EXHIBIT 10
CARDIAC PATHWAYS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
November 7, 2000
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TABLE OF CONTENTS
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1. Definitions.............................................................1
2. Purchase and Sale of Stock..............................................2
2.1 Purchase and Sale..............................................2
2.2 Closing........................................................2
2.3 Delivery.......................................................2
2.4 Subsequent Sales...............................................2
3. Representations and Warranties of the Company...........................3
3.1 Corporate Power................................................3
3.2 Capitalization.................................................3
3.3 Authorization..................................................4
3.4 Financial Statements...........................................4
3.5 SEC Documents..................................................5
3.6 No Conflict; Required Filings and Consent......................6
3.7 Brokers or Finders.............................................6
3.8 Nasdaq National Market.........................................6
3.9 Absence of Litigation..........................................6
3.10 Common Stock to be Issued......................................7
3.11 Securities Law Exemption.......................................7
3.12 Noncontravention...............................................7
3.13 Key Employees..................................................7
3.14 Intellectual Property..........................................7
3.15 Title to Property and Assets...................................8
3.16 Compliance with Laws...........................................8
3.17 Related Entities...............................................9
3.18 Significant Customers and Suppliers............................9
3.19 Foreign Corrupt Practices......................................9
3.20 Taxes..........................................................9
3.21 Environmental Matters.........................................10
3.22 Disclosure....................................................10
3.23 No Integrated Offering........................................11
4. Representations and Warranties of the Purchaser........................11
4.1 Authorization.................................................11
4.2 Purchase Entirely for Own Account.............................11
4.3 Investor Status; Etc..........................................11
4.4 Risk Factors..................................................11
4.5 Shares Not Registered.........................................12
4.6 No Conflict...................................................12
4.7 Brokers.......................................................12
4.8 Consents......................................................12
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TABLE OF CONTENTNS
(continued)
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4.9 Residency.....................................................12
4.10 Acknowledgement Regarding Placement Agent.....................12
4.11 Reliance on Exemptions........................................13
5. Certain Covenants of the Purchasers....................................13
5.1 Forms 13D or 13G..............................................13
5.2 Reporting Obligations Pursuant to Section 16..................13
5.3 Securities Law Transfer Restrictions..........................13
5.4 Legends.......................................................14
5.5 Standstill Provisions; Limitations on Ownership of Stock......14
6. Certain Covenants of the Company.......................................14
6.1 Proxy Statement...............................................14
6.2 Stockholder Approvals; Recommendations........................15
6.3 Notices of Certain Events.....................................15
6.4 Purchase Information..........................................16
6.5 Restrictions on Subsequent Offerings..........................16
6.6 Stock Option Matters..........................................16
6.7 Securities Compliance.........................................17
6.8 No Integration................................................17
6.9 Efforts.......................................................17
7. Conditions Precedent to Closing........................................17
7.1 Conditions to the Obligation of Each Purchaser to
Consummate the Closing........................................17
7.2 Conditions to the Obligation of the Company to
Consummate the Closing........................................19
8. Termination; Liabilities Consequent Thereon............................20
8.1 Termination...................................................20
8.2 Liability.....................................................21
9. Miscellaneous Provisions...............................................21
9.1 Public Statements or Releases.................................21
9.2 Further Assurances............................................21
9.3 Rights Cumulative.............................................21
9.4 Notices.......................................................22
9.5 Captions......................................................22
9.6 Severability..................................................22
9.7 Governing Law; Injunctive Relief..............................23
9.8 Amendments....................................................23
9.9 Expenses......................................................23
9.10 Assignment....................................................23
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TABLE OF CONTENTNS
(continued)
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9.11 Survival......................................................24
9.12 Entire Agreement..............................................24
9.13 Attorneys' Fees...............................................24
9.14 Exculpation Among Purchasers..................................24
9.15 Representation................................................24
9.16 Counterparts..................................................25
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Schedules
Schedule A -- Schedule of Purchasers
Schedule B -- Disclosure Schedule
Exhibits
Exhibit A -- Registration Rights Agreement
Exhibit B -- Form of Opinion
Exhibit C -- Investor Suitability Questionnaire
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 7th day
of November, 2000 by and between Cardiac Pathways Corporation, a Delaware
corporation having its principal office at 995 Benecia Avenue, Sunnyvale,
California (the "Company"), and the purchasers listed on Schedule A hereto,
each of which is herein referred to as a "Purchaser" and collectively, the
"Purchasers".
WHEREAS, the parties desire that the Purchasers make an equity investment
of $25,000,000 in the Company pursuant to the terms and conditions of this
Agreement; and
WHEREAS, the shares of common stock (the "Common Stock") issued to the
Purchasers pursuant to this Agreement shall have the registration and other
rights as evidenced by the Registration Rights Agreement in substantially the
form attached hereto as Exhibit A, dated as of the date hereof, and entered
into between the Company and the Purchasers (the "Registration Rights
Agreement").
NOW THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "Affiliate" of a party means any corporation or other business
entity controlled by, controlling or under common control with such party
directly or indirectly through one or more intermediaries. For this purpose
"control" shall mean (i) the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such
corporation or business entity or (ii) direct or indirect beneficial ownership
of twenty percent (20%) or more of the voting or income interest in such
corporation or other business entity.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
(c) "SEC" shall mean the Securities and Exchange Commission.
(d) "Securities Act" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
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2. Purchase and Sale of Stock.
2.1 Purchase and Sale. The Company hereby agrees to sell to the
Purchasers or their designees, and the Purchasers or their designees hereby
agree to purchase from the Company in the amounts listed on Schedule A hereto,
up to 5,882,353 shares of the Company's Common Stock (the "Shares") at the per
share purchase price (the "Per Share Purchase Price") of $4.25.
2.2 Closing. The closing of the purchase and sale of the Shares
hereunder (the "Closing") will take place, upon the satisfaction of the
conditions to closing set forth in Sections 7.1 and 7.2 hereof, at the offices
of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill
Road, Palo Alto, California, as soon as practicable but in any event, subject
to applicable law, no later than five (5) business days after the last of the
conditions set forth in Sections 7.1 and 7.2 hereof have been satisfied. The
date of the Closing is hereinafter referred to as the "Closing Date."
2.3 Delivery. At the Closing, the Company will deliver a certificate
registered in each Purchaser's name representing the Shares to be purchased by
such Purchaser. Such delivery shall be against payment of the purchase price
therefor by each of the Purchasers to the Company in an amount equal to the
product of the number of Shares to be purchased by such Purchaser and the Per
Share Purchase Price (the "Purchase Price") by wire transfer to the Company's
bank account at:
Bank Name: Citibank
Bank Address: 111 Wall Street
New York, NY 10005
Contact: David L. Hayes (415) 576-2148
ABA#: 021000089
Account Name: Morgan Stanley
Account Number: # 3889-0774
FBO CPC # 14-78247
2.4 Subsequent Sales. At any time on or before the 20th day following
the effective date of this Agreement, the Company may sell up to the balance of
the Shares not sold pursuant to this Agreement. All such sales shall be made on
the terms and conditions set forth in this Agreement. Any shares sold pursuant
to this Section 2.4 shall be deemed to be "Shares" for all purposes under this
Agreement and "Registrable Shares" for the purposes of the Registration Rights
Agreement. Any purchasers of shares sold pursuant to this Section 2.4 shall be
deemed to be "Purchasers" for all purposes under this Agreement, and shall be
deemed to be "Initial Investors" for all purposes under the Registration Rights
Agreement. Such Purchasers shall become signatories to this Agreement and the
Registration Rights Agreement.
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3. Representations and Warranties of the Company. Except as set forth
in the SEC Documents (as defined in Section 3.5 below) filed prior to the date
hereto and in the Disclosure Schedule attached hereto as Schedule B (the
"Disclosure Schedule") and furnished to each Purchaser, which exceptions shall
be deemed to be representations and warranties as if made hereunder, the
Company hereby represents and warrants to the Purchaser as follows:
3.1 Corporate Power. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its respective state of incorporation and is qualified to do business
as a foreign corporation in each jurisdiction except where failure to qualify
would not, individually or in the aggregate, (i) adversely affect the legality,
validity or enforceability of this Agreement or the Registration Rights
Agreement in any respect, (ii) have or result in a material adverse effect on
the results of operations, assets, prospects or financial condition of the
Company, taken as a whole or (iii) adversely impair the Company's ability to
perform fully on a timely basis its obligations under this Agreement or the
Registration Rights Agreement (any of (i), (ii) or (iii), being a "Material
Adverse Effect"). The Company and each of its subsidiaries has full corporate
power and authority to own its property and to carry on its business as
presently conducted.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Common Stock, $.001 par value per share, and 5,000,000
shares of Preferred Stock, $.001 par value per share, of which 30,000 shares
have been designated Series A Participating Preferred Stock, 50,000 shares have
been designated Series B Convertible Preferred Stock and 4,920,000 are
undesignated. As of the date hereof, (i) 3,143,264 shares of Common Stock, no
shares of Series A Participating Preferred Stock and 27,250 shares of Series B
Convertible Preferred Stock were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable; (ii) no shares were
held in treasury by the Company or by any subsidiaries of the Company; (iii)
2,000,644 shares of Common Stock were reserved for issuance under the Company's
stock plans (including: (A) 1,337,269 shares of Common Stock reserved for
issuance under the 1991 Stock Option Plan, 1,176,993 shares of which were
subject to outstanding options and 160,276 of which were reserved for future
grants, (B) 12,000 shares of Common Stock were reserved for issuance under the
1996 Director Option Plan, all of which are reserved for future grants and (C)
651,375 shares of Common Stock were reserved for issuance under the 1998
Non-Statutory Stock Option Plan, 399,615 of which were subject to outstanding
options and 251,760 shares of which were available for future grants
(collectively the Company's "Stock Plans")); (iv) 14,628 shares of Common Stock
and 300 shares of Series B Convertible Preferred Stock were subject to
outstanding warrants to purchase such shares; and (v) 500,000 shares of Common
Stock will be reserved for issuance under the Company's proposed 2000 Stock
Option Plan to be approved by the stockholders of the Company at the Company's
annual meeting currently scheduled for December 1, 2000. All shares of the
Company's Common Stock and Preferred Stock subject to issuance as specified
above, on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable. Except as set forth in this Section 3.2
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and in the Disclosure Schedule, there are no existing options, warrants, calls,
pre-emptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character obligating the Company to issue,
transfer or sell, or cause to be issued, transferred or sold, any shares of the
capital stock of the Company or other equity interests in the Company or any
securities convertible into or exchangeable for such shares of capital stock or
other equity interests, and there are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any shares of its
capital stock or other equity interests.
3.3 Authorization. The Company has full corporate power to execute,
deliver and perform this Agreement and the Registration Rights Agreement, and
each such agreement has been duly executed and delivered by the Company and is
the legal, valid and, assuming due execution by the Purchaser, binding
obligation of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally, and to general equitable principles. The
execution, delivery and performance by the Company of this Agreement and the
Registration Rights Agreement have been duly authorized by all necessary
corporate action on the part of the Company and its officers, directors and
stockholders; provided, however, that the Company makes no representation or
warranty as to the enforceability of the indemnification and contribution
provisions of Section 10 of the Registration Rights Agreement to the extent
that the provisions thereof may be subject to limitations of public policy and
the effect of applicable statutes and judicial decisions. The Board of
Directors of the Company (at a meeting duly called and held) has (a) determined
that the sale of the Shares is advisable and fair and in the best interests of
the Company and its stockholders, and (b) recommended the approval and adoption
by the stockholders of this Agreement and the Registration Rights Agreement and
the approval of the sale of the Shares, and directed that this Agreement, the
Registration Rights Agreement and the sale of the Shares be submitted for
consideration by the Company's stockholders. The Board of Directors of the
Company has taken all action necessary to render inapplicable, as it relates to
Purchasers, the provisions of Section 203 of the Delaware General Corporation
Law. No other corporate action on the part of the Company is necessary to
authorize the execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby (other than, in the case of this Agreement, the
approval of the sale of the Shares by (i) the holders of least a majority of
the Series B Convertible Preferred Stock of the Company and (ii) the holders of
at least a majority of the outstanding voting stock of the Company voting at a
meeting held to consider the sale of the Shares).
3.4 Financial Statements. The Company has delivered to each Purchaser
its audited Statements of Income, Stockholders' Equity and Cash Flows for the
fiscal year ended June 30, 2000, its audited Balance Sheet as of June 30, 2000,
its unaudited Statements of Income and Cash Flows for the three-month period
ended September 30, 2000 and its unaudited Balance Sheet as of September 30,
2000. All such financial statements are hereinafter referred to collectively as
the "Financial Statements". The Financial Statements have been prepared in
accordance with the books and records of the Company and in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, and fairly present, in all material respects, the
financial position of the Company and the results of its operations as of the
date and for the periods indicated thereon, except that the unaudited financial
statements may not be in accordance
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with generally accepted accounting principles because of the absence of
footnotes normally contained therein and are subject to normal year-end audit
adjustments which, individually, and in the aggregate, will not be material.
Since September 30, 2000 there has been no material adverse change (actual or
threatened) in the assets, liabilities (contingent or other), affairs,
operations, prospects or condition (financial or other) of the Company.
3.5 SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since July 1,
1999 in a timely manner. The Company has delivered to each Purchaser a true and
complete copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2000, and any other statement, report, registration statement
(other than registration statements on Form S-8) or definitive proxy statement
filed by the Company with the SEC during the period commencing June 30, 2000
and ending on the date hereof. The Company will, promptly upon the filing
thereof, deliver to the Purchasers all statements, reports (including, without
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K),
registration statements and definitive proxy statements filed by the Company
with the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials required to be furnished to the Purchaser
pursuant to this sentence or pursuant to the preceding sentences of this
Section 3.5 being called, collectively, the "SEC Documents"). As of their
respective filing dates, the SEC Documents complied or will comply in all
material respects with the requirements of the Exchange Act or the Securities
Act, as applicable, and the rules and regulations promulgated thereunder, and
none of the SEC Documents contained or will contain any untrue statement of a
material fact or omitted or will omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, as of
their respective filing dates, except to the extent corrected by a subsequently
filed SEC Document. The financial statements of the Company included in the SEC
Documents complied or will comply as of their respective dates of filing with
the SEC in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
or will be prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Regulation S-X
promulgated by the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the financial position of the Company as of 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 audit adjustments). As of the
date hereof, the Company has, on a timely basis, made all filings required to
be made by the Company with the SEC and the Company is eligible to file a
registration statement on Form S-3 with respect to outstanding shares of its
Common Stock to be offered for sale for the account of any person other than
the Company.
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3.6 No Conflict; Required Filings and Consent.
