UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
VIDAMED, INC.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- ----------------------- -------------------------------------------------------
(Title of Class of Securities)
926530 10 6
- ----------------------- -------------------------------------------------------
(CUSIP Number)
Carol E. Malkinson, Esq.
Medtronic, Inc.
7000 Central Ave. N.E.
Minneapolis, Minnesota 55432
(612) 514-4000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
January 4, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 926530 10 6 Page 2 of 36 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Medtronic, Inc.
41-0793183
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Minnesota
- ---------------------------------------------- -------- ------------------------
7 SOLE VOTING POWER
6,890,000 (includes 1,590,000 shares which may be purchased
NUMBER OF upon exercise of exercisable warrant)
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SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 6,890,000 (includes 1,590,000 shares which may be purchased
PERSON upon exercise of exercisable warrant)
------- -----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,890,000 (includes 1,590,000 shares which may be purchased upon
exercise of exercisable warrant)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.18%
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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<PAGE>
SCHEDULE 13D
CUSIP No. 926530 10 6 Page 3 of 36 Pages
- ---------- ---------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Medtronic Asset Management, Inc.
41-1721127
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [ ]
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Minnesota
- ---------------------------------------------- -------- ------------------------
7 SOLE VOTING POWER
6,890,000 (includes 1,590,000 shares which may be purchased
NUMBER OF upon exercise of exercisable warrant)
------- -----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
------- -----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 6,890,000 (includes 1,590,000 shares which may be purchased
PERSON upon exercise of exercisable warrant)
------- -----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,890,000 (includes 1,590,000 shares which may be purchased upon
exercise of exercisable warrant)
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [ ]
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.18%
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- ---------- ---------------------------------------------------------------------
<PAGE>
Item 1. Security and Issuer
The class of equity security to which this statement relates is the Common
Stock, $0.01 par value per share, of VidaMed, Inc. ("VidaMed"). The name and
address of the principal executive offices of the issuer of such securities are
VidaMed, Inc., 46107 Landing Parkway, Fremont, California 94538.
Item 2. Identity and Background
(a), (b) and (c)
Medtronic, Inc. ("Medtronic"), 7000 Central Ave. N.E., Minneapolis, Minnesota
55432, is a Minnesota corporation, principally engaged in the business of
therapeutic medical technology, specializing in implantable and interventional
therapies. Medtronic Asset Management, Inc., 7000 Central Avenue N.E.,
Minneapolis, Minnesota 55432, a Minnesota corporation ("MAMI") is a wholly-owned
subsidiary of Medtronic, Inc. through which Medtronic, Inc. holds certain
investments. Information is provided below with respect to persons who are
directors and executive officers of the reporting persons.
William W. George, Chairman, Chief Executive Officer and Director, Medtronic,
Inc., 7000 Central Avenue N.E., Minneapolis, MN 55432;
Arthur D. Collins, Jr., President, Chief Operating Officer and Director,
Medtronic, Inc., and President and Director, MAMI, 7000 Central Avenue N.E.,
Minneapolis, MN 55432;
Glen D. Nelson, M.D., Vice Chairman and Director, Medtronic, Inc., 7000 Central
Avenue N.E., Minneapolis, MN 55432;
Michael R. Bonsignore, Director, Medtronic, Inc., Chief Executive Officer,
Honeywell International, Inc., 101 Columbia Road, P. O. Box 4000, Morristown,
New Jersey 07962-2497;
William R. Brody, M.D., Ph.D., Director, Medtronic, Inc., President, The Johns
Hopkins University, 3400 North St. Charles St., 242 Garland Hall, Baltimore, MD
21218;
Paul W. Chellgren, Director, Medtronic, Inc., Chairman and Chief Executive
Officer, Ashland Inc., 50 E. RiverCenter Boulevard, P.O. Box 391, Covington, KY
41012-0391;
Antonio M. Gotto, Jr., M.D., Director, Medtronic, Inc., Dean, The Weill Medical
College of Cornell University, Medical Affairs Provost, Cornell University,
Office of the Dean, 1300 York Avenue, New York, NY 10021;
Bernadine P. Healy, M.D., Director, Medtronic, Inc., President and CEO, American
Red Cross, 430 17th Street, N.W., Washington, DC 20036;
Thomas E. Holloran, Director, Medtronic, Inc., Professor, Graduate School of
Business, University of St. Thomas, 1000 LaSalle Avenue - Suite 343,
Minneapolis, MN 55403-2005;
Jean-Pierre Rosso, Director, Medtronic, Inc., Chairman and Chief Executive
Officer, Case Corporation, 700 State Street, Racine, WI 53404;
Richard L. Schall, Director, Medtronic, Inc., Consultant, 4900 IDS Center, 80
South 8th Street, Minneapolis, MN 55402;
Jack W. Schuler, Director, Medtronic, Inc., Chairman, Stericycle, Inc. and
Ventana Medical Systems, Inc., 28161 N. Keith Drive, Lake Forest, IL 60045;
Gerald W. Simonson, Director, Medtronic, Inc., President and Chief Executive
Officer, Omnetics Connector Corporation, 7260 Commerce Circle East, Fridley, MN
55432;
Gordon M. Sprenger, Director, Medtronic, Inc., Executive Officer, Allina Health
System, 5601 Smetana Drive, Minneapolis, MN 55440;
Janet S. Fiola, Senior Vice President, Human Resources, Medtronic, Inc., 7000
Central Avenue N.E., Minneapolis, MN 55432;
Robert M. Guezuraga, Senior Vice President and President, Cardiac Surgery,
Medtronic, Inc., 7000 Central Avenue N.E., Minneapolis, MN 55432;
Stephen H. Mahle, Senior Vice President and President, Cardiac Rhythm
Management, Medtronic, Inc., 7000 Central Avenue N.E., Minneapolis, MN 55432;
Robert L. Ryan, Senior Vice President and Chief Financial Officer, Medtronic,
Inc., and Chief Financial Officer and Director, MAMI, 7000 Central Avenue N.E.,
Minneapolis, MN 55432;
David J. Scott, Senior Vice President, General Counsel and Secretary, Medtronic,
Inc. and Vice President, Secretary and Director, MAMI, 7000 Central Avenue N.E.,
Minneapolis, MN 55432;
Scott J. Solano, Senior Vice President and President, Vascular, Medtronic, Inc.,
7000 Central Avenue N.E., Minneapolis, MN 55432;
Keith E. Williams, Senior Vice President and President, Asia Pacific, Medtronic,
Inc., 7000 Central Avenue N.E., Minneapolis, MN 55432;
Barry W. Wilson, Senior Vice President and President, Europe, Middle East and
Africa, Medtronic, Inc., 7000 Central Avenue N.E., Minneapolis, MN 55432.
(d) and (e)
To the knowledge of the reporting person, neither the reporting person nor any
of the persons listed above has, during the last five years, been convicted in a
criminal proceeding or was, during the last five years, a party to a civil
proceeding as a result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) All of the individuals referred to above are United States citizens, except
Mr. Wilson, who is a dual citizen of the United Kingdom and South Africa.
Item 3. Source and Amount of Funds or Other Consideration
This statement relates to a Purchase Agreement entered into on January 4, 2000
(the "Purchase Agreement") between VidaMed, Inc. ("VidaMed") and the Purchasers
listed on Exhibit A to the Purchase Agreement, including MAMI. Pursuant to the
Purchase Agreement, MAMI purchased 5,300,000 shares of VidaMed's common stock at
a price of $1.73 per share and a warrant to purchase an additional 1,590,000
shares of VidaMed common stock (the "Warrant") exercisable at a price of $1.80
per share at any time during the five years after January 4, 2000. The Purchase
Agreement grants to MAMI certain registration rights with respect to the shares
purchased and the shares underlying the Warrant. The Purchase Agreement also
grants MAMI the right to designate a member of VidaMed's Board of Directors as
long as MAMI continues to own at least 55% of the securities originally
purchased under the Purchase Agreement. Copies of the Purchase Agreement and the
Warrant are attached hereto as Exhibits and are incorporated herein by
reference. The foregoing descriptions of the Purchase Agreement and the Warrant
are qualified in their entirety by reference to such Exhibits.
