SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. 1)
UROHEALTH SYSTEMS, INC.
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(Name of Issuer)
Common Stock 917272-10-6
par value $.001 per share
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(Title of class of securities) (CUSIP number)
John G. Murray
FoxMeyer Corporation
1220 Senlac Drive, Carrollton, Texas 75006
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(Name, address and telephone number of person authorized to receive
notices and communications)
May 30, 1996
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Check the following box if a fee is being paid with the statement [_].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Note: When filing this statement in paper format, six copies of this
statement, including exhibits, should be filed with the Commission. See
Rule 13d-1(a) for other parties to whom copies are to be sent.
(Continued on following page(s))
(Page 1 of 12 Pages)
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CUSIP No. 917272-10-6 13D Page of 12
1 NAME OF REPORTING PERSON: FoxMeyer Corporation
S.S. OR I.R.S. IDENTIFICATION NO. 75-2547851
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: 00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF Delaware
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 2,464,827
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 2,464,827
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE -0-
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 2,464,827
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 16.6%
14 TYPE OF REPORTING PERSON: CO
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This Amendment to Schedule 13D amends the Statement on Schedule
13D filed in paper format by FoxMeyer Corporation on or about October
11, 1995, with respect to the UroHealth Systems, Inc., a Delaware
corporation formerly known as Davstar Industries Ltd. (the "Issuer").
In accordance with Rule 101(a)(2)(ii) of Regulation S-T, the Statement
on Schedule 13D is restated in this Amendment.
Item 1. Security and Issuer.
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This Amendment to Statement on Schedule 13D relates to the common
stock, par value $.001 per share (the "Common Stock"), of the Issuer.
The principal executive offices of the Issuer are located at 5 Civic
Plaza, Suite 100, Newport Beach California 92660. The principal
executive offices of the Issuer were formerly located at 3050 Redhill
Avenue, Costa Mesa, California 92626.
Item 2. Identity and Background.
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(a) This Statement is filed by FoxMeyer Corporation, a Delaware
corporation (the "Company").
(b) The business address of the Company is 1220 Senlac Drive,
Carrollton, Texas 75006.
(c) The Company is a wholly-owned subsidiary of FoxMeyer Health
Corporation, a Delaware corporation ("FHC"). The business address of
FHC is 1220 Senlac Drive, Carrollton, Texas 75006. The Company is
principally involved in health care services, including the
distribution of a full line of pharmaceutical products and health and
beauty aids to independent drugstores, hospitals, alternate care
facilities and chain stores, as well as providing managed care and
information-based services to health care sponsors, pharmacies and
physicians. Attached as Schedule I and incorporated by reference is a
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list of the directors and executive officers of the Company and FHC,
and the business address and principal occupation or employment of
such directors and officers.
(d) and (e) During the last five years, neither the Company
nor, to the best of the Company's knowledge, any of the persons with
respect to whom information is given in response to this Item 2, has
been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
(f) All of the individuals listed on Schedule I are citizens of
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the United States.
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Item 3. Source and Amount of Funds or Other Consideration.
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Pursuant to a Convertible Note Purchase Agreement dated as of
March 15, 1995, the Company purchased a Convertible Note executed by
the Issuer in the original principal amount of $2,000,000 (the "Note")
for $1,000,000. Pursuant to an Exchangeable Convertible Preferred
Stock Purchase Agreement dated as of March 15, 1995, on April 15, June
12 and July 27, 1995, the Company purchased 15,000, 7,500 and 37,500
shares, respectively, of Class B, Series B, preferred stock (the
"Preferred Stock") of the Issuer with a stated value of $6,000,000 for
$4,000,000. On July 27, 1995, in connection with the purchase of the
Preferred Stock and in consideration of the Company's agreement to
modify certain terms of the Convertible Note Purchase Agreement, the
Company received two Warrants (the "Original Warrants") to purchase a
total of 2,400,000 shares of the Issuer's Common Stock. The source of
the funds used by the Company and paid to the Issuer was general
corporate funds.
In accordance with the terms of a Conversion Agreement dated as
of May 10, 1996 (the "Conversion Agreement"), the Company agreed to
convert the Note and the Preferred Stock into 1,414,827 shares of
Common Stock (the "Shares") and, in consideration of the conversion,
the Issuer agreed to issue (a) one consolidated Warrant to purchase
800,000 shares of Common Stock (the "Consolidated Warrant"), adjusted
to reflect the Issuer's reverse stock split, in exchange for the
Original Warrants, and (b) an additional Warrant (the "New Warrant")
to purchase 250,000 shares of Common Stock. On May 30, 1996, the
Company received the certificate evidencing the Shares, the
Consolidated Warrant and the New Warrant.
Item 4. Purpose of Transaction.
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The Company acquired the Note, the Preferred Stock and Original
Warrants, and converted the Note and the Preferred Stock into the
Shares and acquired the Consolidated Warrant and the New Warrant, for
investment purposes and intends to review its investment in the Issuer
on a continuing basis.
Except as stated above, the Company has not formulated any plans
or proposals of the type referred to in clauses (a) through (j) of
Item 4 of Schedule 13D, although the Company reserves the right to
formulate such plans or proposals in the future.
Item 5. Interest in Securities of the Issuer.
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(a) The following information restates the information that was
set forth in the Schedule 13D filed in paper format by the Company on
or about October 11, 1995:
Original Warrant Number W-1 acquired by the Company on July 27,
1995 entitles the Company to purchase from the Issuer, at an exercise
price of $2.875 per share, 800,000 shares of Common Stock. Original
Warrant Number W-2 acquired by the Company on
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July 27, 1995 entitles the Company to purchase from the Issuer, at an
exercise price of $2.00 per share, 1,600,000 shares of Common Stock.
The Original Warrants may be exercised after December 2, 1995 through
July 26, 2000. Accordingly, as of October 3, 1995, as a result of its
ownership of the Original Warrants, the Company had beneficial
ownership, pursuant to Rule 13d-3, of 2,400,000 shares of Common
Stock.
The Issuer had advised the Company that for the fiscal year ended
June 30, 1995, the Issuer had 13,675,000 shares of Common Stock
outstanding as of June 30, 1995, and that the Issuer had 19,107,000
shares of Common Stock outstanding as of September 15, 1995.
Including the shares of Common Stock that would issuable upon exercise
of the Original Warrants, as of October 11, 1995, the Company had
beneficial ownership of 2,400,000 of the 21,507,000 shares of Common
Stock which would then be outstanding, or approximately 11.1% of such
Common Stock.
On September 11, 1995, the Issuer announced that an additional
15,000,000 shares of Common Stock would be issued in connection with a
merger between the Issuer and Osbon Medical Systems, Ltd. Assuming
such shares are issued, and including the shares of Common Stock which
would issuable upon exercise of the Original Warrants, the Company
would have beneficial ownership of 2,400,000 of the 36,507,000 shares
of Common Stock which would then be outstanding, or approximately
6.57% of such Common Stock.
In addition, at the option of the Company, the Note is
convertible into Common Stock at any time after March 15, 1996, and
the Preferred Stock is convertible into Common Stock at any time after
one year from the Preferred Stock's respective issue dates (i.e.,
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after April 15, June 12 and July 27, 1996, respectively), at $2.00 per
share of Common Stock. As of the date hereof, the Company does not
have beneficial ownership, pursuant to Rule 13d-3, of any shares of
Common Stock as a result of its ownership of the Note or the Preferred
Stock, but as of and after July 27, 1996, the Company may be deemed to
have beneficial ownership of an additional 4,000,000 shares of Common
Stock, 1,000,000 of which would be issuable upon conversion of the
Note and 3,000,000 of which would be issuable upon conversion of the
Preferred Stock. Assuming 15,000,000 shares of Common Stock are
issued in connection with the Osbon Medical Systems, Ltd. merger, and
including the shares of Common Stock which would issuable upon
exercise of the Original Warrants and conversion of the Note and the
Preferred Stock, the Company would have beneficial ownership of
6,400,000 of the 40,507,000 shares of Common Stock which would then be
outstanding, or approximately 15.8% of such Common Stock.
The following information amends the information set forth in the
Schedule 13D filed in paper format by the Company on or about October
11, 1995:
In accordance with the terms of the Conversion Agreement,
FoxMeyer received the Consolidated Warrant and the New Warrant.
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The Company is entitled under the Consolidated Warrant to purchase
from the Issuer, at an exercise price of $6.875 per share, 800,000
shares of Common Stock. The Company is entitled under the New Warrant
to purchase from the Issuer, at an exercise price of $10.00 per share,
250,000 shares of Common Stock. Both the Consolidated Warrant and the
New Warrant may be exercised until June 2, 2000. Accordingly, as of
the date hereof, the Company has beneficial ownership, pursuant to
Rule 13d-3, of 2,464,827 shares of Common Stock, 1,414,827 of which
are represented by the Shares and 1,050,000 of which are represented
by the Consolidated Warrant and the New Warrant.
According to the Issuer's Amendment No. 1 to Form 10-Q/A for the
quarterly period ended December 31, 1995, the Issuer had 12,401,945
shares of Common Stock outstanding as of January 31, 1996. Including
the shares of Common Stock that would issuable upon exercise of the
Consolidated Warrant and the New Warrant, as of the date hereof the
Company has beneficial ownership of 2,464,827 of the 14,866,772 shares
of Common Stock which would then be outstanding, or approximately
16.6% of such Common Stock.
FHC, by virtue of its ownership of the Company, may be deemed,
for purposes of determining beneficial ownership pursuant to Rule
13d-3, to have beneficial ownership of the shares of Common Stock
beneficially owned by the Company. The persons listed in the footnote
to Schedule I attached hereto, by virtue of their direct or indirect
control of the Company and FHC, may be deemed, for purposes of
determining beneficial ownership pursuant to Rule 13d-3, to have
beneficial ownership of the shares of Common Stock beneficially owned
by the Company.
(b) Except as set forth in (a) above and as described in Item 6
below, the Company has sole power to dispose or to direct the
disposition and to vote or direct the voting of the Common Stock it
owns and that would be issuable upon exercise of the Consolidated
Warrant and the New Warrant.
(c) Except as set forth in Item 3 above, the Company has not
effected any transactions in the Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
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with Respect to Securities of the Issuer.
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The following information restates the information that was set
forth in the Schedule 13D filed in paper format by the Company on or
about October 11, 1995:
The Company is a party to Voting Agreements dated as of March 15,
1995 with each of Gerald W. Timm, Charles A. Laverty
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and Michael A. Piraino. Under the Voting Agreements, Mr. Timm. Mr.
Laverty and Mr. Piraino, who are each shareholders of the Issuer, have
each agreed to vote their respective shares of Common Stock in favor
of the election of the two nominees of the Company to serve on the
Board of Directors of the Issuer.
The following information amends the information set forth in the
Schedule 13D filed in paper format by the Company on or about October
11, 1995:
Under the terms of the Conversion Agreement, the Issuer agreed to
include the Shares in its upcoming shelf registration statement and to
use its reasonable best efforts, including nominating, supporting and
soliciting proxies, to ensure that the Company will retain the two
seats currently held by it on the Issuer's Board of Directors for two
years after the conversion of the Note and Preferred Stock.
In connection with the execution of the Conversion Agreement, the
Company also executed a Stockholders Agreement and a Registration
Rights Agreement, each dated as of May 13, 1996, with certain
Investors in the Issuer. Under the terms of the Stockholder
Agreement, the Company agreed to grant to the Issuer irrevocable
proxies to vote the Shares in favor amending the Issuer's Certificate
of Incorporation to (a) increase the authorized shares of Common Stock
to 50,000,000 shares and (b) provide that certain convertible
debentures have voting rights. The Company further agreed to certain
restrictions on transfers of the Shares until such amendment is filed.
Under the terms of the Registration Rights Agreement, the prior
registration rights agreement between the Company and the Issuer was
terminated, and the Company, along with the Investors, were granted
certain demand and piggyback registration rights.
Item 7. Materials to be Filed as Exhibits.
---------------------------------
The following documents were attached as exhibits to the Schedule
13D filed in paper format by the Company on or about October 11, 1995:
Exhibit 1 Warrant W-1 dated July 27, 1995 to purchase
800,000 shares of Common Stock, executed by the
Issuer in favor of the Company
Exhibit 2 Warrant W-2 dated July 27, 1995 to purchase
1,600,000 shares of Common Stock, executed by the
Issuer in favor of the Company
Exhibit 3 Convertible Note, dated as of March 15, 1995,
executed by the Issuer and payable to the Company
Exhibit 4 Certificate of Incorporation of the Issuer, filed
with the Secretary of State of Delaware
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on July 24, 1995, which sets forth the conversion
terms of the Preferred Stock
Exhibit 5 Voting Agreement dated March 15, 1995 by and
between FoxMeyer Corporation and Gerald W. Timm
Exhibit 6 Voting Agreement dated March 15, 1995 by and
between FoxMeyer Corporation and Charles A.
Laverty
Exhibit 7 Voting Agreement dated March 15, 1995 by and
between FoxMeyer Corporation and Michael A.
Piraino
The following documents are attached as exhibits hereto:
Exhibit 1 Conversion Agreement dated as of May 10, 1996
between FoxMeyer Corporation and UroHealth
Systems, Inc.
Exhibit 2 Stockholders Agreement dated as of May 13, 1996
between FoxMeyer Corporation, UroHealth Systems,
Inc. and other parties named therein.
Exhibit 3 Registration Rights Agreement dated as of May 13,
1996 between FoxMeyer Corporation, UroHealth
Systems, Inc. and other parties named therein.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is
true, complete and correct.
DATE: May 31, 1996.
SIGNED: FOXMEYER CORPORATION
By: /s/ John G. Murray
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John G. Murray
Assistant Treasurer
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF FOXMEYER CORPORATION
The following information is provided for the directors and
executive officers of FoxMeyer Corporation (the "Company") listed
below: (a) name; (b) business address; (c) present principal
occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is
conducted.
