As filed with the Securities and Exchange Commission on April 20, 1998.
Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ANGEION CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1579150
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
-------------
7601 NORTHLAND DRIVE
MINNEAPOLIS, MINNESOTA 55428-1088
(612) 315-2000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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WHITNEY A. MCFARLIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
7601 NORTHLAND DRIVE
MINNEAPOLIS, MINNESOTA 55428-1088
(612) 315-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
Copies to:
Gavin B. Grover, Esq. Thomas C. Thomas, Esq.
Morrison & Foerster LLP Oppenheimer Wolff & Donnelly LLP
425 Market Street 3400 Plaza VII, 45 South Seventh Street
San Francisco, California 94105 Minneapolis, Minnesota 55402
(415) 268-7000 (612) 607-7000
---------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT PRICE FEE (2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7 1/2% Senior Convertible Notes due 2003 $22,150,000 $1,000 $22,150,000
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value (3).............. 8,737,661 Shares(2) $2.81 $4,156,479 $7,972
=============================================================================================================================
</TABLE>
(1) The amount of shares of Common Stock to be registered hereunder
which is to be sold by certain Selling Securityholders consists of:
(a) 7,258,487 shares of Common Stock issuable upon conversion of the
Notes; (b) 362,924 shares of Common Stock issuable upon exercise of
the Placement Agent Warrants; (c) 25,000 currently outstanding
shares of Common Stock; and (d) 1,091,250 shares of Common Stock
issuable upon exercise of the Rose Glen Warrant. For purposes of
estimating the number of shares of Common Stock to be included in
this Registration Statement upon conversion of the Notes, the
Company calculated the number of shares issuable upon conversion of
the Notes based on an initial conversion price of $3.0516. For
purposes of estimating the number of shares of Common Stock to be
included in this Registration Statement in respect to the Placement
Agent Warrants, the Company calculated the number of shares issuable
upon exercise of the Placement Agent Warrants based on an initial
exercise price of $2.90625 per share. For purposes of estimating the
number of shares of Common Stock to be included in this Registration
Statement upon exercise of the Rose Glen Warrant, the Company
calculated 150% of the number of shares of Common Stock initially
issuable in connection with the exercise of the Rose Glen Warrant.
In addition to the shares set forth in the table, the amount to be
registered includes an indeterminate number of shares issuable upon
conversion of the Notes and upon exercise of the Placement Agent
Warrants and the Rose Glen Warrant, as such amount or amounts may be
adjusted as a result of stock splits, stock dividends and
antidilution provisions (including floating rate conversion prices)
in accordance with Rule 416 under the Securities Act.
(2) The registration fee has been calculated pursuant to Rule 457 of the
Securities Act by adding (a) the proposed offering price of the
Notes pursuant to Rule 457(i) of the Securities Act of 1933, as
amended and (b) the proposed maximum aggregate offering price for
(i) 25,000 currently outstanding shares of Common Stock (ii)
1,091,250 shares of Common Stock issuable upon exercise of the Rose
Glen Warrant, and (iii) 362,924 shares of Common Stock issuable upon
exercise of the Placement Agent Warrants pursuant to Rule 457(c) of
the Securities Act of 1933. Pursuant to Rule 457(i) there is no
filing fee with respect to the shares of Common Stock issuable upon
conversion of the Notes because no additional consideration will be
received in connection with the exercise of the conversion
privilege.
(3) Each share of Common Stock includes a right to purchase, under
certain circumstances, a fractional share of the registrant's
Series B Junior Preferred Stock, $.01 par value.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 20, 1998
PROSPECTUS
ANGEION CORPORATION
$22,150,000 7 1/2% SENIOR CONVERTIBLE NOTES DUE 2003
8,737,661 SHARES OF COMMON STOCK
-----------------------
This Prospectus relates to (a) $22,150,000 principal amount of 7
1/2% Senior Convertible Notes due 2003 (the "Notes") (b) 7,258,487 shares of the
common stock, par value $0.01 per share (the "Common Stock"), of Angeion
Corporation (the "Company") issuable upon conversion of the Notes (collectively,
the "Conversion Shares"); (c) 362,924 shares of Common Stock issuable upon
exercise of the Placement Agent Warrants (as defined below) (the "Placement
Agent Shares"); (d) 25,000 currently outstanding shares of Common Stock
(collectively, the "Perpetual Growth Shares"); (e) up to 1,091,250 shares of
Common Stock issuable upon the exercise of the Rose Glen Warrant (as defined
below) (collectively, the "Rose Glen Warrant Shares"); and (f) such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Notes and exercise of the Placement Agent Warrants and
the Rose Glen Warrant as a result of adjustment to the conversion price, number
of shares (in the case of the Placement Agent Warrants and the Rose Glen
Warrant) and exercise price, respectively (collectively, the "Additional
Shares"). The Perpetual Growth Shares, Rose Glen Warrant Shares and all related
Additional Shares are hereafter referred to collectively as the "Rose Glen
Shares". The Conversion Shares, the Placement Agent Shares and the Rose Glen
Shares, when referenced collectively, are hereafter referred to as the "Shares"
and together with the Notes as the "Securities."
The Notes and the Placement Agent Warrants were issued and sold in
connection with the Company's April 1998 private placement in transactions
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Section 4(2) of the Securities Act
to persons each of which was reasonably believed by the Company to be an
institution that is an "accredited investor" (as such term is defined in Rule
501(a) under the Securities Act) and are thus "restricted securities" under the
Securities Act. This Prospectus has been prepared, in part, for the purpose of
registering the Notes, the Conversion Shares and the Placement Agent Shares
under the Securities Act to allow for future sales by the applicable selling
securityholders (the "Selling Convertible Securityholders", with the Rose Glen
Selling Securityholders (as defined herein), collectively, the "Selling
Securityholders") to the public without restriction. The Selling Securityholders
have advised the Company that sales of the Shares offered hereunder by them or
by their respective pledgees, donees, transferees or other successors in
interest, may be made from time to time on the NASDAQ National Market, in the
over-the-counter market, in ordinary brokerage transactions, in negotiated
transactions, or otherwise, at market prices prevailing at the time of the sale
or at negotiated prices and sales of the Notes offered hereunder by them or by
their respective pledgees, donees, transferees or other successors in interest,
will be sold in one or more privately-negotiated transactions (which may involve
block transactions). See "Plan of Distribution - Rose Glen," "-Notes" and "-
Placement Agent Shares."
The Notes are convertible into Common Stock at any time after July
13, 1998 and prior to maturity, unless previously redeemed, at a conversion
price of $3.0516 per share, subject to adjustment in certain events (the
"Conversion Price"). See "Description of Securities To Be Registered - Notes -
Conversion."
The Notes do not provide for a sinking fund. The Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after April 14, 2001 at 100% of the principal amount thereof, together with
accrued and unpaid interest. The Notes are redeemable at the option of the
holders upon a Designated Event (as defined herein) at a price equal to 101% of
the principal amount
<PAGE>
thereof, plus accrued and unpaid interest, subject to certain restrictions and
conditions. See "Description of Securities To Be Registered - Notes - Repurchase
at the Option of Holders."
The Notes are senior unsecured obligations of the Company and are
subordinated to all present and future Indebtedness (as defined herein) of the
Company and are effectively subordinated to all indebtedness and other
liabilities of the subsidiaries of the Company. As of December 31, 1997, the
Company and its Subsidiaries had approximately $3,132,606 of indebtedness. The
Indenture (as defined herein) prohibits the Company and its subsidiaries from
incurring Secured Funded Indebtedness (as defined herein). See "Description of
Securities To Be Registered - Notes."
The Outstanding Shares and the Rose Glen Warrant were issued and
sold in connection with the Company's March 1998 bridge financing in
transactions exempt from the registration requirements of the Securities Act,
pursuant to Section 4(2) of the Securities Act under the Securities Act, to
persons each of which was reasonably believed by the Company to be an
"accredited investor" (as such term is defined in Rule 501(a) under the
Securities Act) and are thus "restricted securities" under the Securities Act.
This Prospectus has been prepared, in part, for the purpose of registering the
Rose Glen Shares under the Securities Act to allow for future sales by the
applicable Selling Securityholders (the "Rose Glen Selling Securityholders") to
the public without restriction.
The Securities are being registered to permit public secondary
trading by the holders thereof from time to time after the date of the
Prospectus of (a) the Notes, (b) the Conversion Shares, (c) the Placement Agent
Shares, (d) the Rose Glen Shares, (e) the Perpetual Growth Shares and (f) any
related Additional Shares.
Any of the Selling Securityholders and any broker-dealers or other
persons acting on their behalf in connection with the sale of Common Stock or
Notes hereunder may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any commissions received by the Selling Securityholders and
any profit realized by them on the resale of the Securities as principals may be
deemed to be underwriting commissions under the Securities Act. As of the date
hereof, there are no special selling arrangements between any broker-dealer or
other person and any of the Selling Securityholders.
The Company will not receive any part of the proceeds of any sales
of the Securities pursuant to this Prospectus. Pursuant to the terms of written
agreements between the Company and the Selling Securityholders, the Company will
pay all the expenses of registering the Securities, except for selling expenses
incurred by the Selling Securityholders in connection with this offering,
including any fees and commissions payable to broker-dealers or other persons,
which will be borne by the Selling Securityholders. In addition, these
agreements provide for certain other usual and customary terms, including
indemnification by the Company of the Selling Securityholders against certain
liabilities arising under the Securities Act.
THE SECURITIES OFFERED HEREBY INVOLVE CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
The Company's Common Stock is traded on the NASDAQ National Market
under the symbol "ANGN". On April 17, 1998, the last sale price of the Common
Stock on the NASDAQ National Market was $2.84 per share; the average of the high
and low prices on April 17, 1998 was $2.81 per share.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
THE DATE OF THIS PROSPECTUS IS ______________, 1998.
<PAGE>
PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD CONSULT THEIR OWN
TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THEIR PARTICIPATION IN THIS OFFERING, OWNERSHIP AND DISPOSITION
OF THE SECURITIES, INCLUDING THE CONVERSION OF THE NOTES, IF APPLICABLE, AND THE
EFFECT THAT THEIR PARTICULAR CIRCUMSTANCES MAY HAVE ON SUCH TAX CONSEQUENCES.
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus in
connection with the offer described in this Prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Company or the Selling Securityholders. Neither the delivery
of this Prospectus nor any sale made under this Prospectus shall under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof or since the date of any documents
incorporated herein by reference. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities to which it relates, or an offer or solicitation in any state to any
person to whom it is unlawful to make such offer in such state.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company pursuant to the Exchange
Act may be inspected and copied at the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement
on Form S-3 under the Securities Act. This Prospectus does not contain all of
the information, exhibits and undertakings set forth in the Registration
Statement, certain portions of which are omitted as permitted by the Rules and
Regulations of the Commission. Copies of the Registration Statement and the
exhibits are on file with the Commission and may be obtained, upon payment of
the fee prescribed by the Commission, or may be examined, without charge, at the
offices of the Commission set forth above. For further information, reference is
made to the Registration Statement and its exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
(File No. 0-17019) are incorporated by reference in this Prospectus: (1) the
Company's Annual Report on Form 10-K for the year ended July 31, 1997; (2) the
Company's Quarterly Report on Form 10-Q for the quarter ended October 31, 1997;
(3) the Company's Transition Report for the five-month transition period ended
December 31, 1997; (4) the Company's Current Report on Form 8-K, dated April 20,
1998; (5) all other reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Exchange Act since July 31,
<PAGE>
1997; (6) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A and any amendments or reports filed for the
purpose of updating such description; and (7) the description of the Company's
Series B Junior Preferred Stock and rights to purchase Series B Junior Preferred
Stock contained in its Registration Statement on Form 8-A and any amendments or
reports filed for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document all or any portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a
copy of this Prospectus is delivered, upon written or oral request of such
person, a copy of any or all of the documents referred to above which are
incorporated by reference in this Prospectus (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates). Requests should be directed
to Angeion Corporation, 7601 Northland Drive, Minneapolis, Minnesota 55428-1088,
Attention: Peg O. Norris, Corporate Controller; telephone number (612) 315-2000.
<PAGE>
THE COMPANY
GENERAL
The Company designs, develops, manufactures and markets products
that treat irregular heartbeats (arrhythmias). The Company has developed what it
believes are among the smallest and most technologically advanced implantable
cardioverter defibrillators ("ICDs") in clinical studies or approved for market
sales today. ICDs are designed to treat arrhythmias of the heart which are
characterized by abnormally rapid heartbeats in the ventricular (or lower)
chambers of the heart, a condition known as ventricular tachycardia ("VT"), and
a severe form of VT known as ventricular fibrillation ("VF"), which if not
terminated will lead to sudden cardiac death ("SCD"). ICDs are electronic
devices that are implanted within the body and are connected to the heart with
defibrillator leads. These devices monitor the patient's heartbeat and, in the
event of VT or VF, deliver an electrical shock to restore the heartbeat to
normal rhythm.
The Company is also developing a radio frequency ("RF") catheter
ablation system that it believes offers a potential cure for certain forms of
atrial arrhythmias (rapid heartbeats originating in the upper chambers of the
heart) and a laser catheter ablation system that it believes offers a potential
cure for certain forms of VT.
The Company was incorporated in Minnesota in May 1986. The Company's
principal executive offices are located at 7601 Northland Drive, Minneapolis,
Minnesota 55428-1088, and its telephone number at that location is (612)
315-2000.
RECENT DEVELOPMENTS
ROSE GLEN BRIDGE LOAN
On March 11, 1998, the Company borrowed $5 million (the "Rose Glen
Bridge Loan") from RGC International Investors, LDC ("Rose Glen") pursuant to a
Convertible Senior Note (the "Note"), which Note was repaid by the Company on
April 16, 1998.
In connection with the Rose Glen Bridge Loan, the Company issued
three warrants to purchase an aggregate amount of 970,000 shares of Common Stock
at an exercise price equal to the lower of (a) $3.86, or (b) 125% of the average
of the closing bid prices of the Common Stock over the five trading days ending
on June 9, 1998. Upon the repayment of the Note, warrants for an aggregate
amount of
<PAGE>
243,500 shares of Common Stock were cancelled. The remaining warrant for 727,500
shares of Common Stock (the "Rose Glen Warrant") is exercisable until March 11,
2003.
In connection with the Rose Glen Bridge Loan, the Company entered
into an agreement with Perpetual Growth Advisors ("PGA") dated as of March 11,
1998 pursuant to which the Company issued to PGA the 25,000 Perpetual Growth
Shares in consideration for services rendered with respect to such transaction.
The Company has agreed pursuant to such agreement to register for resale all of
such Perpetual Growth Shares under the Securities Act on the same terms provided
to Rose Glen in the registration rights agreement between the Company and Rose
Glen (the "Rose Glen Registration Rights Agreement.").
In connection with the Rose Glen Bridge Loan, the Company has agreed
to register under the Securities Act no less than one and one half times the sum
of the number of shares of Common Stock currently issuable upon exercise of the
Rose Glen Warrant, without regard to any limitation on the Rose Glen's ability
to exercise the Rose Glen Warrant. All of the Rose Glen Shares, excluding the
Perpetual Growth Shares, have been registered hereunder pursuant to the Rose
Glen Registration Rights Agreement.
OFFERING OF THE NOTES
On April 14, 1998, the Company completed a private placement whereby
the Company issued the Notes pursuant to an indenture (the "Indenture") between
the Company and U.S. Bank National Association, as trustee (the "Trustee"). For
a description of the Notes, see "Description of Securities To Be Registered -
Notes."
PLACEMENT AGENT WARRANTS
In connection with the offering of the Notes, HSBC Securities, Inc.
and Prudential Securities Incorporated (collectively, the "Placement Agents"),
each an investment banking firm, acted as placement agents for the Company in
connection with the private placement of the Notes. In connection therewith, the
Company agreed, among other things, to deliver warrants to purchase 181,462
shares of Common Stock to each of the Placement Agents at an initial exercise
price of $2.90625 per share. The exercise price shall be reduced on a specified
date to equal the lower of (a) the previously applicable exercise price or (b)
the Market Price (as defined in the Indenture) for the Company's Common Stock on
a specified date; provided, however, that in no event shall the exercise price
be reduced to less than $1.5258.
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS BEFORE MAKING AN INVESTMENT IN THE SECURITIES. THIS PROSPECTUS
CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE
STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS PROSPECTUS AND INCLUDE
STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY,
ITS DIRECTORS OR ITS OFFICERS PRIMARILY WITH RESPECT TO THE FUTURE OPERATING
PERFORMANCE OF THE COMPANY. PROSPECTIVE PURCHASERS OF THE SECURITIES ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. THE ACCOMPANYING INFORMATION CONTAINED IN THIS PROSPECTUS,
INCLUDING THE INFORMATION SET FORTH BELOW, IDENTIFIES IMPORTANT FACTORS THAT
COULD CAUSE SUCH DIFFERENCES. SEE "- FORWARD-LOOKING STATEMENTS."
CONTINUING OPERATING LOSSES; PROFITABILITY UNCERTAIN; FLUCTUATIONS IN OPERATING
RESULTS.
The Company has incurred net operating losses from continuing
operations in each year since its inception in 1986, due primarily to costs
incurred in the research and development of the Company's products. The Company
has had minimal revenue since the sale of its Angeion Medical Products division
in September 1992. The Company expects to incur additional operating losses over
the next few
<PAGE>
years as the Company continues to fund research and development (including
clinical trials) relating to its ICDs and catheter ablation systems and invests
in building its manufacturing and marketing capabilities. The Company's ability
to achieve profitability is dependent, in part, upon obtaining regulatory
approvals for its products and developing the capacity to manufacture and sell
its products successfully. There can be no assurance that the Company will
obtain the required regulatory approvals on a timely basis, if at all, or that
the Company will successfully develop, commercialize, manufacture and market its
products, or achieve profitability. In addition, the Company's results of
operations may fluctuate significantly from quarter to quarter depending upon a
number of factors, including the availability of third party reimbursement, the
timing of regulatory approvals, the progress of product development and clinical
trials, the extent to which the Company's products gain market acceptance, as
well as the level of marketing and manufacturing costs required for the sale of
the Company's products and the extent of competition in the Company's markets.
LACK OF PMA APPROVAL; LIMITED CLINICAL REVENUES; COMPLIANCE WITH GOVERNMENT
REGULATIONS
The Company's products are all classified as medical devices by the
Food, Drug and Cosmetic Act (the "FDC Act"), and as such, are subject to
regulation and supervision by the FDA, and to regulation by foreign governmental
authorities. Medical devices are also subject to ongoing controls and
regulations under the FDC Act, including registration by the manufacturer,
compliance with established manufacturing practices, device tracking,
record-keeping, advertising, labeling, packaging and compliance to standards.
Comparable agencies in certain states and foreign countries also regulate the
Company's activities. The process of complying with such regulations with
respect to new products can be costly and time-consuming. FDA requirements for
both the Company's ICD and catheter ablation products require obtaining formal
FDA pre-market approval ("PMA approval"). The first stage of obtaining formal
FDA PMA approval is submission of an application for an Investigational Device
Exemption ("IDE"). The IDE permits clinical evaluations of products on human
subjects under controlled experimental conditions by designated qualified
medical institutions. To obtain an IDE, approval of the investigational plan for
the applicable system is required from the institutional review board within
each participating medical institution as well as from the FDA. The second stage
of formal FDA PMA approval is the PMA approval application. The PMA approval
application, which is submitted after extensive clinical evaluations are
completed under an IDE, is a comprehensive report of all data and information
obtained by the applicant throughout the product's development and testing. The
FDA will grant a PMA approval if it finds that the safety and effectiveness of
the product have been sufficiently demonstrated and that the product complies
with all applicable regulations and standards. The FDA may require further
clinical evaluation of the product, terminate the clinical studies, grant a PMA
approval but restrict the number of devices distributed, or require additional
patient follow-up for an indefinite period of time. Approval of the Company's
PMA approval applications for its ICDs and its catheter ablation systems will
depend on a wide variety of factors, many of which are outside the Company's
control. Although the Company has been successfully inspected with respect to
its old facilities for compliance of its operations with the FDA's current Good
Manufacturing Practices ("GMP"), final approval will require an inspection by
the FDA to determine whether the Company's operations at its new facilities
conform with the FDA's current GMP, which is necessary to market the Company's
products commercially in the U.S. Although the Company filed a PMA approval
application for its SENTINEL 2000 Model and SENTINEL 2010 Model ICDs in June
1997, and has received an IDE for its SENTINEL 2010 Model and AngeCool radio
frequency ("RF") catheter ablation systems in April 1997, and an IDE for the
2020 Model in February 1998, there can be no assurance that the Company will be
successful in obtaining PMA approval for any of its products in a timely manner,
or at all, which is necessary to market the Company's products commercially in
the U.S. The Company has in the past experienced delays related to the
development, testing, marketing and government approval of its
<PAGE>
products. For example, in November 1997, the Company announced a revision to its
clinical trial protocol of its SENTINEL 2000 Model and SENTINEL 2010 Model ICDs
and a temporary suspension of implants due to a component issue. The Company has
since incorporated a new ceramic capacitor to replace the component at issue and
received FDA approval in January 1998 to resume clinical implants of the revised
design of the SENTINEL 2000 Model and SENTINEL 2010 Model ICDs. Delays in
obtaining marketing approvals and clearances in the U.S. or recalls related to
the Company's products could have material adverse effects on the Company and
its operations. The Company is also subject to certain FDA regulations governing
defective products and complaints about its products. The Company's products are
subject to recall at any time by the FDA or the Company if it appears that use
of the products could result in unwarranted health risks. The FDA has authority
to inspect the Company's facilities to ensure compliance with the FDC Act and
regulations thereunder. Failure to comply with these regulations could have a
material adverse effect on the Company's business, financial condition and
results of operations. Further, the FDA regulates the export of medical devices
that have not been approved or cleared for marketing in the United States. The
Company expects to export products directly to the European Union ("EU"), under
the provisions of the FDA Export Reform and Enhancement Act of 1996. In certain
instances, however, the Company may need to apply for export approval from the
FDA.
Until the Company receives PMA approval, the Company will be subject
to FDA-imposed limitations on the number of ICD implants and catheter ablation
procedures that may be performed as well as the number and location of clinical
sites at which implants and procedures may be performed. As the Company
approaches these limitations, it would be required to apply to the FDA for
approval of additional clinical implants and procedures, but there can be no
assurance that such approval will be received on a timely basis, if at all.
Should it reach the limits authorized by the FDA, the Company would be unable to
sell additional ICDs or conduct additional catheter ablation procedures in the
U.S. until such time as PMA approval is granted, if at all, or until such time
as approval for additional clinical implants or procedures is obtained. The
timing of both the IDE and PMA approval review processes is unpredictable and
uncertain, and the failure to obtain the necessary approvals on a timely basis
would have a material adverse effect on the Company's business, financial
condition and results of operations.
Many foreign countries have similar regulatory requirements
concerning the marketing of new medical devices. In January 1995, the AIMDD (as
defined) was fully implemented in the EU, which is intended to make EU
regulatory requirements more consistent. The time required to obtain approvals
required by foreign countries may be longer or shorter than that required for
FDA approval and requirements for licensing may differ from FDA requirements.
Under AIMDD, the Company is subject to "prior notice" of intent to conduct
clinical studies in the EU. This process, similar to the FDA IDE process,
requires regulatory documents and test information to be submitted to the
governmental agency of each country in which the Company intends to conduct
clinical studies. In order to commence commercial marketing of its products in
the EU and the European Free Trade Association, the Company is required to file
for a CE Mark approval. Although the Company has obtained a CE Mark for the
SENTINEL 2000, 2010 2011 and 2012 Model ICDs that allows the Company to commence
marketing of these products in countries that are members of the EU and the
European Free Trade Association, subject to limited regulations in certain
countries, there can be no assurance that the Company will be successful in
obtaining CE Mark approval for any other products on a timely basis if at all,
and any failure to receive or delay in receiving CE Mark approval could have a
material adverse effect on the Company's business, financial condition and
results of operations
<PAGE>
NEED FOR ADDITIONAL FINANCING
The Company will need additional financing for a number of uses,
including: progress with clinical trials; time and costs involved in obtaining
regulatory approvals; costs involved in filing, prosecuting and enforcing
patents or defending against patent infringement claims; competing technological
and market developments; costs of manufacturing and marketing scale-up; and
potential acquisitions of technologies or products. There can be no assurance
that such additional financing would be available on acceptable terms, if at
all. If additional funds are raised by issuing equity securities, further
dilution to then existing stockholders may result. If adequate funds are not
available, the Company may be required to delay, scale back or eliminate one or
more of its research and development programs or obtain funds through
arrangements with collaborative partners or others that may require the Company
to relinquish certain rights to certain of its technology, product candidates or
products that the Company would not otherwise relinquish, and the failure to
obtain any such additional financing would have a material adverse effect on the
Company's business, financial condition and results of operations. There can be
no assurance that Synthelabo's commitment to make an additional investment of up
to $15 million will be met. See "Risk Factors - Uncertainty of Additional
Investment by Synthelabo."
UNCERTAINTY OF ADDITIONAL INVESTMENT BY SYNTHELABO; LIMITED MARKETING AND SALES
RESOURCES OF ANGELLAN; DEPENDENCE UPON STRATEGIC RELATIONSHIPS
Pursuant to the Amended and Restated Investment and Restated
Investment and Master Strategic Relationship Agreement ("Investment Agreement")
with Synthelabo, a French health care company ("Synthelabo"), Synthelabo has
agreed to purchase additional shares of Common Stock for a total additional
investment of up to $15 million in the event that certain regulatory product
development milestones are met. There can be no assurance that such milestones
will be met or, even if they are met, that Synthelabo will fund these
investments in a timely manner, if at all. In addition, pursuant to the
Manufacturing and Supply Agreements with ELA Medical, S.A., a subsidiary of
Synthelabo ("ELA Medical") and Angellan Medical Systems, LLC, ("Angellan"), a
U.S.-based joint venture company formed by the Company and ELA Medical, Inc.,
another subsidiary of Synthelabo, which were entered into in connection with the
Investment Agreement with Synthelabo, the Company has committed to certain
obligations with respect to the exclusivity of marketing of its ICD products in
certain territories. In the event that such arrangements are not successful, the
Company may be restricted in its ability to enter into alternative marketing
arrangements during the term of these agreements. Although these agreements
obligate ELA Medical and Angellan to use their best efforts to market and
promote the ICD products of the Company, there can be no assurance that such
efforts will be put forth or will be successful. These agreements also provide
for transfer prices to be established for future ICD and related products based
upon good faith negotiations between the parties. There can be no assurance that
such transfer prices would be sufficient to allow the Company to operate
profitably. While there are certain minimum purchase obligations to maintain
exclusivity in the case of the Manufacturing and Supply Agreement with ELA
Medical, there can be no assurance that these minimum obligations will be
adequate or will be achieved. With respect to the Angellan joint venture, while
there are obligations for both the Company and ELA Medical to fund this joint
venture and to cooperate in the control of this joint venture, there can be no
assurance that such funding will occur or will be adequate, or that the joint
venture will able to operate successfully in the event of an unresolved dispute
between its owners. Any significant problems pursuant to the agreements with
Synthelabo or ELA Medical could have a material adverse effect upon the
Company's business, financial condition and results of operations.
The Company expects that the majority of its sales will be made
pursuant to manufacturing and supply agreements that the Company has entered
into with (i) Angellan, the joint venture which has been
<PAGE>
granted exclusive rights to have ICD and certain other products manufactured by
the Company for sale in the U.S., and (ii) ELA Medical which has been granted
exclusive rights to have ICD and certain other products manufactured by the
Company for sale in certain territories. The Company's ability to sell its
products successfully will depend substantially on the marketing capabilities of
ELA Medical and Angellan. In recent years there has been significant
consolidation among medical device suppliers as the major suppliers have
attempted to broaden their product lines in order to respond to cost pressures
from health care providers. This consolidation has made it increasingly
difficult for smaller suppliers, such as the Company, to effectively distribute
their products without a relationship with one or more of the major suppliers.
The sales and marketing organizations of ELA Medical and those of Angellan are
substantially smaller than the sales and marketing organizations of certain of
the Company's competitors and there can be no assurance that these organizations
will be able to compete effectively with the Company's larger competitors.
It is the objective of the strategic relationship with ELA Medical
to allow both ELA Medical and Angellan to market an array of products in the
field of cardiac rhythm management in order to compete effectively with these
larger competitors. There can be no assurance that this objective will be met,
or that ELA Medical will have competitive and timely bradycardia pacemakers and
other related products to meet this objective. In addition, as Angellan is a
joint venture, there can be no assurance that Angellan will be in a position to
accomplish the marketing and sales objectives intended by the Company.
ISSUANCE OF ADDITIONAL SHARES AND WARRANTS TO SYNTHELABO
The Investment Agreement with Synthelabo provides that, if the
Company issues and sells additional shares of its Common Stock (or securities
convertible thereinto) during a specified period after the initial $15 million
investment installment (the "Initial Installment") at a price that is less than
a specified price per share (the "Initial Reference Price"), then the Company
would be required to issue to Synthelabo a number of additional shares of its
Common Stock as anti-dilution protection equal to the product of the 2,251,408
shares multiplied by an amount equal to (A) a fraction (x) the numerator of
which shall be the number of shares of Common Stock (or securities convertible
thereinto including securities pursuant to such sale) outstanding immediately
after the issuance of such offering and (y) the denominator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
issuance of such offering plus the number of shares of Common Stock which the
aggregate consideration received for issuance of such offering would purchase at
the Initial Reference Price, minus (B) one. The Company will issue additional
shares to Synthelabo in connection with the Company's recent financing involving
the sale of the Notes. Depending on the structure of the Company's future
financings, the Company may be required to issue to Synthelabo additional Common
Stock to satisfy the anti-dilution provision, resulting in dilution to holders
of Common Stock. A comparable adjustment to the exercise price and number of the
warrants held by Synthelabo may also be required.
The Investment Agreement also provides that if the average closing
price over a specified period for the Company's Common Stock is less than $5.125
per share during a predetermined reset period after the Initial Installment, the
Company shall issue to Synthelabo an additional number of shares of Common Stock
(the "Supplemental Shares") equal to: (A) $5.125 divided by a predetermined
formula price that involves a premium to the market price for the Common Stock
at the time (the "Market Formula Price") and multiplied by 2,251,408 minus (B)
2,251,408 and further minus (C) the number of additional shares of Common Stock,
if any, previously issued under anti-dilution provisions described in the
preceding paragraph. The Company shall also issue to Synthelabo additional
warrants to purchase Common Stock in an amount equal to sixty percent of the
number of Supplemental Shares (the "Supplemental
<PAGE>
Warrants"), with such Supplemental Warrants to have an exercise price equal to
the Market Formula Price, to be exercisable at any time prior to expiration of
the Initial Installment Warrants. Further, if Supplemental Warrants are issued,
the exercise price and number of the Initial Installment Warrants will be reset
based upon the exercise price of such Supplemental Warrants. To the extent that
the average closing price over a specified period of the Common Stock during the
predetermined reset period is less than $5.125 per share, the Company may be
required to issue to Synthelabo additional shares of Common Stock to satisfy the
pricing provision, resulting in dilution to holders of Common Stock. A
comparable issuance of additional warrants and an adjustment to the exercise
price of the warrants held by Synthelabo would also be required.
The Investment Agreement also provides that Synthelabo shall invest
up to $15 million (in subsequent installments of $5 million each, each a
"Subsequent Installment") upon the achievement of certain regulatory product
milestones. For each such Subsequent Installment, the Company would issue Common
Stock at a price (the "Applicable Price") equal to a premium to the then current
market price of the Common Stock. In connection with each Subsequent Installment
of Common Stock purchased. Synthelabo will also receive warrants to purchase a
number of shares of Common Stock equal to 60% of the number of shares of Common
Stock acquired in such installment with an exercise price equal to the
Applicable Price for such installment. Although the Company will receive
compensation for Common Stock purchased at each Subsequent Installment, the
total number of shares of Common Stock to be issued by the Company to Synthelabo
is dependent upon the Applicable Price, and in the event that the Applicable
Price for one or more of the Subsequent Installments is below $5.125 per share,
the total number of shares of Common Stock and warrants issued by the Company
for such Subsequent Installments could be greater than the number of shares of
Common Stock and warrants purchased by Synthelabo in the Initial Installment.
IMPACT OF COMPETITION
Competition in the ICD market is intense. Although the Company's
ICDs also compete with alternative treatments such as drug therapy, open heart
surgery and catheter ablation, the Company believes that ICD manufacturers
currently constitute its primary competition. Four companies (Medtronic, Inc.
("Medtronic"), Cardiac Pacemakers, Inc. ("CPI"), a division of Guidant
Corporation ("Guidant"), Sulzer Intermedics, Inc. ("Intermedics"), a
wholly-owned subsidiary of Sulzer Medica, and Ventritex, Inc. ("Ventritex"), a
wholly-owned subsidiary of St. Jude Medical. Inc. ("St. Jude Medical")) have
obtained PMA Approval for products in the ICD market and currently control
virtually all of the U.S. market. Furthermore, each of these companies has
greater financial, manufacturing, marketing, distribution and technical
resources and greater name recognition than the Company.
The Company believes, based upon industry analyses and attendance by
management at industry meetings, that its product pipeline of ICDs offers the
smallest and most technologically advanced ICDs currently either in clinical
studies or market approved. Competitors of the Company, however, many of whom
have greater financial and technical resources than the Company, are developing
and conducting human clinical studies of ICDs with certain comparable features.
Any ICD product developed by the Company that gains regulatory
approval will have to compete for market acceptance and market share. The timing
of market introduction of competitive products could adversely affect the
competitiveness of the Company's products. Accordingly, the relative speed with
which the Company can develop ICD products, complete clinical testing and the
regulatory approval process and supply commercial quantities of the product to
the market are expected to be important competitive factors. The Company expects
that competition in the ICD market will be based on many
<PAGE>
factors, including device size and weight, longevity, ease of programmability,
ability to provide diagnostic capability, product reliability, physician
familiarity with the device, patent, protection, sales and marketing capability,
third-party reimbursement policies, reputation and price. There can be no
assurance that FDA approval will be obtained for the Company's ICDs, that
competitors will not introduce new products with similar features or that the
market will accept the Company's ICDs.
Although catheter ablation offers a potential cure, rather than a
treatment, of VT, catheter ablation technologies must nonetheless compete with
drug therapy, open heart surgery and ICDs. A number of companies, certain of
which have significantly greater resources than the Company, have developed RF
catheter ablation devices to treat supraventricular tachycardia ("SVT"). There
can be no assurance that competitors of the Company will not be able to develop
and introduce cardiac ablation systems more quickly than the Company or systems
that may be more effective in treating SVT and VT than the Company's catheter
ablation systems. In addition, there can be no assurance that the Company's
catheter ablation systems will receive FDA approval or, if approved, that the
market will accept such systems. In addition, catheter ablation technologies
also compete with drug therapy. While historically drug therapy has had limited
effectiveness and caused adverse side effects, new drugs under development may
offer improved treatment outcomes which could have a material adverse effect on
the ICD market generally and on the Company's business, financial condition and
results of operations.
IMPORTANCE OF INTELLECTUAL PROPERTY PROTECTION
Patents and trademarks are critical in the medical device industry,
and the Company believes strongly in protecting its intellectual property and
has a long history of obtaining patents, when available, in connection with its
research and product development programs. As of March 1, 1998, the Company had
a portfolio of approximately 150 patents and patent applications consisting of
90 U.S. issued patents. 17 U.S. patents which have been allowed but have not yet
been issued, 13 U.S. patent applications pending, two foreign patents issued, 24
foreign patent applications pending, and additional U.S. patent applications in
preparation relating to its research and development products. The Company also
owns certain registered trademarks, and has applied for other trademarks in the
U.S. and certain foreign countries. There can be no assurance that patents and
trademarks will be granted in the future, or that any patents and trademarks
that the Company now holds or may be granted, or under which it has held license
rights, will be valid or otherwise be of value to the Company. Even if the
Company's patents and trademarks are valid, others may be able to introduce
non-infringing products that are competitive with those of the Company.
Competitors of the Company may also hold or be granted patents that are not
licensed to the Company.
The Company conducts ongoing evaluations of potential infringement
of any proprietary rights of third parties by the products the Company intends
to market. Regardless of the Company's efforts to evaluate the potential
infringement of any proprietary rights of third parties, however, there can be
no assurance that such infringements do not exist or may not arise in the
future. There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry, particularly in the
ICD market; and the Company is currently engaged in patent litigation with CPI.
Litigation, which could result in substantial cost to and diversion of effort by
the Company, may be necessary to enforce patents issued to or licensed by the
Company, to protect trade secrets or know-how owned by the Company, to defend
the Company against claimed infringement of the rights of others, and to
determine the scope and validity of the proprietary rights of others. Adverse
determinations in litigation could subject the Company to significant
liabilities to third parties or could require the Company to seek licenses from
third parties.
<PAGE>
In November, 1996, the Company was advised of the results of an
arbitration between Pacesetter, Inc. ("Pacesetter"), a wholly-owned subsidiary
of St. Jude Medical, and Medtronic concerning a purported sublicense of certain
of the Company's patents by Pacesetter to Medtronic. This arbitration arose
under a 1992 cross-license between Medtronic and Pacesetter and under a
provision of the 1993 license agreement between Pacesetter and the Company which
purported to give Pacesetter certain rights to sublicense certain of the
Company's patents. Because the Company was not a party to the arbitration, the
Company did not have an opportunity to present its arguments in this matter and
therefore does not consider itself to be bound by the results of the
arbitration. The Company has notified both Pacesetter and Medtronic that it
disputes the entire matter. The inability of the Company to be successful in
maintaining its position in this matter could have a material adverse effect on
the Company in its ability to obtain a satisfactory resolution of this matter
with both Pacesetter and Medtronic.
The Company has an ongoing patent lawsuit against CPI which was
begun in 1996 and is expected to be tried by the end of 1998. The Company's
lawsuit involves four U.S. patents of the Company which have been asserted
against certain ICD devised manufactured by CPI. These four patents relate to
inventions by the Company with respect to reduced capacitance of the high
voltage capacitors in an ICD, decreased size of the ICD and the ability to use
the housing of the ICD as an electrode in combination with a subcutaneous
electrode. It is not known whether the Company's lawsuit against CPI will be
successful and, if so, what damages or other outcomes may result. The inability
of the Company to prevail in the lawsuit could result in one or more of the
patents of the Company being declared invalid, unenforceable or not infringed,
which could have a material adverse effect on the ability of the Company to
obtain a satisfactory resolution of this matter, if at all, with CPI, as well as
to obtain satisfactory resolutions with other competitors in the industry.
The Company has recently been notified by CPI that certain
unspecified models of the Company's SENTINEL ICD product line infringe four U.S.
patents assigned to Michel Mirowski and sublicensed to CPI. The Company does not
believe that its products infringe any valid and enforceable patents of third
parties to which the Company does not have access by means of licenses or
otherwise. Under the exemption of 35 U.S.C. Section 271(e), the Company is
protected against charges of infringement for products used in clinical trials
until such time as those products receive PMA approval. The Company has
responded to CPI, and has engaged outside patent counsel to review the
allegations and provide further legal advice. Given the litigious nature of this
industry, it is anticipated that CPI may file a lawsuit asserting one or more of
these patents against the Company. In the event that such a lawsuit is filed by
CPI, the Company believes that it is not possible for CPI to move for any kind
of preliminary injunction and it is expected that the case would not be tried
before the end of 1999. Despite the Company's position, it is not known whether
a lawsuit by CPI against the Company would be successful and, if so, what
damages or other outcomes may result. The outcome of both the Company's lawsuit
against CPI and any potential lawsuit by CPI against the Company could have a
significant material impact on the Company.
Although patent and intellectual property disputes in the medical
device area have often been settled through licensing agreements or similar
arrangements, costs associated with such arrangements may be substantial, and
there can be no assurance that necessary licenses would be available to the
Company on satisfactory terms if at all. Accordingly, an adverse determination
in a judicial or administrative proceeding or failure to obtain necessary
licenses could prevent the Company from manufacturing and selling its products,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
<PAGE>
The Company also relies on trade secrets and proprietary know-how,
which it seeks to protect, in part, through confidentiality agreements with
employees, consultants and other parties, as well as contractual exclusivity
with certain suppliers. There can be no assurance, however, that these
agreements will not be breached, that the Company would have adequate remedies
for any breach, or that the Company's trade secrets will not otherwise become
known to or independently developed by competitors.
NEED FOR MARKET ACCEPTANCE
Market acceptance of the Company's products will depend, in part, on
the therapeutic capabilities and operating features of its products as compared
to competing products, the Company's ability to convince the medical community
of the clinical efficacy of its products and its ability to manufacture quality
products in sufficient quantities. Failure of the Company's products to gain
market acceptance would have a material adverse effect on the Company's
business, financial condition and results of operations. Although the markets
for the Company's products are expected to grow, there can be no assurance that
the Company will participate in such growth.
DEPENDENCE ON SENIOR MANAGEMENT AND OTHER KEY PERSONNEL
The Company's success depends largely on its senior management and
other key personnel. Competition for qualified personnel with sufficient and
relevant experience in the medical device industry is intense. Accordingly, the
loss of the services of such individuals, or the inability to hire additional
key individuals as required, could have a material adverse effect on the
Company, including its current and future product development efforts. The
Company maintains a $2.0 million key-person life insurance policy on Whitney A.
McFarlin, its Chairman, President and Chief Executive Officer.
DEPENDENCE ON THIRD PARTY VENDORS
The Company relies on third party vendors for certain of the
components used in the Company's products and for certain contract manufacturing
services. A number of significant components, such as capacitors, batteries,
integrated circuits and lead systems, are purchased from sole source suppliers.
For certain components and manufacturing services, there are relatively few
sources of supply, and establishing additional or replacement suppliers for such
components or services cannot be accomplished quickly. In addition, each
supplier and each component must be qualified with the FDA, and the time
required for such qualification may be lengthy. Although the Company tries to
maintain sufficient quantities of inventory of such components to minimize
production delays or interruptions, there can be no assurance that the Company
will find suitable alternatives at reasonable prices, if at all, or that any
such alternatives will remain available to the Company. The Company's inability
to obtain acceptable components in a timely manner or find and maintain suitable
replacement suppliers of components or manufacturing services would have a
material adverse effect on the Company, including its ability to manufacture its
products.
LIMITED MANUFACTURING EXPERIENCE
To date, the Company's products have been manufactured in limited
quantities for clinical testing purposes and have not been manufactured on a
significant commercial scale. As a result, there can be no assurance that the
Company will not encounter difficulties in scaling up its manufacturing
capabilities, including problems involving production yields, quality control,
component supply and shortages of
<PAGE>
qualified manufacturing personnel. Any significant manufacturing difficulties
could have a material adverse effect on the Company.
POSSIBLE OBSOLESCENCE DUE TO TECHNOLOGICAL CHANGE
The medical device industry is subject to rapid technological
innovation and, consequently, the life cycles of medical devices tend to be
relatively short, typically eighteen months to three years. The Company is
engaged in a field characterized by extensive research and development efforts.
There can be no assurance that alternative treatments or other discoveries and
developments with respect to ICDs or catheter ablation systems will not render
the Company's products obsolete. The greater financial and other resources of
many of the Company's competitors may permit such competitors to respond more
rapidly than the Company to technological advances.
ADJUSTMENT OF CONVERSION PRICE OF THE NOTES AND EXERCISE PRICES OF PLACEMENT
AGENT WARRANTS AND ROSE GLEN WARRANT; POTENTIAL FOR DILUTION
The conversion price of the Notes is subject to various antidilution
adjustments. The conversion price of the Notes shall also be reduced on a
specified date to equal the lower of (a) the previously applicable exercise
price or (b) the Market Price (as defined in the Indenture) for the Company's
Common Stock on a specified date; provided, however, that in no event shall the
conversion price be reduced to less than $1.5258.
The number of Placement Agent Shares and the exercise price of the
Placement Agent Warrants is subject to various antidilution adjustments. The
exercise price shall also be reduced on a specified date to equal the lower of
(a) the previously applicable exercise price or (b) the Market Price for the
Company's Common Stock on a specified date; provided, however, that in no event
shall the exercise price be reduced to less than $1.5258.
The number of Rose Glen Warrant Shares and the exercise price for
the Rose Glen Warrant will be reset to the lower of (i) $3.86 per share and (ii)
125% of the average of the closing bid prices of the Common Stock over the five
trading days ending on a specified date. The exercise price of the Rose Glen
Warrant is also subject to various antidilution adjustments.
The foregoing adjustments to the Notes, the Placement Agent Warrants
and the Rose Glen Warrant could have an impact upon the price of the Company's
Common Stock and could result in dilution to existing holders and holders of the
Conversion Shares, the Placement Agent Shares, the Rose Glen Warrant Shares, the
Perpetual Growth Shares and any related Additional Shares.
PRODUCT LIABILITY AND POTENTIAL INSUFFICIENCY OF PRODUCT LIABILITY INSURANCE
The testing, manufacturing, marketing and sale of medical devices
involves risk of liability claims and product recalls. The Company has in the
past experienced difficulties related to the development, testing and government
approval of its products. For example, in November 1997, the Company announced a
revision to the clinical trial protocol of its SENTINEL 2000 Model and 2010
Model ICDs and a temporary suspension of clinical implants due to a component
issue. The Company has since incorporated a new ceramic capacitor to replace the
component at issue and received FDA approval in January 1998 to resume clinical
implants of its SENTINEL 2000 Model and 2010 Model ICDs. The Company's products
are highly complex and some are, or will be, used in medical procedures and in
situations where there is a potential risk of serious injury, adverse side
effects or death. As a
<PAGE>
result, the Company currently carries product liability insurance covering its
products with policy limits per occurrence and in the aggregate which the
Company has deemed to be sufficient; it cannot be predicted, however, whether
such insurance is sufficient, or if not, whether the Company will be able to
obtain such insurance as is sufficient, to cover the risks associated with the
Company's business or whether such insurance will be available at premiums that
are commercially reasonable. A successful claim against or settlement by the
Company in excess of its insurance coverage or the Company's inability to
maintain insurance in the future could have a material adverse effect on the
Company's business, results of operations and financial condition.
SUBSTANTIAL INDEBTEDNESS; EFFECTIVE OF FINANCIAL LEVERAGE.
Following the issuance of the Notes, the Company will have
indebtedness that is substantial in relation to its stockholders' equity and
cash flow. As of December 31, 1997, after giving effect to the offering of the
Notes (the "Offering"), the Company would have had an aggregate of approximately
$22,150,000 of long-term indebtedness outstanding, representing 46% of total
capitalization. As a result of the substantial indebtedness of the Company
following the Offering, fixed charges of the Company are expected to exceed its
earnings for the foreseeable future, and there can be no assurance that the
Company's operating cash flow will be sufficient to pay interest on the Notes.
In addition, the Indenture does not limit the Company's ability to incur
additional Indebtedness, other than Secured Funded Indebtedness. The leveraged
nature of the Company could limit the ability of the Company to effect future
financings or may otherwise restrict the Company's activities. Substantial
leverage poses the risk that the Company may not be able to generate sufficient
cash flow to service its indebtedness, including the Notes, and to adequately
fund its operations. See "Description of Securities To Be Registered - Notes."
The Company's leverage could have important consequences to the
holders of the Notes or other Securities, including the following: (i) the
Company's ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired in the future; (ii) a substantial portion of the Company's cash flow
from operations must be dedicated to the payment of principal of and interest on
its indebtedness, thereby reducing the funds available to the Company for other
purposes; (iii) the Company's leverage may hinder its ability to adjust rapidly
to changing market conditions; and (iv) the leverage could make the Company more
vulnerable in the event of a downturn in its business or in general economic
conditions.
ABSENCE OF A TRADING MARKET FOR THE NOTES; POSSIBLE VOLATILITY OF NOTE AND
COMMON STOCK PRICES.
The Notes are a new issue of securities with no established trading
market or prior trading history. The Placement Agents have informed the Company
that they do not intend to make a market in the Notes. The absence of a market
maker in respect of the Notes can be expected to limit the opportunity for the
development of a trading market and, accordingly, there can be no assurance as
to the development or liquidity of any market for the Notes. In light of these
considerations, purchasers should be prepared to bear the economic risk of an
investment in the Notes for an indefinite period of time, including the risk of
complete loss of their investment. The Company does not intend to apply for
listing of the Notes on an established trading market including any securities
exchange or for quotation through any automated quotation system. The Company
has agreed to file this Registration Statement under the Securities Act as
provided in the various registration rights agreements regarding the Securities
and to use its reasonable or best efforts, as applicable, to have such
registration statement declared effective by the Commission. The Commission,
however, has broad discretion to determine whether any registration
<PAGE>
statement will be declared effective and may delay or deny the effectiveness of
any registration statement filed by the Company for a variety of reasons.
Failure to have a registration statement relating to the Securities declared
effective could have a material adverse effect on the liquidity and the price of
the Notes and the liquidity of the Conversion Shares, Placement Agent Shares and
Rose Glen Shares as well as any Additional Shares.
If a market for the Notes were to develop, the Notes could trade at
prices that may be higher or lower than their initial offering price depending
upon many factors, including prevailing interest rates, the Company's operating
results and the markets for similar securities. Historically, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the Notes. There
can be no assurance that, if a market for the Notes were to develop, such a
market will not be subject to similar disruptions. The liquidity of, and trading
market for, the Securities may also be materially and adversely affect such
liquidity and trading independently of the financial performance of, and
prospects for, the Company. In addition, the market price of the Common Stock
has experienced substantial fluctuations in the past and may continue to be
volatile depending on news announcements or changes in general market
conditions. In particular, news announcements regarding quarterly results of
operations, competitive developments, product developments, litigation or
governmental regulatory actions impacting the Company may adversely affect the
Common Stock price. Any decrease in the market price of the Common Stock would
adversely affect the market price of the Notes and the Shares.
DESIGNATED EVENT. Upon the occurrence of a Designated Event, each
holder of Notes shall have the right to require the Company to repurchase all or
any part of such holder's Notes at a repurchase price equal to 101% of the
principal amount thereof, together with accrued and unpaid interest and
Liquidated Damages (as defined herein), if any, thereon to the Designated Event
Payment Date (as defined). The Company's failure to purchase the Notes would
result in a default under the Indenture. If a Designated Event were to occur,
there can be no assurance that the Company would have sufficient financial
resources, or would be able to arrange financing, to satisfy all of its
obligations. See "Description of Securities To Be Registered - Notes -
Repurchase at the Option of Holders" and "-- Events of Default and Remedies."
RANKING OF THE NOTES. The Notes will be senior unsecured obligations
of the Company ranking PARI PASSU in right of payment to all existing and future
Indebtedness, other than Indebtedness that is expressly subordinated to the
Notes. The Notes also will be effectively subordinated to any secured
indebtedness of the Company to the extent of the value of the assets securing
such indebtedness and to any liabilities of the Company's Subsidiaries. If the
Company becomes insolvent or is liquidated, or if payment under any secured
obligation is accelerated, the creditor with respect to any secured obligation
would be entitled to exercise the remedies available to a secured creditor under
applicable law and pursuant to instruments governing such obligation.
Accordingly, such creditors will have a prior claim on the secured assets of the
Company. In any event, because the Notes will not be secured by any of the
Company's assets, it is possible that there would be no assets remaining from
which claims of the holders of the Notes could be satisfied, or, if any such
assets remain, such assets might be insufficient to satisfy such claims fully.
See "Description of Securities To Be Registered - Notes."
UNCERTAINTY OF THIRD PARTY REIMBURSEMENT AND HEALTH CARE REFORM
The Company's ability to market its products successfully in the
U.S. and elsewhere will depend in part on the extent to which reimbursement for
the cost of such products and related treatment will be available from
government health administration authorities (such as the Health Care Financing
Administration ("HCFA"), which determines Medicare reimbursement levels),
private health insurers, health maintenance organizations and other third-party
payors. Payors are increasingly challenging the
<PAGE>
need for and prices of medical products and services. Payors may deny
reimbursement for procedures that they deem experimental or for devices that are
used other than for FDA-approved indications. Currently, HCFA does not allow
Medicare reimbursement for certain kinds of products and related procedures that
have not received PMA approval and for which underlying questions of safety and
effectiveness have not been resolved, and certain private third-party payors
have also begun denying such reimbursement. Although the Company's products are
currently being reimbursed by HCFA and third-party payors, there can be no
assurance that HCFA and the third-party payors will continue to reimburse such
products in the future. Even if some products are approved for reimbursement,
some payors may deny coverage until the procedure becomes generally accepted by
the medical profession. The inability of hospitals and other providers to obtain
reimbursement from third-party payors for the Company's products and related
procedures would have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company expects that there will be continued pressure on
cost-containment throughout the U.S. health care system. Reforms may include
mandated basic health care benefits, controls on health care spending through
limitations on the growth of private health insurance premiums and Medicare and
Medicaid spending, the creation of large insurance purchasing groups and
fundamental changes to the health care delivery system. The Company anticipates
that Congress and state legislatures will continue to review and assess
alternative health care delivery systems and payment methodologies and public
debate of these issues will likely continue in the future. Due to uncertainties
regarding the ultimate features of reform initiatives and their enactment and
implementation, the Company cannot predict which, if any, of such reform
proposals will be adopted, when they may be adopted or what impact they may have
on the Company.
EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
The Company is governed by the provisions of Sections 302A.671 and
302A.673 of the Minnesota Business Corporation Act. These anti-takeover
provisions could potentially operate to deny shareholders the receipt of a
premium on their Common Stock and may also have a depressive effect on the
market price of the Company's Common Stock. Section 302A.671 generally provides
that the shares of a corporation acquired in a "control share acquisition" have
no voting rights unless voting rights are approved by the shareholders in a
prescribed manner. A "control share acquisition" is generally defined as an
acquisition of beneficial ownership of shares that would, when added to all
other shares beneficially owned by the acquiring person, entitle the acquiring
person to have voting power of 20% or more in the election of directors. Section
302A.673 prohibits a public corporation from engaging in a "business
combination" with an "interested shareholder" for a period of four years after
the date of the transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions.
An "interested shareholder" is a person who is the beneficial owner of 10% or
more of the corporation's voting stock. Reference is made to the detailed terms
of Sections 302A.671 and 302A.673 of the Minnesota Business Corporation Act.