Item 4. Purpose of Transaction
MAMI has acquired the shares of VidaMed Common Stock and the warrant solely for
investment purposes. Based upon its evaluation of VidaMed's financial condition,
market conditions and other factors it may deem material, the reporting persons
may seek to acquire additional shares of VidaMed Common Stock in the open market
or in private transactions, or may dispose of all or any portion of the shares
currently owned or which may be acquired upon exercise of the Warrant. The
reporting persons plan to designate an individual to serve on VidaMed's Board of
Directors as provided in the Purchase Agreement. Except as set forth in the
preceding sentence, the reporting persons presently do not have any definitive
plans or proposals that relate to or would result in transactions of the kind
described in paragraphs (a) through (j) of Item 4 of Schedule 13D, but may, at
any time and from time to time, review, reconsider and discuss with VidaMed or
others the reporting persons' positions with respect to VidaMed which would
thereafter result in the adoption of such plans or proposals.
Item 5. Interest in Securities of the Issuer
(a) Medtronic, Inc., through MAMI, is the beneficial owner of 6,890,000 shares
of Common Stock of VidaMed (including 1,590,000 shares which are not outstanding
but which may be purchased upon exercise of a currently exercisable warrant),
which represents approximately 28.16% of the outstanding Common Stock of VidaMed
(assuming exercise of the warrant). To the knowledge of the reporting persons,
no other person named in Item 2 beneficially owns any VidaMed shares.
(b) Medtronic, Inc., through MAMI, has the sole power to vote and the sole power
to dispose of all shares of VidaMed Common Stock beneficially owned by it.
(c) The only transaction in the Common Stock of VidaMed that was effected by any
person named in paragraph (a) above during the past 60 days is the acquisition
of 5,300,000 shares and a warrant to purchase 1,590,000 shares as reported in
Item 3 above.
(d) No other person is known to have the right to receive or the power to direct
the receipt of dividends from, or the proceeds of the sale of, the subject
securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
As described in Item 3 above, MAMI is a party to the Purchase Agreement pursuant
to which MAMI acquired 5,300,000 shares of VidaMed Common Stock and a warrant to
purchase 1,590,000 additional shares.
Item 7. Material to Be Filed as Exhibits
Exhibit A - Agreement by the persons filing this Form 13D to make a joint
filing.
Exhibit B - Purchase Agreement dated January 4, 2000 by and between VidaMed,
Inc. and the purchasers listed on Exhibit A thereto, including MAMI.
Exhibit C - Warrant to purchase 1,590,000 shares of VidaMed, Inc. Common Stock
dated January 4, 2000.
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: January 13, 2000
MEDTRONIC, INC.
By: /s/ Michael D. Ellwein
Michael D. Ellwein
Vice President
MEDTRONIC ASSET MANAGEMENT, INC.
By: /s/ Michael D. Ellwein
Michael D. Ellwein
Vice President
<PAGE>
EXHIBIT INDEX
Exhibit Description
A Agreement by the persons filing this Form 13D to make a joint filing.
B Purchase Agreement dated January 4, 2000 by and between VidaMed, Inc.
and the purchasers listed on Exhibit A thereto, including MAMI.
C Warrant to purchase 1,590,000 shares of VidaMed, Inc. Common Stock
dated January 4, 2000.
Exhibit A
The undersigned hereby agree to file a joint Schedule 13D with respect
to the interests of the undersigned in VidaMed, Inc. and that the Schedule 13D
to which this Exhibit A is attached has been filed on behalf of each of the
undersigned.
January 13, 2000
MEDTRONIC, INC.
By: /s/ Michael D. Ellwein
Michael D. Ellwein
Vice President
MEDTRONIC ASSET MANAGEMENT, INC.
By: /s/ Michael D. Ellwein
Michael D. Ellwein
Vice President
VIDAMED, INC.
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made as of January 4, 2000
(the "Agreement Date"), by and between VidaMed, Inc., a Delaware corporation
(the "Company") with its principal office at 46107 Landings Parkway, Fremont,
California 94538 and the purchasers set forth on Exhibit A hereto (individually
a "Purchaser" and collectively the "Purchasers").
RECITALS
WHEREAS, the Company desires to issue and sell to the Purchasers and
the Purchasers desire to purchase from the Company, on the terms and subject to
the conditions set forth in this Agreement, 6,460,000 shares of the Company's
common stock, $0.001 par value (the "Common Stock") at $1.73 per share and
warrants to purchase 1,938,000 shares of the Company's Common Stock, for a total
purchase price of $11,175,800.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1
Purchase and Sale of Common Stock and Warrants
1.1 Purchase and Sale of Common Stock. Subject to the terms and
conditions of this Agreement, at the Closing (as defined below) each Purchaser,
severally and not jointly, agrees to purchase from the Company, and the Company
agrees to issue and sell to such Purchaser the number of shares (the "Shares")
of Common Stock of the Company set forth opposite such Purchaser's name on
Exhibit A hereto, at a purchase price (the "Purchase Price") of $1.73 per share.
1.2 Issuance of Warrants. The Company shall issue to each Purchaser a
warrant (individually a "Warrant" and collectively the "Warrants") exercisable
for thirty percent (30%) of the number of Shares purchased by such Purchaser.
Each Warrant, the form of which is attached hereto as Exhibit B, entitles the
registered holder thereof to purchase shares of Common Stock at a price of $1.80
per share, subject to adjustment in certain circumstances, commencing on the
date hereof until five years from the Closing (as defined below). The Shares,
the Warrants and the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares") are herein collectively referred to as the
"Securities."
Section 2
Closing Date; Delivery
2.1 Closing Date. The completion of the purchase and sale of the Shares
and the Warrants will be held at a location mutually agreeable to the parties on
January 4, 2000 (the "Closing"). The date of the Closing is hereinafter referred
to as the "Closing Date."
2.2 Delivery. At the Closing, the Company will deliver to each
Purchaser the certificates evidencing the Shares and the Warrants and an opinion
of Shartsis, Friese & Ginsburg LLP, counsel to the Company, in the form of
Exhibit C. Such delivery shall be against payment of the Purchase Price for the
Shares by wire transfer of immediately available funds to the Company's bank
account (in accordance with instructions furnished by the Company).
Section 3
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under and by virtue of the laws of the State of
Delaware and is in good standing as a domestic corporation under the laws of
said state, and has the requisite corporate power and authority to own its
properties and to carry on its business as now being conducted. Other than as
disclosed in the SEC Documents (as defined below), the Company has no
subsidiaries or direct or indirect ownership in any firm, corporation or
business which either individually or in the aggregate is material to the
business of the Company. The Company is qualified to do business and is in good
standing as a foreign corporation in every jurisdiction in which its ownership
of property or conduct of business requires it to be so qualified and in which
the failure to so qualify would have a material adverse effect on the financial
condition or business of the Company.
3.2 Corporate Power; Authorization. The Company has all requisite legal
and corporate power and authority and has taken all requisite corporate action
to duly authorize, execute and deliver this Agreement, to sell and issue the
Shares and the Warrant, and to carry out and perform all of its obligations
under and contemplated by this Agreement. This Agreement has been duly executed
and delivered by an authorized officer of the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally, and (b) as limited by equitable principles
generally (regardless of whether such enforceability is considered a proceeding
in equity or at law).
3.3 Issuance and Delivery. The Shares and the Warrants have been duly
authorized and, when issued and delivered in compliance with this Agreement,
will be duly and validly issued and delivered and will be outstanding, fully
paid, nonassessable and free and clear of all pledges, liens, encumbrances and
restrictions other than any liens or encumbrances created by or imposed on the
holders thereof through no action of the Company; provided, however, that the
Shares and the Warrant will be subject to restrictions on transfer and state and
federal securities laws and as provided herein. The Warrant Shares have been
duly authorized and reserved for issuance upon exercise of the Warrant, and such
shares, when issued upon such exercise in accordance with the terms of the
Company's Certificate of Incorporation and the Warrant, respectively, and when
the price is paid upon exercise of the Warrant, shall be fully paid and
nonassessable. No preemptive rights or other rights to subscribe for or purchase
exist with respect to the issuance and sale of the Securities by the Company
pursuant to this Agreement. Except as provided in Schedule 3.3, no stockholder
of the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement) to require the Company to register the sale of any
securities owned by such holder under the Securities Act of 1933, as amended
(the "Securities Act"), in the Registration Statement. Except as provided in
Schedule 3.3, no further approval or authority of the stockholders or the Board
of Directors of the Company will be required for the issuance and sale of the
Securities to be sold by the Company as contemplated herein.