(a) Abbey J. Butler
(b) 1220 Senlac Drive, Carrollton, Texas 75006 (the "FMC
Address")
(c) Co-Chairman of the Board of Directors and Co-Chief Executive
Officer of the Company and of FoxMeyer Health Corporation
("FHC"); 1220 Senlac Drive, Carrollton, Texas 75006; FMC
Address
(a) Melvyn J. Estrin
(b) FMC Address
(c) Co-Chairman of the Board of Directors and Co-Chief Executive
Officer of the Company and of FHC; FoxMeyer Address
(a) Daniel J. Callahan, III
(b) FMC Address
(c) Director of the Company; former Chairman of USLICO
Corporation; 107 Windward Court, Stevensville, MD 21666
(a) Harvey A. Fain
(b) FMC Address
(c) Director of the Company; Chief Operating Officer of Harvey
A. Fain & Co., Inc.; 33 Indian Field Court, Mahwah, NJ
07430
(a) Bruce E. Kahler
(b) FMC Address
(c) Director of the Company; President of Seabrokers, Inc.; 1
Stamford Plaza, 263 Tresser Blvd., Stamford, CT 06901
(a) William L. Estes
(b) FMC Address
(c) Chief Operating Officer the Company; FMC Address
(a) Edward L. Massman
(b) FMC Address
(c) Senior Vice President and Chief Financial Officer of the
Company and of FHC; FMC Address
(a) Kevin J. Rogan
(b) FMC Address
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(c) Senior Vice President, General Counsel and Secretary of the
Company and of FHC; FMC Address
(a) W. Craig Innes
(b) FMC Address
(c) Senior Vice President of the Company - Human Resources and
Administration; FMC Address
(a) Douglas J. Schwinn
(b) FMC Address
(c) Senior Vice President of the Company - Information Services
and Chief Information Officer; FMC Address
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DIRECTORS AND EXECUTIVE OFFICERS
OF FOXMEYER HEALTH CORPORATION
The following information is provided for the directors and
executive officers of FoxMeyer Health Corporation ("FHC") listed
below: (a) name; (b) business address; (c) present principal
occupation or employment and the name, principal business and the
address of any corporation or other organization in which such
employment is conducted.
* (a) Abbey J. Butler
(b) 1220 Senlac Drive, Carrollton, Texas 75006 (the "FHC
Address")
(c) Co-Chairman of the Board of Directors and Co-Chief Executive
Officer of FHC and FoxMeyer Corporation ("FoxMeyer"); FHC
Address
* (a) Melvyn J. Estrin
(b) FHC Address
(c) Co-Chairman of the Board of Directors and Co-Chief Executive
Officer of FHC and FoxMeyer; FHC Address
(a) Sheldon W. Fantle
(b) FHC Address
(c) Director of FHC; Chairman and Chief Executive Officer of
Fantle Enterprises, Inc.; Bethesda Metro Center, Suite 820,
Bethesda, Maryland 20814
(a) Paul M. Finfer
(b) FHC Address
(c) Director of FHC; President and Chief Executive Officer of
Franklin Acceptance Corporation; 6401 Golden Triangle Drive,
Greenville, Maryland 20770
(a) Alfred H. Kingon
(b) FHC Address
(c) Director of FHC; Principal of Kingon International, Inc.;
301 Madison Avenue, 23rd Floor, New York, New York 10022
(a) William G. Tull
(b) FHC Address
(c) Director of FHC; Financial Consultant; 11311 South Glen
Road, Potomac, Maryland 20854
(a) Edward L. Massman
(b) FHC Address
(c) Senior Vice President and Chief Financial Officer of FHC and
of FoxMeyer; FHC Address
(a) Kevin J. Rogan
(b) FHC Address
(c) Senior Vice President, General Counsel and Secretary of FHC
and of FoxMeyer; FHC Address
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________________________
* The Centaur Group holds an aggregate of 3,625,991 shares of the
outstanding shares of common stock of FHC and may be deemed to control
FHC. The Centaur Group is comprised of Messrs. Butler and Estrin,
Centaur Partners IV, a New York general partnership ("Centaur IV"),
Estrin Equities Limited Partnership, a Maryland limited partnership
("Estrin Equities"), and Butler Equities II, L.P., a Delaware limited
partnership ("Butler Equities"). The general partners of Centaur IV
are Estrin Equities and Butler Equities.
The general partners of Estrin Equities are HSG Acquisition Co. and
MJE, Inc. HSG Acquisition Co. is a Delaware corporation, the
outstanding capital stock of which is owned by Human Service Group,
Inc., a Delaware corporation of which Mr. Estrin owns 69.8% of the
outstanding capital stock (subject to a dispute involving ownership of
approximately 9% of such stock). MJE, Inc. is a Virginia corporation
controlled by Mr. Estrin.
The sole general partner of Butler Equities is AB Acquisition Corp., a
Delaware corporation, and Mr. Butler owns all of the outstanding
capital stock AB Acquisition Corp.
Estrin Equities has designated Mr. Estrin and Butler Equities has
designated Mr. Butler to act as a "Coordinating Person" pursuant to
the Centaur IV partnership agreement. Messrs. Estrin and Butler,
acting together, manage the affairs of Centaur IV and have the
authority to make all decisions concerning Centaur IV's interest in
FHC Common Stock.
The address of Centaur IV and Butler Equities is c/o CB Equities
Corporation, 207 Dune Road, Box 137, Westhampton Beach, New York
11978; the address of Estrin Equities is 7200 Wisconsin Avenue, Suite
600, Bethesda, Maryland 20814.
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EXHIBIT INDEX
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Exhibit
Number Exhibit
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Exhibit 1 Conversion Agreement dated as of May 10, 1996 between
FoxMeyer Corporation and UroHealth Systems, Inc.
Exhibit 2 Stockholders Agreement dated as of May 13, 1996 between
FoxMeyer Corporation, UroHealth Systems, Inc. and other
parties named therein.
Exhibit 3 Registration Rights Agreement dated as of May 13, 1996
between FoxMeyer Corporation, UroHealth Systems, Inc.
and other parties named therein.
Exhibit 1
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CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT is entered into as of the 10th day
of May 1996, between Urohealth Systems, Inc., a Delaware corporation
("UROHEALTH"), and FoxMeyer Corporation, a Delaware corporation
("FOXMEYER").
R E C I T A L S
WHEREAS, Urohealth (formerly Davstar Industries Ltd.) and
FoxMeyer are parties to that certain Convertible Note
Purchase Agreement, dated as of March 15, 1995 (the "NOTE
PURCHASE AGREEMENT"), pursuant to which FoxMeyer purchased
from Urohealth a Convertible Note, dated March 15, 1995, in
the principal amount of $2,000,000 (the "CONVERTIBLE NOTE");
and
WHEREAS, Urohealth and FoxMeyer are parties to that certain
Exchangeable Convertible Preferred Stock Purchase Agreement,
dated as of March 15, 1995 (the "PREFERRED STOCK PURCHASE
AGREEMENT"), pursuant to which FoxMeyer agreed to purchase
60,000 shares of Series B Exchangeable Convertible Preferred
Stock (the "SERIES B PREFERRED STOCK"); and
WHEREAS, the Series B Preferred Stock has an original
liquidation preference and conversion value equal to
$6,000,000; and
WHEREAS, the Convertible Note and the Series B Preferred
Stock are convertible into Common Stock of Urohealth at a
conversion price of $6.00 per share of Common Stock; and
WHEREAS, Urohealth, pursuant to the terms of the Convertible
Note, has elected to pay interest under the Convertible Note
"in-kind" by delivery of additional Convertible Notes to
FoxMeyer; and
WHEREAS, Urohealth, pursuant to the terms of the Series B
Preferred Stock, has elected to pay dividends under the
Series B Preferred Stock "in-kind" by delivery of additional
shares of Series B Preferred Stock to FoxMeyer; and
WHEREAS, Urohealth is desirous of having FoxMeyer convert
the Convertible Note and the Series B Preferred Stock into
Urohealth Common Stock; and
DAFS02...:\58\46058\0001\0231\EXH6036R.48B
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WHEREAS, FoxMeyer has agreed, subject to the terms and
conditions set forth below, to convert the Convertible Note
and the Series B Preferred Stock into Urohealth Common Stock
concurrently with the consummation of the private placement
of not less than $10 million of preferred stock or
convertible debentures of Urohealth on terms approved by the
Urohealth Board of Directors (the "PRIVATE PLACEMENT").
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the
covenants set forth herein, the parties agree as follow:
1. Conversion of Convertible Note. Concurrently with the
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first closing of the Private Placement, FoxMeyer elects to convert the
Convertible Note (including payment-in-kind interest thereon) into
Urohealth Common Stock at a conversion price of $6.00 per share. The
parties agree that the number of shares of Urohealth Common Stock to
be issued upon conversion of the Convertible Note shall be 358,369
shares (which includes interest through May 9, 1996). In the event
that the closing of the Private Placement has not occurred on or
before May 9, 1996, the number of shares of Common Stock issuable to
FoxMeyer shall increase by 62 shares per day for each day after May 9,
1996. The obligation under this paragraph to convert shall terminate
if the first closing shall not have occurred on or prior to June 30,
1996.
2. Conversion of Series B Preferred Stock. Concurrently
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with the first closing of the Private Placement, FoxMeyer elects to
convert the Series B Preferred Stock (including payment-in-kind
dividends thereon) into Urohealth Common Stock at a conversion price
of $6.00 per share. The parties agree that the number of shares of
Urohealth Common Stock to be issued upon conversion of the Series B
Preferred Stock shall be 1,055,506 shares (which includes dividends
through May 9, 1996). In the event that the closing of the Private
Placement has not occurred on or before May 9, 1996, the number of
shares of Common Stock issuable to FoxMeyer shall increase by 176
shares per day for each day after May 9, 1996. The obligation under
this paragraph to convert shall terminate if the first closing shall
not have occurred on or prior to June 30, 1996.
3. Consolidated Warrant. The Warrant to Purchase Common
--------------------
Stock of Urohealth (No. W-1), dated June 2, 1995 ("EXISTING WARRANT
NO. 1"), and the Warrant to Purchase Common Stock of Urohealth (No. W-
2), dated July 26, 1995 ("EXISTING
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WARRANT NO. 2"), currently held by FoxMeyer will be consolidated,
concurrently with the conversion of the Convertible Note and the
Series B Preferred Stock into Common Stock, into a single warrant with
a blended exercise price (the "CONSOLIDATED WARRANT"). The
Consolidated Warrant will entitle FoxMeyer to purchase an aggregate of
800,000 shares of Urohealth Common Stock at an exercise rice of $6.875
per share, and will expire June 2, 2000. The Consolidated Warrant
shall be in the form of Exhibit A attached hereto.
4. New Warrant. Concurrently with the conversion of the
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Convertible Note and the Series B Preferred Stock into Common Stock,
Urohealth shall issue to FoxMeyer a new warrant (the "NEW WARRANT")
substantially in the form of Exhibit A hereto which would include the
right to purchase 250,000 shares of Urohealth Common Stock at an
exercise price of $10.00 per share, and would expire June 2, 2000.
5. Board Representation. Urohealth shall use its
--------------------
reasonable best efforts, including nominating, supporting and
soliciting proxies, to ensure that FoxMeyer will retain the two seats
currently held by FoxMeyer representatives on the Urohealth Board of
Directors for two years after the conversion of the Convertible Note
and the Series B Preferred Stock into Common Stock.
6. Release of Liens and Other Termination. Concurrently
--------------------------------------
with the conversion of the Convertible Note, all liens and security
interests of FoxMeyer with respect to assets of Urohealth or its
subsidiaries shall be terminated and released, and FoxMeyer agrees to
execute and deliver such UCC-2 termination statements and other
documents reasonably requested by Urohealth with respect to such
termination and release. In addition, the rights of FoxMeyer under
the Note Purchase Agreement and the Preferred Stock Purchase
Agreement, including the right to designate a specified number of
directors, shall terminate concurrently with the conversion; provided,
that such termination shall not terminate any obligations relating to
representations and warranties previously made or with respect to
indemnification obligations for breaches of representations and
warranties under such agreements.
7. Registration Rights.
-------------------
(a) Urohealth is currently in the process of preparing
a shelf registration statement to cover the resale of shares of
Urohealth Common Stock owned by certain Urohealth stockholders and
Urohealth shall file such registration statement
<PAGE>
<PAGE>
with the Securities and Exchange Commission promptly and in any event
no later than June 30, 1996. Urohealth will use its best efforts to
keep such registration statement effective until the earlier of the
termination of the First Period (as defined in the Registration Rights
Agreement), or until all of the shares registered thereunder have been
distributed; provided, that the term of such shelf registration
statement shall be extended by a period of time equal to the time when
FoxMeyer is not permitted to sell shares pursuant to the terms of the
Registration Rights Agreement (as defined below) or otherwise does not
have a current prospectus available to deliver in connection with any
sale. Urohealth agrees to include the shares to be issued to FoxMeyer
upon conversion of the Convertible Note and the Series B Preferred
Stock into Common Stock (the "CONVERTED SHARES") in such registration
statement. In addition, the Converted Shares shall constitute
"Registrable Shares" within the meaning of that certain Registration
Rights Agreement, dated May __, 1996, between Urohealth, FoxMeyer, the
Investors and the other stockholders of Urohealth identified therein
(the "REGISTRATION RIGHTS AGREEMENT"). The provisions of this
Section 7(a) and the Registration Rights Agreement supersedes any and
all prior registration rights agreements and obligations of Urohealth
to FoxMeyer with respect to the registration of securities of
Urohealth.