Furthermore, Section 3.5 of Article III of the Company's Restated
Articles of Incorporation provides that the affirmative vote of the holders of
two-thirds of the voting power of the shares entitled to vote is required for
shareholder approval of a plan of merger, exchange of securities, or transfer of
assets, as described in Section 302A.601 of the Minnesota Business Corporation
Act. In addition, the Company has adopted a shareholder rights plan that may
have an anti-takeover effect in that any person or group acquiring control of
the Company without the consent of the Company's Board of Directors could suffer
<PAGE>
substantial dilution through operation of the shareholder rights plan. The
Company has also entered into agreements with certain executive officers that
provide for certain benefits upon a change of control.
YEAR 2000 COSTS
Currently, many computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with such "Year 2000"
requirements. The Company and third parties with which the Company does business
rely on numerous computer programs in their day to day operations. The Company
has completed a preliminary evaluation of the Year 2000 issue as it relates to
the Company's internal computer systems and third party computer systems with
which the Company interacts. Based on this evaluation, the Company does not
expect to incur significant costs related to these issues. However, there can be
no assurance that the Year 2000 issues will be resolved in 1998 or 1999. If not
resolved, this issue could have a material adverse impact on the Company's
operations.
FORWARD-LOOKING STATEMENTS
The statements contained in this Prospectus that are not historical
fact are "forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995), which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. Management of the Company wishes to caution potential purchasers
of the Securities that these forward-looking statements contained above and
herein in this Prospectus regarding matters that are not historical facts, are
only predictions. No assurances can be given that the future results indicated,
whether expressed or implied, will be achieved. While sometimes presented with
numerical specificity, these projections and other forward-looking statements
are based upon a variety of assumptions relating to the business of the Company,
which, although considered reasonable by the Company, may not be realized.
Because of the number and range of the assumptions underlying the Company's
projections and forward-looking statements, many of which are subject to
significant uncertainties and contingencies that are beyond the reasonable
control of the Company, some of the assumptions inevitably will not materialize
and unanticipated events and circumstances may occur subsequent to the date of
this Prospectus. These forward-looking statements are based on current
expectations, and the Company assumes no obligation to update this information.
Therefore, the actual experience of the Company and results achieved during the
period covered by any particular projections or forward-looking statements may
differ substantially from those projected. Consequently, the inclusion of
projections and other forward-looking statements should not be regarded as a
representation by the Company or any other person that these estimates and
projections will be realized, and actual results may vary materially. There can
be no assurance that any of these expectations will be realized or that any of
the forward-looking statements contained herein will prove to be accurate.
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the
periods indicated is as follows:
<TABLE>
<CAPTION>
Five Months Ended
December 31, Year Ended July 31,
------------------------------------------ ----------------------------------------------------------------
1997 1996 1997 1996 1995
--------------------- ------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Net earnings/(loss) $(14,940,896) $(7,734,829) $(26,908,861) $(15,182,019) $(9,643,351)
Interest expense 4,893 48,674 103,635 116,683 271,162
Amortization of
debt costs - - - - 22,800
Income taxes - - - - -
--------------------- ------------------- --------------------- -------------------- --------------------
Earnings/(loss) before
fixed charges (14,936,003) (7,686,155) (26,805,226) (15,065,336) (9,349,389)
Fixed charges (1) 4,893 48,674 103,635 116,683 293,962
Ratio of net
earnings
before fixed charges
to fixed charges -3052.5 -157.9 -258.7 -129.1 -31.8
Deficiency of
earnings
to cover fixed
charges (14,940,896) (7,734,829) (26,908,861) (15,182,019) (9,643,351)
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
Net earnings/(loss) $(7,675,743) $(2,708,438)
Interest expense 161,185 76,019
Amortization of
debt costs 22,800 11,400
Income taxes - -
------------------ -------------------
Earnings/(loss) before
fixed charges (7,491,758) (2,621,019)
Fixed charges (1) 183,985 87,419
Ratio of net
earnings
before fixed charges
to fixed charges -40.7 -30.0
Deficiency of
earnings
to cover fixed
charges (7,675,743) (2,708,438)
</TABLE>
(1) - Fixed charges consist of interest expense and amortization of debt
issuance costs
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
the Securities by the Selling Securityholders. See "Selling Securityholders" for
a list of those persons and entities receiving proceeds from sales of
Securities. This Registration Statement is intended to satisfy certain of the
Company's obligations under the registration rights agreements entered into with
certain Selling Securityholders.
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information, as of April 14,
1998, and as adjusted to reflect the sale of the Shares offered hereby, with
respect to the beneficial ownership of the Securities by the Selling
Securityholders. None of the Selling Securityholders or their respective
affiliates has held any position or office or maintained any material
relationship with the Company or its predecessors or affiliates over the past
three years, except for HSBC Securities, Inc. and Prudential Securities,
Incorporated, each of whom served as placement agents in connection with the
offering of the Notes. Unless otherwise indicated, the persons named in the
table have sole voting and sole investment control with respect to all
Securities beneficially owned.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER
SHARES OF COMMON COMPLETION OF
STOCK BENEFICIALLY NUMBER OF SHARES BEING THE OFFERING (1)
OWNED PRIOR TO THE REGISTERED FOR ----------------
SELLING SECURITYHOLDERS OFFERING SALE HEREBY NUMBER % OF CLASS (2)
- ----------------------- -------- ----------- ------ --------------
<S> <C> <C> <C>
- -----------------------------------------------
Argent Classic Convertible Arbitrage Fund L.P. 0 $ 1,000,000** $ 1,000,000** 4.5%***
327,697 327,697 *
Avdan Partners, L.P. 0 $ 250,000** $ 250,000** 1.1%***
81,942 81,942 *
Awad & Associates L.P. 3,515,315 (3) $ 500,000** $ 500,000** 2.3%***
163,848 163,848 *
Calvert New Vision Small Cap Fund 0 $ 1,000,000** $ 1,000,000** 4.5%***
327,697 327,697 *
Heritage Small Cap Fund 0 $ 1,000,000** $ 1,000,000** 4.5%***
327,697 327,697 *
Cincinnati Financial Corporation 0 $ 1,500,000** $ 1,500,000** 6.8%***
491,545 491,545 1.2%*****
CCF Partners II, LLC 0 $ 2,000,000** $ 2,000,000** 9.0%***
655,394 655,394 1.6%*****
Highbridge Capital Corporation 0 $ 2,000,000** $ 2,000,000** 9.0%***
655,394 655,394 1.6%*****
J.M. Hull Associates, L.P. 0 $ 400,000** $ 400,000** 1.8%***
131,079 131,079 *
JMG Capital Partners, LP 0 $ 250,000** $ 250,000** 1.1%***
81,942 81,942 *
KA Management 0 $ 1,675,000** $ 1,675,000** 7.6%***
548,892 548,892 1.4%*****
KA Trading 0 $ 825,000** $ 825,000** 3.7%***
270,350 270,350 *
Keyway Investments, LTD 0 $ 1,000,000** $ 1,000,000** 4.5%***
327,697 327,697 *
CPR (USA) Inc. 0 $ 1,000,000** $ 1,000,000** 4.5%***
327,697 327,697 *
Loews Corporation 0 $ 2,500,000** $ 2,500,000** 11.2%***
819,242 819,242 2.0%*****
EDJ Limited 0 $ 150,000** $ 150,000** *;***
49,155 49,155 *
Legion Fund, LTD 0 $ 200,000** $ 200,000** *;***
65,539 65,539 *
Porter Partners, LP 0 $ 850,000** $ 850,000** 3.8%***
278,542 278,542 *
Professional Edge Fund L.L.C. 0 $ 500,000** $ 500,000** 2.3%***
163,848 163,848 *
Sonz Partners, L.P. 0 $ 250,000** $ 250,000** 1.1%***
81,942 81,942 *
Southbrook International Investments, Ltd. 0 $ 300,000** $ 300,000** 1.4%***
98,309 98,309 *
Triton Capital Investments, LTD 0 $ 250,000** $ 250,000** 1.1%***
81,942 81,942 *
RGC International Investors, LDC 0 $ 1,500,000** $ 1,500,000** 6.8%***
491,545 491,545 1.2%*****
William Bone Trust of 1992 0 $ 200,000** $ 200,000** *;***
65,539 65,539 *
Viviana Partners, L.P. 0 $ 200,000** $ 200,000** *;***
65,539 65,539 *
Michael Klein 0 $ 300,000** $ 300,000** 1.4%***
98,309 98,309 *
Steel Roven Revocable Trust 0 $ 150,000** $ 150,000** *;***
49,155 49,155 *
Spiegel 1982 Grandchildren's Trust 0 $ 300,000** $ 300,000** 1.4%***
98,309 98,309 *
Abraham and Edita Spiegel 1992 Revocable Trust u/a/d
September 26, 1994 0 $ 100,000** $ 100,000** *;***
32,770 32,770 *
HSBC Securities, Inc.(4) 0 181,462 181,462 *
Prudential Securities, Inc.(4) 0 181,462 181,462 *
RGC International Investors, LDC.............. 1,091,250 (5) 1,091,250 (6) 0 *
Perpetual Growth Advisors..................... 25,000 25,000 0 *
</TABLE>
- --------------------------------------
* Less than one percent (1%)
** Amount of Notes
*** Percentage of outstanding Notes held by such Selling Securityholder.
**** Approximate number of Conversion Shares issuable upon conversion
of the Notes, after rounding up or down, as appropriate.
***** Based upon 33,173,943 shares of Common Stock outstanding as of
April 14, 1998 plus 7,258,487 shares of Common Stock issuable upon
conversion of the Notes.
(1) This assumes all Securities being offered and registered hereunder are sold,
although the Selling Securityholders are not obligated to sell any Securities.
(2) Based upon 33,173,943 shares of Common Stock outstanding as of April 14,
1998.
(3) Shares are under the management of Awad Associates L.P.
(4) The aggregate amount of 362,924 Placement Shares offered hereby constitute
all securities beneficially owned by HSBC Securities, Inc. and Prudential
Securities Incorporated as of the date of this Prospectus. The actual number of
shares of Common Stock offered hereby and included in the Registration Statement
of which this Prospectus is a part, includes such additional number of shares of
Common Stock as may be issued or issuable upon exercise of the Placement Agent
Warrants by reason of any stock split, stock dividend or similar transaction
involving the Common Stock in order to prevent dilution, in accordance with Rule
416 under the Securities Act.
(5) Consists of 1,091,250 shares of Common Stock issuable upon exercise of the
Rose Glen Warrant, which equals 150% times the number of shares of Common Stock
issuable upon exercise of the Rose Glen Warrant without regard to any limitation
on the ability of Rose Glen to exercise the Rose Glen Warrant. The foregoing
number represents an estimate of the number of shares of Common Stock
beneficially owned and to be offered by Rose Glen. The actual number of shares
of Common Stock offered hereby and included in the Registration Statement of
which this Prospectus is a part, includes
<PAGE>
such additional number of shares of Common Stock as may be issued or issuable
upon exercise of the Rose Glen Warrant by reason of adjustment mechanisms
described therein, or by reason of any stock split, stock dividend or similar
transaction involving the Common Stock in order to prevent dilution, in
accordance with Rule 416 under the Securities Act. The Rose Glen Warrant is
exercisable into 727,500 shares of Common Stock at an exercise price equal to
the lower of (a) $3.86, (b) 125% of the average of the closing bid prices of the
Common Stock over the five consecutive Trading Days ending on a specified date.
Pursuant to the terms of the Rose Glen Warrant, the Rose Glen Warrant is
exercisable by any holder only to the extent that the number of shares of Common
Stock owned by such holder and its affiliates (but not including shares of
Common Stock underlying the unexercised portions of the Rose Glen Warrant) would
not exceed 4.9% of the then outstanding Common Stock as determined in accordance
with Section 13(d) of the Exchange Act.
(6) The number of shares of Common Stock being registered for sale hereby on
behalf of Rose Glen equals 150% times the number of shares of Common Stock
issuable upon exercise of the Rose Glen Warrant, without regard to any
limitation on Rose Glen's ability to exercise the Rose Glen Warrant. The number
of shares of Common Stock offered hereby and included in the Registration
Statement of which this Prospectus is a part, includes such additional number of
shares of Common Stock as may be issued or issuable upon exercise of the Rose
Glen Warrant by reason of the floating rate conversion price mechanism or other
adjustment mechanisms described therein, or by reason of any stock split, stock
dividend or similar transaction involving the Common Stock in order to prevent
dilution, in accordance with Rule 416 under the Securities Act. See note (5)
above.
PLAN OF DISTRIBUTION
ROSE GLEN
The Rose Glen Selling Securityholders have advised the Company that
sales of the Rose Glen Shares offered hereunder by them, or by their respective
pledgees, donees, transferees or other successors in interest, may be made from
time to time in the Nasdaq National Market, the over-the-counter market, through
negotiated transactions, through the writing of options on the Common Stock or a
combination of such methods of sale, at market prices prevailing at the time of
sale or at negotiated prices. The Rose Glen Shares may be sold by one or more of
the following methods: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. Sales may be made pursuant
to this Prospectus to or through broker-dealers who may receive compensation in
the form of discounts, concessions or commissions from the Rose Glen Selling
Securityholders or the purchasers of Common Stock for whom such broker-dealer
may act as agent or to whom they may sell as principal, or both (which
compensation as to a particular broker-dealer may be in excess of customary
commissions). To the extent required, one or more supplemental prospectuses will
be filed pursuant to Rule 424 under the Securities Act to describe any material
arrangements for the sales of the Rose Glen Shares offered hereunder when such
arrangements are entered into by the Rose Glen Selling Securityholders and any
other broker-dealers that participate in the sale of the Rose Glen Shares. In
addition, any Rose Glen Shares that qualify for sale pursuant to Rule 144 under
the Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus. No period of time has been fixed within which the Rose Glen Shares
covered by this Prospectus may be offered or sold.
<PAGE>
The Rose Glen Selling Securityholders and any broker-dealers or
other persons acting on its behalf in connection with the sale of Common Stock
hereunder may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any commissions received by the Rose Glen Selling
Securityholders and any profit realized by them on the resale of Common Stock as
principals may be deemed to be underwriting commissions under the Securities
Act. As of the date hereof, there are no special selling arrangements between
any broker-dealer or other person and any of the Rose Glen Selling
Securityholders.
The Rose Glen Selling Securityholders and any other persons
participating in the sale or distribution of the Rose Glen Shares will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, which provisions may limit the timing of purchases and
sales of any of the Rose Glen Shares by the Rose Glen Selling Securityholders or
any other such person. The foregoing may affect the marketability of the Rose
Glen Shares.
Pursuant to the terms of certain written agreements between the
Company and the Rose Glen Selling Securityholders, the Company will pay all the
expenses of registering the Rose Glen Shares offered hereby, except for selling
expenses incurred by the Rose Glen Selling Securityholders in connection with
this offering, including any fees and commissions payable to broker-dealers or
other persons, which will be borne by the Rose Glen Selling Securityholders. In
addition, such written agreement provides for certain other usual and customary
terms, including indemnification by the Company of the Rose Glen Selling
Securityholders against certain liabilities arising under the Securities Act.
NOTES
The Notes and the Conversion Shares are being registered to permit
public secondary trading of such securities by the holders thereof from time to
time after the date of the Prospectus. The Company has agreed, among other
things, to bear all expenses, including reasonable fees and disbursements of one
firm or counsel (not to exceed $20,000) designated by the majority holders to
act as counsel for the holders (other than underwriting discounts and selling
commission) in connection with the registration and sale of the Notes and the
Conversion Shares covered by this Prospectus. The Company will not receive any
of the proceeds from the offering of Notes or the Conversion Shares by the
Selling Convertible Securityholders.
The Notes being offered by the Selling Convertible Securityholders
or their respective pledgees, donees, transferees or other successors in
interest, will be sold in one or more transactions (which may involve block
transactions) in privately-negotiated transactions. The sale price to the public
may be the market price prevailing at the time of sale, a price related to such
prevailing market price or such other price as the Selling Convertible
Securityholders determined from time to time. The Notes may also be sold
pursuant to Rule 144. The Selling Convertible Securityholders shall have the
sole and absolute discretion not to accept any purchase offer or make any sale
of Notes if they deem the purchase price to be unsatisfactory at any particular
time.
The Conversion Shares being offered by the Selling Convertible
Securityholders or their respective pledgees, donees, transferees or other
successors in interest, will be sold in one or more transactions (which may
involve block transactions) on the Nasdaq National Market or on such other
market on which the Common Stock may from time to time be trading, in
privately-negotiated transactions, through the writing of options on the shares,
short sales or any combination thereof. The sale price of the public may be the
market price prevailing at the time of sale, a price related to such
<PAGE>
prevailing market price or such other price as the Selling Convertible
Securityholders determined from time to time. The Conversion Shares may also be
sold pursuant to Rule 144. The Selling Convertible Securityholders shall have
the sole and absolute discretion not to accept any purchase offer or make any
sale of Conversion Shares if they deem the purchase price to be unsatisfactory
at any particular time.
The Selling Convertible Securityholders or their respective
pledgees, donees, transferees or other successors in interest, may also sell the
Notes or Conversion Shares directly to market makers acting as principals and/or
broker-dealers acting as agents for themselves or their customers. Brokers
acting as agents for the Selling Convertible Securityholders will receive usual
and customary commissions for brokerage transactions, and market makers and
block purchasers purchasing the Notes or Conversion Shares will do so for their
own account and at their own risk. It is possible that a Selling Convertible
Securityholder will attempt to sell shares of Common Stock in block transactions
to market makers or other purchasers at a price per share which may be below the
then market price. There can be no assurance that all or any of the Notes or
Conversion Shares offered hereby will be issued to, or sold by, the Selling
Convertible Securityholders.
Alternatively, any of the Selling Convertible Securityholders may
from time to time offer the Notes or Conversion Shares beneficially owned by
them through underwriters, dealers or agents, who may receive compensation in
the form of underwriting discounts, commissions or concessions from the Selling
Convertible Securityholders and the purchasers of the Notes or Conversion Shares
for whom they may act as agent. The aggregate proceeds to the Selling
Convertible Securityholders from the sale of the Notes or Conversion Shares
offered by them hereby will be the purchase price of such Notes or Conversion
Shares less discounts and commissions, if any.
The Conversion Shares have been approved for listing on the Nasdaq
National Market.
The Selling Convertible Securityholders and any broker and any
broker-dealers, agents or underwriters that participate with the Selling
Convertible Securityholders in the distribution of the Notes or Conversion
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act, in which event any commissions received by such broker-dealers, agents or
underwriters and any profit on the resale of the Notes or Conversion Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
In addition, any securities covered by this Prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Convertible Securityholder will sell any or all of
the Notes or Conversion Shares described herein, and any Selling Convertible
Securityholder may transfer, devise or gift such securities by other means not
described herein.
Pursuant to the Registration Rights Agreement, the Company has
agreed to indemnify each holder of a Note that is a Selling Convertible
Securityholder, and each holder of a Note that is a Selling Convertible
Securityholder has agreed to indemnify the Company and each other Selling
Convertible Securityholder against certain liabilities arising under the
Securities Act.
PLACEMENT AGENT SHARES
<PAGE>
The Company has been advised by the Placement Agents that all or a
portion of the Placement Agent Shares may be disposed of hereunder from time to
time in one or a combination of the following transactions: (a) to or through
brokers, acting as principal or agent, who may themselves dispose of the
Placement Agent Shares in transactions (which may involve block transactions) in
the over-the-counter market or otherwise, at market prices prevailing at the
time of sale or at prices related to such prevailing market prices; or (b)
directly by gift or directly or through brokers or agents in privately
negotiated transactions at negotiated prices. Any commissions or discounts paid
or allowed to brokers, dealers or agents may be changed from time to time. The
Placement Agents and any brokers, dealers or agents who participate in a sale of
the Securities may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and the commissions paid or discounts allowed to
any of such brokers, dealers or agents, in addition to any profits received on
resale of the Placement Agent Shares, if any of such brokers, dealers or agents
should purchase any Placement Agent Shares as a principal, may be deemed to be
underwriting discounts or commissions under the Securities Act. In the event of
a transaction hereunder in which a broker or dealer acts as principal, this
Prospectus will be supplemented to provide material facts with respect to such
transaction. Placement Agent Shares offered hereby also may be sold in
transactions under Rule 144 promulgated by the Commission under the Securities
Act.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED
CAPITAL STOCK
This Registration Statement incorporates by reference (a) the
description of the Company's Common Stock contained in its Registration
Statement on Form 8-A and any amendments or reports filed for the purpose of
updating such description; and (b) the description of the Company's Series B
Junior Preferred Stock and rights to purchase Series B Junior Preferred Stock
contained in its Registration Statement on Form 8-A and any amendments or
reports filed for the purpose of updating such description.
NOTES
GENERAL
On April 14, 1998, the Company completed the private placement
whereby the Company issued the Notes pursuant to the Indenture between the
Company and the Trustee. The following summary of certain provisions of the
Indenture and the registration rights agreement between the Company and each
investor in the Notes (the "Registration Rights Agreement"), does not purport to
be complete and is qualified in its entirety by reference to the Indenture and
the Registration Rights Agreement, including the definitions in the Indenture of
certain terms used in the following summary. The definitions of certain terms
used in the following summary are set forth below under "Certain Definitions."
The Notes are senior unsecured obligations of the Company ranking
PARI PASSU in right of payment to all existing and future Indebtedness of the
Company, other than Indebtedness that is expressly subordinated to the Notes.
The Notes are also effectively subordinated to any secured indebtedness of the
Company to the extent of the value of assets securing such indebtedness and to
any liabilities of the Company's Subsidiaries. As of December 31, 1997, the
company and its Subsidiaries had approximately $3,132,606 of Indebtedness
outstanding. The Indenture contains no limitation on the incurrence of
Indebtedness, other than Secured Funded Indebtedness. The Indenture prohibits
the Company and its Subsidiaries from incurring Secured Funded Indebtedness.
PRINCIPAL, MATURITY AND INTEREST
The Notes bear interest from April 15, 1998, at 7 1/2% per annum,
and mature on April 15, 2003.
Interest on the Notes is payable semiannually on April 15 and
October 15 of each year (each an "Interest Payment Date"), commencing on October
15, 1998, to holders of record at the close of business on specified dates (each
a "Regular Record Date") immediately preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. If an Interest Payment Date is not a Business Day (as defined
herein), then interest will be payable on the next succeeding Business Day.
Interest on the Notes accrues from the most recent date to which
interest has been paid or, if no interest has been paid, from April 15, 1998.
The Notes were issued in registered form, without coupons, and in
denominations of $25,000 and integral multiples of $1,000 in excess thereof.
<PAGE>
NO GROSS-UP
All payments made by the Company on the Notes will be made without
withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed or levied
by or on behalf of the jurisdiction of incorporation of the Company or any
political subdivision thereof or any authority therein or thereof having power
to tax unless the withholding or deduction of such taxes, duties, assessments or
governmental charges is required by law. If any such withholding or deduction is
required, the Company will not be obliged to pay any additional amounts in
respect of such withholding or deduction.
PAYMENT; PAYING AGENTS, CONVERSION AGENTS AND TRANSFER AGENTS
Payments with respect to principal of, premium, if any, and interest
and Liquidated Damages, if any, on the Notes will be made at the corporate trust
office of the Trustee in the Borough of Manhattan, The City of New York, which
is located at 100 Wall Street, Suite 200, New York, NY 10005 and subject to any
fiscal or other laws and regulations applicable thereto, at the office of any
other Paying Agents appointed by the Company. Payments with respect to principal
of the Notes will be made only against surrender of such Notes. Payment with
respect to principal of, premium, if any, and interest and Liquidated Damages,
if any, with respect to any Note may, at the Company's option, be made, subject
to applicable laws and regulations, by U.S. dollar check drawn on a bank in The
City of New York mailed to the holders of the Notes at their respective
addresses set forth in the register of holders of Notes provided that all
payments with respect to Notes the holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof.
Unless such designation is revoked, any such designation made by such person
with respect to such Note will remain in effect with respect to any future
payments with respect to such Note payable to such person.
If any payment on a Note is due on a day that is, at any place of
payment, a day on which banking institutions are authorized or obligated by law
or executive order to close, then, at each such place of payment, such payment
need not be made on such day but may be made on the next succeeding day that is
not, at such place of payment, a day on which banking institutions are
authorized or obligated by law or executive order to close, with the same force
and effect as if made on the date for such payment, and no interest will accrue
for the period from and after such due date to such next succeeding day that is
not, at such place of payment, a day on which banking institutions are
authorized or obligated by law or executive order to close.
The Indenture provides that any money paid by the Company to the
Trustee and the Paying Agents for any payment with respect to the Notes that
remains unclaimed for two years after such payment became due and payable will
be repaid to the Company, and thereafter the holder of such Notes will look only
to the Company for payments thereof as an unsecured creditor.
Subject to certain limitations set forth in the Indenture, the
Company reserves the right at any time to vary or terminate the appointment of
the Trustee, Registrar, Transfer Agent, any Conversion Agent or any Paying Agent
with or without cause and to appoint another Trustee or additional or other
Paying Agents, Registrars, Conversion Agents or Transfer Agents and to approve
any change in the specified offices through which any Paying Agent, Conversion
Agent or Transfer Agent acts.
OPTIONAL REDEMPTION
<PAGE>
The Notes will not be subject to redemption prior to April 14, 2001
and will be redeemable on such date and thereafter at the option of the Company,
in whole or in part (in any integral multiple of $1,000; provided the Notes may
be redeemed only in whole to the extent a redemption in part would reduce the
principal amount thereof to an amount less than $25,000), upon not less than 30
nor more than 60 days' prior notice by mail at a redemption price equal to 100%
of the principal amount thereof together with accrued and unpaid interest and
Liquidated Damages, if any, up to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on an
Interest Payment Date). On and after the redemption date, interest will cease to
accrue on the Notes, or portion thereof, called for redemption.
MANDATORY REDEMPTION; SINKING FUND
The Company is not required to make mandatory redemption or sinking
fund payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Designated Event (as defined below), each
holder of Notes shall have the right to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof; provided the Notes
shall only be repurchased in whole to the extent a repurchase in part would
reduce the principal amount thereof to an amount less than $25,000) of such
holder's Notes pursuant to the terms described below (the "Designated Event
Offer") at a repurchase price equal to 101% of the principal amount thereof,
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Designated Event Payment Date (the "Designated Event Payment").
Within 30 days following any Designated Event, the Company shall mail a notice
to each holder stating: (1) that the Designated Event Offer is being made
pursuant to the covenant described in this paragraph and that all Notes tendered
will be accepted for payment; (2) the repurchase price and the repurchase date,
which shall be no earlier than 30 days nor later than 40 days from the date such
notice is mailed (the "Designated Event Payment Date"); (3) that any Notes not
tendered or accepted for payment will continue to accrue interest and, if
applicable, Liquidated Damages; (4) that, unless the Company defaults in the
payment of the Designated Event Payment, all Notes accepted for payment pursuant
to the Designated Event Offer shall cease to accrue interest or Liquidated
Damages after the Designated Event Payment Date; (5) that holders electing to
have any Notes repurchased pursuant to a Designated Event Offer will be required
to surrender the Notes, with the form entitled "Option of Noteholder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Designated Event Payment Date; (6) that holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Designated
Event Payment Date, or such longer period as may be required by law, a telegram,
telex, facsimile transmission or letter setting forth the name of the holder,
the principal amount of Notes delivered for repurchase and a statement that such
holder is withdrawing his election to have such Notes repurchased; and (7) that
holders whose Notes are being repurchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof.
The Company will comply with the requirements of Rules 13e-4 and
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes in connection with a Designated Event.
<PAGE>
At least one Business Day prior to the Designated Event Payment
Date, the Company shall irrevocably deposit with the Trustee or the Paying
Agents in immediately available funds an amount equal to the Designated Event
Payment in respect of all Notes or portions thereof so tendered. On the
Designated Event Payment Date, the Company will, to the extent lawful (1) accept
for payment the Notes or portions thereof duly tendered pursuant to the
Designated Event Offer, and (2) deliver or cause to be delivered to the Trustee
the Notes so accepted together with an officers' certificate stating the Notes
or portions thereof have been accepted for payment by the Company. The Paying
Agents shall promptly mail to each holder of Notes so accepted payment in an
amount equal to the repurchase price for such Notes, and the Trustee shall
promptly authenticate and mail to each holder a new certificate representing a
Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; PROVIDED that each such new certificate representing a Note
shall be in a principal amount of $1,000 or an integral multiple thereof. Any
Notes that are not so accepted shall be promptly mailed or delivered by or on
behalf of the Company to the holder thereof. The Company will publicly announce
the results of the Designated Event Offer on or as soon as practicable after the
Designated Event Payment Date.
Except as described above with respect to a Designated Event, the
Indenture does not contain any other provisions that permit the holders of the
Notes to require that the Company repurchase or redeem the Notes in the event of
a takeover, recapitalization or similar restructuring.
The Designated Event repurchase feature of the Notes may in certain
circumstances make more difficult or discourage a takeover of the Company, and,
thus, the removal of incumbent management. The Designated Event purchase
feature, however, is not the result of management's knowledge of any specific
effort to accumulate the Company's stock or to obtain control of the Company by
means of a merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of anti-takeover provisions. Instead, the
Designated Event repurchase feature is a result of negotiations between the
Company and the Placement Agents to establish the terms of the Notes. Management
has no current intention to engage in a transaction involving a Designated
Event, although it is possible that the Company could decide to do so in the
future. Subject to the limitations on mergers, consolidations and sales of
assets described herein, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Designated Event under the Indenture, but that could
increase the amount of Indebtedness outstanding at such time or otherwise affect
the Company's capital structure or credit ratings. If a Designated Event were to
occur, there can be no assurance that the Company would have sufficient
financial resources, or would be able to arrange financing, to pay the
repurchase price for all Notes tendered by holders thereof.
A "Designated Event" will be deemed to have occurred upon a Change
of Control or a Termination of Trading.
A "Change of Control" will be deemed to have occurred when: (i) any
"person" or "group" (as such terms are used in Section 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act) of shares representing more than 50% of the
combined voting power of the then outstanding securities entitled to vote
generally in elections of directors of the Company ("Voting Stock"), (ii) the
Company consolidates with or merges into any other corporation, or any other
corporation merges into the Company, and, in the case of any such transaction,
the outstanding Common Stock are reclassified into or exchanged for any other
property or security, unless the stockholders of the Company immediately before
such transaction own, directly or indirectly immediately following such
transaction, at least a majority of the combined voting power of the outstanding
voting securities of the corporation resulting from such transaction in
substantially the same
<PAGE>
proportion as their ownership of the Voting Stock immediately before such
transaction, (iii) the Company conveys, transfers or leases all or substantially
all of its assets to any person (other than to one or more wholly-owned
subsidiaries of the Company) unless the stockholders of the Company immediately
before such transaction own, directly or indirectly immediately following such
transaction, at least a majority of the combined voting power of the outstanding
securities of the acquiring entity in substantially the same proportion as their
ownership of the Voting Stock immediately before such transaction, or (iv) at
any time that the Continuing Directors (as defined) do not constitute a majority
of the Board of Directors of the Company (or, if applicable, a successor
corporation to the Company).
The definition of Change of Control includes a phrase relating to
the lease, transfer or conveyance of "all or substantially all" of the assets of
the Company. Although there is a developing body of case law interpreting the
phrase "substantially all," there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a holder of Notes to
require the Company to repurchase such Notes as a result of a lease, transfer or
conveyance of less than all of the assets of the Company to another person or
group may be uncertain.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of the Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the directors who were either members of such board at the time of such
nomination or election or became Continuing Directors thereafter.
A "Termination of Trading" will be deemed to have occurred if the
Common Stock (or other securities into which the Notes are then convertible) are
neither listed for trading on a United States national securities exchange nor
approved for trading on an established automated over-the-counter trading market
in the United States.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed, selection of Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate, PROVIDED that no
Notes of $25,000 or less shall be redeemed in part. The Company does not intend
to seek admission for the Notes to trade on any established trading market
including the Nasdaq National Market or the Private Offerings Resales and
Trading through Automated Linkages ("Portal") market. Notice of redemption shall
be mailed to each holder whose Notes are to be redeemed at its registered
address, in each case, at least 30 but not more than 60 days before the
redemption date. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
and Liquidated Damages, if any, will cease to accrue on the Notes called for
redemption.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee, or otherwise become
directly or indirectly liable with respect to any Secured Funded Indebtedness.
REGISTRATION RIGHTS
<PAGE>
Pursuant to the Registration Rights Agreement, the Company agreed
for the benefit of the holders of the Notes or the Conversion Shares that are,
in either case, Registrable Securities (as defined), that (i) it will, at its
cost, within 90 days after the closing of the sale of the Notes (the "Closing"),
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to resales of the Notes and the Conversion Shares
(collectively, the "Registrable Securities"), (ii) the Company will use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act as soon as practicable but, in any
event, within 180 days after the Closing and (iii) the Company will keep such
Shelf Registration Statement continuously effective under the Securities Act
until the earlier of (a) the second anniversary of the date of the Closing, (b)
the date on which the Notes or the Conversion Shares may be sold by
non-affiliates of the Company pursuant to paragraph (k) of Rule 144 (or any
successor provision) promulgated by the Commission under the Securities Act and
(c) the date as of which all the Notes or the Conversion Shares have been sold
pursuant to such Shelf Registration Statement (the "Shelf Registration Period").
The Company shall have the right, however, to defer the use of the prospectus
which will be a part of the Shelf Registration Statement, as more fully
described below.
The Company will provide or cause to be provided to each holder of
the Notes or the Conversion Shares, copies of the prospectus, which will be a
part of such Shelf Registration Statement, notify or cause to be notified to
each such holder when such Shelf Registration Statement for the Notes and the
Conversion Shares has become effective and take certain other actions as are
required to permit unrestricted resales of the Notes and the Conversion Shares.
A holder of Notes or Conversion Shares that sells such securities pursuant to a
Shelf Registration Statement will be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus to purchasers, will
be subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Rights Agreement that are applicable to such holder (including
certain indemnification and contribution rights or obligations). The Company
currently intends to distribute a questionnaire to each beneficial holder of
Notes as of a specified date to obtain certain information regarding such
selling security holders for inclusion in the prospectus.
At least three business days prior to any intended resale of the
Notes or the Conversion Shares, a Selling Convertible Securityholder must notify
the Company of such intention and provide such information with respect to such
holder and the specifics of the intended resale as may be required to amend the
Shelf Registration Statement or supplement the related prospectus (a Selling
Convertible Securityholder giving such notice, a "Notice Holder"). Within two
business days after the foregoing notice is provided by a Notice Holder, the
Company will either (i) notify such Notice Holder that resales may proceed or
file any amendment to the Shelf Registration Statement or supplement to the
related prospectus needed to ensure that those documents, among other things,
comply with the Securities Act, use its reasonable efforts to cause any such
amendment to be declared effective and notify such Notice Holder thereof or (ii)
notify such Notice Holder of the Company's election to defer resales until
further notice (a "Deferral Period") under certain circumstances relating to
issuance of a stop order by the Commission, suspension of qualification under
state law, accuracy of the prospectus which is a part of the Shelf Registration
Statement, pending corporate developments, public filings with the Commission
and similar events. If the Company elects the option described in clause (i) of
the preceding sentence, such Notice Holder may resell Notes or the underlying
Common Stock pursuant to the Shelf Registration Statement for a period of 45
days (with respect to such Notice Holder, a "Selling Period") from the date
notice of such election is given and, if the Company elects the option described
in clause (ii) of the preceding sentence, such Notice Holder may resell such
securities for a Selling Period that commences at the end of the Deferral
Period. The Company may also defer until further notice a Notice Holder's
existing Selling Period upon the occurrence of the events described in clause
(ii) of the second preceding
<PAGE>
sentence; PROVIDED that upon receipt of such further notice, such Selling Period
shall be extended by the number of days elapsed prior to deferral. The Company
may not defer Selling Periods more than one time in any three-month period or
three times in any twelve-month period and no deferral shall exceed 30 days. The
Company will pay all expenses of the Shelf Registration Statement, provide to
each registered holder of Notes copies of such prospectus, notify each such
registered holder when the Shelf Registration Statement has become effective and
take certain other actions as are required to permit, subject to the foregoing,
unrestricted resales of the Notes and the underlying Common Stock.
The holders of Registrable Securities covered by the Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an underwritten offering. In any such underwritten offering, the managing
underwriters that administer the underwritten offering will be selected by, and
the underwriting arrangements with respect thereto will be approved by, the
holders of a majority of the Registrable Securities to be included in such
underwritten offering; PROVIDED, HOWEVER, that (i) such managing underwriters
and underwriting arrangements must be reasonably satisfactory to the Company and
(ii) the Company shall not be obligated to arrange for more than one
underwritten offering during the Shelf Registration Period. No holder may
participate in any such underwritten offering contemplated unless such holder
(a) agrees to sell such holder's Registrable Securities in accordance with any
approved underwriting arrangements, (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such approved
underwriting arrangements and (c) at least 70% of the outstanding Registrable
Securities are included in such underwritten offering. Holders participating in
any underwritten offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders and
shall reimburse the Company for the fees and disbursements of its counsel, its
independent public accountants and any printing expenses incurred in connection
with such underwritten offering.
In the event the Company fails to file the Shelf Registration
Statement within 90 days after Closing, the Shelf Registration Statement is not
declared effective under the Securities Act within 180 days after the Closing, a
stop order is issued by the Commission prior to the end of the Shelf
Registration Period, or Selling Periods have been deferred more frequently or
for longer periods than are described above, the Company has agreed to pay
Liquidated Damages to all Notice Holders of Notes and underlying Common Stock
until such event is cured. Further, if such event continues for a period in
excess of 30 days, the Company has agreed to pay Liquidated Damages to all
holders of Notes and underlying Common Stock which are, in either case,
Registrable Securities, without regard to whether such holder is a Notice
Holder. Liquidated Damages shall be calculated, with respect to Notes held by a
holder, at a rate of one-quarter of one percent (25 basis points) per annum of
the aggregate principal amount of such Notes and, with respect to Common Stock
held by a holder and issued upon conversion of Notes, the same percentage of the
aggregate principal amount of Notes that were converted into such shares.
<PAGE>
CONVERSION
The holder of any Note has the right, exercisable at any time after
90 days following the date of original issuance thereof and prior to the close
of business (New York time) on the Business Day immediately preceding the
maturity date of the Notes, to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $1,000; provided that a holder
of a Note may convert such Note only in whole to the extent a conversion in part
would reduce the principal amount thereof to an amount less than $25,000) into
Common Stock at a conversion price of $3.0516 per share of Common Stock (the
"Conversion Price"), except that if a Note is called for redemption, the
conversion right will terminate at the close of business (New York time) on the
Business Day immediately preceding the redemption date. The Conversion Price of
the Notes shall be reduced on a specified date to the lower of (a) the
previously applicable Conversion Price or (b) the Market Price for the Common
Stock on a specified date; provided, however, in no event shall the Conversion
Price be reduced below $1.5258. In the event that the Company cannot convert the
Notes into Common Stock in excess of the Nasdaq Cap (as defined below), the Note
holders will be entitled to a Cap Payment (as defined below) upon conversion.
To convert a Note, a holder must (1) complete and sign a notice of
election to convert (a "Conversion Notice") substantially in the form set forth
in the Indenture (copies of which are available from the Conversion Agent in New
York), (2) deliver the Conversion Notice and the Note to be converted to a
Conversion Agent in New York, (3) furnish appropriate endorsements or transfer
documents if required by the Registrar or such Conversion Agent and (4) pay any
transfer or similar tax, if required. Upon conversion, no adjustment or payment
will be made for interest, Liquidated Damages, dividends or distributions, but
if any holder surrenders a Note for conversion after the close of business on
the record date for the payment of an installment of interest and Liquidated
Damages and prior to the opening of business on the next interest payment date,
then, notwithstanding such conversion, the interest and Liquidated Damages
payable on such interest payment date will be paid to the registered holder of
such Note on such record date. In such event, such Note, when surrendered for
conversion, must be accompanied by payment in funds acceptable to the Company of
an amount equal to the interest and Liquidated Damages payable on such interest
payment date on the portion so converted. The number of shares of Common Stock
issuable upon conversion of a Note is determined by dividing the principal
amount of the Note converted by the Conversion Price in effect on the Conversion
Date. No fractional shares will be issued upon conversion but a cash adjustment
will be made for any fractional interest.
As soon as practicable after the Conversion Date (subject to the
expiration of any required waiting period following any required filing pursuant
to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976),
the Company will deliver directly to the holder through a Conversion Agent a
certificate for the number of whole shares of Common Stock issuable upon the
conversion and a check for any fractional share determined pursuant to the
Indenture. The person or entity in whose name the certificate is registered
shall become the shareholder of record on the Conversion Date and, as of such
date, such person's or entity's rights as a Noteholder with respect to the
converted Note shall cease.
The Conversion Price is also subject to adjustment upon the
occurrence of certain events, including: (i) the issuance of Common Stock as a
dividend or distribution to holders of Common Stock; (ii) the subdivision,
reclassification or combination of the outstanding Common Stock, (iii) the
issuance to substantially all holders of Common Stock of rights or warrants to
subscribe for or purchase Common Stock at a price per share, or securities
convertible into Common Stock at a conversion price per share, less than the
then Current Market Price per share, as defined; (iv) the distribution of
Capital Stock of the Company (other than Common Stock), evidences of
indebtedness or other assets (excluding cash
<PAGE>
dividends out of current or retained earnings, except as described in clause (v)
below) to all holders of Common Stock; (v) the distribution, by dividend or
otherwise, of cash to all holders of Common Stock in an aggregate amount that,
together with the aggregate of any other distributions of cash that did not
trigger a Conversion Price adjustment to all holders of its Common Stock within
the 12 months preceding the date fixed for determining the stockholders entitled
to such distribution and all Excess Payments (as defined) in respect of each
tender offer or other negotiated transaction by the Company or any of its
Subsidiaries for Common Stock concluded within the preceding 12 months not
triggering a Conversion Price adjustment, exceeds 15% of the product of the
Current Market Price per share (determined as set forth below) on the date fixed
for the determination of shareholders entitled to receive such distribution
times the number of shares of Common Stock outstanding on such date; (vi)
payment of an Excess Payment in respect of a tender offer or other negotiated
transaction by the Company or any of its Subsidiaries for shares of Common
Stock, if the aggregate amount of such Excess Payment, together with the
aggregate amount of cash distributions made within the preceding 12 months not
triggering a Conversion Price adjustment and all Excess Payments in respect of
each tender offer or other negotiated transaction by the Company or any of its
Subsidiaries for shares of Common Stock concluded within the preceding 12 months
not triggering a Conversion Price adjustment, exceeds 15% of the product of the
Current Market Price per share (determined as set forth below) on the expiration
of such tender offer or the date of payment of such negotiated transaction
consideration times the number of shares of Common Stock outstanding on such
date; and (vii) the distribution to substantially all holders of Common Stock of
rights or warrants to subscribe for securities (other than those securities
referred to in clause (iii) above). In the event of a distribution to
substantially all holders of Common Stock of rights to subscribe for additional
shares of the Company's capital stock (other than those securities referred to
in clause (iii) above), the Company may, instead of making any adjustment in the
Conversion Price, make proper provision so that each holder of a Note who
converts such Note after the record date for such distribution and prior to the
expiration or redemption of such rights shall be entitled to receive upon such
conversion, in addition to shares of Common Stock, an appropriate number of such
rights. No adjustment of the Conversion Price will be made until cumulative
adjustments amount to one percent or more of the Conversion Price as last
adjusted.
The Company shall not be obligated to issue upon conversion of the
Notes, the number of shares, if any, as would exceed the difference between (i)
19.9% of the number of shares of the Company's Common Stock outstanding as of
the date hereof and (ii) the number of Placement Agent Shares (such difference
hereinafter referred to as the "Nasdaq Cap"), if issuing such shares would
constitute a breach of the Company's obligations under its agreements with the
National Association of Securities Dealers, Inc. ("NASD") or the Nasdaq Stock
Market, Inc. or the rules and regulations promulgated thereby (collectively, the
"Nasdaq Rules"). As long as the issuance of any shares of Common Stock exceeding
the Nasdaq Cap would constitute such a breach of the Company's obligations under
the Nasdaq Rules, if any Notes are submitted for conversion, the holders of such
Notes shall receive, to the extent of the Notes or portion of the Note or Notes
not converted in accordance with the preceding sentence, in lieu of effecting
such conversion, a cash payment (the "Cap Payment") in an amount equal to 100%
of the principal amount thereof or of such portion thereof, together with
accrued and unpaid interest and Liquidated Damages for such amount or such
portion thereof, if any, to the date the Cap Payment is made, plus the
Applicable Amount for the Notes or portion of the Note or Notes not converted.
Payment of the Cap Payment shall be made no later than one business day after
the date the holder has submitted a properly completed Conversion Notice (the
"Conversion Notice Date"), and shall bear interest daily thereafter at the rate
of 7 1/2% (the interest rate on the Notes) per day until paid. The Nasdaq Cap
<PAGE>
shall be proportionately and equitably adjusted in the event of stock splits,
stock dividends, reverse stock splits, reclassifications or other such events,
in such manner as the Board of Directors of the Company shall reasonably
determine.
Subject to compliance by the Company with the covenants set forth in
the Indenture, if the Company reclassifies or changes its outstanding Common
Stock, or consolidates with or merges into any person or transfers or leases all
or substantially all its assets, or is a party to a merger that reclassifies or
changes its outstanding Common Stock, the Notes will become convertible into the
kind and amount of securities, cash or other assets which the holders of the
Notes would have owned immediately after the transaction if the holders had
converted the Notes immediately prior to the effectiveness of such transaction.
The Indenture also provides that if rights, warrants or options
expire unexercised, the Conversion Price shall be readjusted to take into
account the actual number of such warrants, rights or options which were
exercised.
In the Indenture, the "Current Market Price" for the Common Stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) 30 consecutive Business Days ending on the last full Trading Day
on the exchange or market referred to in determining such Daily Market Prices
prior to the time of determination or (ii) the period commencing on the date
next succeeding the first public announcement of the issuance of such rights or
warrants or such other distribution or such negotiated transaction through such
last full Trading Day prior to the time of determination.
"Excess Payment" means the excess of (A) the aggregate of the cash
and fair market value of other consideration paid by the Company or any of its
Subsidiaries with respect to the shares acquired in the tender offer or other
negotiated transaction over (B) the Daily Market Price on the Trading Day
immediately following the completion of the tender offer or other negotiated
transaction multiplied by the number of acquired shares.
The Company from time to time may to the extent permitted by law
reduce the Conversion Price by any amount for any period of at least 20 days, in
which case the Company shall give at least 15 days' notice of such reduction, if
the Board of Directors has made a determination that such reduction would be in
the best interests of the Company, which determination shall be conclusive. The
Company may, at its option, make such reductions in the Conversion Price, in
addition to those set forth above, as it deems advisable to avoid or diminish
any income tax to holders of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge
with or into any person (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets unless (i) (a) the Company
is the surviving or continuing corporation or (b) the person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
corporation formed by or surviving any such consolidation or merger (if other
than the Company) or the person to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made assumes all the obligations
of the
<PAGE>
Company, pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, under the Notes and the Indenture; (iii) such sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the Company's properties or assets shall be as an entirety or virtually as an
entirety to one corporation; (iv) immediately after such transaction no Default
or Event of Default exists; and (v) the Company or such corporation shall have
delivered to the Trustee an officers' certificate and an opinion of counsel,
each stating that such transaction and the supplemental indenture comply with
the Indenture and that all conditions precedent in the Indenture relating to
such transaction have been satisfied.
REPORTS
Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will file with the
Commission and furnish to the Trustee and the holders of Notes all quarterly and
annual financial information required to be contained in a filing with the
Commission on Forms 10-Q and 10-K, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual consolidated financial statements only, a report thereon by the
Company's certified independent auditors.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an
"Event of Default": (i) default for 30 days in the payment when due of interest
or Liquidated Damages on the Notes; (ii) default in payment when due of
principal on the Notes or of the Cap Payment in respect of the Notes; (iii)
failure by the Company to comply with the provisions described under "Designated
Event"; (iv) failure by the Company for 60 days after the receipt of written
notice to comply with certain other covenants and agreements contained in the
Indenture or the Notes; (v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Material
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Material Subsidiaries), whether such Indebtedness or guarantee now exists or is
created after the date on which the Notes are first authenticated and issued,
which default (a) is caused by a failure to pay when due principal of or
interest or Liquidated Damages on such Indebtedness within the grace period
provided for in such Indebtedness (which failure continues beyond any applicable
grace period) (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity without such acceleration being
rescinded or annulled and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $3,000,000 or more; (vi) failure by the Company or
any Material Subsidiary of the Company to pay final non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) aggregating in excess of $3,000,000, which judgments are not
stayed within 60 days after their entry; and (vii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Material Subsidiaries.
<PAGE>
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any Material
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
By notice to the Trustee, the holders of a majority in aggregate
principal amount of the Notes then outstanding may, on behalf of the holders of
all of the Notes, waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of the Designated Event Payment or interest or Liquidated Damages
on, or the principal of the Notes.
The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required,
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar or the Transfer Agent may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to exchange or register
the transfer of any Note selected for redemption. Also, the Company is not
required to exchange or register the transfer of any Note for a period of 15
days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture
or the Notes may be amended or supplemented with the written consent of the
holders of at least a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the written consent of the holders of
a majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver
may not (with respect to any Notes held by a nonconsenting holder of Notes) (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Notes,
(iii) reduce the rate of or change the time for payment of interest on any Note,
(iv) waive a default in the payment of principal of or interest or Liquidated
Damages on any Notes (except a rescission of acceleration of the Notes by the
holders of at least a majority in aggregate principal amount of the Notes and a
waiver of the payment
<PAGE>
default that resulted from such acceleration), (v) make any Note payable in
money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of holders of Notes to receive payments of principal of or interest or
Liquidated Damages on the Notes, (vii) waive a redemption payment payable on any
Note, (viii) impair the right to convert the Notes into Common Stock, (ix)
modify the conversion provisions of the Indenture in a manner adverse to the
holders of the Notes or (x) make any change in the foregoing amendment and
waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to provide for the
assumption of the Company's obligations to holders of the Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such holder, or to comply with
requirements of the Commission in order to qualify, or maintain the
qualification of, the Indenture under the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss. 77aaa-77bbbb), as amended.
GOVERNING LAW
The Indenture and the Notes are governed by, and shall be construed
in accordance with, the law of New York.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The holders of a majority in principal amount of the then
outstanding Notes have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that, in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any holder of Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
REPLACEMENT OF THE NOTES
Any Note that becomes mutilated, destroyed, stolen or lost will be
replaced by the Company at the expense of the holder upon delivery to the
Trustee of such Note or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note, an indemnity satisfactory to the Company and the Trustee may be
required at the expense of the holder of such Note before a replacement Note
will be issued.
CERTAIN DEFINITIONS
<PAGE>
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"APPLICABLE AMOUNT" means the sum of (i) the product of the number
of shares that would have been issued upon conversion of the Note or Notes but
for the occurrence of the Nasdaq Cap multiplied by a positive difference, if
any, between (a) the average of Daily Market Prices for the five consecutive
Business Days ending on the last full Trading Day on the exchange or market
referred to in determining such Daily Market Prices immediately prior to the
Conversion Notice Date and (b) the Conversion Price on the Conversion Notice
Date; plus (ii) any such adjustment that would have been made for any fractional
interest upon conversion; plus (iii) an amount equal to 5% of the aggregate
principal amount of the Note or Notes submitted for conversion.
"BANK CREDIT AGREEMENT" means, with respect to the Company or any
Subsidiary, one or more debt facilities or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, other
borrowings (including term loans), receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"BUSINESS DAY" means any day that is not a Legal Holiday.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of equity interests in any
entity, including, without limitation, corporate stock and partnership
interests.
"CONVERSION AGENT" means any person authorized by the Company to
convert any Notes.
"CONVERSION DATE" means the date on which the holder satisfies all
requirements for conversion set forth in the Notes.
"DEFAULT" means any event that is or, with the passage of time or
the giving of notice or both, would be an Event of Default.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect from time to
time.
"INDEBTEDNESS" means, with respect to any person, all obligations,
whether or not contingent, of such person (i) (a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of such person which is (1) given to secure all or part
of the purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
<PAGE>
reimbursement obligations with respect to any of the foregoing), (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of deferred and
unpaid purchase price of any property or assets and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (i) or under
clause (iii) below assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"LEGAL HOLIDAY" means a Saturday, Sunday or a day on which banking
institutions in the State of New York or Luxembourg are not required to be open.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or capital lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"LIQUIDATED DAMAGES" means any liquidated damages payable pursuant
to the Registration Rights Agreement.
"MARKET PRICE" per share of Common Stock on any date shall be deemed
to be the average of the Daily Market Prices for the five consecutive Business
Days ending on the last full Trading Day on the exchange or market referred to
in determining such Daily Market Prices occurring immediately prior to the date
of determination.
"MATERIAL SUBSIDIARY" means any Subsidiary of the Company which at
the date of determination is a "significant subsidiary" as defined in Rule
1-02(w) of Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is in effect on the date hereof).
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PAYING AGENT" means any person authorized by the Company to pay the
principal of or interest or Liquidated Damages on any Notes on behalf of the
Company.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
limited liability company or government or any agency or political subdivision
thereof.
"PMA APPROVAL" means the written letter or order indicating
pre-market approval for the SENTINEL 2010 Model ICD issued by the FDA, which
letter or order authorizes the Company to market and sell the SENTINEL 2010
Model ICD with substantially the same level of product characteristics as
<PAGE>
set forth in the related pre-market application dated June 21, 1997, as amended
through the date of the Indenture, and without limiting the number of SENTINEL
2010 Model ICDs that can be sold.
"REGISTRAR" means any person authorized by the Company to (i)
maintain the register, subject to such reasonable regulations as the Company may
prescribe, in which the Company shall provide for the registration, exchange and
transfer of any Notes, and (ii) effectuate the exchange or transfer of any Notes
on behalf of the Company.
"SECURED FUNDED INDEBTEDNESS" means, with respect to any Person, all
Secured Indebtedness of such Person; PROVIDED, HOWEVER, Secured Funded
Indebtedness shall not include Secured Indebtedness incurred pursuant to one or
more Bank Credit Agreements.