3.4 SEC Documents; Financial Statements; Subsequent Events. The Company
has filed in a timely manner all documents that the Company was required to file
with the Securities and Exchange Commission ("SEC") during the twelve (12)
months preceding the date of this Agreement. As of their respective filing
dates, all documents filed by the Company with the SEC (the "SEC Documents")
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or the Securities Act, as
applicable and all rules and regulations thereunder. None of the SEC Documents
contained, as of their respective dates, any untrue statement of material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, and such SEC Documents, when read as a whole, do
not contain any untrue statements of a material fact and do not omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. The Financial Statements have been prepared in accordance with
United States generally accepted accounting principles consistently applied, and
fairly present the financial position of the Company and any subsidiaries at the
dates thereof and the results of the Company's operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
adjustments).
3.5 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the execution and delivery of this Agreement that
has not been accomplished and the consummation of the transactions contemplated
by this Agreement except for (a) the filing of a Form D with the SEC with
respect to the issuance of the Securities, (b) the filing of a Nasdaq Small Cap
Market Notification Form (pursuant to Rule 10b-17 promulgated under the Exchange
Act) with the Nasdaq Small Cap Market, each of which will be filed in a timely
manner, and (c) qualification (or taking such action as may be necessary to
secure an exemption from qualification, if available) of the offer and sale of
the Securities under applicable state laws, which filings and qualifications, if
required, will be accomplished in a timely manner.
3.6 Exempt Transactions. Subject to the accuracy of the Purchasers'
representations and warranties in Section 4 of this Agreement, the offer, sale
and issuance of the Securities in conformity with the terms of this Agreement
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act and from the registration or qualification requirements of
the laws of any applicable state or United States jurisdiction.
3.7 No Material Adverse Change. Since September 30, 1999, there have
not been any changes in the assets, liabilities, financial condition, business
or operations of the Company from that reflected in the Financial Statements
except (i) changes in the ordinary course of business which have not been,
either individually or in the aggregate, materially adverse, and (ii) the
Company's continued incurrence of operating losses and negative cash flow, which
have occurred at a rate not materially in excess of the rate at which operating
losses and negative cash flows were incurred from January 1, 1998 to September
30, 1999.
3.8 Intellectual Property. The Company owns or possesses adequate
rights to use all patents, patent rights, inventions, trademarks, trade names,
copyrights, licenses, governmental authorizations, trade secrets and know-how
that are used or necessary for the conduct of its business as described in the
SEC Documents; except as described in the SEC Documents, neither the Company nor
any of its subsidiaries has received any notice of, or has any knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent right, invention, trademarks, trade names, copyrights, licenses,
governmental authorizations, trade secret or know-how that, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company and its subsidiaries considered
as a whole.
3.9 Authorized Capital Stock. The authorized capital stock of the
Company conforms, as of the dates for which such information is given, in all
material respects to the statements relating thereto contained in the SEC
Documents. The issued and outstanding shares of capital stock of the Company
have been duly authorized, validly issued and are fully paid and nonassessable;
except as set forth or referred to in the SEC Documents, no warrants, options or
other rights to purchase, agreements or other obligation to issue, or agreements
or other rights to convert any obligation into, any shares of capital stock of
the Company have been granted or entered into by the Company. All of the above
securities of the Company were issued in compliance with all applicable federal
and state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. No
holder of any security of the Company is entitled to any preemptive or similar
rights to purchase any securities of the Company.
3.10 Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Company's knowledge, threatened
against the Company or any of its properties before or by any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable likelihood (in the judgment of the Company) of an adverse decision
that (a) would have a material adverse effect on the Company's properties or
assets or the business of the Company as presently conducted or proposed to be
conducted, or (b) would impair the ability of the Company to perform in any
material respect its obligations under this Agreement. The Company is not in
default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality which, individually or in the aggregate,
would have a material adverse effect on the assets, properties or business of
the Company.
3.11 Preemptive and Registration Rights. There are no preemptive
rights, rights of first refusal, repurchase rights or any other right of the
Company or any third party as to the Securities which have not been satisfied or
waived, and except as provided in this Agreement (including Schedule 3.11
hereto), the Company has not granted or agreed to grant any registration rights
that would be applicable to the registration for resale of the Securities
pursuant to the Registration Statement, as defined in and contemplated by
Section 7.1 hereof, to any person or entity which have not been satisfied or
waived.
3.12 Compliance With Other Instruments. The business and operations of
the Company have been and are being conducted in accordance with all applicable
laws, rules and regulations of all governmental authorities, except for such
violations of applicable laws, rules and regulations which would not,
individually or in the aggregate, have a material adverse effect on the assets,
properties, financial condition or business of the Company. Neither the
execution and delivery of, nor the performance or compliance with, this
Agreement and the transactions contemplated hereby, will, with or without the
giving of notice or the passage of time, (i) result in any breach of, or
constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to any agreement
or other instrument to which the Company is a party or by which it or any of its
properties, assets or rights is bound or effected, except for such breach or
default or the imposition of any such lien or encumbrance which, either
individually or in the aggregate, would not have a material adverse effect on
the assets, properties, financial condition or business of the Company, or (ii)
violate the Certificate of Incorporation or Bylaws of the Company, or, except as
set forth on Schedule 3.12, any law, rule, regulation, judgment, order or
decree. The Company is not in violation of its Certificate of Incorporation or
Bylaws nor in violation of or in default under, any lien, indenture, mortgage,
lease, agreement, instrument, commitment or arrangements, except for such
defaults which would not, individually or in the aggregate, have a material
adverse effect on the assets, properties, financial condition or business of the
Company, or subject to any restriction which would prohibit the Company from
entering into or performing its obligations under the Agreement.
3.13 Brokers or Finders. In connection with this transaction, no
person, firm or corporation has or will have, as a result of any act or omission
of the Company, any right, interest or valid claim against the Purchasers for
any commission, fee or other compensation as a finder or broker in connection
with the transactions contemplated by this Agreement.
3.14 Compliance With Environmental Laws. Except as disclosed in the SEC
Documents, the Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation. The Company does not have any material
liability to any governmental authority or other third party arising under or as
a result of any such past or existing statute, law or regulation.
3.15 Contracts. The contracts so described in the SEC Documents or
incorporated by reference therein are in full force and effect on the date
hereof, except for contracts the termination or expiration of which would,
individually or in the aggregate, not have a material adverse effect on the
business, properties or assets of the Company, and neither the Company nor any
of its subsidiaries, nor to the Company's knowledge, any other party is in
breach of or default under any of such contracts.
3.16 Properties. The Company has good and marketable title to all the
properties and assets reflected as owned in the financial statements included in
the SEC Documents, subject to no lien, mortgage, pledge, charge or encumbrance
of any kind except (i) those, if any, reflected in such financial statements or
SEC Documents, (ii) those which are not material in amount and do not adversely
affect the use made and promised to be made of such property by the Company and
its subsidiaries, or (iii) those in favor of Transamerica Business Credit
Corporation. The Company and any applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company and the
subsidiaries. Except as disclosed in the SEC Documents, the Company owns or
leases all such properties as are necessary to its operations as now conducted
or as proposed to be conducted. 3.17 Compliance. The Company has not been
advised and has no reason to believe that either it or any of its subsidiaries
is not conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business; except
where failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business, results of operations or prospects
of the Company and its subsidiaries.
3.18 Taxes. The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and have paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of any
tax deficiency which has been or might be asserted or threatened against the
Company or its subsidiaries which could materially and adversely affect the
business, operations or properties of the Company and its subsidiaries.
3.19 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Securities to be sold to the Purchasers hereunder
will be, or will have been, fully paid or provided for by the Company and all
laws imposing such taxes will be or will have been complied with fully.
3.20 Insurance. Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company and its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
3.21 Contributions. Neither the Company nor any of its subsidiaries
has, directly or indirectly, at any time during the last five years (i) made any
unlawful contribution to any candidate for public office, or failed to disclose
fully any contribution in violation of law, or (ii) made any payment to any
federal or state governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
3.22 State Takeover Laws. The Board of Directors of the Company has
approved the transactions contemplated by this Agreement, such that the
provisions of Section 203 (entitled "Business Combinations with Interested
Shareholders") of the Delaware General Corporations Code will not apply to any
business combination between MAMI and any of its affiliates and the Company.
