<PAGE> 1
ENDOSONICS CORPORATION
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(Name of Issuer)
COMMON STOCK, $.001 PAR VALUE PER SHARE
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(Title of Class of Securities)
29264K105
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(CUSIP Number)
MATTHEW P. FISHER, ESQ.
JACKSON TUFTS COLE & BLACK, LLP
650 CALIFORNIA STREET, 31ST FLOOR
SAN FRANCISCO, CALIFORNIA 94108-2613
(415) 433-1950
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(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications)
OCTOBER 7, 1998
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(Date of Event Which Requires Filing of this Statement)
<PAGE> 2
CUSIP NO. 29264K105 PAGE 2 OF 7 PAGES
1. Name of Reporting Person:
Fukuda Denshi Co., Ltd.
2. Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds: WC
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Japan
Number of Shares 7. Sole Voting Power: 1,052,577
Beneficially Owned 8. Shared Voting Power:
By Each Reporting 9. Sole Dispositive Power: 1,052,577
Person 10. Shared Dispositive Power:
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 1,052,577
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
13. Percent of Class Represented by Amount in Row (11): 6%
14. Type of Reporting Person: CO
-2-
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 29264K105 PAGE 3 OF 7 PAGES
ITEM 1.
SECURITY AND ISSUER.
This Statement relates to the Common Shares (the "Shares") of EndoSonics
Corporation, a Delaware corporation (the "Issuer"). The Issuer has its principal
executive office at 2870 Kilgore Road, Rancho Cordova, California 95670.
ITEM 2.
IDENTITY AND BACKGROUND.
Set forth below and on Schedule A attached hereto, is the following information
with respect to each of the persons filing this Schedule 13D and each of its
officers, directors and control persons: (a) name; (b) address of principal
offices (if entity) or residence or business address (if individual); (c)
principal business (if entity) or principal occupation and name, business and
address of employer (if individual); (d) information concerning criminal
convictions during the last five years; (e) information concerning civil or
administrative proceedings during the past five years with respect to any state
or federal securities laws and (f) state of organization or citizenship.
I.
(a) Fukuda Denshi Co., Ltd. ("Fukuda")
(b) 3-39-4 Hongo Bunkyo-Ku, Tokyo, 113, Japan.
(c) Fukuda is a manufacturer of medical products.
(d) During the past five years, neither Fukuda nor, to Fukuda's
best knowledge, any person named in Schedule A to this
Statement, has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the past five years, neither Fukuda nor, to Fukuda's
best knowledge, any person named in Schedule A to this
Statement, was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of
which such person was or is subject to a judgment, decree or
final order enjoining future violations of or prohibiting or
mandating activity subject to Federal or State securities laws
or finding any violation with respect to such laws.
(f) Japan
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PAGE 4 OF 7 PAGES
ITEM 3.
SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In connection with the acquisition of Navius Corporation by the Issuer,
effective August 5, 1998, Fukuda's shares of the Series D Preferred Stock of
Navius Corporation were exchanged for 86,847 shares of the Issuer's Common Stock
as part of the merger consideration.
Pursuant to the terms of a Stock Purchase Agreement dated as of October 7, 1998
(the "Stock Purchase Agreement") attached hereto as Exhibit 7.1, Fukuda
purchased a total of 965,730 Shares of the Issuer's Common Stock in a private
transaction for a total purchase price of $8,399,996.80. The funds used to
acquire the Shares were taken from working capital.
ITEM 4.
PURPOSE OF TRANSACTION.
Fukuda acquired the Shares indicated herein in the ordinary course of business,
consistent with the belief that the value of the Issuer's stock exceeded that
reflected in the respective market prices of the Issuer's stock on the date of
such purchase. Depending upon their evaluation of the Issuer's business and
prospects, and upon future developments (including, but not limited to,
performance of the Shares in the market, availability of funds, alternative uses
of funds and money, stock market and general economic conditions), Fukuda or
other entities that may be deemed to be affiliated with Fukuda may from time to
time dispose of all or a portion of the Shares. Any such sales of the Shares may
be in open market or privately-negotiated transactions or otherwise.