"SECURED INDEBTEDNESS" means, with respect to any Person, any
Indebtedness of such Person that is secured in any manner by any Lien or any
property.
"SENTINEL 2010 MODEL ICD" means the SENTINEL 2010 Model implantable
cardioverter-defibrillator product manufactured by the Company and identified in
the pre-market approval application of the Company dated June 21, 1998.
"SUBSIDIARY" of a person means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that person or one or more of
the other Subsidiaries of that person or a combination thereof.
"TRANSFER AGENT" means any person authorized by the Company to
effectuate the exchange or transfer of any Notes on behalf of the Company.
VALIDITY OF SECURITIES
The validity of the Shares and the Notes offered hereby will be passed
upon for the Company by Oppenheimer Wolff & Donnelly LLP, Minneapolis,
Minnesota. The binding nature of the obligations contained in the Notes offered
hereby will be passed upon for the Company by Morrison & Foerster LLP, San
Francisco, California.
EXPERTS
The consolidated financial statements of the Company as of July 31,
1997 and 1996, and for each of the years in the three-year period ended July 31,
1997, incorporated by reference in this Prospectus, have been audited by KPMG
Peat Marwick LLP, independent certified public accountants. Such consolidated
financial statements have been incorporated by reference in this Prospectus in
reliance upon the report of KPMG Peat Marwick LLP, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing. To the extent that KPMG Peat Marwick LLP audits and reports on the
consolidated financial statements of the Company issued at future dates and
consents to the use of their reports thereon, such consolidated financial
statements also will be incorporated by reference in this Prospectus in reliance
upon their report and said authority.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table below sets forth the estimated expenses (except the SEC registration
fee, which is an actual expense) in connection with the offer and sale of the
shares of Common Stock of the registrant covered by this Registration Statement.
SEC registration fee.....................................$7,972
Fees and expenses of counsel for the Company.............60,000
Fees and expenses of accountants for the Company..........2,500
Miscellaneous............................................75,000
--------
*Total............................................$145,472
- -----------------------
* None of the expenses listed above will be borne by the Selling
Securityholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Minnesota Statutes Section 302A.521 provides that a Minnesota
business corporation shall indemnify any director, officer, employee or agent of
the corporation made or threatened to be made a party to a proceeding, by reason
of the former or present official capacity (as defined) of the person, against
judgments, penalties, fines, settlements and reasonable expenses incurred by the
person in connection with the proceeding if certain statutory standards are met.
"Proceeding" means a threatened, pending or completed civil, criminal,
administrative, arbitration or investigative proceeding, including one by or in
the right of the corporation. Section 302A.521 contains detailed terms regarding
such right of indemnification and reference is made thereto for a complete
statement of such indemnification rights. The Company's Restated Articles of
Incorporation also require the Company to provide indemnification to the fullest
extent of the Minnesota indemnification statute.
Article V of the Company's Amended Bylaws provides that each
director, officer, employee or agent, past or present, of the Company, and each
person who serves or may have served at the request of the Company as a
director, officer employee or agent of another corporation or employee benefit
plan, and their respective heirs, administrators and executors, shall be
indemnified by the Company in accordance with, and to the fullest extent
permissible by, applicable state law.
The Company maintains directors' and officers' liability insurance,
including a reimbursement policy in favor of the Company.
Pursuant to written agreements between the respective Selling
Securityholders and the Company, the directors and officers of the Company are
indemnified by such Selling Securityholders against certain civil liabilities
that they may incur under the Securities Act in connection with this
Registration Statement and the related Prospectus.
<PAGE>
ITEM 16. EXHIBITS
4.1 Amended Specimen Form of the Company's Common Stock
Certificate (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-3 (File
No. 333-04993)).
4.2 Articles of Merger, including Amended and Restated
Articles of Incorporation of the Company (incorporated
by reference to Exhibit 3A to the Company's Registration
Statement on Form 8-A registering the Common Stock (File
No. 0-17019)).
4.3 Amendment to the Company's Amended and Restated Articles
of Incorporation (incorporated by reference to Exhibit
4.3 to the Company's Registration Statement on Form S-3
(File No. 333-36005)).
4.4 Amendment to the Company's Amended and Restated Articles
of Incorporation (filed herewith).
4.5 Amended Bylaws of the Company (incorporated by reference
to Exhibit 4.2 to the Company's Registration Statement
on Form S-3 (File No. 333-04993)).
4.6 Indenture, dated as of April 14, 1998, between the
Company and U.S. Bank National Association, as Trustee
(filed herewith).
4.7 Form of 7 1/2% Senior Convertible Notes due 2003
(included in Exhibit 4.6).
4.8 Registration Rights Agreement, dated as of April 14,
1998, between the Company and the subscribers named on
the signature pages thereof (filed herewith).
4.9 Form of Subscription Agreement (filed herewith).
4.10 Form of Warrant Agreement between the Company and HSBC
Securities, Inc., dated as of April 14, 1998 (filed
herewith).
4.11 Form of Warrant Agreement between the Company and
Prudential Securities Incorporated, dated as of April
14, 1998 (filed herewith).
4.12 Warrant dated as of March 11, 1998 to purchase 727,500
shares of Common Stock of the Company held by RGC
International Investors, LDC (filed herewith).
4.13 Securities Purchase Agreement dated as of March 11, 1998
between the Company and RCG International Investors, LDC
(filed herewith).
5.1 Opinion and Consent of Oppenheimer Wolff & Donnelly LLP
(filed herewith).
5.2 Opinion and Consent of Morrison & Foerster LLP (filed
herewith).
12.1 Calculation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG Peat Marwick LLP (filed herewith).
23.2 Consent of Oppenheimer Wolff & Donnelly LLP (see Exhibit
5.1).
23.3 Consent of Morrison & Foerster LLP (see Exhibit 5.2).
24.1 Power of Attorney (included on page II-5 of this
Registration Statement).
25.1 Statement of Eligibility of Trustee (Form T-1).
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered ) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis and State of Minnesota, on April 20,
1998.
ANGEION CORPORATION
By /s/ Whitney A. McFarlin
Whitney A. McFarlin
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Whitney A. McFarlin and Peg O. Norris, and each
of them, as his or her true and lawful attorney-in-fact and agent, each with
full powers of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement and any or
all registration statements relating to the transactions covered hereby that may
be filed with the Securities and Exchange Commission pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that all such attorneys-in-fact and agents,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on April 20,
1998 in the capacities indicated.
SIGNATURE TITLE
/s/ Whitney A. McFarlin Chairman of the Board, President
Whitney A. McFarlin Executive Officer (principal
executive and financial officer)
/s/ Peg O. Norris Corporate Controller
Peg O. Norris (principal accounting officer)
/s/ Arnold A. Angeloni Director
Arnold A. Angeloni
/s/ Dennis E. Evans Director
Dennis E. Evans
/s/ Lyle D. Joyce, M.D. Director
Lyle D. Joyce, M.D., Ph.D.
/s/ Joseph C. Kiser, M.D. Director
Joseph C. Kiser, M.D.
/s/ Donald D. Maurer Director
Donald D. Maurer
/s/ Glen Taylor Director
Glen Taylor
<PAGE>
ANGEION CORPORATION
EXHIBIT INDEX TO FORM S-3 REGISTRATION STATEMENT
ITEM
NO. DESCRIPTION OF EXHIBIT AND METHOD OF FILING
--- -------------------------------------------
4.1 Amended Specimen Form of the Company's Common Stock
Certificate (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-3 (File
No. 333-04993)).
4.2 Articles of Merger, including Amended and Restated
Articles of Incorporation of the Company (incorporated
by reference to Exhibit 3A to the Company's Registration
Statement on Form 8-A registering the Common Stock (File
No. 0-17019)).
4.3 Amendment to the Company's Amended and Restated Articles
of Incorporation (incorporated by reference to Exhibit
4.3 to the Company's Registration Statement on Form S-3
(File No. 333-36005)).
4.4 Amendment to the Company's Amended and Restated Articles
of Incorporation (filed herewith).
4.5 Amended Bylaws of the Company (incorporated by reference
to Exhibit 4.2 to the Company's Registration Statement
on Form S-3 (File No. 333-04993)).
4.6 Indenture, dated as of April 14, 1998, between the
Company and U.S. Bank National Association, as Trustee
(filed herewith).
4.7 Form of 7 1/2% Senior Convertible Notes due 2003
(included in Exhibit 4.6).
4.8 Registration Rights Agreement, dated as of April 14,
1998, between the Company and the subscribers named on
the signature pages thereof (filed herewith).
4.9 Form of Subscription Agreement (filed herewith).
4.10 Form of Warrant Agreement between the Company and HSBC
Securities, Inc., dated as of April 14, 1998 (filed
herewith).
4.11 Form of Warrant Agreement between the Company and
Prudential Securities Incorporated, dated as of April
14, 1998 (filed herewith).
4.12 Warrant dated as of March 11, 1998 to purchase 727,500
shares of Common Stock of the Company held by RGC
International Investors, LDC (filed herewith).
4.13 Securities Purchase Agreement dated as of March 11, 1998
between the Company and RCG International Investors, LDC
(filed herewith).
5.1 Opinion and Consent of Oppenheimer Wolff & Donnelly LLP
(filed herewith).
5.2 Opinion and Consent of Morrison & Foerster LLP (filed
herewith)
12.1 Calculation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG Peat Marwick LLP (filed herewith).
23.2 Consent of Oppenheimer Wolff & Donnelly LLP (see Exhibit
5.1).
23.3 Consent of Morrison & Foerster LLP (see Exhibit 5.2)
24.1 Power of Attorney (included on page II-5 of this
Registration Statement).
25.1 Statement of Eligibility of Trustee (Form T-1).
EXHIBIT 4.4
MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
Angeion Corporation
================================================================================
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form 1.)
ARTICLE 3.1
The corporation shall have the authority to issue an aggregate of
seventy-five million (75,000,000) shares of Common Stock, each with
$.01 par value. Such shares shall be designated as this corporation's
"Common Stock."
This amendment has been approved pursuant to MINNESOTA STATUTES 302A OR 317A. I
certify that I am authorized to execute this amendment and I further certify
that I understand that by signing this amendment, I am subject tot he penalties
of perjury as set forth in section 609.48 as if I had signed this amendment
under oath.
/s/ David L. Christofferson
-----------------------------------------
(Signature of Authorized Person)
EXHIBIT 4.6
================================================================================
ANGEION CORPORATION
TO
U.S. BANK NATIONAL ASSOCIATION
as Trustee
-------------
Indenture
DATED AS OF APRIL 14, 1998
7 1/2% Senior Convertible Notes due 2003
================================================================================
<PAGE>
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a), inclusive, of the
Trust Indenture Act of 1939, as amended.
TRUST INDENTURE ACT SECTION INDENTURE SECTION
Section 3(a)(1) 8.10
(a)(2) 11.10
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 8.10
(b) 8.08, 8.08(a), 8.10
(c) Not Applicable
Section 311 (a) 8.11
(b) 8.11
(c) Not Applicable
Section 312 (a) 2.05
(b) 11.03
(c) 11.03
Section 313 (a) 8.06
(b) 8.06
(c) 8.06
(d) 8.06
Section 314 (a)(1) 4.02
(a)(2) 4.02
(a)(3) 8.06
(a)(4) 4.03
(b)(1) Not Applicable
(b)(2) Not Applicable
(c)(1) 4.03
(c)(2) Not Applicable
(c)(3) Not Applicable
(d) Not Applicable
(e) 4.03
(f) Not Applicable
Section 315 (a) 8.01(b)
(b) 8.05
(c) 8.01(a)
(d)(1) 8.01(c)
(d)(2) 8.01(c)
(d)(3) 8.01(c)
(e) 7.11
Section 316 (a)(1)(A) 7.05
(a)(1)(B) 7.04
(a)(2) 10.02
(b) 7.07
(c) Not Applicable
Section 317 (a)(1) 7.08
(a)(2) 7.09
(b) 2.04
Section 318(a) 11.01
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...............................................1
SECTION 1.02. Other Definitions.........................................5
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.........5
SECTION 1.04. Rules of Construction.....................................6
ARTICLE II THE SECURITIES
SECTION 2.01. Form and Dating...........................................6
SECTION 2.03. Registrar, Transfer Agent, Paying Agent and
Conversion Agent........................................7
SECTION 2.04. Paying Agent to Hold Money in Trust.......................7
SECTION 2.05. Securityholder Lists......................................7
SECTION 2.06. Transfer and Exchange.....................................7
SECTION 2.07. Replacement Securities....................................8
SECTION 2.08. Outstanding Securities....................................8
SECTION 2.09. Treasury Securities.......................................8
SECTION 2.10. Temporary Securities......................................8
SECTION 2.11. Cancellation..............................................8
SECTION 2.12. Defaulted Interest or Liquidated Damages..................9
ARTICLE III REDEMPTION
SECTION 3.01. Notices to Trustee........................................9
SECTION 3.02. Selection of Securities to be Redeemed....................9
SECTION 3.03. Notice of Redemption......................................9
SECTION 3.04. Effect of Notice of Redemption...........................10
SECTION 3.05. Deposit of Redemption Price..............................10
SECTION 3.06. Securities Redeemed in Part..............................10
SECTION 3.07. Optional Redemption......................................10
SECTION 3.08. Designated Event Offer...................................10
ARTICLE IV COVENANTS
SECTION 4.01. Payment of Securities....................................12
SECTION 4.02. SEC Reports..............................................12
SECTION 4.03. Compliance Certificate...................................12
SECTION 4.04. Stay, Extension and Usury Law............................12
SECTION 4.05. Corporate Existence......................................13
SECTION 4.06. Taxes. 13
SECTION 4.07. Designated Event.........................................13
SECTION 4.08. Limitation on Secured Funded Indebtedness................13
ARTICLE V CONVERSION
SECTION 5.01. Conversion Privilege.....................................13
SECTION 5.02. Conversion Procedure.....................................14
SECTION 5.03. Fractional Shares........................................14
SECTION 5.04. Taxes on Conversion......................................14
SECTION 5.05. Company to Provide Stock.................................15
SECTION 5.06. Adjustment of Conversion Price...........................15
SECTION 5.07. No Adjustment............................................17
SECTION 5.08. Other Adjustments........................................17
SECTION 5.09. Adjustments for Tax Purposes.............................17
<PAGE>
SECTION 5.10. Adjustments by the Company...............................17
SECTION 5.11. Notice of Adjustment.....................................17
SECTION 5.12. Notice of Certain Transactions...........................17
SECTION 5.13. Effect of Reclassifications, Consolidations, Mergers
or Sales on Conversion Privilege.......................18
SECTION 5.14. Trustee's Disclaimer.....................................18
ARTICLE VI SUCCESSORS
SECTION 6.01. Merger, Consolidation or Sale of Assets..................19
SECTION 6.02. Successor Corporation Substituted........................19
ARTICLE VII DEFAULTS AND REMEDIES
SECTION 7.01. Events of Default........................................19
SECTION 7.02. Acceleration.............................................20
SECTION 7.03. Other Remedies...........................................20
SECTION 7.04. Waiver of Past Defaults..................................21
SECTION 7.05. Control by Majority......................................21
SECTION 7.06. Limitation on Suits......................................21
SECTION 7.07. Rights of Securityholders to Receive Payment.............21
SECTION 7.08. Collection Suit by Trustee...............................21
SECTION 7.09. Trustee May File Proofs of Claim.........................21
SECTION 7.10. Priorities...............................................22
SECTION 7.11. Undertaking for Costs....................................22
ARTICLE VIII TRUSTEE
SECTION 8.01. Duties of Trustee........................................22
SECTION 8.02. Rights of Trustee........................................23
SECTION 8.03. Individual Rights of Trustee.............................23
SECTION 8.04. Trustee's Disclaimer.....................................23
SECTION 8.05. Notice of Defaults.......................................23
SECTION 8.06. Reports by Trustee to Securityholders....................23
SECTION 8.07. Compensation and Indemnity...............................23
SECTION 8.08. Replacement of Trustee...................................24
SECTION 8.09. Successor Trustee by Merger, Etc.........................25
SECTION 8.10. Eligibility; Disqualification............................25
SECTION 8.11. Preferential Collection of Claims Against Company........25
ARTICLE IX DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.....................25
SECTION 9.02. Repayment to Company.....................................25
ARTICLE X AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Securityholders......................25
SECTION 10.02. With Consent of Securityholders.........................26
SECTION 10.03. Compliance with Trust Indenture Act.....................26
SECTION 10.04. Revocation and Effect of Consents.......................26
SECTION 10.05. Notation on or Exchange of Securities...................27
SECTION 10.06. Trustee Protected.......................................27
<PAGE>
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls............................27
SECTION 11.02. Notices.................................................27
SECTION 11.03. Communication by Securityholders with Other
Securityholders.......................................28
SECTION 11.04. Certificate and Opinion as to Conditions Precedent......28
SECTION 11.05. Statements Required in Certificate or Opinion...........28
SECTION 11.06. Rules by Trustee and Agents.............................28
SECTION 11.07. Legal Holidays..........................................28
SECTION 11.08. No Recourse Against Others..............................28
SECTION 11.09. Counterparts............................................29
SECTION 11.10. Variable Provisions.....................................29
SECTION 11.11. Governing Law...........................................29
SECTION 11.12. No Adverse Interpretation of Other Agreements...........29
SECTION 11.13. Successors..............................................29
SECTION 11.14. Severability............................................29
SECTION 11.15. Table of Contents, Headings, Etc........................30
EXHIBIT A FORM OF CONVERTIBLE NOTE.......................................A-1
EXHIBIT B FORM OF REGISTRATION RIGHTS AGREEMENT..........................B-1
<PAGE>
INDENTURE dated as of April 14, 1998 between ANGEION CORPORATION, a
Minnesota corporation (the "Company"), and U.S. Bank National -------
Association, a national banking organization, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Securityholders of the Company's 7 1/2%
Senior Convertible Notes due 2003 (the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Affiliate" of any specified person means any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
Transfer Agent.
"Applicable Amount" means the sum of (i) the product of the number
of shares that would have been issued upon conversion of the Note or Notes but
for the occurrence of the Nasdaq Cap multiplied by a positive difference, if
any, between (a) the average of the Daily Market Prices for the five consecutive
Business Days ending on the last full Trading Day on the exchange or market
referred to in determining such Daily Market Prices immediately prior to the
Conversion Notice Date and (b) the Conversion Price on the Conversion Notice
Date; plus (ii) any cash adjustment that would have been made for any fractional
interest upon conversion; plus (iii) an amount equal to 5% of the aggregate
principal amount of the Note or Notes to be converted.
"Bank Credit Agreement" means, with respect to the Company or any
Subsidiary, one or more debt facilities or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, other
borrowings (including term loans), receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in such
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board.
"Board Resolution" means a copy of a resolution of the Board of
Directors certified by the Secretary or an Assistant Secretary of the Company to
be in full force and effect on the date of such certification and delivery to
the Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of equity interests in any
entity, including, without limitation, corporate stock and partnership
interests.
"Change of Control" means any event where: (i) any "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) of shares representing more than 50% of the combined voting
power of the
<PAGE>
then-outstanding securities entitled to vote generally in elections of directors
of the Company ("Voting Stock"), (ii) the Company consolidates with or merges
into any other corporation, or any other person merges into the Company, and, in
the case of any such transaction, the outstanding Common Stock of the Company is
reclassified into or exchanged for any other property or security, unless the
stockholders of the Company immediately before such transaction own, directly or
indirectly immediately following such transaction, more than 50% of the combined
voting power of the outstanding voting securities of the corporation resulting
from such transaction in substantially the same proportion as their ownership of
the Voting Stock immediately before such transaction, (iii) the Company conveys,
transfers or leases all or substantially all of its assets to any person (other
than to one or more wholly-owned Subsidiaries of the Company) unless the
stockholders of the Company immediately before such transaction own, directly or
indirectly, immediately following such transaction, more than 50% of the
combined voting power of the outstanding securities of the acquiring entity in
substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction, or (iv) any time the Continuing Directors
do not constitute a majority of the Board of Directors of the Company (or, if
applicable, a successor corporation to the Company).
"Common Stock" means the common stock, par value $0.01 per share, of
the Company as the same exists at the date of the execution of this Indenture or
as such stock may be constituted from time to time.
"Company" means the party named as such above until a successor
replaces it in accordance with Article VI and thereafter means the successor.
"Continuing Directors" means as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
"Conversion Agent" means any person authorized by the Company to
convert any Security in accordance with Article 5.01. The Company has initially
appointed the Trustee as its Conversion Agent in the Borough of Manhattan, The
City of New York.
"Daily Market Price" means the price of a share of Common Stock on
the relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the Nasdaq Stock Market's Small
Cap Market (the "Nasdaq Small Cap"), or if the Common Stock is not then listed
on the Nasdaq Small Cap, as reported on such national securities exchange upon
which the Common Stock is listed, or (b) if there is no such reported sale on
the day in question, on the basis of the average of the closing bid and asked
quotations regular way as so reported, or (c) if the Common Stock is not listed
on the Nasdaq Small Cap or on any national securities exchange, on the basis of
the average of the high bid and low asked quotations regular way on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System, or if not so quoted, as
reported by National Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event that is, or with the passage of time or
the giving of notice or both, would be an Event of Default.
"Designated Event" means the occurrence of a Change of Control or a
Termination of Trading.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States, which are in effect from time to
time.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (i)(a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest,
<PAGE>
mortgage or other lien on the assets of such person which is (1) given to secure
all or part of the purchase price of property subject thereto, whether given to
the vendor of such property or to another, or (2) existing on property at the
time of acquisition thereof), (b) evidenced by a note, debenture, bond or
written instrument, (c) under a lease required to be capitalized on the balance
sheet of the lessee under GAAP or under any lease or related document (including
a purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or Guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of the deferred and
unpaid purchase price of any property or assets, and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (i) or under
clause (iii) below assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"Indenture" means this Indenture as amended from time to time.
"Issuance Date" means the date on which the Securities are first
authenticated and issued.
"Liquidated Damages" means any liquidated damages payable pursuant
to the Registration Rights Agreement.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or capital lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Market Price" per share of Common Share on any date shall be deemed
to be the average of the Daily Market Prices for the five consecutive Business
Days ending on the last full Trading Day on the exchange or market referred to
in determining such Daily Market Prices prior to the time of determination.
"Material Subsidiary" means any Subsidiary of the Company which at
the date of determination is a "significant subsidiary" as defined in Rule
1-02(w) of Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is in effect on the date hereof).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by two Officers,
one of whom must be the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer or a Vice-President of the Company. See
Sections 11.04 and 11.05 hereof.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee. See Sections 11.04 and 11.05 hereof.
"Paying Agent" means any person authorized by the Company to pay the
principal of or interest on and any other amounts due in respect of any
Securities on behalf of the Company and, except as otherwise specifically set
forth herein, such term shall include the Company if it shall act as its own
Paying Agent. The Company has initially appointed the Trustee as its Paying
Agent in the Borough of Manhattan, The City of New York.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
<PAGE>
"Principal" of a debt security means the principal of the security
plus the premium, if any, on the security.
"Private Placement Memorandum" means the Confidential Private
Placement Memorandum relating to the Securities dated March 12, 1998.
"Registrar" means any person authorized by the Company (i) to
maintain the register, subject to such reasonable regulations as the Company may
prescribe, in which the Company shall provide for the registration, exchange and
registration of transfer of any Security, and (ii) to effectuate the exchange or
registration of transfer of any Security on behalf of the Company. The Company
has initially appointed the Trustee as Registrar.
"Registration Rights Agreement" means the Registration Rights
Agreement relating to the Securities, between the Company and the initial
purchasers of the Securities, a form of which is attached as Exhibit B hereto.
"SEC" means the Securities and Exchange Commission.
"Secured Funded Indebtedness" means, with respect to any Person, all
Secured Indebtedness of such Person; PROVIDED, HOWEVER, that Secured Funded
Indebtedness shall not include Secured Indebtedness incurred pursuant to one or
more Bank Credit Agreements.
"Secured Indebtedness" means, with respect to any Person, any
Indebtedness of such Person (other than pursuant to clause (c) of the definition
of Indebtedness) that is secured in any manner by any Lien or any property.
"Securities" means the Securities described in the preamble above
that are issued, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder" or "Holder" means a person in whose name a Security
is registered.
"Shelf Registration Statement" shall have the meaning set forth in
the Registration Rights Agreement.
"Subsidiary" means in relation to any person, other than an
individual, any corporation, partnership, limited liability company, joint
venture, association, joint stock company, or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such person and any one or more of the other
Subsidiaries of that person.
"Termination of Trading" means an event where the Common Stock (or
other securities into which the Securities are then convertible) is neither
listed for trading on a United States national securities exchange nor approved
for trading on an established automated over-the-counter trading market in the
United States.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended.
"Trading Day" shall mean (a) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business, (b) if the applicable
security is quoted on the Nasdaq National Market or Nasdaq Stock Market's Small
Cap Market, as the case may be, a day on which trades may be made thereon or (c)
if the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or executive order to
close.
"Transfer Agent" means any person authorized by the Company to
effectuate the exchange or facilitate the registration of transfer of any
Security on behalf the Company. The Company has initially appointed the Trustee
as its Transfer Agent.
<PAGE>
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer this Indenture.
"United States" or "U.S." means the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
SECTION 1.02. Other Definitions.
Defined in
Term Section
- ---- -------
"Bankruptcy Law"............................................................7.01
"Commencement Date" ........................................................3.08
"Conversion Date"...........................................................5.02
"Conversion Price"..........................................................5.01
"Conversion Shares".........................................................5.06
"Current Market Price"......................................................5.06
"Custodian".................................................................7.01
"Designated Event Offer"....................................................4.07
"Designated Event Payment"..................................................4.07
"Designated Event Payment Date".............................................3.08
"Distribution Date".........................................................5.06
"Distribution Record Date"..................................................5.06
"Excess Payment"............................................................5.06
"Event of Default"..........................................................7.01
"Legal Holiday"............................................................11.07
"Offer Amount"..............................................................3.08
"Officer"..................................................................11.10
"Payment Default"...........................................................7.01
"Purchase Date".............................................................5.06
"Restricted Securities Legend...............................................2.01
"Rights"....................................................................5.06
"Tender Period".............................................................3.08
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Securities means the Company or any other obligor
on the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
<PAGE>
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in the
plural include the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE II
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). The Company shall furnish any such legend not
contained in Exhibit A to the Trustee in writing. Each Security shall be dated
the date of its authentication. The terms and provisions of the Securities set
forth in Exhibit A are part of the terms of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
The Securities are being offered in certificated form only to
"accredited investors" (as defined in Rule 501(a)(1), (2), (3), (5), (6) or (7)
of Regulation D under the Securities Act), shall bear the restricted Securities
legend set forth in Exhibit A hereto (the "Restricted Securities Legend") and
shall be issued in denominations of $25,000 or in integral multiples of $1,000
in excess thereof. The Securities will bear the Restricted Securities Legend
unless removed in accordance with Section 2.06(a).
SECTION 2.02. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers, the
Trustee shall authenticate the Securities for original issue up to an aggregate
principal amount of U.S. $22,150,000. The aggregate principal amount of
Securities outstanding at any time shall not exceed such amount except as
provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
SECTION 2.03. Registrar, Transfer Agent, Paying Agent and Conversion
Agent. The Company shall maintain, or caused to be maintained, in the Borough of
Manhattan, The City of New York, (i) an office or agency where Securities may be
presented for registration of transfer or for exchange, (ii) an office or agency
where Securities may be presented for payment and (iii) an office or agency
where Securities may be presented for conversion. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
appoint the Registrar, the Transfer Agent, the Paying Agents and the Conversion
Agents and may appoint one
<PAGE>
or more co-registrars, one or more additional transfer agents, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent, the term "Transfer Agent" includes any additional
transfer agent, and the term "Conversion Agent" includes any additional
conversion agent. The Company may change any Paying Agent, Registrar, Transfer
Agent or Conversion Agent without prior notice to any Securityholder. The
Company shall notify the Trustee of the name and address of any such agent which
is not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar, Transfer Agent, Paying Agent or Conversion Agent,
the Trustee shall act as such. The Company or any of its Affiliates may act as
Paying Agent, Registrar, Transfer Agent or Conversion Agent.
SECTION 2.04. Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment of principal,
interest or Liquidated Damages, if any, on the Securities, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee and to account for any money disbursed by
it. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or an Affiliate of the Company) shall have no further liability for the
money. If the Company or an Affiliate of the Company acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the
Securityholders all money held by it as Paying Agent.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee on or before each interest
payment date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. Where Securities are presented
to the Registrar or a Transfer Agent with a request to register a transfer or to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall register the transfer or exchange if the
Registrar's or Transfer Agent's requirements for such transactions are met, and
such Registrar or Transfer Agent, as the case may be, shall effectuate such
registration of transfer or exchange. To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee shall authenticate Securities
at the Registrar's or Transfer Agent's request. No service charge shall be made
for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.10, 3.06, 3.08, 5.02 or 10.05
hereof).
The Company shall not be required (i) to issue, register the
transfer of, or exchange Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, or (ii) to exchange or register the transfer of any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(a) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement, if Securities are issued upon the registration of transfer, exchange
or replacement of Securities bearing the Restricted Securities Legend, or if a
request is made to remove such Restricted Securities Legend on certificates
evidencing Securities or shares of Common Stock issued upon conversion of such
Securities and bearing a comparable legend as provided in Section 5.05 hereof,
the certificates evidencing Securities or such shares so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel licensed to
practice law in the State of New York, as may be reasonably required by the
Company, that such Securities or shares are not "restricted" within the meaning
of Rule 144 under the Securities Act. Upon provision to the Company of such
satisfactory evidence, the Trustee, at the written direction of the Company,
shall authenticate and deliver Securities or shares of Common Stock that do not
bear the Restricted Securities Legend.
(b) The Trustee shall have no responsibility for any actions taken
or not taken by the Depositary.
<PAGE>
SECTION 2.07. Replacement Securities. If the Holder of a Security
claims that the Security has been lost, destroyed or wrongfully taken or if such
Security is mutilated and is surrendered to the Trustee, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's and
the Company's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be sufficient in the judgment of both to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article III hereof or converted into shares
of Common Stock pursuant to Article V hereof, the Company in its discretion may,
instead of issuing a new Security, pay, redeem or convert such Security, as the
case may be.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. The Securities outstanding at
any time are all the Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Security is replaced, paid, redeemed or converted pursuant to
Section 2.07 hereof, it ceases to be outstanding unless, in the case of a
replaced Security, the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01 hereof, they
cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.
SECTION 2.09. Treasury Securities. In determining whether the
Securityholders of the required principal amount of Securities have concurred in
any direction, waiver or consent, Securities owned by the Company or an
Affiliate of the Company shall be considered as though they are not outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
which a Trust Officer knows are so owned shall be so disregarded.
SECTION 2.10. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
SECTION 2.11. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar, Transfer Agent,
Paying Agents and Conversion Agents shall forward to the Trustee any Securities
surrendered to them for registration of transfer, redemption, conversion,
exchange or payment. The Trustee shall promptly cancel all Securities
surrendered for registration of transfer, redemption, conversion, exchange,
payment, replacement or cancellation and shall destroy all canceled Securities
unless the Company otherwise directs. The Company may not issue new Securities
to replace Securities that it has paid or that have been delivered to the
Trustee for cancellation or that any Holder has converted.
SECTION 2.12. Defaulted Interest or Liquidated Damages. If the
Company fails to make a payment of interest or Liquidated Damages, if any, on
the Securities, it shall pay such defaulted interest or Liquidated Damages, if
any, plus any interest payable on the defaulted interest or Liquidated Damages,
if any, in any lawful manner. It may pay such defaulted interest or Liquidated
Damages, if any, plus any such interest payable on them, to the persons who are
Securityholders on a subsequent special record date. The Company shall fix any
such record date and payment date. At least 15 days before any such record date,
the Company shall mail to Securityholders a notice that states the record date,
payment date, and amount of such interest or Liquidated Damages, if any, to be
paid.
<PAGE>
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to Section 3.07 hereof, it shall notify the Trustee of the
redemption date and the principal amount of Securities to be redeemed. The
Company shall give each notice provided for in this Section 3.01 at least 40
days before the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee).
SECTION 3.02. Selection of Securities to be Redeemed. If less than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed by a method that complies with the requirements of the principal
national securities exchange, if any, on which the Securities are listed, or, if
the Securities are not so listed, on a pro rata basis, by lot or by such other
method as the Trustee considers fair and appropriate. The Trustee shall make the
selection not more than 60 days and not less than 30 days before the redemption
date from Securities outstanding not previously called for redemption. The
Securities may be redeemed only in whole to the extent a redemption in part
would reduce the principal amount thereof to an amount less than U.S. $25,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be called
for redemption.
If any Security selected for partial redemption is converted in part
after such selection, the converted portion of such Security shall be deemed (so
far as may be) to be the portion to be selected for redemption. The Securities
(or portions thereof) so selected shall be deemed duly selected for redemption
for all purposes hereof, notwithstanding that any such Security is converted in
whole or in part before the mailing of the notice of redemption. Upon any
redemption of less than all the Securities, the Company and the Trustee may
treat as outstanding any Securities surrendered for conversion during the period
15 days next preceding the mailing of a notice of redemption and need not treat
as outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a redemption date, the Company shall mail a notice of
redemption to each Holder whose Securities are to be redeemed at such Holder's
registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon cancellation of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued in the name of the Holder thereof;
(d) the name and address of the Paying Agents;
(e) that Securities called for redemption must be surrendered to any
Paying Agent to collect the redemption price plus accrued interest and
Liquidated Damages, if any;
(f) that, unless the Company defaults in making such redemption
payment or any Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, by law or otherwise, interest and
Liquidated Damages, if any, on Securities called for redemption ceases to
accrue on and after the redemption date; and
(g) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed.
Such notice shall also state the current Conversion Price and the
date on which the right to convert such Securities or portions thereof into
Common Stock of the Company will expire.
<PAGE>
At the Company's request, the Trustee shall give notice of
redemption in the Company's name and at its expense.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date at the price set forth in the Security.
SECTION 3.05. Deposit of Redemption Price. On or before the
redemption date, the Company shall deposit with the Trustee or with the Paying
Agents money sufficient to pay the redemption price of and accrued interest and
Liquidated Damages, if any, up to but not including the redemption date on all
Securities to be redeemed on that date (subject to the right of holders of
record on the relevant record date to receive interest and Liquidated Damages,
if any, due on an interest payment date) unless theretofore converted into
Common Stock pursuant to the provisions hereof. The Trustee or the Paying Agents
shall return to the Company any money not required for that purpose.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the Holder at the expense of the Company one or more new
Securities of authorized denominations equal in aggregate principal amount to
the unredeemed portion of the Security surrendered.
SECTION 3.07. Optional Redemption. The Company may redeem all or any
portion of the Securities, upon the terms and at the redemption prices set forth
in each of the Securities. Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. Designated Event Offer. (a) In the event that,
pursuant to Section 4.07 hereof, the Company shall commence a Designated Event
Offer, the Company shall follow the procedures in this Section 3.08.
(b) The Designated Event Offer shall remain open for a period
specified by the Company which shall be no less than 30 calendar days and no
more than 40 calendar days following its commencement on the date of the mailing
of notice in accordance with Section 4.07(b) hereof (the "Commencement Date"),
except to the extent that a longer period is required by applicable law (the
"Tender Period"). Upon the expiration of the Tender Period (the "Designated
Event Payment Date"), the Company shall purchase the principal amount of
Securities required to be purchased pursuant to Section 4.07 hereof (the "Offer
Amount").
(c) If the Designated Event Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest and Liquidated Damages, if any, to the related interest payment
date will be paid to the person in whose name a Security is registered at the
close of business on such record date, and no additional interest or Liquidated
Damages, if any, will be payable to Securityholders who tender Securities
pursuant to the Designated Event Offer.
(d) The Company shall provide the Trustee with written notice of the
Designated Event Offer at least ten Business Days before the Commencement Date
(unless a shorter period shall be satisfactory to the Trustee).
(e) Subject to Section 4.07(b), on or before the Commencement Date,
the Company or the Trustee (at the request and expense of the Company) shall
send, by first class mail, a notice to each of the Securityholders, which shall
govern the terms of the Designated Event Offer and shall state:
(i) that the Designated Event Offer is being made pursuant to this
Section 3.08 and Section 4.07 hereof and that all Securities tendered will
be accepted for payment;
(ii) the Offer Amount, the purchase price (as determined in
accordance with Section 4.07 hereof), the length of time the Designated
Event Offer will remain open and the Designated Event Payment Date;
(iii) that any Security or portion thereof not tendered or accepted
for payment will continue to accrue interest and, if applicable,
Liquidated Damages, if any;
<PAGE>
(iv) that, unless the Company defaults in the payment of the
Designated Event Payment, any Security or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue
interest or Liquidated Damages, if any, after the Designated Event Payment
Date;
(v) that Securityholders electing to have a Security or portion
thereof purchased pursuant to any Designated Event Offer will be required
to surrender the Security, with the form entitled "Option of
Securityholder To Elect Purchase" on the reverse of the Security
completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the
Designated Event Payment Date;
(vi) that Securityholders will be entitled to withdraw their
election if any Paying Agent receives, not later than the close of
business on the second Business Day preceding the Designated Event Payment
Date, or such longer period as may be required by law, a letter or a
telegram, telex, facsimile transmission (receipt of which is confirmed and
promptly followed by a letter) setting forth the name of the
Securityholder, the principal amount of the Security or portion thereof
the Securityholder delivered for purchase and a statement that such
Securityholder is withdrawing his election to have the Security or portion
thereof purchased; and
(vii) that Securityholders whose Securities are being purchased only
in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, which unpurchased
portion must be equal to U.S. $25,000 in principal amount or an integral
multiple of $1,000 in excess thereof.
In addition, the notice shall contain all instructions and materials
that the Company shall reasonably deem necessary to enable such Securityholders
to tender Securities pursuant to the Designated Event Offer.
(f) At least one Business Day prior to the Designated Event Payment
Date, the Company shall irrevocably deposit with the Trustee or the Paying
Agents in immediately available funds an amount equal to the Offer Amount to be
held for payment in accordance with the terms of this Section 3.08. On the
Designated Event Payment Date, the Company shall, to the extent lawful, (i)
accept for payment the Securities or portions thereof tendered pursuant to the
Designated Event Offer, (ii) deliver or cause to be delivered to the Trustee
Securities so accepted and (iii) deliver to the Trustee an Officers' Certificate
stating such Securities or portions thereof have been accepted for payment by
the Company in accordance with the terms of this Section 3.08. The Paying Agents
shall promptly (but in any case not later than five calendar days after the
Designated Event Payment Date) mail or deliver to each tendering Securityholder
an amount equal to the purchase price of the Securities tendered by such
Securityholder, and the Trustee shall promptly authenticate and mail or deliver
to such Securityholders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered, if any; provided, that each new
Security shall be in a principal amount of U.S. $1,000 or an integral multiple
thereof; and provided, further that a Holder may tender such Security only in
whole to the extent a tender in part would reduce the principal amount thereof
to an amount less than U.S. $25,000. Any Securities not so accepted shall be
promptly mailed or delivered by or on behalf of the Company to the Holder
thereof. The Company will publicly announce the results of the Designated Event
Offer on, or as soon as practicable after, the Designated Event Payment Date.
(g) The Designated Event Offer shall be made by the Company in
compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials that the Company shall reasonably deem necessary to
enable such Securityholders to tender their Securities.
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall pay the
principal of and interest and Liquidated Damages, if any, on the Securities on
the dates and in the manner provided in the Securities. Principal, interest and
Liquidated Damages, if any, shall be considered paid on the date due if the
Paying Agents (other than the Company or an Affiliate of the Company) hold on
that date money designated for and sufficient to pay all principal, interest and
Liquidated Damages, if any, then due and such Paying Agents are not prohibited
from paying such money
<PAGE>
to the Securityholders on that date pursuant to the terms of this Indenture. To
the extent lawful, the Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages, if any, (without regard to any applicable grace
period) at the rate borne by the Securities, compounded semiannually. The
Company shall also pay all Liquidated Damages, if any, in the manner, on the
dates and in the amounts set forth in the Registration Rights Agreement.
SECTION 4.02. SEC Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Securities are outstanding, the Company
will file with the SEC and furnish to the Trustee and to the Holders of
Securities all quarterly and annual financial information required to be
contained in a filing with the SEC on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" and, with respect to annual information only, a report thereon by
the Company's certified independent accountants.
SECTION 4.03. Compliance Certificate. The Company shall deliver to
the Trustee, within 120 days after the end of each fiscal year of the Company,
an Officers' Certificate stating that a review of the activities of the Company
and its subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under, and
complied with the covenants and conditions contained in, this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of such Officer's knowledge the Company has kept, observed, performed and
fulfilled each and every covenant, and complied with the covenants and
conditions contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officer may have knowledge) and that to the best
of such Officer's knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal or of interest or
Liquidated Damages, if any, on the Securities are prohibited.
One of the Officers signing such Officers' Certificate shall be
either the Company's principal executive officer, principal financial officer or
principal accounting officer.
The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon becoming aware of:
(a) any Default, Event of Default or default in the performance of
any covenant, agreement or condition contained in this Indenture; or
(b) any event of default under any other mortgage, indenture or
instrument as that term is used in Section 7.01(e),
an Officers' Certificate specifying such Default, Event of Default or default.
SECTION 4.04. Stay, Extension and Usury Law. The Company covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.05. Corporate Existence. Except as provided in Article VII
hereof, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate,
partnership or other existence of each Subsidiary of the Company in accordance
with the respective organizational documents of each Subsidiary and the rights
(charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Securityholders.
<PAGE>
SECTION 4.06. Taxes. The Company shall, and shall cause each of its
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
SECTION 4.07. Designated Event. (a) Upon the occurrence of a
Designated Event, each holder of Securities shall have the right, in accordance
with this Section 4.07 and Section 3.08 hereof, to require the Company to
repurchase all or any part (equal to U.S. $1,000 or an integral multiple
thereof, subject to the limitation set forth in the second proviso to the third
sentence of Section 3.08(f) hereof) of such holder's Securities pursuant to the
terms of Section 3.08 (the "Designated Event Offer") at a purchase price equal
to 101% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Designated Event Payment Date (the
"Designated Event Payment").
(b) Within 30 days following any Designated Event, the Company shall
mail to each Holder the notice provided by Section 3.08(e).
SECTION 4.08. Limitation on Secured Funded Indebtedness. The Company
shall not, and shall not permit any Subsidiary to, directly or indirectly,
create, incur, assume, guarantee, or otherwise become directly or indirectly
liable with respect to any Secured Funded Indebtedness.
ARTICLE V
CONVERSION
SECTION 5.01. Conversion Privilege. A holder of a Security may
convert the principal amount thereof (or any portion thereof that is an integral
multiple of U.S. $1,000); provided, however, that a Holder of a Security may
convert such Security only in whole to the extent a conversion in part would
reduce the principal amount thereof to an amount less than U.S. $25,000 into
fully paid and non-assessable shares of Common Stock of the Company at any time
after 90 days following the Issuance Date and prior to the close of business
(New York time) on the Business Day immediately preceding the maturity date of
the Security at the Conversion Price then in effect, except that, with respect
to any Security called for redemption, such conversion right shall terminate at
the close of business (New York time) on the Business Day immediately preceding
the redemption date (unless the Company shall default in making the redemption
payment when it becomes due, in which case the conversion right shall terminate
on the date such default is cured). The number of shares of Common Stock
issuable upon conversion of a Security is determined by dividing the principal
amount of the Security converted by the conversion price in effect on the
Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 9 of the
Securities and is subject to adjustment as provided in this Article V.
Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of it. A holder of Securities is
not entitled to any rights of a holder of Common Stock until such holder of
Securities has converted such Securities into Common Stock, and only to the
extent that such Securities are deemed to have been converted into Common Stock
under this Article V.
SECTION 5.02. Conversion Procedure. To convert a Security, a Holder
must satisfy the requirements in paragraph 9 of the Securities. The date on
which the Holder satisfies all of those requirements is the conversion date (the
"Conversion Date"). As soon as practicable after the Conversion Date (subject to
the expiration of any required waiting period following any required filing
pursuant to the provisions of the Hart-Scott-Rodino Improvements Act of 1976),
the Company shall deliver to the Holder through a Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
a check for any fractional share determined pursuant to Section 5.03. The person
in whose name the certificate is registered shall become the stockholder of
record on the Conversion Date and, as of such date, such person's rights as a
Holder with respect to the converted Security shall cease; provided, however,
that no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person entitled to
receive the shares of Common Stock upon such conversion as the stockholder of
record of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the person entitled to receive such shares of Common
Stock as the stockholder of record thereof for all purposes at the close of
business on the next succeeding day on which such stock
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transfer books are open; provided further, that such conversion shall be at the
Conversion Price in effect on the date that such Security shall have been
surrendered for conversion, as if the stock transfer books of the Company had
not been closed.
No payment or adjustment will be made for accrued and unpaid
interest and Liquidated Damages, if any, on a converted Security or for
dividends or distributions on shares of Common Stock issued upon conversion of a
Security, but if any Holder surrenders a Security for conversion after the close
of business on the record date for the payment of an installment of interest and
Liquidated Damages, if any, and prior to the opening of business on the next
interest and Liquidated Damages, if any, payment date, then, notwithstanding
such conversion, the interest and Liquidated Damages, if any, payable on such
interest and Liquidated Damages, if any, payment date shall be paid to the
Holder of such Security on such record date. In such event, unless such Security
has been called for redemption on or prior to such interest payment date, such
Security, when surrendered for conversion, must be accompanied by payment in
funds acceptable to the Company of an amount equal to the interest and
Liquidated Damages, if any, payable on such interest and Liquidated Damages, if
any, payment date on the portion so converted.
If a Holder converts more than one Security at the same time, the
number of whole shares of Common Stock issuable upon the conversion shall be
based on the total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Trustee
shall authenticate for the Holder one or more new Securities of authorized
denominations equal in aggregate principal amount to the unconverted portion of
the Security surrendered.
SECTION 5.03. Fractional Shares. The Company will not issue
fractional shares of Common Stock upon conversion of a Security. In lieu
thereof, the Company will pay an amount in cash based upon the Daily Market
Price of the Common Stock on the trading day prior to the date of conversion.
SECTION 5.04. Taxes on Conversion. The issuance of certificates for
shares of Common Stock upon the conversion of any Security shall be made without
charge to the converting Securityholder for such certificates or for any tax in
respect of the issuance of such certificates, and such certificates shall be
issued in the respective names of, or in such names as may be directed by, the
Holder or Holders of the converted Security; provided, however, that in the
event that certificates for shares of Common Stock are to be issued in a name
other than the name of the Holder of the Security converted, such Security, when
surrendered for conversion, shall be accompanied by an instrument of transfer,
in form satisfactory to the Company, duly executed by the Holder or his duly
authorized attorney; and provided further, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder of the converted Security, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid or is not applicable.
SECTION 5.05. Company to Provide Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of issuance upon
conversion of Securities as herein provided, a sufficient number of shares of
Common Stock to permit the conversion of all outstanding Securities for shares
of Common Stock.
All shares of Common Stock which may be issued upon conversion of
the Securities shall be duly authorized, validly issued, fully paid and
non-assessable when so issued.
Shares of Common Stock issued upon conversion of any Security shall
bear a legend comparable to the Restricted Securities Legend until the
requirements for the removal thereof set forth in Section 2.06(a) hereof are
met.
SECTION 5.06. Adjustment of Conversion Price. The Conversion Price
shall be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common
Stock to holders of Common Stock, (2) make a distribution in shares of Common
Stock to holders of Common Stock, (3) subdivide its outstanding shares of Common
Stock into a greater number of shares of Common Stock or (4) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to
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such action shall be adjusted so that the holder of any Security thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock which such holder would have owned immediately following such
action had such Securities been converted immediately prior thereto. Any
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of a
subdivision or combination.
(b) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of holders of
Common Stock entitled to receive such rights or warrants and expiring not more
than 45 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
less than the Current Market Price (as determined pursuant to subsection (f)
below) of the Common Stock on such record date, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
on such record date, plus the number of shares of Common Stock which the
aggregate offering price of the offered shares of Common Stock (or the aggregate
conversion price of the convertible securities so offered) would purchase at
such Current Market Price, and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered (or into which the convertible
securities so offered are convertible). Such adjustments shall become effective
immediately after such record date.
(c) In case the Company shall distribute to all holders of Common
Stock shares of any class of Capital Stock of the Company other than Common
Stock, evidences of indebtedness or other assets (other than cash dividends out
of current or retained earnings), or shall distribute to substantially all
holders of Common Stock rights or warrants to subscribe for securities (other
than those securities referred to in subsection (b) above), then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the Current Market Price (determined as provided in subsection (f) below) of the
Common Stock on the record date mentioned below less the then fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value and described in a Board
Resolution) of the portion of the assets so distributed or of such subscription
rights or warrants applicable to one share of Common Stock, and of which the
denominator shall be such Current Market Price of the Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of the holders of Common Stock entitled to receive such
distribution. Notwithstanding the foregoing, in case the Company shall issue
rights or warrants to subscribe for additional shares of the Company's capital
stock (other than those referred to in subsection (b) above) ("Rights") to
substantially all holders of Common Stock, the Company may, in lieu of making
any adjustment pursuant to this Section 5.06, make proper provision so that each
holder of a Security who converts such Security (or any portion thereof) after
the record date for such distribution and prior to the expiration or redemption
of the Rights shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversion (the "Conversion
Shares"), a number of Rights to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of Rights of
separate certificates evidencing such Rights (the "Distribution Date"), the same
number of Rights to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights; and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal amount of the Security so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company but excluding any
cash that is distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to paragraph (c) of this Section) in an aggregate amount
that, together with the sum of (x) the aggregate amount of any other
distributions to all holders of its Common Stock made in cash plus (y) all
Excess Payments, in each case made within the 12 months preceding the date fixed
for determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to paragraphs (c) or (e) of this Section or this paragraph
(d) has been made, exceeds 15% of the product of the Current Market Price per
share (determined as provided in paragraph (f) of this Section) of the Common
Stock on the Distribution Record Date multiplied by the number of shares of
Common Stock outstanding on the Distribution Record Date (excluding shares held
in the treasury of the Company), the Conversion Price shall be reduced so that
the same shall equal the price
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determined by multiplying such Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
paragraph (d) by a fraction of which the numerator shall be the Current Market
Price per share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date less the amount of such cash and
other consideration (including any Excess Payments) so distributed applicable to
one share of Common Stock (equal to the aggregate amount of such cash and other
consideration (including any Excess Payments) divided by the number of shares of
Common Stock outstanding on the Distribution Record Date) and the denominator
shall be such Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Common Stock on the Distribution Record
Date, such reduction to become effective immediately prior to the opening of
business on the day following the Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall be consummated, if an Excess Payment is made in respect of
such tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (including any distributions of cash out of
current or retained earnings of the Company), in each case made within the 12
months preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender offer, as the case may be
(the "Purchase Date"), and as to which no adjustment pursuant to paragraph (c)
or paragraph (d) of this Section or this paragraph (e) has been made, exceeds
15% of the product of the Current Market Price per share (determined as provided
in paragraph (f) of this Section) of the Common Stock on the Purchase Date
multiplied by the number of shares of Common Stock outstanding (including any
tendered shares but excluding any shares held in the treasury of the Company or
any Subsidiary of the Company) on the Purchase Date, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this paragraph (e) by a fraction of
which the numerator shall be the Current Market Price per share (determined as
provided in paragraph (f) of this Section) of the Common Stock on the Purchase
Date less the amount of such Excess Payments and such cash distributions, if
any, applicable to one share of Common Stock (equal to the aggregate amount of
such Excess Payments and such cash distributions divided by the number of shares
of Common Stock outstanding on the Purchase Date) and the denominator shall be
such Current Market Price per share (determined as provided in paragraph (f) of
this Section) of the Common Stock on the Purchase Date, such reduction to become
effective immediately prior to the opening of business on the day following the
Purchase Date.
(f) The "Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the Daily Market Prices for the shorter of
(i) 30 consecutive Business Days ending on the last full Trading Day on the
exchange or market referred to in determining such Daily Market Prices prior to
the time of determination or (ii) the period commencing on the date next
succeeding the first public announcement of the issuance of such rights or such
warrants or such other distribution or such negotiated transaction through such
last full trading day on the exchange or market referred to in determining such
Daily Market Prices prior to the time of determination.
(g) "Excess Payment" means the excess of (A) the aggregate of the
cash and fair market value of other consideration paid by the Company or any of
its Subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (B) the Daily Market Price on the Trading Day
immediately following the completion of such tender offer or other negotiated
transaction multiplied by the number of acquired shares.
(h) In any case in which this Section 5.06 shall require that an
adjustment be made immediately following a record date for an event, the Company
may elect to defer, until such event, issuing to the Holder of any Security
converted after such record date the shares of Common Stock and other Capital
Stock of the Company issuable upon such conversion over and above the shares of
Common Stock and other Capital Stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence of the right to receive such shares.
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SECTION 5.07. No Adjustment. No adjustment in the Conversion Price
shall be required until cumulative adjustments amount to 1% or more of the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 5.07 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article V shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No adjustment need be made for
rights to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par value
or no par value of the Common Stock.
SECTION 5.08. Other Adjustments. (a) In the event that, as a result
of an adjustment made pursuant to Section 5.06 above, the holder of any Security
thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than shares of its Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any Securities shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Article V.
(b) In the event that shares of Common Stock are not delivered after
the expiration of any of the rights or warrants referred to in Section 5.06(b)
and Section 5.06(c) hereof, the Conversion Price shall be readjusted to the
Conversion Price which would otherwise be in effect had the adjustment made upon
the issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of Common Stock actually delivered.
SECTION 5.09. Adjustments for Tax Purposes. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those
required by Section 5.06 above, as it determines to be advisable in order that
any stock dividend, subdivision of shares, distribution of rights to purchase
stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company to its stockholders will not be
taxable to the recipients thereof.
SECTION 5.10. Adjustments by the Company. The Company from time to
time may, to the extent permitted by law, reduce the Conversion Price by any
amount for any period of at least 20 days, in which case the Company shall give
at least 15 days' notice of such reduction in accordance with Section 5.11, if
the Board of Directors has made a determination that such reduction would be in
the best interests of the Company, which determination shall be conclusive.