(b) The shares of Common Stock issuable upon exercise
of the Consolidated Warrant and the New Warrant shall be covered by,
and shall be "Registrable Securities" for the purposes of, the
Registration Rights Agreement. The obligations of Urohealth to
FoxMeyer under this Conversion Agreement not otherwise described in
this Section 7(a) with respect to the filing of the shelf registration
statement shall be governed by the following provisions of the
Registration Rights Agreement: Section 6 (Preparation and Filing),
Section 7 (Expenses), Section 8 (Indemnification) and Section 14
(Merger).
(c) The Registration Rights Agreement specifically
permits the transfer of the registration rights thereunder to any
lender to FoxMeyer in connection with any transfer of any Registrable
Shares to a lender or at the request of a lender in satisfaction of
any debt or other obligations owed such lender, and to any subsequent
transferee thereof.
8. Miscellaneous.
-------------
8.1 Entire Agreement. This Agreement and the
----------------
documents referred to herein constitute the entire agreement among the
parties, and no party shall be liable or bound to any
<PAGE>
<PAGE>
other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
8.2 Successors and Assigns. Except as otherwise
----------------------
provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any rights,
remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
8.3 Governing Law: Choice of Forum, Etc. This
------------------------------------
Agreement shall be governed by and construed in accordance with the
laws of the State of California, excluding that body of law relating
to conflict of laws. The parties hereto agree that the appropriate
and exclusive forum for any disputes arising out of this Agreement
shall be the United States District Court for the central District of
California or any state court located in Los Angeles County or Orange
County, California and the parties hereto irrevocably consent to the
exclusive jurisdiction of such courts, and agree to comply with all
requirements necessary to give such courts jurisdiction. Each of the
parties hereto irrevocably consents to the service of process in any
action or proceeding hereunder by the mailing of copies thereof by
registered or certified airmail, postage prepaid, to the parties. The
foregoing shall not limit the rights of either party hereto to serve
process in any other manner permitted by law or to obtain execution of
judgment in any other jurisdiction. The parties further agree, to the
extent permitted by law, that final judgment against any of them in
any action or proceeding contemplated above shall be conclusive and
may be enforced in any other jurisdiction within or outside the United
States by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the fact and the amount of
indebtedness.
8.4 Counterparts. This Agreement may be executed in
------------
two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
8.5 Title and Subtitles. The titles and subtitles
-------------------
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
8.6 Notices. Any notice or other communication
-------
required or permitted under this Agreement shall be given in
<PAGE>
<PAGE>
writing and shall be deemed effectively given upon personal delivery
or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid, addressed to Urohealth at 5 Civic
Plaza, Suite 100, Newport Beach, California 92660, Attention: General
Counsel and to FoxMeyer at 1220 Senlac Drive, Carrollton, Texas 85006,
Attention: General Counsel or at such other address as either party
may designate by 10 days' advance written notice to the other party.
8.7 Expenses. The Company shall pay all costs and
--------
expenses that it incurs with respect to the negotiation, execution and
delivery of this Agreement, and FoxMeyer shall pay all costs and
expenses that it incurs with respect to the negotiation, execution and
delivery of this Agreement.
8.8 Amendments and Waivers. Any term of this
----------------------
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively) with the written consent of
Urohealth, FoxMeyer and the Requisite Investors (which is holders of a
majority of the Investor Registrable Shares under the Registration
Rights Agreement); provided, that if such amendment would not
adversely effect the rights of the Requisite Holders such consent of
the Requisite Investors may not be unreasonably withheld. Any
amendment or waiver effected in accordance with this paragraph shall
be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which
such securities have been converted), each future holder of all such
securities, and Urohealth.
8.9 No Waiver; Cumulative Remedies. No failure on the
------------------------------
part of Urohealth or FoxMeyer to exercise, and no delay in exercising,
any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right, remedy, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Agreement are
cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to Urohealth or FoxMeyer.
8.10 Severability. If one or more provision of this
------------
Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of
this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
<PAGE>
<PAGE>
8.11 Relationship. The parties acknowledge and agree
------------
that nothing contained herein is intended to create, nor be deemed to
create, any partnership, joint venture, trust or fiduciary
relationship between FoxMeyer and Urohealth.
8.12 Attorneys' Fees. If any action at law or in
---------------
equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
UROHEALTH SYSTEMS, INC.
a Delaware corporation
By: /s/ Kevin M. Higgins
------------------------------------
Name: Kevin M. Higgins
Title: Sr. V.P. & General counsel
FOXMEYER CORPORATION
By: /s/ John G. Murray
------------------------------------
Name: John G. Murray
Title: Assistant Treasurer
<PAGE>
<PAGE>
EXHIBIT A to
Exhibit 1
---------
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
No. W-___ Warrant to Purchase 800,000
Shares of Common Stock
(subject to adjustment)
WARRANT TO PURCHASE COMMON STOCK
OF
UROHEALTH SYSTEMS, INC.
VOID AFTER JUNE 2, 2000
This certifies that, for value received, FoxMeyer Corporation, or
registered assigns (the "Holder"), is entitled, subject to the terms
set forth below, to purchase from Urohealth Systems, Inc. (formerly
known as "Davstar Industries, Ltd.") (the "Company"), a corporation
organized under the laws of the State of Delaware, Eight Hundred
Thousand (800,000) shares of the Common Stock of the Company, $.001
value per share, as constituted on the date hereof (the "Warrant Issue
Date"), upon surrender hereof, at the principal office of the Company
referred to below, with the subscription form attached hereto duly
executed, and simultaneous payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise
Price as set forth in Section 2 below. The number, character and
---------
Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall
include this Warrant, and any warrants delivered in substitution or
exchange therefor as provided herein.
This Warrant is issued pursuant to that certain Conversion
Agreement between the Company and the Holder, dated as of May __, 1996
(the "Conversion Agreement").
1. Term of Warrant. Subject to the terms and conditions set
---------------
forth herein, this Warrant shall be exercisable, in whole or in part,
during the term commencing on the Warrant Issue Date and ending at
5:00 p.m., Pacific standard time, on June 2, 2000 and shall be void
thereafter.
2. Exercise Price. The Exercise Price at which this Warrant
--------------
may be exercised shall be $6.875 per share of Common
A-1
<PAGE>
<PAGE>
Stock, as adjusted from time to time pursuant to Section 11 hereof.
----------
3. Exercise of Warrant.
-------------------
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, but not for less than
Five Thousand (5,000) shares at any time, or from time to time (or
such lesser number of shares which may then constitute the maximum
number purchasable under this Warrant) (such number being subject to
adjustment as provided in Section 11 below), during the term hereof as
----------
described in Section 1 above, by the surrender of this Warrant and the
---------
Notice of Exercise annexed hereto as Exhibit "A" duly completed and
-----------
executed on behalf of the Holder, at the office of the Company (or
such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing
on the books of the Company), upon payment (i) in cash or by check
acceptable to the Company, (ii) by cancellation by the Holder of
indebtedness of the Company to the Holder, or (iii) by a combination
of (i) and (ii) equal to the purchase price of the shares to be
purchased.
(b) This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to
receive the shares of Common Stock issuable upon such exercise shall
be treated for all purposes as the holder of record of such shares as
of the close of business on such date. As promptly as practicable on
or after such date and in any event within ten (10) days thereafter,
the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise. In the event that
this Warrant is exercised in part, the Company at its expense will
execute and deliver a new Warrant of like tenor exercisable for the
number of shares for which this Warrant may then be exercised.
(c) Notwithstanding any provisions herein to the contrary,
if the fair market value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with the
properly endorsed Notice of Exercise and notice of such election in
which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
A-2
<PAGE>
<PAGE>
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at
the date of such calculation)
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, fair market value of one share
of Common Stock shall be determined by the Company's Board of
Directors in good faith; provided, however, that where there exists a
public market for the Company's Common Stock at the time of such
exercise, the fair market value per share shall be the average of the
closing bid and asked prices of the Common Stock quoted in the Over-
The-Counter Market Summary or the last reported sale price of the
Common Stock or the closing price quoted on the Nasdaq National Market
or on any exchange on which the Common Stock is then listed, whichever
is applicable, as published in the Western Edition of The Wall Street
Journal for the five (5) trading days prior to the date of
determination of fair market value.
4. No Fractional Shares or Scrip. No fractional shares or
-----------------------------
scrip representing fractional shares shall be issued upon the exercise
of this Warrant. In lieu of any fractional share to which the Holder
would otherwise be entitled, the Company shall make a cash payment
equal to the Exercise Price multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company
at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
6. Rights of Stockholders. Subject to Sections 9 and 11 of
---------------------- ---------- --
this Warrant, the Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any
A-3
<PAGE>
<PAGE>
other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to
no par value, consolidation, merger, conveyance, or otherwise) or to
receive notice of meetings, or to receive dividends or otherwise until
the Warrant shall have been exercised as provided herein.
7. Transfer of Warrant.
-------------------
(a) The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder and its
transferees. Any Holder of this Warrant or any portion thereof may
change his address as shown on the Warrant Register by written notice
to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be
delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the Company, the
Company may treat the Holder as shown on the Warrant Register as the
absolute owner of this Warrant for all purposes, notwithstanding any
notice to the contrary.
(b) The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register
referred to in Section 7(a) above, issuing the Common Stock or other
------------
securities then issuable upon the exercise of this Warrant, exchanging
this Warrant, replacing this Warrant, or any or all of the foregoing.
Thereafter, any such registration, issuance, exchange, or replacement,
as the case may be, shall be made at the office of such agent.
(c) This Warrant may not be transferred or assigned in
whole or in part without compliance with all applicable federal and
state securities laws by the transferor and the transferee (including
the delivery of investment representation letters and, if this Warrant
is sold, pledged or hypothecated in whole or in part, legal opinions
reasonably satisfactory to the Company, if such are requested by the
Company). Subject to the provisions of this Warrant with respect to
compliance with the Securities Act of 1933, as amended (the "Act"),
title to this Warrant may be transferred by endorsement (by the Holder
executing the Assignment Form annexed hereto) and delivery in the
same manner
A-4
<PAGE>
<PAGE>
as a negotiable instrument transferable by endorsement and delivery.
(d) On surrender of this Warrant for exchange, properly
endorsed on the Assignment Form and subject to the provisions of this
Warrant with respect to compliance with the Act and with the
limitations on assignments and transfers and contained in this
Section 7, the Company at its expense shall issue to or on the order
---------
of the Holder a new warrant or warrants of like tenor, in the name of
the Holder or as the Holder (on payment by the Holder of any
applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
(e) Compliance with securities laws:
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to be
issued upon exercise hereof, if the issuance or resale thereof is
unregistered under the Act, are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Common Stock to be issued
upon exercise hereof except under circumstances that will not result
in a violation of the Act or any applicable state securities laws.
Upon exercise of this Warrant, the Holder shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company,
that Holder has such investment intent as is required under the Act,
if any.
(ii) This Warrant and all shares of Common Stock issued
upon exercise hereof that are not registered under the Act shall be
stamped or imprinted with a legend in substantially the following form
(in addition to any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. SUCH SECURITIES AND ANY SECURITIES
OR SHARES ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING
THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY
OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.
8. Reservation of Stock. The Company covenants that during the
--------------------
period this Warrant is exercisable, the Company will
A-5
<PAGE>
<PAGE>
reserve and keep available from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of all
Common Stock issuable upon the exercise of this Warrant and, from time
to time, will take all steps necessary to amend its Certificate of
Incorporation (the "Certificate") to provide sufficient reserves of
shares of Common Stock issuable upon exercise of this Warrant. The
Company further covenants that all shares that may be issued upon the
exercise of rights represented by this Warrant and payment of the
Exercise Price, all as set forth herein, will be duly and validly
issued and fully paid and nonassessable, not subject to preemptive
rights, free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein). The Company agrees
that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.
Before taking any action which would cause an adjustment
reducing the current Exercise Price below the then par value, if any,
of the shares of Common Stock issuable upon exercise of this Warrant,
the Company shall take any corporate action which may be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of such Common Stock at such adjusted Exercise
Price.
Before taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is
exercisable or in the current Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as
may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
9. Notices.
-------
(a) Whenever the Exercise Price or number of shares
purchasable hereunder shall be adjusted pursuant to Section 11 hereof,
----------
the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment, and
shall cause a copy of such certificate to be mailed (by first-class
mail, postage prepaid) to the Holder of this Warrant.
(b) In case:
A-6
<PAGE>
<PAGE>
(i) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or
purchase any shares of stock of any class or any other securities, or
to receive any other right, or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation, or
(iii) of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be
mailed to the Holder a notice specifying, as the case may be, (A) the
date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holder of record of Common
Stock (or such stock or securities at the time receivable upon the
exercise of this Warrant) shall be entitled to exchange their shares
(or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least fifteen (15) days prior to the date
therein specified.
(c) All such notices, advices and communications shall be
deemed to have been received (i) in the case of personal delivery, on
the date of such delivery, and (ii) in the case of mailing, on the
third business day following the date of such mailing.
10. Amendments.
----------
(a) Any term of this Warrant may be amended with the
written consent of the Company and the Holder. Any amendment effected
in accordance with this Section 10 shall be binding upon the Holder,
----------
each future holder of all rights pursuant to this Warrant, and the
Company.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
A-7
<PAGE>
<PAGE>
11. Adjustments. The Exercise Price and the number of shares of
-----------
Common Stock purchasable hereunder are subject to adjustment from time
to time as follows:
(a) If at any time while this Warrant, or any portion
thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange
or subdivision of shares otherwise provided for herein), (ii) a merger
or consolidation of the Company with or into another corporation in
which the Company is not the surviving entity, or a reverse triangular
merger in which the Company is the surviving entity but the shares of
the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property,
whether in the form of securities, cash, or otherwise, (iii) an
offering of Common Stock or any other securities pro rata among the
shareholders, or (iv) a sale or transfer of the Company's properties
and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation, sale or
transfer, lawful provision shall be made so that the Holder of this
Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from
such reorganization, merger, consolidation, sale or transfer that a
Holder of the shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this
Section 11. The foregoing provisions of this Section 11(a) shall
---------- -------------
similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any
other corporation that are at the time receivable upon the exercise of
this Warrant. If the per-share consideration payable to the Holder
hereof for shares in connection with any such transaction is in a form
other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the independent
members of the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the independent
members of the Company's Board of Directors) shall be made in the
application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the transaction, to the end
that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this
Warrant.
