of
Investor's election to exclude all of Investor's Registrable Securities from the
Registration Statement.
4.3 Suspension of Sales. Upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3.6, Investor will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until it receives
copies of the supplemented or amended prospectus contemplated by Section 3.6. If
so directed by the Company, Investor will deliver to the Company (at the expense
of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Investor's possession (other than a limited
number of file copies) of the prospectus covering such Registrable Securities
that is current at the time of receipt of such notice.
4.4 Underwritten Offerings.
(a) If Investor determines to engage the services of an underwriter,
Investor will enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering, and will take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities.
(b) Without limiting any Investor's rights under Section 2.1 hereof,
Investor may not participate in any underwritten distribution hereunder unless
Investor (a) agrees to sell its Registrable Securities on the basis provided in
its underwriting arrangements, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (c)
agrees to pay its pro rata share of all underwriting discounts and commissions
and other fees and expenses of investment bankers and any manager or managers of
such underwriting, and legal expenses of the underwriter, applicable with
respect to its Registrable Securities, in each case to the extent not payable by
the Company under the terms of this Agreement.
ARTICLE V
EXPENSES OF REGISTRATION
The Company will bear all reasonable expenses, other than underwriting
discounts and commissions, and transfer taxes, if any, incurred in connection
with registrations, filings or qualifications pursuant to Articles II and III of
this Agreement, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one firm
of legal counsel selected by Investor pursuant to Section 3.7 hereof.
ARTICLE VI
INDEMNIFICATION
In the event that any of Registrable Securities are included in a
Registration Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify and hold
harmless Investor, any underwriter (as defined in the Securities Act) for the
Investor, any directors or officers of Investor or such underwriter and any
person who controls Investor or such underwriter within the
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meaning of the Securities Act or the Exchange Act (each, an "Indemnified
Person") against any losses, claims, damages, expenses or liabilities (joint or
several) (collectively, and together with actions, proceedings or inquiries by
any regulatory or self-regulatory organization, whether commenced or threatened
in respect thereof, "Claims") to which any of them become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims arise out
of or are based upon any of the following statements, omissions or violations in
a Registration Statement (including any exhibits or schedules thereto) filed
pursuant to this Agreement, any amendment or supplement thereof or any
prospectus (preliminary or final) included therein: (a) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment or supplement thereof 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, (b) any untrue
statement or alleged untrue statement of a material fact contained in the
prospectus (as it may be amended or supplemented) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading, or (c) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any other law, including
without limitation any state securities law or any rule or regulation thereunder
(the matters in the foregoing clauses (a) through (c) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6.3 with respect
to the number of legal counsel, the Company will reimburse Investor and each
such underwriter or controlling person and each such other Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.1
(i) does not apply to a Claim arising out of or based upon a Violation that
occurs in reliance upon and in conformity with information furnished in writing
to the Company by any Indemnified Person expressly for use in connection with
the preparation of the Registration Statement (including any exhibits or
schedules thereto) or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.3
hereof; and (ii) does not apply to amounts paid in settlement of any Claim if
such settlement is made without the prior written consent of the Company, which
consent will not be unreasonably withheld. This indemnity obligation will remain
in full force and effect regardless of any investigation made by or on behalf of
the Indemnified Persons and will survive the transfer of the Registrable
Securities by the Investors under Article IX of this Agreement.
6.2 In connection with any Registration Statement in which Investor is
participating, Investor will indemnify and hold harmless, to the same extent and
in the same manner set forth in Section 6.1 above, the Company, each of its
directors, each of its officers who signs the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, and any other stockholder selling securities pursuant
to the Registration Statement or any of its directors or officers or any person
who controls such stockholder within the meaning of the Securities Act or the
Exchange Act (each an "Indemnified Person") against any Claim to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claim arises out of or is based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
Investor expressly for use in connection with such Registration Statement.