SECTION 5.11. Notice of Adjustment. Whenever the Conversion Price is
adjusted, the Company shall promptly mail to Securityholders at the addresses
appearing on the Registrar's books a notice of the adjustment and file with the
Trustee an Officers' Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence of the correctness of such adjustment.
SECTION 5.12. Notice of Certain Transactions. In the event that:
(1) the Company takes any action which would require an adjustment
in the Conversion Price;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 5.13; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that such holder may receive the rights, warrants, securities or assets which a
holder of shares of Common Stock on that date may receive. Therefore, the
Company shall mail to Securityholders at the addresses appearing on the
Registrar's books and the Trustee a notice stating the proposed record or
effective date, as the case may be. The Company shall mail the notice at least
15 days before such date; however, failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in clause
(1), (2) or (3) of this Section 5.12.
SECTION 5.13. Effect of Reclassifications, Consolidations, Mergers
or Sales on Conversion Privilege. If any of the following shall occur, namely:
(i) any reclassification or change of outstanding shares of Common Stock
issuable upon conversion of Securities (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger
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to which the Company is a party other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to no par
value, or from no par value to par value or as a result of a subdivision or
combination) in, outstanding shares of Common Stock or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Company as an entirety, then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture in form satisfactory to the
Trustee providing that the holder of each Security then outstanding shall have
the right to convert such Security into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article V. The foregoing, however, shall not in any way affect the right a
holder of a Security may otherwise have, pursuant to clause (ii) of the last
sentence of subsection (c) of Section 5.06, to receive Rights upon conversion of
a Security. If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities and property of a corporation other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger, sale
or conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the holders of the Securities as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing. The
provision of this Section 5.13 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 5.13, the Company shall promptly file with the Trustee
an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or securities or property (including cash) receivable
by holders of the Securities upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance and any
adjustment to be made with respect thereto.
SECTION 5.14. Trustee's Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article V should be made, how it should
be made or what such adjustment should be, but may accept as conclusive evidence
of the correctness of any such adjustment, and shall be protected in relying
upon the Officers' Certificate with respect thereto which the Company is
obligated to file with the Trustee pursuant to Section 5.11. The Trustee makes
no representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article V.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5. 13, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.13.
ARTICLE VI
SUCCESSORS
SECTION 6.01. Merger, Consolidation or Sale of Assets. The Company
may not consolidate or merge with or into any person (whether or not the Company
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets
unless:
(a) the Company is the surviving corporation or the person formed by
or surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia;
(b) the corporation formed by or surviving any such consolidation or
merger (if other than the Company) or the corporation to which such sale,
assignment, transfer, lease, conveyance or other disposition will have
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been made assumes all the Obligations of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Securities
and the Indenture;
(c) any such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or assets
shall be as an entirety or virtually as an entirety to one corporation;
(d) immediately after such transaction no Default or Event of
Default exists; and
(e) the Company or such corporation shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction and the supplemental indenture comply with the Indenture and
that all conditions precedent in the Indenture relating to such transaction have
been satisfied.
SECTION 6.02. Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 6.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or the corporation to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor person has been named as the Company herein; provided, however, that
the predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest and Liquidated Damages, if any, on the Securities.
ARTICLE VII
DEFAULTS AND REMEDIES
SECTION 7.01. Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest or Liquidated
Damages, if any, on any Security when the same becomes due and payable, and the
Default continues for a period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at maturity, upon redemption or
otherwise or the Cap Payment in respect of the Notes;
(c) the Company fails to observe or perform any covenant or
agreement contained in Section 4.07 hereof;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Securities, required by it to be
performed and the Default continues for a period of 60 days after the receipt of
written notice from the Trustee to the Company or from the Holders of 25% in
aggregate principal amount of the then outstanding Securities to the Company and
the Trustee stating that such notice is a "Notice of Default";
(e) there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any Material Subsidiary of
the Company (or the payment of which is guaranteed by the Company or any
Material Subsidiary of the Company), whether such Indebtedness or guarantee now
exists or is created after the Issuance Date, which default (i) is caused by a
failure to pay when due principal of or interest or Liquidated Damages, if any,
on such Indebtedness within the grace period provided for in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates U.S.
$3,000,000 or more;
(f) a final, non-appealable judgment or final non-appealable
judgments (other than any judgment as to which a reputable insurance company has
accepted full liability) for the payment of money are entered by a court or
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courts of competent jurisdiction against the Company or any Material Subsidiary
of the Company and remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such judgments exceeds U.S. $3,000,000;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii) consents to
the entry of an order for relief against it in an involuntary case in which it
is the debtor, (iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) makes the admission in writing that it
generally is unable to pay its debts as the same become due; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Company or any
Material Subsidiary of the Company in an involuntary case, (ii) appoints a
Custodian of the Company or any Material Subsidiary of the Company or for all or
substantially all of its property, and the order or decree remains unstayed and
in effect for 60 days or (iii) orders the liquidation of the Company or any
Material Subsidiary of the Company, and the order or decree remains unstayed and
in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
SECTION 7.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clauses (g) and (h) of Section 7.01 hereof) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the then outstanding Securities by notice to
the Company and the Trustee, may declare all the Securities to be due and
payable. Upon such declaration, the principal of, premium, if any, and accrued
and unpaid interest and Liquidated Damages, if any, on the Securities shall be
due and payable immediately. If an Event of Default specified in clause (g) or
(h) of Section 7.01 hereof occurs, such an amount shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholder. The Holders of a majority in aggregate
principal amount of the then outstanding Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree, if all amounts payable to the Trustee
pursuant to Section 8.07 hereof have been paid and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest and
Liquidated Damages, if any, that has become due solely because of the
acceleration.
SECTION 7.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest and Liquidated Damages, if any, on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 7.04. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the then outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the payment of the Designated
Event Payment or the principal of, or interest or Liquidated Damages, if any,
on, any Security. When a Default or Event of Default is waived, it is cured and
ceases; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 7.05. Control by Majority. The Holders of a majority in
principal amount of the then outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, is
unduly prejudicial to the rights of other Securityholders, or would involve the
Trustee in personal liability.
SECTION 7.06. Limitation on Suits. A Securityholder may pursue a
remedy with respect to this Indenture or the Securities only if:
<PAGE>
(a) the Securityholder gives to the Trustee notice of a continuing
Event of Default;
(b) the Securityholders of at least 25% in principal amount of the
then outstanding Securities make a request to the Trustee to pursue the remedy;
(c) such Securityholder or Securityholders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then-outstanding Securities do not give the Trustee a direction
inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 7.07. Rights of Securityholders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of principal and interest and Liquidated
Damages, if any, on such Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
SECTION 7.08. Collection Suit by Trustee. If an Event of Default
specified in Section 7.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal and interest and Liquidated Damages,
if any, remaining unpaid on the Securities and interest on overdue principal and
interest and Liquidated Damages, if any, and such further amount as shall be
sufficient to cover the costs and, to the extent lawful, expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts payable under Section
8.07 hereof.
SECTION 7.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property. Nothing contained herein shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Securityholder thereof, or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
SECTION 7.10. Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 8.07 hereof;
Second: to the Securityholders, for amounts due and unpaid on the
Securities for principal and interest and Liquidated Damages, if
any, ratably, according to the amounts due and payable on the
Securities for principal and interest and Liquidated Damages, if
any, respectively; and
Third: to the Company.
Except as otherwise provided in Section 2.12 hereof, the Trustee may
fix a record date and payment date for any payment to Securityholders made
pursuant to this Section.
SECTION 7.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section
<PAGE>
does not apply to a suit by the Trustee, a suit by a holder pursuant to Section
7.06 hereof, or a suit by Holders of more than 10% in principal amount of the
then outstanding Securities.
ARTICLE VIII
TRUSTEE
SECTION 8.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others and (ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and, if required by the terms hereof, conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that: (i) this paragraph does not limit the effect of
paragraph (b) of this Section 8.01; (ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts and (iii) the
Trustee shall not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section
7.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 8.01.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 8.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be charged with knowledge of any Event of
Default under Section 7.01 (other than an Event of Default under Section 7.01
(a) or (b) if the Trustee is also a Paying Agent with respect to the Securities)
unless either (1) a Trust Officer assigned to its Corporate Trust Department
shall have actual knowledge thereof, or (2) the Trustee shall have received
notice thereof in accordance with Section 11.02 hereof from the Company or any
Holder.
<PAGE>
SECTION 8.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or an Affiliate with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 8.10 and 8.11 hereof.
SECTION 8.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in the Indenture or any statement in the Securities (other than its
authentication) or for compliance by the Company with the Registration Rights
Agreement.
SECTION 8.05. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to Securityholders a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in
payment on any Security, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 8.06. Reports by Trustee to Securityholders. Within 60 days
after the reporting date stated in Section 11.10, the Trustee shall mail to
Securityholders a brief report dated as of such reporting date that complies
with TIA ss. 313(a) if and to the extent required by such ss. 313(a). The
Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
SECTION 8.07. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time reasonable compensation for its services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such disbursements and expenses may include the
reasonable disbursements, compensation and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any loss or
liability incurred by it except as set forth in the next paragraph. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
The Company shall defend the claim and the Trustee shall cooperate in the
defense. The Company will not, without the prior written consent of the Trustee,
settle or compromise or consent to the entry of any judgment with respect to any
such claim unless such settlement, compromise or consent includes an
unconditional release of the Trustee from all liabilities arising out of such
claim. The Trustee may have separate counsel and the Company shall pay the
reasonable fees, disbursements and expenses of one such separate counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except money or property held in trust to pay
principal and interest and Liquidated Damages, if any, on particular Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 7.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 8.07 shall survive the appointment of
a successor trustee, the termination of this Indenture and the resignation or
removal of the Trustee.
SECTION 8.08. Replacement of Trustee. A resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section.
<PAGE>
The Trustee may resign by so notifying the Company. The
Securityholders of a majority in principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 8.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA ss. 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the
Securityholders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then-outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 8.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIAss.310(b), any
Securityholder who has been a bona fide holder of a Security for at least six
months may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 8.07 hereof. Notwithstanding the resignation or
replacement of the Trustee pursuant to this Section 8.08, the Company's
obligations under Section 8.07 hereof shall continue for the benefit of the
retiring trustee with respect to expenses and liabilities incurred by it prior
to such resignation or replacement.
SECTION 8.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 8.10. Eligibility; Disqualification. This Indenture shall
always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1) and
(5). The Trustee shall always have a combined capital and surplus as stated in
Section 11.10 hereof. The Trustee is subject to TIA ss. 310(b).
SECTION 8.11. Preferential Collection of Claims Against Company. The
Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed
in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject
to TIA ss. 311(a) to the extent indicated therein.
ARTICLE IX
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations. This Indenture
shall cease to be of further effect (except that the Company's obligations under
Sections 8.07 and 9.02 hereof shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered to the Trustee for
cancellation and
<PAGE>
the Company has paid all sums payable hereunder. Thereupon, the Trustee upon
request of the Company, shall acknowledge in writing the discharge of the
Company's obligations under this Indenture, except for those surviving
obligations specified above.
SECTION 9.02. Repayment to Company. The Trustee and the Paying
Agents shall promptly pay to the Company upon request any excess money or
securities held by them at any time.
The Trustee and the Paying Agents shall pay to the Company upon
request any money held by them for the payment of principal or interest or
Liquidated Damages, if any, that remains unclaimed for two years after the date
upon which such payment shall have become due; provided, however, that the
Company shall have first caused notice of such payment to the Company to be
mailed to each Securityholder entitled thereto no less than 30 days prior to
such payment. After payment to the Company, the Trustee and the Paying Agents
shall have no further liability with respect to such money, and Securityholders
entitled to the money must look to the Company for payment as general creditors
unless any applicable abandoned property law designates another person.
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Securityholders. The Company and
the Trustee may amend or supplement this Indenture or the Securities without the
consent of any Securityholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Sections 5.13 and 6.01 hereof;
(c) to provide for uncertificated Securities in addition to
certificated Securities;
(d) to make any change that does not adversely affect the legal
rights hereunder of any Securityholder;
(e) to qualify this Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA; or
(f) to make any change that provides any additional rights or
benefits to the holders of Securities.
SECTION 10.02. With Consent of Securityholders. Subject to Section
7.07 hereof, the Company and the Trustee may amend or supplement this Indenture
or the Securities with the written consent (including consents obtained in
connection with any tender or exchange offer for Securities) of the
Securityholders of at least a majority in principal amount of the then
outstanding Securities. Subject to Sections 7.04 and 7.07 hereof, the Holders of
a majority in principal amount of the Securities then outstanding may also by
their written consent (including consents obtained in connection with any tender
offer or exchange offer for Securities) waive any existing Default as provided
in Section 7.04 or waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities. However, without the consent
of each Securityholder affected, an amendment, supplement or waiver under this
Section may not (with respect to any Securities held by a nonconsenting
Securityholder):
(a) reduce the amount of Securities whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the rate of or change the time for payment of interest on
any Security;
(c) reduce the principal of or change the fixed maturity of any
Security or alter the redemption provisions with respect thereto;
(d) make any Security payable in cash other than that stated in the
Security;
<PAGE>
(e) make any change in Section 7.04, 7.07 or 10.02 hereof;
(f) waive a default in the payment of the Designated Event Payment
or principal of, or interest or Liquidated Damages, if any, on, any Security
(other than as provided in Section 7.04);
(g) waive a redemption payment payable on any Security; or
(h) make any change that adversely affects the right of
Securityholders to convert Securities into Common Stock of the Company.
To secure a consent of the Securityholders under this Section 10.02,
it shall not be necessary for the Securityholders to approve the particular form
of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Securityholders a notice briefly describing
the amendment or waiver.
SECTION 10.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall be set forth in a supplemental
indenture that complies with the TIA; as then in effect.
SECTION 10.04. Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by a
Securityholder of a Security is a continuing consent by the Securityholder and
every subsequent Securityholder of a Security or portion of a Security that
evidences the same debt as the consenting Securityholder's Security, even if
notation of the consent is not made on any Security. However, any such
Securityholder or subsequent Securityholder may revoke the consent as to such
Holder's Security or portion of a Security if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate certifying that the Securityholders of the requisite principal
amount of Securities have consented to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the provisions of the immediately preceding paragraph, those persons who were
Securityholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Securityholders after such record date. No consent shall be valid
or effective for more than 90 days after such record date unless consents from
Securityholders of the principal amount of Securities required hereunder for
such amendment or waiver to be effective shall have also been given and not
revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall
bind every Securityholder, unless it is of the type described in any of clauses
(a) through (h) of Section 10.02 hereof. In such case, the amendment or waiver
shall bind each Securityholder who has consented to it and every subsequent
Securityholder that evidences the same debt as the consenting Securityholder's
Security.
SECTION 10.05. Notation on or Exchange of Securities. The Trustee
may place an appropriate notation about an amendment or waiver on any Security
thereafter authenticated. The Company in exchange for all Securities may issue
and the Trustee shall authenticate new Securities that reflect the amendment or
waiver.
SECTION 10.06. Trustee Protected. The Trustee shall sign all
supplemental indentures, except that the Trustee may, but need not, sign any
supplemental indenture that adversely affects its rights or duties hereunder. As
a condition to executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trust created by this Indenture, the Trustee shall be entitled to receive
(in addition to those documents required by Section 11.04), and (subject to
Section 315 of the TIA) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture.
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
automatically deemed to be incorporated in this Indenture by the TIA, the
incorporated provision shall control.
SECTION 11.02. Notices. Any notice or communication by the Company
or the Trustee to the other is duly given if in writing and delivered in person
or mailed by first-class mail to the other's address stated in Section 11.10
hereof. The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar, not
later than the latest date (if any), and not earlier than the earliest date (if
any), prescribed for the giving of such notice. Failure to mail a notice or
communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.
Any notice given by publication shall be deemed to have been validly
given on the date of such publication or, if published more than once, on the
date of the first publication. If a notice or communication is mailed in the
manner provided above within the time prescribed, it is duly given, whether or
not the addressee receives it.
If the Company mails a notice or communication to Securityholders,
it shall mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by the Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 11.03. Communication by Securityholders with Other
Securityholders. Securityholders may communicate pursuant to TIA ss. 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 4.03) shall
include:
(a) a statement that the person signing such certificate or
rendering such opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such person, such person has
made such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
<PAGE>
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by, or a meeting of, Securityholders. The Registrar,
Transfer Agent, Paying Agents or Conversion Agents may each make reasonable
rules and set reasonable requirements for its functions.
SECTION 11.07. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions in the State of New York are not
required to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest or Liquidated Damages, if any, shall accrue with
respect to such payment for the intervening period. If any other operative date
for purposes of this Indenture shall occur on a Legal Holiday then for all
purposes the next succeeding day that is not a Legal Holiday shall be such
operative date.
SECTION 11.08. No Recourse Against Others. A director, Officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
SECTION 11.09. Counterparts. This Indenture may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 11.10. Variable Provisions. "Officer" means the Chairman of
the Board, the President, any Vice-President, the Chief Financial Officer, the
Treasurer, the Secretary, the Corporate Controller, any Assistant Treasurer or
any Assistant Secretary of the Company.
The Company initially appoints the Trustee as Paying Agent, Transfer
Agent, Registrar and Conversion Agent in the Borough of Manhattan, The City of
New York, and the Trustee hereby accepts such appointments.
The first certificate pursuant to Section 4.03 hereof shall be for
the fiscal year ending on December 31, 1998.
The reporting date for Section 8.06 hereof is May 15 of each year.
The first reporting date is May 15, 1999.
The Trustee shall always have a combined capital and surplus of at
least U.S. $50,000,000 as set forth in its most recent published annual report
of condition.
The Company's address for purposes of the Indenture is:
Angeion Corporation
7601 Northland Drive
Suite 170
Brooklyn Park, MN 55428
The Trustee's address is:
U.S. Bank National Association
180 East Fifth Street
St. Paul, MN 55101
Attention: Corporate Trust Administration
<PAGE>
The Company or the Trustee may change its address for purposes of
this Indenture by written notice to the other.
SECTION 11.11. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 11.12. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or an Affiliate. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
SECTION 11.13. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.14. Severability. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.15. Table of Contents, Headings, Etc. The Table of
Contents and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
ANGEION CORPORATION,
as the Company,
by /s/ Whitney A. McFarlin
------------------------------------------
Name: Whitney A. McFarlin
Title: Chairman of the Board,
President and Chief
Executive Officer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee,
by /s/ Rick Prokosch
------------------------------------------
Name: Rick Prokosch
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF SENIOR CONVERTIBLE NOTE
[FORM OF FACE OF NOTE]
[Restricted Securities Legend]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO A
NON-PUBLIC OFFERING, IN CONFORMITY WITH THE PRIVATE OFFERING EXEMPTION UNDER
SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF APPLICABLE STATE
SECURITIES LAWS. SUCH SECURITIES HAVE NOT BEEN QUALIFIED WITH ANY STATE
SECURITIES COMMISSION, OR REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL COUNSEL FOR THE COMPANY SHALL HAVE DETERMINED THAT
THE INTENDED DISPOSITION IS PERMISSIBLE AND DOES NOT VIOLATE THE SECURITIES ACT
OR THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION
THEREUNDER, OR THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, OR ANY
RULES OR REGULATIONS THEREUNDER.
<PAGE>
No. __
CUSIP No.________
ANGEION CORPORATION
7 1/2% SENIOR CONVERTIBLE NOTE
DUE 2003
Angeion Corporation, a Minnesota corporation (the "Company")
promises to pay to ________________________________ or registered assigns, the
principal sum of ________ Dollars on April 15, 2003.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Senior
Convertible Note set forth on the reverse hereof which further provisions shall
for all purposes have the same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, Angeion Corporation has caused this Senior
Convertible Note to be signed manually or by facsimile by its duly authorized
Officers.
Dated: April 14, 1998 ANGEION CORPORATION
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the
7 1/2% Senior Convertible Notes due 2003
described in the within-
mentioned Indenture.
U.S. Bank National Association, as Trustee,
By
----------------------------------------
Authorized Signatory
<PAGE>
ANGEION CORPORATION
7 1/2% Senior Convertible Note due 2003
1. Interest. Angeion Corporation, a Minnesota corporation (the
"Company"), is the issuer of the 7 1/2% Senior Convertible Notes due 2003 (the
"Convertible Notes"), of which this Convertible Note is a part. The Company
promises to pay interest on the Convertible Notes in cash semiannually on each
April 15 and October 15, commencing on October 15, 1998, to holders of record on
the immediately preceding April 1 and October 1.
Interest on the Convertible Notes will accrue from the most recent
date to which interest has been paid, or if no interest has been paid, from
April 14, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. To the extent lawful, the Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest or Liquidated Damages, if any, (without regard
to any applicable grace period) at the rate borne by the Convertible Notes,
compounded annually.
All payments made by the Company on the Convertible Notes will be
made without withholding or deduction for, or on account of, any present or
future taxes, duties, assessments or governmental charges of whatever nature
imposed or levied by or on behalf of the jurisdiction of incorporation of the
Company or any political subdivision thereof or any authority therein or thereof
having power to tax unless the withholding or deduction of such taxes, duties,
assessments or governmental charges is required by law. If any such withholding
or deduction is required, the Company will not be obliged to pay any additional
amounts in respect of such withholding or deduction.
2. Method of Payment. The Company will pay interest and Liquidated
Damages, if any, on the Convertible Notes (except defaulted interest) to the
persons who are registered Holders of the Convertible Notes at the close of
business on the record date for the next interest payment date even though
Convertible Notes are canceled after the record date and on or before the
interest payment date. The Securityholder hereof must surrender Convertible
Notes to a Paying Agent to collect principal payments. The Company will pay
principal and interest and Liquidated Damages, if any, in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest and
Liquidated Damages, if any, by check payable in such money drawn on a bank in
The City of New York. It may mail a check for interest or Liquidated Damages, if
any, to a Holders' registered address.
3. Paying Agent and Registrar. The Trustee will act as Paying Agent,
Transfer Agent, Registrar and Conversion Agent in the Borough of Manhattan, The
City of New York. The Company may change any Paying Agent, Registrar, Transfer
Agent or Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity.
4. Indenture. The Company issued the Convertible Notes under an
indenture, dated as of April 14, 1998 (the "Indenture"), between the Company and
U.S. Bank National Association, as Trustee. The terms of the Convertible Notes
include those stated in the Indenture and those made part of the Indenture by
the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa77bbbb), as amended.
The Convertible Notes are subject to, and qualified by, all such terms, certain
of which are summarized hereon, and Securityholders are referred to the
Indenture and such Act for a statement of such terms. The Convertible Notes are
general unsecured obligations of the Company limited to an aggregate principal
amount of U.S. $22,150,000. The Indenture does not limit the ability of the
Company or any of its Subsidiaries to incur indebtedness or to grant security
interests or liens in respect of their assets.
5. Optional Redemption. The Convertible Notes are not redeemable at
the Company's option prior to the third anniversary of the initial issue date.
On or after the third anniversary of the initial issue date, the Convertible
Notes will be subject to redemption at the option of the Company, in whole or in
part (in any integral multiple of U.S. $1,000; provided, however, that a
Convertible Note may be redeemed only in whole to the extent a redemption in
part would reduce the principal amount thereof to an amount less than U.S.
$25,000), at a redemption price equal to 100% of the principal amount thereof
together with accrued interest and Liquidated Damages, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest and Liquidated Damages, if any, due on an interest payment
date). On or after the redemption date, interest and Liquidated Damages, if any,
will cease to accrue on the Convertible Notes, or portion thereof, called for
redemption.
<PAGE>
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder of the Convertible Notes to be redeemed at his address of record. A
Convertible Note may be redeemed only in whole to the extent a redemption in
part would reduce the principal amount thereof to an amount less than U.S.
$25,000. In the event of a redemption of less than all of the Convertible Notes,
the Convertible Notes will be chosen for redemption by the Trustee in accordance
with the Indenture. Unless the Company defaults in making such redemption
payment, or any Paying Agent is prohibited from making such payment pursuant to
the Indenture, by law or otherwise, interest and Liquidated Damages, if any,
cease to accrue from and after the redemption date on the Convertible Notes or
portions thereof called for redemption.
If this Convertible Note is redeemed subsequent to a record date
with respect to any interest payment date specified above and on or prior to
such interest payment date, then any accrued interest or Liquidated Damages, if
any, will be paid to the person in whose name this Convertible Note is
registered at the close of business on such record date.
7. Mandatory Redemption. The Company will not be required to make
mandatory redemption payments with respect to the Convertible Notes. There are
no sinking fund payments with respect to the Convertible Notes.
8. Repurchase at Option of Holder. If there is a Designated Event,
the Company shall be required to offer to purchase on the Designated Event
Payment Date all outstanding Convertible Notes at a purchase price equal to 101%
of the principal amount thereof on the date of purchase, plus accrued and unpaid
interest and Liquidated Damages, if any, to the Designated Event Payment Date.
Holders of Convertible Notes that are subject to an offer to purchase will
receive a Designated Event Offer from the Company prior to any related
Designated Event Payment Date and may elect to have such Convertible Notes or
portions thereof in authorized denominations purchased by completing the form
entitled "Option of Securityholder To Elect Purchase" appearing below.
Securityholders have the right to withdraw their election by delivering a
written notice of withdrawal to the Company or any Paying Agent in accordance
with the terms of the Indenture.
9. Conversion. The holder of any Convertible Note has the right,
exercisable at any time after 90 days following the Issuance Date and prior to
the close of business (New York time) on the Business Day immediately preceding
the date of the Convertible Note's maturity, to convert the principal amount
thereof (or any portion thereof that is an integral multiple of U.S. $1,000;
provided, however that a holder of a Convertible Note may convert such Security
only in whole to the extent a conversion in part would reduce the principal
amount thereof to an amount less than U.S. $25,000) into shares of Common Stock
at the initial Conversion Price of U.S. $3.0516 per share, subject to adjustment
under certain circumstances, except that if a Convertible Note is called for
redemption, the conversion right will terminate at the close of business (New
York time) on the Business Day immediately preceding the date fixed for
redemption.
To convert a Convertible Note, a Holder must (1) complete and sign a
notice of election to convert (a "Conversion Notice") substantially in the form
set forth below (copies of which are available from the Conversion Agent in New
York, (2) deliver the Conversion Notice and the Convertible Note to be converted
in whole or in part to a Conversion Agent in New York, (3) furnish appropriate
endorsements or transfer documents if required by the Registrar or such
Conversion Agent and (4) pay any transfer or similar tax, if required. Upon
conversion, no adjustment or payment will be made for interest, Liquidated
Damages, if any, or dividends, but if any Securityholder surrenders a
Convertible Note for conversion after the close of business on the record date
for the payment of an installment of interest and Liquidated Damages, if any,
and prior to the opening of business on the next interest payment date, then,
notwithstanding such conversion, the interest and Liquidated Damages, if any,
payable on such interest payment date will be paid to the registered Holder of
such Convertible Note on such record date. In such event, such Convertible Note,
when surrendered for conversion, must be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest and Liquidated
Damages, if any, payable on such interest payment date on the portion so
converted. The number of shares of Common Stock issuable upon conversion of a
Convertible Note is determined by dividing the principal amount of the
Convertible Note converted by the Conversion Price in effect on the Conversion
Date. No fractional shares will be issued upon conversion but a cash adjustment
will be made for any fractional interest.
A Convertible Note in respect of which a holder has delivered an
"Option of Securityholder to Elect Purchase" form appearing below exercising the
option of such holder to require the Company to purchase such Convertible Note
may be converted only if the notice of exercise is withdrawn as provided above
and in accordance
<PAGE>
with the terms of the Indenture. The above description of conversion of the
Convertible Notes is qualified by reference to, and is subject in its entirety
by, the more complete description thereof contained in the Indenture.
The Conversion Price of the Notes shall be reduced on December 18,
1998 to the lower of (a) the previously applicable Conversion Price or (b) the
Market Price for the Common Stock on December 18, 1998; provided, however, in no
event shall the Conversion Price be reduced below $1.5258.
The Company shall not be obligated to issue upon conversion of the
Notes, the number of shares, if any, as would exceed the difference between (i)
19.9% of the number of shares of the Company's Common Stock outstanding as of
the date hereof and (ii) the number of Warrant Shares (as hereinafter defined)
(such difference hereinafter referred to as the "Nasdaq Cap"), if issuing such
shares would constitute a breach of the Company's obligations under its
agreements with the National Association of Securities Dealers, Inc. ("NASD") or
the Nasdaq Stock Market, Inc. or the rules and regulations promulgated thereby
(collectively, the "Nasdaq Rules"). As long as the issuance of any shares of
Common Stock exceeding the Nasdaq Cap would constitute such a breach of the
Company's obligations under the Nasdaq Rules, if any Notes are submitted for
conversion, the holders of such Notes shall receive, to the extent of the Notes
or portion of the Note or Notes not converted in accordance with the preceding
sentence, in lieu of effecting such conversion, a cash payment (the "Cap
Payment") in an amount equal to 100% of the principal amount thereof or of such
portion thereof, together with accrued and unpaid interest and Liquidated
Damages for such amount or such portion thereof, if any, to the date the Cap
Payment is made, plus the Applicable Amount for the Notes or portion of the Note
or Notes not converted. Payment of the Cap Payment shall be made no later than
one business day after the date the holder has submitted a properly completed
Conversion Notice (the "Conversion Notice Date"), and shall bear interest daily
thereafter at the rate of 7 1/2% (the interest rate on the Notes) per day until
paid. The Nasdaq Cap shall be proportionately and equitably adjusted in the
event of stock splits, stock dividends, reverse stock splits, reclassifications
or other such events, in such manner as the Board of Directors of the Company
shall reasonably determine. "Warrant Shares" means shares of Common Stock of the
Company issuable upon exercise of the warrants pursuant to the Warrant
Agreements each dated April 14, 1998 entered into by the Company with each of
HSBC Securities, Inc. and Prudential Securities Incorporated.
10. Registration Rights Agreement. The holder of the Convertible
Notes is entitled to the benefits of the Registration Rights Agreement among the
Company and the initial purchasers of the Notes (the "Registration Rights
Agreement"), which agreement is attached to the Indenture as an Exhibit thereto.
Such benefits include the right of the holder to receive Liquidated Damages, if
any, in the event of a failure on the part of the Company to comply with certain
covenants pertaining to registration and availability of a prospectus for
resale, as provided in the Registration Rights Agreement.
11. Denominations, Transfer, Exchange. The Convertible Notes are in
registered form and without coupons, in minimum denominations of U.S. $25,000
and integral multiples of U.S. $10,000 in excess thereof. The transfer of
Convertible Notes may be registered, and Convertible Notes may be exchanged, as
provided in the Indenture. The Transfer Agent or Registrar may require a
Securityholder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Transfer Agent or Registrar need not exchange or register the
transfer of, respectively, any Convertible Note or portion of a Convertible Note
selected for redemption (except the unredeemed portion of any Convertible Note
being redeemed in part). Also, the Transfer Agent or Registrar need not exchange
or register the transfer of, respectively, any Convertible Note for a period of
15 days before a selection of Convertible Notes to be redeemed.
12. Persons Deemed Owners. The registered Holder of a Convertible
Note may be treated as its owner for all purposes.
13. Unclaimed Money. If money for the payment of principal or
interest and Liquidated Damages, if any, remains unclaimed for two years, the
Trustee and the Paying Agents shall pay the money back to the Company at its
request. After that, Securityholders of Convertible Notes entitled to the money
must look to the Company for payment, unless an abandoned property law
designates another person, and all liability of the Trustee and such Paying
Agents with respect to such money shall cease.
14. Defaults and Remedies. The Convertible Notes shall have the
Events of Default as set forth in Section 7.01 of the Indenture. Subject to
certain limitations in the Indenture, if an Event of Default occurs and is
continuing, the Trustee by notice to the Company or the Securityholders of at
least 25% in aggregate principal amount of the then-outstanding Convertible
Notes by notice to the Company and the Trustee may declare all the Convertible
<PAGE>
Notes to be due and payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all unpaid
principal and interest and Liquidated Damages, if any, accrued on the
Convertible Notes shall become due and payable immediately without further
action or notice. Upon acceleration as described in either of the preceding
sentences, the subordination provisions of the Indenture preclude any payment
being made to Securityholders for at least five Business Days except as
otherwise provided in the Indenture.
The Securityholders of a majority in principal amount of the
Convertible Notes then outstanding by written notice to the Trustee may rescind
an acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest or Liquidated Damages, if any,
that has become due solely because of the acceleration. Securityholders may not
enforce the Indenture or the Convertible Notes except as provided in the
Indenture. Subject to certain limitations, Securityholders of a majority in
principal amount of the then outstanding Convertible Notes issued under the
Indenture may direct the Trustee in its exercise of any trust or power. The
Company must furnish compliance certificates to the Trustee annually. The above
description of Events of Default and remedies is qualified by reference to, and
subject in its entirety by, the more complete description thereof contained in
the Indenture.
15. Amendments, Supplements and Waivers. Subject to certain
exceptions, the Indenture or the Convertible Notes may be amended or
supplemented with the consent of the Securityholders of at least a majority in
principal amount of the then outstanding Convertible Notes (including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes), and any existing default may be waived with the consent of the
Securityholders of a majority in principal amount of the then outstanding
Convertible Notes, including consents obtained in connection with a tender offer
or exchange offer for Convertible Notes. Without the consent of any
Securityholder, the Indenture or the Convertible Notes may be amended, among
other things, to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company's obligations to Securityholders, to make any change
that does not adversely affect the rights of any Securityholder, to qualify the
Indenture under the TIA, or to comply with the requirements of the SEC in order
to maintain the qualification of the Indenture under the TIA.
16. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of the
Convertible Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have, as if it were not Trustee, subject to certain
limitations provided for in the Indenture and in the TIA. Any Agent may do the
same with like rights.
17. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder, by accepting a Convertible Note, waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Convertible Notes.
18. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE CONVERTIBLE NOTES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
19. Authentication. The Convertible Notes shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.
20. Abbreviations. Customary abbreviations may be used in the name
of a Securityholder or an assignee, such as: TEN COM (for tenants in common),
TEN ENT (for tenants by the entireties), JT TEN (for joint tenants with right of
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
21. Definitions. Capitalized terms not defined in this Convertible
Note have the meaning given to them in the Indenture.
<PAGE>
The Company will furnish to any Securityholder of the Convertible
Notes upon written request and without charge a copy of the Indenture and the
Registration Rights Agreement. Request may be made to:
Peg Norris
Corporate Controller
Angeion Corporation
7601 Northland Drive
Brooklyn Park, MN 55428
Telephone: (612) 315-2000
Facsimile: (612) 315-2099
<PAGE>
ASSIGNMENT FORM
To assign this Convertible Note, fill in the form below:
(1) or (we) assign and transfer this Convertible Note to
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________ agent to transfer this Convertible
Note on the books of the Company. The agent may substitute another to act for
him.
Your Signature: ____________________________________________________
(Sign exactly as your name appears on
the other side of this Convertible Note)
Date: _____________________
Signature Guarantee:*** _________________________
- --------------------
*** Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
<PAGE>
OPTION OF SECURITYHOLDER TO ELECT PURCHASE
If you want to elect to have this Convertible Note or a portion
thereof repurchased by the Company pursuant to Section 3.08 or 4.07 of the
Indenture, check the box: |_|
If the purchase is in part, indicate the portion (U.S. $1,000 or any
integral multiple thereof) to be purchased: ________
Your Signature: _________________________________________
(Sign exactly as your name appears
on the other side of this Convertible
Note)
Date: _____________
Signature Guarantee:* _________________
- ---------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
<PAGE>
ELECTION TO CONVERT
To Angeion Corporation:
The undersigned owner of this Convertible Note hereby irrevocably
exercises the option to convert this Convertible Note, or the portion below
designated, into Common Stock of ANGEION CORPORATION in accordance with the
terms of the Indenture referred to in this Convertible Note, and directs that
the shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
The undersigned hereby represents and warrants that the undersigned
did not, directly or indirectly, within the period of 90 days after the original
issuance of the Convertible Note, sell, dispose of, hedge or otherwise transfer
or part with the economics of ownership of all or any part of the Common Stock
issuable upon conversion of the Convertible Note.
The undersigned agrees to be bound by the terms of the Registration
Rights Agreement relating to the Common Stock issuable upon conversion of the
Convertible Notes.
Date:
In whole or Portion of Convertible Note to be converted (U.S. $1,000
or any integral multiple thereof): U.S. $_______
Your Signature: ____________________________________________________
(Sign exactly as your name appears on the other
side of this Convertible Note.)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or other Identifying
Number
Signature Guarantee:*
----------------
- --------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
EXHIBIT 4.8
ANGEION CORPORATION
7 1/2% Senior Convertible Notes Due 2003
REGISTRATION RIGHTS AGREEMENT
New York, New York
April 14, 1998
Subscriber named on the Signature Page hereof
Ladies and Gentlemen:
Angeion Corporation, a Minnesota corporation (the "Company"),
proposes to issue and sell to you, in accordance with the Private Placement
Memorandum dated March 12, 1998 (including all exhibits thereto, the "Private
Placement Memorandum"), 7 1/2% Senior Convertible Notes Due 2003 (the "Notes").
The Notes will be convertible into shares of Common Stock, par value $0.01 per
share (the "Common Stock"), of the Company. The Company agrees with you, for the
benefit of the holders from time to time of the Notes or the Common Stock
issuable upon conversion of the Notes (including you) (each of the foregoing, a
"Holder" and together, the "Holders"), as follows:
1. Definitions.
(a) As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any day that is neither a Saturday or a Sunday
nor a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
"Closing Date" has the meaning set forth in the Subscription
Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Accrual Period" has the meaning set forth in Section 2(d)
hereof.
"Damages Payment Date" has the meaning set forth in Section 2(d)
hereof.
"Deferral Period" shall have the meaning set forth in Section 2(c)
hereof.
"Event" has the meaning set forth in Section 2(d) hereof.
"Event Date" has the meaning set forth in Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
<PAGE>
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Notes between the
Company and U.S. Bank National Association, as trustee, as the same may be
amended from time to time in accordance with the terms thereof.
"Initial Placement" means the initial sale of the Notes to the
initial purchasers.
"Interest Payment Date" has the meaning set forth in the Notes.
"Liquidated Damages" has the meaning set forth in Section 2(d)
hereof.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of Notes registered under a Shelf Registration Statement then
outstanding; provided that Holders of Common Stock issued upon conversion of the
Notes shall be deemed to be Holders of the aggregate principal amount of Notes
from which such Common Stock was converted.
"Managing Underwriters" means the Underwriter or Underwriters that
shall administer an Underwritten Offering.
"Notice Holder" has the meaning set forth in Section 2(b) hereof.
"Prospectus" means the prospectus included in any Shelf 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 under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Notes or Common Stock issuable upon conversion
thereof, covered by such Shelf Registration Statement, and all amendments and
supplements to such prospectus, including post-effective amendments.
"Record Date" has the meaning set forth in the Notes.
"Record Holders" has the meaning set forth in Section 2(d).
"Registrable Securities" shall mean the Notes and shares of Common
Stock issued upon conversion thereof, excluding any such securities that, and
any such securities the predecessors of which, were previously sold pursuant to
an effective registration statement of the Company filed under the Act or
pursuant to Rule 144 promulgated under the Act or, which, in the written opinion
of counsel to the Company, may be sold pursuant to Rule 144 promulgated under
the Act.
"Selling Confirmation" has the meaning set forth in Section 2(b)(i).
"Selling Notice" has the meaning set forth in Section 2(b).
"Selling Period" means, with respect to a Notice Holder and a
Selling Notice given by such Notice Holder, a period of 45 calendar days
commencing on the date such Notice Holder receives a Selling Confirmation in
respect of the transactions described in such Selling Notice; provided that the
Company may defer existing Selling Periods in accordance with Section 3(c)(2).
"Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
"Shelf Registration Period" has the meaning set forth in Section
2(a) hereof.
"Shelf Registration Statement" means a registration statement of the
Company pursuant to the provisions of Section 2 hereof (including additional
registration statements filed pursuant to Section 3(d)) that covers some or all
of the Notes and the Common Stock issuable upon conversion thereof, as
applicable, on an appropriate form under Rule 415 promulgated under the Act, or
any similar or successor rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
<PAGE>
"Subscription Agreement" means the Subscription Agreement dated as
of April 3, 1998, between the Company and you.
"Trustee" means the trustee with respect to the Notes under the
Indenture.
"Underwriter" means any underwriter of Notes or Common Stock
issuable upon conversion thereof in connection with an offering thereof under a
Shelf Registration Statement.
"Underwritten Offering" means an offering in which the Notes or
Common Stock are sold to an Underwriter or with the assistance of an Underwriter
for reoffering to the public.
(b) Capitalized terms used but not defined herein shall have the
respective meanings set forth in the Private Placement Memorandum.
2. Shelf Registration; Suspension of Use of Prospectus; Liquidated
Damages.
(a) The Company shall prepare and file with the Commission, as soon
as practicable but in any event on or prior to the date 90 days following the
Closing Date, a Shelf Registration Statement under the Act on any appropriate
form under Rule 415 promulgated under the Securities Act or any similar or
successor rule or regulation registering the resale from time to time by Holders
thereof of all of the Registrable Securities. The Shelf Registration Statement
shall permit resales of Registrable Securities by Holders in the manner or
manners designated by them (including, without limitation, one or more
Underwritten Offerings by an underwriter reasonably acceptable to the Company)
from time to time, which shall be set forth in such Shelf Registration
Statement. The Company shall use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Act as soon as
reasonably practicable but in any event on or prior to the date 180 days
following the Closing Date and to keep the Shelf Registration Statement
continuously effective under the Act until the earlier of (i) the second
anniversary of the Closing Date, (ii) the date on which, in the written opinion
of counsel to the Company, the Registrable Securities may be sold by all
non-affiliates of the Company pursuant to Rule 144 (or any similar or successor
provision) promulgated by the Commission and (iii) such date as of which all the
Registrable Securities have been sold pursuant to the Shelf Registration
Statement (the period ending at such earlier date, the "Shelf Registration
Period").
(b) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell its Registrable Securities pursuant to the Shelf Registration
Statement and the Prospectus, it will do so only in accordance with this Section
2(b). Each Holder of Registrable Securities agrees to give written notice to the
Company at least three Business Days prior to any intended resale of Registrable
Securities under the Shelf Registration Statement, which notice shall specify
the date on which such Holder intends to begin such distribution and such
information with respect to such Holder and the intended distribution as may be
reasonably required to amend the Shelf Registration Statement or supplement the
Prospectus with respect to such intended distribution (each Holder providing the
notice described in this sentence and with respect to which the related Selling
Period is continuing or has been deferred, a "Notice Holder"; each such notice,
a "Selling Notice"). As soon as practicable after the date a Selling Notice is
received by the Company, and in any event within two Business Days after such
date, the Company shall either:
(i)(A) provide a written notice to the Notice Holder who
gave such Selling Notice instructing and notifying such Notice
Holder that the Shelf Registration Statement and Prospectus may be
used during the applicable Selling Period to effect the transactions
described in such Selling Notice, that the Company is then currently
in compliance with Section 3(b) and that the Company reaffirms the
consent granted pursuant to Section 3(f) (each such notice a
"Selling Confirmation") or (B) file a supplement to the Prospectus
or a post-effective amendment to the Shelf Registration Statement as
required by Section 3(b), use its reasonable best efforts to cause
any such amendment to become effective and immediately provide a
Selling Confirmation to such Notice Holder; or
(ii) in the event of the happening of any event of the
kind described in Section 3(c)(2)(i), 3(c)(2)(ii), 3(c)(2)(iii)(y)
or 3(c)(2)(iv) hereof, the Company shall deliver to such Notice
Holder the notice required by Section 3(c)(2) and notify the holders
that the consent granted pursuant to Section 3(f) is suspended until
further notice.
(c) Each such Notice Holder may sell all or any Registrable
Securities pursuant to the Shelf Registration Statement and the Prospectus only
during the Selling Period commencing with the earlier of (x) the date
<PAGE>
on which such Notice Holder receives a Selling Confirmation and (y) the third
Business Day after the related Selling Notice has been received by the Company;
provided that in the event the Company elects to take the actions permitted by
Section 2(b)(ii), the commencement of the Selling Period shall be deferred until
such later date as the Company delivers a Selling Confirmation. A Notice Holder
shall not sell any Registrable Securities pursuant to the Shelf Registration
Statement or the Prospectus after the expiration of the applicable Selling
Period without giving a new Selling Notice pursuant to Section 2(b) hereof and
receiving a new Selling Confirmation. The period during which the commencement
of a Selling Period is deferred by the Company or during which an existing
Selling Period is deferred by the Company is hereinafter referred to as a
"Deferral Period." In the event that (i) the number of Deferral Periods exceeds
three in any twelve-month period or (ii) the number of days in any Deferral
Period exceeds 45 days, the Company shall be liable to pay Liquidated Damages,
in accordance with Section 2(d).
In the event the Company elects to take the actions described in
Section 2(b)(ii), the Company will, at such time as it is in compliance with
Section 3(b) and as use of the Prospectus may be resumed, immediately provide
Selling Confirmations to all Notice Holders.
(d) The parties hereto agree that the Holders of the Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Shelf Registration
Statement has not been filed on or prior to the date 90 days following the
Closing Date, (ii) the Shelf Registration Statement has not been declared
effective under the Securities Act on or before the date 180 days following the
Closing Date, (iii) prior to the end of the Shelf Registration Period, the
Commission shall have issued a stop order suspending the effectiveness of the
Shelf Registration Statement or proceedings have been initiated with respect to
the Shelf Registration Statement under Section 8(d) or 8(e) of the Act, (iv) the
aggregate number of days in any one Deferral Period exceeds 30 days or (v) the
number of Deferral Periods exceeds more than one in any three-month period or
three in any twelve-month period (each of the events of a type described in any
of the foregoing clauses (i) through (v) are individually referred to herein as
an "Event"; and the date 90 days following the Closing Date in the case of
clause (i), the date 180 days following the Closing Date in the case of clause
(ii), the date on which the effectiveness of the Shelf Registration Statement
has been suspended or proceedings with respect to the Shelf Registration
Statement under Section 8(d) or 8(e) of the Act have been commenced in the case
of clause (iii), the date on which the duration of a Deferral Period exceeds the
periods permitted by Section 2(c) hereof in the case of clause (iv), and the
date of the commencement of a Deferral Period that causes the limit on the
number of Deferral Periods under Section 2(c) hereof to be exceeded in the case
of clause (v), are each referred to herein as an "Event Date"). Events shall be
deemed to continue until the date of the termination of such Event, which shall
be the following dates with respect to the respective types of Events: the date
the Registration Statement is filed in the case of an Event of the type
described in clause (i), the date the Registration Statement is declared
effective under the Act in the case of an Event described in clause (ii), the
date that all stop orders suspending effectiveness of the Shelf Registration
Statement have been removed and the proceedings initiated with respect to the
Shelf Registration Statement under Section 8(d) or 8(e) of the Act have
terminated, as the case may be, in the case of Events of the types described in
clause (iii), termination of the Deferral Period which caused the aggregate
number of days in any one Deferral Period to exceed the number permitted by
Section 2(c) to be exceeded in the case of Events of the type described in
clause (iv), and termination of the Deferral Period the commencement of which
caused the number of Deferral Periods permitted by Section 2(c)(ii) to be
exceeded in the case of Events of the type described in clause (v).
Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (the "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): (A) to each Holder of
Registrable Securities that is a Notice Holder, accruing at a rate equal to one
quarter of one percent PER ANNUM (25 basis points) on (y) where such Registrable
Securities are Notes, the aggregate principal amount of such Notes held by such
Notice Holder and (z) where such Registrable Securities are shares of Common
Stock issued upon conversion of the Notes, the aggregate principal amount of the
Notes that were converted into such shares and (B) if the Damages Accrual Period
continues for a period in excess of 30 days from the Event Date, from and after
the end of such 30-day period until such time as there are no Events which have
occurred and are continuing, to each Holder of Registrable Securities (whether
or not a Notice Holder), accruing at a rate equal to one-quarter of one percent
PER ANNUM (25 basis points) on (u) where such Registrable Securities are Notes,
the aggregate principal amount of such Notes held by such Holder and (v) where
such Registrable Securities are shares of Common Stock issued upon conversion
thereof, the aggregate principal amount of the Notes that were converted into
such shares. Notwithstanding the foregoing, no Liquidated Damages shall accrue
under clause (A) of the preceding sentence during any period for which
Liquidated Damages accrue under clause (B) of the preceding sentence or as to
any Notes or shares of Common Stock issued upon conversion thereof from and
after the earlier of (x) the date such securities are no longer Registrable
Securities, and (y) the expiration of the Shelf Registration Period. The rate of
<PAGE>
accrual of the Liquidated Damages with respect to any period shall not exceed
the rate provided for in this paragraph notwithstanding the occurrence of
multiple concurrent Events.
Liquidated Damages, if any, due on any Notes or Common Stock issued
upon conversion thereof shall be payable on each Interest Payment Date on the
Notes accruing (or, if there are no Notes outstanding, which would have accrued)
during the Damages Accrual Period and on the Interest Payment Date immediately
following (or which would have followed) the termination of such Period (a
"Damages Payment Date"). The Company shall pay the Liquidated Damages due on any
Notes by depositing with the Trustee under the Indenture, in trust, for the
benefit of the Holders of Notes or Common Stock issued upon conversion thereof
or Notice Holders, as the case may be, entitled thereto, at least one Business
Day prior to the applicable Damages Payment Date, sums sufficient to pay the
Liquidated Damages, if any, accrued or accruing since the last preceding Damages
Payment Date to such Damages Payment Date. The Liquidated Damages, if any, shall
be paid on each Damages Payment Date to the Holders of record of the Registrable
Securities (the "Record Holders") on the Record Date immediately preceding such
Damages Payment Date by wire transfer of immediately available funds to the
accounts specified by them or by mailing checks to their registered addresses as
they appear in the Notes register or stock transfer books of the Company, if no
such accounts have been specified on or before the applicable Regular Record
Date. The Trustee shall be entitled, on behalf of the Holders of Notes, Common
Stock issued upon conversion thereof and Notice Holders, to seek any available
remedy for the enforcement of this Agreement, including for the payment of such
Liquidated Damages, if any. Notwithstanding the foregoing, the parties agree
that the sole remedy payable for a violation of the terms of this Agreement with
respect to which Liquidated Damages, if any, are expressly provided shall be
such Liquidated Damages. Nothing shall preclude a Notice Holder or Holder of
Registrable Securities from pursuing or obtaining specific performance or other
equitable relief with respect to any violation of this Agreement for which
liquidated damages are not expressly provided by this Agreement.
All of the Company's obligations set forth in this Section 2(d)
which are outstanding with respect to any Registrable Securities at the time
such security ceases to be a Registrable Security shall survive until such time
as all such obligations with respect to such security have been satisfied in
full (notwithstanding termination of the Agreement).
The parties hereto agree that the Liquidated Damages provided for in
this Section 2(d) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or unavailable
(absolutely or as a practical matter) for effecting resales of Registrable
Securities, as the case may be, in accordance with the provisions hereof.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof
with the Commission, a copy of any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the Prospectus
included therein.
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto comply in all material respects with the Act
and the Exchange Act and the respective rules and regulations thereunder, (ii)
any Shelf Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any Prospectus forming part of any
Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided
that no representation or agreement is made hereby with respect to information
with respect to you or any Holder required to be included in any Shelf
Registration or Prospectus pursuant to the Act or the rules and regulations
thereunder or provided by you, any Holder, or any Managing Underwriter
specifically for inclusion in any Shelf Registration Statement or Prospectus.
(c)(1) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
<PAGE>
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when the
Shelf Registration Statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) During any Selling Period, during the deferral of any Selling
Period and within two Business Days of receipt by the Company of any Selling
Notice, the Company shall notify you and the Notice Holders and, if requested by
you or any such Notice Holder, confirm such notification in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Securities included in any Shelf Registration Statement
for sale in any jurisdiction or the initiation or threat of any
proceeding for such purpose;
(iii) of (x) the suspension of the use of the Prospectus
pursuant to Section 2(b) or (y) of the happening of any event that
requires the making of any changes in the Shelf Registration
Statement or the Prospectus so that, as of such date, the statements
therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading; and
(iv) of the determination by the Company, in its
reasonable judgment, that it is advisable to suspend use of the
Prospectus for valid business reasons (not including avoidance of
the Company's obligations hereunder) including, among other things,
the acquisition or divestiture of assets, public filings with the
Commission, pending corporate developments and similar events;
which notice shall be accompanied by an instruction to defer the use
of the Prospectus until the Company delivers a Selling Confirmation whereupon
any existing Selling Period shall be deferred and shall recommence upon delivery
of the aforementioned Selling Confirmation; provided that such Selling Period
shall be extended by the number of days elapsed in such period prior to such
deferral.
(d) The Company shall use its reasonable best efforts to prevent the
issuance, and if issued to obtain the withdrawal of, any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible time,
and in any event shall within 30 days of any such order amend the Shelf
Registration Statement in a manner reasonably expected to obtain the withdrawal
of such order, or file an additional Shelf Registration Statement covering all
of the Registrable Securities (whereupon references herein to the Shelf
Registration Statement shall be deemed to include reference to such additional
filing).
(e) The Company shall furnish to each Holder of the Notes or the
Common Stock issued upon conversion thereof included within the coverage of any
Shelf Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post effective amendment or supplement thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of the Notes or the Common Stock issued upon conversion thereof
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and, except during such periods
as the Company shall have suspended the use of the Prospectus pursuant to
Section 2(b) or 3(c)(2), the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Notes or the Common Stock issued upon
conversion thereof covered by the Prospectus or any amendment or supplement
thereto.
(g) Prior to any offering of the Notes or the Common Stock issued
upon conversion thereof pursuant to any Shelf Registration Statement, the
Company shall register or qualify or cooperate with the Holders of
<PAGE>
the Notes or the Common Stock issued upon conversion thereof included therein
and their respective counsel in connection with the registration or
qualification of such Notes or Common Stock for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holders reasonably
request in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Notes and
the Common Stock issued upon conversion thereof covered by such Shelf
Registration Statement; provided, however, that the Company will not be required
to qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing the Notes or the
Common Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request in connection with sales of
the Notes or the Common Stock issued upon conversion thereof pursuant to such
Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by clause (iii) of
Section (c)(2) above, the Company shall promptly prepare a post-effective
amendment to any Shelf Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered (when and as permitted pursuant to Section 2(c)) to
purchasers of the Registrable Securities included therein, the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(j) The Company shall use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earning statement
satisfying the provisions of Section 11(a) of the Act and Rule 158 promulgated
by the Commission thereunder.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act in a timely manner.