(a) The execution and delivery of this Agreement and the Registration
Rights Agreement by the Company do not, and the performance of this Agreement
and the Registration Rights Agreement by the Company shall not, (i) conflict
with or violate the Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Certificates of Designation, the Company's
Bylaws, as amended (the "Bylaws") or equivalent organizational documents of the
Company or any of its subsidiaries, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which it or their respective properties are bound or
affected, or (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
impair the Company's or any such subsidiary's rights or alter the rights or
obligations of any third party 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 the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected, except for any such
breaches, defaults or other occurrences that do not have or result in,
individually or in the aggregate, a Material Adverse Effect.
(b) The execution and delivery of this Agreement and the Registration
Rights Agreement by the Company do not, and the performance of this Agreement
and the Registration Rights Agreement by the Company shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental entity except for applicable requirements, if any, of the
Securities Act, the Exchange Act, state securities laws, the rules and
regulations of the Nasdaq National Market and the consent of a majority of the
holders of Series B Convertible Preferred Stock of the Company.
3.7 Brokers or Finders. The Company has not incurred, and shall not
incur, directly or indirectly, any liability for any brokerage or finders' fees
or agents commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby other than with respect to arrangements
with Dain Rauscher Wessels relating to services provided in connection with the
financing of the Company consummated by this Agreement.
3.8 Nasdaq National Market. The Company's Common Stock is listed on
the Nasdaq National Market System, and there are no proceedings to revoke or
suspend such listing.
3.9 Absence of Litigation. There is no action, suit, arbitration or
other proceeding or, to the Company's knowledge, any investigation, pending or,
to the Company's knowledge, threatened in which an unfavorable outcome, ruling
or finding in any said matter, or for all matters taken as a whole, might have
a Material Adverse Effect. The foregoing includes, without limitation, any such
action, suit, proceeding or investigation that questions this Agreement or the
Registration Rights Agreement or the right of the Company to execute, deliver
and perform under same.
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3.10 Common Stock to be Issued. The Shares, when issued in compliance
with the provisions of this Agreement, will be validly issued and will be fully
paid and nonassessable, and such Shares will be free of any restrictions on
transfer, liens or encumbrances and any taxes, security interests, options,
warrants, purchase rights, preemptive rights, contracts, commitments, equities,
claims or demands; provided, however, that the Shares may be subject to
restrictions on transfer under state and/or federal securities laws as set
forth herein.
3.11 Securities Law Exemption. The offer, sale and issuance of the
Shares as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act and applicable state securities laws, and
neither the Company nor any authorized agent acting on its behalf has taken or
will take any action hereafter that would cause the loss of such exemption.
3.12 Noncontravention. Neither the Company, nor any of its
subsidiaries, is in violation or breach of, or in default with respect to, any
material contract, agreement, instrument, lease, license, arrangement or
understanding to which it is a party, except where such violation, breach or
default would not result in, individually or in the aggregate, a Material
Adverse Effect, and each such contract, agreement, instrument, lease, license,
arrangement and understanding is in full force and effect and is the legal,
valid and binding obligation of the Company and/or its subsidiaries,
enforceable against the Company and/or its subsidiaries in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
3.13 Key Employees. Since the date of the most recent SEC Document,
there has been no resignation or termination of any officer or key employee or
group of key employees in the Company. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a
present intention to terminate the employment of any of the foregoing.
3.14 Intellectual Property. The Company and each of its subsidiaries
owns, or has the contractual right to use, sell or license all intellectual
property necessary or required for the conduct of its business as presently
conducted and as proposed to be conducted, including, without limitation, all
trade secrets, processes, source code, licenses, trademarks, service marks,
trade names, logos, brands, copyrights, patents, franchises, domain names and
permits (all such intellectual property and the rights thereto are collectively
referred to as the "Company IP Rights"), except where any such failure to own
or failure to have the right to use, sell or license such Company IP Rights
would not result in, individually or in the aggregate, a Material Adverse
Effect. The manufacture, marketing, license, sale or intended use of any
product currently licensed or sold by the Company or its subsidiaries is not in
breach of any material license or agreement between the Company or any of its
subsidiaries and any third party or, to the best of the Company's knowledge,
has not infringed and is not infringing on any intellectual property right of
any other party, except where such breach or infringement will not,
individually or in the aggregate, result in a Material Adverse Effect. To the
best of the Company's knowledge, there is no claim or litigation, pending or
threatened, which contests the validity, ownership or right to use, sell,
license or dispose of any Company IP Rights. Except as set forth in the SEC
Documents or the Disclosure Schedule, the
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Company owns the Company IP Rights free and clear of all liens or other
encumbrances. Neither the Company nor any of its subsidiaries has received any
communications alleging that the Company or any of its subsidiaries has
violated or, by conducting its business presently conducted or as proposed to
be conducted, violates or will violate any intellectual property rights of any
other person or entity. The Company is not aware that any of its employees are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Company or any of its subsidiaries or that would conflict with the
Company's business, or the business of any of its subsidiaries, as presently
conducted or as proposed to be conducted.
3.15 Title to Property and Assets. Neither the Company nor any of its
subsidiaries owns material real property. The Company and each of its
subsidiaries have good and defensible title to all of their material properties
and assets, free and clear of all liens, charges and encumbrances except liens
for taxes not yet due and payable and such liens or other imperfections of
title, if any, as do not materially detract from the value of or interfere with
the present use of the property affected thereby or which, individually or in
the aggregate, will not result in a Material Adverse Effect; and all leases
pursuant to which the Company or any of its subsidiaries lease from others
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, under
any of such leases, any existing material default or event of default (or any
event which with notice or lapse of time, or both, would constitute a material
default and in respect of which the Company or its subsidiary has not taken
adequate steps to prevent such default from occurring) except where the lack of
such good standing, validity and effectiveness or the existence of such default
or event of default will not result in a Material Adverse Effect. All the
plants, structures and equipment of the Company and its subsidiaries, except
such as may be under construction, are in good operating condition and repair,
except where the failure of such plants, structures and equipment to be in such
good operating condition and repair could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
3.16 Compliance with Laws. The Company and each of its subsidiaries
is and has been since January 1, 1996, in compliance with all applicable laws
(including, without limitation, all Environmental Laws (as hereinafter defined)
and laws related to employee matters and employee benefit plans), rules,
regulations, orders, judgments or decrees, except where the failure to so
comply would not result in a Material Adverse Effect. To the best of the
Company's knowledge, prior to January 1, 1996, the Company and each of its
subsidiaries was in compliance with all applicable laws (including, without
limitation, all Environmental Laws and laws relating to employee matters and
employee benefit plans), rules regulations, orders, judgments or decrees,
except where the failure to so comply would not have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any notice or
other communication from any governmental entity or other person regarding any
actual or possible material violation of, or material failure to comply with,
any law, regulation, order, judgment or decree. "Environmental Laws" shall mean
all federal, state, local and foreign laws, ordinances, treaties, rules,
regulations, guidelines and permit conditions relating to contamination,
pollution or the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) or the protection of human health and
worker safety,
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including, without limitation, laws and regulations relating to Hazardous
Materials Activities (as defined in Section 3.21) or emissions, discharges,
releases or threatened releases of Hazardous Materials (as defined in section
3.21).
3.17 Related Entities. Except as set forth in the SEC Documents or
the Disclosure Schedule, the Company does not presently own or control,
directly or indirectly, any interest in any other subsidiary, corporation,
association or other business entity. The Company is not a party to any joint
venture.
3.18 Significant Customers and Suppliers. No customer or supplier
that was significant to the Company or any of its subsidiaries during the
period covered by the Financial Statements or that has been significant to the
Company or any of its subsidiaries thereafter, has terminated, materially
reduced or threatened to terminate or materially reduce its purchases from or
provision of products or services to the Company or any of its subsidiaries.
3.19 Foreign Corrupt Practices. Neither the Company nor any director,
officer, employee, agent or other person acting on behalf of the Company, nor
any subsidiary of the Company, has, in the course of that person's actions for,
or on behalf of, the Company, (a) used any corporate assets for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity, (b) made any direct or indirect unlawful payment to any
foreign or domestic governmental official or employee, (c) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
or (d) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic governmental official or employee.
3.20 Taxes. The Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any of its subsidiaries is or has been a member, have timely
filed all tax returns required to be filed by them and have paid all taxes
shown thereon to be due. These returns and reports are true and complete in all
material respects. The Company and each of its subsidiaries have paid all taxes
and other assessments due. The Company and each of its subsidiaries have
provided adequate accruals in accordance with generally accepted accounting
principles in its financial statements for any taxes that have not been paid,
whether or not shown as being due on any tax returns. There is (i) no material
claim for taxes that is a lien against the property of the Company or any of
its subsidiaries or is being asserted against the Company or any of its
subsidiaries other than liens for taxes not yet due and payable, (ii) no audit
of any tax return of the Company or any of its subsidiaries being conducted by
a tax authority, (iii) no extension of the statute of limitations on the
assessment of any taxes granted by the Company or any of its subsidiaries and
currently in effect, and (iv) no agreement, contract or arrangement to which
the Company or any of its subsidiaries is a party that may result in the
payment of any amount that would not be deductible by reason of Sections
162(m), 280G or 404 of the Code. Neither the Company nor any of its
subsidiaries has ever been a member of any combined, controlled, consolidated
or affiliated group (other than the group of which the Company is the parent)
for tax purposes. Neither the Company nor any of its subsidiaries is a party to
any tax sharing or tax allocation agreement nor does the Company or any of its
subsidiaries owe
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any amount under any such agreement. Neither the Company nor any of its
subsidiaries has been at any time, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
3.21 Environmental Matters.
(a) Hazardous Materials Activities. Neither the Company nor any of
its subsidiaries has (i) transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials (as
hereinafter defined) in violation of Environmental Laws, or (ii) disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any Environmental Laws in
effect prior to or as of the date hereof, which violation has not heretofore
been cured or for which there is any remaining liability. "Hazardous Materials"
shall mean any substance that has been designated by any governmental entity or
by applicable Environmental Laws to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the Resource Conservation and Recovery Act of 1976, as
amended, and the regulations promulgated pursuant to Environmental Laws, but
excluding office and janitorial supplies maintained in accordance with
Environmental Laws.
(b) Permits. The Company and its subsidiaries hold all environmental
approvals, permits, licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of the Company's and its subsidiaries'
Hazardous Material Activities and other businesses as such activities and
businesses are currently being conducted. The Company and its subsidiaries are
and at all times have been in compliance in all material respects with the
terms of the Environmental Permits, except where noncompliance has heretofore
been cured or where there is no remaining liability.
(c) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, claim or injunction is pending, and to
the Company's knowledge, no action, proceeding, revocation proceeding,
amendment procedure, writ, claim or injunction has been threatened by any
governmental entity against the Company or any of its subsidiaries concerning
any Environmental Permit, Hazardous Material or any Hazardous Materials
Activities of the Company or any of its subsidiaries.
3.22 Disclosure. This Agreement, the Schedules and Exhibits hereto,
the Registration Rights Agreement, and all other documents delivered to the
Purchasers in connection herewith or therewith at the Closing, do not and will
not contain any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. There are no facts
that will, individually or in the aggregate, result in a Material Adverse
Effect that have not been disclosed in the SEC Documents or to the Purchasers
in this Agreement (including the Schedules and Exhibits
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hereto), the Registration Rights Agreement and all other documents delivered to
the Purchasers in connection herewith or therewith at the Closing.
3.23 No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the issuance of the Shares to the Purchasers. The issuance of
the Shares to the Purchasers will not be integrated with any other issuance of
the Company's securities (past, current or future) for purposes of the
Securities Act or any applicable rules of Nasdaq.
4. Representations and Warranties of the Purchaser. Each of the
Purchasers, severally and not jointly, represents and warrants to the Company
as follows:
4.1 Authorization. All action on the part of the Purchaser and, if
applicable, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein has been, or, prior to Closing, will be taken.
When executed and delivered, each of this Agreement and the Registration Rights
Agreement will constitute the legal, valid and binding obligation of the
Purchaser, enforceable against such Purchaser in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally and by general equitable
principles. The Purchaser has all requisite corporate power to enter into each
of this Agreement and the Registration Rights Agreement and to carry out and
perform its obligations under the terms of this Agreement and the Registration
Rights Agreement.
4.2 Purchase Entirely for Own Account. The Purchaser is acquiring the
Shares being purchased by it hereunder for investment, for its own account, and
not for resale or with a view to distribution thereof in violation of the
Securities Act.
4.3 Investor Status; Etc. The Purchaser certifies and represents to
the Company that at the time the Purchaser acquires any of the Shares, such
Purchaser will be an "Accredited Investor" as defined in Rule 501 of Regulation
D promulgated under the Securities Act and was not organized for the purpose of
acquiring the Shares. The Purchaser's financial condition is such that it is
able to bear the risk of holding the Shares for an indefinite period of time
and the risk of loss of its entire investment. The Purchaser has been afforded
the opportunity to ask questions of and receive answers from the management of
the Company concerning this investment and has sufficient knowledge and
experience in investing in companies similar to the Company in terms of the
Company's stage of development so as to be able to evaluate the risks and
merits of its investment in the Company.
4.4 Risk Factors.
(a) The Purchaser acknowledges that an investment in the Company
involves known and unknown risks, uncertainties and other factors which may
result in such
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Purchaser's loss of its entire investment. The Company is an early stage
medical device company that develops, manufactures and markets medical devices
for the treatment of certain cardiovascular and circulatory disorders. The
Company has generated only limited revenue from sales of its products and
expects its operating losses to continue through at least the end of fiscal
2002 as it continues to expend funds to conduct its research and development
activities, establish commercial-scale manufacturing capabilities and expand
its sales and marketing activities. There can be no assurance that the
Company's products will be accepted by the medical community for use in
treatment or will generate sufficient or sustainable revenues to enable the
Company to be profitable.
(b) The Purchaser acknowledges that such Purchaser has received a
copy of the Company's annual report for the fiscal year ended June 30, 2000 and
filed on Form 10-K and reviewed the section captioned "Factors That May Impact
Future Operation" contained therein.
4.5 Shares Not Registered. The Purchaser understands that the Shares
have not been registered under the Securities Act, by reason of their issuance
by the Company in a transaction exempt from the registration requirements of
the Securities Act, and that the Shares must continue to be held by such
Purchaser unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. The Purchaser understands
that the exemptions from registration afforded by Rule 144 (the provisions of
which are known to it) promulgated under the Securities Act depend on the
satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.
4.6 No Conflict. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Purchaser and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result
in any violation of or default by such Purchaser (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the organizational documents of such
Purchaser or (ii) any material agreement or material instrument, permit,
franchise, license, judgment, order, statute, law, ordinance, rule or
regulations, applicable to such Purchaser or its respective properties or
assets.
4.7 Brokers. The Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.8 Consents. All consents, approvals, orders and authorizations
required on the part of the Purchaser in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and are, or will be,
effective as of the Closing Date.