Section 4
Representations, Warranties and Covenants of the Purchasers
Each Purchaser, severally and for itself only, hereby represents and
warrants to the Company as follows:
4.1 Authorization. (i) The Purchaser has all requisite legal and
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agreement, to purchase the Securities
to be purchased by it and to carry out and perform all of its obligations under
this Agreement, and (ii) this Agreement constitutes the legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally (regardless of whether such
enforceability is considered a proceeding in equity or at law).
4.2 Investment Experience. The Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. The Purchaser has such
business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Securities.
4.3 Investment Intent. The Purchaser is purchasing the Securities for
its own account as principal, and not as a nominee or agent, for investment
purposes only, and not with a present view to, or for, resale, distribution or
fractionalization thereof, in whole or in part, within the meaning of the
Securities Act. The Purchaser understands that the offer and sale of the
Securities have not been registered under the Securities Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom which exemptions may depend upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein. The Purchaser
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Shares, the Warrants and the Warrant Shares except in
compliance with the Securities Act, and the rules and regulations promulgated
thereunder.
4.4 Registration or Exemption Requirements. The Purchaser further
acknowledges and understands that the Securities may not be resold or otherwise
transferred except in a transaction registered under the Securities Act or
unless an exemption from such registration is available. The Purchaser
understands that the certificate(s) evidencing the Securities will be imprinted
with a legend that prohibits the transfer of such securities unless (i) they are
registered or such registration is not required, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained to the effect that
the transaction is so exempt.
4.5 Removal of Legend. Any legend endorsed on a certificate pursuant to
this Agreement shall be removed, and the Company shall issue a certificate
without such legend to the Purchaser, if such security is being disposed of
pursuant to a registration statement under the Securities Act or pursuant to
Rule 144 or any similar rule then in effect or if such holder provides the
Company with an opinion of counsel satisfactory to the Company to the effect
that a transfer of such security may be made without registration. In addition,
if the holder of such security delivers to the Company an opinion of such
counsel reasonably satisfactory to the Company to the effect that no subsequent
transfer of such security will require registration under the Securities Act,
the Company will promptly upon such contemplated transfer deliver new
certificates evidencing such security that do not bear the legend set forth in
this Agreement.
Section 5
Conditions to the Purchasers' Obligation to Close
The obligation of each Purchaser to purchase the Shares and the
Warrants at the Closing is subject to the fulfillment as of the Closing Date of
the following conditions, any of which may be waived in whole or in part by such
Purchaser.
5.1 Representations and Warranties. The representations and warranties
made by the Company in Section 3 hereof shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.
5.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
5.3 Compliance Certificate. The President or Chief Financial Officer of
the Company shall have delivered to the Purchasers a certificate, dated as of
the Closing Date, certifying that the conditions specified in Sections 5.1 and
5.2 have been fulfilled and stating that since September 30, 1999, there shall
have been no material adverse change in the assets, liabilities, financial
condition, business or operations of the Company from that reflected in the
Financial Statements except (i) changes in the ordinary course of business which
have not been, either individually or in the aggregate, materially adverse, and
(ii) the Company's continued incurrence of operating losses and negative cash
flow which have occurred at a rate not materially in excess of the rate at which
operating losses and negative cash flows were incurred from January 1, 1998 to
September 30, 1999.
5.4 Legal Opinion of Company Counsel. Shartsis, Friese & Ginsburg, LLP,
counsel to the Company, shall have delivered a legal opinion, addressed to the
Purchasers, in the form attached as Exhibit C hereto.
5.5 Closing Date. The Closing shall have occurred on or prior to
January 4, 2000.
Section 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares and the Warrants
at the Closing to a Purchaser is subject to the fulfillment or waiver of the
following conditions:
6.1 Representations and Warranties. The representations and warranties
made by such Purchaser in Section 4 hereof shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of such date.
6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by such Purchaser on or prior to the Closing Date
shall have been performed or complied with in all material respects.
Section 7
Registration Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 Certain Definitions. As used in this Section 7, the following terms
shall have the following meanings:
(a) "Effectiveness Period" shall begin upon the effective date of a
Registration Statement and end on the earlier of (i) four years after the
effective date of a Registration Statement, (ii) completion of the distribution
described in the Registration Statement or (iii) with respect to any Holder,
such time as all Registrable Securities held by such Holder may be sold in
compliance with Rule 144 within any three-month period.
(b) "Holder" shall mean a Purchaser and any transferee or subsequent
transferee of at least 20% of the Registrable Securities originally issued to
such Purchaser (other than a transferee who purchases the Registrable Securities
in a sale effected pursuant to any Registration Statement or pursuant to Rule
144) provided that the Purchaser has assigned its rights under this Agreement to
such transferee, directly or indirectly, such transferee has assumed the
obligations of a Holder hereunder and a copy of such written assignment and
assumption is provided to the Company.
(c) "Indemnified Party" and "Indemnifying Party" shall be as defined in
Section 7.6.
(d) "Losses" shall be as defined in Section 7.6.
(e) "Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement,
including, without limitation, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement and
all other amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
(f) "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(g) "Registrable Securities" shall mean the Shares, the Warrant Shares
and any other security of the Company issued as a dividend or other distribution
with respect to or in exchange for or in replacement of the Shares or the
Warrant Shares; provided, however, that Registrable Securities shall not include
any such Shares that have been sold by a Holder under an effective Registration
Statement or under Rule 144.
(h) "Registration Statement" shall mean any registration statement of
the Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
(i) "Rule 144" shall mean Rule 144, as promulgated by the SEC under the
Securities Act, as such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(j) "Rule 158" shall mean Rule 158, as promulgated by the SEC under the
Securities Act, as such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(k) "Rule 424" shall mean Rule 424 as promulgated by the SEC under the
Securities Act, as such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(l) "Violation" shall be as defined in Section 7.6.
7.2 Registration Requirement. As soon as reasonably practicable
following the Closing, the Company shall prepare and file a Registration
Statement with the SEC under the Securities Act to register the resale of the
Registrable Securities by the Holders and the Company shall use its best efforts
to secure the effectiveness of such Registration Statement as soon as
practicable thereafter.
7.3 Registration Procedures. In connection with the Company's
registration obligations under Section 7.2 hereof, the Company shall effect such
registration to permit the sale of the Registrable Securities in accordance with
the method or methods of disposition thereof as previously provided to the
Company, and pursuant thereto the Company shall as expeditiously as practicable:
(a) Before filing any Registration Statement or Prospectus (other than
documents that would be incorporated or deemed to be incorporated therein by
reference and that the Company is required by applicable securities laws or
stock exchange or quotation system requirements to file), furnish to the Holders
copies of all such documents proposed to be filed, which documents will be
subject to the review of such Holders and their counsel, if any, and the Company
shall not file any such Registration Statement or any Prospectus (other than
such documents which, upon filing, would be incorporated or deemed to be
incorporated by reference therein and that the Company is required by applicable
securities laws or stock exchange or quotation system requirements to file) to
which the Holders of a majority of the securities covered by such Registration
Statement shall reasonably object on a timely basis. In the event of any such
objection, the Holders shall provide the Company with any requested revisions to
such prospectus or supplement within three (3) business days of such objection.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness Period;
cause the related Prospectus to be amended or supplemented by any required
Prospectus amendment or supplement, and as so amended or supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the methods of
disposition intended by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders promptly, and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any Jurisdiction or the initiation or threatening of any proceeding for such
purpose, (iv) of the existence of any fact or the happening of any event that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or which requires the making of any changes in
such Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (v) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
(d) Use best efforts to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement, or the lifting of any suspension
of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction within the United States, at the
earliest practicable time.
(e) If reasonably requested by the Holders of a majority of the
securities being sold, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the Company and the Holders of a
majority of such securities agree should be included therein as required by
applicable law, (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment, and (iii) supplement or make amendments
to any Registration Statement consistent with clause (i) or (ii) above;
provided, that the Company shall not be required to take any actions under this
paragraph that are not, in the opinion of counsel for the Company, in compliance
with applicable law.