(l) The Company may require each Holder of the Notes or the Common
Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Notes or Common Stock as may, from time to
time, be required by the Act and the rules and regulations promulgated
thereunder, and the obligations of the Company to any Holder hereunder shall be
expressly conditioned on the compliance of such Holder with such request.
(m) The Company shall, if requested, use its reasonable best efforts
to promptly incorporate in a supplement to the Prospectus included in the Shelf
Registration or post-effective amendment to a Shelf Registration Statement (i)
such information as the Majority Holders or, if the Notes or Common Stock issued
upon conversion thereof are being sold in an Underwritten Offering, as the
Managing Underwriters and the Majority Holders reasonably agree should be
included therein and provide to the Company in writing for inclusion in the
Shelf Registration Statement or Prospectus, and (ii) such information as a
Holder may provide from time to time to the Company in writing for inclusion in
a Prospectus or any Shelf Registration Statement concerning such Holder and the
distribution of such Holder's Notes and Common Stock and, in either case, shall
make all required filings of such supplement or post-effective amendment as soon
as notified of the matters to be incorporated in such supplement or
post-effective amendment.
(n) The Company shall enter into such reasonable agreements as are
customary (including underwriting agreements) and take all other customary
actions in order to expedite or facilitate the registration or the disposition
of the Notes or the Common Stock issuable upon conversion thereof, and in
connection therewith, if an underwriting agreement is entered into, cause the
same to contain indemnification provisions and procedures no less favorable to
the Holders than those that are customarily made by issuers to Underwriters (or
such other provisions and procedures acceptable to the Majority Holders and the
Managing Underwriters, if any, with respect to all parties to be indemnified
pursuant to Section 5 from Holders of Notes or the Common Stock issuable upon
conversion thereof to the Company).
(o) The Company shall (i) make reasonably available for inspection
by the Holders of Notes or the Common Stock issued upon conversion thereof to be
registered under a Shelf Registration Statement, any Underwriter participating
in any disposition pursuant to such Shelf Registration Statement, and any
attorney,
<PAGE>
accountant or other agent retained by the Holders or any such Underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries; (ii) cause the Company's
officers, directors and employees to supply all relevant information reasonably
requested by the Holders or any such Underwriter, attorney, accountant or agent
in connection with any such Shelf Registration Statement as is customary for
similar due diligence examinations; provided, however, that any information that
is designated in writing by the Company, in its sole discretion, as confidential
at the time of delivery of such information (the "Confidential Information")
shall be kept confidential by the Holders or any such Underwriter, attorney,
accountant or agent, unless such information has become available to the public
generally or through a third party without an accompanying obligation of
confidentiality (provided, however, that in the event that any of such persons
is requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, or similar process) to disclose any of the
Confidential Information, it is agreed that such person will provide the Company
with prompt notice of such request(s) so that the Company may seek an
appropriate protective order or other appropriate remedy and/or waive such
person's compliance with this provision and in the event that such protective
order or other remedy is not obtained, or that the Company grants a waiver
hereunder, such person may furnish that portion of the confidential information
which it is legally compelled to disclose); (iii) make such representations and
warranties to the Holders of the Notes or the Common Stock issued upon
conversion thereof registered thereunder and the Underwriters, if any, in form,
substance and scope as are customarily made by issuers to Underwriters; (iv)
obtain opinions of counsel to the Company and updates thereof (which counsel and
opinions, in form, scope and substance, shall be reasonably satisfactory to the
Managing Underwriters, if any) addressed to each selling Holder and the
Underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and Underwriters; (v) obtain "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the Shelf Registration Statement), addressed to each selling
Holder of the Notes or the Common Stock issued upon conversion thereof
registered thereunder (provided such Holder furnishes the accountants with such
representations as the accountants customarily require in similar situations)
and the Underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and (vi) deliver such documents and certificates as may
be reasonably requested by the Majority Holders and the Managing Underwriters,
if any, including those to evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company. The foregoing actions set forth in clauses (iii),
(iv), (v) and (vi) of this Section 3 (o) shall be performed at (A) the
effectiveness of such Shelf Registration Statement and each post-effective
amendment thereto and (B) each closing under any underwriting or similar
agreement as and to the extent required thereunder.
(p) The Company shall use its reasonable best efforts to take all
other steps necessary to effect the registration, offering and sale of the
Registrable Securities covered by the Shelf Registration Statement contemplated
hereby.
4. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 2 and 3 hereof and shall bear or reimburse the Holders for the
reasonable fees and disbursements (not to exceed $20,000) of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith. However, the Company shall not be liable for underwriting
discounts or commissions or transfer taxes payable in connection with any sale
of Notes or Common Stock issued on conversion thereof included in a Shelf
Registration Statement.
5. Indemnification; Contribution.
(a) (i) In connection with any Shelf Registration
Statement, the Company agrees to indemnify and hold harmless each
Holder of Notes or Common Stock issued upon conversion thereof
covered thereby, the directors, officers, employees and agents of
each such Holder and each person who controls any such Holder within
the meaning of either the Act or the Exchange Act against any and
all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) (i) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement as
originally filed or in any amendment thereof, or in any preliminary
Prospectus or Prospectus, or in any amendment thereof or supplement
thereto, or (ii) arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements
<PAGE>
therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any case
to the extent that any such loss, claim, damage or liability arises
out of or is based upon (i) any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished
to the Company by or on behalf of any such Holder specifically for
inclusion therein, (ii) use of a Shelf Registration Statement or the
related Prospectus during a period when a stop order has been issued
in respect of such Shelf Registration or any proceedings for that
purpose have been initiated or use of a Prospectus when use of such
Prospectus has been deferred pursuant to Section 2(c); provided,
further, in each case, that the Company has delivered prior notice,
and the Holders have received such prior notice, in accordance with
Section 7(c) hereof of such stop order, initiation of proceedings or
deferral or (iii) if the Holder fails to deliver a Prospectus or the
then current Prospectus. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(ii) The Company also agrees to indemnify or contribute
to Losses, as provided in Section 5(d), of any Underwriters of the
Notes or the Common Stock issued upon conversion thereof registered
under a Shelf Registration Statement, their officers and directors
and each person who controls such Underwriters on terms that are
customarily made by issuers to Underwriters and shall, if requested
by any Holder, enter into an underwriting agreement reflecting such
agreement, as provided in Section 3(n) hereof.
(b) Each Holder of Notes or Common Stock issued upon conversion
thereof covered by a Shelf Registration Statement severally agrees to indemnify
and hold harmless (i) the Company, (ii) each of its directors, (iii) each of its
officers who signs such Shelf Registration Statement and (iv) each person who
controls the Company within the meaning of either the Act or the Exchange Act to
the same extent as the foregoing indemnity from the Company to each such Holder,
but only with reference to written information relating to such Holder furnished
to the Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action,
or (iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party; provided further,
that the indemnifying party shall not be responsible for the fees and expenses
of more than one separate counsel (together with appropriate local counsel)
representing all the indemnified parties under paragraph (a)(i), paragraph
(a)(ii) or paragraph (b) above. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding
and does not include an admission of fault.
<PAGE>
(d) In the event that the indemnity provided in Section 5(a) or (b)
is unavailable to or insufficient to hold harmless an indemnified party for any
reason, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, from the Initial Placement and the Shelf Registration Statement which
resulted in such Losses; provided, however, that in no case shall any
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Notes and the Common Stock issued upon
conversion thereof purchased by such Underwriter under the Shelf Registration
Statement which resulted in such Losses. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the indemnifying
party and the indemnified party shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such indemnified party,
on the other hand, in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the sum of (x) the total
net proceeds from the Initial Placement (before deducting expenses) and (y) the
total amount of additional interest which the Company was not required to pay as
a result of registering the Notes and the Common Stock issued upon conversion
thereof covered by the Shelf Registration Statement which resulted in such
Losses. Benefits received by any other Holders shall be deemed to be equal to
the value of receiving the Notes or the Common Stock issuable upon conversion
thereof registered under the Act. Benefits received by any Underwriter shall be
deemed to be equal to the total underwriting discounts and commissions, as set
forth on the cover page of the Prospectus forming a part of the Shelf
Registration Statement which resulted in such Losses. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand, or
by the indemnified party, on the other hand. The parties agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
5(d), no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 5, each person who controls a Holder within the meaning of either the
Act or the Exchange Act and each director, officer, employee and agent of such
Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this Section 5(d).
(e) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred to
in Section 5 hereof, and will survive the sale by a Holder of Notes or Common
Stock issuable upon conversion thereof covered by a Shelf Registration
Statement.
6. Underwritten Offering. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an Underwritten Offering in accordance with the
provisions of this Section 6. In any such Underwritten Offering, the Managing
Underwriters that administer the Underwritten Offering will be selected by, and
the underwriting arrangements with respect thereto will be approved by, the
Majority Holders (if both Notes and Common Stock are to be included in such
Underwritten Offering determined in a manner analogous to that used to calculate
Majority Holders with Holders of Common Stock issued upon conversion thereof
deemed to represent the aggregate principal amount of Notes from which such
Common Stock was converted); provided, however, that (i) such Managing
Underwriters and underwriting arrangements must be reasonably satisfactory to
the Company and (ii) the Company shall not be obligated to arrange for more than
one Underwritten Offering during the Shelf Registration Period. No Holder may
participate in any such Underwritten Offering contemplated unless such Holder
(a) agrees to sell such Holder's Registrable Securities in accordance with any
approved underwriting arrangements, (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such approved
underwriting arrangements and (c) at least 70% of the outstanding Registrable
Securities are included in such Underwritten Offering. The Holders participating
in any Underwritten Offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders and
shall reimburse the Company for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses incurred in
connection with such Underwritten Offering. Notwithstanding the foregoing or the
provisions of Section 3(m) hereof, upon receipt of a request from the Managing
Underwriter or a representative of the Majority Holders to prepare and file an
<PAGE>
amendment or supplement to the Shelf Registration Statement and Prospectus in
connection with an Underwritten Offering, the Company may delay the filing of
any such amendment or supplement for up to 90 days if the Company in good faith
has a valid business reason for such delay.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into nor shall it, on or after the date hereof, enter into, any
agreement with respect to the Notes that conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the majority of the Holders. Notwithstanding the foregoing, a waiver
or consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Registrable Securities are
being sold pursuant to a Shelf Registration Statement (and that does not
directly or indirectly affect the rights of other Holders) may be given by the
Majority Holders, determined on the basis of such Registrable Securities being
sold rather than registered under such Shelf Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
1. if to you, initially at the address specified on the
signature page of the Subscription Agreement;
2. if to any other Holder, at the most current address
given by such Holder to the Company in accordance with the
provisions of this Section 7(c), which address initially is, with
respect to each Holder, the address of such Holder maintained by the
Trustee under the Indenture, with a copy in like manner to you; and
3. if to the Company, initially at its address set forth
in the Private Placement Memorandum.
All such notices and communications shall be deemed to have been
duly given when received, if delivered by hand or air courier, and when sent, if
sent by first-class mail, telex or telecopier.
You or the Company, by notice to the other, may designate additional
or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders. The Company hereby agrees to extend the
benefits of this Agreement to any Holder and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW
RULES THEREOF.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
<PAGE>
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Notes or
the Common Stock issuable upon conversion thereof is required hereunder, the
Notes or the Common Stock issued upon conversion thereof held by the Company or
its Affiliates (other than subsequent Holders of the Notes or the Common Stock
issued upon conversion thereof if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Notes or Common Stock)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
Angeion Corporation
By
------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of this
14th day of April 1998.
Name of Subscriber:
-----------------------
By:
---------------------------------------
Name:
Title:
EXHIBIT 4.9
ANGEION CORPORATION
7601 NORTHLAND DRIVE
BROOKLYN PARK, MN 55428
7 1/2% Senior Convertible Notes due 2003
SUBSCRIPTION AGREEMENT
As of April 3, 1998
TO THE SUBSCRIBER NAMED ON THE SIGNATURE PAGE HEREOF:
Ladies and Gentlemen:
Angeion Corporation, a Minnesota corporation (the "COMPANY"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $22,150,000
aggregate principal amount of its 7 1/2% Senior Convertible Notes due 2003 (the
"NOTES"). The Notes shall be substantially in the form set out in Exhibit A to
the indenture (the "INDENTURE"), between the Company and U.S. Bank National
Association, as trustee (the "TRUSTEE"), attached hereto as Exhibit 1, and
entitled to the benefits of a registration rights agreement (the "REGISTRATION
RIGHTS AGREEMENT") between the Company and you, attached hereto as Exhibit 2, in
each case with such changes therefrom, if any, as may be approved by you and the
Company. Certain capitalized terms used in this Agreement are defined in the
Confidential Private Placement Memorandum dated March 12, 1998 (the "PRIVATE
PLACEMENT MEMORANDUM"); references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing (as defined below) provided for in Section 3, Notes in the principal
amount specified opposite your name in Schedule A at the purchase price of 100%
of the principal amount thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate subscription agreements and
registration rights agreements (the "Other Agreements") identical with this
Agreement and the Registration Rights Agreement with each of the other investors
named in Schedule A (the "Other Investors"), providing for the sale at such
Closing to each of the Other Investors of Notes in the principal amount
specified opposite their name in Schedule A. Your obligation hereunder and the
obligations of the Other Investors under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other Agreement
and no liability to any Person for the performance or non-performance by any
Other Investor thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Investors shall occur at the offices of Milbank, Tweed, Hadley & McCloy, 1
Chase Manhattan Plaza, New York, NY 10005-1413, at 10:00 a.m., New York time, at
a closing (the "CLOSING") on April 14, 1998 or on such other Business Day
thereafter on or prior to April 30, 1998 as may be agreed upon by the Company
and you and the Other Investors. At the Closing, the Company will deliver to you
the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $1,000 as you may request) dated
the date of the Closing and registered in your name (or in the name of your
nominee), against delivery to the Company of the purchase price therefor by wire
transfer of immediately available funds. If at the Closing the Company shall
fail to tender such Notes to you as provided above in
<PAGE>
this Section 3, or any of the conditions specified in Section 4 shall not have
been satisfied, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the satisfaction, prior to or at the Closing, of
the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and in all material respects at the time of the
Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied in all material
respects with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing. Neither the
Company nor any Subsidiary (as defined below) shall have entered into any
transaction since the date of the Private Placement Memorandum that would have
been prohibited by the Indenture had the Indenture applied since such date.
4.3. COMPLIANCE CERTIFICATES.
(a) Officers' Certificate. The Company shall have delivered to you a
certificate signed by two executive officers of the Company (an "OFFICERS'
CERTIFICATE"), dated the date of the Closing, certifying that the conditions
specified in Sections 4.1, 4.2 and 4.7 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes, this Agreement, the Registration Rights Agreement, the Other
Agreements and the Indenture and the reservation of shares of Common Stock
issuable upon the conversion of the Notes.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing, from Morrison & Foerster LLP, special
counsel for the Company, Oppenheimer Wolff & Donnelly, special Minnesota counsel
for the Company and Marcus Magnuson, corporate counsel for the Company, covering
in the aggregate the matters set forth in Exhibit 3 and covering such other
matters incident to the transactions contemplated hereby as you or your counsel
may reasonably request (and the Company hereby instructs its counsel to deliver
such opinion to you). Such counsel may limit such opinions to the laws of New
York, California and Minnesota and the federal laws of the United States.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, (ii) not violate any applicable law or regulation (including, without
limitation, Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject you to any tax, penalty or liability under
or pursuant to any applicable law or regulation, which law or regulation was not
in effect on the date hereof. If requested by you, you shall have received an
Officers' Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
<PAGE>
4.6. PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.7. CHANGES IN CORPORATE STRUCTURE.
Except as specified in the Private Placement Memorandum, the Company
shall not have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any substantial
part of the liabilities of any other entity, at any time following the date of
the most recent financial statements contained in or incorporated by reference
in the Private Placement Memorandum.
4.8. COMFORT LETTERS.
(a) You shall have received a letter (the "Initial Letter") of KPMG
Peat Marwick LLP, addressed to the Company and the Placement Agents and dated
the date hereof, in form and substance satisfactory to you and the Placement
Agents.
(b) You shall have received a letter of KPMG Peat Marwick, LLP,
addressed to the Company and the Placement Agents and dated the date of the
Closing (i) confirming that they are independent public accountants with respect
to the Company and the Subsidiaries within the meaning of Rule 101 of the Code
of Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Private Placement Memorandum, as
of a date not more than three business days prior to the date of such letter),
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered in the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter.
4.9. PROCEEDINGS AND DOCUMENTS.
The Indenture, the Registration Rights Agreement, the Other
Agreements and the Notes shall have been duly authorized, executed and delivered
by the Company and the other parties thereto. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you, and you shall have received all such counterpart originals
or certified or other copies of such documents as you may reasonably request.
4.10. AUTHORIZATION FOR LISTING ON NASDAQ.
The Common Stock issuable upon conversion of the Notes shall have
been authorized for listing on the Nasdaq National Market ("NASDAQ") and trading
in the Common Stock of the Company on Nasdaq shall not have been suspended by
the Commission or Nasdaq.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that except as disclosed
in the Private Placement Memorandum and Schedule B attached hereto:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota, and is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company, Angellan (as defined below) and the Subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT"). The Company has the corporate
power and authority to own or hold under lease the properties it purports to own
or hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this
<PAGE>
Agreement, the Indenture, the Registration Rights Agreement, the Other
Agreements and the Notes, to issue the Common Stock issuable upon the conversion
of the Notes and to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement, the Indenture, the Registration Rights Agreement,
the Other Agreements, the Notes and the Common Stock issuable upon conversion
thereof have been duly authorized by all necessary corporate action on the part
of the Company. Assuming that each of this Agreement, the Other Agreements, the
Indenture and the Registration Rights Agreement has been duly authorized,
executed and delivered by, and constitutes the legal, valid and binding
obligation of, the Trustee and the other party thereto, as the case may be, each
of this Agreement, the Other Agreements, the Indenture and the Registration
Rights Agreement constitutes, and upon execution and delivery thereof each of
the Notes will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
and, when issued upon conversion, each of the shares of Common Stock will be
validly issued, fully paid and non-assessable and the Board of Directors has
duly and validly adopted a resolution reserving such shares for issuance upon
conversion.
5.3. DISCLOSURE.
(a) The Company has delivered to you and each Other Investor a copy
of the Private Placement Memorandum relating to the transactions contemplated
hereby. The Private Placement Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of the
Company and its Subsidiaries. Except as disclosed in the Private Placement
Memorandum and Schedule B attached hereto, this Agreement, the Private Placement
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and the financial statements contained in or incorporated by reference or
accompanying the Private Placement Memorandum, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All documents incorporated by
reference in the Private Placement Memorandum that were filed under the Exchange
Act comply in all material respects with the applicable requirements of the
Exchange Act and the rules thereunder in effect as of the date of the filing.
Except as disclosed in the Private Placement Memorandum, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements, since July 31, 1997, there has been no change in the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company, Angellan or any Subsidiary except changes that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Private Placement Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
(b) No event or circumstance has occurred or exists with respect to
the Company, Angellan or any Subsidiary or their respective condition (financial
or otherwise), business, properties, results of operations or prospects, which,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed.
(c) None of the Company, Angellan or any Subsidiary has any
liabilities or obligations which are material, individually or in the aggregate,
and which are not disclosed in Commission filings, other than those incurred in
the ordinary course of the Company's, Angellan's or such Subsidiarys' respective
businesses since July 31, 1997, and which, individually or in the aggregate,
have had or are likely to have a Material Adverse Effect.
(d) The Notes and the Common Stock issuable upon conversion thereof
conform and, in the case of the Common Stock issuable upon conversion of the
Notes, will conform in all material respects to the descriptions thereof
contained in the Private Placement Memorandum; and the shares of Common Stock
issued upon conversion of the Notes in the manner contemplated by the Indenture
and the Notes, will upon issue be validly issued, fully paid and non-assessable.
<PAGE>
(e) The Registration Rights Agreement and the Indenture conform in
all material respects to the descriptions thereof contained in the Private
Placement Memorandum.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) The Company has no subsidiaries (individually a "SUBSIDIARY"
and, collectively, the "SUBSIDIARIES") other than those listed on Exhibit 21.1
to the Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1997 (the "FORM 10-K") incorporated by reference in the Private Placement
Memorandum.
(b) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
(c) Angellan Medical Systems, LLC ("ANGELLAN") is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and is duly qualified as a foreign limited
liability company and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Angellan
has the limited liability company power and authority to own or hold under lease
the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) All of the outstanding shares of capital stock of each
Subsidiary owned by the Company and its Subsidiaries have been validly issued,
are fully paid and non-assessable and are owned by the Company or another
Subsidiary free and clear of any Lien, except as otherwise disclosed in the
Private Placement Memorandum. All of the equity interests of Angellan owned by
the Company are owned by the Company free and clear of any Lien, except as
otherwise disclosed in the Private Placement Memorandum.
5.5. CAPITALIZATION.
(a) Except as described in Schedule B hereto, the authorized equity
capitalization of the Company is as set forth in the Private Placement
Memorandum, and, the Common Stock conforms in all material respects to the
description thereof contained under the heading "Description of Capital Stock"
in the Private Placement Memorandum. Except as disclosed in the Private
Placement Memorandum and Schedule B hereto, or in Commission filings, there are,
as of the date hereof, no outstanding (i) options, warrants, scrips, preemptive
rights, first offer rights, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company, Angellan or any Subsidiary, or (ii)
contracts, commitments, understandings, or arrangements by which the Company,
Angellan or any Subsidiary is or may become bound to issue, transfer, deliver,
sell, repurchase or redeem shares of capital stock of the Company, Angellan or
any Subsidiary or options, warrants, scrips, rights to subscribe to, or
commitments to purchase or acquire, any shares, or securities or rights
convertible into or exchangeable for shares, of capital stock of the Company,
Angellan or any Subsidiary.
(b) Except as disclosed in the Private Placement Memorandum and
except as provided under the Other Agreements, the Company has not, as of the
date hereof, granted or agreed to grant any registration rights with respect to
any class of its equity securities to any Person.
(c) Except as disclosed in the Private Placement Memorandum, there
are, as of the date hereof, no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of the
capital stock of the Company, and the Company is not aware of any other voting
trusts, agreements or understandings with respect to the voting of its capital
stock.
(d) Except as disclosed in the Private Placement Memorandum, neither
Angellan nor any Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement, other than this Agreement and customary
limitations imposed by corporate law statutes, restricting the ability of
Angellan or such Subsidiary to pay
<PAGE>
dividends out of profits or make any other similar distributions of profits to
the Company or any Subsidiary that owns outstanding shares of capital stock or
similar equity interests of Angellan or such Subsidiary.
(e) Except as disclosed in the Private Placement Memorandum, the
Company has not entered into any contract or agreement regarding any equity
financings.
5.6. FINANCIAL STATEMENTS.
The consolidated financial statements contained in or incorporated
by reference in the Private Placement Memorandum, together with the related
notes thereto, fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates indicated and the consolidated results of their operations and cash flows
of the Company and its consolidated Subsidiaries for the periods so specified.
Such financial statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
5.7. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement, the Other Agreements, the Indenture, the Registration Rights
Agreement, the Notes and the issuance of Common Stock upon conversion of the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company, Angellan or any Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, license, permit, lease, corporate
charter or by-laws, or any other agreement, authorization or instrument to which
the Company, Angellan or any Subsidiary is bound or by which the Company,
Angellan or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
domestic or foreign court, arbitrator or Governmental Authority applicable to
the Company, Angellan or any Subsidiary or (iii) violate any provision of any
domestic or foreign law, ordinance, rule or regulation of any Governmental
Authority applicable to the Company, Angellan or any Subsidiary, including,
without limitation, the Food, Drug and Cosmetic Act, as amended, and the
published orders, rules and regulations of the Food and Drug Administration (the
"FDA"). The term "GOVERNMENTAL AUTHORITY" means: (a) the government of the
United States of America or any State or other political subdivision thereof, or
any jurisdiction in which the Company, Angellan or any Subsidiary conducts all
or any part of its business, or which asserts jurisdiction over any properties
of the Company, Angellan or any Subsidiary; or (b) any domestic or foreign
entity exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government, including, without
limitation, the FDA.
5.8. COMMISSION DOCUMENTS.
If requested, the Company has delivered or made available to you
true and complete copies of Commission filings (including, without limitation,
proxy information and solicitation materials). The Company has not provided to
you any information which, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the Company but
which has not been so disclosed.
5.9. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement, the Other
Agreements, the Indenture, the Registration Rights Agreement, the Notes or the
issuance of Common Stock upon conversion of the Notes, except such as may be
required (i) under the securities or blue-sky laws of the various states, and
(ii) under the Securities Act, the Trust Indenture Act or rules of the National
Association of Securities Dealers (the "NASD") in connection with the
registration of the Notes and the Common Stock issuable upon conversion thereof
under the Securities Act pursuant to the Registration Rights Agreements.
5.10. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in the Private Placement Memorandum, there
are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company, Angellan or
<PAGE>
any Subsidiary or any property of the Company, Angellan or any Subsidiary in any
domestic or foreign court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or that could
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated by this Agreement, the Other Agreements, the
Indenture, the Registration Rights Agreement or the issuance of Common Stock
upon conversion of the Notes.
(b) None of the Company, Angellan or any Subsidiary is in default
under any term of any other agreement, authorization or instrument to which it
is a party or by which it is bound, or any order, judgment, decree or ruling of
any domestic or foreign court, arbitrator or Governmental Authority or is in
violation of any applicable domestic or foreign law, ordinance, rule or
regulation (including, without limitation, the Food, Drug and Cosmetic Act, as
amended, and the published orders, rule and regulations thereunder, and
Environmental Laws, as defined below) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.11. TAXES.
The Company, Angellan and the Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate, Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company, Angellan or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company, Angellan and the Subsidiaries
in respect of Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of the Company, Angellan and the Subsidiaries
have been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended July 31, 1997. "MATERIAL" means
material in relation to the condition (financial or otherwise), business,
properties, results of operations, or prospects of the Company, Angellan and the
Subsidiaries taken as a whole.
5.12. TITLE TO PROPERTY; LEASES.
Except as disclosed in the Private Placement Memorandum, the
Company, Angellan and the Subsidiaries have good and sufficient title to all
real properties and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects except where the failure to have such
title would not have a Material Adverse Effect; and except as disclosed in the
Private Placement Memorandum, the Company, Angellan and the Subsidiaries hold
any leased real or personal property under valid and enforceable leases.
5.13. LICENSES, PERMITS, ETC.
Except as disclosed in the Private Placement Memorandum:
(a) the Company, Angellan and the Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto (each, an "INTANGIBLE" and
collectively, the "INTANGIBLES"), that individually or in the aggregate are
material in relation to the condition (financial or otherwise), business,
properties, results of operations, or prospects of the Company, Angellan and the
Subsidiaries taken as a whole, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company,
Angellan or any Subsidiary infringes in any material respect any Intangible or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company, Angellan or any Subsidiary
with respect to any Intangible or other right owned or used by the Company,
Angellan or any Subsidiary.
<PAGE>
5.14. COMPLIANCE WITH ERISA.
(a) The Company and each trade or business that is treated as a
single employer together with the Company (each, an "ERISA AFFILIATE") under
Section 414 of the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time (the
"CODE"), have operated and administered employee benefit plans (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974 ("ERISA")) in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to such employee benefit plans, and
no event, transaction or condition has occurred or exists that could reasonably
be expected to result in the incurrence of any such liability by the Company or
any ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each employee benefit plan (other than multiemployer plans as such term is
defined in section 4001(a)(3) of ERISA), determined as of the end of such plan's
most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such plan
allocable to such benefit liabilities. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of multiemployer
plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is subject
to the prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Company in the first sentence of this Section 5.14(e) is
made in reliance upon and subject to the accuracy of your representation in
Section 6.3 as to the sources of the funds used to pay the purchase price of the
Notes to be purchased by you.
5.15. PRIVATE OFFERING BY THE COMPANY.
(a) Neither the Company nor, to the Company's best knowledge, anyone
acting on its behalf has offered the Notes or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you, the Other
Investors and not more than 107 other "accredited investors" (as defined in Rule
501(a)(1), (2), (3), (5), (6) or (7) of the Securities Act), each of which has
been offered the Notes at a private sale for investment. Neither the Company nor
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.
(b) None of the Company, its Subsidiaries or any affiliate (an
"AFFILIATE") (as defined in Rule 501(b) of Regulation D under the Securities Act
("REGULATION D")) of the Company, Angellan or the Subsidiaries, or any person
acting on its or their behalf has directly or indirectly, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) that is currently or will be
integrated with the sale of the Notes in a manner that would require the
registration of the Notes or the Common Stock issuable upon conversion thereof
under the Securities Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offering of the Notes.
<PAGE>
5.16. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as set
forth in the Private Placement Memorandum. No part of the proceeds from the sale
of the Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). As used in this Section, the terms
"MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings
assigned to them in said Regulation G.
5.17. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) The Private Placement Memorandum sets forth all outstanding
Indebtedness of the Company and the Subsidiaries as of March 11, 1998, since
which date there has been no Material change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Indebtedness of the
Company or the Subsidiaries. None of the Company, Angellan or any Subsidiary is
in default and no waiver of default is currently in effect, in the payment of
any principal or interest on any Indebtedness of the Company, Angellan or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Company, Angellan or any Subsidiary that would permit (or that with notice
or the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment
(b) Except as disclosed in the Private Placement Memorandum, none of
the Company, Angellan or any Subsidiary has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien.
5.18. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.19. STATUS UNDER CERTAIN STATUTES.
None of the Company, Angellan or any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
5.20. ENVIRONMENTAL MATTERS.
Except as disclosed in the Private Placement Memorandum, none of the
Company, Angellan or any Subsidiary is in violation of any statute, rule,
regulation, decision or order of any Governmental Authority or any domestic or
foreign court relating to the use, disposal or release of hazardous or toxic
substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, or is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim individually or in the aggregate is
reasonably expected to have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
5.21. MISCELLANEOUS.
(a) Neither the Company nor its affiliated purchasers, as defined in
Article 100 of Regulation M of the Exchange Act ("REGULATION M"), either alone
or with one or more other persons: (i) has taken, either directly or indirectly,
any action which was designed to cause or result in, or which has constituted,
or which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Notes (the "SUBJECT SECURITIES") pursuant to this Agreement or
(ii) will bid for or purchase any Subject Securities of the Company or any other
covered securities (within the meaning of Regulation M) relating to the Subject
Securities (together with the Subject Securities, the "COVERED SECURITIES"), or
attempt to induce
<PAGE>
any person to bid for or purchase any Covered Securities, in either case, for
the purpose of creating actual or apparent active trading in, or raising the
price of the Notes, unless an exemption from Rule 102 of Regulation M is
available.
(b) The Company is subject to and in compliance in all material
respects with the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act and the Company has timely filed all reports required to be filed
thereunder within the last 12 months.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. INVESTOR QUALIFICATIONS.
You represent that (a) you are (i) an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) (an "INSTITUTIONAL ACCREDITED INVESTOR") or (ii) an individual "accredited
investor" (as defined in Rule 501(a)(5) or (6) under the Securities Act) (A)
whose individual net worth, or joint net worth with your spouse, at the time of
purchase of the Notes, exceeds $1,000,000 or (B) who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
your spouse in excess of $300,000 in each of those years and you have a
reasonable expectation of reaching the same income level in the current year,
and (b) this Agreement and the Registration Rights Agreement have been duly
authorized by all necessary corporate action on your part.
6.2. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or as a fiduciary for the
account of one or more pension or trust funds, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which you exercise sole investment discretion, and not with a view to
the distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand that
the Notes have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law. You
represent that you have such knowledge and experience in financial and business
matters that you are capable of evaluating the merits and risks of purchasing
the Notes. You represent that you have received a copy of the Private Placement
Memorandum and acknowledge that you have had access to such financial and other
information, and have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as you deem
necessary in connection with your decision to purchase the Notes.
6.3. SOURCE OF FUNDS
If you are an Institutional Accredited Investor, you represent that
at least one of the following statements is an accurate representation as to
each source of funds (a "SOURCE") to be used by you to pay the purchase price of
the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source (i) is a separate
account that is maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to such plan and to
any participant or beneficiary of such plan (including any annuitant) are not
affected in any manner by the investment performance of the separate account or
(ii) is an insurance company general account as such term is used in PTE (as
defined below) 95-60 (issued July 12, 1995); or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1
(issued January 29, 1990), or (ii) a bank collective investment fund, within the
meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to
the Company in writing pursuant to this paragraph (b), no employee benefit plan
or group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate
<PAGE>
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names of all employee
benefit plans whose assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(e); or
(f) less than 25% of each class of "EQUITY INTERESTS" in the Source
is owned by "BENEFIT PLAN INVESTORS" (as such terms are defined in the "plan
asset" regulations promulgated by the U.S. Department of Labor at 29 C.F.R. ss.
2510.3-101); or
(g) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
7. EXPENSES, ETC.
7.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Registration
Rights Agreement, the Indenture or the Notes (whether or not such amendment,
waiver or consent becomes effective), including the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement, the Registration Rights Agreement, the
Indenture or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement, the
Registration Rights Agreement, the Indenture or the Notes, or by reason of being
a holder of any Note.
7.2. SURVIVAL.
The obligations of the Company under this Section 7 will survive the
payment or transfer of any Note, the conversion of any Note into Common Stock,
the enforcement, amendment or waiver of any provision of this Agreement, the
Registration Rights Agreement, the Indenture or the Notes, and the termination
of this Agreement.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement, the Registration Rights Agreement,
the Indenture and the Notes, the purchase or transfer by you of any Note or
portion thereof or interest therein, the payment of any Note and the conversion
of any Note into Common Stock and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement, the
Registration Rights Agreement, the Indenture and the Notes embody the entire
agreement and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
<PAGE>
9. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or at such
other address as you or it shall have specified to the Company in
writing,
(ii) if to any other holder of any Note, to such holder
at such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at its address
set forth at the beginning hereof to the attention of Peg Norris,
Corporate Controller, or at such other address as the Company shall
have specified to the holder of each Note in writing.
Notices under this Section 9 will be deemed given only when actually received.
10. REPRODUCTION OF DOCUMENTS.
This Agreement, the Registration Rights Agreement, the Indenture and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at the Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may destroy
any original document so reproduced. The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 10 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
11. CONFIDENTIAL INFORMATION.
For the purposes of this Section 11, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements that are
otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 11, (iii) any holder
of a Note who is bound by this Section 11, (iv) any investor to which you sell
or offer to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 11), (v) any federal
or state regulatory authority having jurisdiction over you, (vi) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, or (y) in connection with any litigation to
which you are a party to the extent you may reasonably
<PAGE>
determine such delivery and disclosure to be necessary or appropriate in the
enforcement of (or for the protection of the rights and remedies under) your
Notes and this Agreement, the Registration Rights Agreement and the Indenture.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 11 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 11.
12. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and the Registration Rights Agreement and shall contain a confirmation
by such Affiliate of the accuracy with respect to it of the representations set
forth in Section 6. Upon receipt of such notice, wherever the word "you" is used
in this Agreement (other than in this Section 12) and the Registration Rights
Agreement, such word shall be deemed to refer to such Affiliate in lieu of you.
In the event that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to you all of the Notes then held by such
Affiliate, upon receipt by the Company of notice of such transfer, wherever the
word "you" is used in this Agreement (other than in this Section 12) and the
Registration Rights Agreement, such word shall no longer be deemed to refer to
such Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement and the Registration Rights
Agreement. As used in this section, "AFFILIATE" means, with respect to any
Person any other Person that directly or indirectly controls, or is under common
control with, or is controlled by, such Person. As used in this definition,
"control" (including, with their correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of power to direct or cause the
direction of the management and policies of such Person (whether through
ownership of securities or partnership or other ownership interests, contract or
otherwise), provided that, in any event, any Person which owns, directly or
indirectly, more than 10% of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or more than l0%
of the partnership or other ownership interests of any Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person.
13. MISCELLANEOUS.
13.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
13.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
13.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
13.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein
<PAGE>
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
13.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
13.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of New
York, without regard to the conflict of law rules thereof.
* * * * *
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
ANGEION CORPORATION
By
--------------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
Name of Subscriber
By
------------------------------
Name:
Title:
<PAGE>
EXHIBIT 3
MATTERS TO BE COVERED IN COMPANY
COUNSEL OPINION*
1. The Company being duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and the Company
having requisite corporate power and authority to issue and sell the Notes and
Common Stock issuable upon conversion thereof and to execute and deliver the
related documents.
2. The Company being duly qualified and in good standing as a
foreign corporation in appropriate jurisdictions, except where the failure to be
duly qualified and in good standing would not have a Material Adverse Effect.
3. Due authorization and execution of the Indenture, Subscription
Agreements, Registration Rights Agreements and Notes and other documents to
which the Company is a party and such documents being legal, valid, binding and
enforceable.
4. No conflicts with charter documents, laws, orders, decrees or
agreements or documents to which the Company or Angellan is a party, and, to the
best knowledge of such counsel, no default in the observance of agreements,
statutes, orders, etc.
5. All shares of Common Stock being duly authorized and validly
issued, fully paid and non-assessable.
6. The Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
7. All consents required to issue and sell the Notes and Common
Stock issuable upon conversion thereof and to execute and deliver the documents
having been obtained.
8. To the best knowledge of such counsel, no litigation questioning
validity of documents.
9. The initial issuance of the Notes and Common Stock issuable upon
conversion thereof not requiring registration under the Securities Act of 1933,
as amended; no need to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
10. No violation of Regulations G, T or X of the Federal Reserve
Board.
11. The Company not being an "investment company", or a company
"controlled" by an "investment company", under the Investment Company Act of
1940, as amended.
12. The Company's authorized equity capitalization being as set
forth in the Private Placement Memorandum; the Common Stock conforming in all
material respects to the description thereof contained under the heading
"Description of Capital Stock" in the Private Placement Memorandum; except as
described in the Private Placement Memorandum, the holders of the outstanding
shares of capital stock of the Company not being entitled to any statutory
preemptive or, to the knowledge of such counsel after due inquiry, other rights
to subscribe for the Notes or the shares of Common Stock issuable upon
conversion thereof; the shares of Common Stock initially issuable upon
conversion of the Notes being duly and validly authorized and, when issued upon
conversion, will be validly issued, fully paid and non-assessable; and the Board
of Directors has duly and validly adopted a resolution reserving such shares of
Common Stock for issuance upon conversion. As of the date hereof, to the
knowledge of such counsel after due inquiry, except as described in the Private
Placement Memorandum, (A) there are no other outstanding shares of capital stock
of the Company and, (B) there are no outstanding options or warrants to acquire,
or any securities convertible into, any shares of capital stock of the Company.
13. The statements in the Private Placement Memorandum under the
heading "Certain United States Federal Income Tax Considerations", to the extent
that they constitute summaries of matters of law or regulation
- ---------------------------
* The scope and coverage of these opinions shall be the same as the
corresponding representations set forth in the Subscription Agreement.
<PAGE>
or legal conclusions, have been reviewed by such counsel and fairly summarize
the matters described therein in all material respects; and such counsel does
not have actual knowledge of any current or pending legal or governmental
actions, suits or proceedings which would be required to be described in the
Private Placement Memorandum if the Private Placement Memorandum were a
prospectus included in a registration statement on Form S-3 which are not
described as so required.
EXHIBIT 4.10
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement"), dated as of April 14, 1998, by
and between Angeion Corporation, a corporation incorporated under the laws of
the State of Minnesota (the "Company"), and HSBC Securities, Inc. (the "Initial
Holder" or "HSBC").
W I T N E S S E T H:
WHEREAS, as an inducement to HSBC to act as placement agent in
connection with the Company's issuance of the Notes, the Company has agreed to
issue to HSBC Warrants (as hereinafter defined) exercisable by the Holder
thereof, in accordance with the terms and conditions thereof, for shares of
Common Stock (as hereinafter defined) of the Company;
WHEREAS, the Company has authorized the issuance of the Warrants;
and
WHEREAS, HSBC now desires to subscribe for, and the Company now
desires to issue the Warrants to HSBC upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises set forth herein
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
1.01 Definitions. As used herein:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with their correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of power to direct or cause the direction of the
management and policies of such Person (whether through ownership of securities
or partnership or other ownership interests, contract or otherwise), provided
that, in any event, any Person which owns, directly or indirectly, more than 10%
of the securities having ordinary voting power for the election of directors or
other governing body of a corporation or more than 10% of the partnership or
other ownership interests of any Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, neither the Initial Holder nor any of its
Affiliates shall be deemed to be an Affiliate of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Common Stock" shall mean the Company's authorized common stock, par
value $0.01 per share, as constituted on the date hereof.
"Commission" shall mean the Securities and Exchange Commission or
any successor entity.
"Deferral Period" shall have the meaning set forth in the
Registration Rights Agreement.
"Demand Registration" shall have the meaning provided in Section
5.01(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning set forth in the Warrant.
"GAAP" shall mean accounting principles generally accepted in the
United States from time to time.
<PAGE>
"Holder" shall mean the Initial Holder and each other holder of any
Warrant or Warrant Share that is a direct or indirect transferee of the Initial
Holder or any other Holder as permitted hereunder unless, with respect to any
such Warrant Share, such Warrant Share is acquired in a public distribution
pursuant to an effective registration statement under the Securities Act or
pursuant to a transaction exempt from registration under the Securities Act, if
securities sold in such transaction may be resold without registration under the
Securities Act.
"Holder Expenses" shall have the meaning specified in Section 5.05.
"Notes" shall mean $22,150,000 principal amount of 7 1/2% Senior
Convertible Notes of the Company due 2003 to be issued and sold by the Company
as set out in the Private Placement Memorandum.
"Person" shall mean an individual, a corporation, a limited
liability company, a company, a voluntary association, a general partnership, a
limited partnership, a trust, an unincorporated organization or a government or
any agency, instrumentality or political subdivision thereof.
"Piggy-Back Registration" shall have the meaning provided in Section
5.02.
"Private Placement Memorandum" shall mean the Company's Confidential
Private Placement Memorandum dated March 12, 1998 relating to the Notes.
"Registrable Securities" shall mean any Warrant Shares until: (i)
one or more registration statements covering any such Warrant Shares have become
effective under the Securities Act and all such Warrant Shares have been
disposed of pursuant to such effective registration statement; (ii) such Warrant
Shares are sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act are
met; (iii) such Warrant Shares may be sold pursuant to Rule 144(k); (iv) the
Company has delivered a new certificate or other evidence of ownership for such
Warrant Shares not bearing any legend relating to restrictions on transfer and
such Warrant Shares may be resold without registration under the Securities Act;
or, (v) such Warrant Shares are no longer outstanding.
"Registration Expenses" shall have the meaning provided in Section
5.05.
"Registration Period" shall have the meaning provided in Section
5.04(a).
"Registration Rights Agreement" shall have the meaning provided in
Section 5.02.
"Registration Statement" shall have the meaning provided in Section
5.01.
"Required Holders" shall mean the holders of more than 50% of all
Warrant Shares (assuming the full exercise of all outstanding Warrants).
"Rose Glen Registration Rights Agreement" shall have the meaning
provided in Section 5.02.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares of Common Stock" shall have the meaning provided in Section
4.1(b) of the Warrants.
"Shelf Registration" shall mean (i) a registration statement filed
on any appropriate form under Rule 415 promulgated under the Securities Act or
any successor rule or regulation, or (ii) an amendment or supplement to any then
effective shelf registration.
"Subscription Agreement" shall mean each subscription agreement
dated as of April 3, 1998 between the Company and each subscriber thereto
relating to the offering and sale of the Notes.
"Suspension Period" shall have the meaning provided in Section
5.01(b)(iii).
"Warrant" shall mean an outstanding warrant substantially in the
form of Exhibit A hereto issued in accordance with this Agreement and any
warrant or warrants issued upon transfer thereof or in substitution therefor.
<PAGE>
"Warrant Share" shall mean a share of Common Stock issued or
issuable upon exercise of a Warrant. For purposes of this Agreement, a Warrant
Share shall be deemed to be "outstanding" from and after the date hereof until
the redemption or cancellation of such Warrant Share (or, if the related Warrant
has not been exercised, the expiration, repurchase or cancellation of such
Warrant) by the Company; provided, however, that for purposes of the definition
of "Required Holders", Warrant Shares shall not be deemed to be outstanding if
they have been sold pursuant to an effective registration statement.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. Terms and Conditions of Issuance of Warrants.
2.01 Issuance of the Warrants. In consideration of the premises and
other good and valuable consideration, the Company hereby agrees to issue to the
Initial Holder, on the date hereof, one or more Warrants to purchase an
aggregate of 181,462 shares of Common Stock.
2.02 Opinion of Counsel. Prior to or concurrently with the initial
issuance of the Warrants, HSBC shall have received opinions in form and
substance satisfactory to HSBC, dated the date of the issuance of the Warrants,
from Morrison & Foerster LLP, special counsel for the Company, Oppenheimer Wolff
& Donnelly, special Minnesota counsel for the Company and Marcus Magnuson, the
corporate attorney of the Company, covering in the aggregate the matters set
forth in Exhibit B and in such form as HSBC or its counsel may reasonably
request.
Section 3. Representations and Warranties of the Company. The
Company represents and warrants to each Holder as follows:
3.01 Authorization. The Company has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants and to issue and deliver the Warrants and Warrant Shares; the
execution, delivery and performance by the Company of this Agreement and the
Warrants have been duly authorized by all necessary action; each of this
Agreement and the Warrants has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to creditors' rights generally and to
general equitable principles. The Warrant Shares have been authorized for
listing on the Nasdaq National Market and trading in the Common Stock of the
Company on the Nasdaq National Market has not been suspended by the Commission
or the Nasdaq National Market.
3.02 Reservation; Valid Issuances. The Warrant Shares have been duly
and validly reserved for issuance upon the exercise of the Warrants. The
Warrants, when issued and delivered pursuant hereto, and the Warrant Shares when
issued and delivered upon exercise of the Warrants in accordance with their
terms and the payment of the applicable Exercise Price, will be validly issued,
fully paid and non-assessable, with no liability on the part of the holders
thereof and are not subject to any preemptive rights, rights of first refusal or
rights of first offer.
3.03 No Breach. None of the execution and delivery by the Company of
this Agreement or the Warrants, the consummation of the transactions herein or
therein contemplated, including the issuance and delivery of the Warrants and,
upon the exercise of the Warrants, the Warrant Shares, or compliance with the
terms and provisions hereof or thereof will conflict with or result in a breach
of, or require any consent under, the Certificate of Incorporation or By-Laws of
the Company, or any applicable law or regulation, or any order, writ, injunction
or decree of any court or governmental authority or agency (although the Company
will need to comply with the applicable provisions of the Securities Act, the
Exchange Act and state securities laws in connection with the exercise by the
Holders of their rights under Sections 5.01 and 5.02 hereof), or any agreement
or instrument to which the Company is a party or by which it is bound or to
which any of its properties or assets is subject, or constitute a default under
any such agreement or instrument or result in the creation or imposition of any
lien upon any of the revenues or assets of the Company pursuant to the terms of
any such agreement or instrument.
<PAGE>
3.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, which have not already been made or obtained, are necessary for the
execution, delivery or performance by the Company of this Agreement or the
Warrants, the consummation of the transactions contemplated herein and therein
or the validity or enforceability hereof or thereof, except for compliance by
the Company with the applicable provisions of the Securities Act, the Exchange
Act and state securities laws in connection with the exercise by the Holders of
their rights under Sections 5.01 and 5.02 hereof.
3.05 Capitalization. Except as described in Schedule A hereto, the
Company's authorized equity capitalization is as set forth in the Private
Placement Memorandum and the Common Stock conforms in all material respects to
the description thereof contained under the heading "Description of Capital
Stock" in the Private Placement Memorandum. As of the date hereof, except as set
forth in the Private Placement Memorandum under the heading "Description of
Capital Stock" and Schedule A hereto, there are no other outstanding shares of
capital stock of the Company and, except as set forth therein and Schedule A
hereto, and for the Warrants, there are no outstanding options or warrants to
acquire, or any securities convertible into, any shares of capital stock of the
Company.
3.06 Offer of Warrants. Neither the Company nor any Person acting on
its behalf has directly or indirectly offered the Warrants or any part thereof
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Initial Holder so as to cause the registration provisions
of the Securities Act to apply to the offer and sale of the Warrants. Neither
the Company nor any Person acting on its behalf has taken or will take any
action which would subject the offer and sale of the Warrants to the provisions
of Section 5 of the Securities Act, or to the provisions of any state securities
law requiring registration of securities, notification of the issuance or sale
thereof or confirmation of the availability of any exemption from such
registration except pursuant to this Agreement.
Section 4. Covenants.
4.01 Notice of Merger. Prior to the exercise of all of the Warrants,
the Company shall give each Holder at least 20 Business Days' prior written
notice before it consummates any merger, acquisition, consolidation or similar
transaction in which the Company shall not be the surviving corporation.
4.02 Inspection. The Company covenants and agrees that it will
permit each Holder and its representatives to examine and make extracts and
copies from the books and records of the Company during normal business hours to
the same extent that any shareholder of the Company has the right to do so under
the laws of the State of New York.
4.03 Information. The Company covenants and agrees that it will
deliver to each Holder such financial statements and other information regarding
the Company or any of its subsidiaries that the Company is obligated to prepare
and deliver to its shareholders generally, in each case at the same time such
financial statements and other information are delivered to such shareholders.
Each Holder agrees to treat, and to cause its respective Affiliates to treat,
any non-public information received from the Company pursuant to this Section
4.03 as confidential.
4.04 Rules 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Exchange Act and that it will take
such further action as the Initial Holder or the Required Holders may reasonably
request, all to the extent required from time to time to enable the Holders to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rules 144 and 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar or successor rules or regulations hereafter adopted by the Commission.
In particular, while any Registrable Securities remain outstanding, the Company
will make available, upon request, to any Holder, the information required
pursuant to Rule 144(d)(4) under the Securities Act during any period in which
the Company is not subject to Section 13 or 15(d) of the Exchange Act. Upon the
request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
<PAGE>
Section 5. Registration Rights.
5.01 Demand Registrations. (a) Demand Registrations. If: (i)(A) the
Company fails to file the Shelf Registration required under the Registration
Rights Agreement within 90 days following the issuance of the Notes; (B) the
Company fails to cause such Shelf Registration to become effective within the
180-day time period set forth in the Registration Rights Agreement; (C) the
number of Deferral Periods exceeds one in any three-month period or three in any
twelve-month period; or, (D) the number of days in a Deferral Period exceeds 30
days or (ii) the Company fails to file the Registration Statement (as defined in
the Rose Glen Registration Rights Agreement) as required under the Rose Glen
Registration Rights Agreement within the time period specified therein, then on
the date of such event the Holders of the Warrants shall have demand
registration rights as set forth in this Section 5.01. From and after such
event, for so long as the Warrants or any Registrable Securities are
outstanding, the Holder may make a written request to the Company for
registration under the Securities Act on Form S-1 or Form S-3 (or other similar
short-form if the Company then qualifies for such short form registration) of
Registrable Securities for public offering (a "Demand Registration"); provided,
however, that the Holders shall have the right to only one Demand Registration
of all or any part of their Registrable Securities. Whenever the Company shall
receive a request for a Demand Registration, the Company will promptly give
written notice of such registration request to all Holders. All requests made
pursuant to this Section 5.01(a) will specify the number of Registrable
Securities to be registered and will also specify the intended methods of
disposition thereof.
(b) Effective Registration. (i) A registration initiated as a Demand
Registration shall not be deemed a Demand Registration until such registration
has become effective and (except in the case of a Shelf Registration) until the
Registrable Securities included in such registration have actually been sold;
provided, however, that a registration that does not become effective after the
Company has filed a registration statement with respect thereto solely by reason
of the refusal to proceed by the Holders shall be deemed to have been effected
by the Company unless the Holders shall have elected (without any obligation) to
pay, and in fact pay, all reasonable Registration Expenses in connection with
such registration.
(ii) The Company may delay the filing of a registration statement
for up to 90 days if, at the time of a request for registration under Section
5.01(a) above, (i) the Company is a party to a transaction involving the
purchase, sale, conversion or issuance of securities of the Company (excluding
the purchase, sale, conversion or issuance of the Notes), (ii) there is material
undisclosed information concerning the Company or any subsidiary of the Company
which cannot be disclosed for BONA FIDE and significant business reasons, which
reason shall be provided to the Holders, in writing (without any obligation to
disclose the exact nature of any material undisclosed information concerning the
Company), (iii) financial statements required to be included or incorporated in
the registration statement have not been prepared or are otherwise not
available, or (iv) the Company reasonably expects to promptly commence an
offering of securities of the Company and the investment banker for the Company
shall advise the Company in writing (with a copy to the Holders) that, in its
opinion, the offering contemplated by the Company would be materially and
adversely affected by the sale of Registrable Securities by the Holders. The
Company shall promptly notify the Holders of any delay in such filing, the
reasons for such delay and proposed length of such delay (without any obligation
to disclose the exact nature of any material undisclosed information concerning
the Company).
(iii) The Company may suspend the effectiveness of any registration
statement filed pursuant to a Demand Registration or, without suspending such
effectiveness, instruct the Holders that no sales of Registrable Securities
included in such registration statement may be made (a "Suspension Period") (and
the Holders shall forthwith discontinue disposition of any such Registrable
Securities) if, in the Company's reasonable good faith judgment, the Company
would be required to disclose any actions taken or proposed to be taken by the
Company, which disclosure would have a material adverse effect on the Company or
on such actions by providing the Holders with written notice of such Suspension
Period and the reasons therefor (without any obligation to disclose the exact
nature of any material undisclosed information concerning the Company). The
Company shall use its reasonable best efforts to provide such notice as soon as
reasonably practicable prior to the commencement of a Suspension Period;
provided that in any event the Company shall provide such notice no later than
two Business Days prior to the commencement of such Suspension Period. No more
than three Suspension Periods may be commenced in any 12-month period and no
Suspension Period shall exceed 45 days. The Company shall give prompt written
notice to the Holders of the termination of any Suspension Period.