A-8
<PAGE>
<PAGE>
(b) If the Company, at any time while this Warrant, or any
portion thereof, remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject
to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall
be appropriately adjusted, all subject to further adjustment as
provided in this Section 11.
----------
(c) If the Company at any time while this Warrant, or any
portion thereof, remains outstanding and unexpired, shall split,
subdivide or combine the securities as to which purchase rights under
this Warrant exist, into a different number of securities of the same
class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately
increased in the case of a combination.
(d) If while this Warrant, or any portion thereof, remains
outstanding and unexpired, the holders of the securities as to which
purchase rights under this Warrant exist at the time shall have
received, or, on or after the record date fixed for the determination
of eligible Stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the
right to acquire, in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without payment of any
additional consideration therefor, the amount of such other or
additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise
had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during
the period from the date hereof to and including the date of such
exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this
Section 11.
----------
(e) Upon the occurrence of each adjustment or readjustment
pursuant to this Section 11, the Company at its expense shall promptly
----------
compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a certificate
setting forth such adjustment or
A-9
<PAGE>
<PAGE>
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the
written request, at any time, of any such Holder, furnish or cause to
be furnished to such Holder a like certificate setting forth:
(i) such adjustments and readjustments; (ii) the Exercise Price at the
time in effect; and (iii) the number of shares and the amount, if any,
of other property that at the time would be received upon the exercise
of the Warrant.
(f) The Company will not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times
in good faith assist in the carrying out of all the provisions of this
Section 11 and in the taking of all such actions as may be necessary
----------
or appropriate in order to protect the rights of the Holders of this
Warrant against impairment.
12. Registration Rights. The shares of Common Stock issuable
-------------------
upon exercising of this Warrant shall be entitled to the registration
rights set forth in the Registration Rights Agreement among the
Holder, Company and the parties thereto dated May __, 1996.
13. Limitation of Liability. No provision hereof, in the
-----------------------
absence of affirmative action by the Holder to purchase shares of
Common Stock, and no enumeration herein of the rights or privileges of
the Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by
creditors of the Company.
14. Miscellaneous.
-------------
(a) Except as otherwise expressly provided herein, all
notices referred to in this Warrant will be in writing and will be
delivered personally or by registered or certified mail, return
receipt requested, postage prepaid and will be deemed to have been
given when so personally delivered or on the date of receipt appearing
on the return receipt requested or, if refused, on the date of
refusal,
(i) To the Company:
Urohealth Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
Attention: General Counsel
A-10
<PAGE>
<PAGE>
(ii) To the Holder
FoxMeyer Corporation
1220 Senlac Drive
Carrollton, Texas 75006
Attention: President
(b) The descriptive headings of the several parts and
paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant. The corporate law of the State
of California will govern all questions concerning the relative rights
of the Company and holders of its securities. All other questions
concerning the construction, validity and interpretation of this
Warrant will be governed by the internal law of the State of
California without regard to provisions of conflicts or choice of law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated as of May __, 1996
UROHEALTH SYSTEMS, INC.
By:______________________________
James L. Johnson
Executive Vice President and
Chief Financial Officer
A-11
<PAGE>
<PAGE>
NOTICE OF EXERCISE
To: Urohealth Systems, Inc.
(1) The undersigned hereby elects to purchase ____ shares of
Common Stock or Urohealth Systems, Inc., pursuant to the terms of the
attached Warrant. (Indicate (a) or (b), below)
(a) The undersigned tenders herewith payment of the
purchase price for such shares in full.
(b) The undersigned elects to exercise the Warrant through
the withholding of Shares as provided in Section 3(c) of the Warrant.
______
(2) In exercising this Warrant, the undersigned hereby confirms
and acknowledges that the shares of Common Stock are being acquired
solely for the account of the undersigned and not as a nominee for any
other party, [and for investment,] and that the undersigned will not
offer, sell or otherwise dispose of any such shares of Common Stock
except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended,
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other
name as is specified below:
----------------------------------------
(Name)
----------------------------------------
(Name)
(4) Please issue a new Warrant for the unexercised portion of
the attached Warrant in the name of the undersigned or in such other
name as is specified below:
----------------------------------------
(Name)
----------------------------------------
(Name)
<PAGE>
Exhibit 2
---------
STOCKHOLDERS AGREEMENT, dated as of May 13, 1996 (this
"Agreement"), among UROHEALTH SYSTEMS, INC., a Delaware corporation
(the "Company"), and each stockholder listed on Exhibit A attached
hereto (each, a "Stockholder," and collectively, the "Stockholders").
As of the date hereof each Stockholder owns (either
beneficially or of record) the number of shares of Common Stock, par
value $.001 per share (the "UroHealth Stock"), of the Company, set
forth opposite such Stockholder's name on Exhibit A hereto (all such
---------
shares and any shares hereafter acquired by the Stockholders prior to
the termination of this Agreement being referred to herein as the
"Shares");
Pursuant to the Securities Purchase Agreement dated as of
May 3, 1996, between the Company and the Investors (as defined
therein), the Company is issuing and the Investors are purchasing
Convertible Debentures, Preferred Stock and Warrants for an aggregate
purchase price of not less than $50,000,000. In order to induce the
Investors to enter into the Securities Purchase Agreement and
consummate the transactions contemplated thereby the Company has
requested that each Stockholder agree, and each Stockholder has
agreed, to grant the Company irrevocable proxies to vote such
Stockholder's Shares in favor of amending the Certificate of
Incorporation to (i) increase the authorized shares of Common Stock of
the Company to 50,000,000 shares and (ii) provide that the Convertible
Debentures have voting rights. A copy of the Certificate of Amendment
to be filed with the Secretary of State of the State of Delaware upon
its approval by the Company's stockholders is attached hereto as
Exhibit B.
---------
NOW, THEREFORE, in consideration of the promises and of the
mutual agreements and covenants set forth herein and in the Securities
Purchase Agreement, the parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby
represents and warrants to the Company, as follows:
1.1. DUE AUTHORITY. (a) Such Stockholder has full power and
-------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by or on behalf of such
DAFS02...:\58\46058\0001\0231\EXH6036R.54B
<PAGE>
<PAGE>
Stockholder and, constitutes a legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance
with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in proceeding in equity or at law).
(b) There is no beneficiary or holder of a voting
trust certificate or other interest of any trust of which such
Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(c) If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has
been duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, such Stockholder's spouse, enforceable
against such person in accordance with its terms.
1.2. NO CONFLICT; CONSENTS. (a) The execution and delivery
----------------------
of this Agreement by such Stockholder do not, and the performance of
the transaction contemplated by this Agreement by such Stockholder and
the compliance by such Stockholder with any provisions hereof shall
not (i) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to such Stockholder or by which such
Stockholders assets are bound or affected, (ii) conflict with or
violate the Stockholder's certificate of incorporation or by laws or
other organizational document, if applicable to such Stockholder,
(iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of such Stockholder's assets pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such
Stockholder is a party or by which such Stockholder or such
Stockholder's assets are bound or affected or (iv) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties
or assets.
(b) The execution and delivery of this Agreement by
such Stockholder do not, and the performance of this Agreement by such
Stockholder shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority except for applicable
<PAGE>
<PAGE>
requirements, if any, of the Securities Exchange Act of 1934, as
amended, and except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by such
Stockholder of his, her or its obligations under this Agreement in any
material respect.
1.3. TITLE TO SHARES. (a) Such Stockholder is the record
---------------
or beneficial owner of his, her or its Shares free and clear of any
proxy or voting restriction other than pursuant to this Agreement.
The Shares set forth opposite such Stockholder's name on Exhibit A
---------
hereto constitute all of the shares of UroHealth Stock owned of
record or beneficially by such Stockholder.
(b) Such Stockholder has sole power of disposition
with respect to all the Shares set forth opposite such Stockholder's
name on Exhibit A hereto and the sole voting power with respect to the
---------
matters set forth in Article II hereof and the sole power to demand
dissenter's or appraisal rights, in each case with respect to all of
the Shares set forth opposite such Stockholder's name on Exhibit A
---------
hereto, with no restrictions on such rights, subject to applicable
federal securities laws and the terms of this Agreement.
1.4. NO ENCUMBRANCES. Such Stockholder's Shares and the
---------------
certificates representing such Shares are now and at all times during
the term hereof will be held by such Stockholder, or by a nominee or
custodian for the benefit of such Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever except for any such encumbrances or proxies arising
hereunder, provided that nothing herein shall prevent the bona fide
---- ----
pledge of such Stockholder's Shares, so long as the pledgee thereof
agrees to be subject to the terms hereof or such other agreement with
provisions reasonably acceptable to the Investors that provide for the
proxy agreement to remain in full force and effect.
1.5. ACKNOWLEDGMENT OF RELIANCE. Such Stockholder
--------------------------
understands and acknowledges that the Investors are entering into the
Securities Purchase Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement.
1.6. BROKERS. No broker, investment banker, financial
-------
adviser or other person s entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection
with the transactions contemplated hereby based upon arrangements made
by or on behalf of such Stockholder.
<PAGE>
<PAGE>
ARTICLE II
TRANSFER AND VOTING OF SHARES
2.1. TRANSFER OF SHARES. During the Proxy Term (as defined
------------------
below), and except as otherwise provided herein, each Stockholder
shall not (a) offer for sale, tender, transfer, pledge, encumber,
assign or otherwise dispose of any of such Stockholder's Shares, (b)
deposit such Stockholder's Shares into a voting trust or enter into a
voting agreement or arrangement with respect to such Shares or grant
any proxy or power of attorney with respect thereto, (c) enter into
any contract, option or other arrangement or undertaking with respect
to the direct or indirect acquisition or sale, transfer, pledge,
encumbrance, assignment or other disposition of any UroHealth Stock or
(d) take any action that would make any representation or warranty of
such Stockholder contained herein to be untrue or incorrect or have
the effect of preventing or disabling such Stockholder from performing
such Stockholder's obligations under this Agreement. Notwithstanding
the foregoing, nothing herein shall prevent the bona fide pledge of a
---- ----
Stockholders Shares so long as the pledgee thereto agrees to be
subject to the terms hereof or such other agreement with provisions
reasonably acceptable to the Investors that provides for the proxy
agreement to remain in full force and effect.
2.2. VOTING OF SHARES: FURTHER ASSURANCES. (a) Each
------------------------------------
Stockholder, by this Agreement, with respect to those Shares that such
Stockholder owns of record, does hereby constitute and appoint the
Company, or any nominee of the Company, with full power of
substitution, during and for the Proxy Term, as such Stockholder's
true and lawful attorney and irrevocable proxy, for and in such
Stockholder's name, place and stead, to vote each of such Shares as
such Stockholder's proxy, at every annual, special or adjourned
meeting of the stockholders of the Company (including the right to
sign such Stockholder's name (as stockholder) to any consent,
certificate or other document relating to the Company that the law of
the State of Delaware may permit or require) to authorize the Company
to take all actions necessary to increase the number of shares of
Common Stock authorized by the Certificate of Incorporation to
50,000,000 and to provide the Convertible Debentures with the voting
rights as described in the Certificate of Amendment for each share of
Common Stock purchasable upon conversion of the Convertible
Debentures, including filing the Certificate of Amendment attached
hereto as Exhibit B with the Secretary of State of State of Delaware.
---------
Each Stockholder intends this proxy to be irrevocable and coupled with
an interest and will take such further action and execute such other
instruments as may be necessary to effectuate the intent of this proxy
and hereby
<PAGE>
<PAGE>
revokes any proxy previously granted by such Stockholder with respect
to such Stockholder's Shares to the extent inconsistent with the
obligations hereunder. Each Stockholder further agrees to cause the
Shares owned by such Stockholder beneficially to be voted in
accordance with the foregoing; provided, that nothing hereunder shall
--------
obligate any Stockholder to exercise any option or warrant which may
be deemed to constitute beneficial ownership of the underlying Shares.
(b) For the purposes of this Agreement, "Proxy Term"
shall mean the period from the execution of this Agreement, until the
Certificate of Amendment has been filed with and accepted by the
Secretary of State of the State of Delaware; provided, that the
--------
restrictions on transfer set forth in Sections 2.1 and 3.2 shall
terminate on December 31, 1996, if the expiration of the Proxy Term
has not occurred by such date.
(c) Each Stockholder shall perform such further acts
and execute such further documents and instruments as may reasonably
be required to vest in the Company the power to carry out the
provisions of this Agreement.
2.3. CERTAIN EVENTS. Each Stockholder agrees that this
--------------
Agreement and the obligations hereunder shall attach to such
Stockholder's Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Shares shall pass, whether
by operation of law or otherwise, including without limitation such
Stockholder's heirs, guardians, administrators or successors or as a
result of any divorce.
ARTICLE III
CERTAIN COVENANTS OF STOCKHOLDERS
3.1. VOTING. Each Stockholder set forth on Exhibit A to
------ ---------
this Agreement hereby severally agrees that during the Proxy Term at
any meeting of stockholders of the Company, however called, or in
connection with any written consent of the Company's stockholders,
such Stockholder shall vote (or cause to be voted) the Shares held of
record or beneficially by such Stockholder, except as specifically
requested in writing by the Company in advance, against any action
which, is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, discourage or materially adversely
affect the amendment of the Company's Certificate of Incorporation as
contemplated by this Agreement. Such Stockholder shall not enter into
any agreement or understanding with any person or entity prior to the
Certificate of Amendment being filed with and accepted by the
Secretary of State of the State of Delaware to vote or give
<PAGE>
<PAGE>
instructions after such termination in any manner inconsistent with
this provision.