(f) Furnish to each Holder and its counsel, if any, upon written
request and without charge to such Holder, at least one conformed copy of the
Registration Statement or Statements and any post-effective amendment thereto,
including financial statements (but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits,
unless requested in writing by such Holder or counsel).
(g) Deliver to each Holder and its counsel, if any, without charge, as
many copies of the Prospectus or Prospectuses relating to such Registrable
Securities (including each preliminary prospectus) and any amendment or
supplement thereto as such persons may reasonably request in writing; and the
Company hereby consents to the use of such Prospectus or each amendment or
supplement thereto by each Holder in connection with the offering and sale of
the Registrable Securities covered by such Prospectus or any amendment or
supplement thereto.
(h) Use reasonable efforts to register and qualify the Registrable
Securities under (or obtain exemption from) the securities or Blue Sky laws of
such jurisdictions within the United States as any Holder reasonably requests in
writing; use reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and use
reasonable efforts to do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided, that the Company
will not be required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified or (ii) take any action that would subject it
to general service of process in any such jurisdiction where it is not then so
subject.
(i) Within five (5) business days following the occurrence of any event
contemplated by paragraphs 7.3(c)(v) or 7.3(c)(vi) above, prepare and file with
the SEC a supplement or post-effective amendment to each Registration Statement
or an amendment or supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document (such as a
Current Report on Form 8-K) so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(j) If necessary in connection with a disposition of Registrable
Securities, make available for inspection, at the offices where normally kept
during reasonable business hours, by a representative of any Holder and any
attorney or accountant retained by such Holder, financial and other records,
pertinent corporate documents and properties of the Company and its subsidiaries
as they may reasonably request, and cause the officers, directors and employees
of the Company and its subsidiaries to supply all information reasonably
requested by any such representative, attorney or accountant in connection with
such disposition; provided, that any records, information or documents that are
designated by the Company in writing as confidential at the time of delivery of
such records, information or documents shall be kept confidential by such
Persons, and such Persons shall so agree in writing.
(k) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earning statements satisfying
the provisions of Section 11 (a) of the Securities Act and Rule 158 thereunder
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) commencing on the
first day of the first fiscal quarter of the Company, after the effective date
of a Registration Statement, which statements shall cover said 12-month period.
(l) Cooperate with the Holders and transfer agent and registrar to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as a Holder may request.
(m) Cause the Shares to be listed on each securities exchange or
quotation system on which the Company's Common Stock is then listed no later
than the date the Registration Statement is declared effective and, in
connection therewith, to the extent applicable, to make any required filings
under the Exchange Act and to have such filings declared effective thereunder.
In connection with the disclosures in a Registration Statement, as
required under the Securities Act, the Company may require a Holder, and each
Holder agrees, to furnish to the Company in writing such information regarding
the distribution of the Registrable Securities covered by such Registration
Statement as the Company may, from time to time, reasonably request in writing
and the Company may exclude from such registration the Registrable Securities of
any Holder if such Holder unreasonably fails to furnish such information in
writing within a reasonable time after receiving such request. Each Holder
agrees promptly to furnish to the Company all information required to be
disclosed in such Registration Statement in order to make the information
previously furnished to the Company by such Holder not misleading. Any sale of
any Registrable Securities by any Holder shall constitute a representation and
warranty by such Holder that the required information relating to such Holder
and its plan of distribution is as set forth in the Prospectus delivered by such
Holder in connection with such disposition, that such Prospectus does not as of
the time of such sale contain any untrue statement of a material fact relating
to such Holder or its plan of distribution and that such Prospectus does not as
of the time of such sale omit to state any material fact relating to such Holder
or its plan of distribution necessary to make the statements in such Prospectus,
in the light of the circumstances under which they were made, not misleading.
Each Holder agrees that, upon receipt of any notice from the Company of
the happening of (i) any event of the kind described in paragraphs 7.3(c)(ii),
7.3(c)(iii), 7.3(c)(iv) or 7.3(c)(v) hereof, or (ii) a determination by the
Company's Board of Directors that it is advisable to suspend use of the
Prospectus for a discrete period of time due to pending corporate developments
such as negotiation of a material transaction, such Holder will forthwith
discontinue disposition of such Registrable Securities covered by the applicable
Registration Statement or Prospectus until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by paragraph 7.3(i)
hereof, or until such Holder is advised in writing by the Company that the use
of the applicable Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. The Company agrees to so advise
such Holder promptly after the Company determines that the use of the applicable
Prospectus may be resumed. The Company shall not suspend use of a Prospectus or
Registration Statement under this paragraph of Section 7.3 for more than 30 days
at a time and more than twice in any 12 month period. Any period for which use
of a Prospectus or Registration Statement is suspended under this paragraph of
Section 7.3 shall be added to the time for which the Company is required to
maintain the effectiveness of such Registration Statement, including the
Prospectus constituting a part thereof, under Section 7.3(b).
7.4 Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any of the Registration Statements become
effective and whether or not any of the Registrable Securities are transferred
pursuant to the Registration Statement. Such fees and expenses shall include,
without limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to designation of the Registrable
Securities as eligible for trading on applicable securities exchange or
quotation system, and (B) of compliance with securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company in connection with the Company's performance of its obligations under
this Agreement, (v) reasonable fees and disbursements of all independent
certified public accountants, (vi) Securities Act liability insurance if the
Company so desires such insurance, (vii) fees and expenses of all other persons
retained by the Company in connection with the performance by the Company of its
duties under this Agreement and (viii) fees and expenses of counsel to MAMI up
to a maximum of $10,000. Except as set forth in the preceding sentences of this
paragraph, the Company shall not be responsible for paying the expenses of
Holder, or its counsel, incurred in connection with the registration or approval
of the Registration Statement or the transactions contemplated thereby by
governmental agencies or authorities other than those administering applicable
securities laws and applicable exchange or quotation system regulations. In
addition, the Company will, in any event, bear its own internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange or quotation system on which
similar securities issued by the Company are then listed and the fees and
expenses of any person, including special experts, retained by the Company.
7.5 Limitations on Additional Registration Rights. The registration
statement filed in accordance with Section 7.2 may include other securities of
the Company with respect to which registration rights have been granted, and may
include securities of the Company being sold for the account of the Company;
provided however, that such inclusions do not adversely affect the registration
of the Registrable Securities.
7.6 Indemnification.
(a) By the Company. To the maximum extent permitted by law, the Company
will indemnify and hold harmless each Holder of Registrable Securities, each
person, if any, who controls such Holder within the meaning of the Securities
Act or the Exchange Act, and each underwriter, if any, of Registrable
Securities, against any losses, claims, damages, liabilities or expenses (joint
or several) (collectively "Losses") to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
Losses (or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law. The
Company will reimburse each such Holder or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Losses (or action in respect thereof); provided, however,
that the indemnity agreement contained in this Section 7.6 shall not apply to
amounts paid in settlement of any such Losses (or action in respect thereof) if
such settlement is effected without the consent of the Company (in which case
the parties shall first have met and conferred in good faith regarding such
settlement), nor shall the Company be liable in any such case for any such
Losses (or action in respect thereof) to the extent that they arise out of or
are based upon a Violation which arises out of or is based upon information
furnished in writing expressly for use in connection with such registration by
any such Holder, controlling person, as the case may be; provided, further, that
the Company will not be liable to any Holder or controlling person or
underwriter, as the case may be with respect to any Losses arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission to state a material fact in any preliminary prospectus which is
corrected in an amended, supplemented or final prospectus if the purchaser
asserting such Losses purchased from such Holder or underwriter, as applicable,
and was not, due to the fault of such Holder, sent or given a copy of such
amended, supplemented or final prospectus at or prior to the sale of Registrable
Securities to such purchaser.
(b) By Holders. To the maximum extent permitted by law, each Holder
(severally, but not jointly) will, if Registrable Securities held by such Holder
are included in the Registrable Securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless the
Company, each of its directors and officers, each underwriter, if any, of
Registrable Securities, and each person who controls the Company or such
underwriter within the meaning of the Securities Act or the Exchange Act,
against any Losses to which the Company or any such director or controlling
person may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such Losses (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation arises out of or is based upon
information furnished by such Holder in writing expressly for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any such Losses (or actions in
respect thereof); provided, however, that the indemnity agreement contained in
this Section 7.6(b) shall not apply to amounts paid in settlement of any such
Losses (or actions in respect thereof) if such settlement is effected without
the consent of the Holder (in which case the parties shall first have met and
conferred in good faith regarding such settlement). Each Holder's liability
under this Section 7.6(b) shall not exceed the proceeds received by such Holder
from the sale of Registrable Securities held by such Holder included in such
registration, qualification or compliance.