(c) No Right of Company or Other Person to Piggyback on Demand
Registrations. Neither the Company nor any Person owning any of its securities
(other than the Holders) shall have the right to include any of
<PAGE>
the Company's securities in a registration statement initiated as a Demand
Registration under this Section 5.01, unless (i) such securities are of the same
class and type as the Registrable Securities being registered and (ii) if such
Demand Registration is to be in the form of an underwritten offering, the
Company or such Person, as applicable, agrees in writing to sell their
securities on the same terms and conditions as apply to the Registrable
Securities being sold. If any Person owning any securities of the Company (other
than any Holder) registers securities of the Company in a Demand Registration
(in accordance with the provisions of this Section 5.01(c)), such Person shall
pay the fees and expenses of counsel to such Person and its PRO RATA share of
the Registration Expenses if the Registration Expenses for such registration are
not paid by the Company, for any reason. The Company covenants that it shall not
grant any registration rights to any Person which rights would, in the
reasonable judgment of the Placement Agents, be superior to the rights of the
Holders under this Agreement such as to conflict with the rights of such
Holders.
(d) Selection of Underwriters and Counsel, Etc. If the Initial
Holder or any Affiliate of the Initial Holder so elects, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering. If the registration involves an underwritten
offering, the Initial Holder or such Affiliate of the Initial Holder, as the
case may be, shall have the right to select (i) the investment banker or bankers
and the lead managers, to administer the offering (who may include the Initial
Holder and one or more of such Affiliates); provided, however, that any
investment banker and manager other than the Initial Holder or one or more of
its Affiliates, must be reasonably satisfactory to the Company, and (ii) one law
firm as counsel to represent the Holders. Any Holder participating in an
underwritten offering pursuant to this Section 5.01 or Section 5.02 shall, if
required by the managing underwriter or underwriters of such offering, enter
into an underwriting agreement in a form customary for underwritten offerings of
the same general type as such offering.
5.02 Piggy-Back Registration. If, at any time or from time to time
while any Warrants or Registrable Securities are outstanding, the Company
proposes to file a registration statement with respect to any of its securities
(whether for its own or another's account) under the Securities Act (including
the Shelf Registration to be filed by the Company in accordance with its
obligations under the Registration Rights Agreements each dated April 14, 1998
between the Company and each subscriber thereto (each, a "Registration Rights
Agreement") and the Registration Statement to be filed by the Company in
accordance with its obligations under the Registration Rights Agreement dated as
of March 11, 1998, as amended, between the Company and RGC International
Investors, LDC (the "Rose Glen Registration Rights Agreement"), but excluding
registration statements on Form S-4, Form S-8 or other forms that do not include
substantially the same information as would be required in a form for the
general registration of securities or that would not be available for
registration of Registrable Securities), the Company shall, as expeditiously as
possible, give written notice to the Holders, of the Company's intention to file
such registration statement. If, within 20 days after receipt of such notice,
any Holder submits a written request to the Company specifying the Registrable
Securities such Holder proposes to sell or otherwise dispose of (a "Piggy-Back
Registration"), the Company shall include the number of shares of Registrable
Securities specified in such Holder's request in such registration statement and
the Company shall use its reasonable best efforts to keep each such registration
statement in effect and to maintain compliance with each Federal and state law
and regulation for the period necessary for such Holder to effect the proposed
sale or other disposition. Notwithstanding the foregoing notice provisions, the
Company shall include the number of shares of Registrable Securities requested
by a Holder in writing to Company in the Registration Statement to be filed by
the Company in accordance with its obligations under the Rose Glen Registration
Rights Agreement.
5.03 Reduction of Offering. Subject to any superior rights contained
in agreements of the Company existing on the date of this Agreement that
conflict with the rights of the Holders and notwithstanding anything contained
herein, if the managing underwriter or underwriters of an offering described in
Section 5.01 or 5.02 hereof delivers a written opinion to the Holders that the
size of the offering that the Holders, the Company or any other Person intends
to make or the kind or combination of securities that the Holders, the Company
and any other Persons intend to include in such offering are such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then the amount of any
securities proposed to be offered shall be reduced or excluded from the offering
as follows:
(i) in the case of a Demand Registration, (x) all securities
proposed to be included in such offering by Persons other than the Holders shall
be reduced or excluded from such offering on a PRO RATA basis (or on another
basis agreed to by such other Persons) before any Registrable Securities of the
Holders are reduced or excluded from such offering, and (y) in the event that
any Registrable Securities of the Holders are required to be reduced or excluded
from such offering (which will only be required after all securities of Persons
other than the Holders have
<PAGE>
been reduced or excluded as provided in immediately preceding clause (x)), then
the number of Registrable Securities of the Holders shall be reduced or excluded
from such offering on a PRO RATA basis;
(ii) in the case of a Piggy-Back Registration initiated by a Person
other than the Company, all securities (including Registrable Securities) to be
included in such offering by the Company, the Holders and the holders of similar
"piggyback" registration rights shall be reduced or excluded from such offering
on a PRO RATA basis before any securities of the Persons initiating the
Piggy-Back Registration are reduced or excluded; and
(iii) in the case of a Piggy-Back Registration initiated by the
Company, all securities (including Registrable Securities) to be included in
such offering by the Holders and any other holders of similar "piggy-back"
registration rights shall be reduced or excluded from such offering on a PRO
RATA basis before any securities of the Company are reduced or excluded.
5.04 Registration Procedures. Whenever any Holder or Holders request
that any Registrable Securities be registered pursuant to this Section 5, the
Company will use its reasonable best efforts to effect the registration of the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
request:
(a) The Company will, as expeditiously as possible, but in any event
within 90 days after the request, prepare and file with the Commission a
registration statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 180 days or until all of such
Registrable Securities have been disposed of (if earlier) (such period, the
"Registration Period"); provided, however, that, if the Holders specify that
such registration shall be a Shelf Registration, the Company shall use its
reasonable best efforts to effect such Shelf Registration; provided further,
that, in the case of a Piggy-Back Registration, if the Company shall furnish to
the Holders a certificate signed by its chief executive officer stating that in
such officer's good faith judgment it would be significantly disadvantageous to
the Company or its shareholders for such a registration statement to be filed as
expeditiously as possible, the Company shall have a period of not more than 60
days within which to file such registration statement measured from the date of
receipt of the request in accordance with Section 5.02 hereof.
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to the
Holders requesting registration of Registrable Securities and to each
underwriter, if any, of the Registrable Securities covered by such registration
statement copies of such registration statement as proposed to be filed, and
thereafter furnish to the Holders requesting registration of Registrable
Securities and underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as the Holders requesting registration of
Registrable Securities or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holders.
(c) After the filing of the registration statement, the Company will
promptly notify the Holders of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
(d) The Company will use its reasonable best efforts to (i) register
or qualify the Registrable Securities under such other securities or blue-sky
laws of such jurisdictions in the United States as the Holders requesting
registration of Registrable Securities reasonably (in light of such Holders'
intended plan of distribution) request and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable the Holders to consummate the disposition of
the Registrable Securities owned by the Holders; provided, however, that the
Company will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction.
<PAGE>
(e) The Company will immediately notify the Holders, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an 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 promptly make available to the Holders any such supplement or
amendment.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.
(g) The Company will make available for inspection by the Initial
Holder requesting registration of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by such Initial Holder or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. In the event that an Inspector or any of its representatives is
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, or similar process) to disclose any of the
confidential information contained in the Records, it is agreed that such
Inspector or its representative, as the case may be, will provide the Company
with prompt notice of such request(s) so that the Company may seek an
appropriate protective order or other appropriate remedy and/or waive such
Inspector's or its representative's compliance with this provision. In the event
that such protective order or other remedy is not obtained, or that the Company
grants a waiver hereunder, such inspector or its representative may furnish that
portion of the Records which it is legally compelled to disclose. Each Holder
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public.
(h) The Company will furnish to each underwriter, if any, a signed
counterpart, addressed to such underwriter, of (i) an opinion or opinions of
counsel to the Company and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters, as
the case may be, as the managing underwriter therefor reasonably requests.
(i) The Company will otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to the Holders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company will (at its own expense) use its reasonable best
efforts to cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed.
The Company may require the Holders requesting registration of
Registrable Securities to promptly furnish in writing to the Company such
information regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
The Holders agree that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5.04(e) hereof,
the Holders will forthwith discontinue disposition of any Registrable Securities
registered pursuant to this Section 5 pursuant to the registration statement
covering such Registrable Securities until the Holders' receipt of the copies of
the supplemented or amended prospectus contemplated by Section 5.04(e) hereof,
and, if so directed by the Company, the Holders will deliver to the
<PAGE>
Company all copies, other than permanent file copies then in such Holders'
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the Registration Period) by
the number of days during the period from and including the date of the giving
of notice pursuant to Section 5.04(e) hereof to the date when the Company shall
make available to the Holder a prospectus supplemented or amended to conform
with the requirements of Section 5.04(e) hereof.
5.05 Registration Expenses. In connection with any registration
statement required to be filed hereunder, the Company shall pay the following
registration expenses incurred in connection with the registration hereunder
(the "Registration Expenses"): (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or blue-sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties); (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities; (vi) fees and disbursements of counsel for the Company and customary
fees and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 5.04(h) hereof); (vii) the fees
and expenses of any special experts retained by the Company in connection with
such registration; and (viii) reasonable fees and expenses (not to exceed
$20,000) of one law firm acting as counsel for the Holders and holders of the
Notes being registered thereunder. The Company shall have no obligation to pay
any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities, or any out-of-pocket expenses of the Holders (other than
as provided in clause (viii) above) selling Registrable Securities under this
Section 5 (or the agents who manage its account) (collectively, the "Holder
Expenses").
5.06 Indemnification and Contribution. (a) In connection with each
registration statement relating to the disposition of Registrable Securities,
the Company shall indemnify and hold harmless each of the Holders, each
underwriter of Registrable Securities, each partner, officer, director or
employee of each of the Holders or any such underwriter and each Person, if any,
who controls (within the meaning of either the Securities Act or the Exchange
Act) any of the Holders or any such underwriter against all losses, claims,
damages or liabilities, joint or several, to which any of the Holders, such
underwriter or any such Person may be subject arising out of or based upon (A)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement or the prospectus included therein (or any
supplement or amendment thereto) or a preliminary prospectus, or (B) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company shall reimburse each of the Holders and each of such other Persons
for any reasonable legal or other expenses incurred in connection with the
investigation or defense thereof (any such reimbursement to be made as such
expenses are incurred); provided, however, that the Company shall not be liable
in any such instance to the extent that any such loss, claim, damage or
liability arises out of or is based upon (A) any untrue statement or omission or
alleged untrue statement or omission made in any such registration statement,
preliminary prospectus, or prospectus (or amendment or supplement) in reliance
upon and in conformity with information relating to any Person referred to above
who would be indemnified by the Company pursuant to this Section 5.06(a)
furnished in writing to the Company by such Person expressly for use therein,
(B) use of a Shelf Registration Statement or the related Prospectus during a
period when a stop order has been issued in respect of such Shelf Registration
or any proceedings for that purpose have been initiated or use of a Prospectus
when use of such Prospectus has been deferred by the Company; provided further,
in each case, that the Company delivered prior notice, and the Holders have
received such prior notice, in accordance with Section 7.02 hereof of such stop
order, initiation of proceedings or deferral or (C) if the Holder fails to
deliver a Prospectus or the then current Prospectus. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) In connection with each registration relating to the disposition
of Registrable Securities, each Holder shall severally indemnify the Company,
each director of the Company, each officer of the Company who signs the
registration statement and any Person who controls the Company (within the
meaning of either the Securities Act or the Exchange Act) to the same extent as
the indemnity from the Company provided in Section 5.06(a) hereof, but only with
respect to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any such registration statement,
preliminary prospectus or prospectus (or amendment or supplement). The maximum
liability of any Holder under this Section 5.06(b) shall be limited to the
aggregate amount of all sales proceeds actually received by such Holder upon the
sale of such Holder's Registrable Securities in connection with such
registration.
<PAGE>
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to subsections (a) or (b) of this Section 5.06,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the indemnified party, and shall assume the
payment of all fees and disbursements related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (x) the indemnifying party and indemnified party
shall have mutually agreed to the retention of such counsel at the expense of
the indemnifying party or (y) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate law firm (in addition to
any reasonably necessary local counsel) at any time for all such indemnified
parties, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate law firm for the indemnified parties,
such law firm shall be designated in writing by the indemnified parties. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
(d) If the indemnification provided for in this Section 5.06 is
unavailable to the indemnified parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and the respective Holder on
the other, in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and such Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the respective Holder on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 5.06(d) were determined by
PRO RATA allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.06(d), no Holder shall be
required to contribute any amount in excess of the amount of all sales proceeds
actually received by such Holder upon the sale of such Holder's Registrable
Securities in connection with such registration. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
5.07 Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company and the Holders and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and these registration rights.
5.08 Holdback Agreement. (a) The Company and its Affiliates agree
not to effect any public sale or distribution of any Registrable Securities or
any securities similar to the Registrable Securities, or any securities
convertible into or exchangeable or exercisable for Registrable Securities
during the 14 days prior to, and during the Registration Period of any
registration statement (other than the Shelf Registration Statement) filed
pursuant to Section 5.01 or 5.02 of this Agreement with respect to an
underwritten public offering of any such securities (except
<PAGE>
as part of such registration statement where the Initial Holder consents) or the
commencement of a public distribution of Registrable Securities; provided,
however, that the provisions of this Section 5.08(a) shall not prevent (x) the
conversion or exchange of any securities pursuant to their terms into or for
other securities or (y) the issuance of securities pursuant to the Company's
employee benefit plans.
(b) To the extent not inconsistent with applicable law, each Holder
agrees not to effect any public sale or distribution of the issue being
registered or any similar security of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the 14 days
prior to and during the Registration Period of any such registration statement
with respect to an underwritten public offering of any such securities (except
in any case as part of such registration), if and to the extent requested by the
Company in the case of a non-underwritten public offering or if and to the
extent requested by the managing underwriter or underwriters in the case of an
underwritten public offering.
5.09 Specific Enforcement. The Company and each of the Holders
acknowledge that remedies at law for the enforcement of this Section 5 may be
inadequate and intend that this Section 5 shall be specifically enforceable in
accordance with Section 7.04 hereof.
Section 6. Compliance with the Securities Act.
6.01 Representations and Warranties. Each Holder by its acceptance
of the Warrants represents and warrants as of the date hereof and as of the date
of any exercise of the Warrants held by such Holder as follows:
(a) Such Holder is acquiring the Warrants and the related Warrant
Shares for its own account and not as nominee or agent for any other Person and
not for offer or sale in any manner that would be in violation of the securities
laws of the United States of America or any state thereof, without prejudice,
however, to its right at all times to sell or otherwise dispose of all or any
part of said Warrants or Warrant Shares under a registration under the
Securities Act or any applicable state securities laws or under an exemption
from such registration available under such Act or any applicable state
securities laws.
(b) Such Holder is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
6.02 Transfer Restriction. No Holder will sell, transfer or
otherwise dispose of any Warrant or Warrant Share other than to an Affiliate of
such Holder, an employee of such Holder or one of its Affiliates or in a
transaction that complies with the registration requirements of Section 5 of the
Securities Act or pursuant to an exemption (including, without limitation, sales
under Rules 144 and 144A promulgated under the Securities Act) therefrom.
6.03 Legend. Each Warrant or certificate or instrument (if any)
representing the Warrant Shares issued upon exercise of the Warrants (and each
Warrant or certificate or instrument (if any) representing the Warrant Shares
issued to transferees of such Warrant or certificate or instrument (if any)),
unless at such time as the same is no longer required under the applicable
requirements of the Securities Act, shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT."
Section 7. Miscellaneous.
7.01 Expenses. The Company agrees to pay any and all stamp, transfer
and other similar taxes payable or determined to be payable by the Initial
Holder in connection with the execution and delivery of this Agreement, any
Warrants or the issuance or transfer of the Warrants (other than any such taxes
in connection with a transfer of the Warrants to another Holder).
7.02 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex,
<PAGE>
telegraph, facsimile, cable or other writing and telexed, faxed, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice to
the Company given in accordance with this Section 7.02. All such communications
shall be deemed to have been duly given when transmitted by telex or facsimile,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
7.03 Exclusion. This Agreement and the Warrants shall be binding
upon, and inure solely to the benefit of the Company and the Holders, and no
other Person shall acquire or have any right under or by virtue of this
Agreement or the Warrants (other than any such Person to whom such Holders have
transferred an interest in the Warrants pursuant to the terms thereof and
hereof).
7.04 Specific Performance. The Company acknowledges and agrees that
in the event of any breach of this Agreement or the Warrants by the Company, the
Holders would be irreparably harmed and could not be made whole by monetary
damages. The Company accordingly agrees (i) to waive the defense in any action
for specific performance that a remedy at law would be adequate, and (ii) that
the Holders, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement or the Warrants in any action instituted in the United States District
Court for the Southern District of New York, or, in the event such Court would
not have jurisdiction for such action, in any court of the United States or any
state thereof having subject matter jurisdiction for such action.
7.05 Holder Not a Shareholder. Prior to the exercise of any of its
Warrants, no Holder shall, except as specifically provided herein, be entitled
to any of the rights of, or be deemed to be, a shareholder in the Company.
7.06 No Waivers. No failure or delay by any party in exercising any
rights, power or privilege hereunder or under the Warrants shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
7.07 Amendments and Waivers. Any provision of this Agreement or the
Warrants may be amended or waived if, but only if, such amendment or waiver is
in writing and signed by the Company, the Required Holders and, until such time
as the Initial Holder (or any Affiliate thereof) no longer holds any Warrants or
Warrant Shares, the Initial Holder (or such Affiliates).
7.08 GOVERNING LAW. THIS AGREEMENT AND THE WARRANTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAW PRINCIPLES OF ANY
JURISDICTION WHICH WOULD CAUSE THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
7.09 Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatories thereto and hereto were upon the same instrument.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
ANGEION CORPORATION
By /s Whitney A. McFarlin
-----------------------------------------------------
Name: Whitney A. McFarlin
Title: Chairman of the Board
President and Chief
Executive Officer
Address for Notices:
7601 Northland Drive
Brooklyn Park, MN 55428-1088
Telephone: (612) 315-2062
Telecopier: (612) 315-2059
Attention: Peg Norris, Corporate Controller
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105-2482
Telephone: (415) 268-7113
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
HSBC SECURITIES, INC.
By /s/ Thomas Callahan
-----------------------------------------------------
Name: Thomas Callahan
Title: Executive Managing Director
Address for Notices:
HSBC Securities, Inc.
140 Broadway
5th Floor
New York, NY 10005
Telephone: (212) 658-4114
Telecopier: (212) 658-4859
Attention: Thomas Callahan, Executive Managing Director
With a copy to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Telephone: (212) 530-5000
Telecopier: (212) 530-5219
Attention: Arnold B. Peinado, III, Esq.
<PAGE>
Exhibit A
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
ANGEION CORPORATION
Common Stock Purchase Warrant
Representing Right To Purchase 181,462 shares of Common Stock of
Angeion Corporation (as such number may be adjusted as provided herein).
No. R-__
FOR VALUE RECEIVED, ANGEION CORPORATION, a Minnesota corporation
(the "Company"), hereby certifies that HSBC SECURITIES, INC., or its registered
assigns (the "Holder"), is entitled, subject to the provisions of this Warrant,
to purchase from the Company, at any time or from time to time during the
Exercise Period (as hereinafter defined), up to a total of 181,462 shares (as
such number of shares may be adjusted pursuant to Section 2 and/or 4 below, the
"Warrant Shares") of Common Stock (as hereinafter defined), at $2.90625 per
share (as such price may be adjusted pursuant to Section 2 or 4 below, the
"Exercise Price"). This Warrant is issued to the Holder (together with such
other Warrants as may be issued in exchange, transfer or replacement of this
Warrant, the "Warrants") and entitles the Holder to purchase the Warrant Shares
(as hereinafter defined).
The Exercise Price shall be reduced on December 18, 1998 to equal
the lower of (a) the previously applicable Exercise Price or (b) the Market
Price (as defined in the Indenture) for the Company's Common Stock on December
18, 1998; provided, however that in no event shall the Conversion Price be
reduced to less than $1.5258.
Section 1.1. Certain Definitions. Terms defined in the Warrant
Agreement (as hereinafter defined) and not otherwise defined herein have, as
used herein, the respective meanings provided for therein. The following
additional terms, as used herein, have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any successor entity.
"Common Stock" shall mean the Company's authorized common stock,
$0.01 par value, per share, as constituted on the date hereof.
"Current Market Price" shall have the meaning set forth in Section
4.1(h).
"Daily Market Price" shall have the meaning set forth in Section
4.1(j).
"Date of Issuance" shall have the meaning set forth in Section 8.
"Excess Payment" shall have the meaning set forth in Section 4.1(i).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Period" shall mean the period of time from April 14, 1998,
until 5:00 P.M., local time in the City of New York, on April 14, 2003.
"Exercise Price" shall have the meaning set forth in the preamble.
"Indenture" shall mean the Indenture, dated as of April 14, 1998, by
and between the Company and U.S. Bank National Association, as trustee, pursuant
to which the Notes are issued.
<PAGE>
"Notes" shall mean $22,150,000 aggregate principal amount of the
Company's 7 1/2% Senior Convertible Notes Due 2003.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business, (B) if the applicable
security is quoted on The Nasdaq National Market or Nasdaq Stock Market's Small
Cap Market, as the case may be, a day on which trades may be made thereon or (C)
if the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday, Sunday or any other day on which banking institutions
in the State of New York are authorized or obligated by law or executive order
to close.
"Warrant Agreement" shall mean the Warrant Agreement, dated as of
April 14, 1998, between the Company and the Holder, as such agreement may be
modified, amended and supplemented and in effect from time to time.
Section 1.2. Other Definitions. Capitalized terms used but not
defined herein shall have the meaning set forth in the Indenture.
Section 2. Exercise of Warrant; Cancellations of Warrant. This
Warrant may be exercised in whole or in part, at any time or from time to time,
during the Exercise Period, by presentation and surrender of this Warrant to the
Company at its principal office at the address set forth in Section 12 hereof
(or at such other address as the Company may after the date hereof notify the
Holder in writing), or at the office of its transfer agent or warrant agent, if
any, with the Purchase Form annexed hereto duly executed and accompanied by
proper payment either (at the option of the Holder) in cash or check equal to
the Exercise Price for the Warrant Shares for which this Warrant is being
exercised.
Upon receipt by the Company of this Warrant and such Purchase Form,
together with the Exercise Price for the Warrant Shares for which this Warrant
is being exercised, the Holder shall be deemed to be the holder of record of the
number of Warrant Shares specified in such Purchase Form, notwithstanding that
the transfer books of the Company shall then be closed or that certificates (if
any) representing the Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all documentary stamp or similar issue
taxes payable in respect of the issue of the Warrant Shares. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder
thereof to purchase the balance of the Warrant Shares issuable hereunder.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is exchangeable at the option of, and without cost to, the Holder, upon
presentation and surrender of this Warrant to the Company for other Warrants of
different denominations, entitling the Holder to purchase in the aggregate the
same number of Warrant Shares. The Holder of this Warrant shall be entitled,
without obtaining the consent of the Company, to transfer or assign its interest
in (and rights under) this Warrant in whole or in part to any Person or Persons,
subject to the provisions of Section 6 of the Warrant Agreement. Upon surrender
of this Warrant to the Company, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees named in such instrument of assignment and, if the
Holder's entire interest is not being assigned, in the name of the Holder, and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at the
office of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 4.1. Adjustment of Number of Warrant Shares and Exercise
Price. The number of Warrant Shares purchasable pursuant hereto shall be subject
to adjustment from time to time on and after the Date of Issuance as hereinafter
provided in this Section 4.1.
<PAGE>
(a) In case the Company shall at any time after the Date of Issuance
(i) declare or pay a dividend in shares of Common Stock, (ii) make a
distribution in shares of Common Stock, (iii) subdivide its outstanding shares
of Common Stock, (iv) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (v) issue any shares of its capital
stock or other assets in a reclassification or reorganization of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing entity), the securities
purchasable pursuant hereto shall be adjusted to the number of Warrant Shares
and amount of any other securities, cash or other property of the Company which
the Holder would have owned or have been entitled to receive after the happening
of any of the events described above, had this Warrant been exercised
immediately prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event, retroactive to the
record date, if any, for such event. Any Warrant Shares purchasable as a result
of such adjustment shall not be issued prior to the effective date of such
event.
(b) For the purpose of this Section 4.1 and Section 4.2 hereof, the
term "Shares of Common Stock" shall mean (i) the classes of stock designated as
the Common Stock of the Company as of the date hereof, (ii) any other class of
stock resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value, or (iii) any other capital stock of the Company
which is not by its terms restricted in amount or timing to the entitlement to
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company. In the event that at any
time, as a result of an adjustment made pursuant to this Section 4.1, the Holder
shall become entitled to receive any securities of the Company other than shares
of Common Stock, thereafter the number of such other securities so receivable
upon exercise of this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares contained in this Section 4.
(c) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of holders of
Common Stock entitled to receive such rights or warrants and expiring not more
than 45 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
less than the Current Market Price per share of Common Stock on such record date
(determined as provided in paragraph (h) below), the number of Warrant Shares
purchasable pursuant hereto shall be adjusted so that the same shall equal the
number of Warrant Shares determined by multiplying the number of Warrant Shares
purchasable immediately prior to such record date by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock offered (or into which
the convertible securities so offered are convertible) and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of shares of Common Stock which the aggregate offering
price of the offered shares of Common Stock (or the aggregate conversion price
of the convertible securities so offered) would purchase at such Current Market
Price. Such adjustment shall become effective immediately after such record
date.
(d) In case the Company shall distribute to all holders of Common
Stock shares of any class of Capital Stock of the Company other than Common
Stock, evidences of indebtedness or other assets (other than cash dividends out
of current or retained earnings), or shall distribute to substantially all
holders of Common Stock rights or warrants to subscribe for securities (other
than those securities referred to in paragraph (c) above), then in each such
case the number of Warrant Shares purchasable pursuant hereto shall be adjusted
so that the same shall equal the number of Warrant Shares determined by
multiplying the number of Warrant Shares purchasable immediately prior to the
date of such distribution by a fraction the numerator of which shall be the
Current Market Price per share of Common Stock on the record date mentioned
below (determined as provided in paragraph (h) below) and the denominator of
which shall be such Current Market Price less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value and described in a Board Resolution (as
defined in the Indenture)) of the portion of the assets so distributed or of
such subscription rights or warrants applicable to one share of Common Stock.
Such adjustment shall become effective immediately after the record date for the
determination if the holders of Common Stock entitled to receive such
distribution.
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company, but excluding any
cash that is distributed as part of a distribution requiring an adjustment
pursuant to paragraph (d)
<PAGE>
above) in an aggregate amount that, together with the sum of (x) the aggregate
amount of any other distributions to all holders of its Common Stock made in
cash plus (y) all Excess Payments (as defined below in paragraph (i)), in each
case made within the 12 months preceding the date fixed for determining the
shareholders entitled to such distribution (the "Distribution Record Date") and
in respect of which no adjustment to the Exercise Price of Warrants pursuant to
paragraphs (d) or (f) of this Section 4.1 or this paragraph (e) has been made,
exceeds 15% of the product of the Current Market Price per share (determined as
provided in paragraph (i) below) of Common Stock on the Distribution Record Date
multiplied by the number of shares of Common Stock outstanding on the
Distribution Record Date (excluding shares of Common Stock held in the treasury
of the Company), the number of Warrant Shares purchasable pursuant hereto shall
be adjusted so that the same shall equal the number of Warrant Shares determined
by multiplying the number of Warrant Shares purchasable pursuant hereto
immediately prior to the effectiveness of the adjustment contemplated by this
paragraph (e) by a fraction the numerator of which shall be the Current Market
Price per share of Common Stock on the Distribution Record Date (determined as
provided in paragraph (h) below) and the denominator of which shall be such
Current Market Price less the amount of such cash and other consideration
(including any Excess Payments) so distributed applicable to one share of Common
Stock (equal to the aggregate amount of such cash and other consideration
(including any Excess Payments) divided by the number of shares of Common Stock
outstanding on the Distribution Record Date). Such adjustment shall become
effective immediately prior to the opening of business on the day following the
Distribution Record Date.
(f) In case a tender offer or other negotiated transaction made by
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall be consummated, if an Excess Payment is made in respect of
such tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (including any distributions of cash out of
current or retained earnings of the Company), in each case made within the 12
months preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender Offer, as the case may be
(the "Purchase Date"), and as to which no adjustment pursuant to paragraph (d)
or paragraph (e) of this Section 4.1 or this paragraph (f) has been made,
exceeds 15% of the product of the Current Market Price per share of Common Stock
on the Purchase Date (determined as provided in paragraph (i) below) multiplied
by the number of shares of Common Stock outstanding (including any tendered
shares but excluding any shares of Common Stock held in the treasury of the
Company) on the Purchase Date, the number of Warrant Shares purchasable pursuant
hereto shall be adjusted so that the same shall equal the number of Warrant
Shares purchasable pursuant hereto determined by multiplying the number of
Warrant Shares purchasable pursuant hereto in effect immediately prior to the
effectiveness of the adjustment contemplated by this paragraph (f) by a fraction
the numerator of which shall be the Current Market Price per share of Common
Stock on the Purchase Date (determined as provided in paragraph (h) below) and
the denominator shall be such Current Market Price less the amount of such
Excess Payments and such cash distributions, if any, applicable to one share of
Common Stock (equal to the aggregate amount of such Excess Payments and such
cash distributions divided by the number of shares of Common Stock outstanding
on the Purchase Date). Such adjustment shall become effective immediately prior
to the opening of business on the day following the Purchase Date.
(g) Whenever the number of Warrant Shares purchasable pursuant
hereto is adjusted as herein provided, the Exercise Price shall be adjusted by
multiplying the Exercise Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Warrant Shares
purchasable pursuant hereto immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares purchasable pursuant
hereto immediately thereafter.
(h) The "Current Market Price" per share of Common Stock on any date
of determination shall be deemed to be the average of the Daily Market Prices
for the shorter of (i) 5 consecutive Business Days ending on the last full
Trading Day on the exchange or market referred to in determining such Daily
Market Prices prior to the time of determination or (ii) the period commencing
on the date next succeeding the first public announcement of the issuance of
such rights or such warrants or such other distribution or such negotiated
transaction through such last full Trading Day on the exchange or market
referred to in determining such Daily Market Prices prior to the time of
determination.
(i) "Excess Payment" means the excess of (A) the aggregate of the
cash and fair market value of other consideration paid by the Company or any of
its subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (B) the Daily Market Price on the Trading Day
immediately following the completion of such tender offer or other negotiated
transaction multiplied by the number of acquired shares.
<PAGE>
(j) "Daily Market Price" means the price of a share of Common Stock
on the relevant date, determined (a) on the basis of the last reported sale
price regular way of the Common Stock as reported on the Nasdaq Stock Market's
Small Cap Market (the "Nasdaq Small Cap"), or if the Common Stock is not then
listed on the Nasdaq Small Cap, as reported on such national securities exchange
upon which the Common Stock is listed, or (b) if there is no such reported sale
on the day in question, on the basis of the average of the closing bid and asked
quotations regular way as so reported, or (c) if the Common Stock is not listed
on the Nasdaq Small Cap or on any national securities exchange, on the basis of
the average of the high bid and low asked quotations regular way on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotations, or if not so quoted, as reported by
National Quotation Bureau, Co., or a similar organization.
4.2. No Adjustment. No adjustment in the number of Warrant Shares
purchasable pursuant hereto shall be required until cumulative adjustments
amount to 1% or more of the number of Warrant Shares purchasable pursuant hereto
as last adjusted; provided, however, that any adjustments which by reason of
this Section 4.2 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 4
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest. No
adjustment need be made for a change in the par value or no par value of the
Common Stock.
4.3. Other Adjustments. In the event that shares of Common Stock are
not delivered after the expiration of any of the rights or warrants referred to
in Section 4.1 (c) and Section 4.1 (d) hereof, the number of Warrant Shares
purchasable pursuant hereto shall be readjusted to the number of Warrant Shares
purchasable pursuant hereto which would otherwise be in effect had the
adjustment made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered.
4.4. Adjustments for Tax Purposes. The Company may, at its option,
make such reductions in the number of Warrant Shares purchasable pursuant
hereto, in addition to those required by Section 4.1 above, as it determines to
be advisable in order that any stock dividend, subdivision of shares,
distribution of rights to purchase stock or securities or distribution of
securities convertible into or exchangeable for stock made by the Company to its
shareholders will not be taxable to the recipients thereof.
4.5. Adjustments by the Company. The Company from time to time may,
to the extent permitted by law, increase the number of Warrant Shares
purchasable pursuant hereto by any amount for any period of at least 20 days, in
which case the Company shall give at least 15 days' prior notice of such
increase in accordance with Section 4.6, if the Board of Directors has made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive.
4.6. Reorganization, Merger, etc. If any capital reorganization,
reclassification or similar transaction involving the capital stock of the
Company (other than a stock dividend), any consolidation, merger or business
combination of the Company with another corporation, or the sale or conveyance
of all or any substantial part of its assets to another corporation (such
transactions collectively, a "Reorganization"), shall be effected in such a way
that holders of the shares of Common Stock shall be entitled to receive stock,
securities or assets (including, without limitation, cash) with respect to or in
exchange for shares of the Common Stock, then, prior to and as a condition of
such Reorganization, lawful and adequate provision shall be made whereby the
Holder shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Warrant and in lieu of the
Warrant Shares of the Company immediately theretofore purchasable and receivable
upon the exercise of this Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding Warrant Shares equal to the number of Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby had such Reorganization not taken place. The Company shall
not effect any such Reorganization unless prior to or simultaneously with the
consummation thereof the survivor or successor corporation (if other than the
Company) resulting from a consolidation or merger, or the corporation purchasing
the Company's assets, as the case may be, shall assume by written instrument
executed and sent to each registered Holder, the obligation to deliver to such
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to receive.
<PAGE>
4.7. Other Events. If any event occurs as to which the provisions of
Section 4.6 are not strictly applicable or, if strictly applicable, would not,
in the good faith judgment of the Board of Directors of the Company, fairly and
adequately protect the purchase rights represented by the Warrants in accordance
with the essential intent and principles of such provisions, then such Board of
Directors shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board of Directors, to protect such
purchase rights as aforesaid.
4.8. Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Warrant Shares, this
Warrant may continue to express the same price and number and kind of shares as
are stated on the front page hereof.
4.9 Exceptions to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment to the
number of Warrant Shares issuable hereunder in the case of the issuance of the
Warrants or the issuance of shares of the Common Stock upon exercise of the
Warrants.
4.10. Common Stock Outstanding. The number of shares of the Common
Stock outstanding at any time shall not include shares owned or held by or for
the account of the Company, but the disposition of any such shares shall be
considered an issue or sale of the Common Stock for the purposes of this Section
4.
4.11. Adjustment Notices to Holder. Upon any increase or decrease in
the number of Warrant Shares purchasable upon the exercise of this Warrant the
Company shall, within 15 days thereafter, deliver written notice thereof to the
Holder, which notice shall state the increased or decreased number of Warrant
Shares purchasable upon the exercise of this Warrant and the changed Exercise
Price, if any, setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based. If the Company shall fail so
to timely deliver any notice required pursuant to this Section 4.11, the
Exercise Period shall be extended until the Holder shall have received the
proper notification under this Section 4.11.
Section 5.1. Special Covenants of the Company. The Company covenants
and agrees that until all Warrants have been exercised in full:
(a) The Company will not, by amendment of its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
directly or indirectly avoid or seek to avoid the observance or performance of
any of the terms of this Warrant or the Warrant Agreement, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Holder against dilution or other impairment in accordance with the
terms of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of the Warrants above the Exercise Price payable
therefor upon such exercise, and (ii) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of stock upon the exercise of all Warrants
from time to time outstanding (including as a result of a reduction in the
purchase price pursuant to the terms hereof).
(b) If any Warrant Shares required to be reserved for the purposes
of exercise of this Warrant require registration with or approval of any
governmental authority under any federal law (other than the Securities Act) or
under any state law before such Warrant Shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible use
its reasonable best efforts to cause such Warrant Shares to be duly registered
or approved, as the case may be.
(c) If at any time as the Common Stock is listed on any national
securities exchange (as defined in the Exchange Act), the Company will, at its
expense, obtain and maintain the approval for listing on each such exchange upon
official notice of issuance of all Warrant Shares receivable upon the exercise
of the Warrants at the time outstanding and maintain the listing of such Warrant
Shares after their issuance; and the Company will so list on such national
securities exchange, will register under the Exchange Act (and any similar state
statute then in effect), and will maintain such listing of, any other securities
that at any time are issuable upon exercise of the Warrants, if and at the time
that any securities of the same class shall be listed on such national
securities exchange by the Company.
<PAGE>
(d) The Company will give notice to the Holder within five days
after the Company shall have filed with the Commission or with any national
securities exchange an application to register any securities of the Company
pursuant to the Exchange Act.
Section 5.2. Pro Rata Purchase. If at any time the Company or any of
its Affiliates shall offer to purchase any shares of Common Stock, other than
shares purchased from any employees of the Company or any of its subsidiaries as
permitted by the terms of any employee benefit plan or shareholders or similar
agreement that has been approved by the Board of Directors of the Company, the
Company shall, as part of such offer, also make an offer to purchase the
Warrants and Warrant Shares from the holders of all outstanding Warrant Shares
and Warrants, and with any purchase pursuant to each offer to be allocated pro
rata among the holders of Warrant Shares and Warrants and the other holders of
Common Stock accepting each offer to purchase.
Section 6. Notification by the Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock or any other class of its capital stock; or
(ii) the Company shall offer for subscription PRO RATA to the
holders of its Common Stock or any other class of its capital stock any
additional shares of stock of any class or any other securities convertible into
or exchangeable for shares of stock or any rights or options to subscribe
thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving the
capital stock of the Company, or a sale or conveyance of all or a substantial
part of the assets of the Company, or a consolidation, merger or business
combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder, at the earliest time legally practicable (and not less than 15 days
before any record date or other date set for definitive action) of the date on
which (A) the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or options or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding up shall take place or be voted on by
shareholders of the Company, as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in said dividend, distribution, subscription rights or options or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case may
be. If the action in question or the record date is subject to the effectiveness
of a registration statement under the Securities Act or to a favorable vote of
shareholders, the notice required by this Section 6 shall so state.
Section 7. No Voting Rights; Limitations of Liability. Prior to
exercise, this Warrant will not entitle the Holder to any voting rights or other
rights as a shareholder of the Company. No provision hereof, in the absence of
affirmative action by the Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Holder shall give rise to any
liability of the Holder for the purchase price of Common Stock acquirable by
exercise hereof or as a shareholder of the Company.
Section 8. Date of Issuance. The date the Company initially issues
this Warrant will be deemed to be the "Date of Issuance" hereof and of each new
Warrant issued in exchange, transfer or replacement hereof, regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued.
Section 9. Amendment and Waiver. (a) No failure or delay of the
Holder in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right of power. The rights and remedies of the Holder are cumulative and not
<PAGE>
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Required Holders.
(b) Any such amendment, modification or waiver effected pursuant to
this Section 9 shall be binding upon the Holders of all Warrants and Warrant
Shares, upon each future holder thereof, upon the Company and its shareholders.
In the event of any such amendment, modification or waiver, the Company shall
give prompt written notice thereof to all Holders and, if appropriate, notation
thereof shall be made on all Warrants thereafter surrendered for registration of
transfer or exchange.
(c) No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
Section 10. No Fractional Warrant Shares. The Company shall not be
required to issue stock certificates representing fractions of Warrant Shares,
but may at its option in respect of any final fraction of a Warrant Share make a
payment in cash based on the then current market price of the Common Stock (as
determined in good faith by the Board of Directors of the Company) after giving
effect to the full exercise or conversion of the Warrants.
Section 11. Reservation of Warrant Shares. The Company will
authorize, reserve and keep available at all times, free from preemptive rights,
a sufficient number of Warrant Shares to satisfy the requirements of this
Warrant and any other outstanding Warrants.
Section 12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing (including, telegraphic, telex,
facsimile or cable communication) and delivered, mailed telegraphed, telexed,
telecopied or cabled:
(i) if to a Holder, to its address as set forth in records of the
Company; and
(ii) if to the Company, to Angeion Corporation, 7601 Northland
Drive, Brooklyn Park, Minnesota 55428-1088, Attention: President, or at such
other address as may have been furnished to the Holder in writing by the
Company.
All such notices and communications shall, when mailed, telegraphed,
telexed, facsimiled, or cabled or sent by overnight courier, be effective three
Business Days after deposited in the mails, certified, return receipt requested,
when delivered to the telegraph company, cable company or one day following
delivery to an overnight courier, as the case may be, or sent by telex or
facsimile device.
Section 13. Headings. The headings of the sections and subsections
of this Warrant are inserted for convenience only and shall not be deemed to
constitute a part of this Warrant.
Section 14. Governing Law; Consent to Jurisdiction. THIS WARRANT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. If any action or proceeding shall be brought by the Holder in order to
enforce any right or obligation in respect of this Warrant, the Company hereby
consents and submits, to the fullest extent permitted by law, to the
non-exclusive jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Warrant, and agrees that venue will be proper in any
such court.
Section 15. Binding Effect. The terms and provisions of this Warrant
shall inure to the benefit of the original Holder and its successors and assigns
and shall be binding upon the Company and its successors and assigns, including,
without limitation, any Person succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
Section 16. Registration Rights, etc. Each Holder shall be entitled
to the benefits of registration and other rights pursuant to the Warrant
Agreement and shall be subject to the restrictions on sale or transfer of this
Warrant or the Warrant Shares subject hereto, as the case may be, pursuant to
the Warrant Agreement.
* * *
<PAGE>
IN WITNESS WHEREOF, the signature of its duly authorized officer has
been affixed hereto as of April 14, 1998.
ANGEION CORPORATION
By
----------------------------------------
Name:
Title:
Attest:
---------------------
<PAGE>
PURCHASE FORM
Dated ______________,
The undersigned hereby irrevocably elects to exercise the attached
Warrant to the extent of purchasing ____ shares of the Common Stock issuable
hereunder and hereby makes payment of $___________ in payment of the exercise
price thereof.
-----------
INSTRUCTIONS FOR REGISTRATION OF
COMMON STOCK
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
Signature ______________________________________________________________________
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
Name _________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
its right to purchase _____ shares of the Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint _________________
Attorney, to transfer the same on the books of the Company, with full power of
substitution in the premises.
Date: __________________________
Signature Guaranteed:
<PAGE>
MATTERS TO BE COVERED IN COMPANY
COUNSEL OPINION
1. The Company being duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and the Company
having requisite corporate power and authority to execute, deliver and perform
its obligations under the Warrant Agreement and the Warrants and to issue and
deliver the Warrants and Warrant Shares.
2. The Company being duly qualified and in good standing as a
foreign corporation in appropriate jurisdictions, except where the failure to be
duly qualified and in good standing would not have a Material Adverse Effect.
3. Due authorization and execution of the Warrant Agreement and the
Warrants and such documents being legal, valid, binding and enforceable.
4. No conflicts with charter documents, laws, orders, decrees or
other agreements to which the Company or Angellan Medical Systems, LLC
("Angellan") is a party, and, to the best knowledge of such counsel, no default
in the observance of agreements, statutes, orders, etc.
5. All shares of Capital Stock being duly authorized and validly
issued, fully paid and non-assessable.
6. All resolutions required to reserve the Warrant Shares issuable
upon exercise of the Warrants.
7. All consents required to issue the Warrants and the Warrant
Shares and to execute and deliver the documents having been obtained.
8. The Company's authorized equity capitalization being as set forth
in the Private Placement Memorandum; the Common Stock conforms in all material
respects to the description thereof contained under the heading "Description of
Capital Stock" in the Private Placement Memorandum; except as described in the
Private Placement Memorandum, the holders of the outstanding shares of capital
stock of the Company not being entitled to any statutory preemptive or, to the
knowledge of such counsel after due inquiry, other rights to subscribe for
Warrants and the Warrant Shares; the Warrant Shares being duly and validly
authorized. As of the date hereof, to the knowledge of such counsel after due
inquiry, except as described in the Private Placement Memorandum, (A) there are
no other outstanding shares of capital stock of the Company and, (B) there are
no outstanding options or warrants to acquire, or any securities convertible
into, any shares of capital stock of the Company
9. The Warrants, when issued and delivered pursuant to the Warrant
Agreement, and the Warrant Shares when issued and delivered pursuant to the
Warrants, will be validly issued, fully paid and non-assessable, with no
liability on the part of the holders thereof.
10. To the best knowledge of such counsel, no litigation questioning
validity of documents.
11. The initial issuance of the Warrants and Warrant Shares not
requiring registration under the Securities Act of 1933, as amended.
12. The Company not being an "investment company," or a company
"controlled" by an "investment company," under the Investment Company Act of
1940, as amended.
13. The statements in the Private Placement Memorandum under the
heading "Certain United States Federal Income Tax Considerations," to the extent
that they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize the matters
described therein in all material respects; and such counsel does not have
actual knowledge of any current or pending legal or governmental actions, suits
or proceedings which would be required to be described in the Private Placement
Memorandum if the Private Placement Memorandum were a prospectus included in a
registration statement on Form S-3 which are not described as so required.
EXHIBIT 4.11
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement"), dated as of April 14, 1998, by
and between Angeion Corporation, a corporation incorporated under the laws of
the State of Minnesota (the "Company"), and Prudential Securities Incorporated
(the "Initial Holder" or "Prudential Securities").
W I T N E S S E T H:
WHEREAS, as an inducement to Prudential Securities to act as
placement agent in connection with the Company's issuance of the Notes, the
Company has agreed to issue to Prudential Securities Warrants (as hereinafter
defined) exercisable by the Holder thereof, in accordance with the terms and
conditions thereof, for shares of Common Stock (as hereinafter defined) of the
Company;
WHEREAS, the Company has authorized the issuance of the Warrants;
and
WHEREAS, Prudential Securities now desires to subscribe for, and the
Company now desires to issue the Warrants to Prudential Securities upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth herein
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
1.01 Definitions. As used herein:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with their correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of power to direct or cause the direction of the
management and policies of such Person (whether through ownership of securities
or partnership or other ownership interests, contract or otherwise), provided
that, in any event, any Person which owns, directly or indirectly, more than 10%
of the securities having ordinary voting power for the election of directors or
other governing body of a corporation or more than 10% of the partnership or
other ownership interests of any Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, neither the Initial Holder nor any of its
Affiliates shall be deemed to be an Affiliate of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Common Stock" shall mean the Company's authorized common stock, par
value $0.01 per share, as constituted on the date hereof.
"Commission" shall mean the Securities and Exchange Commission or
any successor entity.
"Deferral Period" shall have the meaning set forth in the
Registration Rights Agreement.
"Demand Registration" shall have the meaning provided in Section
5.01(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning set forth in the Warrant.
"GAAP" shall mean accounting principles generally accepted in the
United States from time to time.
<PAGE>
"Holder" shall mean the Initial Holder and each other holder of any
Warrant or Warrant Share that is a direct or indirect transferee of the Initial
Holder or any other Holder as permitted hereunder unless, with respect to any
such Warrant Share, such Warrant Share is acquired in a public distribution
pursuant to an effective registration statement under the Securities Act or
pursuant to a transaction exempt from registration under the Securities Act, if
securities sold in such transaction may be resold without registration under the
Securities Act.
"Holder Expenses" shall have the meaning specified in Section 5.05.
"Notes" shall mean $22,150,000 principal amount of 7 1/2% Senior
Convertible Notes of the Company due 2003 to be issued and sold by the Company
as set out in the Private Placement Memorandum.
"Person" shall mean an individual, a corporation, a limited
liability company, a company, a voluntary association, a general partnership, a
limited partnership, a trust, an unincorporated organization or a government or
any agency, instrumentality or political subdivision thereof.
"Piggy-Back Registration" shall have the meaning provided in Section
5.02.
"Private Placement Memorandum" shall mean the Company's Confidential
Private Placement Memorandum dated March 12, 1998 relating to the Notes.
"Registrable Securities" shall mean any Warrant Shares until: (i)
one or more registration statements covering any such Warrant Shares have become
effective under the Securities Act and all such Warrant Shares have been
disposed of pursuant to such effective registration statement; (ii) such Warrant
Shares are sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act are
met; (iii) such Warrant Shares may be sold pursuant to Rule 144(k); (iv) the
Company has delivered a new certificate or other evidence of ownership for such
Warrant Shares not bearing any legend relating to restrictions on transfer and
such Warrant Shares may be resold without registration under the Securities Act;
or, (v) such Warrant Shares are no longer outstanding.
"Registration Expenses" shall have the meaning provided in Section
5.05.
"Registration Period" shall have the meaning provided in Section
5.04(a).
"Registration Rights Agreement" shall have the meaning provided in
Section 5.02.
"Registration Statement" shall have the meaning provided in Section
5.01.
"Required Holders" shall mean the holders of more than 50% of all
Warrant Shares (assuming the full exercise of all outstanding Warrants).
"Rose Glen Registration Rights Agreement" shall have the meaning
provided in Section 5.02.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares of Common Stock" shall have the meaning provided in Section
4.1(b) of the Warrants.
"Shelf Registration" shall mean (i) a registration statement filed
on any appropriate form under Rule 415 promulgated under the Securities Act or
any successor rule or regulation, or (ii) an amendment or supplement to any then
effective shelf registration.
"Subscription Agreement" shall mean each subscription agreement
dated as of April 3, 1998 between the Company and each subscriber thereto
relating to the offering and sale of the Notes.
"Suspension Period" shall have the meaning provided in Section
5.01(b)(iii).
"Warrant" shall mean an outstanding warrant substantially in the
form of Exhibit A hereto issued in accordance with this Agreement and any
warrant or warrants issued upon transfer thereof or in substitution therefor.
<PAGE>
"Warrant Share" shall mean a share of Common Stock issued or
issuable upon exercise of a Warrant. For purposes of this Agreement, a Warrant
Share shall be deemed to be "outstanding" from and after the date hereof until
the redemption or cancellation of such Warrant Share (or, if the related Warrant
has not been exercised, the expiration, repurchase or cancellation of such
Warrant) by the Company; provided, however, that for purposes of the definition
of "Required Holders", Warrant Shares shall not be deemed to be outstanding if
they have been sold pursuant to an effective registration statement.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. Terms and Conditions of Issuance of Warrants.
2.01 Issuance of the Warrants. In consideration of the premises and
other good and valuable consideration, the Company hereby agrees to issue to the
Initial Holder, on the date hereof, one or more Warrants to purchase an
aggregate of 187,197 shares of Common Stock.
2.02 Opinion of Counsel. Prior to or concurrently with the initial
issuance of the Warrants, Prudential Securities shall have received opinions in
form and substance satisfactory to Prudential Securities, dated the date of the
issuance of the Warrants, from Morrison & Foerster LLP, special counsel for the
Company, Oppenheimer Wolff & Donnelly, special Minnesota counsel for the Company
and Marcus Magnuson, the corporate attorney of the Company, covering in the
aggregate the matters set forth in Exhibit B and in such form as Prudential
Securities or its counsel may reasonably request.
Section 3. Representations and Warranties of the Company. The
Company represents and warrants to each Holder as follows:
3.01 Authorization. The Company has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants and to issue and deliver the Warrants and Warrant Shares; the
execution, delivery and performance by the Company of this Agreement and the
Warrants have been duly authorized by all necessary action; each of this
Agreement and the Warrants has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to creditors' rights generally and to
general equitable principles. The Warrant Shares have been authorized for
listing on the Nasdaq National Market and trading in the Common Stock of the
Company on the Nasdaq National Market has not been suspended by the Commission
or the Nasdaq National Market.
3.02 Reservation; Valid Issuances. The Warrant Shares have been duly
and validly reserved for issuance upon the exercise of the Warrants. The
Warrants, when issued and delivered pursuant hereto, and the Warrant Shares when
issued and delivered upon exercise of the Warrants in accordance with their
terms and the payment of the applicable Exercise Price, will be validly issued,
fully paid and non-assessable, with no liability on the part of the holders
thereof and are not subject to any preemptive rights, rights of first refusal or
rights of first offer.
3.03 No Breach. None of the execution and delivery by the Company of
this Agreement or the Warrants, the consummation of the transactions herein or
therein contemplated, including the issuance and delivery of the Warrants and,
upon the exercise of the Warrants, the Warrant Shares, or compliance with the
terms and provisions hereof or thereof will conflict with or result in a breach
of, or require any consent under, the Certificate of Incorporation or By-Laws of
the Company, or any applicable law or regulation, or any order, writ, injunction
or decree of any court or governmental authority or agency (although the Company
will need to comply with the applicable provisions of the Securities Act, the
Exchange Act and state securities laws in connection with the exercise by the
Holders of their rights under Sections 5.01 and 5.02 hereof), or any agreement
or instrument to which the Company is a party or by which it is bound or to
which any of its properties or assets is subject, or constitute a default under
any such agreement or instrument or result in the creation or imposition of any
lien upon any of the revenues or assets of the Company pursuant to the terms of
any such agreement or instrument.
<PAGE>
3.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, which have not already been made or obtained, are necessary for the
execution, delivery or performance by the Company of this Agreement or the
Warrants, the consummation of the transactions contemplated herein and therein
or the validity or enforceability hereof or thereof, except for compliance by
the Company with the applicable provisions of the Securities Act, the Exchange
Act and state securities laws in connection with the exercise by the Holders of
their rights under Sections 5.01 and 5.02 hereof.
3.05 Capitalization. Except as described in Schedule A hereto, the
Company's authorized equity capitalization is as set forth in the Private
Placement Memorandum and the Common Stock conforms in all material respects to
the description thereof contained under the heading "Description of Capital
Stock" in the Private Placement Memorandum. As of the date hereof, except as set
forth in the Private Placement Memorandum under the heading "Description of
Capital Stock" and Schedule A hereto, there are no other outstanding shares of
capital stock of the Company and, except as set forth therein and Schedule A
hereto, and for the Warrants, there are no outstanding options or warrants to
acquire, or any securities convertible into, any shares of capital stock of the
Company.