3.2. STOP TRANSFER. Each Stockholder agrees with, and
-------------
covenants to, the Investors and the Company that such Stockholder
shall not request that the Company register the transfer (book-entry
or otherwise) of any certificate or uncertificated interest
representing any of such Stockholder's Shares, unless such transfer is
made in compliance with this Agreement. Each Stockholder agrees, with
respect to any Shares in certificated form, that such Stockholder will
tender to the Company, within ten business days after the date hereof,
the certificates representing such Shares and the Company will
inscribe upon such certificates the following legend: "The shares of
Common stock, par value $.01 per share, of UroHealth Systems, Inc.
(the "Company"), represented by this certificate are subject to a
Stockholders Agreement dated as of May __, 1996, and may not be sold
or otherwise transferred, except in accordance therewith. Copies of
such Agreement may be obtained at the principal executive offices of
the Company." Each Stockholder agrees that within ten business days
after the date hereof, such Stockholder will no longer hold any
Shares, whether certificated or uncertificated, in "street name" or in
the name of any nominee. Pursuant to the Securities Purchase
Agreement, the Company has agreed to notify the transfer agent for any
Shares in uncertificated form of the provisions set forth in this
Section 3.2 and has agreed to, and each Stockholder agrees to, provide
such documentation and to do such other things as may be required to
give effect to such provisions with respect to such uncertificated
Shares.
3.3. FURTHER ASSURANCES. At the other party's request and
------------------
without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as
may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by
this Agreement.
ARTICLE IV
GENERAL PROVISIONS
4.1. SEVERABILITY. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable
<PAGE>
<PAGE>
of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent pertained by
applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
4.2. ENTIRE AGREEMENT. This Agreement constitutes the
----------------
entire agreement of the parties and supersedes all prior agreements
and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof.
4.3. AMENDMENTS. This Agreement may not be modified,
----------
amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto;
provided that Exhibit A hereto may be supplemented by the Company by
---------
adding the name and other relevant information concerning any
stockholder of the Company who agrees to be bound by the terms of this
Agreement without the agreement of any other party hereto, and
thereafter such added stockholder shall be treated as a "Stockholder"
for all purposes of this Agreement.
4.4. ASSIGNMENT. This Agreement shall not be assigned by
----------
operation of law or otherwise; provided that this Agreement may be
--------
assigned to an affiliate of such Stockholder so long as such affiliate
shall continue to be bound by the obligations hereof as a Stockholder
hereunder.
4.5. PARTIES IN INTEREST. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer
upon any person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
4.6. SPECIFIC PERFORMANCE. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and
that the parties shall be entitled to an injunction to prevent
breaches of this Agreement and specific performance of the terms
hereof, in addition to any other remedy at law or in equity.
4.7. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF DELAWARE TO BE APPLIED. IN
<PAGE>
<PAGE>
FURTHERANCE OF THE FOREGOING, THE INTERNAL LAWS OF THE STATE OF
DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT
OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.
4.8. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the
same agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Stockholders Agreement as of the date first written above.
UROHEALTH SYSTEMS, INC.
By:
-------------------------------------
Name:
Title:
FOXMEYER CORPORATION
By:
-------------------------------------
Name:
Title:
----------------------------------------
Gerald W. Timm
----------------------------------------
Julian W. Osbon
----------------------------------------
James B. Osbon
----------------------------------------
Robert E. Osbon
----------------------------------------
Anthony D. Osbon
----------------------------------------
Carolyn O. Health
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
Number of Shares of
Name and Address UroHealth Owned
of Stockholder by Stockholder<F1>
------------------------------------- -----------------------
<S> <C>
FoxMeyer Corporation 1,414,589
1220 Senlac Drive
Carrollton, Texas 75006
Gerald W. Timm 1,218,480
930 Mount Curve Avenue
Minneapolis, Minnesota 55403
Julian W. Osbon 3,000,000
c/o UROHEALTH Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
James B. Osbon 500,000
c/o UROHEALTH Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
Robert E. Osbon 500,000
c/o UROHEALTH Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
Anthony D. Osbon 500,000
c/o UROHEALTH Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
Carolyn O. Health 500,000
c/o UROHEALTH Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
<FN> Indicates beneficial and, unless otherwise indicated,
record ownership.
</TABLE>
<PAGE>
<PAGE>
EXHIBIT B
---------
Certificate of Amendment
<PAGE>
Exhibit 3
---------
======================================================================
REGISTRATION RIGHTS AGREEMENT
AMONG
UROHEALTH SYSTEMS, INC.
AND
THE STOCKHOLDERS
(AS DEFINED HEREIN)
DATED MAY 13, 1996
======================================================================
DAFS02...:\58\46058\0001\0231\EXH6036R.56B
<PAGE>
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Required Registration . . . . . . . . . . . . . . . 5
SECTION 3. Shelf Registration . . . . . . . . . . . . . . . . . 9
SECTION 4. Piggyback Registration . . . . . . . . . . . . . . . 9
SECTION 5. Holdback Agreement . . . . . . . . . . . . . . . . 10
SECTION 6. Preparation and Filing . . . . . . . . . . . . . . 10
SECTION 7. Expenses . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8. Indemnification . . . . . . . . . . . . . . . . . 14
SECTION 9. Underwriting Agreement . . . . . . . . . . . . . . 18
SECTION 10. Underwritten Registrations . . . . . . . . . . . . 18
SECTION 11. Information by Holder . . . . . . . . . . . . . . 18
SECTION 12. Agreement of Holder . . . . . . . . . . . . . . . 18
SECTION 13. Exchange Act Compliance . . . . . . . . . . . . . 18
SECTION 14. Mergers, Etc. . . . . . . . . . . . . . . . . . . 19
SECTION 15. No Conflict of Rights . . . . . . . . . . . . . . 19
SECTION 16. Termination . . . . . . . . . . . . . . . . . . . 19
SECTION 17. Successors and Assigns . . . . . . . . . . . . . . 19
SECTION 18. Assignment . . . . . . . . . . . . . . . . . . . . 19
SECTION 19. Severability . . . . . . . . . . . . . . . . . . . 19
SECTION 20. Entire Agreement . . . . . . . . . . . . . . . . . 20
SECTION 21. Notices . . . . . . . . . . . . . . . . . . . . . 20
SECTION 22. Modifications; Amendments; Waivers . . . . . . . . 21
(i)
<PAGE>
<PAGE>
SECTION 23. Counterparts; Facsimile Signatures . . . . . . . . 21
SECTION 24. Headings . . . . . . . . . . . . . . . . . . . . . 21
SECTION 25. Governing Law . . . . . . . . . . . . . . . . . . 21
(ii)
<PAGE>
<PAGE>
INDEX OF DEFINED TERMS
----------------------
SECTION OR
TERM OTHER LOCATION
---- --------------
Blackout . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(a)
cold comfort . . . . . . . . . . . . . . . . . . . . . . . . 6(a)(x)
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(b)
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1(c)
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Debenture Registration Agreement . . . . . . . . . . . . . . . . 1(d)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . 1(e)
Existing Shelf Registration . . . . . . . . . . . . . . . . . 2(e)(ii)
Existing Stockholder Registrable Shares . . . . . . . . . . . . . 1(f)
Existing Stockholders . . . . . . . . . . . . . . . . . . . . . . 1(g)
First Period . . . . . . . . . . . . . . . . . . . . . . . . . . 1(h)
FoxMeyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(i)
FoxMeyer Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1(j)
FoxMeyer Stockholder . . . . . . . . . . . . . . . . . . . . . . 1(k)
FoxMeyer Warrant Shares . . . . . . . . . . . . . . . . . . . . . 1(m)
FoxMeyer Warrants . . . . . . . . . . . . . . . . . . . . . . . . 1(l)
Included Percentage . . . . . . . . . . . . . . . . . . . . . . . 1(n)
Information . . . . . . . . . . . . . . . . . . . . . . . . . 6(a)(ix)
Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . 6(a)(ix)
Investor Registrable Shares . . . . . . . . . . . . . . . . . . . 1(o)
Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(p)
Majority of the Stockholders . . . . . . . . . . . . . . . . . . 1(q)
material transaction . . . . . . . . . . . . . . . . . . . 2(e)(iii)
Miscellaneous Shares . . . . . . . . . . . . . . . . . . . . . . 1(r)
NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . 6(a)(xiv)
Osbon Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1(s)
Osbon Stockholders . . . . . . . . . . . . . . . . . . . . . . . 1(t)
Osbon Stockholders . . . . . . . . . . . . . . . . . . . . . . . 1(t)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(u)
Primary Percentage . . . . . . . . . . . . . . . . . . . . . . . 1(v)
Primary Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1(w)
Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 6(a)(ix)
Registrable Shares . . . . . . . . . . . . . . . . . . . . . . . . 14
Registrable Shares . . . . . . . . . . . . . . . . . . . . . . . 1(x)
Registrable Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
Registrable Shares. . . . . . . . . . . . . . . . . . . . . . . . . 14
Requisite Investors . . . . . . . . . . . . . . . . . . . . . . . 1(y)
Reserve Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1(z)
road show . . . . . . . . . . . . . . . . . . . . . . . . . 6(a)(xvi)
Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(aa)
Second Period . . . . . . . . . . . . . . . . . . . . . . . . . 1(ab)
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 1(ac)
(iii)
<PAGE>
<PAGE>
Securities Act1(ad)
Securities Purchase Agreement . . . . . . . . . . . . . . . . . 1(ae)
shelf . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2(e)(i)
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . 1(af)
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Stockholders' Counsel . . . . . . . . . . . . . . . . . . . . 6(a)(ii)
Third Period . . . . . . . . . . . . . . . . . . . . . . . . . 1(ag)
Timm Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1(ah)
Timm Stockholders . . . . . . . . . . . . . . . . . . . . . . . 1(ai)
Timm Stockholders . . . . . . . . . . . . . . . . . . . . . . . 1(ai)
(iv)
<PAGE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT dated as of May 13, 1996,
among UROHEALTH SYSTEMS, INC., a Delaware corporation (the
"Corporation"), and each of the Persons identified on Schedule I (each
a "Stockholder" and collectively, the "Stockholders").
The Stockholders own or have the right to purchase or
otherwise acquire common stock of the Corporation. The Corporation
and the Stockholders deem it to be in their respective best interests
to enter into this Agreement to set forth the rights of the
Stockholders in connection with public offerings and sales of Common
Stock of the Corporation.
ACCORDINGLY, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Corporation and
the Stockholders hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
-----------
following terms have the following meanings:
(a) "Blackout" means any period during which either (i)
the Corporation has informed Existing Stockholders that they may not
consummate sales of Common Stock under the Existing Shelf Registration
due to the fact that a current prospectus thereunder is not available
or (ii) any period during which the Corporation delays effecting
demand registration rights under Section 2 in accordance with Section
2 (e) (iii).
(b) "Commission" means the Securities and Exchange
Commission or any other Federal agency at the time administering the
Securities Act.
(c) "Common Stock" means the Common Stock, par value $.001,
of the Corporation.
(d) "Debenture Registration Agreement" means the Debenture
Registration Rights Agreement dated as of the date hereof among the
Corporation and the Investors.
(e) "Exchange Act" means the Securities Exchange Act of
1934 or any successor Federal statute, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in
effect from time to time.
(f) "Existing Stockholder Registrable Shares" means (i) the
FoxMeyer Shares, (ii) the FoxMeyer Warrant Shares, (iii) the Osbon
Shares, (iv) the Timm Shares, (v) any other securities of the
Corporation into or for which the shares described in (i) through (iv)
may be exchanged, converted or reclassified or which
<PAGE>
<PAGE>
may be issued as a dividend or distribution on or with respect thereto
and (vi) any securities received in respect of the foregoing, in each
case which are held by the Existing Stockholders. As to any
particular Existing Stockholders Registrable Shares, once issued, such
Existing Stockholders Registrable Shares shall cease to be Existing
Stockholders Registrable Shares when (A) they have been registered
under the Securities Act, the registration statement in connection
therewith has been declared effective and they have been disposed of
pursuant to and in the manner described in such effective registration
statement, (B) they are sold or distributed pursuant to Rule 144, or
(C) they have ceased to be outstanding.
(g) "Existing Stockholders" means, collectively, the
FoxMeyer Stockholder, the Timm Stockholders and the Osbon
Stockholders.
(h) "First Period" means the period beginning on the date
hereof and ending on the earlier of (i) the first anniversary of the
date hereof and (ii) the date on which an aggregate of 4,000,000
shares of Common Stock shall have been disposed of pursuant to one or
more effective registration statements, including any shelf-
registration statements filed in respect of such shares, excluding any
Primary Shares and Investor Registrable Shares, by stockholders of the
Corporation other than the Investors provided however that First
-------- -------
Period shall be extended for a number of days, in no event to exceed
180 days equal to the number of days during which there were Blackouts
during the First Period.
(i) "FoxMeyer" means FoxMeyer Corporation, a Delaware
corporation.
(j) "FoxMeyer Shares" means the 1,414,589 shares of Common
Stock held by FoxMeyer on the date hereof or any shares of Common
Stock acquired subsequent thereto.
(k) "FoxMeyer Stockholder" means FoxMeyer and any Person or
Persons who acquires FoxMeyer Shares, FoxMeyer Warrants or FoxMeyer
Warrant Shares and includes any successor to, or transferee of, any
such Person who or which agrees in writing to be treated as a FoxMeyer
Stockholder hereunder and to be bound by the terms and comply with all
applicable provisions hereof.