4.9 Residency. The Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on Schedule A hereto.
4.10 Acknowledgement Regarding Placement Agent. Purchaser
acknowledges that Dain Rauscher Wessels is acting as placement agent (the
"Placement Agent") for the Shares being offered hereby and will be compensated
by the Company for acting in such capacity. Purchaser
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further acknowledges that the Placement Agent has acted solely as placement
agent in connection with the offering of the Shares by the Company, that the
information and data provided to Purchaser in connection with the transactions
contemplated hereby have not been subjected to independent verification by the
Placement Agent, and that the Placement Agent makes no representation or
warranty with respect to the accuracy or completeness of such information, data
or other related disclosure material. Purchaser further acknowledges that in
making its decision to enter into this Agreement and purchase the Shares it has
relied on its own examination of the Company and the terms of, and
consequences, of holding the Shares. Purchaser further acknowledges that the
provisions of this Section 4.10 are for the benefit of, and may be enforced by,
the Placement Agent. The Company shall indemnify and hold harmless the
Purchasers from and against all fees, commissions or other payments owing by
the Company to the Placement Agent or any other person or firm acting on behalf
of the Company.
4.11 Reliance on Exemptions. The Purchaser understands that the
Shares are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Shares.
5. Certain Covenants of the Purchasers. Each Purchaser, severally and
not jointly, covenants and agrees as follows:
5.1 Forms 13D or 13G. Promptly following the Closing, the Purchaser
shall, if required, file with the SEC any reports regarding its ownership of
the Company's Common Stock as required by Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder.
5.2 Reporting Obligations Pursuant to Section 16. The Purchaser
shall, if required, agree to file with the SEC any reports required to be filed
pursuant to Section 16(a) of the Exchange Act, and the rules and regulations
promulgated thereunder, by such Purchaser, its officers, directors, employees
or Affiliates within the time such filings are required to be made and to
provide the Company with a copy of all such filings promptly thereafter.
5.3 Securities Law Transfer Restrictions. The Purchaser shall not
sell, assign, pledge, transfer or otherwise dispose or encumber any of the
Shares being purchased by it hereunder, except (i) pursuant to an effective
registration statement under the Securities Act or (ii) pursuant to an
available exemption from registration under the Securities Act and applicable
state securities laws and, if requested by the Company, upon delivery by such
Purchaser of an opinion of counsel reasonably satisfactory to the Company to
the effect that the proposed transfer is exempt from registration under the
Securities Act and applicable state securities laws. Any transfer or purported
transfer of the Shares in violation of this Section 5.3 shall be voidable by
the Company. The Company shall not register any transfer of the Shares in
violation of this Section 5.3. The Company may, and may instruct any transfer
agent for the Company, to place such stop transfer orders as may
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be required on the transfer books of the Company in order to ensure compliance
with the provisions of this Section 5.3.
5.4 Legends. Each certificate representing any of the Shares shall be
endorsed with the legends set forth below, and the Purchaser covenants that,
except to the extent such restrictions are waived in writing by the Company, it
shall not transfer the shares represented by any such certificate without
complying with the restrictions on transfer described in this Agreement and the
legends endorsed on such certificate:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
TRANSFERRED UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
COVERING SUCH OFFER, SALE OR TRANSFER OR (II) THERE IS AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS FOR SUCH OFFER, SALE OR TRANSFER IS
AVAILABLE.
5.5 Standstill Provisions; Limitations on Ownership of Stock. Without
the prior written consent of the Company's Board of Directors neither the
Purchaser, nor any Affiliate of such Purchaser, or partnership, syndicate or
group of which such Purchaser is a member, nor any entity affiliated with such
Purchaser or with which such Purchaser is acting in concert (all of which shall
together be referred to as a "Purchaser" in this Section 5.5) shall acquire
(other than by the transactions contemplated under this Agreement or the
vesting or exercise of warrants to purchase capital stock of the Company
granted to the Purchaser by the Company), directly or indirectly, beneficial
ownership (as defined under Rule 13d-3 of the Exchange Act) of any Voting Stock
(as defined below) of the Company if after such acquisition the Purchaser would
beneficially own more than thirty-five percent (35%) of the total combined
voting power of the Voting Stock then outstanding. For purposes of this
Agreement, "Voting Stock" shall mean the Common Stock and Preferred Stock of
the Company, any securities convertible into or exchangeable for the Common or
Preferred Stock, any other right to acquire Common or Preferred Stock, any
other right to acquire any securities convertible into or exchangeable for
Common or Preferred Stock, and other securities issued by the Company having
the power to vote in the election of directors of the Company.
6. Certain Covenants of the Company.
6.1 Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
the Company shall prepare and file with the SEC preliminary proxy materials
which shall constitute the preliminary Proxy Statement in connection with the
sale of the Shares. As promptly as practicable after comments are received from
the SEC with respect to the preliminary proxy materials, the
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Company shall file with the SEC the definitive Proxy Statement, which Proxy
Statement shall comply in all material respects with the applicable
requirements of the Exchange Act and Securities Act, respectively, and the
applicable rules and regulations of the SEC thereunder.
(b) The Company shall cause the Proxy Statement to be mailed to its
stockholders and after the Proxy Statement shall have been so mailed, promptly
circulate any amended, supplemental or supplemented proxy material, if any,
and, if required in connection therewith, resolicit proxies.
(c) The Company shall use its best efforts to obtain approval for
quotation on the Nasdaq National Market (and each other national securities
exchange or automated quotation system, if any, on which shares of the
Company's Common Stock are then listed or traded), upon official notice of
issuance, of the Shares.
(d) The Company shall make all necessary filings with respect to the
sale of Shares under the Securities Act and the Exchange Act and the rules and
regulations thereunder and under applicable blue sky or similar laws and shall
use its best efforts to obtain required approvals and clearances with respect
thereto.
6.2 Stockholder Approvals; Recommendations. The Company, acting
through its Board of Directors, shall call, give notice of, convene and hold a
meeting of the holders of the Common Stock of the Company for the purpose of
voting upon the sale of the Shares (the "Stockholders' Meeting"). The Company
shall ensure that the Stockholders' Meeting is called, noticed, convened, held
and conducted, and that all proxies solicited in connection with the
Stockholders' Meeting are solicited in compliance with all applicable laws,
regulations, orders, judgments and decrees.
6.3 Notices of Certain Events. The Company hereto shall promptly
notify Purchasers of:
(a) the receipt by the Company of any notice or other communication
from any person alleging that the consent of such person is or may be required
in connection with the transactions contemplated by this Agreement;
(b) the receipt by the Company of any notice or other communication
from any governmental entity in connection with the transactions contemplated
by this Agreement;
(c) the Company obtaining knowledge of any actions, suits, claims
investigations or proceedings commenced or threatened against, relating to or
involving or otherwise affecting the Company or the Purchasers, as the case may
be, or any of their respective subsidiaries which relate to the consummation of
the transactions contemplated by this Agreement; and
(d) the Company obtaining knowledge of the occurrence, or failure to
occur, of any event which occurrence or failure to occur will be likely to
cause (A) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material
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respect, or (B) any material failure of any party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement.
6.4 Purchase Information. The Company will keep the Purchasers
informed of the Company's best estimate of the earliest date on which the
registration statement by which the Company will register the Shares sold
hereunder pursuant to the terms of the Registration Rights Agreement (the
"Registration Statement"), or any post-effective amendment thereto, will become
effective and will notify each Purchaser (i) when the Registration Statement or
any post-effective amendment to such Registration Statement is filed or becomes
effective, (ii) of any request by the SEC for an amendment or any supplement to
such Registration Statement or any related prospectus, or any other information
request by any other governmental agency directly relating to the offering, and
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or of any order preventing or suspending the use
of any related prospectus or the initiation or threat of any proceeding for
that purpose.
6.5 Restrictions on Subsequent Offerings. The Company agrees that
during the period beginning on the Closing Date and ending on and including the
date which is ninety (90) days after the Closing Date (the "Limitation
Period"), the Company will not issue and sell (i) shares of the Company's
common stock at a price per share of less than $4.25, or (ii) any options,
warrants or any other securities of the Company convertible or exchangeable
into or for common stock of the Company at a conversion or exercise price per
share of less than $4.25 (such sales to be collectively referred to as a
"Subsequent Dilutive Offering"). In the event the Company shall, during the
Limitation Period, complete a Subsequent Dilutive Offering, the Company shall,
within ten (10) days of the closing of the Subsequent Dilutive Offering, pay to
each Purchaser an amount equal to the number of Shares purchased by such
Purchaser multiplied by the difference between $4.25 and the effective purchase
price per common share (as of the date of sale) of the securities sold in the
Subsequent Dilutive Offering; provided, however, that Subsequent Dilutive
Offerings shall be deemed to not include any of the following: (i) securities
issued in connection with a loan or leasing arrangement with a commercial bank,
equipment lessor or insurance company, (ii) any transaction involving the
Company's issuances of securities (A) as consideration in a merger or
consolidation, (B) in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital) or (C) as
consideration for the acquisition of a business, product, license or other
assets by the Company, (iii) the issuance of securities upon exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof and (iv) the grant of additional options or
warrants, or the issuance of additional securities, under any Company stock
option plan, restricted stock plan or stock purchase plan for the benefit of
the Company's employees, directors or consultants.
6.6 Stock Option Matters. The Company shall, within thirty (30) days
of the Closing Date, adopt such amendments to the Company's stock option plans,
restricted stock plans, stock purchase plans and its Bylaws to provide (i)
that, unless approved by the holders of a majority of the voting stock (voting
together as a single class), the Company shall not grant any stock options with
an exercise price of less than 100% of the fair market value of the underlying
stock on the date of grant, (ii) that these amendments may not be further
amended or repealed without the affirmative
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vote of the holders of a majority of the voting stock of the Company (voting
together as a single class) and (iii) that, unless approved by the holders of a
majority of the voting stock (voting together as a single class), the Company
will not amend, waive or repeal Sections 8.8 and 8.9 of its Bylaws. The Company
shall provide to each of the Purchasers such documents or instruments used to
effect the foregoing provisions of this Section 6.6 promptly upon such
amendments being brought into force.
6.7 Securities Compliance. The Company shall do all things necessary
and advisable as is necessary to enable the Purchasers to utilize Form S-3 for
the sale of their Registrable Securities as contemplated in the Registration
Rights Agreement.
6.8 No Integration. The Company will not make any offers or sales of
any security (other than the Shares) under circumstances that would cause the
offering of the Shares to be integrated with any other offering of securities
by the Company (i) for the purposes of any stockholder approval provision
applicable to the Company or its securities or (ii) for purposes of any
registration requirement under the Securities Act.
6.9 Efforts. The Company shall, and shall cause its respective
subsidiaries to, cooperate and use their best efforts to take, or cause to be
taken, all appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, their best efforts to (i) obtain, prior to the
Closing Date, all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and its subsidiaries, (ii) defend against and respond to any
action, suit, proceeding or investigation relating to the transactions
contemplated by this Agreement and (iii) provide such assistance as is
reasonably requested by any of the Purchasers in preparing any filings and
obtaining any approvals required under the Hart-Scott-Rodino Antitrust Act of
1976 prior to the Closing Date, in each case as are necessary for consummation
of the transactions contemplated by this Agreement and to fulfill the
conditions to the sale of Shares.
7. Conditions Precedent to Closing
7.1 Conditions to the Obligation of Each Purchaser to Consummate the
Closing. The obligation of each Purchaser to consummate the Closing and to
purchase and pay for the Shares being purchased by it pursuant to this
Agreement is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein of the Company shall be true and correct on and as
of the Closing Date in all material respects with the same force and effect as
though made on and as of the Closing Date (it being understood and agreed by
each Purchaser that, in the case of any representation and warranty of the
Company contained herein which is hereinabove qualified by application thereto
of a materiality standard, such representation and warranty need be true and
correct in all respects in order to satisfy as to such representation or
warranty the condition precedent set forth in the foregoing provisions of this
Section 7.1(a)).
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(b) Performance. The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed by it or with which it is
required to have complied on or before the Closing Date.
(c) Rights Agreement. The Registration Rights Agreement shall have
been executed and delivered by the Company.
(d) Stockholder Approval. The Company shall have satisfied all
stockholder approval requirements of applicable law, rule or regulation,
including provisions of the Nasdaq Stock Market, or any other exchange or
market on which the Common Stock is then listed or traded, with respect to the
issuance of 20% or more of the Company's Common Stock.
(e) Series B Preferred Approval. The Company shall have received the
required approval of the holders of the outstanding Series B Convertible
Preferred Stock of the Company for the sale of the Shares.
(f) HSR Act. All waiting periods, if any, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 relating to the transactions contemplated
hereby will have expired or terminated early.
(g) Adverse Change. Since the date of the financial statements
included in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2000, no event which had, or could be reasonably expected to have, a
Material Adverse Effect, and no material adverse change in the financial
condition or prospects of the Company, shall have occurred.
(h) Absence of Litigation. No proceeding challenging this Agreement
or the transactions contemplated hereby, or seeking to prohibit, alter, prevent
or materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
(i) Consents. The purchase of and payment for the Shares by each
Purchaser shall not be prohibited by any law or governmental order or
regulation. All necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
governmental or administrative agency or of any other person with respect to
any of the transactions contemplated hereby shall have been duly obtained or
made and shall be in full force and effect.
(j) Proceedings and Documents. All instruments and corporate
proceedings in connection with the transactions specifically contemplated by
this Agreement to be consummated at the Closing shall be satisfactory in form
and substance to each Purchaser, and each Purchaser shall have received copies
(executed or certified, as may be appropriate) of all documents which such
Purchaser may have reasonably requested in connection with such transactions.
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(k) Securities Compliance. The Company shall have taken all action
necessary to comply with any federal or state securities laws applicable to the
transactions contemplated by this Agreement.
(l) Compliance Certificate. The Company shall deliver to each
Purchaser at the Closing a certificate signed by the President of the Company
stating that the Company has complied with or satisfied each of the conditions
to the Purchaser's obligation to consummate the Closing set forth in Sections
7.1(a) - (b), 7.1(d) - (i) and 7.1(k), unless waived in writing by such
Purchaser.
(m) Opinion of Counsel. The Company shall deliver to each Purchaser
at Closing an opinion of counsel for the Company, dated as of the Closing Date,
in the form attached hereto as Exhibit B.
(n) Stock Certificate. The Company shall deliver to each Purchaser at
the Closing a duly executed stock certificate evidencing the shares of Common
Stock purchased by such Purchaser at the Closing.
7.2 Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the Closing and to issue
and sell the Shares at the Closing is subject to the satisfaction of the
following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties contained herein of the Purchasers shall be true and correct on and
as of the Closing Date in all material respects with the same force and effect
as though made on and as of the Closing Date (it being understood and agreed by
the Company that, in the case of any representation and warranty of each
Purchaser contained herein which is hereinabove qualified by application
thereto of a materiality standard, such representation and warranty need be
true and correct in all respects in order to satisfy as to such representation
or warranty the condition precedent set forth in the foregoing provisions of
this Section 7.2(a)).