3.06 Offer of Warrants. Neither the Company nor any Person acting on
its behalf has directly or indirectly offered the Warrants or any part thereof
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Initial Holder so as to cause the registration provisions
of the Securities Act to apply to the offer and sale of the Warrants. Neither
the Company nor any Person acting on its behalf has taken or will take any
action which would subject the offer and sale of the Warrants to the provisions
of Section 5 of the Securities Act, or to the provisions of any state securities
law requiring registration of securities, notification of the issuance or sale
thereof or confirmation of the availability of any exemption from such
registration except pursuant to this Agreement.
Section 4. Covenants.
4.01 Notice of Merger. Prior to the exercise of all of the Warrants,
the Company shall give each Holder at least 20 Business Days' prior written
notice before it consummates any merger, acquisition, consolidation or similar
transaction in which the Company shall not be the surviving corporation.
4.02 Inspection. The Company covenants and agrees that it will
permit each Holder and its representatives to examine and make extracts and
copies from the books and records of the Company during normal business hours to
the same extent that any shareholder of the Company has the right to do so under
the laws of the State of New York.
4.03 Information. The Company covenants and agrees that it will
deliver to each Holder such financial statements and other information regarding
the Company or any of its subsidiaries that the Company is obligated to prepare
and deliver to its shareholders generally, in each case at the same time such
financial statements and other information are delivered to such shareholders.
Each Holder agrees to treat, and to cause its respective Affiliates to treat,
any non-public information received from the Company pursuant to this Section
4.03 as confidential.
4.04 Rules 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Exchange Act and that it will take
such further action as the Initial Holder or the Required Holders may reasonably
request, all to the extent required from time to time to enable the Holders to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rules 144 and 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar or successor rules or regulations hereafter adopted by the Commission.
In particular, while any Registrable Securities remain outstanding, the Company
will make available, upon request, to any Holder, the information required
pursuant to Rule 144(d)(4) under the Securities Act during any period in which
the Company is not subject to Section 13 or 15(d) of the Exchange Act. Upon the
request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
<PAGE>
Section 5. Registration Rights.
5.01 Demand Registrations. (a) Demand Registrations. If: (i)(A) the
Company fails to file the Shelf Registration required under the Registration
Rights Agreement within 90 days following the issuance of the Notes; (B) the
Company fails to cause such Shelf Registration to become effective within the
180-day time period set forth in the Registration Rights Agreement; (C) the
number of Deferral Periods exceeds one in any three-month period or three in any
twelve-month period; or, (D) the number of days in a Deferral Period exceeds 30
days or (ii) the Company fails to file the Registration Statement (as defined in
the Rose Glen Registration Rights Agreement) as required under the Rose Glen
Registration Rights Agreement within the time period specified therein, then on
the date of such event the Holders of the Warrants shall have demand
registration rights as set forth in this Section 5.01. From and after such
event, for so long as the Warrants or any Registrable Securities are
outstanding, the Holder may make a written request to the Company for
registration under the Securities Act on Form S-1 or Form S-3 (or other similar
short-form if the Company then qualifies for such short form registration) of
Registrable Securities for public offering (a "Demand Registration"); provided,
however, that the Holders shall have the right to only one Demand Registration
of all or any part of their Registrable Securities. Whenever the Company shall
receive a request for a Demand Registration, the Company will promptly give
written notice of such registration request to all Holders. All requests made
pursuant to this Section 5.01(a) will specify the number of Registrable
Securities to be registered and will also specify the intended methods of
disposition thereof.
(b) Effective Registration. (i) A registration initiated as a Demand
Registration shall not be deemed a Demand Registration until such registration
has become effective and (except in the case of a Shelf Registration) until the
Registrable Securities included in such registration have actually been sold;
provided, however, that a registration that does not become effective after the
Company has filed a registration statement with respect thereto solely by reason
of the refusal to proceed by the Holders shall be deemed to have been effected
by the Company unless the Holders shall have elected (without any obligation) to
pay, and in fact pay, all reasonable Registration Expenses in connection with
such registration.
(ii) The Company may delay the filing of a registration statement
for up to 90 days if, at the time of a request for registration under Section
5.01(a) above, (i) the Company is a party to a transaction involving the
purchase, sale, conversion or issuance of securities of the Company (excluding
the purchase, sale, conversion or issuance of the Notes), (ii) there is material
undisclosed information concerning the Company or any subsidiary of the Company
which cannot be disclosed for BONA FIDE and significant business reasons, which
reason shall be provided to the Holders, in writing (without any obligation to
disclose the exact nature of any material undisclosed information concerning the
Company), (iii) financial statements required to be included or incorporated in
the registration statement have not been prepared or are otherwise not
available, or (iv) the Company reasonably expects to promptly commence an
offering of securities of the Company and the investment banker for the Company
shall advise the Company in writing (with a copy to the Holders) that, in its
opinion, the offering contemplated by the Company would be materially and
adversely affected by the sale of Registrable Securities by the Holders. The
Company shall promptly notify the Holders of any delay in such filing, the
reasons for such delay and proposed length of such delay (without any obligation
to disclose the exact nature of any material undisclosed information concerning
the Company).
(iii) The Company may suspend the effectiveness of any registration
statement filed pursuant to a Demand Registration or, without suspending such
effectiveness, instruct the Holders that no sales of Registrable Securities
included in such registration statement may be made (a "Suspension Period") (and
the Holders shall forthwith discontinue disposition of any such Registrable
Securities) if, in the Company's reasonable good faith judgment, the Company
would be required to disclose any actions taken or proposed to be taken by the
Company, which disclosure would have a material adverse effect on the Company or
on such actions by providing the Holders with written notice of such Suspension
Period and the reasons therefor (without any obligation to disclose the exact
nature of any material undisclosed information concerning the Company). The
Company shall use its reasonable best efforts to provide such notice as soon as
reasonably practicable prior to the commencement of a Suspension Period;
provided that in any event the Company shall provide such notice no later than
two Business Days prior to the commencement of such Suspension Period. No more
than three Suspension Periods may be commenced in any 12-month period and no
Suspension Period shall exceed 45 days. The Company shall give prompt written
notice to the Holders of the termination of any Suspension Period.
(c) No Right of Company or Other Person to Piggyback on Demand
Registrations. Neither the Company nor any Person owning any of its securities
(other than the Holders) shall have the right to include any of
<PAGE>
the Company's securities in a registration statement initiated as a Demand
Registration under this Section 5.01, unless (i) such securities are of the same
class and type as the Registrable Securities being registered and (ii) if such
Demand Registration is to be in the form of an underwritten offering, the
Company or such Person, as applicable, agrees in writing to sell their
securities on the same terms and conditions as apply to the Registrable
Securities being sold. If any Person owning any securities of the Company (other
than any Holder) registers securities of the Company in a Demand Registration
(in accordance with the provisions of this Section 5.01(c)), such Person shall
pay the fees and expenses of counsel to such Person and its PRO RATA share of
the Registration Expenses if the Registration Expenses for such registration are
not paid by the Company, for any reason. The Company covenants that it shall not
grant any registration rights to any Person which rights would, in the
reasonable judgment of the Placement Agents, be superior to the rights of the
Holders under this Agreement such as to conflict with the rights of such
Holders.
(d) Selection of Underwriters and Counsel, Etc. If the Initial
Holder or any Affiliate of the Initial Holder so elects, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering. If the registration involves an underwritten
offering, the Initial Holder or such Affiliate of the Initial Holder, as the
case may be, shall have the right to select (i) the investment banker or bankers
and the lead managers, to administer the offering (who may include the Initial
Holder and one or more of such Affiliates); provided, however, that any
investment banker and manager other than the Initial Holder or one or more of
its Affiliates, must be reasonably satisfactory to the Company, and (ii) one law
firm as counsel to represent the Holders. Any Holder participating in an
underwritten offering pursuant to this Section 5.01 or Section 5.02 shall, if
required by the managing underwriter or underwriters of such offering, enter
into an underwriting agreement in a form customary for underwritten offerings of
the same general type as such offering.
5.02 Piggy-Back Registration. If, at any time or from time to time
while any Warrants or Registrable Securities are outstanding, the Company
proposes to file a registration statement with respect to any of its securities
(whether for its own or another's account) under the Securities Act (including
the Shelf Registration to be filed by the Company in accordance with its
obligations under the Registration Rights Agreements each dated April 14, 1998
between the Company and each subscriber thereto (each, a "Registration Rights
Agreement") and the Registration Statement to be filed by the Company in
accordance with its obligations under the Registration Rights Agreement dated as
of March 11, 1998, as amended, between the Company and RGC International
Investors, LDC (the "Rose Glen Registration Rights Agreement"), but excluding
registration statements on Form S-4, Form S-8 or other forms that do not include
substantially the same information as would be required in a form for the
general registration of securities or that would not be available for
registration of Registrable Securities), the Company shall, as expeditiously as
possible, give written notice to the Holders, of the Company's intention to file
such registration statement. If, within 20 days after receipt of such notice,
any Holder submits a written request to the Company specifying the Registrable
Securities such Holder proposes to sell or otherwise dispose of (a "Piggy-Back
Registration"), the Company shall include the number of shares of Registrable
Securities specified in such Holder's request in such registration statement and
the Company shall use its reasonable best efforts to keep each such registration
statement in effect and to maintain compliance with each Federal and state law
and regulation for the period necessary for such Holder to effect the proposed
sale or other disposition. Notwithstanding the foregoing notice provisions, the
Company shall include the number of shares of Registrable Securities requested
by a Holder in writing to Company in the Registration Statement to be filed by
the Company in accordance with its obligations under the Rose Glen Registration
Rights Agreement.
5.03 Reduction of Offering. Subject to any superior rights contained
in agreements of the Company existing on the date of this Agreement that
conflict with the rights of the Holders and notwithstanding anything contained
herein, if the managing underwriter or underwriters of an offering described in
Section 5.01 or 5.02 hereof delivers a written opinion to the Holders that the
size of the offering that the Holders, the Company or any other Person intends
to make or the kind or combination of securities that the Holders, the Company
and any other Persons intend to include in such offering are such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then the amount of any
securities proposed to be offered shall be reduced or excluded from the offering
as follows:
(i) in the case of a Demand Registration, (x) all securities
proposed to be included in such offering by Persons other than the Holders shall
be reduced or excluded from such offering on a PRO RATA basis (or on another
basis agreed to by such other Persons) before any Registrable Securities of the
Holders are reduced or excluded from such offering, and (y) in the event that
any Registrable Securities of the Holders are required to be reduced or excluded
from such offering (which will only be required after all securities of Persons
other than the Holders have
<PAGE>
been reduced or excluded as provided in immediately preceding clause (x)), then
the number of Registrable Securities of the Holders shall be reduced or excluded
from such offering on a PRO RATA basis;
(ii) in the case of a Piggy-Back Registration initiated by a Person
other than the Company, all securities (including Registrable Securities) to be
included in such offering by the Company, the Holders and the holders of similar
"piggyback" registration rights shall be reduced or excluded from such offering
on a PRO RATA basis before any securities of the Persons initiating the
Piggy-Back Registration are reduced or excluded; and
(iii) in the case of a Piggy-Back Registration initiated by the
Company, all securities (including Registrable Securities) to be included in
such offering by the Holders and any other holders of similar "piggy-back"
registration rights shall be reduced or excluded from such offering on a PRO
RATA basis before any securities of the Company are reduced or excluded.
5.04 Registration Procedures. Whenever any Holder or Holders request
that any Registrable Securities be registered pursuant to this Section 5, the
Company will use its reasonable best efforts to effect the registration of the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
request:
(a) The Company will, as expeditiously as possible, but in any event
within 90 days after the request, prepare and file with the Commission a
registration statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 180 days or until all of such
Registrable Securities have been disposed of (if earlier) (such period, the
"Registration Period"); provided, however, that, if the Holders specify that
such registration shall be a Shelf Registration, the Company shall use its
reasonable best efforts to effect such Shelf Registration; provided further,
that, in the case of a Piggy-Back Registration, if the Company shall furnish to
the Holders a certificate signed by its chief executive officer stating that in
such officer's good faith judgment it would be significantly disadvantageous to
the Company or its shareholders for such a registration statement to be filed as
expeditiously as possible, the Company shall have a period of not more than 60
days within which to file such registration statement measured from the date of
receipt of the request in accordance with Section 5.02 hereof.
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to the
Holders requesting registration of Registrable Securities and to each
underwriter, if any, of the Registrable Securities covered by such registration
statement copies of such registration statement as proposed to be filed, and
thereafter furnish to the Holders requesting registration of Registrable
Securities and underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as the Holders requesting registration of
Registrable Securities or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holders.
(c) After the filing of the registration statement, the Company will
promptly notify the Holders of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
(d) The Company will use its reasonable best efforts to (i) register
or qualify the Registrable Securities under such other securities or blue-sky
laws of such jurisdictions in the United States as the Holders requesting
registration of Registrable Securities reasonably (in light of such Holders'
intended plan of distribution) request and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable the Holders to consummate the disposition of
the Registrable Securities owned by the Holders; provided, however, that the
Company will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction.
<PAGE>
(e) The Company will immediately notify the Holders, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an 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 promptly make available to the Holders any such supplement or
amendment.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.
(g) The Company will make available for inspection by the Initial
Holder requesting registration of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by such Initial Holder or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. In the event that an Inspector or any of its representatives is
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, or similar process) to disclose any of the
confidential information contained in the Records, it is agreed that such
Inspector or its representative, as the case may be, will provide the Company
with prompt notice of such request(s) so that the Company may seek an
appropriate protective order or other appropriate remedy and/or waive such
Inspector's or its representative's compliance with this provision. In the event
that such protective order or other remedy is not obtained, or that the Company
grants a waiver hereunder, such inspector or its representative may furnish that
portion of the Records which it is legally compelled to disclose. Each Holder
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public.
(h) The Company will furnish to each underwriter, if any, a signed
counterpart, addressed to such underwriter, of (i) an opinion or opinions of
counsel to the Company and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters, as
the case may be, as the managing underwriter therefor reasonably requests.
(i) The Company will otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to the Holders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company will (at its own expense) use its reasonable best
efforts to cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed.
The Company may require the Holders requesting registration of
Registrable Securities to promptly furnish in writing to the Company such
information regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
The Holders agree that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5.04(e) hereof,
the Holders will forthwith discontinue disposition of any Registrable Securities
registered pursuant to this Section 5 pursuant to the registration statement
covering such Registrable Securities until the Holders' receipt of the copies of
the supplemented or amended prospectus contemplated by Section 5.04(e) hereof,
and, if so directed by the Company, the Holders will deliver to the
<PAGE>
Company all copies, other than permanent file copies then in such Holders'
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the Registration Period) by
the number of days during the period from and including the date of the giving
of notice pursuant to Section 5.04(e) hereof to the date when the Company shall
make available to the Holder a prospectus supplemented or amended to conform
with the requirements of Section 5.04(e) hereof.
5.05 Registration Expenses. In connection with any registration
statement required to be filed hereunder, the Company shall pay the following
registration expenses incurred in connection with the registration hereunder
(the "Registration Expenses"): (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or blue-sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties); (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities; (vi) fees and disbursements of counsel for the Company and customary
fees and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 5.04(h) hereof); (vii) the fees
and expenses of any special experts retained by the Company in connection with
such registration; and (viii) reasonable fees and expenses (not to exceed
$20,000) of one law firm acting as counsel for the Holders and holders of the
Notes being registered thereunder. The Company shall have no obligation to pay
any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities, or any out-of-pocket expenses of the Holders (other than
as provided in clause (viii) above) selling Registrable Securities under this
Section 5 (or the agents who manage its account) (collectively, the "Holder
Expenses").
5.06 Indemnification and Contribution. (a) In connection with each
registration statement relating to the disposition of Registrable Securities,
the Company shall indemnify and hold harmless each of the Holders, each
underwriter of Registrable Securities, each partner, officer, director or
employee of each of the Holders or any such underwriter and each Person, if any,
who controls (within the meaning of either the Securities Act or the Exchange
Act) any of the Holders or any such underwriter against all losses, claims,
damages or liabilities, joint or several, to which any of the Holders, such
underwriter or any such Person may be subject arising out of or based upon (A)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement or the prospectus included therein (or any
supplement or amendment thereto) or a preliminary prospectus, or (B) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company shall reimburse each of the Holders and each of such other Persons
for any reasonable legal or other expenses incurred in connection with the
investigation or defense thereof (any such reimbursement to be made as such
expenses are incurred); provided, however, that the Company shall not be liable
in any such instance to the extent that any such loss, claim, damage or
liability arises out of or is based upon (A) any untrue statement or omission or
alleged untrue statement or omission made in any such registration statement,
preliminary prospectus, or prospectus (or amendment or supplement) in reliance
upon and in conformity with information relating to any Person referred to above
who would be indemnified by the Company pursuant to this Section 5.06(a)
furnished in writing to the Company by such Person expressly for use therein,
(B) use of a Shelf Registration Statement or the related Prospectus during a
period when a stop order has been issued in respect of such Shelf Registration
or any proceedings for that purpose have been initiated or use of a Prospectus
when use of such Prospectus has been deferred by the Company; provided further,
in each case, that the Company delivered prior notice, and the Holders have
received such prior notice, in accordance with Section 7.02 hereof of such stop
order, initiation of proceedings or deferral or (C) if the Holder fails to
deliver a Prospectus or the then current Prospectus. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) In connection with each registration relating to the disposition
of Registrable Securities, each Holder shall severally indemnify the Company,
each director of the Company, each officer of the Company who signs the
registration statement and any Person who controls the Company (within the
meaning of either the Securities Act or the Exchange Act) to the same extent as
the indemnity from the Company provided in Section 5.06(a) hereof, but only with
respect to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any such registration statement,
preliminary prospectus or prospectus (or amendment or supplement). The maximum
liability of any Holder under this Section 5.06(b) shall be limited to the
aggregate amount of all sales proceeds actually received by such Holder upon the
sale of such Holder's Registrable Securities in connection with such
registration.
<PAGE>
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to subsections (a) or (b) of this Section 5.06,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the indemnified party, and shall assume the
payment of all fees and disbursements related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (x) the indemnifying party and indemnified party
shall have mutually agreed to the retention of such counsel at the expense of
the indemnifying party or (y) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate law firm (in addition to
any reasonably necessary local counsel) at any time for all such indemnified
parties, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate law firm for the indemnified parties,
such law firm shall be designated in writing by the indemnified parties. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
(d) If the indemnification provided for in this Section 5.06 is
unavailable to the indemnified parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and the respective Holder on
the other, in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and such Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the respective Holder on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 5.06(d) were determined by
PRO RATA allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.06(d), no Holder shall be
required to contribute any amount in excess of the amount of all sales proceeds
actually received by such Holder upon the sale of such Holder's Registrable
Securities in connection with such registration. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
5.07 Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company and the Holders and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and these registration rights.
5.08 Holdback Agreement. (a) The Company and its Affiliates agree
not to effect any public sale or distribution of any Registrable Securities or
any securities similar to the Registrable Securities, or any securities
convertible into or exchangeable or exercisable for Registrable Securities
during the 14 days prior to, and during the Registration Period of any
registration statement (other than the Shelf Registration Statement) filed
pursuant to Section 5.01 or 5.02 of this Agreement with respect to an
underwritten public offering of any such securities (except
<PAGE>
as part of such registration statement where the Initial Holder consents) or the
commencement of a public distribution of Registrable Securities; provided,
however, that the provisions of this Section 5.08(a) shall not prevent (x) the
conversion or exchange of any securities pursuant to their terms into or for
other securities or (y) the issuance of securities pursuant to the Company's
employee benefit plans.
(b) To the extent not inconsistent with applicable law, each Holder
agrees not to effect any public sale or distribution of the issue being
registered or any similar security of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the 14 days
prior to and during the Registration Period of any such registration statement
with respect to an underwritten public offering of any such securities (except
in any case as part of such registration), if and to the extent requested by the
Company in the case of a non-underwritten public offering or if and to the
extent requested by the managing underwriter or underwriters in the case of an
underwritten public offering.
5.09 Specific Enforcement. The Company and each of the Holders
acknowledge that remedies at law for the enforcement of this Section 5 may be
inadequate and intend that this Section 5 shall be specifically enforceable in
accordance with Section 7.04 hereof.
Section 6. Compliance with the Securities Act.
6.01 Representations and Warranties. Each Holder by its acceptance
of the Warrants represents and warrants as of the date hereof and as of the date
of any exercise of the Warrants held by such Holder as follows:
(a) Such Holder is acquiring the Warrants and the related Warrant
Shares for its own account and not as nominee or agent for any other Person and
not for offer or sale in any manner that would be in violation of the securities
laws of the United States of America or any state thereof, without prejudice,
however, to its right at all times to sell or otherwise dispose of all or any
part of said Warrants or Warrant Shares under a registration under the
Securities Act or any applicable state securities laws or under an exemption
from such registration available under such Act or any applicable state
securities laws.
(b) Such Holder is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
6.02 Transfer Restriction. No Holder will sell, transfer or
otherwise dispose of any Warrant or Warrant Share other than to an Affiliate of
such Holder, an employee of such Holder or one of its Affiliates or in a
transaction that complies with the registration requirements of Section 5 of the
Securities Act or pursuant to an exemption (including, without limitation, sales
under Rules 144 and 144A promulgated under the Securities Act) therefrom.
6.03 Legend. Each Warrant or certificate or instrument (if any)
representing the Warrant Shares issued upon exercise of the Warrants (and each
Warrant or certificate or instrument (if any) representing the Warrant Shares
issued to transferees of such Warrant or certificate or instrument (if any)),
unless at such time as the same is no longer required under the applicable
requirements of the Securities Act, shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT."
Section 7. Miscellaneous.
7.01 Expenses. The Company agrees to pay any and all stamp, transfer
and other similar taxes payable or determined to be payable by the Initial
Holder in connection with the execution and delivery of this Agreement, any
Warrants or the issuance or transfer of the Warrants (other than any such taxes
in connection with a transfer of the Warrants to another Holder).
7.02 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex,
<PAGE>
telegraph, facsimile, cable or other writing and telexed, faxed, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice to
the Company given in accordance with this Section 7.02. All such communications
shall be deemed to have been duly given when transmitted by telex or facsimile,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
7.03 Exclusion. This Agreement and the Warrants shall be binding
upon, and inure solely to the benefit of the Company and the Holders, and no
other Person shall acquire or have any right under or by virtue of this
Agreement or the Warrants (other than any such Person to whom such Holders have
transferred an interest in the Warrants pursuant to the terms thereof and
hereof).
7.04 Specific Performance. The Company acknowledges and agrees that
in the event of any breach of this Agreement or the Warrants by the Company, the
Holders would be irreparably harmed and could not be made whole by monetary
damages. The Company accordingly agrees (i) to waive the defense in any action
for specific performance that a remedy at law would be adequate, and (ii) that
the Holders, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement or the Warrants in any action instituted in the United States District
Court for the Southern District of New York, or, in the event such Court would
not have jurisdiction for such action, in any court of the United States or any
state thereof having subject matter jurisdiction for such action.
7.05 Holder Not a Shareholder. Prior to the exercise of any of its
Warrants, no Holder shall, except as specifically provided herein, be entitled
to any of the rights of, or be deemed to be, a shareholder in the Company.
7.06 No Waivers. No failure or delay by any party in exercising any
rights, power or privilege hereunder or under the Warrants shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
7.07 Amendments and Waivers. Any provision of this Agreement or the
Warrants may be amended or waived if, but only if, such amendment or waiver is
in writing and signed by the Company, the Required Holders and, until such time
as the Initial Holder (or any Affiliate thereof) no longer holds any Warrants or
Warrant Shares, the Initial Holder (or such Affiliates).
7.08 GOVERNING LAW. THIS AGREEMENT AND THE WARRANTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAW PRINCIPLES OF ANY
JURISDICTION WHICH WOULD CAUSE THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
7.09 Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatories thereto and hereto were upon the same instrument.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
ANGEION CORPORATION
By /s/ Whitney A. McFarlin
-----------------------------------------
Name: Whitney A. McFarlin
Title: Chairman of the Board
President and Chief
Executive Officer
Address for Notices:
7601 Northland Drive
Brooklyn Park, MN 55428-1088
Telephone: (612) 315-2062
Telecopier: (612) 315-2059
Attention: Peg Norris, Corporate Controller
With a copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105-2482
Telephone: (415) 268-7113
Telecopier: (415) 268-7522
Attention: Gavin B. Grover, Esq.
PRUDENTIAL SECURITIES INCORPORATED
By /s/ Anne Kavanagh
-----------------------------------------
Name: Anne Kavanagh
Title: Managing Director
Address for Notices:
Prudential Securities Incorporated
One New York Plaza
16th Floor
New York, NY 10292
Telephone: (212) 778-6098
Telecopier: (212) 778-6441
Attention: Anne Kavanagh, Managing Director
With a copy to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Telephone: (212) 530-5000
Telecopier: (212) 530-5219
Attention: Arnold B. Peinado, III, Esq.
<PAGE>
Exhibit A
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
ANGEION CORPORATION
Common Stock Purchase Warrant
Representing Right To Purchase 181,462 shares of Common Stock of
Angeion Corporation (as such number may be adjusted as provided herein).
No. R-__
FOR VALUE RECEIVED, ANGEION CORPORATION, a Minnesota corporation
(the "Company"), hereby certifies that PRUDENTIAL SECURITIES INCORPORATED, or
its registered assigns (the "Holder"), is entitled, subject to the provisions of
this Warrant, to purchase from the Company, at any time or from time to time
during the Exercise Period (as hereinafter defined), up to a total of 181,462
shares (as such number of shares may be adjusted pursuant to Section 2 and/or 4
below, the "Warrant Shares") of Common Stock (as hereinafter defined), at
$2.90625 per share (as such price may be adjusted pursuant to Section 2 or 4
below, the "Exercise Price"). This Warrant is issued to the Holder (together
with such other Warrants as may be issued in exchange, transfer or replacement
of this Warrant, the "Warrants") and entitles the Holder to purchase the Warrant
Shares (as hereinafter defined).
The Exercise Price shall be reduced on December 18, 1998 to equal
the lower of (a) the previously applicable Exercise Price or (b) the Market
Price (as defined in the Indenture) for the Company's Common Stock on December
18, 1998; provided, however that in no event shall the Conversion Price be
reduced to less than $1.5258.
Section 1.1. Certain Definitions. Terms defined in the Warrant
Agreement (as hereinafter defined) and not otherwise defined herein have, as
used herein, the respective meanings provided for therein. The following
additional terms, as used herein, have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any successor entity.
"Common Stock" shall mean the Company's authorized common stock,
$0.01 par value, per share, as constituted on the date hereof.
"Current Market Price" shall have the meaning set forth in Section
4.1(h).
"Daily Market Price" shall have the meaning set forth in Section
4.1(j).
"Date of Issuance" shall have the meaning set forth in Section 8.
"Excess Payment" shall have the meaning set forth in Section 4.1(i).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Period" shall mean the period of time from April 14, 1998,
until 5:00 P.M., local time in the City of New York, on April 14, 2003.
"Exercise Price" shall have the meaning set forth in the preamble.
"Indenture" shall mean the Indenture, dated as of April 14, 1998, by
and between the Company and U.S. Bank National Association, as trustee, pursuant
to which the Notes are issued.
<PAGE>
"Notes" shall mean $22,150,000 aggregate principal amount of the
Company's 7 1/2% Senior Convertible Notes Due 2003.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business, (B) if the applicable
security is quoted on The Nasdaq National Market or Nasdaq Stock Market's Small
Cap Market, as the case may be, a day on which trades may be made thereon or (C)
if the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday, Sunday or any other day on which banking institutions
in the State of New York are authorized or obligated by law or executive order
to close.
"Warrant Agreement" shall mean the Warrant Agreement, dated as of
April 14, 1998, between the Company and the Holder, as such agreement may be
modified, amended and supplemented and in effect from time to time.
Section 1.2. Other Definitions. Capitalized terms used but not
defined herein shall have the meaning set forth in the Indenture.
Section 2. Exercise of Warrant; Cancellations of Warrant. This
Warrant may be exercised in whole or in part, at any time or from time to time,
during the Exercise Period, by presentation and surrender of this Warrant to the
Company at its principal office at the address set forth in Section 12 hereof
(or at such other address as the Company may after the date hereof notify the
Holder in writing), or at the office of its transfer agent or warrant agent, if
any, with the Purchase Form annexed hereto duly executed and accompanied by
proper payment either (at the option of the Holder) in cash or check equal to
the Exercise Price for the Warrant Shares for which this Warrant is being
exercised.
Upon receipt by the Company of this Warrant and such Purchase Form,
together with the Exercise Price for the Warrant Shares for which this Warrant
is being exercised, the Holder shall be deemed to be the holder of record of the
number of Warrant Shares specified in such Purchase Form, notwithstanding that
the transfer books of the Company shall then be closed or that certificates (if
any) representing the Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all documentary stamp or similar issue
taxes payable in respect of the issue of the Warrant Shares. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder
thereof to purchase the balance of the Warrant Shares issuable hereunder.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is exchangeable at the option of, and without cost to, the Holder, upon
presentation and surrender of this Warrant to the Company for other Warrants of
different denominations, entitling the Holder to purchase in the aggregate the
same number of Warrant Shares. The Holder of this Warrant shall be entitled,
without obtaining the consent of the Company, to transfer or assign its interest
in (and rights under) this Warrant in whole or in part to any Person or Persons,
subject to the provisions of Section 6 of the Warrant Agreement. Upon surrender
of this Warrant to the Company, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees named in such instrument of assignment and, if the
Holder's entire interest is not being assigned, in the name of the Holder, and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at the
office of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 4.1. Adjustment of Number of Warrant Shares and Exercise
Price. The number of Warrant Shares purchasable pursuant hereto shall be subject
to adjustment from time to time on and after the Date of Issuance as hereinafter
provided in this Section 4.1.
<PAGE>
(a) In case the Company shall at any time after the Date of Issuance
(i) declare or pay a dividend in shares of Common Stock, (ii) make a
distribution in shares of Common Stock, (iii) subdivide its outstanding shares
of Common Stock, (iv) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (v) issue any shares of its capital
stock or other assets in a reclassification or reorganization of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing entity), the securities
purchasable pursuant hereto shall be adjusted to the number of Warrant Shares
and amount of any other securities, cash or other property of the Company which
the Holder would have owned or have been entitled to receive after the happening
of any of the events described above, had this Warrant been exercised
immediately prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event, retroactive to the
record date, if any, for such event. Any Warrant Shares purchasable as a result
of such adjustment shall not be issued prior to the effective date of such
event.
(b) For the purpose of this Section 4.1 and Section 4.2 hereof, the
term "Shares of Common Stock" shall mean (i) the classes of stock designated as
the Common Stock of the Company as of the date hereof, (ii) any other class of
stock resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value, or (iii) any other capital stock of the Company
which is not by its terms restricted in amount or timing to the entitlement to
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company. In the event that at any
time, as a result of an adjustment made pursuant to this Section 4.1, the Holder
shall become entitled to receive any securities of the Company other than shares
of Common Stock, thereafter the number of such other securities so receivable
upon exercise of this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares contained in this Section 4.
(c) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of holders of
Common Stock entitled to receive such rights or warrants and expiring not more
than 45 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
less than the Current Market Price per share of Common Stock on such record date
(determined as provided in paragraph (h) below), the number of Warrant Shares
purchasable pursuant hereto shall be adjusted so that the same shall equal the
number of Warrant Shares determined by multiplying the number of Warrant Shares
purchasable immediately prior to such record date by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock offered (or into which
the convertible securities so offered are convertible) and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of shares of Common Stock which the aggregate offering
price of the offered shares of Common Stock (or the aggregate conversion price
of the convertible securities so offered) would purchase at such Current Market
Price. Such adjustment shall become effective immediately after such record
date.
(d) In case the Company shall distribute to all holders of Common
Stock shares of any class of Capital Stock of the Company other than Common
Stock, evidences of indebtedness or other assets (other than cash dividends out
of current or retained earnings), or shall distribute to substantially all
holders of Common Stock rights or warrants to subscribe for securities (other
than those securities referred to in paragraph (c) above), then in each such
case the number of Warrant Shares purchasable pursuant hereto shall be adjusted
so that the same shall equal the number of Warrant Shares determined by
multiplying the number of Warrant Shares purchasable immediately prior to the
date of such distribution by a fraction the numerator of which shall be the
Current Market Price per share of Common Stock on the record date mentioned
below (determined as provided in paragraph (h) below) and the denominator of
which shall be such Current Market Price less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value and described in a Board Resolution (as
defined in the Indenture)) of the portion of the assets so distributed or of
such subscription rights or warrants applicable to one share of Common Stock.
Such adjustment shall become effective immediately after the record date for the
determination if the holders of Common Stock entitled to receive such
distribution.
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company, but excluding any
cash that is distributed as part of a distribution requiring an adjustment
pursuant to paragraph (d)
<PAGE>
above) in an aggregate amount that, together with the sum of (x) the aggregate
amount of any other distributions to all holders of its Common Stock made in
cash plus (y) all Excess Payments (as defined below in paragraph (i)), in each
case made within the 12 months preceding the date fixed for determining the
shareholders entitled to such distribution (the "Distribution Record Date") and
in respect of which no adjustment to the Exercise Price of Warrants pursuant to
paragraphs (d) or (f) of this Section 4.1 or this paragraph (e) has been made,
exceeds 15% of the product of the Current Market Price per share (determined as
provided in paragraph (i) below) of Common Stock on the Distribution Record Date
multiplied by the number of shares of Common Stock outstanding on the
Distribution Record Date (excluding shares of Common Stock held in the treasury
of the Company), the number of Warrant Shares purchasable pursuant hereto shall
be adjusted so that the same shall equal the number of Warrant Shares determined
by multiplying the number of Warrant Shares purchasable pursuant hereto
immediately prior to the effectiveness of the adjustment contemplated by this
paragraph (e) by a fraction the numerator of which shall be the Current Market
Price per share of Common Stock on the Distribution Record Date (determined as
provided in paragraph (h) below) and the denominator of which shall be such
Current Market Price less the amount of such cash and other consideration
(including any Excess Payments) so distributed applicable to one share of Common
Stock (equal to the aggregate amount of such cash and other consideration
(including any Excess Payments) divided by the number of shares of Common Stock
outstanding on the Distribution Record Date). Such adjustment shall become
effective immediately prior to the opening of business on the day following the
Distribution Record Date.
(f) In case a tender offer or other negotiated transaction made by
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock shall be consummated, if an Excess Payment is made in respect of
such tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (including any distributions of cash out of
current or retained earnings of the Company), in each case made within the 12
months preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender Offer, as the case may be
(the "Purchase Date"), and as to which no adjustment pursuant to paragraph (d)
or paragraph (e) of this Section 4.1 or this paragraph (f) has been made,
exceeds 15% of the product of the Current Market Price per share of Common Stock
on the Purchase Date (determined as provided in paragraph (i) below) multiplied
by the number of shares of Common Stock outstanding (including any tendered
shares but excluding any shares of Common Stock held in the treasury of the
Company) on the Purchase Date, the number of Warrant Shares purchasable pursuant
hereto shall be adjusted so that the same shall equal the number of Warrant
Shares purchasable pursuant hereto determined by multiplying the number of
Warrant Shares purchasable pursuant hereto in effect immediately prior to the
effectiveness of the adjustment contemplated by this paragraph (f) by a fraction
the numerator of which shall be the Current Market Price per share of Common
Stock on the Purchase Date (determined as provided in paragraph (h) below) and
the denominator shall be such Current Market Price less the amount of such
Excess Payments and such cash distributions, if any, applicable to one share of
Common Stock (equal to the aggregate amount of such Excess Payments and such
cash distributions divided by the number of shares of Common Stock outstanding
on the Purchase Date). Such adjustment shall become effective immediately prior
to the opening of business on the day following the Purchase Date.
(g) Whenever the number of Warrant Shares purchasable pursuant
hereto is adjusted as herein provided, the Exercise Price shall be adjusted by
multiplying the Exercise Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Warrant Shares
purchasable pursuant hereto immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares purchasable pursuant
hereto immediately thereafter.
(h) The "Current Market Price" per share of Common Stock on any date
of determination shall be deemed to be the average of the Daily Market Prices
for the shorter of (i) 5 consecutive Business Days ending on the last full
Trading Day on the exchange or market referred to in determining such Daily
Market Prices prior to the time of determination or (ii) the period commencing
on the date next succeeding the first public announcement of the issuance of
such rights or such warrants or such other distribution or such negotiated
transaction through such last full Trading Day on the exchange or market
referred to in determining such Daily Market Prices prior to the time of
determination.
(i) "Excess Payment" means the excess of (A) the aggregate of the
cash and fair market value of other consideration paid by the Company or any of
its subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (B) the Daily Market Price on the Trading Day
immediately following the completion of such tender offer or other negotiated
transaction multiplied by the number of acquired shares.
<PAGE>
(j) "Daily Market Price" means the price of a share of Common Stock
on the relevant date, determined (a) on the basis of the last reported sale
price regular way of the Common Stock as reported on the Nasdaq Stock Market's
Small Cap Market (the "Nasdaq Small Cap"), or if the Common Stock is not then
listed on the Nasdaq Small Cap, as reported on such national securities exchange
upon which the Common Stock is listed, or (b) if there is no such reported sale
on the day in question, on the basis of the average of the closing bid and asked
quotations regular way as so reported, or (c) if the Common Stock is not listed
on the Nasdaq Small Cap or on any national securities exchange, on the basis of
the average of the high bid and low asked quotations regular way on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotations, or if not so quoted, as reported by
National Quotation Bureau, Co., or a similar organization.
4.2. No Adjustment. No adjustment in the number of Warrant Shares
purchasable pursuant hereto shall be required until cumulative adjustments
amount to 1% or more of the number of Warrant Shares purchasable pursuant hereto
as last adjusted; provided, however, that any adjustments which by reason of
this Section 4.2 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 4
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest. No
adjustment need be made for a change in the par value or no par value of the
Common Stock.
4.3. Other Adjustments. In the event that shares of Common Stock are
not delivered after the expiration of any of the rights or warrants referred to
in Section 4.1 (c) and Section 4.1 (d) hereof, the number of Warrant Shares
purchasable pursuant hereto shall be readjusted to the number of Warrant Shares
purchasable pursuant hereto which would otherwise be in effect had the
adjustment made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered.
4.4. Adjustments for Tax Purposes. The Company may, at its option,
make such reductions in the number of Warrant Shares purchasable pursuant
hereto, in addition to those required by Section 4.1 above, as it determines to
be advisable in order that any stock dividend, subdivision of shares,
distribution of rights to purchase stock or securities or distribution of
securities convertible into or exchangeable for stock made by the Company to its
shareholders will not be taxable to the recipients thereof.
4.5. Adjustments by the Company. The Company from time to time may,
to the extent permitted by law, increase the number of Warrant Shares
purchasable pursuant hereto by any amount for any period of at least 20 days, in
which case the Company shall give at least 15 days' prior notice of such
increase in accordance with Section 4.6, if the Board of Directors has made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive.
4.6. Reorganization, Merger, etc. If any capital reorganization,
reclassification or similar transaction involving the capital stock of the
Company (other than a stock dividend), any consolidation, merger or business
combination of the Company with another corporation, or the sale or conveyance
of all or any substantial part of its assets to another corporation (such
transactions collectively, a "Reorganization"), shall be effected in such a way
that holders of the shares of Common Stock shall be entitled to receive stock,
securities or assets (including, without limitation, cash) with respect to or in
exchange for shares of the Common Stock, then, prior to and as a condition of
such Reorganization, lawful and adequate provision shall be made whereby the
Holder shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Warrant and in lieu of the
Warrant Shares of the Company immediately theretofore purchasable and receivable
upon the exercise of this Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding Warrant Shares equal to the number of Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby had such Reorganization not taken place. The Company shall
not effect any such Reorganization unless prior to or simultaneously with the
consummation thereof the survivor or successor corporation (if other than the
Company) resulting from a consolidation or merger, or the corporation purchasing
the Company's assets, as the case may be, shall assume by written instrument
executed and sent to each registered Holder, the obligation to deliver to such
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to receive.
<PAGE>
4.7. Other Events. If any event occurs as to which the provisions of
Section 4.6 are not strictly applicable or, if strictly applicable, would not,
in the good faith judgment of the Board of Directors of the Company, fairly and
adequately protect the purchase rights represented by the Warrants in accordance
with the essential intent and principles of such provisions, then such Board of
Directors shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board of Directors, to protect such
purchase rights as aforesaid.
4.8. Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Warrant Shares, this
Warrant may continue to express the same price and number and kind of shares as
are stated on the front page hereof.
4.9 Exceptions to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment to the
number of Warrant Shares issuable hereunder in the case of the issuance of the
Warrants or the issuance of shares of the Common Stock upon exercise of the
Warrants.
4.10. Common Stock Outstanding. The number of shares of the Common
Stock outstanding at any time shall not include shares owned or held by or for
the account of the Company, but the disposition of any such shares shall be
considered an issue or sale of the Common Stock for the purposes of this Section
4.
4.11. Adjustment Notices to Holder. Upon any increase or decrease in
the number of Warrant Shares purchasable upon the exercise of this Warrant the
Company shall, within 15 days thereafter, deliver written notice thereof to the
Holder, which notice shall state the increased or decreased number of Warrant
Shares purchasable upon the exercise of this Warrant and the changed Exercise
Price, if any, setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based. If the Company shall fail so
to timely deliver any notice required pursuant to this Section 4.11, the
Exercise Period shall be extended until the Holder shall have received the
proper notification under this Section 4.11.
Section 5.1. Special Covenants of the Company. The Company covenants
and agrees that until all Warrants have been exercised in full:
(a) The Company will not, by amendment of its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
directly or indirectly avoid or seek to avoid the observance or performance of
any of the terms of this Warrant or the Warrant Agreement, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Holder against dilution or other impairment in accordance with the
terms of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of the Warrants above the Exercise Price payable
therefor upon such exercise, and (ii) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of stock upon the exercise of all Warrants
from time to time outstanding (including as a result of a reduction in the
purchase price pursuant to the terms hereof).
(b) If any Warrant Shares required to be reserved for the purposes
of exercise of this Warrant require registration with or approval of any
governmental authority under any federal law (other than the Securities Act) or
under any state law before such Warrant Shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible use
its reasonable best efforts to cause such Warrant Shares to be duly registered
or approved, as the case may be.
(c) If at any time as the Common Stock is listed on any national
securities exchange (as defined in the Exchange Act), the Company will, at its
expense, obtain and maintain the approval for listing on each such exchange upon
official notice of issuance of all Warrant Shares receivable upon the exercise
of the Warrants at the time outstanding and maintain the listing of such Warrant
Shares after their issuance; and the Company will so list on such national
securities exchange, will register under the Exchange Act (and any similar state
statute then in effect), and will maintain such listing of, any other securities
that at any time are issuable upon exercise of the Warrants, if and at the time
that any securities of the same class shall be listed on such national
securities exchange by the Company.
<PAGE>
(d) The Company will give notice to the Holder within five days
after the Company shall have filed with the Commission or with any national
securities exchange an application to register any securities of the Company
pursuant to the Exchange Act.
Section 5.2. Pro Rata Purchase. If at any time the Company or any of
its Affiliates shall offer to purchase any shares of Common Stock, other than
shares purchased from any employees of the Company or any of its subsidiaries as
permitted by the terms of any employee benefit plan or shareholders or similar
agreement that has been approved by the Board of Directors of the Company, the
Company shall, as part of such offer, also make an offer to purchase the
Warrants and Warrant Shares from the holders of all outstanding Warrant Shares
and Warrants, and with any purchase pursuant to each offer to be allocated pro
rata among the holders of Warrant Shares and Warrants and the other holders of
Common Stock accepting each offer to purchase.
Section 6. Notification by the Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock or any other class of its capital stock; or
(ii) the Company shall offer for subscription PRO RATA to the
holders of its Common Stock or any other class of its capital stock any
additional shares of stock of any class or any other securities convertible into
or exchangeable for shares of stock or any rights or options to subscribe
thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving the
capital stock of the Company, or a sale or conveyance of all or a substantial
part of the assets of the Company, or a consolidation, merger or business
combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder, at the earliest time legally practicable (and not less than 15 days
before any record date or other date set for definitive action) of the date on
which (A) the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or options or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding up shall take place or be voted on by
shareholders of the Company, as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in said dividend, distribution, subscription rights or options or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case may
be. If the action in question or the record date is subject to the effectiveness
of a registration statement under the Securities Act or to a favorable vote of
shareholders, the notice required by this Section 6 shall so state.
Section 7. No Voting Rights; Limitations of Liability. Prior to
exercise, this Warrant will not entitle the Holder to any voting rights or other
rights as a shareholder of the Company. No provision hereof, in the absence of
affirmative action by the Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Holder shall give rise to any
liability of the Holder for the purchase price of Common Stock acquirable by
exercise hereof or as a shareholder of the Company.
Section 8. Date of Issuance. The date the Company initially issues
this Warrant will be deemed to be the "Date of Issuance" hereof and of each new
Warrant issued in exchange, transfer or replacement hereof, regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued.
Section 9. Amendment and Waiver. (a) No failure or delay of the
Holder in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right of power. The rights and remedies of the Holder are cumulative and not
<PAGE>
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Required Holders.
(b) Any such amendment, modification or waiver effected pursuant to
this Section 9 shall be binding upon the Holders of all Warrants and Warrant
Shares, upon each future holder thereof, upon the Company and its shareholders.
In the event of any such amendment, modification or waiver, the Company shall
give prompt written notice thereof to all Holders and, if appropriate, notation
thereof shall be made on all Warrants thereafter surrendered for registration of
transfer or exchange.
(c) No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
Section 10. No Fractional Warrant Shares. The Company shall not be
required to issue stock certificates representing fractions of Warrant Shares,
but may at its option in respect of any final fraction of a Warrant Share make a
payment in cash based on the then current market price of the Common Stock (as
determined in good faith by the Board of Directors of the Company) after giving
effect to the full exercise or conversion of the Warrants.
Section 11. Reservation of Warrant Shares. The Company will
authorize, reserve and keep available at all times, free from preemptive rights,
a sufficient number of Warrant Shares to satisfy the requirements of this
Warrant and any other outstanding Warrants.
Section 12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing (including, telegraphic, telex,
facsimile or cable communication) and delivered, mailed telegraphed, telexed,
telecopied or cabled:
(i) if to a Holder, to its address as set forth in records of the
Company; and
(ii) if to the Company, to Angeion Corporation, 7601 Northland
Drive, Brooklyn Park, Minnesota 55428-1088, Attention: President, or at such
other address as may have been furnished to the Holder in writing by the
Company.
All such notices and communications shall, when mailed, telegraphed,
telexed, facsimiled, or cabled or sent by overnight courier, be effective three
Business Days after deposited in the mails, certified, return receipt requested,
when delivered to the telegraph company, cable company or one day following
delivery to an overnight courier, as the case may be, or sent by telex or
facsimile device.
Section 13. Headings. The headings of the sections and subsections
of this Warrant are inserted for convenience only and shall not be deemed to
constitute a part of this Warrant.
Section 14. Governing Law; Consent to Jurisdiction. THIS WARRANT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. If any action or proceeding shall be brought by the Holder in order to
enforce any right or obligation in respect of this Warrant, the Company hereby
consents and submits, to the fullest extent permitted by law, to the
non-exclusive jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the date of this Warrant, and agrees that venue will be proper in any
such court.
Section 15. Binding Effect. The terms and provisions of this Warrant
shall inure to the benefit of the original Holder and its successors and assigns
and shall be binding upon the Company and its successors and assigns, including,
without limitation, any Person succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
Section 16. Registration Rights, etc. Each Holder shall be entitled
to the benefits of registration and other rights pursuant to the Warrant
Agreement and shall be subject to the restrictions on sale or transfer of this
Warrant or the Warrant Shares subject hereto, as the case may be, pursuant to
the Warrant Agreement.
* * *
<PAGE>
IN WITNESS WHEREOF, the signature of its duly authorized officer has
been affixed hereto as of April 14, 1998.
ANGEION CORPORATION
By
-----------------------------------------
Name:
Title:
Attest:
----------------------
<PAGE>
PURCHASE FORM
Dated ______________,
The undersigned hereby irrevocably elects to exercise the attached
Warrant to the extent of purchasing ____ shares of the Common Stock issuable
hereunder and hereby makes payment of $___________ in payment of the exercise
price thereof.
-----------
INSTRUCTIONS FOR REGISTRATION OF
COMMON STOCK
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
Signature ______________________________________________________________________
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
Name _________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
its right to purchase _____ shares of the Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint _________________
Attorney, to transfer the same on the books of the Company, with full power of
substitution in the premises.
Date: ____________________________
Signature Guaranteed:
<PAGE>
MATTERS TO BE COVERED IN COMPANY
COUNSEL OPINION
1. The Company being duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and the Company
having requisite corporate power and authority to execute, deliver and perform
its obligations under the Warrant Agreement and the Warrants and to issue and
deliver the Warrants and Warrant Shares.
2. The Company being duly qualified and in good standing as a
foreign corporation in appropriate jurisdictions, except where the failure to be
duly qualified and in good standing would not have a Material Adverse Effect.
3. Due authorization and execution of the Warrant Agreement and the
Warrants and such documents being legal, valid, binding and enforceable.
4. No conflicts with charter documents, laws, orders, decrees or
other agreements to which the Company or Angellan Medical Systems, LLC
("Angellan") is a party, and, to the best knowledge of such counsel, no default
in the observance of agreements, statutes, orders, etc.
5. All shares of Capital Stock being duly authorized and validly
issued, fully paid and non-assessable.
6. All resolutions required to reserve the Warrant Shares issuable
upon exercise of the Warrants.
7. All consents required to issue the Warrants and the Warrant
Shares and to execute and deliver the documents having been obtained.
8. The Company's authorized equity capitalization being as set forth
in the Private Placement Memorandum; the Common Stock conforms in all material
respects to the description thereof contained under the heading "Description of
Capital Stock" in the Private Placement Memorandum; except as described in the
Private Placement Memorandum, the holders of the outstanding shares of capital
stock of the Company not being entitled to any statutory preemptive or, to the
knowledge of such counsel after due inquiry, other rights to subscribe for
Warrants and the Warrant Shares; the Warrant Shares being duly and validly
authorized. As of the date hereof, to the knowledge of such counsel after due
inquiry, except as described in the Private Placement Memorandum, (A) there are
no other outstanding shares of capital stock of the Company and, (B) there are
no outstanding options or warrants to acquire, or any securities convertible
into, any shares of capital stock of the Company
9. The Warrants, when issued and delivered pursuant to the Warrant
Agreement, and the Warrant Shares when issued and delivered pursuant to the
Warrants, will be validly issued, fully paid and non-assessable, with no
liability on the part of the holders thereof.
10. To the best knowledge of such counsel, no litigation questioning
validity of documents.
11. The initial issuance of the Warrants and Warrant Shares not
requiring registration under the Securities Act of 1933, as amended.
12. The Company not being an "investment company," or a company
"controlled" by an "investment company," under the Investment Company Act of
1940, as amended.
13. The statements in the Private Placement Memorandum under the
heading "Certain United States Federal Income Tax Considerations," to the extent
that they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize the matters
described therein in all material respects; and such counsel does not have
actual knowledge of any current or pending legal or governmental actions, suits
or proceedings which would be required to be described in the Private Placement
Memorandum if the Private Placement Memorandum were a prospectus included in a
registration statement on Form S-3 which are not described as so required.
EXHIBIT 4.12
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE
AGREEMENT DATED AS OF MARCH 11, 1998, NEITHER THIS WARRANT NOR ANY OF
SUCH SHARES MAY BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR
AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. ANY SUCH SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE
SECURITIES LAWS.
Right to
Purchase
727,500
Shares of
Common
Stock, par
value $.01
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, RGC International Investors,
LDC or its registered assigns, is entitled to purchase from Angeion Corporation,
a Minnesota corporation (the "Company"), at any time or from time to time during
the period specified in Paragraph 2 hereof, Seven Hundred Twenty-Seven Thousand
Five Hundred (727,500) fully paid and nonassessable shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock"), at an exercise
price per share equal to the lower of (i) $3.86 and (ii) 125% of the average of
the closing bid prices of the Common Stock over the five (5) trading days ending
on the ninetieth (90th) day following the date of issuance of this Warrant (the
"Exercise Price"). The term "Warrant Shares," as used herein, refers to the
shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Paragraph 4 hereof. The
term Warrants means this Warrant and the other warrants issued pursuant to that
certain Securities Purchase Agreement, dated March 11, 1998, by and among the
Company and the Buyers listed on the execution page thereof (the "Securities
Purchase Agreement").
This Warrant is subject to the following terms, provisions, and
conditions:
<PAGE>
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been delivered, and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the holder
hereof and shall be registered in the name of such holder or such other name as
shall be designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
Notwithstanding anything in this Warrant to the contrary, in no event
shall the Holder of this Warrant be entitled to exercise a number of Warrants
(or portions thereof) in excess of the number of Warrants (or portions thereof)
upon exercise of which the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants and unconverted portions of the Notes (as defined in the
Securities Purchase Agreement) and (ii) the number of shares of Common Stock
issuable upon exercise of the Warrants (or portions thereof) with respect to
which the determination described herein is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.9% of the
outstanding shares of Common Stock. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G
thereunder, except as otherwise provided in clause (i) hereof.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and delivered
pursuant to the terms of the Securities Purchase Agreement and before 5:00 p.m.,
New York City time on the fifth (5th) anniversary of the date of issuance (the
"Exercise Period").
<PAGE>
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly
issued, fully paid, and nonassessable and free from all taxes, liens,
and charges with respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient number
of shares of Common Stock to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon exercise of the Warrant upon
each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to
official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of this Warrant; and the Company shall so
list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the exercise
of this Warrant if and so long as any shares of the same class shall be
listed on such national securities exchange or automated quotation
system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its charter or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder
of this Warrant in order to protect the exercise privilege of the
holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. Without limiting the
generality of the foregoing, the Company (i) will not increase the par
value of any shares of Common Stock receivable upon the exercise of
this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all the Company's assets.