(c) Procedures. Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed). Without limiting the generality of the
foregoing, if the Indemnified Party has been advised in writing by its counsel
that representation of both the Indemnified and Indemnifying Party by the same
counsel would be inappropriate under standards of professional conduct due to
actual or potential differing interests, with respect to such claim or
litigation, the Indemnifying Party shall bear the expense of another counsel who
shall represent the Indemnified Party and any other persons or entities who have
indemnification rights from the Indemnifying Party hereunder, with respect to
such claim or litigation, and shall be selected as provided in the first
sentence of this Section 7.6(c). The Indemnified Party may participate in such
defense at such party's expense (except to the extent that the Indemnifying
Party is required to pay the expense of such counsel pursuant to this Section
7.6(c)), and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement, except to the extent such failure is
prejudicial to the Indemnifying Party in defending such claim or litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party (which consent shall not be
unreasonably withheld or delayed), consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this Section
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any Losses referred to therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party (on the one hand) and of the Indemnified Party
(on the other) in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
7.7 Information Requirements. The Company shall file in a timely manner
the reports required to be filed by it under the Securities Act and the Exchange
Act, and if at any time the Company is not required to file such reports, it
will, upon the request of any Holder, make publicly available other information
so long as necessary to permit sales pursuant to Rule 144 under the Securities
Act. The Company further covenants that it will cooperate with any Holder and
take such further action as such Holder may reasonably request (including
without limitation making such representations as any such Holder may reasonably
request), all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act.
Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such filing requirements.
The Company shall file in a timely manner the reports required to be filed by it
under the Exchange Act and shall comply with all other requirements set forth in
the instructions to any Securities Act registration form used in connection with
any Shelf Registration effected pursuant hereto in order to allow the Company to
be eligible to file registration statements on such form.
Section 8
Other Affirmative Covenants of the Company
8.1 Board Member. As soon as reasonably practicable following the
Closing, the Company will cause to be appointed to its Board of Directors an
individual designated by MAMI. In connection with each meeting of shareholders
of the Company at which directors are to be elected which occurs following the
date of this Agreement and while MAMI continues to own at least fifty-five
percent (55%) (based upon the aggregate number of Shares and Warrant Shares
beneficially owned) of the Securities originally purchased by MAMI hereunder,
the Company shall nominate an individual designated by MAMI for election to the
Company's Board of Directors by the shareholders and shall use commercially
reasonable efforts to cause such individual to be elected to the Board.
8.2 Nasdaq Listing. The Company shall use its best efforts to obtain
approval for listing of the Shares and the Warrant Shares on the Nasdaq SmallCap
Market as soon as practicable following the date hereof.
Section 9
Restrictions on Transferability of Securities;
Compliance with Securities Act
9.1 Restrictions on Transferability. The Shares, the Warrants and the
Warrant Shares shall not be transferable in the absence of a registration under
the Securities Act or an exemption therefrom or in the absence of compliance
with any term of this Agreement.
9.2 Restrictive Legend. Each certificate representing the Securities
shall bear substantially the following legend (in addition to any legends
required under applicable securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
9.3 Transfer of Securities After Registration. Each Purchaser hereby
covenants with the Company not to make any sale of the Shares, the Warrant or
the Warrant Shares except either (i) in accordance with the Registration
Statement, in which case such Purchaser covenants to comply with the requirement
of delivering a current prospectus, (ii) in accordance with Rule 144, in which
case such Purchaser covenants to comply with Rule 144, or (iii) in accordance
with another exemption from the registration requirements of the Securities Act.
The legend set forth in Section 9.2 will be removed from a certificate
representing the Securities following and in connection with any sale of the
Securities pursuant to subsection (i) or (ii) hereof, but not in connection with
any sale of Shares pursuant to subsection (iii) hereof, and also will be removed
at such time that the Securities may be sold under Rule 144 without restriction
as to volume and manner of sale.
9.4 Purchaser Information. Each Purchaser covenants that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser, under the heading "Selling
Security Holders" or "Plan of Distribution" or elsewhere.
Section 10
Miscellaneous
10.1 Construction. The Company and the Purchasers have participated
jointly in the negotiation and drafting of this Agreement. No presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
10.2 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if delivered to the
party personally or sent to the party by telecopy, telegram or by registered or
certified mail (return receipt requested) with postage and registration or
certification fees thereon prepaid, addressed to the party at its address set
forth below:
If to the Company:
Vidamed, Inc.
46107 Landings Parkway
Fremont, California 94538
Attention: General Counsel
If to a Purchaser, at the address for such Purchaser set forth
on Exhibit A hereto.
10.3 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
10.4 Survival of Representations, Warranties and Agreements. The
representations and warranties of the Company in Section 3 hereof and the
representations and warranties of the Purchasers in Section 4 hereof shall
survive the purchase of the Shares for a period of twenty-four (24) months
following the Closing. No independent investigation of the Company by any
Purchaser, its counsel, or any of its agents or employees, shall in any way
limit or restrict the scope of the representations and warranties made by the
Company in this Agreement. All covenants and agreements set forth herein shall
survive the Closing without limitation, except as otherwise specifically
provided herein.
10.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the conflicts of laws principles thereof.
10.6 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable in the event that any provision hereof is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
(b) such invalid, void or otherwise unenforceable provision shall be
automatically replaced by another provision which is as similar as possible in
terms to such invalid, void or otherwise unenforceable provision but which is
valid and enforceable, and (c) the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
10.7 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended or should be construed to confer upon or give to any person other
than the parties hereto and their successors and assigns any rights or remedies
under or by reason of this Agreement.
10.8 Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof, and
supersedes any prior agreements or understandings, written or oral, between the
parties with respect to the subject matter hereof.
10.9 Amendment and Waiver. The parties may, by mutual agreement, amend
this Agreement in any respect in a writing executed by each party, and any
party, as to such party, may waive any of its rights hereunder. To be effective,
any such waiver must be in writing and be signed by the party providing such
waiver. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies which any party may otherwise have at law or
in equity. The waiver by any party hereto of any breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach, whether or not similar.
10.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
10.11 Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement nor shall they affect its meaning,
construction or effect.
10.12 Public Announcement. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this Agreement
or the transactions contemplated hereby, such party shall so advise the other
party hereto, and the parties shall thereafter use their best efforts to cause a
mutually agreeable release or announcement to be issued. Neither party will
publicly disclose or divulge any provisions of this Agreement or the
transactions contemplated hereby without the other parties' written consent,
except as may be required by applicable law (including applicable SEC rules and
regulations) or stock exchange regulation, and except for communications to
employees.
10.13 Further Assurances. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
10.15 Expenses. Each Purchaser and the Company shall each pay their own
expenses incident to this Agreement and the preparation for, and consummation
of, the transactions provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first written above.
VIDAMED, INC.
/s/ Randy D. Lindholm
Name: Randy D. Lindholm
Title: President and CEO
PURCHASERS:
MEDTRONIC ASSET MANAGEMENT, INC.
/s/ Michael D. Ellwein
Name: Michael D. Ellwein
Title: Vice President and COO
[Signatures of Additional Purchasers on subsequent pages]
THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE REOFFERED OR SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO (1) REGISTRATION OR
(2) AN OPINION OF COUNSEL FOR THE COMPANY OR OTHER COUNSEL REASONABLY ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
To Purchase Shares of Common Stock of
VIDAMED, INC.
January 4, 2000
VidaMed, Inc., a Delaware corporation (the "Company"), for value
received, hereby certifies that Medtronic Asset Management, Inc., a Minnesota
corporation, or its registered assigns (the "Holder"), is entitled, subject to
the terms set forth below, upon exercise of this Warrant to purchase from the
Company 1,590,000 shares of Common Stock, $0.001 par value, of the Company
("Common Stock"). Until adjusted as provided by the terms of this Warrant, the
exercise price per share (the "Exercise Price") shall be $1.80, which the
Company hereby represents and warrants to equal 105% of the average closing
price per share of Common Stock for the five (5) trading days ending on and
including the trading day immediately preceding the date hereof. The shares
issuable upon exercise or conversion of this Warrant as adjusted from time to
time pursuant to the provisions of this Warrant, are hereinafter referred to as
the "Warrant Shares."