Subject to the restrictions set forth in Section 6.3, Investor will promptly
reimburse any legal or other expenses (promptly as such expenses are incurred
and due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim. However, the indemnity agreement
contained in this Section 6.2 does not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
Investor,
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which consent will not be unreasonably withheld, and Investor not will be liable
under this Agreement (including this Section 6.2 and Article VII) for the amount
of any Claim that exceeds the net proceeds actually received by Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. This indemnity will remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnified Party and will survive the
transfer of the Registrable Securities by the Investors under Article IX of this
Agreement.
6.3 Promptly after receipt by an Indemnified Person under this Article VI
of notice of the commencement of any action (including any governmental action),
such Indemnified Person will, if a Claim in respect thereof is to be made
against any indemnifying party under this Article VI, deliver to the
indemnifying party a written notice of the commencement thereof. The
indemnifying party may participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly given notice,
assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying parties and the Indemnified Person. In that case, the indemnifying
party will diligently pursue such defense. If, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel
of the Indemnified Person and the indemnifying party would be inappropriate due
to actual or potential conflicts of interest between the Indemnified Person and
any other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action including the
Indemnified Person, and any such Indemnified Person reasonably determines that
there may be legal defenses available to such Indemnified Person that are
different from or in addition to those available to the indemnifying party, then
the Indemnified Person is entitled to assume such defense and may retain its own
counsel, with the fees and expenses to be paid by the indemnifying party. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action does not relieve an indemnifying
party of any liability to an Indemnified Person under this Article VI, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Article VI will be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
ARTICLE VII
CONTRIBUTION
To the extent that any indemnification provided for herein is prohibited
or limited by law, the indemnifying party will make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Article
VI to the fullest extent permitted by law. However, (a) no contribution will be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Article VI, (b) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (c) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
will be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
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ARTICLE VIII
EXCHANGE ACT REPORTING
In order to make available to Investor the benefits of Rule 144 or any
similar rule or regulation of the SEC that may at any time permit Investor to
sell securities of the Company to the public without registration, the Company
will:
(a) File with the SEC in a timely manner, and make and keep
available, all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein limits the Company's
obligations under Section 4.3 of the Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) Furnish to Investor, so long as Investor holds Registrable
Securities, promptly upon the Investor's request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents filed by
the Company with the SEC and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144
without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of Investor hereunder, including the right to have the Company
register Registrable Securities pursuant to this Agreement, will be
automatically assigned by Investor to transferees or assignees of all or any
portion of the Registrable Securities, but only if (a) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c) after such transfer
or assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, (d) at or before the time the Company received the written notice
contemplated by clause (b) of this sentence, the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein, (e) such transfer is made in accordance with the applicable requirements
of the Purchase Agreement, and (f) the transferee is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
This Agreement may be amended and the obligations hereunder may be waived
(either generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Company and Investor. Any
amendment or waiver effected in accordance with this Article X is binding upon
Investor and the Company.
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ARTICLE XI
MISCELLANEOUS
11.1 Conflicting Instructions. A person or entity is deemed to be a holder
of Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company will act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
11.2 Notices. Any notices required or permitted to be given under the
terms of this Agreement will be given as set forth in the Purchase Agreement.
11.3 Waiver. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, does not operate as a waiver thereof.
11.4 Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of New York with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby or thereby.
11.5 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
11.6 Entire Agreement. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
11.7 Successors and Assigns. Subject to the requirements of Article IX
hereof, this Agreement inures to the benefit of and is binding upon the
successors and assigns of each of the parties hereto. Notwithstanding anything
to the contrary herein, including, without limitation, Article IX, the rights of
an Investor hereunder are assignable to and exercisable by a bona fide pledgee
of the Registrable Securities in connection with an Investor's margin or
brokerage accounts.
11.8 Use of Pronouns. All pronouns refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
11.9 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement. This
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Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission, and facsimile signatures are binding on the parties
hereto.
11.11 Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party 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.
11.12 No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, the undersigned Investor and the Company have caused
this Agreement to be duly executed as of the date first above written.
NOVOSTE CORPORATION:
By: __________________________________
Name:
Title:
PRESIDENT AND FELLOWS OF HARVARD COLLEGE:
By: Harvard Management Co., Inc.
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
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