In connection with the acquisition of the Shares, a representative of Fukuda was
appointed to the Issuer's board of directors. With respect to the Issuer's
voting securities, Fukuda has agreed for a period of one year from the date of
acquisition of the Shares not to (i) acquire, directly or indirectly, by itself
or in concert with any other person or entity, additional shares of the
Issuer's voting securities, except in certain limited situations, (ii)
transfer voting control of the Shares to another party, (iii) solicit "proxies"
in opposition to the Issuer's board of directors, (iv) initiate shareholder
proposals, (v) make any proposal to the Issuer's board of directors that would
require the Issuer to make a public disclosure under applicable law, or (vi)
dispose of the Shares in a tender or exchange offer that has not been
recommended to the Issuer's stockholders by its board of directors.
ITEM 5.
INTEREST IN SECURITIES OF THE ISSUER.
As of the date hereof, Fukuda beneficially owns in the aggregate 1,052,577
Shares. These Shares represent approximately 6% of the 17,471,759 Shares
believed to be outstanding as of October 9, 1998, as indicated by information
supplied by the Issuer as of that date. Fukuda has sole voting and dispositive
power with respect to 1,052,577 of the Shares.
ITEM 6.
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
None.
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PAGE 5 OF 7 PAGES
ITEM 7.
MATERIAL TO BE FILED AS EXHIBITS.
Filed as exhibits hereto are the following:
7.1 Common Stock Purchase Agreement by and between EndoSonics
Corporation and Fukuda Denshi Co., Ltd.
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SCHEDULE 13D
CUSIP NO. 29264K105 PAGE 6 OF 7 PAGES
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: October 13, 1998 FUKUDA DENSHI CO., LTD., a corporation
organized under the laws of Japan
By: /s/ Kotaro Fukuda
Name: Kotaro Fukuda
Title: President
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<PAGE> 7
SCHEDULE 13D
CUSIP NO. 29264K105 PAGE 7 OF 7 PAGES
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF FUKUDA DENSHI CO. LTD.
<TABLE>
<CAPTION>
Name, Title and Principal Occupation Citizenship
------------------------------------- -----------
<S> <C>
Kotaro Fukuda, President and Representative Director Japanese
Takashi Takahashi, Managing Director Japanese
Teruo Haraguchi, Managing Director Japanese
Takeyasu Yamamura, Managing Director Japanese
Ryouichi Ooomote, Director Japanese
Isamu Suzuki, Director Japanese
Masakatsu Shimada, Director Japanese
Susumu Segawa, Director Japanese
Masayuki Iwamoto, Director Japanese
Hisakazu Haruhara, Director Japanese
Noboru Yamamoto, Director Japanese
Yoshiyuki Ariyoshi, Director Japanese
Ryozo Noguchi, Director Japanese
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</TABLE>
<PAGE> 8
EXHIBIT 7.1
ENDOSONICS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of
the 7th day of October, 1998 by and between EndoSonics Corporation, a Delaware
corporation (the "Company") and the Fukuda Denshi Co. Ltd., a Japanese
corporation, (the "Purchaser").
RECITALS
A. On August 5, 1998, the Company completed the acquisition of Navius
Corporation, the purchase price of which included payment by the Company of
approximately $9.5 million in cash. The Company will use the proceeds from the
sale of the Stock (as defined below) primarily to offset cash expenditures by
the Company in connection with the acquisition of Navius Corporation.
B. Contemporaneously with the execution and delivery of this Agreement,
the Company and Purchaser are entering into the Investor's Rights Agreement (as
defined in Section 4.8), Research and Development Agreement (as defined in
Section 4.7), EndoSonics Distribution Agreement (as defined in Section 4.6) and
Navius Distribution Agreement (as defined in Section 4.5).
AGREEMENT
In consideration of the foregoing premises and mutual promises set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Stock.
(a) Subject to the terms and conditions of this
Agreement, the Purchaser agrees to purchase at the Closing and the Company
agrees to sell and issue to the Purchaser at the Closing 965,730 shares Common
Stock to a purchase price of $8.69808 per share, which price has been determined
between the Company and the Purchaser as derived from the average closing price
over time of the Company's common stock as reported on the Nasdaq National
Market. The shares of Common Stock issued to the Purchaser pursuant to this
Agreement shall be hereinafter referred to as the "Stock."
1.2 Closing; Delivery.
(a) The purchase and sale of the Stock shall take
place at the offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park,
California, at 10:00 a.m., on September __, 1998, or at such other time and
place as the Company and the Purchasers mutually agree upon, orally or in
writing (which time and place are designated as the "Closing").