(b) Rights Agreement. The Registration Rights Agreement shall have
been executed and delivered by each Purchaser.
(c) Performance. Each Purchaser shall have performed all obligations
and conditions herein required to be performed or observed by such Purchaser on
or prior to the Closing Date.
(d) Stockholder Approval. The Company shall have received the
approval of its stockholders required under applicable law, including
provisions of the Nasdaq Stock Market, or any other exchange or market on which
the Common Stock is then listed or traded, with respect to the issuance of
twenty percent (20%) or more of the Company's Common Stock.
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(e) Series B Preferred Approval. The Company shall have received the
required approval of the holders of the outstanding Series B Convertible
Preferred Stock of the Company for the sale of the Shares.
(f) HSR Act. All waiting periods, if any, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 relating to the transactions contemplated
hereby will have expired or terminated early.
(g) Absence of Litigation. No proceeding challenging this Agreement
or the transactions contemplated hereby, or seeking to prohibit, alter, prevent
or materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
(h) Investors' Questionnaire. Each Purchaser shall have executed and
delivered to the Company and the Placement Agent a Purchaser's Questionnaire,
in the form attached hereto as Exhibit C, pursuant to which each Purchaser
shall provide information necessary to confirm each of the Purchasers' status
as an "accredited investor" (as such term is defined in Rule 501 promulgated
under the Securities Act)".
(i) Payment. Each Purchaser shall have paid the Purchase Price set
forth in Section 2.3.
8. Termination; Liabilities Consequent Thereon.
8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereunder abandoned by the Company with respect to a
Purchaser and/or by a Purchaser (but, in either case, only with respect to that
Purchaser) at any time prior to the Closing only as follows:
(a) by a Purchaser, upon notice to the Company, if the conditions set
forth in Section 7.1 shall not have been satisfied on or prior to January 31,
2001;
(b) by the Company, upon notice to a Purchaser, if the conditions set
forth in Section 7.2 shall not have been satisfied with respect to such
Purchaser on or prior to January 31, 2001;
(c) at any time by mutual agreement of the Company and a Purchaser;
(d) by a Purchaser, if there has been any material breach of any
representation or warranty or any material breach of any covenant of the
Company contained herein and the same has not been cured within 15 days after
notice thereof, (it being understood and agreed by such Purchaser that, in the
case of any representation or warranty of the Company contained herein which is
hereinabove qualified by application thereto of a materiality standard, such
representation or warranty will be deemed to have been breached for purposes of
this Section 8.1(d)
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<PAGE>
if such representation or warranty was not true and correct in all respects at
the time such representation or warranty was made by the Company); or
(e) by the Company with respect to a Purchaser, if there has been any
material breach of any representation, warranty or any material breach of any
covenant by such Purchaser contained herein and the same has not been cured
within 15 days after notice thereof (it being understood and agreed by the
Company that, in the case of any representation and warranty of a Purchaser
contained herein which is hereinabove qualified by application thereto of a
materiality standard, such representation or warranty will be deemed to have
been breached for purposes of this Section 8.1(e) if such representation or
warranty was not true and correct in all respects at the time such
representation or warranty was made by such Purchaser).
8.2 Liability. Any termination pursuant to this Section 8 shall be
without liability on the part of any party, unless such termination is the
result of a material breach of this Agreement by a party to this Agreement
(which is not cured as permitted under Section 8.1(d) or 8.1(e)) in which case
such breaching party shall remain liable for such breach notwithstanding any
termination of this Agreement.
9. Miscellaneous Provisions.
9.1 Public Statements or Releases. None of the parties to this
Agreement shall make, issue, or release any announcement, whether to the public
generally, or to any of its suppliers or customers, with respect to this
Agreement or the transactions provided for herein, or make any statement or
acknowledgment of the existence of, or reveal the status of, this Agreement or
the transactions provided for herein, without the prior consent of the other
parties, which shall not be unreasonably withheld or delayed, provided, that
nothing in this Section 9.1 shall prevent any of the parties hereto from making
such public announcements as it may consider necessary in order to satisfy its
legal obligations, but to the extent not inconsistent with such obligations, it
shall provide the other parties with an opportunity to review and comment on
any proposed public announcement before it is made.
9.2 Further Assurances. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other party to better evidence and reflect the transactions described
herein and contemplated hereby, and to carry into effect the intents and
purposes of this Agreement.
9.3 Rights Cumulative. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise of any right, power or remedy shall neither constitute
the exclusive election thereof nor the waiver of any other right, power or
remedy available to such party.
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<PAGE>
9.4 Notices
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, overnight courier
or telecopy or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. Any notice or other communication
delivered by hand shall be deemed to have been delivered and received on the
date on which such notice or communication is actually received, or in the case
of certified mail deposited with the appropriate postal authorities on the date
when such notice or communication is actually received, and in any other case
shall be deemed to have been delivered on the date on which such notice or
communication is actually received.
(b) All correspondence to the Company shall be addressed as follows:
Cardiac Pathways Corporation
995 Benecia Avenue
Sunnyvale, California 94086
Telephone: (408) 737-0505
Facsimile: (408) 737-1700
Attention: Eldon Bullington, Chief Financial Officer
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Telephone: (650) 493-9300
Facsimile: (650) 845-5000
Attention: Chris F. Fennell
(c) All correspondence to any Purchaser shall be sent to such
Purchaser at the address set forth across from such Purchaser's name on
Schedule A.
(d) Any entity may change the address to which correspondence to it
is to be addressed by notification as provided for herein.
9.5 Captions. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
9.6 Severability. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of
any jurisdiction, the invalid or unenforceable part or provisions shall be
replaced with a provision which accomplishes, to the extent
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possible, the original business purpose of such part or provision in a valid
and enforceable manner, and the remainder of this Agreement shall remain
binding upon the parties hereto.
9.7 Governing Law; Injunctive Relief
(a) This Agreement shall be governed by and construed in accordance
with the internal and substantive laws of California and without regard to any
conflicts of laws concepts which would apply the substantive law of some other
jurisdiction.
(b) Each of the parties hereto acknowledges and agrees that damages
will not be an adequate remedy for any material breach or violation of this
Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled
to seek, in any state or federal court in the County of Alameda, State of
California, equitable relief of a kind appropriate in light of the nature of
the ongoing or threatened Irreparable Breach, which relief may include, without
limitation, specific performance or injunctive relief; provided, however, that
if the party bringing such action is unsuccessful in obtaining the relief
sought, the moving party shall pay the non-moving party's reasonable costs,
including attorney's fees, incurred in connection with defending such action.
Such remedies shall not be the parties' exclusive remedies, but shall be in
addition to all other remedies provided in this Agreement.
9.8 Amendments. This Agreement may not be amended, modified or
terminated, and no rights or provisions may be waived, except with the written
consent of the Company and those Purchasers holding a majority of the aggregate
number of Shares held by all of the Purchasers. Notwithstanding the foregoing,
the Company may at its election, by notifying the Purchasers, amend this
Agreement to add as parties to this Agreement additional purchasers of Common
Stock pursuant to Section 2.4 hereof.
9.9 Expenses. Each party will bear its own costs and expenses in
connection with this Agreement, except that the Company shall pay the legal
fees and expenses of Shartsis, Friese & Ginsburg LLP ("SF&G"), counsel for Van
Wagoner Capital Management and its Affiliates (collectively, "VWCM"),
regardless of whether or not the Closing occurs, in an amount not to exceed
$25,000 incurred in connection with the negotiation and preparation of this
Agreement, the Registration Rights Agreement and the transactions contemplated
hereby and thereby, which payment shall be made within ten (10) days after
receiving an invoice therefor. For the avoidance of doubt, no fees paid to SF&G
pursuant to this Section 9.9 shall be deemed to be payment to counsel for the
"Investors" (as defined in the Registration Rights Agreement) as required to be
made by the Company pursuant to Section 8 of the Registration Rights Agreement.
9.10 Assignment.
(a) The rights and obligations of the parties hereto shall inure to the benefit
of and shall be binding upon the authorized successors and permitted assigns of
each party. Neither party may assign its rights or obligations under this
Agreement or designate another person (i) to perform all or part of its
obligations under this Agreement or (ii) to have all or part of its rights
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<PAGE>
and benefits under this Agreement, in each case without the prior written
consent of the other party. In the event of any assignment in accordance with
the terms of this Agreement, the assignee shall specifically assume and be
bound by the provisions of the Agreement by executing and agreeing to an
assumption agreement reasonably acceptable to the other party.
(b) Notwithstanding anything set forth herein, the Company may assign
all of its rights and obligations under this Agreement in connection with a
merger or similar reorganization or the sale of all or substantially all of its
assets. This Agreement shall survive any such merger or reorganization of
either party with or into, or such sale of assets to, another party and no
consent for such merger, reorganization or sale shall be required hereunder.
(c) Notwithstanding anything set forth herein, a Purchaser may assign
all of its rights and obligations under this Agreement to an affiliated pooled
investment partnership or fund under common investment management with such
Purchaser without the consent of the Company.
9.11 Survival. The respective representations and warranties given by
the parties hereto, and the other covenants and agreements contained herein,
shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of two years, without regard to any
investigation made by any party.
9.12 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or oral.
No modification, alteration, waiver or change in any of the terms of this
Agreement shall be valid or binding upon the parties hereto unless made in
writing and in accordance with the provisions of Section 9.8 hereof.
9.13 Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement or the Registration Rights
Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
9.14 Exculpation Among Purchasers. Each Purchaser acknowledges that
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling person, officers, directors, partners, agents or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Common Stock or the execution of or performance under any of
this Agreement or the Registration Rights Agreement.
9.15 Representation. Each party hereto acknowledges that (a) VWCM has
retained SF&G to represent VWCM in connection with this Agreement, the
Registration Rights Agreement and the transaction related hereto and thereto,
(b) the interests of VWCM may not necessarily coincide with the interests of
other Purchasers, (c) SF&G does not represent any Purchaser other
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<PAGE>
than VWCM, and (d) each Purchaser has consulted with, or has had an opportunity
to consult with, its own legal counsel and has not relied on SF&G for legal
counsel in connection with this Agreement, the Registration Rights Agreement
and the transactions related hereto and thereto.
9.16 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, and all of which
together shall be considered one and the same agreement.
[Remainder of this Page is Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
CARDIAC PATHWAYS CORPORATION
By: /s/ Thomas M. Prescott
------------------------------------------
Name: Thomas M. Prescott
Title: President and Chief Executive Officer
VAN WAGONER FUNDS
By: /s/ Audrey Lam Buchner
------------------------------------------
Name: Audrey Lam Buchner
Title: Managing Director
VAN WAGONER CAPITAL PARTNERS, L.P.
by Van Wagoner Management LLC, its General
Partner
By: /s/ Audrey Lam Buchner
------------------------------------------
Name: Audrey Lam Buchner
Title:
VAN WAGONER CROSSOVER FUND, LP
by Van Wagoner Management LLC, its General
Partner
By: /s/ Audrey Lam Buchner
------------------------------------------
Name: Audrey Lam Buchner
Title:
<PAGE>
BANK OF AMERICA VENTURES
By: /s/ Mark Brooks
------------------------------------------
Name: Mark Brooks
Title: Principal
BA VENTURE PARTNERS V
By: /s/ Mark Brooks
------------------------------------------
Name: Mark Brooks
Title: General Partner
STATE OF WISCONSIN INVESTMENT BOARD
By: /s/ John F. Nelson
------------------------------------------
Name: John F. Nelson
Title: Investment Director
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ David Greenhouse
------------------------------------------
Name: David Greenhouse
Title: Managing Director
<PAGE>
MORGAN STANLEY VENTURE PARTNERS III, L.P.
By: Morgan Stanley Venture Partners III, LLC
its General Partner
By: Morgan Stanley Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ Debra Abramovitz
------------------------------------------
Name: Debra Abramovitz
Title: Principal
MORGAN STANLEY VENTURE INVESTORS III, L.P.
By: Morgan Stanley Venture Partners III, LLC
its General Partner
By: Morgan Stanley Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ Debra Abramovitz
------------------------------------------
Name: Debra Abramovitz
Title: Principal
THE MORGAN STANLEY VENTURE
PARTNERS ENTREPRENEUR FUND, L.P.
By: Morgan Stanley Venture Partners III, LLC
its General Partner
By: Morgan Stanley Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ Debra Abramovitz
------------------------------------------
Name: Debra Abramovitz
Title: Principal
<PAGE>
FARIA FUND LTD
By: /s/ Mai Pogue
------------------------------------------
Name: Mai N. Pogue
Title: Investment Manager
TRELLIS HEALTH VENTURES, L.P.,
By: THV Management LLC, the General Partner
of Trellis Health Ventures, L.P.
By: /s/ Paul J. Felton
------------------------------------------
Name: Paul J. Felton
Title: Manager
FOGARTY FAMILY REVOCABLE TRUST
By: /s/ Thomas J. Fogarty
------------------------------------------
Name: Thomas J. Fogarty, M.D.
Title: Trustee
<PAGE>
Schedule A
Schedule of Purchasers
Common Aggregate
Purchaser Shares Proceeds
--------- ------ ---------
Van Wagoner Funds 3,529,412 $15,000,000
345 California Street, Suite 2450
San Francisco, CA 94104
Bank of America Ventures 500,000 $2,125,000
BA Venture Partners V 88,235 $375,000
950 Tower Lane, Suite 700
Foster City, CA 94404 Subtotal: 588,235 $2,500,000
Morgan Stanley Venture Partners III, L.P. 516,062 $2,193,264
Morgan Stanley Venture Investors III, L.P. 49,551 $210,592
The Morgan Stanley Venture Partners Entrepreneur
Fund, L.P. 22,622 $96,144
1221 Avenue of the Americas
New York, NY 10020 Subtotal: 588,235 $2,500,000
State of Wisconsin Investment Board 588,235 $2,500,000
Lake Terrace
121 E Wilson Street
PO Box 7842
Madison, WI 53707
Special Situations Private Equity Fund, L.P. 470,588 $2,000,000
153 East 53rd Street, Floor 55
New York, NY 10022
Faria Fund Ltd. 47,059 $200,000
c/o Pogue Capital Management
60 Patterson Avenue
Greenwich, CT 06830
Thomas J. Fogarty, M.D. 23,529 $100,000
3270 Alpine Road
Portola Valley, CA 94028
Trellis Health Ventures, L.P. 23,529 $100,000
1 Sansome Street, Suite 2100
San Francisco, CA 94104
Total 5,858,823 $24,900,000
<PAGE>
Schedule B
DISCLOSURE SCHEDULE
The following are the exceptions to the representations and warranties of
the Company set forth in Section 3 of the Agreement. Each exception applies to
each section of the Agreement to which it pertains, whether or not the specific
section numbers are indicated below. All capitalized terms used and not
otherwise defined shall have the meanings given them in the Agreement.