(l) "FoxMeyer Warrants" mean the (i) warrants dated June 2,
1995, (ii) warrants dated July 26, 1995, and (iii) warrants dated as
of the date hereof held by FoxMeyer to purchase
<PAGE>
<PAGE>
in the aggregate 1,050,000 shares (subject to adjustment) of Common
Stock.
(m) "FoxMeyer Warrant Shares" means the shares of Common
Stock issued upon the exercise of the FoxMeyer Warrants.
(n) "Included Percentage" shall mean, with respect to each
stockholder group (i.e., the Investors, FoxMeyer Stockholders, Osbon
----
Stockholders or Timm Stockholders) and with respect to each
registration initiated pursuant to Section 2, the fraction (expressed
as a percentage) the numerator of which is the number of Registrable
Shares sold by such group in such registration and the denominator of
which is the aggregate Registrable Shares held by such group
immediately prior to such registration.
(o) "Investor Registrable Shares" means (i) the Reserve
Shares, (ii) any other securities of the Corporation into or for which
the Reserved Shares may be exchanged, converted or reclassified or
which may be issued as a dividend or distribution on or with respect
thereto, (iii) any shares of Common Stock acquired subsequent thereto
and (iv) any securities received in respect of the foregoing, in each
case in clauses (i) through (iii) which at any time are held by the
Investors. As to any particular Investor Registrable Shares, once
issued, such Investor Registrable Shares shall cease to be Investor
Registrable Shares when (A) they have been registered under the
Securities Act, the registration statement in connection therewith has
been declared effective and they have been disposed of pursuant to and
in the manner described in such effective registration statement,
(B) they are sold or distributed pursuant to Rule 144, or (C) they
have ceased to be outstanding.
(p) "Investors" means the purchasers of the Securities
under the Securities Purchase Agreement and includes any successor to,
or transferee of, any such Person who or which agrees in writing to be
treated as an Investor hereunder and to be bound by the terms and
comply with all applicable provisions hereof.
(q) "Majority of the Stockholders" means those Stockholders
who at the time in question hold at least a majority of the
Registrable Shares then held by all Stockholders or if applicable, the
Stockholders participating in a registration hereunder.
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<PAGE>
(r) "Miscellaneous Shares" means at any time those shares
of Common Stock which do not constitute Primary Shares or Registrable
Shares.
(s) "Osbon Shares" means the 5,000,000 shares of Common
Stock held by the Osbon Stockholders on the date hereof or any shares
of Common Stock acquired subsequent thereto.
(t) "Osbon Stockholders" means the Persons identified on
Schedule I under the heading "Osbon Stockholders" and includes any
successor to, or transferee of, any such Person who or which agrees in
writing to be treated as an Osbon Stockholder hereunder and to be
bound by the terms and comply with all applicable provisions hereof.
(u) "Person" shall be construed broadly and shall include
an individual, a partnership, a corporation, an association, a joint
stock company, a limited liability company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
(v) "Primary Percentage" means with respect to each
registration initiated pursuant to Section 2, a fraction (expressed as
a percentage) the numerator of which is the number of Primary Shares
issued by the Corporation in such registration and the denominator of
which is the number of Registrable Shares and Primary Shares included
in such registration.
(w) "Primary Shares" means at any time the authorized but
unissued shares of Common Stock and shares of Common Stock held by the
Corporation in its treasury.
(x) "Registrable Shares" means, collectively, the Investor
Registrable Shares and the Existing Stockholder Registrable Shares.
(y) "Requisite Investors" means, the Investors who at the
time in question hold at least a majority of the Investor Registrable
Shares then held by the Investors or, if applicable, the Investors
participating in a registration hereunder.
(z) "Reserve Shares" shall have the meaning ascribed
thereto in the Securities Purchase Agreement.
(aa) "Rule 144" means Rule 144 promulgated under the
Securities Act or any successor rule thereto.
<PAGE>
<PAGE>
(ab) "Second Period" means the period beginning on the next
day after the last day of the First Period and ending on the day
immediately preceding the first day of the Third Period.
(ac) "Securities" shall have the meaning ascribed thereto
in the Securities Purchase Agreement.
(ad) "Securities Act" means the Securities Act of 1933 or
any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to
time.
(ae) "Securities Purchase Agreement" means the Securities
Purchase Agreement dated as of the date hereof among the Corporation
and the Investors, as amended or modified from time to time.
(af) "Stockholder" means, any Person which holds
Registrable Shares or securities exercisable therefore or convertible
into Registrable Shares and which is a party to this Agreement and
includes any successor to, or transferee of, any such Person who or
which agrees in writing to be treated as a Stockholder hereunder and
to be bound by the terms and comply with all applicable provisions
hereof.
(ag) "Third Period" means subject to the provisions herein,
the period beginning 18 months after the Closing Date in the
Securities Purchase Agreement.
(ah) "Timm Shares" means the 1,218,480 shares of Common
Stock held by the Timm Stockholders on the date hereof.
(ai) "Timm Stockholders" means the Persons identified on
Schedule I under the heading "Timm Stockholders" includes any
successor to, or transferee of, any such Person who or which agrees in
writing to be treated as a Timm Stockholder hereunder and to be bound
by the terms and comply with all applicable provisions hereof.
SECTION 2. Required Registration. (a) If at any time
---------------------
after the date of this Agreement, the Corporation shall be requested
by one or more Investors to effect the registration under the
Securities Act of Investor Registrable Shares which constitute at
least 20% of the Investor Registrable Shares (which number of shares
shall be an amount greater than or equal to 750,000 (or if less, all
of the remaining registrable shares held by such group) or have an
anticipated aggregate offering price of at least $10,000,000) then the
Corporation shall (i) notify each
<PAGE>
<PAGE>
Stockholder of such request and shall provide each Stockholder the
right (exercisable by notice to the Corporation delivered within 15
days of notice of such registration) to participate in such
registration and (ii) use its best efforts to effect the registration
under the Securities Act of the Registrable Shares which the
Corporation is requested to register by the Investors initiating such
registration and Stockholders delivering notices under clause (i).
(b) If at any time after the date of this Agreement, the
Corporation shall be requested by one or more FoxMeyer Stockholders to
effect the registration under the Securities Act of Registrable Shares
which constitute at least 20% of the Registrable Shares held by all
FoxMeyer Stockholders (which number of shares shall be an amount
greater than or equal to 750,000 (or if less, all of the remaining
registrable shares held by such group) or have an anticipated
aggregate offering price of at least $10,000,000) then the Corporation
shall (i) notify each Stockholder of such request and shall provide
each Stockholder the right (exercisable by notice to the Corporation
delivered within 15 days of notice of such registration) to
participate in such registration and (ii) use its best efforts to
effect the registration under the Securities Act of the Registrable
Shares which the Corporation is requested to register by the FoxMeyer
Stockholders initiating such registration and Stockholders delivering
notices under clause (i).
(c) If at any time after the date of this Agreement, the
Corporation shall be requested by one or more Osbon Stockholders to
effect the registration under the Securities Act of Registrable Shares
which constitute at least 20% of the Registrable Shares held by Osbon
Stockholders (which number of shares shall be an amount greater than
or equal to 750,000 (or if less, all of the remaining registrable
shares held by such group) or have an anticipated aggregate offering
price of at least $10,000,000) then the Corporation shall (i) notify
each Stockholder of such request and shall provide each Stockholder
the right (exercisable by notice to the Corporation delivered within
15 days of notice of such registration) to participate in such
registration and (ii) use its best efforts to effect the registration
under the Securities Act of the Registrable Shares which the
Corporation is requested to register by the Osbon Stockholders
initiating such registration and Stockholders delivering notices under
clause (i).
(d) If at any time after the date of this Agreement, the
Corporation shall be requested by one or more Timm Stockholders to
effect the registration under the Securities Act
<PAGE>
<PAGE>
of Registrable Shares which constitute at least 20% of the Registrable
Shares held by all Timm Stockholders (which number of shares shall be
an amount greater than or equal to 500,000 (or if less, all of the
remaining registrable shares held by such group) or have an
anticipated aggregate offering price of at least $5,000,000) then the
Corporation shall (i) notify each Stockholder of such request and
shall provide each Stockholder the right (exercisable by notice to the
Corporation delivered within 15 days of notice of such registration)
to participate in such registration and (ii) use its best efforts to
effect the registration under the Securities Act of the Registrable
Shares which the Corporation is requested to register by Timm
Stockholders initiating such registration and Stockholders delivering
notices under clause (i).
(e) Anything contained in Sections 2(a) to the contrary
notwithstanding, the Corporation shall not be obligated to effect any
registration under the Securities Act pursuant to Sections 2(a), 2(b),
2(c) or 2(d) except in accordance with the following provisions:
(i) the Corporation shall not be obligated to use its
best efforts to file and cause to become effective more than (A)
three registration statements initiated pursuant to Section 2(a)
(provided, that if the Corporation, shall consummate a "shelf"
registration pursuant to the Debenture Registration Agreement, or
this Agreement such registration shall be deemed to count as one
demand registration by the Investors), (B) two registration
statements initiated pursuant to Section 2(b) (C) one
registration statement initiated pursuant to Section 2(c) and (D)
one registration statement initiated pursuant to Section 2(d);
provided however that for purposes hereof, the stockholder group
-------- -------
which has the largest Included Percentage for any registration
shall be deemed to be the group who requested such registration
notwithstanding the fact that such registration was initiated by
another Stockholder;
(ii) the Corporation shall not be obligated to use its
best efforts to file and cause to become effective any
registration statement during any period in which any other
registration statement (other than on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms
thereto or the shelf registration statement (the "Existing Shelf
Registration") being filed by the Corporation with respect to
shares held by Existing Stockholders or a shelf registration
filed pursuant to Section 3) pursuant to which Primary Shares or
Registrable
<PAGE>
<PAGE>
Shares are to be or were sold has been filed and not withdrawn or
has been declared effective within the prior 90 days; provided,
--------
that in the event the Existing Shelf Registration shall not have
been terminated prior to the expiration of the First Period, the
Corporation shall promptly, upon request of the Requisite
Investors, amend the Existing Shelf Registration (no amendment
shall reduce the number of shares included in such registration
statement by the Existing Stockholders without their consent) to
include any Investor Registrable Shares requested to be included
by the Investors thereon prior to any sale of Registrable Shares
thereunder after the First Period;
(iii) the Corporation may delay the filing or
effectiveness of any registration statement for a period of up to
90 days after the date of a request for registration pursuant to
this Section 2, if at the time of such request (A) the
Corporation is engaged, or intends to engage within 90 days of
the time of such request, in a firm commitment underwritten
public offering of Primary Shares in which the holders of
Registrable Shares may include Registrable Shares pursuant to
Section 4 and such plans or intentions have been approved by the
Board of Directors of the Corporation or (B) the Corporation
reasonably determines that such registration and offering would
interfere with any material transaction involving the
Corporation, as approved by the Board of Directors (as used
herein "material transaction" shall mean any transaction which
requires a supplemental filing to a quarterly report filed under
Form 8-K with the Commission); provided, that the Corporation may
--------
only so delay the filing or effectiveness of a registration
statement on one occasion during any twelve month period;
(iv) with respect to any registration pursuant to this
Section 2, the Corporation may include in such registration any
Primary Shares or Miscellaneous Shares; and
(v) if the managing underwriter advises the
Corporation that the inclusion of all Registrable Shares, Primary
Shares and/or Miscellaneous Shares proposed to be included in
such registration would interfere with the successful marketing
(including pricing) of the Registrable Shares proposed to be
included in such registration, then the number of Registrable
Shares, Primary Shares and/or Miscellaneous Shares proposed to be
included in such registration shall be included according to the
following priority:
<PAGE>
<PAGE>
(A) During the First Period, the shares
proposed to be included in such registration shall be
included in the following order: (w) first, the Primary
Shares; (x) second, the Existing Stockholder
Registrable Shares (allocated pro rata among the
--- ----
Existing Stockholders requesting inclusion in such
registration based upon the number of Registrable Shares
held by each such Existing Stockholder); (y) third, the
Investor Registrable Shares (allocated pro rata among the
--- ----
Investors requesting inclusion in such registration based
upon the number of Registrable Shares held by each such
Investor); and fourth, the Miscellaneous Shares.
(B) During the Second Period, the shares
proposed to be included in such registration shall be
included in the following order: (x) first, the Primary
Shares; (y) second, 50% of any remaining shares shall
be Investor Registrable Shares (allocated pro rata
--- ----
among the Investors requesting inclusion in such
registration based upon the number of Registrable Shares
held by each such Investor) and 50% of any remaining shares
shall be Existing Stockholder Registrable Shares (allocated
pro rata among the Existing Stockholders requesting
--- ----
inclusion in such registration based upon the number of
Registrable Shares held by each such Existing Stockholder)
and (z) third, if all Registrable Shares are included, the
Miscellaneous Shares.
(C) During the Third Period, the shares
proposed to be included in such registration shall be
included in the following order: (x) first, the Primary
Shares; (y) second, 75% of any remaining shares shall
be Investor Registrable Shares (allocated pro rata
--- ----
among the Investors requesting inclusion in such
registration based upon the number of Registrable Shares
held by each such Investor) and 25% of any remaining shares
shall be Existing Stockholder Registrable Shares (allocated
pro rata among the Existing Stockholders requesting
--- ----
inclusion in such registration based upon the number of
Registrable Shares held by each such Existing Stockholder);
and (z) third, if all Registrable Shares are included, the
Miscellaneous Shares.
<PAGE>
<PAGE>
(vi) at any time before the registration statement
covering Registrable Shares becomes effective, the Stockholders
which requested such registration may request the Corporation to
withdraw or not to file the registration statement. In that
event, if such request of withdrawal shall not have been caused
by, or made in response to, a material adverse change in the
business, properties, condition, financial or otherwise, or
operations of the Corporation, the Stockholders which requested
such registration shall have used one demand registration right
under Section 2(a) unless such Stockholders initiating such
request shall pay to the Corporation the reasonable out-of-pocket
expenses incurred by the Corporation through the date of such
request.