This Warrant is further subject to the following provisions, terms and
conditions:
1. Term. This Warrant may be exercised by the Holder, in whole or in
part, at any time before the close of business on the date five years after the
date hereof.
2. Manner of Exercise. This Warrant may be exercised by the Holder, in
whole or in part (but not as to any fraction of a share of Common Stock), by
surrendering this Warrant, with the Exercise Form attached hereto as Exhibit A
filled-in and duly executed by such Holder or by such Holder's duly authorized
attorney, to the Company at its principal office accompanied by payment of the
Exercise Price in the amount of the Exercise Price multiplied by the number of
shares as to which the Warrant is being exercised. The Exercise Price may be
paid by in the form of a check or wire transfer of funds.
3. Conversion of Warrant.
(a) The Holder shall also have the right (the "Conversion
Right") at any time when this Warrant may be exercised to convert all
or any portion of this Warrant into such number of shares (rounded to
the nearest whole share) of Company Common Stock equal to the quotient
obtained by dividing (i) the "Aggregate Warrant Spread" as of the date
the Conversion Right is exercised, by (ii) the "Market Price of the
Common Stock" as of the date the Conversion Right is exercised. The
Conversion Right shall be exercisable at any time that this Warrant is
exercisable pursuant to Section 1 above, by surrendering this Warrant
with the Conversion Form attached hereto as Exhibit B filled-in and
duly executed by such Holder or by such Holder's duly authorized
attorney to the Company at its principal office.
(b) For purposes of this Section 3, the "Aggregate Warrant
Spread" of all or a portion of this Warrant as of a particular date
shall equal (i) the Market Price of the Common Stock multiplied by the
number of shares of Common Stock purchasable upon exercise of all or
such portion of this Warrant on such date, minus (ii) the Exercise
Price multiplied by the number of shares of Common Stock purchasable
upon exercise of all or such portion of this Warrant on such date. For
purposes of this Warrant, the "Market Price of the Common Stock" as of
a particular date shall equal: (i) if the Common Stock is traded on an
exchange or is quoted on either the Nasdaq National Market or Small-Cap
Market, then the average of the closing or last sale prices,
respectively, reported for the ten (10) trading days immediately
preceding such date, or (ii) if the Common Stock is not traded on an
exchange, the Nasdaq National Market, or the Nasdaq Small-Cap Market
but is traded in the local over-the-counter market, then the average of
the mid-points between the highest bid and lowest asked quotations for
each of the ten (10) trading days immediately preceding such date.
4. Effective Date of Exercise or Conversion. Each exercise or
conversion of this Warrant shall be deemed effective as of the close of business
on the day on which this Warrant is surrendered to the Company as provided in
Section 2 or Section 3(a) above. At such time, the person or persons in whose
name or names any certificates for Warrant Shares shall be issuable upon such
exercise or conversion shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates. Within ten (10)
days after the exercise or conversion of this Warrant in full or in part, the
Company will, at its expense, cause to be issued in the name of and delivered to
the Holder or such other person as the Holder may (upon payment by such Holder
of any applicable transfer taxes) direct: (i) a certificate or certificates for
the number of full Warrant Shares to which such Holder is entitled upon such
exercise or conversion, and (ii) unless this Warrant has expired, a new Warrant
or Warrants (dated the date hereof and in form identical hereto) representing
the right to purchase the remaining number of shares of Common Stock, if any,
with respect to which this Warrant has not then been exercised or converted.
5. Adjustments to Exercise Price. The above provisions are, however,
subject to the following:
(a) (i) If the Company shall at anytime after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, then the number of shares
of Common Stock for which this Warrant may be exercised as of
immediately prior to the subdivision, combination or record date for
such dividend payable in Common Stock shall forthwith be
proportionately decreased, in the case of combination, or increased, in
the case of subdivision or dividend payable in Common Stock.
(ii) If the Company shall at anytime after the date of this
Warrant subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, the Exercise Price in
effect immediately prior to the subdivision, combination or record date
for such dividend payable in Common Stock shall forthwith be
proportionately increased, in the case of combination, or decreased, in
the case of subdivision or dividend payable in Common Stock.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or share exchange, combination,
consolidation or merger of the Company with another corporation, or the
sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, share exchange, combination, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to receive upon exercise of this
Warrant upon the basis and upon the terms and conditions specified in
this Warrant and in lieu of the shares of the Common Stock of the
Company into which this Warrant could be exercisable or convertible,
such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the maximum number of shares of such stock
issuable upon exercise of this Warrant, and in any such case
appropriate provisions shall be made with respect to the rights and
interests of Holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Exercise Price and
of the number of shares purchasable upon exercise or conversion of this
Warrant) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise or conversion hereof. The Company shall
not effect any such share exchange, combination, consolidation, merger
or sale, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such share
exchange, combination, consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed to the Holder at the last address of such Holder appearing on
the books of the Company, the obligation to deliver to such Holder such
shares of stock, securities or assets which, in accordance with the
foregoing provisions, such Holder may thereafter be entitled to receive
upon exercise or conversion of this Warrant.
(c) If at anytime after the date of this Warrant the Company
distributes to all holders of Common Stock any assets (excluding
ordinary cash dividends), debt securities, or any rights or warrants to
purchase debt securities, assets or other securities (including Common
Stock), the Exercise Price shall be adjusted in accordance with the
formula:
E1 = E x (O x M) - F
---------------
O x M
where:
E1 = the adjusted Exercise Price.
E = the current Exercise Price.
M = the average market price of Common Stock
for the 30 consecutive trading days
commencing 45 trading days before the record
date mentioned below.
O = the number of shares of Common Stock
outstanding on the record date mentioned below.
F = the fair market value on the record date of the
aggregate of all assets, securities, rights or
warrants distributed. The Company's Board of
Directors shall determine the fair market
value in the exercise of its reasonable
judgment.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
the distribution.
(d) Except for (i) any securities granted, awarded or issued
by the Company prior to the date of this Warrant (and securities issued
by the Company after that date in exchange for or upon exercise of such
securities), (ii) the grant or award to Transamerica Business Credit
Corporation or its affiliates of a warrant for the purchase of not more
than 75,000 shares of the Company's Common Stock at a price per share
of not less than $0.89 in connection with the extension of the
Company's credit facility, and (iii) the issuance during each twelve
month period following the date of this Warrant of warrants, options or
other rights to purchase not more than 100,000 shares of the Company's
Common Stock (appropriately adjusted to reflect stock splits, stock
dividends, reorganizations, consolidations and provided that for the
twelve months in which the transaction referenced in (ii) occurs, the
share limit shall be reduced by the number of shares issued or issuable
pursuant to such transaction) to banks or other institutional lenders
in connection with debt financing transactions at a price per share of
not less than 60% of the last sale price of the Company's Common Stock
as reported by Nasdaq on the last trading day preceding such issuance,
if the Company should decide to issue and sell any additional shares of
capital stock of the Company, or any warrants, securities convertible
into capital stock of the Company or other rights to subscribe for or
to purchase any capital stock of the Company (all such capital stock,
warrants, securities convertible into capital stock and other rights
being hereinafter collectively referred to as "Additional Securities")
for a consideration per share less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Exercise Price shall be reduced to such
lesser price.
No adjustment of the Exercise Price, however, shall be made in
an amount less than 2% of the Exercise Price in effect on the date of
such adjustment, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any such adjustment so
carried forward, shall be an amount equal to or greater than 2% of the
Exercise Price then in effect.