Section 3.2 - Capitalization
The SEC Documents currently disclose that each share of Series B
Convertible Preferred Stock of the Company is convertible into 200 shares of
Common Stock. After the Closing, each share of Series B Convertible Preferred
Stock will be convertible into 218 shares of Common Stock.
The Company will be asking the shareholders, at the upcoming Annual
Shareholders' meeting currently scheduled for December 20, 2000, to approve an
amendment to the 1998 Employee Stock Purchase Plan to provide for a one-time
increase of 50,000 shares of Common Stock to the number of shares available for
sale under this plan, which increase will be effective November 1, 2000, and to
modify the annual automatic increase in the number of shares available for
grant under the 1998 Employee Stock Purchase Plan by increasing it from (i) the
lesser of 40,000 shares, or 1.5% of the outstanding shares of the Company, to
(ii) the lesser of 150,000, 3.0% of the outstanding shares of the Company, or a
lesser amount determined by the Board of Directors.
Section 3.17 - Japan Lifeline License Agreement for Ensemble/Trio
The Company is in process of negotiating a non-exclusive license with
Japan Lifeline Company LTD ("JLL") to manufacture and market its 2F Ensemble
Catheter and Trio Enducer products in Japan. JLL is currently purchasing from
the Company and distributing these products into the Japan market. The
agreement would have no material impact on FY2001 revenues. FY2002 revenues
would be reduced by approximately $1.5M or less than 5% of projected revenues
for the year. The Company would receive a series of payments totaling $1.6M
within six months of the effective date of the agreement for technology
transfer and royalties. Based on sales volume the Company would have the
opportunity to earn additional royalties over the life of the agreement
(projected to be in place for approximately 10 years). The Company and JLL
would continue the existing distribution relationship for the Company's Radii,
Chilli, and RPM products as well as other potential new products.
<PAGE>
Exhibit A
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
November 3, 2000 by and among (i) Cardiac Pathways Corporation, a Delaware
corporation (the "Company"), (ii) Van Wagoner Funds, Van Wagoner Capital
Partners, L.P., Van Wagoner Crossover Fund, BankAmerica Ventures, BA Venture
Partners V, Morgan Stanley Venture Partners III, L.P., Morgan Stanley Venture
Investors III, L.P., and The Morgan Stanley Venture Partners Entrepreneur Fund,
L.P., State of Wisconsin Investment Board, Special Situations Fund, Pogue
Capital Management and Trellis Health Ventures, L.P. (collectively the "Initial
Investors") and (iii) each person or entity that subsequently becomes a party
to this Agreement pursuant to, and in accordance with, (x) the provisions of
Section 2.4 of the Stock Purchase Agreement (defined below) or (y) the
provisions of Section 13 hereof (collectively, the "Investor Permitted
Transferees" and each individually an "Investor Permitted Transferee").
WHEREAS, the Company has agreed to issue and sell to the Initial
Investors, and the Initial Investors have agreed to purchase from the Company,
5,835,293 shares (the "Purchased Shares") of the Company's common stock, $0.001
par value per share (the "Common Stock"), all upon the terms and conditions set
forth in that certain Stock Purchase Agreement, dated of even date herewith,
between the Company and the Initial Investors (the "Stock Purchase Agreement");
and
WHEREAS, the terms of the Stock Purchase Agreement provide that it shall
be a condition precedent to the closing of the transactions thereunder for the
Company and the Initial Investors to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below:
"Board" shall mean the board of directors of the Company.
"Closing" shall have the meaning ascribed to such term in the Stock
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and all of the rules and regulations promulgated thereunder.
"Investors" shall mean, collectively, the Initial Investors and the
Investor Permitted Transferees; provided, however, that the term "Investors"
shall not include any Initial Investors or any of the Investor Permitted
Transferees that cease to own or hold any Registrable Shares.
"Majority Holders" shall mean, at the relevant time of reference thereto,
those Investors holding more than fifty percent (50%) of the Registrable Shares
held by all of the Investors.
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<PAGE>
"Qualifying Holder" shall have the meaning ascribed thereto in Section 13
hereof.
"Registrable Shares" shall mean (i) the Purchased Shares and any shares
issued in respect thereof, (ii) shares of the Company's Common Stock issuable
on exercise of the Warrants (as defined in Section 4 hereof) issued pursuant to
this Agreement and (iii) any Common Stock of the Company issued as (or issuable
on the conversion or exercise of any warrant, right or other security that is
issued as) a dividend or other distribution with respect to, or in exchange
for, or in replacement of, the shares referenced in clauses (i) and (ii) above.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act and
any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
all of the rules and regulations promulgated thereunder.
2. EFFECTIVENESS; TERMINATION. This Agreement shall become effective and
legally binding only if the Closing occurs. This Agreement shall terminate and
be of no further force or effect, automatically and without any action being
required of any party hereto, if the Stock Purchase Agreement is terminated
pursuant to Section 8 thereof.
3. MANDATORY REGISTRATION.
(a) Within thirty days after the Closing, the Company will prepare and
file with the SEC a registration statement on Form S-3 (or, if Form S-3 is not
then available to the Company, on such form of registration statement that is
then available to effect a registration of all Registrable Shares, subject to
the consent of the Investors holding at least a majority of the Registrable
Shares) for the purpose of registering under the Securities Act all of the
Registrable Shares for resale by, and for the account of, the Investors as
selling stockholders thereunder (the "Registration Statement"). The
Registration Statement shall permit the Investors to offer and sell, on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, any
or all of the Registrable Shares. The Company agrees to use best efforts to
cause the Registration Statement to become effective as soon as practicable
after filing. The Company shall be required to keep the Registration Statement
effective until such date that is the earlier of (i) the date when all of the
Registrable Shares registered thereunder shall have been sold, (ii) such time
as all the Registrable Shares held by the Investors can be sold pursuant to
Rule 144 within a given three-month period without volume limitation and
without compliance with the registration requirements of the Securities Act or
(iii) the second anniversary of the date on which the Registration Statement is
declared effective, subject to extension as set forth below (such date is
referred to herein as the "Mandatory Registration Termination Date").
Thereafter, the Company shall be entitled to withdraw the Registration
Statement and the Investors shall have no further right to offer or sell any of
the Registrable Shares pursuant to the Registration Statement (or any
prospectus relating thereto).
(b) The offer and sale of the Registrable Shares pursuant to the
Registration Statement shall not be underwritten.
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<PAGE>
4. WARRANT COVERAGE.
(a) In the event the Company has not filed the Registration Statement with
the SEC within thirty (30) days after the Closing, the Company shall issue to
each Investor a warrant in the form attached hereto as Exhibit A (each, a
"Warrant" and, collectively, the "Warrants") to acquire that number of shares
of Common Stock of the Company equal to (i) three percent (3%) of the aggregate
amount of shares of common stock sold pursuant to the Stock Purchase Agreement,
multiplied by, (ii) a fraction, the numerator of which is the number of shares
of Common Stock acquired by that Investor pursuant to the Stock Purchase
Agreement and the denominator of which is equal to the aggregate number of
shares of Common Stock sold pursuant to the Stock Purchase Agreement. The
exercise price of each such Warrant will be $4.25 per share of Common Stock
issuable on exercise of the Warrant (as adjusted for stock splits, stock
combinations, reorganizations and the like effected after the date of this
Agreement).
(b) At the end of each thirty (30) day period (or a portion thereof),
after the initial thirty day period referred to in Section 4(a), that the
Registration Statement has not been filed with the SEC, the Company shall issue
to each Investor a Warrant to acquire that number of shares of Common Stock
equal to (i) three percent (3%) of the aggregate amount of shares of common
stock sold pursuant to the Stock Purchase Agreement, multiplied by, (ii) a
fraction, the numerator of which is the number of shares of Common Stock
acquired by that Investor pursuant to the Stock Purchase Agreement and the
denominator of which is equal to the aggregate number of shares of Common Stock
sold pursuant to the Stock Purchase Agreement, multiplied by (iii) a fraction,
the numerator of which is the number of days during such thirty-day period
before the date on which the Registration Statement was filed with the SEC and
the denominator of which is thirty. The exercise price of each such Warrant
will be $4.25 per share of Common Stock issuable on exercise of the Warrant (as
adjusted for stock splits, stock combinations, reorganizations and the like
effected after the date of this Agreement).
(c) In the event the Registration Statement has not been declared
effective by the SEC within seventy (70) days after the Closing, the Company
shall issue to each Investor a Warrant to acquire that number of shares of
Common Stock of the Company equal to (i) three percent (3%) of the aggregate
amount of shares of common stock sold pursuant to the Stock Purchase Agreement,
multiplied by, (ii) a fraction, the numerator of which is the number of shares
of Common Stock acquired by that Investor pursuant to the Stock Purchase
Agreement and the denominator of which is equal to the aggregate number of
shares of Common Stock sold pursuant to the Stock Purchase Agreement. The
exercise price of each such Warrant will be $4.25 per share of Common Stock
issuable on exercise of the Warrant (as adjusted for stock splits, stock
combinations, reorganizations and the like effected after the date of this
Agreement).
(d) At the end of each thirty-day period (or a portion thereof), after the
initial seventy (70) day period referred to in Section 4(c), that the
Registration Statement has not been declared effective by the SEC, the Company
shall issue to each Investor a Warrant to acquire that number of shares of
Common Stock equal to (i) three percent (3%) of the aggregate amount of shares
of common stock sold pursuant to the Stock Purchase Agreement, multiplied by,
(ii) a fraction, the numerator of which is the number of shares of Common Stock
acquired by that Investor pursuant to the Stock Purchase Agreement and the
denominator of which is equal to the
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<PAGE>
aggregate number of shares of Common Stock sold pursuant to the Stock Purchase
Agreement, multiplied by (iii) a fraction, the numerator of which is the number
of days during such thirty-day period before the date on which the Registration
Statement was declared effective by the SEC and the denominator of which is
thirty. The exercise price of each such Warrant will be $4.25 per share of
Common Stock issuable on exercise of the Warrant (as adjusted for stock splits,
stock combinations, reorganizations and the like effected after the date of
this Agreement).
(e) The Company shall execute such other and further certificates,
instruments and other documents as may be reasonably requested by the Investors
or reasonably necessary or proper to implement, complete and perfect the
Investors' rights under this Section 4 and Section 3 and to freely trade the
Registrable Shares without limitation or restriction imposed or created by the
Company or securities law.
5. "PIGGYBACK" REGISTRATION RIGHTS.
(a) If, at any time after the Mandatory Registration Termination Date, the
Company proposes to register any of its Common Stock under the Securities Act,
whether as a result of a primary or secondary offering of Common Stock or
pursuant to registration rights granted to holders of other securities of the
Company (whether as a demand registration right or a Form S-3 registration
right, but excluding in all cases any registrations to be effected on Forms S-4
or S-8 or other applicable successor Forms), the Company shall, each such time,
give to the Investors holding Registrable Shares written notice of its intent
to do so. If, within twenty (20) days of giving such notice, the Company shall
receive from an Investor a written request to include its Registrable Shares in
such registration, the Company shall use commercially reasonable efforts to
cause to be included in such registration the Registrable Shares of such
selling Investor, to the extent requested to be registered; provided, however,
that (i) the number of Registrable Shares proposed to be sold by such selling
Investor will be at least ten percent (10%) of the total number of Registrable
Shares then held by such participating selling Investor (or a lesser percentage
if the gross proceeds to the selling Investor resulting from the sale of such
Registrable Shares will equal at least $2,000,000), (ii) such selling Investor
may not include its Registrable Shares in such registration if the Investor can
sell all such Registrable Shares pursuant to Rule 144 within a given
three-month period without volume limitation and without compliance with the
registration requirements of the Securities Act, (iii) such selling Investor
agrees to sell those of its Registrable Shares to be included in such
registration in the same manner and on the same terms and conditions as the
other shares of Common Stock which the Company proposes to register and (iv) in
the event (x) the registration is to include shares of Common Stock to be sold
for the account of the Company or any party exercising registration rights
pursuant to any other agreement with the Company and (y) the proposed managing
underwriter advises the Company that in its opinion the inclusion of such
selling Investor's Registrable Shares (without any reduction in the number of
shares to be sold for the account of the Company or such party exercising
registration rights) is likely to affect materially and adversely the success
of the offering or the price that would be received for any shares of Common
Stock offered, then the rights of such selling Investor shall be as provided in
Section 5(b) hereof.
(b) If a registration pursuant to Section 5(a) hereof involves an
underwritten offering and the managing underwriter shall advise the Company in
writing that, in its opinion,
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<PAGE>
the number of shares of Common Stock requested by the Investors to be included
in such registration is likely to affect materially and adversely the success
of the offering or the price that would be received for any shares of Common
Stock offered in such offering, then, notwithstanding anything in Section 5(a)
to the contrary, the Company shall only be required to include in such
registration, to the extent of the number of shares of Common Stock which the
Company is so advised can be sold in such offering, (i) first, the number of
shares of Common Stock proposed to be included in such registration for the
account of the Company and/or any stockholders of the Company (other than the
Investors) that have exercised demand registration rights, in accordance with
the priorities, if any, then existing among the Company and/or such
stockholders of the Company with registration rights (other than the
Investors), and (ii) second, the shares of Common Stock requested to be
included in such registration by all other stockholders of the Company who have
piggyback registration rights (including, without limitation, the Investors),
pro rata among such other stockholders (including, without limitation, the
Investors) on the basis of the number of shares of Common Stock that each of
them beneficially owns.
(c) In connection with any offering involving an underwriting of shares,
the Company shall not be required under Section 5 hereof or otherwise to
include the Registrable Shares of any Investor therein unless such Investor
accepts and agrees to the terms of the underwriting, which shall be reasonable
and customary, as agreed upon between the Company and the underwriters selected
by the Company.