<PAGE> 9
(b) At the Closing, the Company shall deliver to the
Purchaser a certificate, registered in the Purchaser's name, representing the
Stock being purchased thereby against payment of the purchase price therefor by
wire transfer to the Company's designated account or certified or cashier's
check drawn on a United States bank made payable to the order of EndoSonics
Corporation.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that, except as expressly indicated on
a Schedule of Exceptions attached hereto as Exhibit A (the "Schedule of
Exceptions"), which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite corporate power and authority to own its
property and assets and to carry on its business. The Company is duly qualified
to transact business and is in good standing in all jurisdictions where such
qualification is required, except for such failures to be so qualified or in
good standing as would not, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or otherwise), assets,
liabilities, properties or results of operations of the Company.
2.2 Capitalization. As of September 24, 1998, the authorized
capital of the Company consisted of:
(a) 5,000,000 shares of Preferred Stock, none of
which are issued and outstanding.
(b) 25,000,000 shares of Common Stock, 16,491,282
shares of which are issued and outstanding. All of the outstanding shares of
Common Stock have been duly authorized, fully paid and are non-assessable and
issued in compliance with all applicable federal and state securities laws. The
Company has reserved an aggregate of 2,933,766 shares of Common Stock for
issuance to employees, directors and independent contractors upon exercise of
outstanding options to acquire shares of the Company's Common Stock issued under
the Amended and Restated 1988 EndoSonics Stock Option Plan, and the Company has
reserved for issuance 720,000 shares of Common Stock for future grants under
such option plan.
2.3 Authorization. The Company has full power to execute,
deliver and perform this Agreement. All corporate action on the part of the
Company, its officers and directors necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder and the authorization, sale, issuance and delivery of the
Stock has been taken or will be taken prior to the Closing, and the Agreement,
when executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
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2.4 Valid Issuance of Securities. The Stock that is being
issued to the Purchaser hereunder, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be duly and
validly issued and outstanding, fully paid and non-assessable, free of any
liens, encumbrances, preemptive rights or rights of first refusal, and free of
restrictions on transfer other than restrictions on transfer under this
Agreement and applicable state and federal securities laws.
2.5 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the valid and lawful authorization,
execution and delivery by the Company of this Agreement and the consummation of
the transactions contemplated hereby, or for or in connection with the valid and
lawful authorization, issuance, sale and delivery of the Stock in accordance
with this Agreement, other than filings pursuant to Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), and the qualification
(or taking of such action as may be necessary to secure an exemption from
qualification if available) of the offer and sale of the Stock under all
applicable state securities laws, which filings and qualifications, if required,
will be accomplished in a timely manner so as to comply with such qualification
or exemption from qualification requirements.
2.6 SEC Documents; Financial Statements. The Company has
timely filed all the documents that it was required to file with the Securities
and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended ("Exchange Act") (the "SEC Documents"), since December 31, 1996. As of
their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as
applicable, and were duly and timely filed with the SEC. None of the SEC
Documents as of their respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. Except as may be indicated in the notes to the Financial
Statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC, the Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied and fairly present
the financial position of the Company and its subsidiary at the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end adjustments).
2.7 Changes. Except as disclosed in the SEC Documents, since
December 31, 1997, the Company has conducted its business only in the ordinary
and usual course and, without limiting the generality of the foregoing, there
has not been a material adverse effect on the condition (financial or
otherwise), business, net worth, assets, liabilities, properties or results of
operations of the Company.
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2.8 No Conflict. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
(i) conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit, under, any provision of the Certificate of Incorporation or Bylaws of
the Company or any mortgage, indenture, lease or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statue, law,
ordinance, rule or regulation applicable to the Company, its properties or
assets, which conflict, violation, default or right would have a material
adverse effect on the Company or (ii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or the Stock.
2.9 Securities Laws. Assuming that the Purchaser's
representations and warranties contained in Section 3 of this Agreement are true
and correct, the offer, issuance and sale of the Securities are and will be
exempt from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
2.10 Disclosure. Neither this Agreement, nor any other written
document, certificate, instrument or statement furnished or made available in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading. There
is no fact known to the Company materially affecting the Company or its business
or the existence of which could have a material adverse effect on the Company,
which has not been set forth in this Agreement or in the Schedule of Exceptions
prepared by the Company.
3. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company that:
3.1 Authorization. The Purchaser has full power and authority
to enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable.