<PAGE>
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs
4(c) and 4(e) hereof, if and whenever on or after the date of issuance
of this Warrant, the Company issues or sells, or in accordance with
Paragraph 4(b) hereof is deemed to have issued or sold, any shares of
Common Stock for no consideration or for a consideration per share
(before deduction of reasonable expenses or commissions or underwriting
discounts or allowances in connection therewith) less than the Market
Price (as hereinafter defined) on the date of issuance (a "Dilutive
Issuance"), then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the Exercise
Price in effect immediately prior to the Dilutive Issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of
(x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance, plus (y) the quotient of
the aggregate consideration, calculated as set forth in Paragraph 4(b)
hereof, received by the Company upon such Dilutive Issuance divided by
the Market Price in effect immediately prior to the Dilutive Issuance,
and (ii) the denominator of which is the total number of shares of
Common Stock Deemed Outstanding (as defined below) immediately after
the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under Paragraph 4(a) hereof,
the following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in
any manner issues or grants any warrants, rights or options,
whether or not immediately exercisable, to subscribe for or to
purchase Common Stock or other securities convertible into or
exchangeable for Common Stock ("Convertible Securities") (such
warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as
"Options") and the price per share for which Common Stock is
issuable upon the exercise of such Options is less than the
Market Price on the date of issuance or grant of such Options,
then the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options will, as of the
date of the issuance or grant of such Options, be deemed to be
outstanding and to have been issued and sold by the Company
for such price per share. For purposes of the preceding
sentence, the "price per share for which Common Stock is
issuable upon the exercise of such Options" is determined by
dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting
of all such Options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon
the exercise of all such Options, plus, in the case of
Convertible Securities issuable upon the exercise of such
Options, the minimum aggregate amount of additional
consideration payable upon the conversion or
<PAGE>
exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of
all such Options (assuming full conversion of Convertible
Securities, if applicable). No further adjustment to the
Exercise Price will be made upon the actual issuance of such
Common Stock upon the exercise of such Options or upon the
conversion or exchange of Convertible Securities issuable upon
exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options) and
the price per share for which Common Stock is issuable upon
such conversion or exchange is less than the Market Price on
the date of issuance, then the maximum total number of shares
of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities will, as of the date of the
issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company
for such price per share. For the purposes of the preceding
sentence, the "price per share for which Common Stock is
issuable upon such conversion or exchange" is determined by
dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of
all such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If
there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any
Options; (ii) the amount of additional consideration, if any,
payable to the Company upon the conversion or exchange of any
Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable
for Common Stock (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price in
effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding
provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially
granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of
shares of Common Stock issuable upon exercise of any Option or
upon conversion or exchange of any Convertible Securities is
not, in fact, issued and the rights to exercise such Option or
to convert or exchange such Convertible Securities shall have
expired or terminated, the Exercise Price then in effect will
be readjusted to the Exercise Price which would have been in
effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding
immediately prior to such
<PAGE>
expiration or termination (other than in respect of the actual
number of shares of Common Stock issued upon exercise or
conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any
Common Stock, Options or Convertible Securities are issued,
granted or sold for cash, the consideration received therefor
for purposes of this Warrant will be the amount received by
the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in
connection with such issuance, grant or sale. In case any
Common Stock, Options or Convertible Securities are issued or
sold for a consideration part or all of which shall be other
than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received
by the Company will be the Market Price thereof as of the date
of receipt. In case any Common Stock, Options or Convertible
Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets
and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined
in good faith by the Board of Directors of the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the
exercise of any warrants, options or convertible securities
granted, issued and outstanding on the date of issuance of
this Warrant; (ii) upon the grant or exercise of any stock or
options which may hereafter be granted or exercised under any
employee benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the independent
members of the Board of Directors of the Company or a majority
of the members of a committee of independent directors
established for such purpose; or (iii) upon the exercise of
the Warrants.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company
at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the
shares of Common Stock acquirable hereunder into a greater number of
shares, then, after the date of record for effecting such subdivision,
the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced. If the Company at any time combines (by
reverse stock split, recapitalization, reorganization, reclassification
or otherwise) the shares of Common Stock acquirable hereunder into a
smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Paragraph 4, the
number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted by multiplying a number equal to the Exercise Price
in effect immediately prior to such adjustment by the number of shares
of
<PAGE>
Common Stock issuable upon exercise of this Warrant immediately prior
to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any
consolidation of the Company with, or merger of the Company into any
other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in connection
with a plan of complete liquidation of the Company, then as a condition
of such consolidation, merger or sale or conveyance, adequate provision
will be made whereby the holder of this Warrant will have the right to
acquire and receive upon exercise of this Warrant in lieu of the shares
of Common Stock immediately theretofore acquirable upon the exercise of
this Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore acquirable and
receivable upon exercise of this Warrant had such consolidation, merger
or sale or conveyance not taken place. In any such case, the Company
will make appropriate provision to insure that the provisions of this
Paragraph 4 hereof will thereafter be applicable as nearly as may be in
relation to any shares of stock or securities thereafter deliverable
upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the
Company) assumes by written instrument the obligations under this
Paragraph 4 and the obligations to deliver to the holder of this
Warrant such shares of stock, securities or assets as, in accordance
with the foregoing provisions, the holder may be entitled to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare
or make any distribution of its assets (including cash) to holders of
Common Stock as a partial liquidating dividend, by way of return of
capital or otherwise, then, after the date of record for determining
stockholders entitled to such distribution, but prior to the date of
distribution, the holder of this Warrant shall be entitled upon
exercise of this Warrant for the purchase of any or all of the shares
of Common Stock subject hereto, to receive the amount of such assets
which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the
determination of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event
which requires any adjustment of the Exercise Price, then, and in each
such case, the Company shall give notice thereof to the holder of this
Warrant, which notice shall state the Exercise Price resulting from
such adjustment and the increase or decrease in the number of Warrant
Shares purchasable at such price upon exercise, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the
chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the
Exercise Price in effect at the time such adjustment is otherwise
required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which,
<PAGE>
together with any adjustments so carried forward, shall amount to not
less than 1% of such Exercise Price.
(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional share which
would otherwise be issuable in an amount equal to the same fraction of
the Market Price of a share of Common Stock on the date of such
exercise.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make
any other distribution (including dividends or distributions
payable in cash out of retained earnings) to the holders of
the Common Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares
of stock of any class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or
consolidation or merger of the Company with or into, or sale
of all or substantially all its assets to, another corporation
or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder
of this Warrant (a) notice of the date on which the books of
the Company shall close or a record shall be taken for
determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for
determining the holders of Common Stock entitled to vote in
respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then
known, a reasonable approximation thereof by the Company) when
the same shall take place. Such notice shall also specify the
date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or
to exchange their Common Stock for stock or other securities
or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or
the date on which the Company's books are closed in respect
thereto. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to
in clauses (i), (ii), (iii) and (iv) above.
<PAGE>
(k) CERTAIN DEFINITIONS.
(i) "Common Stock Deemed Outstanding" shall mean the
number of shares of Common Stock actually outstanding (not
including shares of Common Stock held in the treasury of the
Company), plus (x) pursuant to Paragraph 4(b)(i) hereof, the
maximum total number of shares of Common Stock issuable upon
the exercise of Options, as of the date of such issuance or
grant of such Options, if any, and (y) pursuant to Paragraph
4(b)(ii) hereof, the maximum total number of shares of Common
Stock issuable upon conversion or exchange of Convertible
Securities, as of the date of issuance of such Convertible
Securities, if any.
(ii) "Market Price," as of any date, (i) means the
average of the last reported sale prices for the shares of
Common Stock on the Nasdaq National Market ("Nasdaq") for the
five (5) trading days immediately preceding such date as
reported by Bloomberg, L.P. ("Bloomberg"), or (ii) if Nasdaq
is not the principal trading market for the shares of Common
Stock, the average of the last reported sale prices on the
principal trading market for the Common Stock during the same
period as reported by Bloomberg, or (iii) if market value
cannot be calculated as of such date on any of the foregoing
bases, the Market Price shall be the fair market value as
reasonably determined in good faith by (a) the Board of
Directors of the Corporation or, at the option of a
majority-in-interest of the holders of the outstanding
Warrants by (b) an independent investment bank of nationally
recognized standing in the valuation of businesses similar to
the business of the corporation. The manner of determining the
Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in
respect of which a determination as to market value must be
made hereunder.
(iii) "Common Stock," for purposes of this Paragraph
4, includes the Common Stock, par value $.01 per share, and
any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation,
provided that the shares purchasable pursuant to this Warrant
shall include only shares of Common Stock, par value $.01 per
share, in respect of which this Warrant is exercisable, or
shares resulting from any subdivision or combination of such
Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the
character referred to in Paragraph 4(e) hereof, the stock or
other securities or property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof,
<PAGE>
shall give rise to any liability of such holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part,
upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the
Company referred to in Paragraph 7(e) below, provided, however, that
any transfer or assignment shall be subject to the conditions set forth
in Paragraph 7(f) hereof and to the applicable provisions of the
Securities Purchase Agreement. Until due presentment for registration
of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein,
the registration rights described in Paragraph 8 are assignable only in
accordance with the provisions of that certain Registration Rights
Agreement, dated as of March 11, 1998, by and among the Company and the
other signatories thereto (the "Registration Rights Agreement").
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the office or agency of the Company referred to in Paragraph 7(e)
below, for new Warrants of like tenor representing in the aggregate the
right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Warrants to represent the right
to purchase such number of shares as shall be designated by the holder
hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant and, in the case of any such loss, theft,
or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company, or, in the case of any
such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement
as provided in this Paragraph 7, this Warrant shall be promptly
canceled by the Company. The Company shall pay all taxes (other than
securities transfer taxes) and all other expenses (other than legal
expenses, if any, incurred by the Holder or transferees) and charges
payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Paragraph 7.
(e) REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this
Warrant, in which the Company shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name
and address of each transferee and each prior owner of this Warrant.
<PAGE>
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time
of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or, in the case of
any exercise, the Warrant Shares issuable hereunder), shall not be
registered under the Securities Act of 1933, as amended (the
"Securities Act") and under applicable state securities or blue sky
laws, the Company may require, as a condition of allowing such
exercise, transfer, or exchange, (i) that the holder or transferee of
this Warrant, as the case may be, furnish to the Company a written
opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer, or exchange may be
made without registration under said Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act; provided that no such opinion, letter or status as an
"accredited investor" shall be required in connection with a transfer
pursuant to Rule 144 under the Securities Act. The first holder of this
Warrant, by taking and holding the same, represents to the Company that
such holder is acquiring this Warrant for investment and not with a
view to the distribution thereof.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in Section 2 of the Registration
Rights Agreement.
9. NOTICES. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 7601 Northland Drive,
Brooklyn Park, Minnesota 55428, Attention: President and Chief Executive
Officer, or at such other address as shall have been furnished to the holder of
this Warrant by notice from the Company. Any such notice, request, or other
communication may be sent by facsimile, but shall in such case be subsequently
confirmed by a writing personally delivered or sent by certified or registered
mail or by recognized overnight mail courier as provided above. All notices,
requests, and other communications shall be deemed to have been given either at
the time of the receipt thereof by the person entitled to receive such notice at
the address of such person for purposes of this Paragraph 9, or, if mailed by
registered or certified mail or with a recognized overnight mail courier upon
deposit with the United States Post Office or such overnight mail courier, if
postage is prepaid and the mailing is properly addressed, as the case may be.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
<PAGE>
THE STATE OF NEW YORK WITHOUT REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF
LAW.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the
holder hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any
of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant Shares
by the holder is not then registered pursuant to an effective
registration statement under the Securities Act, this Warrant may be
exercised by presentation and surrender of this Warrant to the Company
at its principal executive offices with a written notice of the
holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon
such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for
that number of shares of Common Stock determined by multiplying the
number of Warrant Shares to which it would otherwise be entitled by a
fraction, the numerator of which shall be the difference between the
then current Market Price per share of the Common Stock and the
Exercise Price, and the denominator of which shall be the then current
Market Price per share of Common Stock.
(d) CALL RIGHTS. Beginning on March 11, 2001, in the event
that the closing bid price of the Common Stock exceeds 200% of the
Exercise Price for fifteen (15) trading days in any twenty (20)
consecutive trading day period (provided that the closing bid price on
the last trading day of such period exceeds 200% of the Exercise
Price), this Warrant will be callable at the option of the Company for
$.001.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
-------------------------------------
Whitney A. McFarlin
President and Chief Executive Officer
Dated as of March 11, 1998
<PAGE>
FORM OF EXERCISE AGREEMENT
Dated: ________, ____.
To: Angeion Corporation
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by surrender of securities issued by the
Company (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:
Name:
-------------------------------------
Signature:
--------------------------------
Address:
----------------------------------
----------------------------------
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
The undersigned hereby represents that it presently is the beneficial
owner of ______________ shares of Common Stock of the Company (excluding shares
beneficially owned by the undersigned pursuant to the Note and the Warrants
issued pursuant the Securities Purchase Agreement).
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No of Shares
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints ______________
________________________ as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of substitution in
the premises.
Dated: _____________________, ____,
In the presence of
- ------------------
Name:
-----------------------------------------
Signature:
---------------------------------
Title of Signing Officer or Agent (if any):
-----------------------------------------
Address:
---------------------------------
---------------------------------
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
EXHIBIT 4.13
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of March 11,
1998, by and among Angeion Corporation, a Minnesota corporation, with
headquarters located at 7601 Northland Drive, Brooklyn Park, Minneapolis,
Minnesota 55428 ("COMPANY"), and the purchaser set forth on the signature page
hereto (the "BUYER").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Company has authorized the issuance to the Buyer of (i) a
convertible senior note of the Company, in the form attached hereto as EXHIBIT
"A", in the aggregate principal amount of Five Million Dollars ($5,000,000),
convertible into shares of common stock, $.01 par value per share, of the
Company (the "COMMON STOCK"), upon the terms and subject to the limitations and
conditions set forth in such note (collectively, together with any note(s)
issued in replacement thereof or as a dividend thereon or otherwise with respect
thereto in accordance with the terms thereof, the "NOTE") and (ii) warrants, in
the form attached hereto as EXHIBITS "B-1", "B-2" and "B-3" to purchase an
aggregate of Nine Hundred Seventy Thousand (970,000) shares of Common Stock (the
"WARRANTS");
C. The Buyer desires to purchase and the Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement, the Note and
Warrants, for an aggregate purchase price of Five Million Dollars ($5,000,000);
D. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as EXHIBIT "C" (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws; and
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTE AND WARRANTS.
a. Purchase of Note and Warrants. The Company shall
issue and sell to the Buyer and the Buyer agrees to purchase
from the Company such principal amount of Note and number of
Warrants for the aggregate purchase price (the "PURCHASE
PRICE") as is set forth immediately below such Buyer's name on
the signature page hereto. The aggregate principal amount of
the Note to be issued at the Closing (as defined below) is
Five Million Dollars
<PAGE>
($5,000,000) and the aggregate number of Warrants to be issued
at the Closing is Nine Hundred Seventy Thousand (970,000), for
an aggregate purchase price of Five Million Dollars
($5,000,000).
b. Form of Payment. On the Closing Date (as defined
below), (i) the Buyer shall pay the Purchase Price for the
Note and the Warrants to be issued and sold to it at the
Closing (as defined below) by wire transfer of immediately
available funds to the Company, in accordance with the
Company's written wiring instructions, against delivery of the
Note in the principal amount equal to the Purchase Price and
the number of Warrants as is set forth immediately below such
Buyer's name on the signature page hereto, and (ii) the
Company shall deliver such Note and Warrants duly executed on
behalf of the Company, to the Buyer, against delivery of such
Purchase Price.
c. Closing Date. Subject to the satisfaction (or
waiver) of the conditions thereto set forth in Section 6 and
Section 7 below, the date and time of the issuance and sale of
the Note and the Warrants pursuant to this Agreement (the
"CLOSING DATE") shall be 12:00 noon, Eastern Standard Time on
March 11, 1998 or such other mutually agreed upon time. The
closing of the transactions contemplated by this Agreement
(the "CLOSING") shall occur on the Closing Date at the offices
of Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street,
Philadelphia, PA 19103, or at such other location as may be
agreed to by the parties.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer
represents and warrants to the Company solely as to such Buyer that:
a. Investment Purpose. As of the date hereof, the
Buyer is purchasing the Note and the shares of Common Stock
issuable upon conversion thereof (the "CONVERSION SHARES") and
the Warrants and the shares of Common Stock issuable upon
exercise thereof (the "WARRANT SHARES" and, collectively with
the Note, Warrants and Conversion Shares the "SECURITIES") for
its own account for investment only and not with a present
view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration
under the 1933 Act.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a)
of Regulation D.
c. Reliance on Exemptions. The Buyer understands that
the Securities are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer
set forth herein in order to determine the availability of
such exemptions and the eligibility of the Buyer to acquire
the Securities.
<PAGE>
d. Information. The Buyer and its advisors have been
furnished with all materials relating to the business,
finances and operations of the Company and materials relating
to the offer and sale of the Securities which have been
requested by the Buyer or its advisors. The Buyer and its
advisors have been afforded the opportunity to ask questions
of the Company and have received what the Buyer believes to be
satisfactory answers to any such inquiries. Neither such
inquiries nor any other due diligence investigation conducted
by Buyer or any of its advisors or representatives shall
modify, amend or affect Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below.
The Buyer understands that its investment in the Securities
involves a significant degree of risk.
e. Governmental Review. The Buyer understands that no
United States federal or state agency or any other government
or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
f. Transfer or Resale. The Buyer understands that (i)
except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under
the 1933 Act or any applicable state securities laws, and may
not be transferred unless (a) subsequently included in an
effective registration statement thereunder, (b) the Buyer
shall have delivered to the Company an opinion of counsel
(which opinion shall be reasonably acceptable to the Company)
to the effect that the Securities to be sold or transferred
may be sold or transferred pursuant to an exemption from such
registration, (c) sold or transferred to an "affiliate" (as
defined in Rule 144 promulgated under the 1933 Act (or a
successor rule) ("RULE 144")) or (d) sold pursuant to Rule
144; (ii) any sale of such Securities made in reliance on Rule
144 may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be
an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or
any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other
than pursuant to the Registration Rights Agreement).
Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or
other lending arrangement.
g. Legends. The Buyer understands that the Note and
the Warrants and, until such time as the Conversion Shares and
Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the
Conversion Shares and Warrant Shares, may bear a restrictive
legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for such Securities):
<PAGE>
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or
an opinion of counsel, in form, substance and scope reasonably
acceptable to the Company, that registration is not required
under said Act or unless sold pursuant to Rule 144 under said
Act."
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of any
Security upon which it is stamped, if, unless otherwise required by
applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933
Act, or (b) such holder provides the Company with an opinion of
counsel, in form, substance and scope reasonably acceptable to the
Company, to the effect that a public sale or transfer of such Security
may be made without registration under the 1933 Act and such sale or
transfer is effected or (c) such holder provides the Company with
reasonable assurances that such Security can be sold pursuant to Rule
144 under the 1933 Act (or a successor rule thereto) without any
restriction as to the number of Securities acquired as of a particular
date that can then be immediately sold. The Buyer agrees to sell all
Securities, including those represented by a certificate(s) from which
the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any.
h. Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of the Buyer and
are valid and binding agreements of the Buyer enforceable in
accordance with their terms.
i. Residency. The Buyer is a resident of the
jurisdiction set forth immediately below such Buyer's name on
the signature pages hereto.
j. Trading in Common Stock. Neither the Buyer nor any
of its affiliates (as defined in Rule 144) has directly or
indirectly traded or taken a position in any equity security
(including by entering into any puts, calls or options) of the
Company prior to the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Buyer that except as disclosed in the schedules
to this Section 3:
a. Organization and Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and
to carry on its
<PAGE>
business as and where now owned, leased, used, operated and conducted.
SCHEDULE 3(A) sets forth a list of all of the Subsidiaries of the
Company and the jurisdiction in which each is incorporated. The Company
and each of its Subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which
the nature of the business conducted by it makes such qualification
necessary except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. "MATERIAL ADVERSE
EFFECT" means any material adverse effect on the business, operations,
assets, financial condition or prospects of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be entered
into in connection herewith. "SUBSIDIARIES" means any corporation or
other organization, whether incorporated or unincorporated, in which
the Company owns, directly or indirectly, any equity or other ownership
interest.
b. Authorization; Enforcement. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Note and the Warrants
and to consummate the transactions contemplated hereby and thereby and
to issue the Securities, in accordance with the terms hereof and
thereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement, the Note and the Warrants by the Company
and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Note and the
Warrants and the issuance and reservation for issuance of the
Conversion Shares and Warrant Shares issuable upon conversion or
exercise thereof in accordance with the terms of this Agreement) have
been duly authorized by the Company's Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly executed
and delivered by the Company, and (iv) this Agreement constitutes, and
upon execution and delivery by the Company of the Registration Rights
Agreement, the Note and the Warrants, each of such instruments will
constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 50,000,000 shares of
Common Stock of which 33,156,443 shares are issued and outstanding,
3,371,582 shares are reserved for issuance pursuant to the Company's
stock option plans, 5,000,000 shares are reserved for issuance pursuant
to securities (other than the Note and the Warrants) exercisable for,
or convertible into or exchangeable for shares of Common Stock and
4,455,000 shares are reserved for issuance upon conversion of the Note
and exercise of the Warrants (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(h) below); and (ii) 3,000,000
shares of preferred stock, of which 600,000 shares are designated Class
A Convertible Preferred Stock, $.01 par value per share and 300,000
shares are designated Series B Preferred Stock, $0.01 par value per
share. No shares of preferred stock are issued and outstanding. All of
such outstanding shares of capital stock are, or upon issuance will be,
duly authorized, validly issued, fully paid and nonassessable. Except
as set forth on SCHEDULE 3(C), no shares of capital stock of the
Company are subject to preemptive rights or any other similar rights of
the stockholders of the Company or any liens or
<PAGE>
encumbrances imposed through the actions or failure to act of the
Company. Except as disclosed in SCHEDULE 3(C), as of the effective date
of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of
any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the
Company or any of its Subsidiaries, or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
Subsidiaries, and (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register
the sale of any of its or their securities under the 1933 Act (except
the Registration Rights Agreement) and (iii) there are no anti-dilution
or price adjustment provisions contained in any security issued by the
Company (or in any agreement providing rights to security holders) that
will be triggered by the issuance of the Note, the Warrants, the
Conversion Shares or Warrant Shares. The Company has furnished to the
Buyer true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof ("CERTIFICATE OF
INCORPORATION"), the Company's By-laws, as in effect on the date hereof
(the "BY-LAWS"), and the terms of all securities convertible into or
exercisable for Common Stock of the Company and the material rights of
the holders thereof in respect thereto. The Company shall provide the
Buyer with a written update of this representation signed by the
Company's Chief Executive or Chief Financial Officer on behalf of the
Company as of the Closing Date.
d. Issuance of Shares. The Conversion Shares and Warrant
Shares are duly authorized and, upon issuance in accordance with the
terms of this Agreement (including the issuance of the Conversion
Shares upon conversion of the Note and the Warrant Shares upon exercise
of the Warrants in accordance with their respective terms) will be
validly issued, fully paid and non-assessable and shall not be subject
to preemptive rights or other similar rights of stockholders of the
Company except as set forth on SCHEDULE 3(C). The term Conversion
Shares and Warrant Shares includes the shares of Common Stock issuable
upon conversion of the Note or exercise of the Warrants, including
without limitation, such additional shares, if any, as are issuable as
a result of the events described in Sections 1.3 and 1.4(g) of the Note
and Section 2(b) of the Registration Rights Agreement. The Company
understands and acknowledges the potentially dilutive effect to the
Common Stock upon the issuance of the Conversion Shares and Warrant
Shares upon conversion or exercise of the Note or Warrants. The Company
further acknowledges that its obligation to issue Conversion Shares and
Warrant Shares upon conversion of the Note or exercise of the Warrants
in accordance with the terms and conditions of this Agreement, the Note
and the Warrants is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests
of other stockholders of the Company.
e. No Conflicts. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the Warrants by
the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Conversion Shares and
<PAGE>
Warrant Shares) will not (i) conflict with or result in a violation of
any provision of the Certificate of Incorporation or By-laws or (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries
is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws
and regulations) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse
Effect). Neither the Company nor any of its Subsidiaries is in
violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its
Subsidiaries is in default (and no event has occurred which with notice
or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that
would give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party or by which any property
or assets of the Company or any of its Subsidiaries is bound or
affected, except for possible defaults as would not, individually or in
the aggregate, have a Material Adverse Effect. The businesses of the
Company and its Subsidiaries, if any, are not being conducted, and
shall not be conducted so long as a Buyer owns any of the Securities,
in material violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Registration Rights Agreement,
the Note or the Warrants in accordance with the terms hereof or
thereof. Except as disclosed in SCHEDULE 3(E), all consents,
authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company is not
in violation of the listing requirements of the Nasdaq National Market
("NASDAQ") and has not received any notice from Nasdaq that the Common
Stock will be delisted by Nasdaq. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of
the foregoing.
f. SEC Documents; Financial Statements. Since July 31, 1995,
the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to
the reporting requirements of the Exchange Act of 1934, as amended (the
"1934 ACT") (all of the foregoing filed prior to the date hereof and
all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference
therein, being hereinafter referred to herein as the "SEC DOCUMENTS").
As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC
<PAGE>
promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case
of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to
July 31, 1997 and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such
financial statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the
Company.
g. Absence of Certain Changes. Except as set forth in SCHEDULE
3(G), since July 31, 1997, there has been no material adverse change
and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.
h. Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries
that could have a Material Adverse Effect. SCHEDULE 3(H) contains a
complete list and summary description of any pending or threatened
proceeding against or affecting the Company or any of its Subsidiaries,
without regard to whether it would have a Material Adverse Effect. The
Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any action, suit, claim, proceeding, inquiry
or investigation including any pending or threatened proceeding.
i. Patents, Copyrights, etc. The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use
all patents, patent rights, inventions, know-how, trade secrets,
trademarks, service marks, service names, trade names and copyrights
("INTELLECTUAL PROPERTY") necessary to enable it to conduct its
business as now operated (and, except as set forth in SCHEDULE 3(I)
hereof, to the best of the Company's knowledge, as presently
contemplated to be operated in the future); there is no claim or action
by
<PAGE>
any person pertaining to, or proceeding pending, or to the Company's
knowledge threatened which challenges the right of the Company or of a
Subsidiary with respect to any Intellectual Property necessary to
enable it to conduct its business as now operated (and, except as set
forth in SCHEDULE 3(I) hereof, to the best of the Company's knowledge,
as presently contemplated to be operated in the future); to the best of
the Company's knowledge, the Company's or its Subsidiaries, current and
intended products, services and processes do not infringe on any
Intellectual Property or other rights held by any person; and the
Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy,
confidentiality and value of their Intellectual Property.
j. No Materially Adverse Contracts, Etc. Except as set forth
in SCHEDULE 3(J), neither the Company nor any of its Subsidiaries is
subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of
the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the
judgment of the Company's officers has or is expected to have a
Material Adverse Effect.
k. Tax Status. Except as set forth on SCHEDULE 3(K), the
Company and each of its Subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to
the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its
books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
l. Certain Transactions. Except as set forth on SCHEDULE 3(L)
and except for arm's length transactions pursuant to which the Company
or any of its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the grant
of stock options disclosed on SCHEDULE 3(C), none of the officers,
directors, or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
<PAGE>
m. Disclosure. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and
provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and
correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or exists
with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the
Company's reports filed under the 1934 Act are being incorporated into
an effective registration statement filed by the Company under the 1933
Act).
n. Acknowledgment Regarding Buyer's Purchase of Securities.
The Company acknowledges and agrees that the Buyer are acting solely in
the capacity of arm's length purchasers with respect to this Agreement
and the transactions contemplated hereby. The Company further
acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice
given by any Buyer or any of their respective representatives or agents
in connection with this Agreement and the transactions contemplated
hereby is merely incidental to the Buyer's purchase of the Securities.
The Company further represents to each Buyer that the Company's
decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.
o. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any
offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to
the Buyer. The Company believes that the issuance of the Securities to
the Buyer will not be integrated with any other issuance of the
Company's securities (past, current or future) which requires
stockholder approval under the rules of The Nasdaq Stock Market.
p. No Brokers. The Company has taken no action which would
give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments relating to this Agreement or the
transactions contemplated hereby, except for dealings with Perpetual
Growth Advisors, whose commissions and fees will be paid for by the
Company solely in accordance with SCHEDULE 3(P).
q. Permits; Compliance. The Company and each of its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now
being conducted (collectively, the "COMPANY
<PAGE>
PERMITS"), and there is no action pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of the
Company Permits. Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, any of the Company
Permits, except for any such conflicts, defaults or violations which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Since July 31, 1997, neither the
Company nor any of its Subsidiaries has received any notification with
respect to possible conflicts, defaults or violations of applicable
laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a
Material Adverse Effect.
r. Environmental Matters.
(i) Except as set forth in SCHEDULE 3(R), there are,
to the Company's knowledge, with respect to the Company or any
of its Subsidiaries or any predecessor of the Company, no past
or present violations of Environmental Laws (as defined
below), releases of any material into the environment,
actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to
any common law environmental liability or any liability under
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any of its
Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company's
knowledge, threatened in connection with any of the foregoing.
The term "ENVIRONMENTAL LAWS" means all federal, state, local
or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS
MATERIALS") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved
thereunder.
(ii) Other than those that are or were stored, used
or disposed of in compliance with applicable law, no Hazardous
Materials are contained on or about any real property
currently owned, leased or used by the Company or any of its
Subsidiaries, and no Hazardous Materials were released on or
about any real property previously owned, leased or used by
the Company or any of its Subsidiaries during the period the
property was owned, leased or used by the Company or any of
its Subsidiaries, except in the normal course of the Company's
or any of its Subsidiaries' business.
(iii) Except as set forth in SCHEDULE 3(R), there are
no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its
Subsidiaries that are not in compliance with applicable law.
<PAGE>
s. Title to Property. The Company and its Subsidiaries have
good and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in SCHEDULE 3(S) or such as would not have a Material
Adverse Effect. Any real property and facilities held under lease by
the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as would not
have a Material Adverse Effect.
t. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any
such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material
Adverse Effect.
u. Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
v. Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any Subsidiary has, in the
course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation
of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
4. COVENANTS.
a. [Intentionally Omitted]
<PAGE>
b. Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to
provide a copy thereof to the Buyer promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is necessary to qualify the
Securities for sale to the Buyer at the applicable closing pursuant to
this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken
to the Buyer on or prior to the Closing Date.
c. Reporting Status; Eligibility to Use Form S-3. The
Company's Common Stock is registered under Section 12(g) of the 1934
Act. So long as the Buyer beneficially owns any of the Securities, the
Company shall timely file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company currently meets, and will use its best efforts
to continue to meet, the "registrant eligibility" requirements set
forth in the general instructions to Form S-3.
d. Use of Proceeds. The Company shall use the proceeds from
the sale of the Note and the Warrants in the manner set forth in
SCHEDULE 4(D) attached hereto and made a part hereof and shall not,
directly or indirectly, use such proceeds for any loan to or investment
in any other corporation, partnership, enterprise or other person
(except in connection with its currently existing direct or indirect
Subsidiaries).
e. Additional Equity Capital; Right of First Refusal. Subject
to the exceptions described below, the Company will not conduct any
equity financing (including debt with an equity component) ("FUTURE
OFFERINGS") during the period beginning on the Closing Date and ending
on the earlier of (i) the date the Note is repaid in full and (ii) six
(6) months from the date the Registration Statement (as defined in the
Registration Rights Agreement) is declared effective (plus any days in
which sales cannot be made thereunder) unless it shall have first
delivered to the Buyer, at least fifteen (15) business days prior to
the closing of such Future Offering, written notice describing the
proposed Future Offering, including the terms and conditions thereof
and proposed definitive documentation to be entered into in connection
therewith, and providing the Buyer an option during the ten (10) day
period following delivery of such notice to purchase its pro rata share
(based on the ratio that the aggregate principal amount of Note
purchased by it hereunder bears to the aggregate principal amount of
Note purchased hereunder) of the securities being offered in the Future
Offering on the same terms as contemplated by such Future Offering (the
limitations referred to in this sentence are collectively referred to
as the "CAPITAL RAISING LIMITATIONS"). The Buyer's option to
participate in such Future Offering shall be limited to the greater of
Ten Million Dollars ($10,000,000) and fifty percent (50%) of such
Future Offering. In the event the terms and conditions of a proposed
Future Offering are amended in any respect after delivery of the notice
to the Buyer concerning the proposed Future Offering, the Company shall
deliver a new notice to the Buyer describing
<PAGE>
the amended terms and conditions of the proposed Future Offering and
the Buyer thereafter shall have an option during the ten (10) day
period following delivery of such new notice to purchase its pro rata
share of the securities being offered on the same terms as contemplated
by such proposed Future Offering, as amended. The foregoing sentence
shall apply to successive amendments to the terms and conditions of any
proposed Future Offering. The Capital Raising Limitations shall not
apply to (i) the contemplated offering of the Company's securities
involving HSBC Securities and/or Prudential Securities (the "HSBC
FINANCING") (ii) any transaction involving issuances of securities in a
firm commitment underwritten public offering (excluding a continuous
offering pursuant to Rule 415 under the 1933 Act), (iii) the offering
to Synthelabo pursuant to the Investment Agreement (as defined in
SCHEDULE 3(C) hereto) made pursuant to Synthelabo's share ownership
maintenance rights set forth in Section 2.3 thereof or (iv) issuances
of securities as consideration for a merger, consolidation or sale of
assets, or in connection with any strategic relationship or joint
venture (the primary purpose of which is not to raise equity capital),
or in connection with the disposition or acquisition of a business,
product or license by the Company. The Capital Raising Limitations also
shall not apply to the issuance of securities upon exercise or
conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof or to the grant of
additional options or warrants, or the issuance of additional
securities, under any existing Company stock option or restricted stock
plan approved by a majority of the Company's disinterested directors.
In addition to the foregoing and notwithstanding anything else
contained herein to the contrary, the Buyer shall have the right to
participate in the HSBC Financing up to a dollar amount equal to the
principal amount of the Note that are expected to be repaid in cash
upon the consummation of the HSBC Financing.
f. Expenses. The Company shall reimburse Rose Glen Capital
Management, L.P. ("RGC") for all reasonable expenses incurred by it in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses (but excluding any finder's fees). The
Company's obligation to reimburse RGC's expenses under this Section
4(f) shall be limited to Thirty Thousand Dollars ($30,000).
g. Financial Information. The Company agrees to send the
following reports to each Buyer until such Buyer transfers, assigns, or
sells all of the Securities: (i) within one (1) day after release,
copies of all press releases issued by the Company or any of its
Subsidiaries; and (ii) contemporaneously with the making available or
giving to the stockholders of the Company, copies of any notices or
other information the Company makes available or gives to such
stockholders.
h. Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the full conversion or
exercise of the outstanding Note and Warrants and issuance of the
Conversion Shares and Warrant Shares in connection therewith (based on
the Conversion Price of the Note or Exercise Price of the Warrants in
effect from time to time). The
<PAGE>
Company shall not reduce the number of shares of Common Stock reserved
for issuance upon conversion of Note and exercise of the Warrants
without the consent of each Buyer. The Company shall use its best
efforts at all times to maintain the number of shares of Common Stock
so reserved for issuance at no less than one and one-half (1 1/2) times
the number that is then actually issuable upon full conversion of the
Note and exercise of the Warrants (based on the Conversion Price of the
Note or Exercise Price of the Warrants in effect from time to time). If
at any time the number of shares of Common Stock authorized and
reserved for issuance is below the number of Conversion Shares and
Warrant Shares issued and issuable upon conversion of the Note and
exercise of the Warrants (based on the Conversion Price of the Note or
Exercise price of the Warrants then in effect), the Company will
promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a
special meeting of shareholders to authorize additional shares to meet
the Company's obligations under this Section 4(h), in the case of an
insufficient number of authorized shares, and using its best efforts to
obtain shareholder approval of an increase in such authorized number of
shares.
i. Listing. The Company shall promptly, but no later than ten
(10) business days from the Closing Date, secure the listing of the
Conversion Shares and Warrant Shares upon each national securities
exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Conversion Shares and Warrant Shares
from time to time issuable upon conversion of the Note or exercise of
the Warrants. The Company will obtain and maintain the listing and
trading of its Common Stock on Nasdaq, the Nasdaq SmallCap Market
("NASDAQ SMALLCAP"), the New York Stock Exchange ("NYSE"), or the
American Stock Exchange ("AMEX") and will comply in all respects with
the Company's reporting, filing and other obligations under the bylaws
or rules of the National Association of Securities Dealers ("NASD") and
such exchanges, as applicable. The Company shall promptly provide to
the Buyer copies of any notices it receives from Nasdaq and any other
exchanges or quotation systems on which the Common Stock is then listed
regarding the continued eligibility of the Common Stock for listing on
such exchanges and quotation systems.
j. Corporate Existence. So long as the Buyer beneficially owns
any Note or Warrants, the Company shall maintain its corporate
existence and shall not sell all or substantially all of the Company's
assets, except in the event of a merger or consolidation or sale of all
or substantially all of the Company's assets, where (i) the surviving
or successor entity in such transaction (A) assumes the Company's
obligations hereunder and under the agreements and instruments entered
into in connection herewith and (B) is a publicly traded corporation
whose Common Stock is listed for trading on Nasdaq, Nasdaq SmallCap,
NYSE or AMEX (a "Publicly Traded Corporation") or (ii) if the survivor
or successor entity in such transaction is not a Publicly Traded
Corporation, such event shall be treated as an Event of Default (as
defined in Article IV of the Note) and the Note is prepaid at the
Default Amount in accordance with Article IV of the Note.
<PAGE>
k. No Integration. The Company will use its best efforts not
to conduct any future offering that will be integrated with the
issuance of the Securities solely for purposes of Rule 4460(i) of the
Nasdaq Stock Market.
l. Solvency. The Company (both before and after giving effect
to the transactions contemplated by this Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become
absolute and matured) and currently the Company has no information that
would lead it to reasonably conclude that the Company would not have,
nor does it intend to take any action that would impair, its ability to
pay its debts from time to time incurred in connection therewith as
such debts mature. The Company did not receive a qualified opinion from
its auditors with respect to its most recent fiscal year end and does
not anticipate or know of any basis upon which its auditors might issue
a qualified opinion in respect of its current fiscal year.
m. Trading Restrictions. Neither the Buyer nor any of its
affiliates (as defined in rule 144) will directly or indirectly engage
in any transactions or take any positions in the Company's Common Stock
(including entering into any puts, calls or options) until the earlier
of (i) the date that the proposed HSBC Financing is abandoned, (ii) the
ninety-first (91st) day following the Closing Date and (iii) the
occurrence of an event set forth in Schedule 2.1 of the Note. The Buyer
covenants and agrees that, during any period during which a Conversion
Price or Exercise Price is computed, neither the Buyer nor others
acting on its behalf shall be responsible for the low closing bid price
of the Company's Common Stock.
5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent to issue certificates, registered in the name
of the Buyer or its nominee, for the Conversion Shares and Warrant Shares in
such amounts as specified from time to time by the Buyer to the Company upon
conversion of the Note or exercise of the Warrants in accordance with the terms
thereof (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to registration
of the Conversion Shares and Warrant Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares and Warrant Shares, prior to registration of the Conversion
Shares and Warrant Shares under the 1933 Act), will be given by the Company to
its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section shall affect in any way the Buyer's obligations and agreement set
forth in Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities. If the Buyer provides the
Company with an opinion of counsel, reasonably satisfactory to the Company in
form, substance and scope, that registration of a resale by the Buyer of any of
the Securities is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares
<PAGE>
and Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by the Buyer.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Note and Warrants to the Buyer at
the Closing is subject to the satisfaction, at or before the Closing Date of
each of the following conditions thereto, provided that these conditions are for
the Company's sole benefit and may be waived by the Company at any time in its
sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.
b. The Buyer shall have delivered the Purchase Price in
accordance with Section 1(b) above and the Company shall have received
an aggregate of Five Million Dollars ($5,000,000) from the Buyer.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this Agreement.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of
the Buyer hereunder to purchase the Note and Warrants at the Closing is subject
to the satisfaction, at or before the Closing Date of each of the following
conditions, provided that these conditions are for the Buyer's sole benefit and
may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement and the
<PAGE>
Registration Rights Agreement, and delivered the same to the Buyer.
b. The Company shall have delivered to the Buyer a duly
executed Note (in such denominations as the Buyer shall request) and
Warrants in accordance with Section 1(b) above.
c. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company's Transfer Agent.
d. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at such time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by the Company at or prior to the Closing Date. The Buyer shall have
received a certificate or certificates, executed by the chief executive
officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by
the Buyer including, but not limited to certificates with respect to
the Company's Certificate of Incorporation, By-laws and Board of
Directors' resolutions relating to the transactions contemplated
hereby.
e. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this Agreement.
f. The Buyer shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer and in substantially the same form
as EXHIBIT "D" attached hereto.
g. The Buyer shall have received an officer's certificate
described in Section 3(c) above, dated as of the Closing Date.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. The parties
hereto hereby submit to the exclusive jurisdiction of the United States
Federal Courts located in Delaware with respect to any dispute arising
under this Agreement, the agreements entered into in connection
herewith or the transactions contemplated hereby or thereby.
<PAGE>
b. Counterparts; Signatures by Facsimile. This Agreement may
be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this
Agreement.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company
nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or
registered mail (return receipt requested) or delivered personally or
by courier (including a recognized overnight delivery service) or by
facsimile and shall be effective five days after being placed in the
mail, if mailed by regular U.S. mail, or upon receipt, if delivered
personally or by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Angeion Corporation
7601 Northland Drive
Brooklyn Park, Minnesota 55428
Facsimile: (612) 315-2059
<PAGE>
With copy to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Attention: Gavin B. Grover, Esquire
Facsimile: (415) 268-7522
If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and
assigns. Neither the Company nor the Buyer shall assign this Agreement
or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to Section
2(f), the Buyer may assign its rights hereunder to any person that
purchases Securities in a private transaction from the Buyer or to any
of its "affiliates," as that term is defined under the 1934 Act,
without the consent of the Company.
h. Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. The representations and warranties of the Company
and the agreements and covenants set forth in Sections 3, 4, 5 and 8
shall survive the closing hereunder notwithstanding any due diligence
investigation conducted by or on behalf of the Buyer.
j. Publicity. The Company and the Buyer shall have the right
to review a reasonable period of time before issuance of any press
releases, SEC, Nasdaq or NASD filings, or any other public statements
with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval
of the Buyer, to make any press release or SEC, Nasdaq or NASD filings
with respect to such transactions as is required by applicable law and
regulations (although the Buyer shall be consulted by the Company in
connection with any such press release prior to its release and shall
be provided with a copy thereof and be given an opportunity to comment
thereon).
<PAGE>
k. Further Assurances. Each party 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 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.
l. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused
this Agreement to be duly executed as of the date first above written.
ANGEION CORPORATION
By: /s/ Whitney A. McFarlin
------------------------------------------
Whitney A. McFarlin
President and Chief Executive Officer
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P., Investment Manager
By: RGC General Partner Corp., as General Partner
By: /s/ Wayne D. Bloch
------------------------------------------
Wayne D. Bloch
Managing Director
RESIDENCE: Cayman Islands
ADDRESS:
c/o Rose Glen Capital Management, L.P.
3 Bala Plaza East, Suite 200
251 St. Asaphs Road
Bala Cynwyd, PA 19004
Facsimile: (610) 617-0570
Telephone: (610) 617-5900
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Note: $5,000,000
Number of Warrants: 970,000
Aggregate Purchase Price: $5,000,000
EXHIBIT 5.1
[OPPENHEIMER WOLFF & DONNELLY LLP LETTERHEAD]
April 20, 1998
Board of Directors
Angeion Corporation
7601 Northland Drive
Minneapolis, Minnesota 55428-1088
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Angeion Corporation, a Minnesota corporation (the
"Company"), in connection with the registration by the Company of the resale of
(a) $22,150,000 7 1/2% Senior Convertible Notes due 2003 (the "Notes") and (b)
an aggregate of 8,737,661 shares of the Company's Common Stock, $.01 par value
per share, together with the preferred stock purchase rights attached thereto
(the "Common Stock"), pursuant to the Company's Registration Statement on Form
S-3 filed with the Securities and Exchange Commission on April 20, 1998 (the
"Registration Statement") on behalf of the certain selling securityholders named
therein (the "Selling Securityholders"). The securities to be registered for
resale under the Registration Statement consist of: (i) the Notes, (ii) 25,000
currently outstanding shares (the "Outstanding Shares"), (iii) the shares (the
"RGC Warrant Shares") issuable upon the exercise of a certain warrant for
727,500 shares of Common Stock held by RGC International Investors, LDC (the
"RGC Warrant"); (iv) the shares (the "Conversion Shares") issuable upon the
conversion of the Notes; (v) the shares (the "Underwriters Warrant Shares")
issuable upon the exercise of certain warrants held by HSBC Securities, Inc. and
Prudential Securities, Incorporated (the "Underwriters Warrants"), to be sold by
the Selling Securityholders; and (vi) such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Notes and
exercise of the RGC Warrant and the Underwriters Warrants as a result of
adjustment to the conversion price and exercise price, respectively
(collectively, the "Additional Shares"). The RGC Warrant and the Underwriters
Warrants are collectively referred to herein as the "Warrants" and the RGC
Warrant Shares and the Underwriters Warrant Shares are collectively referred to
herein as the "Warrant Shares."
In acting as counsel for the Company and arriving at the opinions expressed
below, we have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein. In
connection with our examination, we have assumed the genuiness of all
signatures, the authenticity of all documents
<PAGE>
Board of Directors
Angeion Corporation
April 20, 1998
Page 2
tendered to us as originals, the legal capacity of all natural persons and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies.
Based on the foregoing, and subject to the qualifications and limitations stated
herein, it is our opinion that:
1. The Company had the corporate authority to issue the Notes and the
Outstanding Shares and has the corporate authority to issue the
Conversion Shares, Warrant Shares and Additional Shares in the manner
and under the terms set forth in the Registration Statement.
2. The Notes and the Outstanding Shares being registered for resale by the
Selling Securityholders under the Registration Statement have been duly
authorized and validly issued. The Outstanding Shares are fully paid
and nonassessable. The Conversion Shares, Warrant Shares and Additional
Shares have been duly authorized and when issued, delivered and paid
for in accordance with the terms of the Note and Warrants,
respectively, will be validly issued, fully paid and nonassessable.
We express no opinion with respect to laws other than those of the State of
Minnesota and the federal law of the United States of America, and we assume no
responsibility as to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement, to its use as part of the Registration Statement, and to
the use of our name under the caption "Validity of Securities" in the Prospectus
constituting a part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement as described above. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose. Other
than the Company and Morrison & Foerster LLP to the extent necessary to deliver
its opinion set forth in Exhibit 5.2 of the Registration Statement, no one is
entitled to rely on this opinion.
Very truly yours,
/s/ Oppenheimer Wolff & Donnelly LLP
OPPENHEIMER WOLFF & DONNELLY LLP
Plaza VII Suite 3400
45 South Seventh Street
Minneapolis, MN 55402
Exhibit 5.2
MORRISON & FOERSTER LLP LETTERHEAD
April 20, 1998
Board of Directors
Angeion Corporation
7601 Northland Drive
Minneapolis, Minnesota 55428-1088
RE: 7 1/2% SENIOR CONVERTIBLE NOTES DUE 2003
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Angeion Corporation, a Minnesota corporation (the
"Company"), in connection with the Registration Statement (the "Registration
Statement") on Form S-3 under the Securities Act of 1933, as amended, for the
registration and resale of an aggregate of $22,150,000 principal amount of
7 1/2% Senior Convertible Notes due 2003 (the "Notes") and 8,737,661 shares of
the common stock, par value $.01 per share of the Company. The Notes will be
issued pursuant to the terms and conditions of, and in the forms set forth in,
an indenture dated as of April 14, 1998 (the "Indenture") between the Company
and U.S. Bank National Association, as trustee (the "Trustee"). The form of the
Indenture has been filed as an exhibit to the Registration Statement.
We have examined originals or copies of the Indenture and the Notes. In
addition, we have examined such records, documents, certificates of public
officials and of the Company, made such inquiries of officials of the Company,
and considered such questions of law as we have deemed necessary for the purpose
of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures, the authenticity of all Notes
submitted to us as originals and the conformity with originals of all items
submitted to us as copies. We have also assumed that each party to the Indenture
and the Notes, other than the Company, has the power and authority to execute
and deliver, and to perform and observe the provisions of, the Indenture and the
Notes, and has duly authorized, executed and delivered the Indenture and the
Notes, that the Indenture constitutes the legal, valid and binding obligations
of the Trustee, and that the Indenture has been duly authenticated by the
Trustee and will be duly qualified under the Trust Indenture Act of 1939, as
amended. We have also assumed compliance with all applicable state securities
and "Blue Sky" laws.
<PAGE>
In rendering the opinions set forth below, insofar as they relate to the power
and authority of the Company to execute and deliver the Notes and insofar as
they relate to the validity of the Notes, we have relied upon the opinion of
Oppenheimer Wolff & Donnelly LLP, dated of even date herewith. Insofar as they
relate to such matters, our opinions are subject to all exceptions, limitations
and qualifications set forth in that opinion.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(i) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws relating to fraudulent
transfers or conveyances, preferences and equitable subordination;
(ii) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the Notes
and the Indenture; and the effect of judicial decisions which have held that
certain provisions are unenforceable where their enforcement would violate the
implied covenants of good faith and fair dealing, or would be commercially
unreasonable, or where their breach is not material;
(iii) We express no opinion as to the effect on the opinions expressed
herein of (a) the compliance or non-compliance of any party to the Indenture or
the Notes (other than the Company) with any laws or regulations applicable to
it, or (b) the legal or regulatory status or the nature of the business of any
such party;
(iv) The effect of judicial decisions which may permit the introduction
of extrinsic evidence to supplement the terms of the Indenture or the Notes or
to aid in the interpretation of the Indenture or the Notes;
(v) We express no opinion as to the enforceability of provisions of the
Indenture or the Notes imposing, or which are construed as effectively imposing,
penalties;
(vi) The enforceability of provisions of the Indenture or the Notes
which purport to establish evidentiary standards or to make determinations
conclusive; and
(vii) We express no opinion as to the enforceability of any choice of
law provisions contained in the Indenture or the Notes or the enforceability of
any provisions which purport to establish a particular court as the forum for
adjudication of any controversy relating to the Indenture or the Notes or which
purport to cause any party to waive or alter any right to a trial by jury or
which waive objection to jurisdiction.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion that the Notes,
assuming due authentication of the Notes by the Trustee, will constitute valid
and binding obligations of the Company.
We express no opinion as to matters governed by laws of any jurisdiction other
than the following as in effect on the date hereof: the substantive laws of the
State of New York (without reference to its choice of law rules) and the federal
laws of the United States of America.
We hereby consent to the filing of this opinion as Exhibit 5.2 to the
Registration Statement, to its use as part of the Registration Statement, and to
the use of our name under the caption "Validity of Securities" in the Prospectus
constituting a part of the Registration Statement.
Very truly yours,
/s/ Morrison & Foerster LLP
MORRISON & FOERSTER LLP
EXHIBIT 12.1
ANGEION CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the
periods indicated is as follows:
<TABLE>
<CAPTION>
Five Months Ended
December 31, Year Ended July 31,
------------------------------------------ ----------------------------------------------------------------
1997 1996 1997 1996 1995
--------------------- ------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Net earnings/(loss) $(14,940,896) $(7,734,829) $(26,908,861) $(15,182,019) $(9,643,351)
Interest expense 4,893 48,674 103,635 116,683 271,162
Amortization of
debt costs - - - - 22,800
Income taxes - - - - -
--------------------- ------------------- --------------------- -------------------- --------------------
Earnings/(loss) before
fixed charges (14,936,003) (7,686,155) (26,805,226) (15,065,336) (9,349,389)
Fixed charges (1) 4,893 48,674 103,635 116,683 293,962
Ratio of net
earnings
before fixed charges
to fixed charges -3052.5:1 -157.9:1 -258.7:1 -129.1:1 -31.8:1
Deficiency of
earnings
to cover fixed
charges (14,940,896) (7,734,829) (26,908,861) (15,182,019) (9,643,351)
</TABLE>
---------------------------------------
1994 1993
------------------ -------------------
Net earnings/(loss) $(7,675,743) $(2,708,438)
Interest expense 161,185 76,019
Amortization of
debt costs 22,800 11,400
Income taxes - -
------------------ -------------------
Earnings/(loss) before
fixed charges (7,491,758) (2,621,019)
Fixed charges (1) 183,985 87,419
Ratio of net
earnings
before fixed charges
to fixed charges -40.7:1 -30.0:1
Deficiency of
earnings
to cover fixed
charges (7,675,743) (2,708,438)
(1) - Fixed charges consist of interest expense and amortization of debt
issuance costs
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Angeion Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 20, 1998
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
F.K.A. FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer
Identification No.)
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
ANGEION CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1579150
(State of Incorporation) (I.R.S. Employer
Identification No.)
7601 Northland Drive
Minneapolis, Minnesota 55428-1088
(Address of Principal Executive Offices) (Zip Code)
7 1/2% SENIOR CONVERTIBLE NOTES DUE 2003
(Title of the Indenture Securities)
<PAGE>
GENERAL
1. General Information Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
of eligibility and qualification.
1. Copy of Articles of Association.
2. Copy of Certificate of Authority to Commence Business.
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).
4. Copy of existing By-Laws.
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority incorporated by reference to File Number 333-26679.
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this
<PAGE>
statement, or what persons are owners of 10% or more of the voting securities of
the obligors, or affiliates, are based upon information furnished to the Trustee
by the obligors. While the Trustee has no reason to doubt the accuracy of any
such information, it cannot accept any responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 21st day of April 15,
1998.
U.S. BANK NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
------------------------------
Richard H. Prokosch
Assistant Vice President
/s/ Kathe M. Barrett
- -------------------------------
Kathe M. Barrett
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: April 15, 1998
U.S. BANK NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
-------------------------------
Richard H. Prokosch
Assistant Vice President