6. OBLIGATIONS OF THE COMPANY. In connection with the Company's obligation
under Section 3 and 5 hereof to file a Registration Statement with the SEC and
to use its best efforts to cause the Registration Statement to become effective
as soon as practicable after filing, the Company shall, as expeditiously as
reasonably possible, subject to Section 12 hereof:
(a) Prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may
be necessary to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Shares covered by the Registration
Statement;
(b) Furnish to the selling Investors such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents (including,
without limitation, prospectus amendments and supplements as are prepared by
the Company in accordance with Section 6(a) above) as the selling Investors may
reasonably request in order to facilitate the disposition of such selling
Investors' Registrable Shares;
(c) Notify the selling Investors, at any time when a prospectus relating
to the Registration Statement is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in or relating to the Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading; and, thereafter, subject to Section 12 hereof the Company will
promptly prepare (and, when completed, deliver to each selling Investor) a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Shares, such
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<PAGE>
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
provided that upon such notification by the Company, the selling Investors will
not offer or sell Registrable Shares until the Company has notified the selling
Investors that it has prepared a supplement or amendment to such prospectus and
delivered copies of such supplement or amendment to the selling Investors (it
being understood and agreed by the Company that the foregoing proviso shall in
no way diminish or otherwise impair the Company's obligation to promptly
prepare a prospectus amendment or supplement as above provided in this Section
6(c) and deliver copies of same as above provided in Section 6(b) hereof);
(d) Use commercially reasonable efforts to register and qualify the
Registrable Shares covered by the Registration Statement under such other
securities or Blue Sky laws of all states requiring such securities or Blue Sky
registration or qualification, provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions, and provided further that (notwithstanding anything in this
Agreement to the contrary with respect to the bearing of expenses) if any
jurisdiction in which any of such Registrable Shares shall be qualified shall
require that expenses incurred in connection with the qualification therein of
any such Registrable Shares be borne by the selling Investors, then the selling
Investors shall, to the extent required by such jurisdiction, pay their pro
rata share of such qualification expenses;
(e) Cause all such Registrable Shares registered hereunder to be listed on
each securities exchange on which securities of the same class issued by the
Company are then listed;
(f) Provide a transfer agent and registrar for all Registrable Shares
registered hereunder and a CUSIP number for all such Registrable Shares, in
each case not later than the effective date of such registration; and
(g) If an Investor's Registrable Shares are being sold through an
underwritten public offering, the Company shall furnish to each selling
Investor whose shares of Registrable Shares are being registered pursuant to
Section 5, on the date that such Registrable Shares are delivered to the
underwriters for sale, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters and (ii) a "comfort" letter signed by
the independent public accountants who have certified the Company's financial
statements included in the Registration Statement, covering substantially the
same matters with respect to the Registration Statement (and the prospectus
included therein) and with respect to events subsequent to the date of the
financial statements, as are customarily covered in accountants' letters
delivered to the underwriters in underwritten public offerings of securities
addressed to the underwriters.
7. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall furnish to the Company such information regarding
them and the securities held by them as the Company shall reasonably request
and as shall be required in order to effect any registration by the Company
pursuant to this Agreement.
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<PAGE>
8. EXPENSES OF REGISTRATION. All expenses incurred in connection with the
registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing
expenses, fees and disbursements of counsel for the Company, and the reasonable
fees and disbursements of one counsel for the selling Investors selected by the
selling Investors, shall be borne by the Company.
9. DELAY OF REGISTRATION. The Investors shall not take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.
10. INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each selling Investor (including, without limitation, the partners or
officers, directors and stockholders of such Investor, legal counsel and
accountants for such Investor), any investment banking firm acting as an
underwriter for the selling Investors, any broker/dealer acting on behalf of
any selling Investors and each officer and director of such selling Investor,
such underwriter, such broker/dealer and each person, if any, who controls such
selling Investor, such underwriter or broker/dealer within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act, the
Exchange Act, and other federal or state securities laws, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
(i) arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, (ii) arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading or (iii) arise out of
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any other federal or state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any other
federal or state securities law; and will reimburse such selling Investor, such
underwriter, broker/dealer or such officer, director or controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 10(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed), nor
shall the Company be liable in any such case for any such loss, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission made in connection
with the Registration Statement, any preliminary prospectus or final prospectus
relating thereto or any amendments or supplements to the Registration Statement
or any such preliminary prospectus or final prospectus, in reliance upon and in
conformity with written information furnished expressly for use in connection
with the Registration Statement or any such preliminary prospectus or final
prospectus by the selling Investors, any underwriter for them, any
broker/dealer acting on their behalf or controlling person with respect to
them.
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<PAGE>
(b) To the extent permitted by law, each selling Investor will severally
and not jointly indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement, each person,
if any, who controls the Company within the meaning of the Securities Act, any
investment banking firm acting as underwriter for the Company or the selling
Investors, or any broker/dealer acting on behalf of the Company or any selling
Investors, and all other selling Investors against any losses, claims, damages
or liabilities to which the Company or any such director, officer, controlling
person, underwriter, or broker/dealer or such other selling Investor may become
subject to, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or any preliminary prospectus or final
prospectus, relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
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, in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, in reliance upon and in conformity with written information
furnished by the selling Investor expressly for use in connection with the
Registration Statement, or any preliminary prospectus or final prospectus; and
such selling Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter, broker/dealer or other selling Investor in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that the liability of each selling Investor hereunder (when
aggregated with amounts contributed, if any, pursuant to Section 10(d)) shall
be limited to the proceeds (net of underwriting discounts and commissions, if
any) received by such selling Investor from the sale of Registrable Shares
covered by the Registration Statement, and provided, further, however, that the
indemnity agreement contained in this Section 10(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld or delayed).
(c) Promptly after receipt by an indemnified party under this Section 10
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 10, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in and,
to the extent the indemnifying party desires, jointly with any other
indemnifying party similarly noticed, to assume at its expense the defense
thereof with counsel mutually satisfactory to the indemnifying parties with the
consent of the indemnified party which consent will not be unreasonably
withheld, conditioned or delayed. In the event that the indemnifying party
assumes any such defense, the indemnified party may participate in such defense
with its own counsel and at its own expense, provided, however, that the
counsel for the indemnifying party shall act as lead counsel in all matters
pertaining to such defense or settlement of such claim and the indemnifying
party shall only pay for such indemnified party's reasonable legal fees and
expenses for the period prior to the date of its participation on such defense.
The failure to notify an indemnifying party promptly of the commencement of any
such
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<PAGE>
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
10, but the omission so to notify the indemnifying party will not relieve him
of any liability which he may have to any indemnified party otherwise other
than under this Section 10.
(d) If the indemnification provided in this Section 10 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense 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 that shall have resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations; provided that in no event shall any contribution by an Investor
under this Section 10(d), when aggregate with amounts paid, if any, pursuant to
Section 10(b), exceed the proceeds (net of underwriting discounts and
commissions, if any) from the sale of Registrable Shares hereunder received by
such Investor. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(e) The obligations of the Company and Investors under this Section 10
shall survive the completion of any offering of Registrable Shares in a
Registration Statement under Sections 3 and 5, and otherwise.
(f) Notwithstanding anything to the contrary herein, the indemnifying
party shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such claim, suit or proceeding
and such settlement does not contain any admission of fault by the indemnified
party.
11. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit the Investors to sell the Registrable Shares to the
public without registration, the Company agrees to use best efforts: (i) to
make and keep public information available, as those terms are understood and
defined in the General Instructions to Form S-3, or any successor or substitute
form, and in Rule 144, (ii) to file with the SEC in a timely manner all reports
and other documents required to be filed by an issuer of securities registered
under the Securities Act or the Exchange Act, (iii) as long as any Investor
owns any Registrable Shares, to furnish in writing upon such Investor's request
a written statement by the Company that it has complied with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, and to
furnish to such Investor a copy of the most recent annual or quarterly report
of the Company, and such other reports, documents and other information as may
be reasonably requested in availing such Investor of any rule or regulation of
the SEC permitting the selling of any such Registrable
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<PAGE>
Shares without registration and (iv) undertake any additional actions
reasonably necessary to maintain the availability of the Registration Statement
or the use of Rule 144.
12. DEFERRAL. Notwithstanding anything in this Agreement to the contrary,
if the Company shall furnish to the selling Investors a certificate signed by
the President or Chief Executive Officer of the Company stating that the Board
of Directors of the Company has made the good faith determination (i) that
continued use by the selling Investors of the Registration Statement for
purposes of effecting offers or sales of Registrable Shares pursuant thereto
would require, under the Securities Act, premature disclosure in the
Registration Statement (or the prospectus relating thereto) of material,
nonpublic information concerning the Company, its business or prospects or any
proposed material transaction involving the Company, (ii) that such premature
disclosure would be materially adverse to the Company, its business or
prospects or any such proposed material transaction or would make the
successful consummation by the Company of any such material transaction
significantly less likely and (iii) that it is therefore essential to suspend
the use by the Investors of such Registration Statement (and the prospectus
relating thereto) for purposes of effecting offers or sales of Registrable
Shares pursuant thereto, then the right of the selling Investors to use the
Registration Statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registrable Shares pursuant thereto shall be
suspended for a period (the "Suspension Period") of not more than 30 days after
delivery by the Company of the certificate referred to above in this Section
12; provided, however, that the Company may not utilize this right more than
two (2) times in any twelve month period and that the Company shall not
register shares for its own account during the Suspension Period except in
connection with a merger or the registration of shares relating to a stock
option, stock purchase or similar plan. During the Suspension Period, none of
the Investors shall offer or sell any Registrable Shares pursuant to or in
reliance upon the Registration Statement (or the prospectus relating thereto).
13. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Investor
under this Agreement shall be transferred or assigned to any person unless (i)
such person is a Qualifying Holder (as defined below), and (ii) such person
agrees to become a party to, and be bound by, all of the terms and conditions
of, this Agreement by duly executing and delivering to the Company an
Instrument of Adherence in the form attached as Exhibit B hereto. For purposes
of this Section 13, the term "Qualifying Holder" shall mean, with respect to
any Investor, (i) any partner thereof, (ii) any corporation or partnership
controlling, controlled by, under common control or under common investment
management with, such Investor or any partner thereof, or (iii) any other
direct transferee from such Investor of at least 50% of those Registrable
Shares held or that may be acquired by such Investor. None of the rights of any
Investor under this Agreement shall be transferred or assigned to any Person
(including, without limitation, a Qualifying Holder) that acquires Registrable
Shares in the event that and to the extent that such Person is eligible to
resell such Registrable Shares pursuant to Rule 144(k) of the Securities Act or
may otherwise resell all such Registrable Shares pursuant to an exemption from
the registration provisions of the Securities Act.
14. ENTIRE AGREEMENT. This Agreement (including the exhibits hereto)
constitutes and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof, and it also supersedes any and all
prior negotiations, correspondence, agreements or understandings with respect
to the subject matter hereof.
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<PAGE>
15. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated, and no
rights or provisions may be waived, except with the written consent of the
Majority Holders and the Company. Notwithstanding the foregoing, the Company
may at its election by notifying the Initial Investors amend this Agreement to
add as parties to this Agreement additional purchasers of Common Stock pursuant
to the Stock Purchase Agreement.
(b) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of California, and shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors or assigns, provided that the terms and
conditions of Section 13 hereof are satisfied. This Agreement shall also be
binding upon and inure to the benefit of any transferee of any of the
Registrable Shares provided that the terms and conditions of Section 13 hereof
are satisfied. Notwithstanding anything in this Agreement to the contrary, if
at any time any Investor shall cease to own any Registrable Shares, all of such
Investor's rights under this Agreement shall immediately terminate.
(c) (i) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by mail, courier (overnight or same day) or telecopy or
delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the
date of its actual receipt.
(ii) All correspondence to the Company shall be addressed as follows:
Cardiac Pathways Corporation
995 Benecia Avenue
Sunnyvale, CA 94086
Attention: Eldon Bullington
Title: Chief Financial Officer
Fax: (408) 720-2171
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Chris F. Fennell
Fax (650) 845-5000
(iii) All correspondence to any Investor shall be sent to the most
recent address furnished by the Investor to the Company.
(d) Any Investor may change the address to which correspondence to it is
to be addressed by notification as provided for herein.
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<PAGE>
(e) The parties acknowledge and agree that in the event of any breach of
this Agreement, remedies at law may be inadequate, and each of the parties
hereto shall be entitled to seek specific performance of the obligations of the
other parties hereto and such appropriate injunctive relief as may be granted
by a court of competent jurisdiction.
(f) If any action at law or in equity is necessary to enforce or interpret
any of the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
(g) If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, such provision shall be
replaced with a provision that accomplishes, to the extent possible, the
original business purpose of such provision in a valid and enforceable manner,
and the balance of the Agreement shall be interpreted as if such provision were
so modified and shall be enforceable in accordance with its terms.
(h) Registrable Shares held or acquired by affiliated entities or persons
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.
(i) This Agreement may be executed in a number of counterparts, any of
which together shall for all purposes constitute one Agreement, binding on all
the parties hereto notwithstanding that all such parties have not signed the
same counterpart.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
CARDIAC PATHWAYS CORPORATION
By: /s/ Thomas M. Prescott
------------------------------------------
Name: Thomas M. Prescott
Title: President and Chief Executive Officer
VAN WAGONER FUNDS
By: /s/ Audrey Lam Buchner
------------------------------------------
Name: Audrey Lam Buchner
Title: Managing Director
VAN WAGONER CAPITAL PARTNERS, L.P.
by Van Wagoner Management LLC, its General
Partner
By: /s/ Audrey Lam Buchner
------------------------------------------
Name: Audrey Lam Buchner
Title:
VAN WAGONER CROSSOVER FUND, LP
by Van Wagoner Management LLC, its General
Partner
By: /s/ Audrey Lam Buchner
------------------------------------------
Name: Audrey Lam Buchner
Title:
<PAGE>
BANK OF AMERICA VENTURES
By: /s/ Mark Brooks
------------------------------------------
Name: Mark Brooks
Title: Principal
BA VENTURE PARTNERS V
By: /s/ Mark Brooks
------------------------------------------
Name: Mark Brooks
Title: General Partner
STATE OF WISCONSIN INVESTMENT BOARD
By: /s/ John F. Nelson
------------------------------------------
Name: John F. Nelson
Title: Investment Director
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ David Greenhouse
------------------------------------------
Name: David Greenhouse
Title: Managing Director
<PAGE>
MORGAN STANLEY VENTURE PARTNERS III, L.P.
By: Morgan Stanley Venture Partners III, LLC
its General Partner
By: Morgan Stanley Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ Debra Abramovitz
------------------------------------------
Name: Debra Abramovitz
Title: Principal
MORGAN STANLEY VENTURE INVESTORS III, L.P.
By: Morgan Stanley Venture Partners III, LLC
its General Partner
By: Morgan Stanley Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ Debra Abramovitz
------------------------------------------
Name: Debra Abramovitz
Title: Principal
THE MORGAN STANLEY VENTURE PARTNERS
ENTREPRENEUR FUND, L.P.
By: Morgan Stanley Venture Partners III, LLC
its General Partner
By: Morgan Stanley Venture Capital III, Inc.,
its Institutional Managing Member
By: /s/ Debra Abramovitz
------------------------------------------
Name: Debra Abramovitz
Title: Principal
<PAGE>
FARIA FUND LTD
By: /s/ Mai N. Pogue
------------------------------------------
Name: Mai N. Pogue
Title: Investment Manager
TRELLIS HEALTH VENTURES, L.P.,
By: THS Management LLC, the General Partner
of Trellis Health Ventures, L.P.
By: /s/ Paul J. Felton
------------------------------------------
Name: Paul J. Felton
Title: Manager
FOGARTY FAMILY REVOCABLE TRUST
By: /s/ Thomas J. Fogarty
------------------------------------------
Name: Thomas J. Fogarty, M.D.
Title: Trustee
<PAGE>
Exhibit A
FORM OF WARRANT
THIS WARRANT AND THE SHARES OF EQUITY SECURITIES THAT MAY BE PURCHASED PURSUANT
TO THE EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
TRANSFERRED UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH OFFER, SALE OR TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS FOR
SUCH OFFER, SALE OR TRANSFER IS AVAILABLE.