3.2 Purchase Entirely for Own Account. This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the Purchaser's execution of this Agreement, the Purchaser
hereby confirms, that the Securities to be acquired by the Purchaser will be
acquired for investment for the Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof.
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<PAGE> 12
3.3 Disclosure of Information. The Purchaser has had an
opportunity to discuss the Company's business, management, financial affairs and
the terms and conditions of the offering of the Stock with the Company's
management and has had an opportunity to review the Company's facilities. The
Purchaser has received and has had the opportunity to review the Company's
Annual Report for the year ended December 31, 1997, the Company's Report on Form
10-K for the year ended December 31, 1997, the Company's Proxy Statement dated
April 30, 1998 and the Company's Report on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998. The Purchaser understands that such
discussions, and any other written information delivered by the Company to the
Purchaser, were intended to describe the aspects of the Company's business which
it believes to be material. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Purchasers to rely thereon.
3.4 Restricted Securities. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Investors' Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser's
control, and, subject to the Company's obligations under the Investors' Rights
Agreement, which the Company is under no obligation and may not be able to
satisfy.
3.5 Legends. The Purchaser understands that the Securities and
any securities issued in respect of or exchange for the Securities, may bear one
or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH ACT."
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(b) Any legend required by the Blue Sky laws of any
state to the extent such laws
are applicable to the shares represented by the certificate so legended.
3.6 Accredited Investor. The Purchaser is an accredited
investor as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
3.7 Foreign Investors. If the Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Stock or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Stock, (ii) any foreign exchange restrictions applicable to such purchase, (iii)
any governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Stock. Such Purchaser's
subscription and payment for and continued beneficial ownership of the Stock,
will not violate any applicable securities or other laws of the Purchaser's
jurisdiction.
4. Conditions of the Purchasers' Obligations at Closing. The
obligations of each Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived in writing by each Purchaser:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects (disregarding for this purpose any qualifications with
respect to materiality), on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
4.2 Performance. The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Compliance Certificate. The President of the Company shall
deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4.2 and 4.4 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
4.5 Navius Distribution Agreement. Navius Corporation
("Navius") and Purchaser shall have agreed to amend that certain Distribution
Agreement by and between Navius and Purchaser dated as of June 28, 1997,
according to the terms attached hereto as Exhibit B (the "Navius Distribution
Agreement").
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<PAGE> 14
4.6 EndoSonics Distribution Agreement. The Company and the
Purchaser shall have executed and delivered the Distribution Agreement in the
form attached hereto as Exhibit C (the "EndoSonics Distribution Agreement").
4.7 Research and Development Agreement. The Company and the
Purchaser shall have executed and delivered the Research and Development
Agreement in the form attached hereto as Exhibit D (the "Research and
Development Agreement")
4.8 Investor's Rights Agreement. The Company and the Purchaser
shall have executed and delivered the Investor's Rights Agreement in the form
attached hereto as Exhibit E (the "Investor's Rights Agreement").
4.9 Board of Directors. [Jakob Stapfer], the Purchaser's
designee, shall have been appointed to the Company's Board of Directors.
4.10 Legal Investment. The sale of the Shares pursuant to the
terms of this Agreement shall be permitted by all laws to which Purchaser is
subject.
4.11 Opinion of Counsel. Purchaser shall have received an
opinion of Venture Law Group, counsel to the Company, dated as of the Closing,
in substantially the form attached hereto as Exhibit F.
5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to the Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived in writing:
5.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Section 3 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
5.2 Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchaser on or prior to the
Closing shall have been performed or complied with in all material respects.
5.3 Qualifications. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
6. Covenants of Company and Purchaser.
6.1 Nomination of Purchaser Designee to Company Board of
Directors. For so long as Purchaser owns at least 650,000 shares of the
Company's Common Stock, the Company shall nominate a designee of Purchaser
reasonably acceptable to the Company's Board of Directors to serve as a member
of the Company's Board of Directors.
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6.2 Reports Under Securities Exchange Act of 1934. With a view
to making available to the Purchaser the benefits of Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit the Purchaser to sell securities of the Company to the public
without registration, for so long as Purchaser owns shares of the Company's
Common Stock, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144 at all times;
(b) file with the SEC in a timely manner all reports
and other documents required
of the Company under the Securities Act and the Exchange Act; and
(c) furnish to the Purchaser, so long as the
Purchaser owns any of the Shares, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144, the Securities Act and the Exchange Act and (ii) such other information as
may be reasonably requested in availing the Purchaser of any rule or regulation
of the SEC which permits the selling of any such securities without
registration.