(f) In any registration statement initiated pursuant to
this Section 2, if the Primary Percentage exceeds the Included
Percentage of each stockholder group requesting that Registrable
Shares be included in such registration statement or the number of
primary shares so registered exceeds the number of Registrable Shares,
then such registration statement shall be deemed not to be initiated
pursuant to this Section 2.
SECTION 3. SHELF REGISTRATION. On any date after the First
------------------
Period, if the Corporation shall be requested by the Requisite
Investors to file a shelf registration statement for an offering to be
made on a continuous basis pursuant to Rule 415 promulgated under the
Securities Act covering Investor Registrable Shares, then:
(a) The Corporation shall, as expeditiously as practicable,
file with the SEC a shelf registration statement permitting
registration of such Investors Registrable Shares for resale by
Investors in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings).
(b) The Corporation shall use its best efforts to keep such
shelf registration statement continuously effective under the
Securities Act until the date which is 12 months from its effective
date, or such shorter period ending when all Investors Registrable
Shares covered by such shelf registration statement have been sold in
the manner set forth and as contemplated in the shelf registration
statement.
(c) The Corporation shall promptly supplement and amend the
shelf registration statement if required by the rules, regulations or
instructions applicable to the registration form
<PAGE>
<PAGE>
used for such shelf registration statement, if required by the
Securities Act, or if reasonably requested by the Requisite Investors
or by any underwriter of the Investor Registrable Shares registered
thereunder.
SECTION 4. PIGGYBACK REGISTRATION. If the Corporation at
----------------------
any time proposes for any reason to register Primary Shares or
Miscellaneous Shares under the Securities Act (other than on Form S-4
or Form S-8 promulgated under the Securities Act or any successor
forms thereto), it shall promptly give written notice to the
Stockholders of its intention to so register such shares and, upon the
written request, delivered to the Corporation within 30 days after
delivery of any such notice by the Corporation, of any of the
Stockholders (other than the Investors with respect to the Existing
Shelf Registration) to include in such registration Registrable Shares
held by such Stockholder (which request shall specify the number of
Registrable Shares requested to be included in such registration), the
Corporation shall use its best efforts to cause all such Registrable
Shares to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such
registration; provided, however, that if the managing underwriter
-------- -------
advises the Corporation that the inclusion of all Registrable Shares
requested to be included in such registration would interfere with the
successful marketing (including pricing) of the shares proposed to be
registered, then the number of Primary Shares, Registrable Shares and
Miscellaneous Shares proposed to be included in such registration
shall be included in the order set forth in Section 2(e) above.
SECTION 5. HOLDBACK AGREEMENT. If the Corporation at any
------------------
time shall register shares of Common Stock under the Securities Act
(including any registration pursuant to Sections 2, 3 or 4) for sale
to the public in an underwritten public offering, the Stockholders
shall not sell publicly, make any short sale of, grant any option for
the purchase of, or otherwise dispose publicly of, any Common Stock
(other than those shares of Common Stock included in such registration
pursuant to Sections 2, 3 or 4) without the prior written consent of
the Corporation, for a period designated by the Corporation in writing
to the Stockholders, which period shall begin not more than 10 days
prior to the effectiveness of the registration statement pursuant to
which such public offering shall be made and shall not last more than
90 days after the closing of sale of shares pursuant to such
registration statement. The Corporation shall obtain the agreement of
any person permitted to sell shares of Common Stock in a registration
to be bound by and to comply with this Section 5 as if such person was
an Stockholder hereunder. The
<PAGE>
<PAGE>
Corporation will not seek to register shares that would trigger the
provisions of this Section 5 for at least 90 days after the
effectiveness of the Existing Shelf Registration Statement.
Notwithstanding the foregoing, the provisions of this Section 5 shall
not apply to any Stockholder which owns less than 2% of the
Corporation's outstanding Common Stock. The Corporation will agree to
customary restrictions on its inability to offer or sell shares during
a similar 90-day period in connection with any underwritten public
offering by the Stockholders, in which the Corporation elects not to
participate.
SECTION 6. PREPARATION AND FILING. (a) If and whenever
----------------------
the Corporation is under an obligation pursuant to the provisions of
this Agreement to use its best efforts to effect the registration of
any Registrable Shares, the Corporation shall, as expeditiously as
practicable:
(i) use its best efforts to cause a registration
statement that registers such Registrable Shares to become and
remain effective for a period of 180 days (extended by any period
during which such registration statement or related prospectus is
not available for sales) or until all of such Registrable Shares
have been disposed of (if earlier);
(ii) furnish, at least five business days before
filing a registration statement that registers such Registrable
Shares, a prospectus relating thereto or any amendments or
supplements relating to such a registration statement or
prospectus, to one counsel selected by a Majority of the
Stockholders initiating such registration (counsel in each case
referred to herein as the "Stockholders' Counsel"), copies of all
such documents proposed to be filed (it being understood that
such five-business-day period need not apply to successive drafts
of the same document proposed to be filed so long as such
successive drafts are supplied to the Stockholders' Counsel in
advance of the proposed filing by a period of time that is
customary and reasonable under the circumstances);
(iii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective for at least a period
of 180 days (extended by any period during which such
registration statement or related prospectus is not available for
sales) or until all of such Registrable Shares have been disposed
of (if earlier) and to comply with
<PAGE>
<PAGE>
the provisions of the Securities Act with respect to the sale or
other disposition of such Registrable Shares;
(iv) notify in writing the Stockholders' Counsel
promptly of (A) the receipt by the Corporation of any
notification with respect to any comments by the Commission with
respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission
for the amending or supplementing thereof or for additional
information with respect thereto, (B) the receipt by the
Corporation of any notification with respect to the issuance by
the Commission of any stop order suspending the effectiveness of
such registration statement or prospectus or any amendment or
supplement thereto or the initiation or threatening of any
proceeding for that purpose and (C) the receipt by the
Corporation of any notification with respect to the suspension of
the qualification of such Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purposes;
(v) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws
of such United States jurisdictions as the Stockholders who are
holders of Registrable Shares included in such registration
statement reasonably request and do any and all other acts and
things which may be reasonably necessary or advisable to enable
the Stockholders who are holders of Registrable Shares included
in such registration statement to consummate the disposition in
such United States jurisdictions of the Registrable Shares owned
by them; provided, however, that the Corporation will not be
-------- -------
required to qualify generally to do business, subject itself to
general taxation or consent to general service of process in any
jurisdiction where it would not otherwise be required to do so
but for this clause (v) or to make any changes in its By-laws or
Certificate of Incorporation;
(vi) furnish to the Stockholders holding such
Registrable Shares such number of copies of a summary prospectus,
if any, or other prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and
such other documents as such Stockholders may reasonably request
in order to facilitate the public sale or other disposition of
such Registrable Shares;
(vii) use its best efforts to cause such Registrable
Shares to be registered with or approved by such
<PAGE>
<PAGE>
other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Corporation to
enable the Stockholders holding such Registrable Shares to
consummate the disposition of such Registrable Shares;
(viii) notify the Stockholders holding such
Registrable Shares on a timely basis at any time when a
prospectus relating to such Registrable Shares is required to be
delivered under the Securities Act within the appropriate period
mentioned in clause (iii) of this Section 6(a), of the happening
of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing and, at the request of such Stockholders, prepare and
furnish to such Stockholders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offerees of
such shares, such prospectus shall not include 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 in light of the circumstances then
existing;
(ix) subject to the execution of customary
confidentiality agreements in form and substance reasonably
satisfactory to the Corporation, make available upon reasonable
notice and during normal business hours, for inspection by the
Stockholders holding such Registrable Shares, any underwriter
participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by
such Stockholders or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Corporation
(collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility,
and cause the Corporation's officers, directors and employees to
supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector in
connection with such registration statement. Any of the
Information which the Corporation determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, shall not be disclosed by the Inspectors unless (A) the
disclosure of such Information is
<PAGE>
<PAGE>
necessary to avoid or correct a misstatement or omission in the
registration statement, (B) the release of such Information is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (C) such Information has been made
generally available to the public; the Stockholders holding such
Registrable Shares agree that they will, upon learning that
disclosure of such Information is sought in a court of competent
jurisdiction, give notice to the Corporation and allow the
Corporation, at the Corporation's expense, to undertake
appropriate action to prevent disclosure of the Information
deemed confidential;
(x) use its best efforts to obtain from its
independent certified public accountants "cold comfort" letters
in customary form and at customary times and covering matters of
the type customarily covered by cold comfort letters;
(xi) use its best efforts to obtain from its counsel
an opinion or opinions in customary form naming the Stockholders
holding such Registrable Shares as additional addressees or
parties who may rely thereon;
(xii) provide a transfer agent and registrar (which
may be the same entity and which may be the Corporation) for such
Registrable Shares;
(xiii) issue to any underwriter to which the
Stockholders holding such Registrable Shares may sell shares in
such offering certificates evidencing such Registrable Shares;
(xiv) list such Registrable Shares on any national
securities exchange or automated quotation system on which any
shares of the Common Stock are listed; or, if the Common Stock is
not listed on a national securities exchange, use its best
efforts to qualify such Registrable Shares for inclusion on the
automated quotation system of the National Association of
Securities Dealers, Inc. (the "NASD"), or any national securities
exchange;
(xv) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make
available to its securityholders, as soon as reasonably
practicable, earnings statements (which need not be audited)
covering a period of 12 months beginning within three months
after the effective date of the registration
<PAGE>
<PAGE>
statement, which earnings statements shall satisfy the provisions
of Section 11(a) of the Securities Act;
(xvi) in connection with any underwritten public
offering initiated pursuant to Section 2(a),(b),(c) or (d),
cooperate and participate in the marketing of such offering as if
such registration was an underwritten primary registration
(including participating in an appropriate "road show"); and
(xvii) use its best efforts to take all other steps
necessary to effect the registration of such Registrable Shares
contemplated hereby.
(b) Each holder of the Registrable Shares included in any
registration statement, upon receipt of any notice from the
Corporation of any event of the kind described in Section 6(a)(viii)
hereof, shall forthwith discontinue disposition of the Registrable
Shares pursuant to the registration statement covering such
Registrable Shares until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(a)(viii)
hereof, and, if so directed by the Corporation, such holder shall
deliver to the Corporation all copies, other than permanent file
copies then in such holder's possession, of the prospectus covering
such Registrable Shares at the time of receipt of such notice.
SECTION 7. EXPENSES. All expenses (other than discounts,
--------
fees and commissions of underwriters, selling brokers, dealer
managers, sales agents and similar securities industry professionals,
which shall be borne as provided in the following proviso and
applicable transfer taxes, if any) incurred by the Corporation in
complying with Section 6, including, without limitation, all
registration and filing fees (including all expenses incident to
filing with the NASD), fees and expenses of complying with securities
and blue sky laws, printing expenses, fees and expenses of the
Corporation's counsel and accountants, and fees and expenses of the
one Stockholder's Counsel, which counsel shall be selected by a
Majority of the Stockholders initiating such registration and shall
act for all of the Stockholders, shall be paid by the Corporation;
provided, however, that all of the foregoing discounts, fees and
-------- -------
commissions applicable to the Registrable Shares shall be borne by the
holders selling such Registrable Share, in proportion to the number of
Registrable Shares sold by each such holder.
SECTION 8. INDEMNIFICATION. (a) In connection with any
---------------
registration of any Registrable Shares under the Securities
<PAGE>
<PAGE>
Act pursuant to this Agreement, the Corporation shall indemnify and
hold harmless the holders of such Registrable Shares, each
underwriter, broker or any other Person acting on behalf of the
holders of such Registrable Shares and each other Person, if any, who
controls any of the foregoing Persons within the meaning of the
Securities Act against any losses, claims, damages or liabilities,
joint or several (or actions in respect thereof), to which any of the
foregoing Persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or allegedly untrue statement of a material fact contained
in the registration statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document
incident to registration or qualification of such Registrable Shares,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with
respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading,
or any violation by the Corporation of the Securities Act or state
securities or blue sky laws applicable to the Corporation and relating
to action or inaction required of the Corporation in connection with
such registration or qualification under the Securities Act or such
state securities or blue sky laws; and shall reimburse the holders of
such Registrable Shares, such underwriter, such broker or such other
Person acting on behalf of the holders of such Registrable Shares and
each such controlling Person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
--------
however, that the Corporation shall not be liable in any such case to
-------
the extent that any such loss, claim, damage, liability or action
(including any legal or other expenses incurred) arises out of or is
based upon an untrue statement or allegedly untrue statement or
omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or
document incident to registration or qualification of any Registrable
Shares in reliance upon and in conformity with written information
furnished to the Corporation by such holder of Registrable Shares or
such underwriter, or an agent or representative thereof, specifically
for use in the preparation thereof; provided further, however, that
-------- ------- -------
the foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any untrue statement, allegedly untrue
statement, omission or
<PAGE>
<PAGE>
alleged omission made in any preliminary prospectus but eliminated or
remedied in the final prospectus (filed pursuant to Rule 424 of the
Securities Act), such indemnity agreement shall not inure to the
benefit of any Stockholder, underwriter, broker or other Person acting
on behalf of holders of the Registrable Shares from whom the Person
asserting any loss, claim, damage, liability or expense purchased the
Registrable Shares which are the subject thereof, if a copy of such
final prospectus had been made available to such Person and such
Stockholder, underwriter, broker or other Person acting on behalf of
holders of the Registrable Shares and such final prospectus was not
delivered to such Person with or prior to the written confirmation of
the sale of such Registrable Shares to such Person.