Void after ___________ __, ____
Cardiac pathways corporation
Common STOCK PURCHASE WARRANT
No. ____ - _____ ________ __, ____
THIS CERTIFIES THAT, for value received, ______________ (together with its
permitted assignees, the "Holder") is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase (subject to
Section 1 hereof) up to ________ shares (the "Shares") of fully paid and
nonassessable Common Stock, par value $0.001 per share, of Cardiac Pathways
Corporation, a Delaware corporation (the "Company"), at an exercise price of
$4.25 per Share (as the same may be adjusted from time to time in accordance
with Section 4 hereof, the "Exercise Price").
The Warrant is one of a series of warrants (collectively, the
"Warrants") issued to certain investors of the Company, dated of even date
herewith, in accordance with the provisions of Section 4 of the Registration
Rights Agreement entered into between the Company and the Investors named
therein and dated as of November 3, 2000 (the "Registration Rights Agreement").
Any terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Registration Rights Agreement.
1. Expiration of Warrant. This Warrant shall expire and shall no longer be
exercisable at 5:00 p.m., local time in Santa Clara, California, on ________
__, _____ [5 years after the date of grant of the Warrant].
<PAGE>
2. Exercise of Warrant.
(a) General. This Warrant may be exercised by the Holder as to the whole
or any lesser number of the Shares covered hereby, upon surrender of this
Warrant to the Company at its principal executive office together with the
Notice of Exercise and Investment Representation Statement attached hereto as
Exhibit A, duly completed and executed by the Holder, and payment to the
Company of the aggregate exercise price for the Shares to be purchased, as
determined in accordance with the terms hereof, in the form of (i) a check made
payable to the Company, (ii) a wire transfer according to the Company's
instructions, or (iii) any combination of (i) and (ii). The exercise of this
Warrant shall be deemed to have been effected on the day on which the Holder
surrenders this Warrant to the Company and satisfies all of the requirements of
this Section 2. Upon such exercise, the Holder will be deemed a stockholder of
record of those Shares for which the warrant has been exercised with all rights
of a stockholder (including, without limitation, all voting rights with respect
to such Shares and all rights to receive any dividends with respect to such
Shares). If this Warrant is to be exercised in respect of less than all of the
Shares covered hereby, the Holder shall be entitled to receive, and the Company
shall issue, a new warrant covering the number of Shares in respect of which
this Warrant shall not have been exercised and for which it remains subject to
exercise. Such new warrant shall be in all other respects identical to this
Warrant.
(b) Net Issue Exercise. In lieu of exercising this Warrant via cash
payment, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of election to
exercise by means of a net issuance exercise, in which event the Company shall
issue to the Holder a number of Shares computed using the following formula:
X = Y (A - B)
---------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares purchasable under this
Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
cancelled (at the date of such calculation).
A = the Fair Market Value (as defined below) of one
Share (at the date of such calculation).
B = the exercise price for the Shares (as adjusted to
the date of such calculation).
If the above calculation results in a negative number, then no Shares
shall be issued or issuable upon conversion of this Warrant.
(c) Fair Market Value. For purposes of this Section 2, the "Fair Market
Value" of one Share shall be determined as follows: (i) if the Common Stock of
the Company is traded on a securities exchange, the Fair Market Value of one
Share shall be deemed to be the average of the
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<PAGE>
closing prices of the Common Stock of the Company on such exchange over the
30-day period ending five business days prior to the date of determination of
Fair Market Value; (ii) if the Common Stock of the Company is traded on the
Nasdaq Stock Market or other over-the-counter system, the fair market value of
the Common Stock shall be deemed to be the average of the closing bid and asked
prices of the Common Stock of the Company over the 30-day period ending five
business days prior to the date of determination of Fair Market Value; and
(iii) if there is no public market for the Common Stock of the Company, then
fair market value shall be determined by mutual agreement of the Holder and the
Company.
(d) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time, but in any event, not later
than ten business days after the date of exercise.
3. Covenants of the Company. The Company covenants and agrees that: (i)
all Shares that may be issued upon the exercise of the rights represented by
the Warrants will, upon issuance pursuant to the terms and conditions herein,
be fully paid and nonassessable, free from all preemptive rights of any
stockholders, free from all taxes, liens and charges with respect to the issue
thereof and free and clear of any restrictions on transfer (other than under
the Securities Act and state securities laws); and (ii) that during the period
within which the rights represented by this Warrant may be exercised, the
Company will, at all times, have authorized, and reserved for the purpose of
the issue upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant. The offer, sale and issuance of the Shares
issued on the exercise of this Warrant shall be exempt from the registration
requirements of the Securities Act and applicable state securities laws, and
neither the Company nor any authorized agent acting on its behalf has taken or
will take any action hereafter that would cause the loss of such exemption.
4. Adjustment of Exercise Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise
Price therefor shall be subject to adjustment from time to time upon the
occurrence as follows:
(a) Merger. If at any time there shall be a merger or consolidation of the
Company with or into another corporation where the Company is not the surviving
corporation or as a result of which all of the outstanding capital stock of the
Company is exchanged for capital stock of another corporation or other entity,
then, as a part of such merger or consolidation, 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 aggregate Exercise Price then in effect, the number of shares of stock
or other securities or property of the surviving or successor corporation or
other entity resulting from such merger or consolidation (or the corporation
the capital stock of which is issued in exchange for the capital stock of the
Company), to which a holder of the stock deliverable upon exercise of this
Warrant would have been entitled in such merger or consolidation if this
Warrant had been exercised immediately before such merger or consolidation and
the surviving or successor corporation or other entity in such merger or
consolidation shall duly execute and deliver to the Holder a supplement hereto
acknowledging such corporation's or entity's obligations under this Warrant. In
any such case, appropriate adjustment shall be made in the
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<PAGE>
application of the provisions of this Warrant with respect to the rights and
interests of the Holder after the merger or consolidation.
(b) Reclassification, etc. If the Company shall, at any time, by
subdivision, combination, or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into a different number of securities of the same class or classes or
into the same or a different number of securities of any other class or
classes, the Exercise Price shall be adjusted such that 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 which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
(c) Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist, (i) the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination, and (ii) the number of securities issuable upon exercise of this
Warrant shall be proportionately increased in the case of a split or
subdivision or proportionately decreased in the case of a combination.
(d) Payment of Dividend. In case the Company shall make or issue, or shall
fix a record date for the determination of eligible holders entitled to
receive, a dividend or other distribution payable with respect to the Shares
that is payable in (i) securities of the Company (other than issuances with
respect to which adjustment is made under this Section 4), or (ii) assets
(other than cash dividends paid or payable solely out of retained earnings),
then, and in each such case, the Holder, upon exercise of this Warrant at any
time after the consummation, effective date or record date of such event, shall
receive, in addition to the Shares issuable upon such exercise prior to such
date, the securities or such other assets of the Company to which the Holder
would have been entitled upon such date if the Holder had exercised this
Warrant immediately prior thereto (all subject to further adjustment as
provided in this Warrant).
5. Notice of Adjustments; Notices. Whenever the Exercise Price or number
of Shares issuable upon exercise hereof shall be adjusted pursuant to Section 4
hereof, the Company shall issue a written notice 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 notice to be mailed to the Holder. The form of
this Warrant need not be changed because of any adjustment in the Exercise
Price or the number of Shares issuable upon its exercise. The Company shall
provide the Holder with not less than 10 days prior written notice of (i) any
event resulting in an adjustment under Section 4 and (ii) any sale, lease or
other disposition of all or substantially all of the assets of the Company.
6. 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 such Holder would otherwise
be entitled, such Holder shall be entitled, at its option, to receive either
(a) a
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<PAGE>
cash payment equal to the excess of the Fair Market Value for such fractional
share above the Exercise Price for such fractional share (as mutually
determined by the Company and the Holder) or (b) a whole share if the Holder
tenders the Exercise Price for one whole share.
7. Compliance with Securities Act; Disposition of Warrant or Shares of
Common Stock.
(a) Compliance with Securities Act. The Holder, by acceptance hereof,
agrees that this Warrant, and the Shares to be issued upon exercise hereof are
being acquired for investment and that such Holder will not offer, sell or
otherwise dispose of this Warrant, or any Shares except under circumstances
which will not result in a violation of the Securities Act or any applicable
state securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Shares so purchased are being acquired
for investment and not with a view toward distribution or resale in violation
of the Securities Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:
"the securities represented hereby HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") or any state securities laws and MAY
NOT BE OFFERED, SOLD, PLEDGED OR TRANSFERRED UNLESS (I) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH OFFER, SALE OR TRANSFER
OR (II) THERE IS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT or any applicable state securities laws FOR SUCH OFFER,
SALE OR TRANSFER IS AVAILABLE."
Said legend shall be removed by the Company, upon the request of a Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated. In addition, in connection with the issuance of this
Warrant, the Holder specifically represents to the Company by acceptance of
this Warrant as follows:
(i) The Holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant. The
Holder is acquiring this Warrant for its own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Securities Act.
(ii) The Holder understands that this Warrant has not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Holder's investment intent as expressed herein.
-5-
<PAGE>
(iii) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Securities Act and
qualified under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available. The Holder is aware of
the provisions of Rule 144, promulgated under the Securities Act.
(iv) The Holder is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.
(b) Transfer of Warrant. This Warrant may be transferred or assigned by
the Holder, in whole or in part, provided that the Holder (i) provides written
notice to the Company prior to such transfer or assignment, and (ii) delivers
to the Company, on the Company's reasonable request, a written opinion of such
Holder's counsel reasonably satisfactory to the Company (or other evidence
reasonably satisfactory to the Company) that such transfer does not require
registration or qualification under the Securities Act and any applicable state
securities law; provided, however, that this Warrant may be transferred by (i)
a Holder which is a partnership or limited liability company to a partner,
former partner, member, former member, or other affiliate of such partnership
or limited liability company, as the case may be, or (ii) a Holder to any
corporation or partnership controlling, controlled by, or under common
investment management with such Holder, if, in each case, (a) the transferee
agrees in writing to be subject to the terms of this Warrant; and (b) the
Holder delivers notice of such transfer to the Company. The rights and
obligations of the Company and the Holder under this Warrant shall be binding
upon and benefit their respective permitted successors, assigns, heirs,
administrators and transferees.
8. Rights as Stockholders; Information. No Holder, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities which 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 receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
9. Lost Warrants or Stock Certificates. The Company covenants to the
Holder that, upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding
-6-
<PAGE>
day not a Saturday or a Sunday or a legal holiday.
11. Miscellaneous.
(a) Successors and Assigns. This Warrant shall be binding upon any
successors or assigns of the Company.
(b) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
the conflict of laws principles thereof.
(c) Attorneys' Fees. In any litigation, arbitration, or court proceeding
between the Company and a Holder relating hereto, the prevailing party shall be
entitled to reasonable fees and expenses incurred in enforcing this Warrant,
including attorney's fees.
(d) Amendments. This Warrant may be amended and the observance of any term
of this Warrant may be waived only with the written consent of the Company and
the Majority Holders.
(e) Notices
(i) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, overnight courier
or telecopy or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. Any notice or other communication
delivered by hand shall be deemed to have been delivered and received on the
date on which such notice or communication is actually received, or in the case
of certified mail deposited with the appropriate postal authorities on the date
when such notice or communication is actually received, and in any other case
shall be deemed to have been delivered on the date on which such notice or
communication is actually received.
(ii) All correspondence to the Company shall be addressed as follows:
Cardiac Pathways Corporation
995 Benecia Avenue
Sunnyvale, California 94086
Facsimile: (408) 737-1700
Attention: Eldon Bullington, Chief Financial Officer
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Facsimile: (650) 845-5000
Attention: Chris F. Fennell
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<PAGE>
(iii) All correspondence to any Holder shall be sent to such Holder
at the address set forth under such Holder's name on the signature page hereto.
(iv) Any party may, at any time, by providing ten days' advance notice
to the other party hereto, designate any other address in substitution of an
address established pursuant to the foregoing.
(f) Severability. If one or more provisions of this Warrant are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
(g) Registration Rights. All Shares issuable upon exercise of this Warrant
shall be deemed to be "Registrable Shares" or such other definition of
securities entitled to registration rights pursuant to the Registration Rights
Agreement, and are entitled, subject to the terms and conditions of that
agreement, to all registration rights granted to holders of Registrable Shares
thereunder.
(h) No Impairment. The Company will not, by amendment of its Amended and
Restated Certificate of Incorporation or Bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights
of the Holder of this Warrant against impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable Shares upon exercise of this Warrant.
[Remainder of this page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Holder have caused this Common
Stock Purchase Warrant to be executed as of the date first above written.
CARDIAC PATHWAYS CORPORATION
By:
Name:
Title
ACKNOWLEDGED AND AGREED:
[Name of HOLDER]
By:
Name:
Title:
Address:
Telephone:
Facsimile:
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
COMMON STOCK WARRANT AND
INVESTMENT REPRESENTATION STATEMENT
To: Cardiac Pathways Corporation
1. Exercise Notice. The undersigned hereby elects to purchase _________
shares of Common Stock (the "Shares") of Cardiac Pathways Corporation (the
"Company") pursuant to the terms of the attached Warrant, and (check the
applicable box):
-------------------------------------------------------------------------------
[ ] Tenders herewith payment of the exercise price in
full in the form of cash or a certified or official bank check
in same-day funds in the amount of $____________ for ____________
shares of such securities and any transfer taxes payable pursuant to
the terms of the Warrant.
-------------------------------------------------------------------------------
[ ] Elects the Net Issue Exercise option pursuant to
Section 2(b) of the Warrant, and accordingly
requests delivery of a net of ______________ shares
of such securities.
-------------------------------------------------------------------------------
2. Investment Representation Statement. Any terms used herein and not
otherwise defined shall have the meanings ascribed thereto in that certain
Registration Rights Agreement entered into between the Company and those
Investors named therein and dated as of November 3, 2000 (the "Registration
Rights Agreement"). In connection with the purchase of the above-listed Shares,
the undersigned represents to the Company the following:
(a) The Holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach
an informed and knowledgeable decision to acquire the Shares. The Holder is
acquiring the Shares for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Securities Act.
(b) The Holder understands that these Shares have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Holder's investment intent as expressed herein.
(c) The Holder further understands that these Shares must be held
indefinitely unless subsequently registered under the Securities Act and
qualified under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available. The Holder is aware of
the provisions of Rule 144, promulgated under the Securities Act.
<PAGE>
(d) The Holder is an "accredited investor" as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act.
3. Legend. The undersigned understands the instruments evidencing the
Shares may bear the following legend, in addition to any legend required by
applicable state securities laws:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR TRANSFERRED UNLESS (I) THERE
IS AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH OFFER, SALE OR
TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAWS FOR SUCH OFFER, SALE OR TRANSFER IS AVAILABLE."