6.3 Nasdaq Notification. The Company shall file such forms and
take such other actions as are required under the rules of Nasdaq National
Market in connection with the issuance of the Shares.
6.4 Restrictions on Certain Actions by Purchaser. Purchaser
agrees that it shall not, nor shall it permit any of its affiliates (as such
term is defined in Rule 12b-2 of the General Rules and Regulations promulgated
under the Exchange Act) (Purchaser, together with such affiliates, the
"Purchaser Group") to, directly or indirectly, without the prior written consent
of the Company duly authorized by a majority of its Board of Directors (the
"Board of Directors"):
(a) acquire, directly or indirectly, by purchase or
otherwise, any securities of the Company entitled to vote generally for the
election of directors, or securities convertible into, or entitling the holder
thereof to acquire, such voting securities (collectively, "Voting Securities"),
except for the Stock and except by way of stock dividends or other distributions
or offerings made available to holders of Voting Securities generally; provided,
however, that:
(i) in the event that (A) (1) a tender or
exchange offer shall be commenced as evidenced by the filing with the SEC of a
statement on Schedule 14D-1, or any successor schedule or form promulgated or
adopted for adopted for such purpose by the SEC, by any Person or 13D Group
(each as hereinafter defined) (other than an affiliate of, or any Person acting
in concert with, any member of the Purchaser Group), or (2) any Person or 13D
Group shall file with the SEC a statement on Schedule 13D, or any successor
schedule or form
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<PAGE> 16
promulgated or adopted for such purpose by the SEC, or shall file any amendment
thereto, proposing, in each such case to acquire Voting Securities which, if
added to the Voting Securities already beneficially owned by such Person or 13D
Group, would represent more than 15.0% of the total combined voting power of all
Voting Securities then outstanding, and (B) either of the following events shall
have occurred: (1) such tender or exchange offer by such Person or 13D Group
shall have been consummated, or (2) the Company shall have taken all actions
necessary to ensure that such Person or 13D Group shall not be deemed an
"interested stockholder" under Section 203 of the Delaware General Corporation
Law, then the Purchaser Group shall be permitted to (i) commence a tender or
exchange offer on its own behalf for Voting Securities without regard to the
foregoing limitation, or (ii) make an Acquisition Proposal (as hereinafter
defined) to the Board of Directors without regarding to the limitation set forth
in paragraph (f) below; and
(ii) no member of the Purchaser Group shall
be obligated to dispose of any
Voting Securities if the aggregate percentage ownership of such Voting
Securities of the Purchaser Group shall be increased as a result of a
recapitalization of the Company or any other action taken by the Company or its
affiliates (other than the Purchaser Group), including, without limitation, any
repurchase of Voting Securities by the Company;
(b) deposit any Voting Securities in a voting trust
or subject them to any arrangement or agreement with respect to the voting
thereof;
(c) "solicit" proxies with respect to Voting
Securities under any circumstances or become a "participant" in a "solicitation"
(as such terms are defined in Regulation 14A of the General Rules and
Regulations promulgated under the Exchange Act) in opposition to the
recommendation of a majority of the directors of the Company with respect to any
matter;
(d) initiate, propose or otherwise solicit
stockholders of the Company for the approval of one or more stockholder
proposals relating to the Company at any time, or induce or attempt to induce
any other Person to initiate any stockholder proposal with respect to the
Company;
(e) join a partnership, limited partnership,
syndicate or other group, or otherwise act in concert with any other Person, for
the purpose of acquiring, holding, voting or disposing of Voting Securities, or
otherwise become a "person" within the meaning of Section 13(d)(3) of the
Exchange Act (in each case, other than solely with members of the Purchaser
Group); or
(f) make any proposal to the Board of Directors or
otherwise with respect to the purchase of additional Voting Securities by any
member of the Purchaser Group or with respect to a merger or consolidation with,
or a sale of a substantial portion of the Company's assets to, any member of the
Purchaser Group, if such proposal would be of a kind such that public disclosure
thereof might reasonably be required under applicable law (each such proposal,
an "Acquisition Proposal").