(b) In connection with any registration of Registrable
Shares under the Securities Act pursuant to this Agreement, each
holder of Registrable Shares included in such registration statement
shall severally and not jointly indemnify and hold harmless the
Corporation, each director of the Corporation, each officer of the
Corporation who shall sign such registration statement, each
underwriter, broker or other Person acting on behalf of the holders of
Registrable Shares and each Person who controls any of the foregoing
Persons within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several (or actions in
respect thereof), to which any of the foregoing Persons may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or based upon any untrue statement of a material fact contained
in such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission,
any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or, with respect to any prospectus,
necessary to make the statements therein in light of the circumstances
under which they were made not misleading, in each case if such
statement or omission was made in reliance upon and in conformity with
written information furnished to the Corporation or such underwriter
by such holder of Registrable Shares, or an agent or representative
thereof, specifically for use in connection with the preparation of
such registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document; provided, however, that the maximum
-------- -------
amount of liability in respect of such indemnification shall be
limited, in the case of each seller of Registrable Shares, to an
<PAGE>
<PAGE>
amount equal to the net proceeds actually received by such holder of
Registrable Shares from the sale of Registrable Shares effected
pursuant to such registration; provided further, however, that the
-------- ------- -------
foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any untrue statement, allegedly untrue
statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in the final prospectus (filed
pursuant to Rule 424 of the Securities Act), such indemnity agreement
shall not inure to the benefit of the Corporation, any officer or
director thereof, any underwriter, broker or other Person acting on
behalf of holders of the Registrable Shares from whom the Person
asserting any loss, claim, damage, liability or expense purchased the
Registrable Shares which are the subject thereof, or any Person who
controls any of the foregoing, if a copy of such final prospectus had
been made available and such final prospectus was not delivered to
such Person with or prior to the written confirmation of the sale of
such Registrable Shares to such Person.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action involving a claim referred to
in the preceding paragraphs of this Section 8, such indemnified party
will, if a claim in respect thereof is made against an indemnifying
party, give written notice to the latter of the commencement of such
action. In case any such action is brought against an indemnified
party, the indemnifying party will be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
responsible for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof;
provided, however, that if any indemnified party shall have reasonably
-------- -------
concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or
conflict with those available to the indemnifying party, or that such
claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section
8, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such
indemnifying party shall reimburse such indemnified party and any
Person controlling such indemnified party for that portion of the fees
and expenses of any counsel retained by the indemnified party
<PAGE>
<PAGE>
which is reasonably related to the matters covered by the indemnity
agreement provided in this Section 8.
(d) If the indemnification provided for in this Section 8
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability
or action referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such
loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. Notwithstanding the provisions of this Section 8(d), no
Stockholder shall be required to contribute an amount greater than the
dollar amount by which the net proceeds received by such Stockholder
with respect to the sale of any Registrable Shares under the
registration statement exceeds the amount of damages which such
Stockholder has otherwise been required to pay by reason of any
statements in or omissions from such registration statement. For
purposes of the immediately preceding sentence, the amount which a
Stockholder has otherwise been required to pay shall be deemed to
include any legal or other fees or expenses incurred by such
Stockholder in connection with investigating or defending any action
or claim in respect of such registration statement.
SECTION 9. UNDERWRITING AGREEMENT. Notwithstanding the
----------------------
provisions of Sections 5, 6, 7 and 8 to the extent that one or more of
the Stockholders shall enter into an underwriting or similar
agreement, which agreement contains provisions covering one or more
issues addressed in such Sections, the provisions contained in such
agreement addressing such issue or issues shall control with respect
to such Stockholders and the other parties to such agreement;
provided, however, that any such agreement to which the Corporation is
-------- -------
not a party shall not be binding upon the Corporation. No such
underwriting or similar agreement shall
<PAGE>
<PAGE>
contain indemnification provisions which are more onerous with respect
to one Stockholder than to any other Stockholder.
SECTION 10. UNDERWRITTEN REGISTRATIONS. If any of the
--------------------------
Registrable Shares covered by any Registration Statement are to be
sold in an underwritten offering, the investment banker or bankers and
manager or managers that will manage the offering will be selected by
Stockholders holding a majority of the Registrable Shares to be
registered pursuant to such Registration Statement and be reasonably
acceptable to the Corporation.
SECTION 11. INFORMATION BY HOLDER. The Stockholders
---------------------
requesting inclusion of Registrable Shares in a registration statement
shall furnish to the Corporation such written information regarding
such Stockholders and the distribution proposed by such Stockholders
as the Corporation may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement.
SECTION 12. AGREEMENT OF HOLDER. Each Stockholder agrees
-------------------
that a request by such Stockholder pursuant to Section 2, 3 or 4 of
this Agreement for inclusion of Registrable Shares in a registration
statement shall be deemed to be a commitment to convert any securities
which are convertible into such Registrable Shares upon sale thereof
under such registration statement.
SECTION 13. EXCHANGE ACT COMPLIANCE. The Corporation shall
-----------------------
comply with all of the reporting requirements of the Exchange Act
required to be complied with by it and shall comply with all other
public information reporting requirements of the Commission required
to be complied with by it which are conditions to the availability of
Rule 144 for the sale of the Common Stock. The Corporation shall
cooperate with the Stockholders in supplying such information as may
be necessary for the Stockholders to complete and file any information
reporting forms presently or hereafter required by the Commission as a
condition to the availability of Rule 144.
SECTION 14. MERGERS, ETC. The Corporation shall not,
-------------
directly or indirectly, enter into any merger, consolidation or
reorganization in which the corporation shall not be the surviving
corporation unless the surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume
the obligations of the Corporation under this Agreement, and for that
purpose references hereunder to "Registrable Shares" shall be deemed
to include the shares of
<PAGE>
<PAGE>
common stock, if any, which the Stockholders would be entitled to
receive in exchange for Common Stock under any such merger,
consolidation or reorganization, provided that, to the extent the
Stockholders receive securities that are by their terms convertible
into shares of common stock of the issuer thereof, then any such
shares of common stock as are issued or issuable upon conversion of
said convertible securities shall be included within the definition of
"Registrable Shares."
SECTION 15. NO CONFLICT OF RIGHTS. The Corporation shall
---------------------
not, after the date hereof, grant any registration rights which
conflict with the registration rights granted hereby.
SECTION 16. TERMINATION. This Agreement shall terminate
-----------
and be of no further force or effect when there shall no longer be any
securities outstanding that meet the definition of "Registrable
Shares"; provided, however, that Sections 1, 8, 25 and this Section 16
-------- -------
shall not be so terminated but shall survive without limitation.
SECTION 17. SUCCESSORS AND ASSIGNS. This Agreement shall
----------------------
bind and inure to the benefit of the Corporation and the Stockholders
and, subject to Section 16, the respective successors and assigns of
the Corporation and the Stockholders.
SECTION 18. ASSIGNMENT. Each Stockholder may assign its
----------
rights hereunder to any transferee of Registrable Shares; provided,
--------
however, that such transferee shall, as a condition to the
-------
effectiveness of such assignment, be required to execute a counterpart
to this Agreement agreeing to be treated as an Stockholder, whereupon
such transferee shall have the benefits of and shall be subject to the
restrictions contained in this Agreement as if such transferee was
originally included in the definition of an Stockholder and had
originally been a party hereto.
SECTION 19. SEVERABILITY. It is the desire and intent of
------------
the parties hereto that the provisions of this Agreement be enforced
to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or
enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
Notwithstanding the
<PAGE>
<PAGE>
foregoing, if such provision could be more narrowly drawn so as not to
be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting
the validity or enforceability of such provision in any other
jurisdiction.
SECTION 20. ENTIRE AGREEMENT. This Agreement and the
----------------
Securities Purchase Agreement, and the other writings referred to
herein or delivered pursuant hereto, contain the entire agreement
among the parties with respect to the subject matter thereof and
supersede all prior and contemporaneous arrangements or understandings
with respect thereto. The Existing Stockholders hereby agree and
acknowledge that any registration rights, or other rights related
thereto, pursuant to any other agreements are hereby terminated and
superseded by this Agreement.
SECTION 21. NOTICES. All communications hereunder to any
-------
party shall be deemed to be sufficient if contained in a written
instrument delivered in person or sent by telecopy (with receipt
confirmed), nationally-recognized overnight courier or first class
registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at its address below or such other
address as such party may hereafter designate in writing:
(a) if to the Corporation, to:
UROHEALTH Systems, Inc.
5 Civic Plaza, Suite 100
Newport Beach, California 92660
Attention: General Counsel
Telephone: (714) 668-5858
Telecopy: (714) 668-5824
(b) with a copy to:
Morrison & Foerster, LLP
19900 MacArthur Boulevard, 12th Floor
Irvine, California 92715
Attention: Robert M. Mattson, Jr., Esq.
Telephone: (714) 251-7500
Telecopy: (714) 251-0900
(c) if to any Stockholder, to it at its address set forth
on Schedule I, with a copy to:
<PAGE>
<PAGE>
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: John J. Suydam, Esq.
Telephone: (212) 408-2400
Telecopy: (212) 408-2420; and
All such notices, requests, consents and other communications shall be
deemed to have been delivered (i) in the case of personal delivery, on
the date of such delivery, (ii) in the case of delivery by telecopy,
on the date of confirmation of receipt, (iii) in the case of dispatch
by nationally-recognized overnight courier, on the next business day
following such dispatch and (iv) in the case of mailing, on the third
business day after the posting thereof.
SECTION 22. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms
----------------------------------
and provisions of this Agreement may not be modified or amended, nor
may any provision be waived, except pursuant to a writing signed by
the Corporation, the Requisite Investors, FoxMeyer Stockholders
holding a majority of Registrable Shares held by all FoxMeyer
Stockholders, Osbon Stockholders holding a majority of the Registrable
Shares held by all Osbon stockholders and Timm Stockholders holding a
majority of Registrable Shares held by Timm Stockholders and the
Existing Stockholders who at the time in question hold at least a
majority of the Existing Stockholder Registrable Shares then held by
the Existing Stockholders.
SECTION 23. COUNTERPARTS; FACSIMILE SIGNATURES. This
----------------------------------
Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
Facsimile counterpart signatures to this Agreement shall be acceptable
at the Closing (as defined in the Securities Purchase Agreement) if
the originally executed counterpart is delivered within a reasonable
period thereafter.
SECTION 24. HEADINGS. The headings of the various sections
--------
of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be a part of this Agreement.
SECTION 25. GOVERNING LAW. This Agreement shall be
-------------
governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed wholly
therein.
* * * * *
<PAGE>
<PAGE>
IN WITNESS WHEREOF, THE undersigned have duly executed this
Registration Rights Agreement as of the date first written above.
UROHEALTH SYSTEMS, INC.
By:
-------------------------------------
Name:
Title:
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
BY: CHASE CAPITAL PARTNERS, ITS GENERAL
PARTNER
By:
--------------------------------
Name:
Title:
APOLLO INVESTMENT FUND III, L.P.
BY: APOLLO ADVISORS II, L.P., ITS
GENERAL PARTNER
BY: APOLLO CAPITAL MANAGEMENT II, INC.,
ITS GENERAL PARTNER
By:
--------------------------------
Name:
Title:
APOLLO OVERSEAS PARTNERS III, L.P.
BY: APOLLO ADVISORS II, L.P., ITS
GENERAL PARTNER
BY: APOLLO CAPITAL MANAGEMENT II, INC.,
ITS GENERAL PARTNER
By:
--------------------------------
Name:
Title:
<PAGE>
<PAGE>
APOLLO U.K. PARTNERS III, L.P.
BY: APOLLO ADVISORS II, L.P., ITS
GENERAL PARTNER
BY: APOLLO CAPITAL MANAGEMENT II, INC.,
ITS GENERAL PARTNER
By:
--------------------------------
Name:
Title:
NAZEM & COMPANY IV, L.P.
BY: NAZEM & ASSOCIATES, IV, L.P., ITS
GENERAL PARTNER
By:
-------------------------------------
Name:
Title:
STERNECK PARTNERS, L.P.
BY: STERNECK CAPITAL MANAGEMENT, L.P.,
ITS GENERAL PARTNER
By:
--------------------------------
Name: Frank M. Sterneck
Title: General Partner
STERNECK AGGRESSIVE GROWTH, L.P.
BY: STERNECK CAPITAL MANAGEMENT, L.P.,
ITS GENERAL PARTNER
By:
--------------------------------
Name: Frank M. Sterneck
Title: General Partner
<PAGE>
<PAGE>
HARBOR FINANCIAL PARTNERS
By:
-------------------------------------
Name: Steven Mizel
Title: General Partner
----------------------------------------
Ralph Mack
----------------------------------------
Robert L. Harteveldt
----------------------------------------
Michael L. Tarnopol
----------------------------------------
Steven Ackerman
----------------------------------------
Anita Fleischman
----------------------------------------
Barry J. Cohen
----------------------------------------
Robert M. Steinberg
----------------------------------------
William H. Finn
----------------------------------------
David Liebowitz
<PAGE>
<PAGE>
----------------------------------------
Yan Erlikh
----------------------------------------
George Sarner
----------------------------------------
Steven M. Dantus
----------------------------------------
Steven Winograd
----------------------------------------
Brian A. McCarthy
----------------------------------------
Stephen Straty
----------------------------------------
Theodore H. Strauss
----------------------------------------
William M. Jennings
----------------------------------------
Bruce M. Lisman
----------------------------------------
Richard Harriton
<PAGE>
<PAGE>
----------------------------------------
Karen Harriton
Nelson Fleischman, IRA
By:
-------------------------------------
Name:
<PAGE>
<PAGE>
FOXMEYER CORPORATION
By:
-------------------------------------
Name:
Title:
----------------------------------------
Julian W. Osbon
----------------------------------------
Robert B. Osbon
----------------------------------------
Carolyn O. Heath
----------------------------------------
Anthony D. Osbon
----------------------------------------
James B. Osbon
----------------------------------------
Gerald W. Timm
<PAGE>