For the purposes of this Section 5(d), the following
provisions (i) to (vi), inclusive, shall also be applicable:
(i) In case at any time the Company shall grant
(whether directly or by assumption in a merger or otherwise)
any rights to subscribe for or to purchase, or any options for
the purchase of, (a) Common Stock or (b) any obligations or
any shares of stock of the Company which are convertible into,
or exchangeable for, Common Stock (any of such obligations or
shares of stock being hereinafter called "Convertible
Securities") whether or not such rights or options or the
right to convert or exchange any such Convertible Securities
are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible
Securities (determined by dividing (x) the total amount, if
any, received or receivable by the Company as consideration
for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the
Company upon the exercise of such rights or options, plus, in
the case of such rights or options which relate to Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue of such
Convertible Securities and upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect
immediately prior to the time of the granting of such rights
or options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such
rights or options) be deemed to have been issued for such
price per share. No further adjustments of the Applicable
Conversion Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise
of such rights or options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) In case the Company shall issue or sell (whether
directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (x) the total
amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price
in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to
have been issued for such price per share, provided that (a)
no further adjustments of the Exercise Price shall be made
upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such
issue or sale of such Convertible Securities is made upon
exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Section 5(d)(ii), no
further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii) In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company
therefor, without deducting therefrom any expenses incurred or
any underwriting commissions, discounts or concessions paid or
allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights
or options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value
of such consideration as determined by the Board, without
deducting therefrom any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common
Stock or Convertible Securities or any rights or options to
purchase such Common Stock or Convertible Securities shall be
issued in connection with any merger or consolidation in which
the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as
determined by the Board of such portion of the assets and
business of the non-surviving corporation or corporations as
such Board shall determine to be attributable to such Common
Stock, Convertible Securities, rights or options, as the case
may be. In the event of any consolidation or merger of the
Company in which the Company is not the surviving corporation
or in the event of any sale of all or substantially all of the
assets of the Company in which the corporation is not the
surviving corporation or in the event of any sale of all or
substantially all of the assets of the Company for stock or
other securities of any other corporation, the Company shall
be deemed to have issued a number of shares of its Common
Stock for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on which
the transaction was predicated and for a consideration equal
to the fair market value on the date of such transaction of
such stock or securities of the other corporation, and if any
such calculation results in the adjustment of the Exercise
Price, the determination of the number of shares of Common
Stock issuable upon conversion immediately prior to such
merger, conversion or sale, for purposes of Section 5(b)
above, shall be made after giving effect to such adjustment of
the Exercise Price.
(iv) In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them
(a) to receive a dividend or other distribution payable in
Common Stock or in Convertible Securities, or in any rights or
options to purchase any Common Stock or Convertible
Securities, or (b) to subscribe for or purchase Common Stock
or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such rights of
subscription or purchase, as the case may be.
(v) The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common
Stock for the purpose of this Section 5(d).
(vi) Notwithstanding anything to the contrary in the
preceding provisions of this Section 5(d), no adjustments to
the Exercise Price shall be made pursuant to this Section 5(d)
after the original Holder has sold or transferred more than
eighty percent (80%) of the shares of the Company's Common
Stock purchased by such original Holder concurrently with the
issuance of this Warrant.
(e) Upon any adjustment of the Exercise Price, then and in
each such case, the Company shall give written notice thereof, by first
class mail, postage prepaid, addressed to the Holder of this Warrant at
the address of such Holder as shown on the books of the Company, which
notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares for which
this Warrant may be exercised, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based.
6. Common Stock. As used herein, the term "Common Stock" shall mean and
include the Company's presently authorized shares of common stock and shall also
include any capital stock of any class of the Company hereafter authorized which
shall not be limited to a fixed sum or percentage in respect of the rights of
the holders thereof to participate in dividends or in the distribution,
dissolution or winding up of the Company.
7. No Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company unless and until
exercised or converted pursuant to the provisions hereof.
8. Exercise or Transfer of Warrant or Resale of Common Stock. The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant, in whole or in part, or transferring any
shares of Common Stock issued upon the exercise or conversion hereof, of such
Holder's intention to do so, describing briefly the manner of any proposed
transfer. Such notice shall include an opinion of counsel reasonably
satisfactory to the Company that (i) the proposed exercise or transfer may be
effected without registration or qualification under the Securities Act of 1933,
as amended (the "Act") and any applicable state securities or blue sky laws, or
(ii) the proposed exercise or transfer has been registered under such laws. Upon
delivering such notice, such Holder shall be entitled to transfer this Warrant
or such Warrant Shares, all in accordance with the terms of the notice delivered
by such Holder to the Company, provided that an appropriate legend may be
endorsed on the certificates for such shares respecting restrictions upon
transfer thereof necessary or advisable in the opinion of counsel to the Company
to prevent further transfer which would be in violation of Section 5 the Act and
applicable state securities or blue sky laws.
If in the opinion of counsel to the Company or other counsel reasonably
acceptable to the Company the proposed transfer or disposition of this Warrant
or the Warrant Shares described in the written notice given pursuant to this
Section 8 may not be effected without registration of this Warrant or the
Warrant Shares, the Company shall promptly give written notice thereof to the
Holder within 10 days after the Company receives such notice, and such holder
will limit its activities in respect to such as, in the opinion of such counsel,
is permitted by law.
9. Covenants of the Company. The Company covenants and agrees that all
shares which may be issued upon conversion of this Warrant will, upon issuance,
be duly authorized and issued, fully paid, nonassessable and free from all
taxes, liens and charges with respect to the issue thereof. The Company further
covenants and agrees that the Company will at all times have authorized, and
reserved for the purpose of issue upon exercise hereof, a sufficient number of
shares of its Common Stock to provide for the exercise of this Warrant.
10. Certain Notices. The Holder shall be entitled to receive from the
Company immediately upon declaration thereof and at least ten (10) business days
prior to the record date for determination of shareholders entitled thereto or
to vote thereon (or if no record date is set, prior to the event), written
notice of any event which could require an adjustment pursuant to Section 5
hereof or of the dissolution or liquidation of the Company. All notices
hereunder shall be in writing and shall be delivered personally or by telecopy
(receipt confirmed) to such party (or, in the case of an entity, to an executive
officer of such party) or shall be sent by a reputable express delivery service
or by certified mail, postage prepaid with return receipt requested, addressed
as follows:
if to Medtronic, to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
Minneapolis, MN 55432
with separate copies thereof addressed to:
Attention: General Counsel
FAX (612) 572-5459
Attention: Vice President, Corporate Development and Associate General
Counsel
FAX (612) 572-5404
if to the Company to:
VidaMed, Inc.
46107 Landings Parkway
Fremont, California 94538
Attention: President and Chief Executive Officer
FAX ( ) -
Any party may change the above-specified recipient and/or mailing
address by notice to all other parties given in the manner herein prescribed.
All notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail or delivery service).
11. Registration Rights. The Holders of this Warrant and the Warrant
Shares are entitled to the rights and benefits of all of the terms, provisions
and conditions of that certain Purchase Agreement dated of even date herewith
between the Company and Medtronic Asset Management, Inc., provided an express
sharing or assignment of such rights and benefits is made to each such Holder by
such Holder's transferor.
12. Miscellaneous.
(a) No amendment, modification or waiver of any provision of
this Warrant shall be effective unless the same shall be in writing and
signed by the holder hereof.
(b) This Warrant shall be governed by and construed in
accordance with the laws of the State of Minnesota.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its authorized officer and dated as of the date stated above.
VIDAMED, INC.
/s/ John F. Howe
By: John F. Howe
Title: Vice President and Chief Financial Officer
<PAGE>
Exhibit A
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered
Holder in Order to Exercise the
Warrant
The undersigned hereby irrevocably elects to exercise the attached
Warrant to purchase, for cash pursuant to Section 2 thereof, ________________
shares of Common Stock issuable upon the exercise of such Warrant. The
undersigned requests that certificates for such shares be issued in the name of
__________________________________. If this Warrant is not fully exercised, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: _________, ______
_____________________________________
[name of registered Holder]
_____________________________________
[signature]
_____________________________________
[street address]
_____________________________________
[city, state, zip]
_____________________________________
[tax identification number]
<PAGE>
Exhibit B
NOTICE OF CONVERSION OF WARRANT -- To Be Executed by the Registered Holder
in Order to Convert the Warrant on a
Cashless Basis
The undersigned hereby irrevocably elects to convert, on a cashless
basis, a total of ______________ shares of Common Stock otherwise purchasable
upon exercise of the attached Warrant into such lesser number of shares of
Common Stock as determined by Section 3 of the Warrant. The undersigned requests
that certificates for such shares be issued in the name of
__________________________________. If this Warrant is not fully converted, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: _________, ______
_____________________________________
[name of registered Holder]
_____________________________________
[signature]
_____________________________________
[street address]
_____________________________________
[city, state, zip]
_____________________________________
[tax identification number]