4. Name of Registered Certificate Holder. Please issue a certificate or
certificates representing said shares of Stock in the name of the undersigned:
Name:
Address:
IN WITNESS WHEREOF, the Holder has executed this Notice of Exercise and
Investment Representation Statement effective this ___ day of ________, ______.
WARRANT HOLDER
By:
Name:
Title:
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Common Stock Purchase Warrant, execute this form and
supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
(Please Print)
whose address is
(Please Print)
Dated: ____________, ____
Holder's Signature:
Holder's Address:
Signature Guaranteed:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE>
Exhibit B
INSTRUMENT OF ADHERENCE
Reference is hereby made to that certain Registration Rights Agreement,
dated as of _________, 2000, among Cardiac Pathways Corporation, a Delaware
corporation (the "Company"), the Initial Investors and the Investor Permitted
Transferees, as amended and in effect from time to time (the "Registration
Rights Agreement"). Capitalized terms used herein without definition shall have
the respective meanings ascribed thereto in the Registration Rights Agreement.
The undersigned, in order to become the owner or holder of ___________
shares of common stock, par value $0.001 per share (the "Common Stock"), of the
Company, hereby agrees that, from and after the date hereof, the undersigned
has become a party to the Registration Rights Agreement in the capacity of an
Investor Permitted Transferee, and is entitled to all of the benefits under,
and is subject to all of the obligations, restrictions and limitations set
forth in, the Registration Rights Agreement that are applicable to Investor
Permitted Transferees. This Instrument of Adherence shall take effect and shall
become a part of the Registration Rights Agreement immediately upon execution.
Executed under seal as of the date set forth below under the laws of
___________________.
Signature:
-------------------------------
Name:
Title:
Accepted:
COMPANY
By:
----------------------------------------------------------------
Name: [name]
Title: President and Chief Executive Officer
Date:
--------------------------------
<PAGE>
Exhibit B
FORM OF OPINION
December 20, 2000
TO EACH OF THE PURCHASERS LISTED ON SCHEDULE A
TO THE CARDIAC PATHWAYS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 7, 2000
Ladies and Gentlemen:
Reference is made to the Common Stock Purchase Agreement, dated as of
November 7, 2000 (the "Purchase Agreement"), complete with all exhibits and
schedules attached thereto, by and among Cardiac Pathways Corporation, a
Delaware corporation (the "Company"), and each of you (collectively, the
"Investors"), which provides for the issuance by the Company to the Investors
of shares of Common Stock of the Company (the "Shares"). This opinion is
rendered to you pursuant to Section 7.1(m) of the Purchase Agreement, and all
terms used herein have the meanings defined for them in the Purchase Agreement
unless otherwise defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Purchase Agreement, the Registration Rights Agreement
(collectively, with the Purchase Agreement, the "Agreements") and the issuance
of the Shares. As such counsel, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for the
purpose of rendering this opinion. In addition, we have examined, among other
things, originals or copies of such corporate records of the Company,
certificates of public officials and such other documents and questions of law
that we consider necessary or advisable for the purpose of rendering this
opinion. In such examination we have assumed the genuineness of all signatures
on original documents, the authenticity and completeness of all documents
submitted to us as originals, the conformity to original documents of all
copies submitted to us as copies thereof, the legal capacity of natural
persons, and the due execution and delivery of all documents (except as to due
execution and delivery by the Company) where due execution and delivery are a
prerequisite to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge", "known to us"
or similar language with reference to matters of fact means that, after an
examination of the SEC Documents and the documents made available to us by the
Company, and after inquiries of officers of the Company, but without any
further independent factual investigation, we find no reason to believe that
the opinions expressed herein are factually incorrect. Further, the expression
"to our knowledge", "known to us" or similar language with reference to matters
of fact refers to the current actual knowledge of the attorneys of this firm
who are presently employed by the firm and have worked on matters for the
Company. Except to the extent expressly set forth herein or as we otherwise
believe to be necessary to our opinion, we have not undertaken any independent
investigation to determine the existence or absence of any fact, and no
inference as to our knowledge of the existence or absence of any fact should be
drawn from our representation of the Company or the rendering of the opinion
set forth below.
<PAGE>
For purposes of this opinion, we are assuming that you have all the
requisite power and authority, and have taken any and all necessary corporate
or partnership action, to execute and deliver the Agreements, and we are
assuming that the representations and warranties made by you in the Purchase
Agreement and pursuant thereto are true and correct. We are also assuming that
you have purchased the Shares for value, in good faith and without notice of
any adverse claims within the meaning of the California Uniform Commercial
Code.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or state laws
affecting the rights of creditors.
(b) We express no opinion as to the effect or availability of rules of law
governing specific performance, injunctive relief or other equitable remedies
(regardless of whether any such remedy is considered in a proceeding at law or
in equity).
(c) We express no opinion as to compliance with applicable anti-fraud
provisions of federal or state securities laws.
(d) We express no opinion as to the enforceability of the indemnification
provisions of the Registration Rights Agreement to the extent the provisions
thereof may be subject to limitations of public policy and the effect of
applicable statutes and judicial decisions.
(e) We are members of the Bar of the State of California and, except as
set forth in paragraphs 5 and 6 below with respect to the securities laws of
other states, we express no opinion as to any matter relating to the laws of
any jurisdiction other than the federal laws of the United States of America,
the laws of the State of California and the General Corporation Law of the
State of Delaware. To the extent this opinion addresses applicable securities
laws of states other than the State of California, we have not retained nor
relied on the opinion of counsel admitted to the bar of such states, but rather
have relied on compilations of the securities laws of such states contained in
reporting services presently available to us.
(f) In rendering the opinion set forth in paragraph 4 below, we have not
made any independent investigation of court records to determine whether any
actions have been filed.
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<PAGE>
Based upon and subject to the foregoing, and except as set forth in the
Disclosure Schedule to the Agreement, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of Delaware, and is in good standing
under such laws. The Company has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Company is qualified to do business as a foreign corporation and
is in good standing in each state in which the failure to be so qualified or in
good standing would result in a Material Adverse Effect.
2. The Company has the requisite legal and corporate power to execute and
deliver the Agreements and to issue and sell the Shares under the Purchase
Agreement, and to carry out and perform its obligations under the terms of the
Agreements.
3. All corporate action on the part of the Company, its directors and its
stockholders necessary for the authorization, execution, delivery and
performance of the Agreements by the Company, the authorization, sale, issuance
and delivery of the Shares and the performance of the Company's obligations
under the Agreements has been taken. The Agreements have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable in accordance with their terms. The Shares have been
validly issued and are fully paid and nonassessable and the certificates
representing the Shares are in due and proper form and have been validly
executed by the officers of the Company named thereon.
4. To our knowledge, there are no actions, suits, proceedings or
investigations pending or threatened against the Company, or its properties
before any court or governmental agency in any case or in the aggregate, are
likely to result in a Material Adverse Effect, or which question the validity
or enforceability of, or seeks to enjoin or invalidate, the Agreements or any
action to be taken by the Company in connection therewith.
5. Except as obtained and in effect at the Closing, no consent, approval
or authorization of or designation or filing with any governmental authority on
the part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares or the
consummation of any other transaction contemplated by the Agreements, except
the qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) under applicable blue sky laws (but
excluding jurisdictions outside of the United States) of the offer and sale of
the Shares that may, under applicable law, be made on or after the Closing
Date. Our opinion herein is otherwise subject to the timely and proper
completion of all filings and other actions contemplated herein where such
filings and actions are to be undertaken on or after the date hereof.
6. Subject to the accuracy of the Purchasers' representations in Section 4
of the Purchase Agreement and their responses (if any) to the Company's
inquiries, we are of the opinion that the offer, sale and issuance of the
Shares in conformity with the terms of the Purchase Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended, and the qualification requirements of
applicable state securities laws.
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<PAGE>
7. The Company's executionz and delivery of, and performance of its
obligations under, the Agreements do not and will not violate any provision of
the Company's Amended and Restated Certificate of Incorporation or Bylaws, or
any provision of any applicable federal or state law, rule or regulation. To
our knowledge, the Company's execution, delivery and performance of and
compliance with the Agreements do not (i) violate, or consitute a default under
any material contract, agreement, instrument, judgment or decree binding upon
the Company, or (ii) breach or otherwise violate any existing obligation of or
restriction on the Company under any order, judgment or decree of any
California or federal court or governmental authority binding on the Company.
This opinion is solely for your benefit and may not be relied on by, nor may
copies be delivered to, any other person without our prior written consent. We
assume no obligation to inform you of any facts, circumstances, events or
changes in the law that may hereafter be brought to our attention that may
alter, affect or modify the opinion expressed herein.
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
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<PAGE>
Exhibit C
INVESTOR QUESTIONNAIRE
CARDIAC PATHWAYS CORPORATION
(ALL INFORMATION FURNISHED IN COMPLETING THIS
QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY)
Cardiac Pathways Corporation (the "Company") will use the responses to
this questionnaire to qualify prospective investors for purposes of federal and
state securities laws.
Please complete, sign, date and return one copy of this questionnaire as
soon as possible to Don Harrison, Wilson, Sonsini, Goodrich & Rosati, 650 Page
Mill Road, Palo Alto, CA 94304.
If the answer to any question below is "none" or "not applicable", please
so indicate.
Your answers will be kept confidential at all times. However, by signing
this questionnaire, you agree that the Company may present this questionnaire
to such parties as it deems appropriate to establish the availability of
exemptions from registration under state and federal security laws.
<PAGE>
I. INDIVIDUAL INVESTORS
(INVESTORS OTHER THAN INDIVIDUALS SHOULD TURN TO PAGE 6)
1. PERSONAL
Name
(Exact name as it should appear on stock certificate)
Amount of proposed investment
Residence Address
Home Telephone
Date of Birth
Social Security Number
2. BUSINESS
Occupation
Number of Years
Present Employer
Position/Title
Business Address
Business Telephone
3. RESIDENCE INFORMATION
(a) Set forth in the space provided below the state(s) in which you
have maintained your principal residence during the past three
years and the dates during which you resided in each state.
(b) Are you registered to vote in, or do you have a driver's license
issued by, or do you maintain a residence in any other state? If
yes, in which state(s)?
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<PAGE>
4. INCOME
(a) Do you reasonably expect either your own income from all sources
during the current year to exceed $200,000 or the joint income
of you and your spouse (if married) from all sources during the
current year to exceed $300,000?
Yes No If not, please specify
----- ----- amount
(b) What percentage of your income as shown above is anticipated to
be derived from sources other than salary?
(c) Was either your yearly income from all sources during each of
the last two years in excess of $200,000 or was the joint income
of you and your spouse (if married) from all sources during each
of such years in excess of $300,000?
Yes No
----- -----
If no, please specify amount for:
Last Year:
Year Before Last:
5. NET WORTH
Will your net worth as of the date you purchase the securities
offered, together with the net worth of your spouse (if married), be
in excess of $1,000,000?
Yes No If not, please specify
----- ----- amount
6. EDUCATION
Please describe your educational background and degrees obtained, if
any.
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<PAGE>
7. AFFILIATION
If you have any pre-existing personal or business relationship with
the Company or any of its officers, directors or controlling persons,
please describe the nature and duration of such relationship.
8. BUSINESS AND FINANCIAL EXPERIENCE
(a) Please describe in reasonable detail the nature and extent of
your business, financial and investment experience which you
believe gives you the capacity to evaluate the merits and risks
of the proposed investment and the capacity to protect your
interests.
(b) Are you purchasing the securities offered for your own account
and for investment purposes only?
Yes No
----- -----
If no, please state for whom you are investing and/or the reason
for investing.
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<PAGE>
9. FINANCIAL ADVISORS
In evaluating this investment, will you use the services of any of the
following advisors? (If so, please identify, providing address and
telephone number.)
Accountant:
Attorney:
Other:
PLEASE TURN TO PAGE 8 AND SIGN AND DATE THIS QUESTIONNAIRE
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<PAGE>
II. NON-INDIVIDUAL INVESTORS
(Please answer Part II only if the purchase is proposed to be undertaken by a
corporation, partnership or other entity.)
IF INVESTMENT WILL BE MADE BY MORE THAN ONE AFFILIATED ENTITY, PLEASE COMPLETE
A COPY OF THIS QUESTIONNAIRE FOR EACH ENTITY.
1. IDENTIFICATION
Name
(Exact name as it will appear on stock certificate)
Address of Principal
Place of Business
Jurisdiction of Formation
or Incorporation
Contact Person
Telephone Number ( )
Type of Entity
(corporation, partner-
ship, trust, etc.)
Was entity formed for the purpose of this investment?
Yes No
----- -----
If the answer is yes, all shareholders, partners or other equity
owners must answer Part I of this Questionnaire. If the above answer
is no, please continue completing this form.
2. PROPOSED INVESTMENT
Please indicate the amount of your proposed investment: $
Please state the investing entity's net worth at the time the
securities will be purchased:
$
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<PAGE>
3. BUSINESS
Please check the appropriate box to indicate which of the following
accurately describes the nature of the business conducted by the
investing entity:
[ ] a corporation, organization described in Section 501(c)(3)
of the Internal Revenue Code, a Massachusetts or similar
business trust or a partnership, in each case, not formed for
the purpose of this investment, with total assets in excess
of $5,000,000;
[ ] private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
[ ] a U.S. venture capital fund which invests primarily through
private placements in non-publicly traded securities and
makes available (either directly or through co-investors) to
the portfolio companies significant guidance concerning
management, operations or business objectives;
[ ] a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958;
[ ] an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
[ ] a bank as defined in Section 3(a)(2) or a savings and loan
association or other institution defined in Section
3(a)(5)(A) of the Securities Act of 1933 acting in either an
individual or fiduciary capacity;
[ ] an insurance company as defined in Section 2(13) of the
Securities Act of 1933;
[ ] an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 whose
investment decision is made by a fiduciary which is either a
bank, savings and loan association, insurance company, or
registered investment advisor, or whose total assets exceed
$5,000,000, or, if a self-directed plan, a plan whose
investment decisions are made solely by persons who are
accredited investors;
[ ] an entity not located in the U.S. and whose equity owners are
neither U.S. citizens nor U.S. residents;
[ ] a trust with total assets in excess of $5,000,000 whose
purchase is directed by a sophisticated person as described
in Rule 506(b)(2)(ii) of the Securities Act of 1933.
[ ] Other. Describe:
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<PAGE>
4. INVESTMENT EXPERIENCE
Please provide information detailing the business, financial and
investment experience of the entity and investment manager of such
entity.
III. SIGNATURE
The above information is true and correct in all material respects and
the undersigned recognizes that the Company and its counsel are relying on the
truth and accuracy of such information in reliance on the exemption contained
in Subsection 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The undersigned agrees to notify the Company promptly
of any changes in the foregoing information which may occur prior to the
investment.
Executed at ________________, on ________________ ____, 2000.
(Signature)
(Title if for Entity)
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