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<PAGE> 17
As used in this Agreement, the term "13D Group" shall mean any
group of Persons formed for the purpose of acquiring, holding, voting or
disposing of Voting Securities which would be required under Section 13(d) of
the Exchange Act and the rules and regulations thereunder to file a statement
with the SEC on Schedule 13D as a "person" within the meaning of Section
13(d)(3) of the Exchange Act if such group shall beneficially own Voting
Securities representing more than 5% of the total combined voting power of all
Voting Securities then outstanding, and the term "Person" shall mean an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department, agency or other
political subdivision thereof.
6.5 Restrictions on Resales of Shares. Purchaser agrees that,
subject to the further provisions of this Agreement, it shall not, nor shall it
permit any member of the Purchaser Group to, directly or indirectly, without the
prior written consent of the Company, offer, sell or transfer any Voting
Securities, other than:
(a) to a wholly owned subsidiary of Purchaser, or by
any such subsidiary to Purchaser;
(b) pursuant to Rule 144 ("Rule 144") of the General
Rules and Regulations promulgated under the Securities Act of 1933 (the
"Securities Act") (provided, however, that no opinion of counsel shall be
required for sales by Purchaser pursuant to Rule 144, except for such transfers
as reasonably requested by the Company based on the advice of outside counsel);
(c) pursuant to any tender or exchange offer that
shall have been recommended to
the stockholders of the Company by the Board of Directors; or
(d) pursuant to any bona fide public offering of
Voting Securities (including any sale made pursuant to Rule 144).
With respect to permitted sales or other transfers of Voting
Securities by Purchaser pursuant to paragraph (a) above, any buyer or transferee
of such Voting Securities shall as a precondition to the consummation of the
proposed sale or transfer be required to execute in writing an agreement to be
bound by the terms of this Agreement, which agreement to be bound shall be in
form and substance reasonably satisfactory to the Company.
7. Miscellaneous.
7.1 Survival of Warranties. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants of the Company and the
Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement for a period of one year following the
Closing and shall in no way be affected by an investigation of the subject
matter thereof made by or on behalf of the Company or the Purchaser.
7.2 Transfer; Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns
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<PAGE> 18
of the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
7.3 Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.
7.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.5 Titles 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.
7.6 Notices. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient (if not, then on
the next business day), (iii) ten (10) days after having been sent by registered
or certified airmail, return receipt requested, postage's prepaid, or (iv) four
(4) business days, after being properly deposited with an internationally
recognized overnight courier, specifying express delivery, with written
verification of receipt addressed to the party to be notified at such party's
address as set forth on the signature pages, or as subsequently modified by
written notice with a copy to Hiromasa Ogawa, Esq., Kojima Law Offices, Gobancho
Kataoka Building 4F, Gobancho 2-7 Chiyoda-ku, Tokyo 102, Japan, and if to the
Company, with a copy to Michael W. Hall, Venture Law Group, 2800 Sand Hill Road,
Menlo Park, CA 94025.
7.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finder's fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless the Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
7.8 Attorney's Fees. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any of
the Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
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<PAGE> 19
7.9 Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the
Purchaser. Any amendment or waiver effected in accordance with this Section 7.9
shall be binding upon the Purchaser and each transferee of the Stock (or the
Common Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company.
7.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
7.11 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.12 Entire Agreement. This Agreement, and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to the subject matter hereof existing between the parties
hereto are expressly canceled.
7.13 Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
7.14 Confidentiality. Each party hereto agrees that, except
with the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or
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<PAGE> 20
shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder. The provisions of this Section 7.14
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
7.15 Publicity. No party shall originate any publicity, news
release or other public announcement, written or oral (a "Release"), whether
relating to the performance under this Agreement or the existence of any
arrangement between the parties, without the prior written consent of the other
party, except where such Release is required by law.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 21
The parties have executed this Common Stock Purchase Agreement as of
the date first written above.
COMPANY:
EndoSonics Corporation
By:
-------------------------------------------
Name:
-----------------------------------------
(print)
Title:
----------------------------------------
Address: 2870 Kilgore Road
Rancho Cordova, California 95670
PURCHASER:
Fukuda Denshi Co. Ltd.
By:
-------------------------------------------
Name:
-----------------------------------------
(print)
Title:
-----------------------------------------
Address: 3-39-4 Hongo Bunkyo-Ku
Tokyo, 113, Japan
SIGNATURE PAGE TO PURCHASE AGREEMENT
